EFiled: Nov 05 2024 04:S8PMESTYA
`Case No. 2022-1001-KSJM eXotLy
`Transaction ID 74921406=/>),/4.1"|)*)
`
`OFDAS
`
`EXHIBIT C-65
`EXHIBIT C-65
`
`EFiled: Nov 05 2024 04:58PM EST
`Transaction ID 74921406
`Case No. 2022-1001-KSJM
`
`

`

`10/30/24, 1:28 PM
`8-K 1 d383000d8k.htm FORM 8-K
`
`
`Form 8-K
`
`
`
`
`
`
`
`
`
`
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D. C. 20549
`
`FORM 8-K
`
`CURRENT REPORT
`Pursuant to Section 13 or 15(d)
`of the Securities Exchange Act of 1934
`
`Date of Report (Date of earliest event reported): June 1, 2017
`
`
`THE VALSPAR CORPORATION
`
`(Exact name of registrant as specified in its charter)
`
`Delaware
`(State or other jurisdiction of incorporation)
`
`1-3011
`(Commission
`File Number)
`
`1101 South 3rd Street, Minneapolis, Minnesota
`(Address of principal executive offices)
`
`
`
`
`
`
`
`
`36-2443580
`(I.R.S. Employer
`Identification No.)
`
`55415
`(Zip Code)
`
`Registrant’s telephone number, including area code: (612) 851-7000
`
`
`
`Not Applicable
`(Former name or former address, if changed since last report)
`
`Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
`any of the following provisions (see General Instructions A.2. below):
` ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
` ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
` ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
` ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
`Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933
`(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
`Emerging growth company ☐
`If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
`complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
`
`
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`10/30/24, 1:28 PM
`
`Form 8-K
`
`Introductory Note
`As previously disclosed, on March 19, 2016, The Valspar Corporation (“Valspar” or the “Company”) entered into that certain
`Agreement and Plan of Merger (the “Merger Agreement”) with The Sherwin-Williams Company (“Sherwin-Williams”) and Viking
`Merger Sub Inc., a wholly owned subsidiary of Sherwin-Williams (“Merger Sub”), providing for the merger of Merger Sub with and
`into the Company (the “Merger”).
`
`On June 1, 2017 (the “Closing Date”), upon the terms and subject to the conditions set forth in the Merger Agreement and in
`accordance with the applicable provisions of the General Corporation Law of the State of Delaware, the Merger was completed. At the
`effective time of the Merger (the “Effective Time”), the separate corporate existence of Merger Sub ceased, and the Company survived
`the Merger as a wholly owned subsidiary of Sherwin-Williams.
`
`Item 1.02. Termination of a Material Definitive Agreement.
`On June 1, 2017, in connection with the Merger, the Company terminated that certain Amended and Restated Credit Agreement,
`dated as of December 16, 2013 (the “Credit Agreement”), by and among the Company, the subsidiary borrowers referred to therein,
`Wells Fargo Bank, National Association, as administrative agent and an issuing bank and lender, Bank of America, N.A., as syndication
`agent and an issuing bank and lender and the lenders party thereto. There were no amounts outstanding under the Credit Agreement at
`the time of termination.
`
`Item 2.01. Completion of Acquisition or Disposition of Assets.
`As described above, at the Effective Time on the Closing Date, Sherwin-Williams completed its previously announced acquisition
`of the Company. As a result of the Merger, the Company became a wholly owned subsidiary of Sherwin-Williams. At the Effective
`Time, each outstanding share of common stock of Valspar, par value $0.50 per share (“Common Stock”) (other than Common Stock
`held in treasury by Valspar, owned by a wholly owned subsidiary of Valspar or owned by Sherwin-Williams or any of its wholly owned
`subsidiaries) was automatically converted into the right to receive $113.00 in cash (the “Merger Consideration”).
`
`Also as previously disclosed, on April 11, 2017, the Company entered into that certain Asset Purchase Agreement (as amended,
`the “Purchase Agreement”) with Axalta Coating Systems Ltd. (“Axalta”) and, solely with respect to certain provisions, Sherwin-
`Williams, providing for the purchase by Axalta of certain assets of the Company’s North America Industrial Wood Coatings business
`for $420 million, subject to certain customary adjustments (the “Divestiture”). On May 31, 2017, Axalta, Valspar and Sherwin-
`Williams entered into an amendment to the Purchase Agreement, which made changes thereto required to obtain regulatory approval.
`On the Closing Date, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Divestiture was completed.
`The Divestiture was completed as a result of the reviews by the Federal Trade Commission and the Canadian Competition Bureau of
`the acquisition of Valspar by Sherwin-Williams.
`
`At the Effective Time, (a) each outstanding Company stock option, restricted stock unit award, performance-based restricted stock
`unit award and restricted share award granted prior to the date of the Merger Agreement was converted into the right to receive a cash
`payment equal to the product of (i) the number of shares of Common Stock subject to such award and (ii) the Merger Consideration (in
`the case of stock options, less the exercise price per share), less any applicable taxes, and (b) each outstanding Company stock option
`and restricted stock unit award granted after the date of the Merger Agreement was converted into an equivalent award relating to
`shares of Sherwin-Williams common stock on the terms set forth in the Merger Agreement.
`
`The foregoing description of the Merger Agreement and the transactions contemplated thereby is not complete and is subject to
`and qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K
`filed by the Company with the Securities and Exchange Commission (“SEC”) on March 21, 2016 and the terms of which are
`incorporated by reference herein.
`
`Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
`
`https://www.sec.gov/Archives/edgar/data/102741/000119312517191056/d383000d8k.htm
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`10/30/24, 1:28 PM
`
`Form 8-K
`
`On the Closing Date, the Company notified the New York Stock Exchange (the “NYSE”) that the Merger had been completed,
`and requested that the NYSE suspend trading of the Common Stock on the NYSE and remove the Common Stock from listing on the
`NYSE, in each case, prior to market open on the Closing Date. The Company also requested that the NYSE file with the SEC a
`notification of removal from listing on Form 25 to delist the Common Stock from the NYSE and to deregister the Common Stock
`under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On the Closing Date, in accordance
`with the Company’s request, the NYSE filed the Form 25 with the SEC.
`
`The Company intends to file with the SEC a certification and notice of termination on Form 15 requesting that the Company’s
`reporting obligations under Sections 13 and 15(d) of the Exchange Act be terminated with respect to the Common Stock.
`
`The information set forth in the Introductory Note above and in Item 2.01 is incorporated by reference into this Item 3.01.
`
`
`Item 3.03. Material Modification to Rights of Security Holders.
`The information set forth in the Introductory Note above and in Item 1.01, Item 2.01 and Item 3.01 is incorporated by reference
`into this Item 3.03.
`
`Item 5.01. Changes in Control of Registrant.
`The information set forth in the Introductory Note above and in Item 2.01 and Item 5.02 is incorporated by reference into this
`Item 5.01.
`
`Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
`Arrangements of Certain Officers.
`
`Directors
`Pursuant to the Merger Agreement, effective at the Effective Time, each of Ian R. Friendly, Janel S. Haugarth, John M. Ballbach,
`David Lumley, Jack J. Allen, John S. Bode, Jeffrey H. Curler, Shane D. Fleming, William M. Cook, Gary E. Hendrickson and Mae C.
`Jemison ceased to be directors of the Company. Additionally, effective as of the Effective Time, John G. Morikis became the sole
`director of the Company.
`
`Executive Officers
`Pursuant to the Merger Agreement, effective at the Effective Time, each of Gary E. Hendrickson, James L. Muehlbauer, Rolf
`Engh, Howard Heckes and Les Ireland ceased to be executive officers of the Company. Following the Effective Time, the officers of
`the Company are as follows: John G. Morikis–President, Allen J. Mistysyn–Vice President and Treasurer, Catherine M. Kilbane–Vice
`President and Secretary, Jeffrey J. Miklich–Vice President and Assistant Treasurer, Michael T. Cummins–Vice President and Assistant
`Secretary, Stephen J. Perisutti–Vice President and Assistant Secretary and Mary L. Garceau–Vice President and Assistant Secretary.
`
`Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
`Certificate of Incorporation
`At the Effective Time, the Restated Certificate of Incorporation of the Company was amended and restated as set forth in the
`Certificate of Incorporation that is filed as Exhibit 3.1 hereto and is incorporated herein by reference.
`
`Bylaws
`Immediately after the Effective Time, the Restated Bylaws of the Company were amended and restated as set forth in the Bylaws
`that are filed as Exhibit 3.2 hereto and are incorporated herein by reference.
`
`Item 9.01. Financial Statements and Exhibits.
`
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`
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`
`

`

`10/30/24, 1:28 PM
`
`Form 8-K
`
`(b) Pro forma financial information.
`
`The unaudited pro forma condensed consolidated balance sheet of the Company as of April 28, 2017 and the unaudited pro forma
`condensed consolidated statements of operation of the Company for the six months ended April 28, 2017 and for the fiscal year ended
`October 28, 2016, in each case giving pro forma effect to the Divestiture, are included as Exhibit 99.1 to this Current Report on Form
`8-K and are incorporated herein by reference.
`
`(d) Exhibits.
`
`Exhibit No.
` 2.1
`
` 3.1
` 3.2
`99.1
`
`Description of Exhibit
`Agreement and Plan of Merger, dated as of March 19, 2016, by and among The Valspar Corporation, The Sherwin-
`Williams Company and Viking Merger Sub, Inc. (attached as Exhibit 2.1 to the Form 8-K of The Valspar Corporation
`filed on March 21, 2016).
`
` Amended and Restated Certificate of Incorporation of The Valspar Corporation.
` Amended and Restated Bylaws of The Valspar Corporation.
` Unaudited Pro Forma Condensed Consolidated Financial Information.
`
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`10/30/24, 1:28 PM
`
`Form 8-K
`
`SIGNATURES
`
`Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
`by the undersigned hereunto duly authorized.
`
`
`THE VALSPAR CORPORATION
`
`/s/ Allen J. Mistysyn
`Name: Allen J. Mistysyn
`Title: Vice President and Treasurer
`
`Dated: June 1, 2017
`
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`
`Form 8-K
`
`EXHIBIT INDEX
`
`
`Exhibit No.
` 2.1
`
` 3.1
` 3.2
`99.1
`
`Description of Exhibit
`Agreement and Plan of Merger, dated as of March 19, 2016, by and among The Valspar Corporation, The Sherwin-
`Williams Company and Viking Merger Sub, Inc. (attached as Exhibit 2.1 to the Form 8-K of The Valspar Corporation
`filed on March 21, 2016).
`
` Amended and Restated Certificate of Incorporation of The Valspar Corporation.
` Amended and Restated Bylaws of The Valspar Corporation.
` Unaudited Pro Forma Condensed Consolidated Financial Information.
`
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`

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`EXHIBIT C-66
`EXHIBIT C-66
`
`

`

`10/30/24, 3:10 PM
`
`10-K 1 val-10282016x10k.htm 10-K
`
`Document
`
`Table of Contents
`
`UNITED STATES SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`FORM 10-K
`
`
`
`
`
`
`
`
`(Mark One)
`☒
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`For the fiscal year ended October 28, 2016
`
`
`☐
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`or
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
`EXCHANGE ACT OF 1934
`For the transition period from _______________________ to ___________________
`
`Commission File Number 1-3011
`
`THE VALSPAR CORPORATION
`(Exact name of registrant as specified in its charter)
`
`
`
`
`
`Delaware
`(State of incorporation)
`
`36-2443580
`(I.R.S. Employer Identification No.)
`
`1101 South 3rd Street
`Minneapolis, Minnesota
`(Address of principal executive offices)
`
`
`
`
`(612) 851-7000
`(Registrant’s telephone number, including area code)
`
`55415
`(Zip Code)
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`
`
`
`
`Name of Each Exchange on which Registered
`
`New York Stock Exchange
`
`Title of Each Class
`
`Common Stock, $0.50 Par Value
`
`
`
`Securities registered pursuant to Section 12(g) of the Act: None
`
`
`
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`☒ Yes ☐No
`
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`Document
`Table of Contents
`
`Shown below is a breakdown of the approximate square footage of principal facilities by region as of October 28, 2016:
`
`Region
`North America
`Asia Pacific
`Europe
`Other
`Total
`
`Approximate
`Square Footage
`Owned
`3,828,000
`2,235,000
`1,538,000
`673,000
`8,274,000
`
`Approximate
`Square Footage
`Leased
`762,000
`75,000
`164,000
`—
`1,001,000
`
`Set forth below is a breakdown of the approximate square footage of principal facilities by business segment:
`
`Business Segment
`Coatings
`Paints
`Other and Administrative
`Total
`
`Total
`4,590,000
`2,310,000
`1,702,000
`673,000
`9,275,000
`
`Approximate
`Square Footage
`5,384,000
`3,114,000
`777,000
`9,275,000
`
`We believe our properties are well maintained, in good operating condition and adequate for the purposes for which they are being
`used. Operating capacity of our manufacturing properties varies by product line, but additional production capacity is available for
`most product lines by increasing the number of days and/or shifts worked.
`
`ITEM 3 LEGAL PROCEEDINGS
`Environmental Matters
`
`We are involved in various claims relating to environmental matters at a number of current and former plant sites and waste
`management sites. We engage or participate in remedial and other environmental compliance activities at certain of these sites. At other
`sites, we have been named as a potentially responsible party (PRP) under federal and state environmental laws for site remediation. We
`analyze each individual site, considering the number of parties involved, the level of our potential liability or contribution relative to
`the other parties, the nature and magnitude of the hazardous wastes involved, the method and extent of remediation, the potential
`insurance coverage, the estimated legal and consulting expense with respect to each site and the time period over which any costs
`would likely be incurred. Based on the above analysis, we estimate the clean-up costs and related claims for each site. The estimates are
`based in part on discussion with other PRPs, governmental agencies and engineering firms.
`
`We accrue appropriate reserves for potential environmental liabilities when the amount of the costs that will be incurred can be
`reasonably determined. Accruals are reviewed and adjusted as additional information becomes available. While uncertainties exist with
`respect to the amounts and timing of our ultimate environmental liabilities, we believe it is neither probable nor reasonably possible
`that such liabilities, individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations
`or cash flows.
`
`Other Legal Matters
`
`We are involved in a variety of legal claims and proceedings relating to personal injury, product liability, warranties, customer
`contracts, employment, trade practices, environmental and other legal matters that arise in the normal course of business. These claims
`and proceedings include cases where we are one of a number of defendants in proceedings alleging that the plaintiffs suffered injuries
`or contracted diseases from exposure to chemicals or other ingredients used in the production of some of our products or waste
`disposal. We are also subject to claims related to the performance of our products. We believe these claims and proceedings are in the
`ordinary course for a business of the type and size in which we are engaged. While we are unable to predict the ultimate outcome of
`these claims and proceedings, we believe it is neither probable nor reasonably possible that the costs and liabilities of such matters,
`individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.
`
`ITEM 4 MINE SAFETY DISCLOSURES
`
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`Not applicable.
`
`Document
`
`10
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`PART II
`
`ITEM 5
`
`Document
`Table of Contents
`
`MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
`MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
`
`Our common stock is listed on the New York Stock Exchange under the trading symbol VAL. The table below sets forth the quarterly
`high and low market prices of our common stock for fiscal years 2016 and 2015 as quoted on the New York Stock Exchange.
`
`
`For the Fiscal Year
`First Quarter
`Second Quarter
`Third Quarter
`Fourth Quarter
`
`Market Price (high/low)
`2016
`2015
`$85.27 - 71.99
`$88.36 - 80.97
`$107.05 - 74.20
`$90.91 - 81.04
`$108.64 - 105.90
`$88.17 - 78.66
`$107.40 - 97.62
`$84.05 - 70.58
`
`The quarterly dividend declared November 17, 2016, to be paid on December 15, 2016 to common stockholders of record December 1,
`2016, was increased to $0.37 per share. The table below sets forth the quarterly dividends paid for fiscal years 2016 and 2015.
`
`
`For the Fiscal Year
`First Quarter
`Second Quarter
`Third Quarter
`Fourth Quarter
`
`
`
`Per Share Dividends
`
`2016
`2015
`0.33 $
`0.33 $
`0.33 $
`0.33 $
`1.32 $
`
`0.30
`0.30
`0.30
`0.30
`1.20
`
`$
`$
`$
`$
`$
`
`The number of record holders of our common stock at December 13, 2016 was 1,101.
`
`ISSUER PURCHASES OF EQUITY SECURITIES
`
`Period
`Repurchase program:
`7/30/16 - 8/26/16
`8/27/16 - 9/22/16
`9/23/16 - 10/28/16
`Other transactions2
`
`Total Number
`of Shares
`Purchased1
`
`0
`0
`0
`1,020 $
`
`Average
`Price Paid
`per Share
`
`N/A
`N/A
`N/A
`105.75
`
`
`
`
`
`Total Number of
`Shares Purchased as Part
`of Publicly Announced
`Plans or Programs1
`
`Maximum Amount
`that May Yet be
`Purchased Under
`the Plans or Programs1
`
`0 $
`0 $
`0 $
`
`1,175,630
`1,175,630
`1,175,630
`
`1On November 21, 2014, the Board approved a share repurchase program, with no expiration date, authorizing us to purchase up to $1.5 billion of outstanding shares of
`our common stock. We repurchased a total of 221,060 shares in fiscal 2016.
`2Our other transactions include our acquisition of our common stock in satisfaction of tax-payment obligations upon vesting of restricted stock.
`
`STOCK PERFORMANCE GRAPH
`
`The following graph compares our cumulative total stockholder return for the last five fiscal years with the cumulative total return of
`the Standard & Poor’s 500 Stock Index and a peer group of companies selected by us on a line-of-business basis. The graph assumes
`the investment of $100 in our common stock, the S&P 500 Index and the peer group at the end of fiscal 2011 and the reinvestment of
`all dividends.
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`Document
`Table of Contents
`
`The companies selected to form the peer group index are: Akzo Nobel N.V.; Ferro Corporation; H.B. Fuller Company; Masco
`Corporation; Newell Rubbermaid Inc.; PPG Industries, Inc.; RPM International Inc.; and The Sherwin-Williams Company.
`
`COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
`Among The Valspar Corporation, a Peer Group and the S&P 500 Index
`
`
`Fiscal Year End
`Valspar
`Peer Group
`S&P 500
`
`2011
`
`2012
`
`$
`$
`$
`
`100
`100
`100
`
`$
`$
`$
`
`
`156 $
`130 $
`115 $
`
`Cumulative Total Return
`
`2013
`2014
`202 $
`193 $
`147 $
`
`240
`214
`172
`
`$
`$
`$
`
`2015
`
`
`240 $
`244 $
`181 $
`
`2016
`
`294
`238
`189
`
`Assumes $100 invested on October 28, 2011 in our common stock, the Peer Group and the S&P 500 Index, including reinvestment of
`dividends.
`
`EQUITY COMPENSATION PLANS
`
`Plan Category
`Equity compensation plans approved by security holders
`Equity compensation plans not approved by security holders
`Total
`
`Number of Securities
`to be Issued Upon
`Exercise of
`Outstanding Options,
`
`Warrants and Rights
`4,343,011 $
`None
`4,343,011 $
`
`Weighted-Average
`Exercise Price of
`Outstanding
`Options, Warrants
`and Rights
`41.01
`None
`41.01
`
`Number of Securities
`Remaining Available
`for Future Issuance
`Under Equity
`Compensation Plans1
`4,105,254
`None
`4,105,254
`
`1 The number of securities remaining available for future issuance under equity compensation plans consists of shares issuable under the 2015 Omnibus Equity Plan,
`which was approved by the stockholders in February 2015.
`
`12
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`Document
`Table of Contents
`
`The Valspar Corporation and Subsidiaries
`
`Consolidated Statements of Changes in Equity
`(Dollars in thousands, except per share amounts)
`
`Additional
`Paid-in
`Capital
`444,609
`—
`—
`
`Retained
`Earnings
`$ 1,648,980
`345,401
`—
`
`Treasury
`Stock
`$ (1,083,678) $
`—
`—
`
`Accumulated
`Other
`Comprehensive
`Income (Loss)
`53,419
`—
`(73,089)
`
`—
`—
`
`—
`
`—
`
`2,558
`423
`
`36,009
`
`(349,181)
`
`—
`—
`
`—
`
`—
`
`Total
`$ 1,122,550
`345,401
`(73,089)
`
`5,444
`855
`
`43,864
`
`(349,181)
`
`(87,380)
`—
`—
`$ 1,907,001
`399,506
`—
`—
`—
`
`—
`—
`—
`$ (1,393,869) $
`—
`—
`3,694
`643
`
`(87,380)
`—
`6,382
`—
`(3,755)
`—
`(19,670) $ 1,011,091
`—
`399,506
`(175,828)
`(175,828)
`—
`13,851
`—
`1,083
`
`—
`
`—
`
`19,567
`
`(322,420)
`
`—
`
`—
`
`22,779
`
`(322,420)
`
`(96,879)
`—
`$ 2,209,628
`353,040
`—
`—
`
`—
`—
`—
`—
`$ (1,692,385) $ (195,498) $
`—
`—
`—
`(21,685)
`—
`—
`
`—
`
`—
`
`27,884
`
`(18,134)
`
`—
`
`—
`
`(96,879)
`1,826
`855,009
`353,040
`(21,685)
`18,718
`
`31,042
`
`(18,134)
`
`
`Balance, October 25, 2013
`Net income
`Other comprehensive income (loss)
`Restricted stock granted for 62,994 Shares,
`net of forfeitures
`Director stock granted for 11,124 shares
`Common stock options exercised of
`1,098,023 shares
`Purchase of shares of common stock for
`treasury of 4,705,081 shares
`Cash dividends on common stock – $1.04
`per share (net of forfeited restricted stock
`dividends of $47)
`Stock option expense
`Purchase of equity award shares
`Balance, October 31, 2014
`Net income
`Other comprehensive income (loss)
`Stock-based compensation, net
`Director stock granted for 15,067 shares
`Common stock options exercised of
`621,237 shares
`Purchase of shares of common stock for
`treasury of 3,891,545 shares
`Cash dividends on common stock – $1.20
`per share (net of forfeited restricted stock
`dividends of $11)
`Stock option expense
`Balance, October 30, 2015
`Net income
`Other comprehensive income (loss)
`Stock-based compensation, net
`Restricted stock vested and common stock
`options exercised of 660,022 shares
`Purchase of shares of common stock for
`treasury of 221,060 shares
`Cash dividends on common stock – $1.32
`per share (net of forfeited restricted stock
`dividends of $14)
`Balance, October 28, 2016
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`Common
`Stock
`59,220
`—
`—
`
`—
`—
`
`—
`
`—
`
`—
`—
`—
`59,220
`—
`—
`—
`—
`
`—
`
`—
`
`—
`—
`59,220
`—
`—
`—
`
`—
`
`—
`
`2,886
`432
`
`7,855
`
`—
`
`—
`6,382
`(3,755)
`458,409
`—
`—
`10,157
`440
`
`3,212
`
`—
`
`—
`1,826
`474,044
`—
`—
`18,718
`
`3,158
`
`—
`
`—
`59,220
`
`—
`495,920
`
`(104,567)
`$ 2,458,101
`
`(104,567)
`—
`—
`$ (1,682,635) $ (217,183) $ 1,113,423
`
`$
`
`$
`
`See Notes to Consolidated Financial Statements
`
`34
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`Document
`Table of Contents
`
`The Valspar Corporation and Subsidiaries
`Consolidated Statements of Cash Flows
`(Dollars in thousands)
`
`October 28, 2016
`(52 weeks)
`
`353,040
`
`$
`
`October 30, 2015 October 31, 2014
`
`(52 weeks)
`(53 weeks)
`
`
`
`399,506 $
`345,401
`
`$
`
`
`86,216
`11,806
`30,250
`(50,206)
`(805)
`5,867
`
`42,837
`(26,136)
`
`31,279
`9,842
`(9,645)
`(1,633)
`482,712
`
`(120,420)
`(24,408)
`—
`10,128
`450
`(134,250)
`
`—
`(2,078)
`3,037
`(265,480)
`16,416
`(18,134)
`14,626
`(104,553)
`(356,166)
`(7,704)
`(3,537)
`185,961
`174,720
`
`90,378
`
`$
`
`$
`
`
`
`82,963
`9,640
`14,793
`(3,058)
`(51,256)
`—
`
`
`(83,098)
`(23,102)
`
`48,791
`(6,402)
`(5,128)
`(449)
`383,200
`
`
`(97,126)
`(346,680)
`54,552
`7,650
`1,561
`(380,043)
`
`
`1,187,357
`(635,686)
`(13,988)
`(61,007)
`12,043
`(322,420)
`13,150
`(96,890)
`82,559
`85,716
`(27,958)
`128,203
`185,961 $
`
`76,847 $
`
`
`92,637
`8,273
`28,314
`(2,107)
`(3,301)
`—
`
`(116,566)
`(105,841)
`
`84,111
`3,938
`7,175
`5,070
`347,104
`
`(121,271)
`—
`4,716
`3,872
`683
`(112,000)
`
`123,867
`(118,714)
`8,937
`66,393
`24,233
`(349,181)
`19,161
`(87,427)
`(312,731)
`(77,627)
`(10,320)
`216,150
`128,203
`
`65,297
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`
`
`
`
`
`
`
`
`
`
`
`
`
`
`For the Year Ended
`Operating Activities:
`Net income
`
`Adjustments to reconcile net income to net cash (used in)/provided
`by operating activities:
`Depreciation
`Amortization
`Stock-based compensation
`Deferred income taxes
`(Gain)/loss on asset divestitures
`Impairment of certain long-lived assets
`Changes in certain assets and liabilities:
`(Increase)/decrease in accounts and notes receivable
`(Increase)/decrease in inventories and other assets
`Increase/(decrease) in trade accounts payable and other accrued
`liabilities
`
`Increase/(decrease) in income taxes payable
`
`Increase/(decrease) in other non-current liabilities
`
`Other
`
`Net cash (used in)/provided by operating activities
`Investing Activities:
`Purchases of property, plant and equipment
`
`Acquisition of businesses, net of cash acquired
`
`Proceeds from divestiture of businesses
`
`
`Cash proceeds on disposal of assets
`(Increase)/decrease in restricted cash
`
`Net cash (used in)/provided by investing activities
`Financing Activities:
`Net proceeds from issuance of debt
`
`Payments of debt
`
`
`Net change in other borrowings
`Net proceeds (repayments) of commercial paper
`
`Proceeds from stock options exercised
`
`Treasury stock purchases
`
`Excess tax benefit from stock-based compensation
`
`Dividends paid
`
`Net cash (used in)/provided by financing activities
`Increase/(decrease) in cash and cash equivalents
`
`Effect of exchange rate changes on cash and cash equivalents
`
`Cash and cash equivalents at beginning of period
`$
`Cash and cash equivalents at end of period
`
`Interest and income taxes paid:
`$
`
`Interest paid, net of amounts capitalized
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`10/30/24, 3:10 PM
`
`Income taxes paid
`
`Document
`$
`
`120,183
`
`$
`
`155,283 $
`
`104,291
`
`See Notes to Consolidated Financial Statements
`
`35
`
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`Document
`Table of Contents
`
`Notes to Consolidated Financial Statements
`The Valspar Corporation and Subsidiaries
`Years Ended October 2016, 2015 and 2014
`(Dollars in thousands, except per share amounts)
`NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
`
`Description of Business: The Valspar Corporation (Valspar, the Company, we, us or our) is a global leader in the paints and coatings
`industry. We develop, manufacture and distribute a broad range of coatings, paints and related products, and operate our business in two
`reportable segments: Coatings and Paints.
`
`Proposed Merger with The Sherwin-Williams Company
`On March 19, 2016, Valspar entered into an Agreement and Plan of Merger (the Merger Agreement) with The Sherwin-Williams
`Company (Sherwin-Williams) and Viking Merger Sub, Inc., a wholly-owned subsidiary of Sherwin-Williams (Merger Sub).
`
`The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (1) Merger
`Sub will be merged with and into Valspar (the Merger), with Valspar surviving the Merger as a wholly-owned subsidiary of Sherwin-
`Williams, and (2) at the effective time of the Merger, each outstanding share of common stock of Valspar, par value $0.50 per share
`(Valspar common stock) (other than Valspar common stock held in treasury by Valspar, owned by a subsidiary of Valspar or owned by
`Sherwin-Williams or any of its wholly-owned subsidiaries, or shares with respect to which appraisal rights have been validly exercised
`and not lost in accordance with Delaware law) will be converted into the right to receive the Merger Consideration.
`The Merger Consideration means $113.00 per share in cash, except that if Sherwin-Williams is required, in order to obtain the
`necessary antitrust approvals, to commit to any divestiture, license, hold separate, sale or other disposition of or with respect to assets,
`businesses or product lines of Valspar, Sherwin-Williams or their subsidiaries representing, in the aggregate, in excess of $650 million
`of Net Sales (as defined in the Merger Agreement), then the Merger Consideration will be $105.00 per share in cash.
`The Merger Agreement contains certain termination rights, and we may be required to pay Sherwin-Williams a termination fee of $300
`million.
`For further information on the Merger Agreement, refer to the Merger Agreement, a copy of which was filed as Exhibit 2.1 to our
`Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2016, and which is incorporated by
`reference herein.
`On June 29, 2016, Valspar stockholders voted to adopt the Merger Agreement at a special meeting of stockholders held for that
`purpose. Completion of the Merger remains subject to certain closing conditions, including the expiration or termination of the
`applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act and the receipt of regulatory approvals in
`certain other jurisdictions.
`
`In connection with the proposed Merger, we recognized costs of $28,021 for the year ended October 28, 2016 in selling, general and
`administrative expenses in the Consolidated Statements of Operations, for employee-related expenses, professional services and
`regulatory fees.
`Fiscal Year: We have a 4-4-5 week accounting cycle with the fiscal year ending on the Friday on or immediately preceding October 31.
`Fiscal years 2016 and 2015 both include 52 weeks while 2014 includes 53 weeks.
`
`Principles of Consolidation: The consolidated financial statements include the accounts of the parent company and its subsidiaries.
`All intercompany accounts and transactions have been eliminated in consolidation. Investments in which we have significant influence
`and where we do not have management control and are not the primary beneficiary are accounted for using the equity method. In order
`to facilitate our year-end closing process, foreign subsidiaries’ financial results are included in our consolidated financial statements on
`a one-month lag.
`
`Estimates: The preparation of financial statements in conformity with United States generally accepted accounting principles (GAAP)
`requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
`Such estimates and assumptions impact, among others, the following: the amount of revenue deferred under extended furniture
`protection plans, the amount of accounts receivable that will be uncollectible, the amount of customer rebates owed, the amount of
`inventory reserves, the amount to be paid for other liabilities, including contingent liabilities, assumptions around the valuation of
`goodwill and indefinite-lived intangible assets, including impairment, ou