Mail Stop 7010
December 8, 2005
Rolf Engh, General Counsel
The Valspar Corporation
1101 Third Street South
Minneapolis, Minnesota 55415
Re: The Valspar Corporation
Form S-4
Amended November 16, 2005
File No. 333-128753
Dear Mr. Engh:
We have reviewed your amended filing and have the following
comments. Feel free to call us at the telephone numbers listed at
the end of this letter.
Prospectus Summary, page 1
1. We note your response to comment 8 of our October 28, 2005
letter;
however, please disclose this response in the prospectus.
Selected Consolidated Financial Data, page 14
2. We note your response to prior comment 20. To the extent you
choose to continue to highlight the impact of certain charges in
future earnings releases or Financial Data, please confirm to us
that
you will also highlight subsequent reversals and changes in
estimates
related to those charges. We do not believe that disclosing them
in
MD&A is sufficient.
Form 10-K for the fiscal year ended October 29, 2004
MD&A, Operations
3. Based on your response to prior comment 24, we assume you
concluded that an additional material loss related to these
contingencies is not reasonably possible. Please confirm your
conclusion on a supplemental basis and clarify it in future
filings.
Alternatively, if you believe that an additional material loss is
reasonably possible, please provide all the disclosures required
by
SFAS 5 and SAB 5:Y.
4. Please ensure that, in future filings, MD&A includes a
quantified
and comprehensive discussion of the impact of price increases and
raw
material cost increases on gross profits as well as a discussion
of
future expectations regarding trends in sales prices and raw
material
costs as required by Item 303 of Regulation S-K.
5. The EBIT results for your "other" segment have had a
significant
impact on your consolidated results of operations. We believe
that
the underlying reasons for these results are not adequately
discussed
in MD&A, either on an overall or financial statement line basis.
Please revise as appropriate.
6. In regard to your response to prior comment 27, please provide
us
the following additional information:
* Help us understand the specific facts and circumstances that
occurred in 2003 that resulted in the increase in expected claim
expenses;
* The amount you accrued above that recommended in the actuarial
report;
* Help us understand the specific facts and circumstances that
occurred in 2004 that resulted in claim expenses being
substantially
less than your initial estimate;
* Provide us additional information regarding the specific nature
of
the unamortized acquisition costs;
* Help us understand how paragraph 5 of FTB 90-1 supports your
classification of the charge you recorded between cost of sales
and
selling and administrative expenses;
* The impact of these plans on your results of operations during
each
period presented and
* Help us understand how you determined your maximum exposure to
these plans.
7. We reviewed your response to prior comment 27. Please
disclose,
under critical accounting policies, the specific factors that lead
to
the charge for furniture claims, the significant assumptions
underlying the amount you recorded, the specific factors that
resulted in the partial reversal, and the significant assumptions
underlying the amount you reversed. In addition, please also
disclose the changes you have made to your claims processing
procedures, the expected impact of those changes and the magnitude
of
your potential obligations under these plans.
Consolidated Financial Statements
Note 1- Significant Accounting Policies, Goodwill and Indefinite-
Lived Intangible Assets
8. In the light of the materiality of goodwill and intangible
assets
to total assets and equity, we do not that believe that your
proposed
disclosures in response to prior comment 31 are adequate. We
believe
that your disclosures under critical accounting policies should
not
merely reiterate your accounting policies but should address and
discuss the material assumptions underlying your estimates and the
potential impact of changes in your estimates. Please revise. In
addition, please confirm that you will appropriately revise your
accounting policies related to goodwill, definite-lived intangible
assets and indefinite-lived intangible assets in the notes to your
financial statements.
9. We also note in your proposed disclosures that you state you
have
two reporting units. Please tell us what each reporting unit
includes and how it was determined. Refer to paragraph 30 of FAS
142. In addition, please reconcile this proposed disclosure to
the
disclosure in your response to prior comment 33.
Note 7. Guarantees and Contractual Obligations
10. Please note that you should present a roll-forward of warranty
claims for three years in accordance with FIN 45. In addition,
based
on your proposed disclosures, it is not clear to us if or how you
have presented the $15.2M after tax charge you took in 2003 and if
or
how you plan to present the subsequent partial reversal of this
charge. Please clarify or revise.
Note 8. Goodwill and Other Intangible Assets
11. Please ensure that the roll-forward of goodwill you present in
future filings is for two years in accordance with SFAS 142.
Note 14- Segment Information
12. As previously requested, please provide us an update of how
you
have considered each of the aggregation criteria in paragraph 17
of
FAS 131 in determining that it is appropriate to combine your
various
operating segments into your reporting segments. In addition,
please
confirm that you will disclose that you aggregate operating
segments
in future filings.
Form 10-Q for the Three Months Ended July 29, 2005
Item 2. Management`s Discussion and Analysis, page 14
13. Please provide us with the following information regarding the
planned closure of your manufacturing facilities:
* The nature of the charge that will be incurred;
* How such charge will be estimated;
* The periods over which the charge will be expensed;
* What actions you have taken to date in both closing the
identified
facilities and finalizing your plan.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may contact Patricia Armelin,
Staff
Accountant, at (202) 551-3747 or Anne McConnell, Senior
Accountant,
at (202) 551-3709 if you have questions regarding comments on the
financial statements and related matters. Please contact Craig
Slivka, Staff Attorney, at (202) 551-3729 or in his absence Chris
Edwards, Special Counsel, at (202) 551-3742 with any other
questions.
Sincerely,
Assistant Director
Pamela A. Long
CC: Martin R. Rosenbaum, Esq.
(612) 642-8326
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Rolf Engh, General Counsel
The Valspar Corporation
Page 1 of 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE