SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Commission File
Ended January 24, 2003 Number: 1-3011
THE VALSPAR CORPORATION
-----------------------
State of Incorporation: IRS Employer ID No.:
Delaware 36-2443580
Principal Executive Offices:
1101 Third Street South
Minneapolis, MN 55415
Telephone Number: 612/332-7371
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 12 months and (2) has been subject to such filing requirements for
the past 90 days. |X| Yes |_| No
Indicate by check mark whether the registrant is an accelerated filed (as
defined in Rule 12b-2 of the Exchange Act). |X| Yes |_| No
As of February 28, 2003, The Valspar Corporation had 50,378,740 shares of common
stock outstanding, excluding 9,842,572 shares held in treasury. The Company had
no other classes of stock outstanding.
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THE VALSPAR CORPORATION
Index to Form 10-Q
for the Quarter Ended January 24, 2003
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - January 24, 2003,
January 25, 2002 and October 25, 2002..................... 2 - 3
Condensed Consolidated Statements of Income - Three months
ended January 24, 2003 and January 25, 2002............... 4
Condensed Consolidated Statements of Cash Flows - Three
months ended January 24, 2003 and January 25, 2002........ 5
Notes to Condensed Consolidated Financial Statements -
January 24, 2003.......................................... 6 - 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9 - 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 11
Item 4. Controls and Procedures..................................... 11 - 12
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings........................................... 12
Item 6. Exhibits and Reports on Form 8-K............................ 12
SIGNATURES/CERTIFICATIONS............................................... 13 - 15
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-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE VALSPAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
January 24, January 25, October 25,
2003 2002 2002
----------- ----------- -----------
(Unaudited) (Unaudited) (Note)
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 26,967 $ 23,343 $ 22,715
Accounts receivable less allowance
(1/24/03 - $16,058; 1/25/02 - $12,326;
10/25/02 - $17,013) 352,917 332,697 368,134
Inventories:
Manufactured products 137,124 129,208 123,274
Raw materials, supplies and work-
in-process 81,622 72,021 77,371
----------- ----------- -----------
218,746 201,229 200,645
Deferred income taxes 29,174 40,564 30,498
Prepaid expenses and other 78,367 64,521 79,796
----------- ----------- -----------
TOTAL CURRENT ASSETS 706,171 662,354 701,788
GOODWILL 946,476 937,049 938,759
INTANGIBLES, NET 292,202 290,677 293,208
OTHER ASSETS, NET 73,513 75,696 68,333
LONG-TERM DEFERRED INCOME TAX 16,223 -- 14,989
PROPERTY, PLANT AND EQUIPMENT 667,581 607,674 652,164
Less allowance for depreciation (264,662) (219,845) (249,689)
----------- ----------- -----------
402,919 387,829 402,475
----------- ----------- -----------
$ 2,437,504 $ 2,353,605 $ 2,419,552
=========== =========== ===========
NOTE: The Balance Sheet at October 25, 2002 has been derived from the audited
consolidated financial statements at that date.
See Notes to Condensed Consolidated Financial Statements.
-3-
THE VALSPAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(DOLLARS IN THOUSANDS)
January 24, January 25, October 25,
2003 2002 2002
----------- ----------- -----------
(Unaudited) (Unaudited) (Note)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes payable to banks $ 55,607 $ 61,900 $ 40,579
Trade accounts payable 178,386 166,431 197,047
Income taxes 32,965 28,142 20,998
Accrued liabilities 220,281 195,322 245,271
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 487,239 451,795 503,895
LONG-TERM DEBT 890,236 1,003,248 885,819
DEFERRED INCOME TAXES 181,296 167,092 180,592
DEFERRED LIABILITIES 118,977 65,984 111,993
STOCKHOLDERS' EQUITY:
Common Stock (Par Value - $.50;
Authorized - 120,000,000 shares;
Shares issued, including shares
in treasury - 60,221,312) 30,110 30,110 30,110
Additional paid-in capital 236,271 226,662 230,163
Retained earnings 623,072 528,463 614,964
Other (23,082) (10,189) (29,919)
----------- ----------- -----------
866,371 775,046 845,318
Less cost of Common Stock in treasury
(1/24/03 - 9,859,050 shares; 1/26/01 -
10,442,813; 10/25/02 - 10,117,299 shares) 106,615 109,560 108,065
----------- ----------- -----------
759,756 665,486 737,253
----------- ----------- -----------
$ 2,437,504 $ 2,353,605 $ 2,419,552
=========== =========== ===========
NOTE: The Balance Sheet at October 25, 2002 has been derived from the audited
financial statements at that date.
See Notes to Condensed Consolidated Financial Statements
-4-
THE VALSPAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
--------------------------
January 24, January 25,
2003 2002
----------- -----------
Net sales $ 468,971 $ 431,040
Costs and expenses:
Cost of sales 325,323 299,340
Research and development 16,617 15,204
Selling and administration 89,884 82,956
----------- -----------
Income from Operations 37,147 33,540
Interest expense 11,817 12,224
Other (income)/expense - net 140 476
----------- -----------
Income before income taxes 25,190 20,840
Income taxes 9,572 8,232
----------- -----------
Net income $ 15,618 $ 12,608
=========== ===========
Net income per common share - basic $ 0.31 $ 0.25
=========== ===========
Net income per common share - diluted $ 0.30 $ 0.25
=========== ===========
Average number of common shares
outstanding - basic 50,205,519 49,547,786
=========== ===========
- diluted 51,558,029 50,986,521
=========== ===========
Dividends paid per common share $ 0.150 $ 0.140
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
-5-
THE VALSPAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
------------------
January 24, January 25,
2003 2002
-------- --------
OPERATING ACTIVITIES:
Net income $ 15,618 $ 12,608
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 11,692 10,859
Amortization 1,112 1,182
Gains on asset divestiture 783 --
Changes in certain assets and liabilities, net of effects of
acquired businesses:
Decrease (increase) in accounts and notes receivable 20,301 10,967
Decrease (increase) in inventories and other current assets (13,925) (17,912)
Increase (decrease) in trade accounts payable and accrued
liabilities (44,581) (12,543)
Increase (decrease) in income taxes payable 11,843 4,814
Increase (decrease) in other deferred liabilities 1,196 (2,113)
Other (2,771) (621)
-------- --------
Net Cash Provided/(Used) In Operating Activities 1,268 7,241
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (8,546) (6,468)
Acquired businesses/assets, net of cash 0 (12,000)
-------- --------
Net Cash Used In Investing Activities (8,546) (18,468)
FINANCING ACTIVITIES:
Net proceeds from borrowings 14,541 17,331
Proceeds from sale of treasury stock 4,499 4,043
Dividends paid (7,510) (6,943)
-------- --------
Net Cash Provided By Financing Activities 11,530 14,431
Increase in Cash and Cash Equivalents 4,252 3,204
Cash and Cash Equivalents at Beginning of Period 22,715 20,139
-------- --------
Cash and Cash Equivalents at End of Period $ 26,967 $ 23,343
======== ========
See Notes to Condensed Consolidated Financial Statements.
-6-
THE VALSPAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 24, 2003
NOTE 1: BASIS OF PRESENTATION
- ------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the quarter ended January 24, 2003 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 2003.
The Condensed Consolidated Balance Sheet at October 25, 2002 has been derived
from the audited consolidated financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial information.
For further information refer to the consolidated financial statements and
footnotes thereto included in The Valspar Corporation's annual report on Form
10-K for the year ended October 25, 2002.
NOTE 2: ACCOUNTS PAYABLE
- ------
Trade accounts payable include $38,500,000 at January 24, 2003, $41,100,000 at
October 25, 2002 and $28,300,000 at January 25, 2002 of issued checks which had
not cleared the Company's bank accounts.
NOTE 3: ACQUISITIONS AND DIVESTITURES
- ------
In March 2002, the Company purchased from its joint venture partner the
remaining 20% interest in Dyflex B.V., a resin manufacturer in the Netherlands.
The transaction was accounted for as a purchase. Accordingly, the net assets and
operating results have been included in the Company's financial statements from
the date of acquisition. The pro forma results of operations for this
acquisition have not been presented as the impact on reported results is not
material.
In December 2001, the Valspar Renner joint venture acquired a plant from Renner
Herrmann S.A. (a Brazilian company), and in January 2002, the Company acquired
the remaining 50% interest in the Valspar Renner joint venture. Valspar Renner
supplies packaging coatings and metal decorating inks to the South American
market. Revenues for the joint venture were $17 million in 2001. The transaction
was accounted for as a purchase. Accordingly, the net assets and operating
results have been included in the Company's financial statements from the date
of acquisition. The pro forma results of operations for this acquisition have
not been presented as the impact on reported results is not material.
-7-
THE VALSPAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 24, 2003 - CONTINUED
Effective November 30, 2001, Valspar acquired the coil, spray-applied door, and
rigid packaging coatings businesses of Technical Coatings Co., a subsidiary of
Benjamin Moore and Co. Revenues for these businesses were $25 million in 2001.
The transaction was accounted for as a purchase. Accordingly, the net assets and
operating results have been included in the Company's financial statements from
the date of acquisition. The pro forma results of operations for this
acquisition have not been presented as the impact on reported results is not
material.
NOTE 4: OTHER COMPREHENSIVE INCOME
- ------
For the three months ended January 24, 2003 and January 25, 2002, the activity
within the components of other comprehensive income, classified as a component
of Other within Stockholders' Equity, was as follows:
Three Months Ended
---------------------------
January 24, January 25,
2003 2002
----------- -----------
Other Comprehensive Income:
Foreign currency translation $ 8,583 $(7,393)
Deferred loss on hedging
activities, net of tax 461 --
Minimum pension liability,
net of tax (2,425) --
------- -------
Total Other Comprehensive Income $ 6,619 $(7,393)
NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS
- ------
The carrying amount of goodwill for the quarter ended January 24, 2003 increased
by $7,717,000 to $946,476,000 due to foreign currency translation.
Total intangible amortization expense for the three months ended January 24,
2003 was $1,112,000. Estimated amortization expense for each of the five
succeeding fiscal years based on the intangible assets as of January 24, 2003 is
expected to be approximately $4,900,000 annually.
NOTE 6: SEGMENT INFORMATION
- ------
The Company operates its business in one reportable segment: Coatings. The
Company manufactures and distributes a broad portfolio of coatings products
principally in three product lines. The Industrial product line includes
decorative and protective coatings for wood, metal and plastic substrates. The
Architectural, Automotive and Specialty (AAS) product line includes interior and
exterior decorative paints and aerosols, automotive and fleet refinish and high
performance floor coatings. The Packaging product line includes coatings and
inks for rigid packaging containers. The Other category primarily includes
resins, colorants and composites. The resins and colorants are used internally
and sold to other coatings manufacturers.
-8-
THE VALSPAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 24, 2003 - CONTINUED
Net sales by product line are as follows (dollars in thousands):
Three Months Ended
---------------------------
January 24, January 25,
2003 2002
----------- -----------
Industrial $ 202,370 $ 186,790
Packaging 115,470 108,787
AAS 120,952 108,653
Other 30,179 26,810
----------- -----------
$ 468,971 $ 431,040
NOTE 7: FINANCIAL INSTRUMENTS
- ------
The Company's involvement with derivative financial instruments is limited to
managing well-defined interest rate and foreign currency exchange risks. Forward
foreign currency exchange contracts are used to hedge the impact of currency
fluctuations on certain inter-company transactions.
The Company also holds interest rate swaps used to manage the interest rate risk
associated with its borrowings and to manage the Company's mix of fixed and
variable rate debt. The interest rate swap contracts are reflected at fair value
in the consolidated balance sheets. Amounts to be paid or received under the
contracts are accrued as interest rates change and are recognized over the life
of the contracts as an adjustment to interest expense.
At January 24, 2003, the Company had interest rate swap contracts designated as
fair value hedges to pay fixed rates of interest and receive variable rates of
interest based on one-month and three-month LIBOR on $200,000,000 notional
amount of indebtedness. The $200,000,000 notional amount of outstanding
contracts will mature $100,000,000 during fiscal 2003 and $100,000,000 during
fiscal 2004. At January 24, 2003, the Company had interest rate swap contracts
designated as cash flow hedges to pay floating rates of interest based on
three-month LIBOR on $100,000,000 notional amount of indebtedness. The
$100,000,000 notional amount of outstanding contracts will mature during fiscal
2008. As the critical terms of the interest rate swap and hedged debt match,
there is an assumption of no ineffectiveness for these hedges.
NOTE 8: GUARANTEES AND CONTRACTUAL OBLIGATIONS
- ------
In November 2002, the Financial Accounting Standards Board issued Interpretation
No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." The
interpretation requires disclosure in periodic financial statements of certain
guarantee arrangements. The interpretation also clarifies situations where a
guarantor is required to recognize the fair value of certain guarantees in the
financial statements. The Company does not have any guarantees that require
recognition at fair value under the interpretation.
-9-
THE VALSPAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 24, 2003 - CONTINUED
The Company sells extended furniture protection plans and offers warranties for
certain of its products. These items are required to be disclosed in periodic
financial statements under the interpretation. For the furniture protection
plans, revenue is deferred over the contract period, generally five years, and
is recognized based on the ratio of costs incurred to estimated total costs at
program completion. For product warranties, the Company estimates the costs that
may be incurred under these warranties based on historical claim data and
records a liability in the amount of such costs at the time revenue is
recognized. The Company periodically assesses the adequacy of these recorded
amounts and adjusts as necessary.
Changes in the recorded amounts during the period are as follows:
Balance, October 25, 2002 $53,026,108
Additional accrual made during the period 5,629,448
Payments made during the period (5,677,014)
Balance, January 24, 2003 $52,978,542
NOTE 9: RECLASSIFICATION
- ------
Certain amounts in the 2002 financial statements have been reclassified to
conform with the 2003 presentation.
NOTE 10: RECENT ACCOUNTING PRONOUNCEMENTS
- -------
In December 2002, the Financial Accounting Standards Board issued Statement No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure."
Statement 148 amends Statement 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary change to the fair
value method of accounting for stock-based employee compensation. Statement 148
also amends the disclosures in both annual and interim financial statements
about the method used to account for stock-based employee compensation and the
effect of the method used on reported results. The Company will continue to
apply Accounting Principles Board Opinion No. 25 as the method used to account
for stock-based compensation, but will adopt the disclosure timing requirements
of Statement 148 beginning with the second quarter ending April 25, 2003.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Critical Accounting Policies:
There were no material changes in the Company's critical accounting policies
during the quarter ended January 24, 2003.
-10-
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
Operations: Net sales for the quarter increased 8.8% to $468,971,000 from
$431,040,000 in 2002. Core business growth was up 7.7% due to strong sales
across all product lines, with the impact of foreign currency translation and
acquisition and divestitures accounting for 0.9% and 0.2% of the increase,
respectively. Due to the seasonal nature of the Company's business, sales for
the first quarter are not necessarily indicative of sales for the full year.
The gross profit margin remained constant at 30.6% in the first quarter of 2003
and 2002. Increases in raw material costs were effectively offset through
customer pricing increases and the continued benefits from manufacturing
integration.
Operating expenses (research and development, selling and administrative)
increased 8.5% to $106,501,000 (22.7% of net sales) in the first quarter of 2003
compared to $98,160,000 (22.8% of net sales) in 2002. This increase was
primarily attributable to increased employment cost, specifically related to
higher medical expenses, and the investment in Far East infrastructure for
growth in the Industrial product line.
Interest expense decreased to $11,817,000 in the first quarter of 2003 from
$12,224,000 in 2002 due to lower debt levels.
The effective tax rate decreased to 38.0% from 39.5% due to a more favorable mix
of income from foreign subsidiaries, which generally represent lower tax
jurisdictions.
Net income in the first quarter of 2003 increased 23.9% to $15,618,000 or $.30
per diluted share.
Financial Condition: The net cash provided by the Company's operations was
$1,268,000 for the first quarter of 2003, compared with $7,241,000 for the first
quarter of 2002. During the first quarter of 2003, $14,541,000 in proceeds from
bank borrowings and cash provided by operations were used to fund $8,546,000 in
capital expenditures and $7,510,000 in dividend payments.
Accounts receivable decreased $20,301,000 as higher year-end balances resulting
from fourth quarter sales were collected and sales volumes decreased.
Inventories and other current assets increased $13,925,000 due to seasonality in
the AAS product line. Accounts payable and accrued liabilities decreased
$44,581,000 primarily as a result of payment of various year-end accruals and
the timing of accounts payable and interest disbursements.
Capital expenditures for property, plant and equipment were $8,546,000 in the
first quarter of 2003, compared with $6,468,000 in the first quarter of 2002.
The Company expects capital spending in 2003 to be approximately $50,000,000.
The ratio of total debt to capital decreased to 55.4% at the end of first
quarter of 2003 compared to 55.7% at the close of fiscal 2002. The total debt to
capital ratio as of January 26, 2002 was 61.5%. The Company believes its
existing lines of credit, access to credit facilities and access to debt and
capital markets will be sufficient to meet its current and projected needs for
financing.
-11-
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
There were no material changes in the Company's fixed cash obligations during
the quarter ended January 24, 2003.
Forward Looking Statements: This discussion contains certain "forward-looking"
statements. These forward-looking statements are based on management's
expectations and beliefs concerning future events. Forward-looking statements
are necessarily subject to risks, uncertainties and other factors, many of which
are outside the control of the Company that could cause actual results to differ
materially from such statements. These uncertainties and other factors include
dependence of internal earnings growth on economic conditions and growth in the
domestic and international coatings industry; risks related to any future
significant acquisitions, including risks of adverse changes in the results of
acquired businesses, risks of disruptions in business resulting from the
integration process and higher interest costs resulting from further borrowing
for any such acquisitions; our reliance on the efforts of vendors, government
agencies, utilities and other third parties to achieve adequate compliance and
avoid disruption of our business; changes in the Company's relationships with
customers and suppliers; unusual weather conditions that might adversely affect
sales; changes in raw materials pricing and availability; changes in
governmental regulation, including more stringent environmental, health, and
safety regulations; the nature, cost, and outcome of pending and future
litigation and other legal proceedings; the outbreak of war and other
significant national and international events; and other risks and
uncertainties. The foregoing list is not exhaustive, and the Company disclaims
any obligation to subsequently revise any forward-looking statements to reflect
events or circumstances after the date of such statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's foreign sales and results of operations are subject to the impact
of foreign currency fluctuations. The Company has not hedged its exposure to
translation gains and losses; however, it has reduced its exposure by borrowing
funds in local currencies. A 10% adverse change in foreign currency rates would
not have a material effect on the Company's results of operations or financial
position.
The Company is also subject to interest rate risk. At January 24, 2003,
approximately 50% of the Company's total debt consisted of floating rate debt.
From time to time, the Company may enter into interest rate swaps to hedge a
portion of either its variable or fixed rate debt. Assuming the current level of
borrowings, a 10% increase in interest rates from those in effect at the end of
the first quarter would increase the Company's interest expense for the second
quarter of 2003 by approximately $300,000.
ITEM 4: CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), within 90 days of the filing date of this report.
Based on their evaluation, our chief executive officer and chief financial
officer concluded that the Company's disclosure controls and procedures are
effective.
-12-
ITEM 4: CONTROLS AND PROCEDURES - CONTINUED
There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation referenced above.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
During the period covered by this report, there were no legal proceedings
instituted that are reportable, and there were no material developments in any
of the legal proceedings that were previously reported on the Company's Form
10-K for the year ended October 25, 2002.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10(a) The Valspar Corporation Deferred Compensation Plan for Richard
M. Rompala
99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.
ss.1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
ss.1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) The registrant did not file any reports on Form 8-K during the three
months ended January 24, 2003.
-13-
SIGNATURES
Pursuant to the requirements of the Securities and 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
Date: March 10, 2003 By /s/ Rolf Engh
------------------------------
Rolf Engh
Secretary
Date: March 10, 2003 By /s/ Paul C. Reyelts
------------------------------
Paul C. Reyelts
Senior Vice President, Finance
(Chief Financial Officer)
CERTIFICATIONS
I, Richard M. Rompala, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Valspar
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
-14-
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 10, 2003
/s/ Richard M. Rompala
--------------------------------------
Richard M. Rompala
Chairman and Chief Executive Officer
I, Paul C. Reyelts, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Valspar
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
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c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 10, 2003 /s/ Paul C. Reyelts
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Paul C. Reyelts
Senior Vice President, Finance
(Chief Financial Officer)