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Annual Report on Form 10-K
THE VALSPAR CORPORATION
October 27, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended October 27, 2000 Commission file number 1-3011
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THE VALSPAR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-2443580
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(State of incorporation) (I.R.S. Employer
Identification No.)
1101 Third Street South
Minneapolis, Minnesota 55415
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 332-7371
Securities registered pursuant to Section 12(b) of
the Act:
Name of Each Exchange
Title of Each Class on which Registered
------------------- -------------------
Common Stock, $.50 Par Value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to the filing requirements
for the past 90 days.
Yes _X_ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by persons other than
officers, directors and more than 5% stockholders of the registrant as of
December 29, 2000 was $747 million based on the closing sales price of $32.18
per share as reported on the New York Stock Exchange. As of such date 42,493,022
shares of Common Stock, $.50 par value per share (net of 10,828,290 shares in
treasury) were outstanding.
DOCUMENTS INCORPORATED IN PART BY REFERENCE
Incorporated Documents Location in Form 10-K
---------------------- ---------------------
1. The Valspar Corporation Annual Report to Stockholders Parts II and IV
for fiscal year ended October 27, 2000
2. The Valspar Corporation Notice of 2001 Annual Meeting Part III
of Stockholders and Proxy Statement to be filed with
the Securities and Exchange Commission within 120 days
of fiscal year ended October 27, 2000
2
PART I
ITEM 1. BUSINESS
DESCRIPTION
The Valspar Corporation (the "Company") is a multinational paint and coatings
manufacturer that has two reportable segments: Coatings and Coating
Intermediates. The Company manufactures and distributes a broad portfolio of
coatings products. The Architectural, Automotive and Specialty ("AAS") product
line includes interior and exterior decorative paints and aerosols, automotive
and fleet refinish coatings and high performance floor coatings. The Packaging
product line includes coatings and inks for rigid packaging containers. The
Industrial product line includes decorative and protective coatings for metal,
wood and plastic substrates. Coating Intermediates, primarily resins and
colorants, are sold to the Company and to other coatings manufacturers.
The following table shows the net sales for these two operating segments for the
past three fiscal years and the net sales for the product lines within the
Coatings segment.
Operating Segments 2000 1999 1998
------------------ ---- ---- ----
Coatings $ 1,385,765 $ 1,292,475 $ 1,074,416
Coating Intermediates 150,139 145,725 126,843
----------- ----------- -----------
1,535,904 1,438,200 1,201,259
Intersegment Sales (52,584) (50,523) (46,125)
----------- ----------- -----------
Total Net Sales - External $ 1,483,320 $ 1,387,677 $ 1,155,134
----------- ----------- -----------
Coatings Segment Product Lines 2000 1999 1998
------------------------------ ---- ---- ----
Architectural, Automotive and Specialty $ 505,087 $ 510,960 $ 482,295
Packaging 508,536 452,846 319,653
Industrial 372,142 328,669 272,468
----------- ----------- -----------
$ 1,385,765 $ 1,292,475 $ 1,074,416
----------- ----------- -----------
For additional financial information about the Company's operating segments, see
Note 11 to the Consolidated Financial Statements included in the 2000 Annual
Report to Stockholders, incorporated by reference into this Form 10-K.
In December 2000, the Company acquired Lilly Industries, Inc., a corporation
that manufactures and distributes a wide variety of industrial coatings
products, in a transaction accounted for under the purchase method. Except with
respect to information relating to periods prior to the acquisition or unless
the context otherwise requires, the following description of the Company's
business reflects the operations of the Company on a post-acquisition basis,
including the operations of Lilly Industries, Inc.
3
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
PRODUCTS AND DISTRIBUTION METHODS
The Company is engaged in the manufacture and distribution of paint and coatings
in its COATINGS segment through the AAS, Packaging and Industrial product lines.
Within the AAS product line, the Company manufactures and markets a broad line
of architectural products including interior and exterior paints, stains,
primers, varnishes and specialty decorative products such as enamels, aerosols,
sealers and faux finishes, primarily for the do-it-yourself market in the United
States. Primary distribution channels for this product line are home centers,
mass merchants, hardware wholesalers and independent dealers. The Company
develops highly customized marketing programs for customers which enable them to
differentiate their paint departments from those of competitors through
point-of-purchase materials, labeling and product and color selection
assistance.
Within the AAS product line, the Company also manufactures and distributes,
primarily in the United States, automotive and fleet refinish coatings marketed
under the brand names "Valspar" and "House of Kolor", as well as aerosol spray
paints for automotive distributors and mass automotive supply retailers under
the brand names "Plasti-Kote", "Tempo" and "Mr. Spray".
In 1998, the Company acquired Plasti-Kote Co., Inc., a manufacturer and
distributor of aerosol spray paint with production facilities located in Medina,
Ohio. As noted above, Plasti-Kote's broad range of branded and private label
products is marketed within the AAS product line.
Specialty products within the AAS product line once included marine,
maintenance, functional powder and floor coatings. However, in 1997, the Company
sold its maintenance coatings business, and in 1998, the Company sold its
functional powder business (powder coatings applied primarily to pipelines). In
March 1999, the Company completed the sale of its marine coatings business. The
Company continues to manufacture and market, primarily in the United States,
high performance floor coatings for industrial and commercial use under the
"Valspar" and "Federal" brand names. These products include specialty coatings
and resurfacing coatings for concrete and wood floors.
The primary manufacturing plants for the AAS product line are located in
Statesville, North Carolina; Tampa, Florida; Medina, Ohio; Chicago, Illinois;
Wheeling, Illinois; Rockford, Illinois; Picayune, Mississippi; Grand Prairie,
Texas; and Garland, Texas. In addition, in 1999, the Company opened a major
distribution facility in Sacramento, California.
The Company's PACKAGING product line includes coatings and inks for rigid
packaging, principally food and beverage cans. The Company is the largest global
coatings supplier to the rigid packaging industry. Packaging coatings and inks
for application to food and beverage can bodies and ends comprise the largest
volume of sales in this line. The Company also produces coatings for aerosol and
paint cans, bottle crowns for glass and plastic packaging and glass bottle
closures. These coatings are required to meet F.D.A., U.S.D.A. and other
country-specific regulations.
4
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
In 1996, the Company opened a plant for the manufacture of packaging coatings in
the People's Republic of China with the Company's Chinese joint venture partner.
In 1996, the Company acquired the can coatings and metal decorating inks
business of Coates Coatings. The first phase of the acquisition, completed in
May 1996, included businesses in the UK, France, Norway, Spain, Germany,
Australia and the U.S.A. The second phase, completed in January 1997, included
businesses in Hong Kong and China. In December 1997, as part of the Coates
acquisition, the Company acquired a 49% interest in a joint venture with Coates
for packaging coatings in South Africa. In February 1999, as part of the Dexter
acquisition, the Company acquired Dexter's majority position in a joint venture
with Plascon (Pty) Limited, a South African company, for packaging coatings in
South Africa. As of October 2000, the Company acquired Coates' 51% interest in
the Valspar/Coates joint venture and reorganized the businesses of both South
African joint ventures so that Valspar now has a majority position in a joint
venture with Plascon for a combined packaging coatings business in South Africa.
The Packaging product line expanded its operations to South America through the
formation of a joint venture in June 1997 with Renner Herrmann, S.A., a leading
Brazilian coatings manufacturer. In July 1998, the Company increased its
ownership position from 49% to 51% of its Valspar Marlux joint venture in
Mexico, and in November 2000, the Company acquired the remaining 49% interest of
its joint venture partner in Mexico. In April 1998, the Company acquired Anzol
Pty. Ltd., an Australian industrial and packaging coatings company based in
Sydney, Australia. In February 1999, the Company acquired Dexter Corporation's
worldwide Packaging coatings product line. Dexter was a worldwide supplier of
beverage can, food can and specialty coatings to the packaging market. In April
1999, the Company completed the sale of its North American flexible packaging
coatings business.
The primary manufacturing plants for the PACKAGING product line are located in
Birmingham, Alabama; Carol Stream, Illinois; Covington, Georgia; Garland, Texas;
Hayward, California; Pittsburgh, Pennsylvania; Rochester, Pennsylvania; West
Hill, Ontario, Canada; Deeside, Wales; Durban, South Africa; Gruningen,
Switzerland; Machen, Wales; Melbourne, Australia; Mexico City, Mexico; Nantes,
France; Sao Paulo, Brazil; Singapore; Sydney, Australia; Tokyo, Japan; Tournus,
France; and XiXiang, China.
The Company's INDUSTRIAL product line includes decorative and protective
coatings for metal, wood and plastic, primarily for distribution to original
equipment manufacturers in North America and selected countries in Europe,
Australia and Asia. Products include fillers, primers, stains and topcoats which
are used by a wide range of customers, including the automotive parts, building
products, railcar, appliance, home and office furniture, cabinets, agricultural
equipment, construction equipment and metal fabrication industries. The Company
is also a leading U.S. supplier of coating systems which are used to coat coils
of metal prior to fabrication into pre-engineered products such as buildings,
doors, lighting fixtures and appliances. The Company uses a variety of coatings
technologies to meet customer requirements, including electrodeposition, powder,
high solids, water-borne and UV light-cured coatings.
5
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
During 1997, the Company acquired additional powder and general industrial
business through a business exchange with Ameron International Corporation and
entered into the mirror backing metals and coatings market by acquiring
Sureguard, Incorporated and Hilemn Laboratories, Inc. With the acquisition of
Anzol Pty. Ltd. in April 1998, the Industrial product line entered the
Australian industrial market, specifically coil coatings and general industrial
products, with full manufacturing capabilities. In February 1999, the Company
acquired Dexter Corporation's Industrial Coatings subsidiary, Dexter SAS,
located in Tournus, France, which supplies a variety of coatings to the European
industrial market. In September 1999, the Company acquired the remaining 50%
interest in Farboil Company held by its joint venture partner. Farboil Company
is located in Baltimore, Maryland and produces decorative powder coatings. In
December 2000, the Company acquired Lilly Industries, Inc., one of the five
largest industrial coatings manufacturers in North America. Lilly Industries
manufactures and distributes coatings for products such as home and office
furniture, cabinets, appliances, building products, transportation, agricultural
and construction equipment, mirrors and a variety of metal and fiberglass
reinforced surfaces. As a condition to receiving approval from the U.S. Federal
Trade Commission for the Lilly Industries acquisition, the Company divested its
existing mirror coatings business, which had sales of approximately $12 million
for fiscal 2000.
The primary manufacturing plants for the INDUSTRIAL product line are located in
Baltimore, Maryland; Bowling Green, Kentucky; Charlotte, North Carolina; Dallas,
Texas; Davie, Florida; Elkhart, Indiana; Fort Wayne, Indiana; Garland, Texas;
High Point, North Carolina; Indianapolis, Indiana; Jackson, Tennessee; Kankakee,
Illinois; Kansas City, Missouri; Little Rock, Arkansas; Los Angles, California;
Moline, Illinois; Rocky Hill, Connecticut; Seattle, Washington; Cornwall,
Ontario, Canada; London, Ontario, Canada; West Hill, Ontario, Canada;
Ballinamore, Ireland; Dongguan, China; Eschweiler, Germany; Kaohsiung, Taiwan;
Monterrey, Mexico; Sawton, England; Selangor, Malaysia; Shanghai, China;
Tournus, France; and Singapore.
COATING INTERMEDIATES, which is the Company's other reportable segment, includes
resins and colorants. These products are sold to the Company to support its AAS,
Industrial and Packaging product lines, and they are also sold to external
customers, such as other coatings manufacturers and building products
manufacturers.
Resins, which act as binding agents for coatings, are manufactured primarily in
the United States and sold throughout North America and in Western Europe. The
Company offers a broad range of water-based and solvent-based resins, including
water-based acrylics, styrene acrylics and polyvinylacetates for architectural
and industrial coatings and building products, and solvent-based urethanes,
alkyds, polyesters, co-polymers and acrylics for architectural, industrial, wood
and coil coatings and building products.
The Company manufactures resins at its facilities in Los Angeles, California;
Garland, Texas; Kankakee, Marengo and Rockford, Illinois; and Hagerstown,
Maryland (the Hagerstown facility was acquired in May 1997 from Rust-Oleum
Corporation, a subsidiary of RPM, Inc.). In December 1998, the Company's Dutch
subsidiary, Forton B.V., acquired a majority interest in Dyflex B.V., a
Netherlands producer of specialty water-based polymers.
6
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
Colorants are manufactured by the Company in the United States and sold
throughout the Americas. The Company's water-based colorants are sold primarily
to retail paint dealers and paint manufacturers to color architectural paint to
customer specifications. The Company's solvent-based colorants are sold
primarily to industrial coatings manufacturers.
The Company manufactures colorants at its facilities in Louisville, Kentucky and
Rockford, Illinois.
The Company has formed various international joint ventures over the past
several years. In the Mexican and Central American markets, the Company formed a
joint venture in 1993 called Valspar-Marlux with Regio Empresas, a Mexican
corporation. While the initial focus of the joint venture was to engage in the
marketing, sales, distribution and technical service of packaging, coil, wood
and general metals coatings, during fiscal year 1996, the joint venture started
manufacturing coatings products at its plant in Monterrey, Mexico. During 1998,
the Company obtained a majority position of 51% in the joint venture. In 1999,
the Dexter acquisition added a manufacturing facility in Mexico City, and the
entire business in Mexico is now known as Valspar Mexico. In November 2000, the
Company acquired the remaining 49% interest of Regio Empresas, and Valspar
Mexico is now wholly owned by the Company. Polycoat Powders Limited, a joint
venture of the Company and The Goodlass Nerolac Paint Co., Ltd. in India,
manufactures decorative powder coatings for the industrial coatings market in
India. Another joint venture company was formed in Hong Kong in 1995 between the
Company and China Merchants Hai Hong Holdings Co., Ltd. for the purpose of
constructing a packaging coatings plant in the Shenzhen Economic Development
Zone in the Guangdong Province of China. This plant became operational at the
beginning of the 1997 fiscal year and currently manufactures and distributes the
Company's packaging coatings products in China, Hong Kong and other Southeast
Asian markets. The Company also acquired Coates' packaging coatings and metal
decoration inks business in Hong Kong and Guangzhou, China during 1997 and
Dexter's packaging coatings business in China during 1999. The Company
consolidated these businesses with its Hong Kong joint venture. The Company
formed a joint venture in 1997, called Valspar Renner, with Renner Herrmann
S.A., a Brazilian company. Valspar Renner supplies packaging coatings and metal
decoration inks to the South American market. In December 1997, as part of the
Coates acquisition, the Company acquired a 49% interest in a joint venture with
Coates for packaging coatings in South Africa. In February 1999, as part of the
Dexter acquisition, the Company acquired Dexter's majority position in a joint
venture with Plascon (Pty) Limited, a South African company, for packaging
coatings in South Africa. As of October 2000, the Company acquired Coates' 51%
interest in the Valspar/Coates joint venture and reorganized the businesses of
both South African joint ventures so that Valspar now has a majority position in
a joint venture with Plascon for a combined packaging coatings business in South
Africa. In 1999, the Company also assumed Dexter's majority position in a joint
venture with Rock Paint, a Japanese company.
RAW MATERIALS
Materials are procured from a number of suppliers. Many of these raw materials
are petroleum-based derivatives, including olefin and natural gas derivatives,
as well as mined products. Under normal conditions all of these materials are
generally available on the open market, although prices and availability are
subject to fluctuation from time to time.
7
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
PATENTS
Although the Company licenses some technology, the Company's business is not
materially dependent upon franchises, licenses or similar rights, or on any
single patent or trademark or group of related patents or trademarks.
SEASONALITY AND WORKING CAPITAL ITEMS
The Company's sales volume is traditionally lowest during the first quarter of
the fiscal year, primarily due to the buying cycle in the Coatings Segment
product lines. When sales are generally lowest, the Company builds inventory,
the financing for which is provided primarily by internally generated funds and
short-term and long-term credit lines discussed in Note 6 of the Notes to
Consolidated Financial Statements on pages 17 and 18 of Valspar's 2000 Annual
Report to Stockholders incorporated by reference into this Form 10-K.
SIGNIFICANT CUSTOMERS
In 2000, the Company's sales to Lowe's Companies, Inc. exceeded 10% of
consolidated net sales.
BACKLOG AND GOVERNMENT CONTRACTS
The Company has no significant backlog of orders and generally is able to fill
orders on a current basis.
No material portion of the business of the Company is subject to renegotiation
of profits or termination of contracts or subcontracts at the election of the
government.
COMPETITION
All aspects of the coatings business are highly competitive. The Company has
many competitors in all areas of its business, some of which are larger and
better capitalized than the Company.
Principal methods of competition for AAS products include price, consumer
recognition, product innovation, product quality and rapid response to customer
orders. The Company offers merchandising and promotion programs to its AAS
customers to counter the extensive advertising programs of some of its
competitors, and has maintained product recognition through high quality,
well-designed products.
Principal methods of competition for Industrial and Packaging coatings product
lines are technical capabilities for specific product formulation, ability to
meet customer delivery requirements, technical assistance to the customer in
product application, price and new product concepts. The Company believes that
its Industrial and Packaging coatings are competitive in these respects in the
industries it serves. The markets for these coatings are increasingly global,
and the Company is well positioned to serve the global markets.
8
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
Competitive factors in the Coating Intermediates product line for resins are
product quality, rapid response to customer orders, technical assistance to the
customer in product application, price and new product development. The
competitive factors for sales of colorants and color systems include color
design and range, product quality, compatibility with various types of paint
bases, dealer merchandising assistance and price. The Company believes that it
is competitive in these respects.
RESEARCH AND DEVELOPMENT
Research and development costs for fiscal 2000 were $46,353,000, representing a
5.1% increase over fiscal 1999 ($44,091,000). Fiscal 1999 costs increased 11.5%
over those of fiscal 1998 ($39,555,000). Primary emphasis has been on emerging
technologies in the Industrial and Packaging coatings product lines.
ENVIRONMENTAL COMPLIANCE
The Company undertakes to comply with applicable regulations relating to
protection of the environment and workers' safety. Capital expenditures for this
purpose were not material in fiscal 2000, and capital expenditures for 2001 to
comply with existing laws and regulations are also not expected to be material.
EMPLOYEES
The Company employs approximately 6,500 persons, approximately 900 of whom are
members of unions.
FOREIGN OPERATIONS AND EXPORT SALES
The Company's foreign operations consist of a mixture of wholly-owned subsidiary
companies, joint ventures and, to a limited extent, licensing arrangements with
independent third parties. The market for Packaging coatings has become an
increasingly global market. During 1996, the Company acquired the metal
decorating and packaging coatings business of Coates Coatings to provide global
support to the Company's customers. In 1999, the Company acquired the European
industrial coatings business and the global packaging coatings business of the
Dexter Corporation, adding several manufacturing operations throughout Europe
and in Singapore. In December 2000, the Company acquired Lilly Industries, Inc.,
an industrial coatings company with manufacturing operations in Canada, Mexico,
Europe and Asia. The Company now has operations in, among other countries,
Australia, Brazil, Canada, France, Germany, Hong Kong, Ireland, Malaysia,
Norway, Singapore, Spain, Switzerland, Taiwan and the United Kingdom. Joint
venture companies have been established in Brazil, China, Hong Kong, India,
Japan and South Africa. Greater emphasis is being placed on wholly-owned
subsidiaries
9
PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
and majority-owned ventures to permit the Company to retain greater control over
its technology, but licensing arrangements for the utilization of the Company's
technologies in the fields of packaging coatings, colorants, coil coatings,
general industrial coatings and architectural coatings continue in over fifty
foreign countries. Export sales are increasing as the Company's products are
being recognized in the global markets. During fiscal 2000, export sales
represented approximately 5.6% of the Company's business. The Company's various
acquisitions over the past three years have also increased revenues from foreign
subsidiaries and operations, which comprised 23% of the Company's total revenues
in fiscal 2000.
ITEM 2. PROPERTIES
The Company's principal offices in Minneapolis, Minnesota are owned. Operations
in North America are conducted at forty-six locations, primarily in Illinois,
California, Texas, Indiana, North Carolina and Pennsylvania, with three plants
in Canada and three plants in Mexico. Forty-two plants with square footage of
4,620,000 are owned, and four of the plants with square footage of 350,000 are
leased. Manufacturing operations in Europe are conducted at ten locations with
plants in the United Kingdom, France, Germany, Ireland and Switzerland. The ten
plants are owned with a combined square footage of 530,000. The Company owns two
plants in Australia and one plant in each of China, Malaysia and Taiwan with a
combined square footage of 240,000. The Company leases two plants in both
Singapore and China with a combined square footage of 45,000.
The Company considers that the principal properties and facilities owned or
leased by it are adequately maintained, in good operating condition and are
adequate for the purposes for which they are being used. Operating capacity
varies by product line, but for most of the Company's product lines, additional
production capacity is available by increasing the number of shifts worked.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various claims relating to environmental and waste
disposal matters at the sites of a number of current and former plants. The
Company participates in remedial and other environmental compliance activities
at certain of these sites. At other sites, the Company has been named as a
potentially responsible party (PRP) under federal and state environmental laws
for the remediation of hazardous waste. While uncertainties exist with respect
to the amounts and timing of the Company's ultimate environmental liabilities,
the Company believes that such liabilities, individually and in the aggregate,
will not have a material adverse effect on the Company's financial condition or
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 8 through 10 of the Company's 2000
Annual Report to Stockholders incorporated by reference into this Form 10-K.
The Company is a defendant in a number of other legal proceedings which it
believes are not out of the ordinary in a business of the type and size in which
it is engaged. The Company believes that these legal proceedings, individually
and in the aggregate, will not have a material adverse effect on its business or
financial condition.
10
PART I (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted during the fourth quarter of fiscal year 2000 to a
vote of security holders.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all of the registrant's executive officers, all of whose
terms expire in February 2001, and the positions held by them are as listed
below. There are no family relationships between any of the officers or between
any officer and director.
Name Age Position
---- --- --------
Richard M. Rompala 54 Chairman since February 1998, Chief Executive
Officer since October 1995 and President since
March 1994
John M. Ballbach 40 Senior Vice President, Operations, E-Commerce,
EPS and Color Corporation since December 2000
Rolf Engh 47 Senior Vice President since November 1998,
General Counsel and Secretary since April 1993
Steven L. Erdahl 48 Senior Vice President, Industrial Coatings and
Automotive since December 2000
William L. Mansfield 52 Senior Vice President, Architectural and
Packaging Coatings since December 2000
Paul C. Reyelts 54 Senior Vice President, Finance and Chief
Financial Officer since November 1998
The foregoing executive officers have served in the stated capacity for the
registrant during the past five years, except for the following:
Prior to December 2000, Mr. Ballbach was Senior Vice President - Operations, EPS
and Color Corporation since February 2000. Prior to February 2000, Mr. Ballbach
was Group Vice President - Packaging since November 1998 and President - Europe,
Middle East and South Africa since June 1996.
Prior to November 1998, Mr. Engh was Vice President, International since
September 1993.
Prior to December 2000, Mr. Erdahl was Senior Vice President - Packaging and
Industrial Coatings since February 2000. Prior to February 2000, Mr. Erdahl was
Senior Vice President - Operations since November 1998. Prior to November 1998,
Mr. Erdahl was Vice President - Industrial Coatings Group since June 1991.
11
PART I (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Prior to December 2000, Mr. Mansfield was Senior Vice President - Architectural,
Automotive and Specialty Coatings since February 2000. Prior to February 2000,
Mr. Mansfield was Senior Vice President - Packaging and Industrial Coatings
since November 1998. Prior to November 1998, Mr. Mansfield was Vice President -
Packaging Coatings Group since February 1991.
Prior to November 1998, Mr. Reyelts was Vice President, Finance since April
1982.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information in the section titled "Stock Information and Dividends" on pages
6 and 7 of Valspar's 2000 Annual Report to Stockholders is incorporated herein
by reference. All market prices indicated in this section represent transactions
on the New York Stock Exchange. The number of record holders of the Company's
Common Stock at December 29, 2000 was 1,731.
The quarterly dividend declared December 12, 2000, which was paid January 15,
2001 to Common Stockholders of record December 29, 2000, was increased to
13.5(cent) per share.
ITEM 6. SELECTED FINANCIAL DATA
The information in the section titled "Eleven Year Financial Summary" for the
years 1996 through 2000 on pages 6 and 7 of Valspar's 2000 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information in the section titled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 8 through 10 of
Valspar's 2000 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information in the section titled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Market Risk" on page 10 of
Valspar's 2000 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto on pages 11 through 22
of Valspar's 2000 Annual Report to Stockholders are incorporated herein by
reference.
12
PART II (CONTINUED)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors set forth on pages 2 and 3 of Valspar's
Proxy Statement dated January 26, 2001 is incorporated herein by reference. The
information in the section titled "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 6 of Valspar's Proxy Statement dated January 26, 2001 is
incorporated herein by reference. The information regarding executive officers
is set forth in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information in the section titled "Executive Compensation" on pages 7
through 9 and the section titled "Director Compensation" on page 5 of Valspar's
Proxy Statement dated January 26, 2001 is incorporated herein by reference. The
information in the section titled "Change in Control Agreements" on page 9 of
Valspar's Proxy Statement dated January 26, 2001 is incorporated herein by
reference. The information on pages 10 through 15 of Valspar's Proxy Statement
dated January 26, 2001 is not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the section titled "Share Ownership of Certain Beneficial
Owners" and "Share Ownership of Management" on pages 21 and 22 of Valspar's
Proxy Statement dated January 26, 2001 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in the section titled "Certain Transactions" on page 6 of
Valspar's Proxy Statement dated January 26, 2001 is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) For financial statements and the financial statement schedule filed as a
part of this report, reference is made to "Index to Financial Statements
and Financial Statement Schedule" on page F-2 of this report. For a list of
exhibits filed as a part of this report, see Item 14(c) below. Compensatory
Plans listed in Item 14(c) are denoted by a double asterisk.
(b) No reports on Form 8-K were filed during the fourth quarter of the year
ended October 27, 2000.
13
PART IV (CONTINUED)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(CONTINUED)
(c) The following exhibits are filed as part of this report.
Exhibit
No. Description
-----------------------------------------------------------------------
2(a)(6) ACQUISITION AGREEMENT BETWEEN COATES BROTHERS PLC AND THE
REGISTRANT MADE AND ENTERED INTO AS OF FEBRUARY 26, 1996, AS
AMENDED BY AMENDMENT NO. 1 TO THE ACQUISITION AGREEMENT
DATED MAY 2, 1996 (PURSUANT TO RULE 24b-2, CERTAIN
INFORMATION HAS BEEN DELETED AND FILED SEPARATELY WITH THE
COMMISSION)
2(b)(9) DEXTER COATINGS BUSINESS PURCHASE AND SALE AGREEMENT BETWEEN
DEXTER CORPORATION AND THE REGISTRANT MADE AND ENTERED INTO
AS OF AUGUST 21, 1998, AS AMENDED BY THE FIRST AMENDMENT TO
DEXTER COATINGS BUSINESS PURCHASE AND SALE AGREEMENT DATED
FEBRUARY 26, 1999 (PURSUANT TO RULE 24b-2, CERTAIN
INFORMATION HAS BEEN DELETED AND FILED SEPARATELY WITH THE
COMMISSION)
2(c)(14) AGREEMENT AND PLAN OF MERGER BETWEEN LILLY INDUSTRIES, INC.,
VAL ACQUISITION CORP. (A WHOLLY-OWNED SUBSIDIARY OF THE
REGISTRANT) AND THE REGISTRANT MADE AND ENTERED INTO AS OF
JUNE 23, 2000.
3(a)(7) CERTIFICATE OF INCORPORATION--as amended to and including
June 30, 1970, with further amendments to Article Four dated
February 29, 1984, February 25, 1986, February 26, 1992 and
February 26, 1997, and to Article Eleven dated February 25,
1987
3(b)(7) BY-LAWS--as amended to and including October 15, 1997
4(a)(11) RIGHTS AGREEMENT DATED AS OF MAY 1, 2000, BETWEEN THE
REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS
RIGHTS AGENT.
10(a)(1) THE VALSPAR CORPORATION SUPPLEMENTAL STOCK OWNERSHIP PLAN**
10(b)(1) THE VALSPAR CORPORATION KEY EMPLOYEES' SUPPLEMENTARY
RETIREMENT PLAN**
10(c)(2) THE VALSPAR CORPORATION SUPPLEMENTAL BONUS PLAN**
14
PART IV (CONTINUED)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(CONTINUED)
(c) Index of Exhibits (continued)
Exhibit
No. Description
-----------------------------------------------------------------------
10(d)(10) THE VALSPAR CORPORATION 1991 STOCK OPTION PLAN--as amended
to and including September 20, 1999**
10(e)(3) THE VALSPAR CORPORATION LEVERAGED EQUITY PURCHASE PLAN**
10(f)(10) THE VALSPAR CORPORATION KEY EMPLOYEE ANNUAL BONUS PLAN--as
amended to and including October 20, 1999**
10(g)(7) THE VALSPAR CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS**
10(h)(7) THE VALSPAR CORPORATION ANNUAL BONUS PLAN--as amended August
19, 1997**
10(i)(4) THE VALSPAR CORPORATION INCENTIVE BONUS PLAN**
10(j)(5) CREDIT AGREEMENT DATED AS OF APRIL 20, 1995 AMONG THE
REGISTRANT, CERTAIN BANKS, WACHOVIA BANK OF GEORGIA, N.A.,
AS AGENT, AND CHEMICAL BANK AS CO-AGENT, AND RELATED
SYNDICATED LOAN NOTE, MONEY MARKET LOAN NOTE AND SWING LOAN
NOTE
10(k)(8) CREDIT AGREEMENT DATED AS OF MARCH 16, 1998 AMONG THE
REGISTRANT AND WACHOVIA BANK N.A.
10(l)(12) CHANGE OF CONTROL AGREEMENT BETWEEN THE REGISTRANT AND THE
COMPANY'S NAMED EXECUTIVES
10(m)(13) 180-DAY CREDIT AGREEMENT DATED AS OF AUGUST 25, 2000 AMONG
THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE REGISTRANT
AND WACHOVIA BANK, N.A., AS ADMINISTRATIVE AGENT.
10(n)* 364-DAY CREDIT AGREEMENT DATED AS OF NOVEMBER 17, 2000,
AMONG THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE
REGISTRANT AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE
AGENT.
10(o)* FIVE-YEAR CREDIT AGREEMENT DATED AS OF NOVEMBER 17, 2000,
AMONG THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE
REGISTRANT AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE
AGENT.
15
PART IV (CONTINUED)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(CONTINUED)
(c) Index of Exhibits (continued)
Exhibit
No. Description
-----------------------------------------------------------------------
10(p)* CREDIT AGREEMENT DATED AS OF DECEMBER 19, 2000, AMONG THE
REGISTRANT, CERTAIN BANKS, AND WACHOVIA BANK, N.A., AS
ADMINISTRATIVE AGENT.
13* 2000 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed
filed with the Commission)
21* Subsidiaries of the Registrant
23(a)* Consent of Independent Auditors--Ernst & Young LLP
----------------------
(1) As filed with Form 10-K for the period ended October 31,
1981.
(2) As filed with Form 10-K for the period ended October 31,
1983.
(3) As filed with Form 10-K for the period ended October 25,
1991; amendment filed with Form 10-K for the period ended
October 31, 1997.
(4) As filed with Form 10-K for the period ended October 30,
1992.
(5) Incorporated by reference to Exhibit 10(a) to Form 10-Q for
the quarter ended April 28, 1995.
(6) Incorporated by reference to Exhibit 2.1 to Form 8-K filed
on May 17, 1996 and with Form 8-K/A filed on July 16, 1996.
(7) As filed with Form 10-K for the period ended October 31,
1997.
(8) As filed with Form 10-K for the period ended October 30,
1998.
(9) Incorporated by reference to Exhibit 2.1 to Form 8-K filed
on March 15, 1999 and with Form 8-K/A filed on May 12, 1999.
(10) As filed with Form 10-K for the period ended October 29,
1999.
(11) Incorporated by reference to Exhibit 2.1 to Form 8-A filed
on May 3, 2000.
(12) Incorporated by reference to Exhibit 10(a) to Form 10-Q for
the quarter ended April 28, 2000.
16
PART IV (CONTINUED)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(CONTINUED)
(c) Index of Exhibits (continued)
Exhibit
No. Description
-----------------------------------------------------------------------
(13) Incorporated by reference to Exhibit 10(a) to Form 10-Q for
the quarter ended July 28, 2000.
(14) Incorporated by reference to Exhibit 1 to Form 8-K filed on
January 4, 2000.
* As filed with this Form 10-K.
** Compensatory Plan or arrangement required to be filed
pursuant to Item 14(c) of Form 10-K.
Portions of the 2001 Proxy Statement are incorporated herein by
reference as set forth in Items 10, 11, 12 and 13 of this report. Only
those portions expressly incorporated by reference herein shall be
deemed filed with the Commission.
(d) See page F-2 of this report.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE VALSPAR CORPORATION
/s/Rolf Engh 1/23/01
------------------------------------
Rolf Engh, Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/Richard M. Rompala 1/23/01 /s/Susan S. Boren 1/23/01
- --------------------------------------- ------------------------------------
Richard M. Rompala, Director Susan S. Boren, Director
Chairman, President and Chief Executive
Officer (principal executive officer) /s/Jeffrey H. Curler 1/23/01
------------------------------------
/s/Paul C. Reyelts 1/23/01 Jeffrey H. Curler, Director
- ---------------------------------------
Paul C. Reyelts, Senior Vice President, /s/Charles W. Gaillard 1/23/01
Finance and Chief Financial Officer ------------------------------------
(principal financial officer) Charles W. Gaillard, Director
/s/Lori A. Walker 1/23/01
- --------------------------------------- ------------------------------------
Lori A. Walker, Controller Thomas R. McBurney, Director
(principal accounting officer)
------------------------------------
Kendrick B. Melrose, Director
/s/Gregory R. Palen 1/23/01
------------------------------------
Gregory R. Palen, Director
------------------------------------
Lawrence Perlman, Director
/s/Edward B. Pollak 1/23/01
------------------------------------
Edward B. Pollak, Director
------------------------------------
Michael P. Sullivan, Director
/s/Richard L. White 1/23/01
------------------------------------
Richard L. White, Director
F-1
Annual Report on Form 10-K
Item 14(a)(1) and (2), (c) and (d)
Financial Statements and
Financial Statement Schedule
Certain Exhibits
Year ended October 27, 2000
THE VALSPAR CORPORATION
Minneapolis, Minnesota
F-2
The Valspar Corporation
Form 10-K - Item 14(a)(1) and (2) and Item 14(d)
Index to Financial Statements and Financial Statement Schedule
The following consolidated financial statements of The Valspar Corporation and
subsidiaries are incorporated in Part II, Item 8, and Part IV, Item 14(a) of
this report by reference to the Registrant's Annual Report to Stockholders for
the year ended October 27, 2000:
Pages in
Annual Report
-------------
Report of Independent Auditors ........................................ 23
Financial Statements:
Consolidated Balance Sheets--October 27, 2000 and October 29, 1999 .. 11
Consolidated Statements of Income--Years ended October 27, 2000,
October 29, 1999 and October 30, 1998 .............................. 12
Consolidated Statements of Changes in Stockholders' Equity--Years
Ended October 27, 2000, October 29, 1999 and October 30, 1998 ...... 13
Consolidated Statements of Cash Flows--Years ended October 27, 2000,
October 29, 1999 and October 30, 1998 .............................. 14
Notes to Consolidated Financial Statements .......................... 15 - 22
Selected Quarterly Financial Data (Unaudited) ......................... 22
The following consolidated financial statement schedule should be read in
conjunction with the consolidated financial statements referred to above:
Financial Statement Schedule:
Years ended October 27, 2000, October 29, 1999 and October 30, 1998
Schedule Page
- -------- ----
II Valuation and Qualifying Accounts and Reserves ................ F-3
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
F-3
The Valspar Corporation
Schedule II--Valuation and Qualifying Accounts and Reserves
- ------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------------------
Additions
------------------------------
(1) (2)
Balance at Charged to Charged to Other
Beginning of Expense Accounts-- Deductions-- Balance at End
Description Period or (Income) Describe Describe of Period
- ------------------------------------------------------------------------------------------------------------------------
Reserves and allowances deducted
from asset accounts
Allowance for doubtful accounts:
Year ended October 27, 2000 $4,801,000 $ 999,313 $1,084,064 (1) $4,925,000
(208,751)(2)
Year ended October 29, 1999 1,464,000 1,937,000 $2,606,000 (3) 1,355,000 (1) 4,801,000
(149,000)(2)
Year ended October 30, 1998 1,364,000 2,099,000 2,436,000 (1) 1,464,000
(437,000)(2)
(1) Uncollectible accounts written off.
(2) Recoveries on accounts previously written off.
(3) Consists principally of amounts relating to businesses acquired.
INDEX TO EXHIBITS FILED WITH THIS REPORT
THE VALSPAR CORPORATION
Exhibit
No. Description
-----------------------------------------------------------------------
2(a)(6) ACQUISITION AGREEMENT BETWEEN COATES BROTHERS PLC AND THE
REGISTRANT MADE AND ENTERED INTO AS OF FEBRUARY 26, 1996, AS
AMENDED BY AMENDMENT NO. 1 TO THE ACQUISITION AGREEMENT
DATED MAY 2, 1996 (PURSUANT TO RULE 24b-2, CERTAIN
INFORMATION HAS BEEN DELETED AND FILED SEPARATELY WITH THE
COMMISSION)
2(b)(9) DEXTER COATINGS BUSINESS PURCHASE AND SALE AGREEMENT BETWEEN
DEXTER CORPORATION AND THE REGISTRANT MADE AND ENTERED INTO
AS OF AUGUST 21, 1998, AS AMENDED BY THE FIRST AMENDMENT TO
DEXTER COATINGS BUSINESS PURCHASE AND SALE AGREEMENT DATED
FEBRUARY 26, 1999 (PURSUANT TO RULE 24b-2, CERTAIN
INFORMATION HAS BEEN DELETED AND FILED SEPARATELY WITH THE
COMMISSION)
2(c)(14) AGREEMENT AND PLAN OF MERGER BETWEEN LILLY INDUSTRIES, INC.,
VAL ACQUISITION CORP. (A WHOLLY-OWNED SUBSIDIARY OF THE
REGISTRANT) AND THE REGISTRANT MADE AND ENTERED INTO AS OF
JUNE 23, 2000.
3(a)(7) CERTIFICATE OF INCORPORATION--as amended to and including
June 30, 1970, with further amendments to Article Four dated
February 29, 1984, February 25, 1986, February 26, 1992 and
February 26, 1997, and to Article Eleven dated February 25,
1987
3(b)(7) BY-LAWS--as amended to and including October 15, 1997
4(a)(11) RIGHTS AGREEMENT DATED AS OF MAY 1, 2000, BETWEEN THE
REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS
RIGHTS AGENT.
10(a)(l) THE VALSPAR CORPORATION SUPPLEMENTAL STOCK OWNERSHIP PLAN**
10(b)(l) THE VALSPAR CORPORATION KEY EMPLOYEES' SUPPLEMENTARY
RETIREMENT PLAN**
10(c)(2) THE VALSPAR CORPORATION SUPPLEMENTAL BONUS PLAN**
10(d)(10) THE VALSPAR CORPORATION 1991 STOCK OPTION PLAN--as amended
to and including September 20, 1999**
10(e)(3) THE VALSPAR CORPORATION LEVERAGED EQUITY PURCHASE PLAN**
INDEX TO EXHIBITS FILED WITH THIS REPORT
THE VALSPAR CORPORATION
Exhibit
No. Description
-----------------------------------------------------------------------
10(f)(10) THE VALSPAR CORPORATION KEY EMPLOYEE ANNUAL BONUS PLAN--as
amended to and including October 20, 1999**
10(g)(7) THE VALSPAR CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS**
10(h)(7) THE VALSPAR CORPORATION ANNUAL BONUS PLAN--as amended August
19, 1997**
10(i)(4) THE VALSPAR CORPORATION INCENTIVE BONUS PLAN**
10(j)(5) CREDIT AGREEMENT DATED AS OF APRIL 20, 1995 AMONG THE
REGISTRANT, CERTAIN BANKS, WACHOVIA BANK OF GEORGIA, N.A.,
AS AGENT, AND CHEMICAL BANK AS CO-AGENT, AND RELATED
SYNDICATED LOAN NOTE, MONEY MARKET LOAN NOTE AND SWING LOAN
NOTE
10(k)(8) CREDIT AGREEMENT DATED AS OF MARCH 16, 1998 AMONG THE
REGISTRANT AND WACHOVIA BANK N.A.
10(l)(12) CHANGE OF CONTROL AGREEMENT BETWEEN THE REGISTRANT AND THE
COMPANY'S NAMED EXECUTIVES
10(m)(13) 180-DAY CREDIT AGREEMENT DATED AS OF AUGUST 25, 2000 AMONG
THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE REGISTRANT
AND WACHOVIA BANK, N.A., AS ADMINISTRATIVE AGENT.
10(n)* 364-DAY CREDIT AGREEMENT DATED AS OF NOVEMBER 17, 2000,
AMONG THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE
REGISTRANT AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE
AGENT.
10(o)* FIVE-YEAR CREDIT AGREEMENT DATED AS OF NOVEMBER 17, 2000,
AMONG THE REGISTRANT AND CERTAIN SUBSIDIARIES OF THE
REGISTRANT AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE
AGENT.
10(p)* CREDIT AGREEMENT DATED AS OF DECEMBER 19, 2000, AMONG THE
REGISTRANT, CERTAIN BANKS, AND WACHOVIA BANK, N.A., AS
ADMINISTRATIVE AGENT.
13* 2000 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed
filed with the Commission)
INDEX TO EXHIBITS FILED WITH THIS REPORT
THE VALSPAR CORPORATION
Exhibit
No. Description
-----------------------------------------------------------------------
21* Subsidiaries of the Registrant
23(a)* Consent of Independent Auditors--Ernst & Young LLP
--------------------
(1) As filed with Form 10-K for the period ended October 31,
1981.
(2) As filed with Form 10-K for the period ended October 31,
1983.
(3) As filed with Form 10-K for the period ended October 25,
1991; amendment filed with Form 10-K for the period ended
October 31, 1997.
(4) As filed with Form 10-K for the period ended October 30,
1992.
(5) Incorporated by reference to Exhibit 10(a) to Form 10-Q for
the quarter ended April 28, 1995.
(6) Incorporated by reference to Exhibit 2.1 to Form 8-K filed
on May 17, 1996 and with Form 8-K/A filed on July 16, 1996.
(7) As filed with Form 10-K for the period ended October 31,
1997.
(8) As filed with Form 10-K for the period ended October 30,
1998.
(9) Incorporated by reference to Exhibit 2.1 to Form 8-K filed
on March 15, 1999 and with Form 8-K/A filed on May 12, 1999.
(10) As filed with Form 10-K for the period ended October 29,
1999.
(11) Incorporated by reference to Exhibit 2.1 to Form 8-A filed
on May 3, 2000.
(12) Incorporated by reference to Exhibit 10(a) to Form 10Q for
the quarter ended April 28, 2000.
(13) Incorporated by reference to Exhibit 10(a) to Form 10-Q for
the quarter ended July 28, 2000.
(14) Incorporated by reference to Exhibit 1 to Form 8-K filed on
January 4, 2000.
* As filed with this Form 10-K.
** Compensatory Plan or arrangement required to be filed
pursuant to Item 14(c) of Form 10-K.