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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 28, 1994 Commission file number 1-3011
THE VALSPAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2443580
(State of incorporation) (I.R.S. Employer
Identification No.)
1101 Third Street South
Minneapolis, Minnesota 55415
(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
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 defini-tive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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 30, 1994 was $390 million based on the closing sales price of $33.50
per share as reported on the New York Stock Exchange. As of such date,
21,544,479 shares of Common Stock, $.50 par value per share (net of 5,116,177
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 28, 1994
2. The Valspar Corporation Notice of 1995 Annual Meeting of Part III
Stockholders and Proxy Statement to be filed with the Securities and
Exchange Commission within 120 days of fiscal year ended October 28, 1994
PART I
ITEM 1. BUSINESS
DESCRIPTION
The Valspar Corporation (the "Company") is a paint and coatings manufacturer and
has one reportable industry segment. Operating groups of the Company are
organized so as to reflect classes of similar products, and the following table
shows the percentage of net sales for these groups for the past three fiscal
years.
Class of Products 1994 1993 1992
Consumer Coatings 31% 30% 29%
Packaging Coatings 25 27 27
Industrial Coatings 23 23 23
Special Products 21 20 21
PRODUCTS AND DISTRIBUTION METHODS
The Company is engaged in the manufacture and distribution of paint and coatings
through its Consumer Coatings, Industrial Coatings, Packaging Coatings and
Special Products groups.
The CONSUMER COATINGS group manufactures and distributes a full line of latex
and oil-based paints, stains and varnishes serving primarily the do-it-yourself
market. Its products are marketed under proprietary brands (Colony, Valspar,
Enterprise, Magicolor, McCloskey, BPS and Masury) and under private labels.
Colony, Valspar, Enterprise and McCloskey paint sales are directed primarily to
home improvement centers. Magicolor's marketing focus is mass merchants and the
branded products of Masury and Valspar are sold directly to paint specialty
stores and independent building material outlets. Private label and BPS consumer
products are primarily sold to hardware wholesalers, home center chains, farm
store chains and farm cooperatives. A group of specialty products, which
includes Valspar and McCloskey varnishes, clear polyurethanes, interior stains
and marine paints, is sold nationally through all of these channels.
Merchandising assistance is provided to consumer customers in the form of
seasonal promotion programs, cooperative advertising on a local basis,
informational literature and self-merchandised displays. Consumer products are
distributed throughout the United States, primarily from factory warehouses and
warehouse distribution centers.
The primary manufacturing plants for CONSUMER COATINGS are located in Azusa,
California; Garland, Texas; Philadelphia, Pennsylvania; Rockford, Illinois;
Tampa, Florida; and Wheeling, Illinois. The latex manufacturing plant in
Wheeling is one of the most modern facilities in the consumer paint industry.
The Garland plant is also a very modern manufacturing facility providing needed
capacity for producing consumer latex paint, industrial coatings, packaging
coatings and resins. In December 1993, a 200,000 square foot warehouse building
located in Statesville, North Carolina was purchased and has been used as a
distribution center. During 1994, the building was modified to include a modern
consumer latex paint plant. Production will begin in early 1995.
The PACKAGING COATINGS group is the largest coatings supplier to the rigid
packaging industry in North America and a major licensor of the related
technology to coatings companies throughout the world. Packaging coatings for
application to food and beverage can bodies and ends comprise the largest volume
of sales by this group. Great care is taken to ensure that these coatings meet
F.D.A. and U.S.D.A. standards. Also produced are coatings for aerosol cans,
bottle crowns, closures for glass bottles, and coatings for flexible
packaging-paper, film and foil substrates. In 1994, the Packaging Coatings Group
expanded its operations to the Far East by opening a sales office in Hong Kong
to sell to and service customers in Southeast Asia. The group also entered into
a letter of intent with a large Chinese company for the manufacture of packaging
coatings in the Peoples Republic of China which is expected to begin operations
in late 1995.
The primary manufacturing plants for the PACKAGING COATINGS group are in Azusa,
California; Covington, Georgia; Garland, Texas; Pittsburgh, Pennsylvania;
Rochester, Pennsylvania; and West Hill, Ontario, Canada.
The INDUSTRIAL COATINGS group manufactures and distributes, primarily in the
United States and Canada, decorative and protective coatings for application to
wood, metal and plastic substrates. The Company is a major supplier of finishes
to the furniture and wood paneling industry. Products include fillers, primers,
stains and topcoats which are sold for such diversified end uses as exterior
siding, prefinished flooring, interior wall paneling, kitchen cabinets, pianos
and furniture. For metal and plastic substrates a large variety of coatings are
formulated to meet customers' needs and also, when required, to meet EPA
requirements through the use of such technologies as electrodeposition, powder,
high solids, water-borne and UV light cured coatings. These products are used by
a wide range of industries including the railcar, appliance, office furniture,
agricultural and construction equipment and metal fabrication industries. The
Company also supplies coating systems to the coil coatings industry which are
used to coat coils of metal prior to fabrication into products for such markets
as pre-engineered buildings, doors, lighting fixtures and appliances. The
Company does not sell original equipment manufacturers of auto body primer or
exterior topcoats but has a definitive agreement to acquire Sunbelt Coatings,
Inc., a manufacturer of automotive and fleet refinish coatings. The acquisition
is expected to be completed in the second quarter of fiscal 1995. The Company is
also a supplier for auto underbody, underhood and some exterior trim parts.
The manufacturing plants for the INDUSTRIAL COATINGS group are located at Fort
Wayne, Indiana; Garland, Texas; High Point, North Carolina; Jackson, Tennessee;
Kankakee, Illinois; and West Hill, Ontario, Canada.
The SPECIAL PRODUCTS group is engaged in the production and marketing, primarily
in the United States, of resins and emulsions for coatings, heavy duty
maintenance and marine coatings, high performance floor coatings for industrial
and commercial use, colorants and colorant systems. Emulsions and resins are
produced at the Company's facilities in Los Angeles, California; Garland, Texas;
Kankakee and Rockford, Illinois for use by the Company and for sale to other
coatings manufacturers. Certain resin operations previously included in the
Company's McWhorter subsidiary were distributed to the Company's shareholders in
the form of a stock dividend at the time of the spin-off of McWhorter
Technologies, Inc. in April 1994. Following the spin-off, the Company retained
the resin operations located in Los Angeles, Rockford, Kankakee and Garland as
described above. The spin-off is described in Note B to the Consolidated
Financial Statements on pages 15 and 16 of Valspar's 1994 Annual Report to
Stockholders included in this Form 10-K. By mid 1995, production of emulsions
will begin at a new resin plant under construction in Marengo, Illinois to
support the growth of the Company's consumer paint business and to better
service external customers. Heavy duty maintenance coatings are formulated for
applicators with highly corrosive and other harsh environmental exposures
requiring specialized coatings technology. Major markets are petrochemical
units, utilities, nuclear plants, paper mills, food processing and
pharmaceutical plants, waste and water treatment facilities, off-shore oil
structures and the marine industry. Heavy duty maintenance and marine coatings
are primarily manufactured in Beaumont, Texas and Garland, Texas. Also
distributed through its Federal International Chemical division are specialty
coatings and resurfacers for concrete and wood floors. These products are
produced at Federal's plant in Chicago, Illinois. Paint colorants, manufactured
at the Company's facilities in Chicago and Rockford, Illinois, are used by
retail paint dealers to color paint to customer specification. These colorants
are used to support the Company's consumer business and are sold directly to
external customers. During 1994, new colorant capacity was added to the
Company's Louisville, Kentucky plant. This state-of-the-art facility primarily
produces colorants to serve the industrial segment as well as provide additional
trade sales colorant capacity.
The Company invested in two joint ventures during the first quarter of 1993. To
expand coatings sales in the Mexican and Central American markets, the Company
formed a joint venture with Pinturas Atlas Marlux called Valspar-Marlux to
engage in the marketing, sales, distribution and technical service of packaging,
coil, wood and general metals coatings. To further develop the professional
paint market served by home centers, the Company entered into a sales and
marketing joint venture with Smiland Paint Company called Conco Paint Company.
In each venture, both the Company and its joint venture partner manufacture the
products sold by the joint venture.
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.
PATENTS
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 highest during the third quarter of
the fiscal year. This seasonality is due to the buying cycle of the consumer
paint and heavy duty maintenance businesses. During the first quarter, when
sales are generally lowest, the Company builds inventory, the financing for
which is provided primarily by internally generated funds and short-term credit
lines discussed in Note E of the Notes to Consolidated Financial Statements on
pages 16 and 17 of Valspar's 1994 Annual Report to Stockholders included in this
Form 10-K.
SIGNIFICANT CUSTOMERS
No material part of the business is dependent upon a single customer or upon a
small number of customers, the loss of which would have a materially adverse
effect on the Company.
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 profit or termination of contracts or subcontracts at the election of the
Government.
COMPETITION
All aspects of the paint and coatings business are highly competitive. There are
approximately 800 domestic paint and coatings manufacturers, and the Company
now ranks sixth in North America with less than 5% of the market.
Principal methods of competition for consumer coatings and specialty paint
products include price, consumer recognition, product innovation, product
quality and rapid response to customer orders. The Company offers merchandising
and promotion programs to its consumer 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 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 taking measures to establish a presence in Asia and Europe to
address these important markets.
Principal methods of competition for resins and emulsions, heavy duty
maintenance coatings and high performance floor coatings are product quality,
rapid response to customer orders, technical assistance to the customer in
product application, price and new product development. The Company believes it
is competitive in these respects in the Special Products business discussed
previously.
The Company competes in the colorant and colorant systems business with fewer
than five colorant manufacturers. The Company ranks second in sales to the
largest colorant producer, which has greater than 50% of U.S. colorant sales.
Competitive factors 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 1994 were $26,980,000, representing a
9.8% increase over fiscal 1993 ($24,579,000). Fiscal 1993 costs decreased
slightly over those of fiscal 1992 ($24,802,000). Fiscal 1992 was a 53 week
fiscal year. Excluding the additional accounting week, research and development
costs for fiscal 1993 increased 1% over fiscal 1992. Primary emphasis has been
in emerging technologies in the industrial and packaging coatings markets.
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 1994, and capital expenditures for 1995 to
comply with existing laws and regulations are also not expected to be material.
EMPLOYEES
The Company employs approximately 2,500 persons, approximately 538 of whom are
members of unions.
FOREIGN OPERATIONS AND EXPORT SALES
The Company's plant in West Hill, Ontario, Canada manufactures and distributes
packaging, coil and general industrial coatings for the Canadian market. This
plant is one of the largest suppliers of powder coatings in Canada. Other than
the business of the Canadian subsidiary, the Company's foreign operations
consist primarily of licensing and joint venture arrangements. Technologies for
packaging and heavy duty maintenance coatings, colorants, powder coatings and
general industrial coatings are currently licensed to paint and coating
manufacturers in over twenty foreign countries. The markets for industrial and
packaging coatings are becoming increasingly global. To capitalize on this
globalization, the Company is reducing its reliance on licensing agreements in
various foreign countries and placing greater emphasis on joint ventures which
provide the Company an equity interest and permit the Company to exert greater
control over the use of its technology. Export sales are not material.
ITEM 2. PROPERTIES
The Company's principal offices in Minneapolis, Minnesota are owned. Operations
are conducted at seventeen locations, primarily in Illinois, California, Texas
and Pennsylvania with one plant in West Hill, Ontario, Canada. Fourteen plants
with square footage of 2,170,000 are owned and three of the plants with square
footage of 250,000 are leased. The Statesville, North Carolina plant with 50,000
square footage and the Marengo, Illinois plant with 52,000 square footage will
begin production in 1995.
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 division, but for most of the Company's businesses, additional
productive 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 engages or 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 1994 Annual Report to Stockholders incorporated by reference into Part
II Item 7.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted during the fourth quarter of fiscal year 1994 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 1995, 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
C. Angus Wurtele 60 Chairman of the Board and Chief Executive Officer
since February 1973
Robert E. Pajor 58 Vice Chairman since March 1994
Richard M. Rompala 48 President since March 1994
Larry B. Brandenburger 47 Vice President, Research and Development since
October 1989
Stephen M. Briggs 38 Vice President, Consumer Coatings Group since August
1993
Rolf Engh 41 Vice President, International since September 1993
and Secretary since April 1993
Steven L. Erdahl 42 Vice President, Industrial Coatings Group since June
1991
William L. Mansfield 46 Vice President, Packaging Coatings Group since
February 1991
Paul C. Reyelts 48 Vice President, Finance since April 1982
The foregoing executive officers have served in the stated capacity for the
registrant during the past five years, except for the following:
Prior to March 1994, Mr. Pajor was President and Chief Operating Officer since
June 1981.
Prior to March 1994, Mr. Rompala was Group Vice President-Coatings and Resins
since January 1992 and Group Vice President-Chemicals since June 1987 at PPG
Industries, Inc.
Prior to August 1993, Mr. Briggs was Vice President, Consumer Sales since
February 1992. Previously he held the position of Vice President, Color
Corporation of America and McCloskey since December 1991 and was General
Manager, Color Corporation of America since November 1989.
Prior to April 1993, Mr. Engh was a partner of Lindquist & Vennum, a
Minneapolis, Minnesota law firm, since 1986.
Prior to June 1991, Mr. Erdahl was Vice President, Metal Coatings since October
1989.
Prior to February 1991, Mr. Mansfield was Vice President, Packaging Coatings
since July 1990. Previously he held the position of Packaging Group General
Manager since July 1989.
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 page
7 of Valspar's 1994 Annual Report to Stockholders is incorporated herein by
reference. All market prices indicated in this section commencing December 8,
1993, represent transactions on the New York Stock Exchange. Prior to that date,
the Company's Common Stock was traded on the American Stock Exchange. The number
of record holders of the Company's Common Stock at December 30, 1994 was 1,903.
The quarterly dividend declared December 14, 1994, which was paid January 13,
1995 to Common Stockholders of record December 30, 1994, was increased to 15
cents per share.
ITEM 6. SELECTED FINANCIAL DATA
The information in the section titled "Eleven Year Financial Summary" for the
years 1990 through 1994 on pages 6 and 7 of Valspar's 1994 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 1994 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 19
of Valspar's 1994 Annual Report to Stockholders are incorporated herein by
reference.
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 20, 1995 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 6 and 7
and the section titled "Directors Compensation" on pages 4 and 5 of Valspar's
Proxy Statement dated January 20, 1995 is incorporated herein by reference. The
information on pages 8 through 11 of Valspar's Proxy Statement dated January 20,
1995 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 12 and 13 of Valspar's
Proxy Statement dated January 20, 1995 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in the section titled "Certain Transactions" on page 5 of
Valspar's Proxy Statement dated January 20, 1995 is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) For financial statements and financial statement schedules filed as a part
of this report, reference is made to "Index to Financial Statements and
Financial Statement Schedules" 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 28, 1994.
(c) The following exhibits are filed as part of this report.
Exhibit
No. Description
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 and February
26, 1992, and to Article Eleven dated February 25, 1987
3(b)3 BY-LAWS--as amended to and including February 25, 1987
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 **
10(d)5 THE VALSPAR CORPORATION DEFERRED BONUS AND STOCK SALE
PLAN--as amended August 12, 1987, December 21, 1988 and
December 12, 1990 **
10(e)4 THE VALSPAR CORPORATION 1982 INCENTIVE STOCK OPTION PLAN--as amended February 25,
1987 **
10(f)4 THE VALSPAR CORPORATION NONQUALIFIED STOCK
OPTION PLAN **
10(g)6 THE VALSPAR CORPORATION 1991 STOCK OPTION PLAN **
10(h)6 THE VALSPAR CORPORATION LEVERAGED EQUITY PURCHASE PLAN **
10(i)7 THE VALSPAR CORPORATION KEY EMPLOYEE ANNUAL BONUS PLAN **
10(j)8 THE VALSPAR CORPORATION RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS--as
amended December 14, 1994**
10(k)7 THE VALSPAR CORPORATION ANNUAL BONUS PLAN **
10(l)7 THE VALSPAR CORPORATION INCENTIVE BONUS PLAN **
10(m)+ DISTRIBUTION AGREEMENT REGARDING McWHORTER SPIN-OFF
10(n)+ ENVIRONMENTAL MATTERS AGREEMENT
10(o)+ TECHNOLOGY LICENSE AGREEMENT
10(p)+ TAX SHARING AGREEMENT
10(q)+ MASTER TOLLING AGREEMENT
10(r)+ SALE AND PURCHASE OF ASSETS AGREEMENT BETWEEN CARGILL, INCORPORATED AND McWHORTER,
INC. DATED AS OF MAY 19, 1993, AS SUBSEQUENTLY MODIFIED AND AMENDED
10(s)+ AGREEMENT CONTAINING CONSENT ORDER EXECUTED AS OF
SEPTEMBER 30, 1993 BY THE FEDERAL TRADE COMMISSION, THE
VALSPAR CORPORATION AND McWHORTER, INC.
10(t)+ $60,000,000 CREDIT AGREEMENT DATED AS OF FEBRUARY 1, 1994 AMONG McWHORTER, INC.,
McWHORTER TECHNOLOGIES, INC., THE BANKS LISTED THEREIN AND WACHOVIA BANK OF
GEORGIA, N.A., AS AGENT
10(u)+ LEASE AGREEMENT BETWEEN McWHORTER TECHNOLOGIES, INC. AND THE VALSPAR CORPORATION
FOR THE LEASE TO McWHORTER OF OFFICE AND LABORATORY SPACE IN MINNEAPOLIS, MINNESOTA
10(v)+ LEASE AGREEMENT BETWEEN McWHORTER TECHNOLOGIES, INC. AND THE VALSPAR CORPORATION
FOR THE LEASE TO VALSPAR OF MANUFACTURING, WAREHOUSING, LABORATORY AND OFFICE SPACE
IN PHILADELPHIA, PENNSYLVANIA
13* 1994 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed
filed with the Commission)
22* Subsidiaries of the Registrant
23(a)* Consent of Independent Auditors--Ernst & Young LLP
23(b)* Consent of Independent Auditors--Deloitte & Touche LLP
28(a)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Stock Ownership Trust for Salaried Employees
28(b)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Stock Ownership Trust for Hourly Employees
28(c)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Profit Sharing Retirement Plan
----------------------------
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 30, 1987.
4 As filed with Form 10-K for the period ended October 27, 1989.
5 As filed with Form 10-K for the period ended October 26, 1990.
6 As filed with Form 10-K for the period ended October 25, 1991.
7 As filed with Form 10-K for the period ended October 30, 1992.
8 Plan filed with Form 10-K for the period ended October 30, 1992; amendment
filed with this Form 10-K.
* As filed with this Form 10-K.
** Compensatory Plan or arrangement required to be filed pursuant to Item
14(c) of Form 10-K.
+ Incorporated by reference to Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.11,
10.12, 10.13, 10.14 and 10.15, respectively to Form S-1 Registration
Statement of McWhorter (Commission File No. 33-75726), as declared
effective on April 4, 1994.
Portions of the 1995 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.
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
January 24, 1995 /s/ Rolf Engh
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/ C. Angus Wurtele January 24, 1995 /s/ Thomas R. McBurney January 24, 1995
C. Angus Wurtele, Chairman of the Board Thomas R. McBurney, Director
and Chief Executive Officer
/s/ Paul C. Reyelts January 24, 1995 /s/ Kendrick B. Melrose January 24, 1995
Paul C. Reyelts, Vice President, Finance Kendrick B. Melrose, Director
(Chief Financial Officer)
/s/ Curtis O. Huovie January 24, 1995 -------------------------------
Curtis O. Huovie, Vice President Robert E. Pajor, Director
and Controller (Chief Accounting Officer) (Vice Chairman)
/s/ Susan S. Boren January 24, 1995 -------------------------------
Susan S. Boren, Director Gregory R. Palen, Director
- ---------------------------------- /s/ Lawrence Perlman January 24, 1995
Richard N. Cardozo, Director Lawrence Perlman, Director
- ---------------------------------- /s/ Richard M. Rompala January 24, 1995
William W. George, Director Richard M. Rompala, Director
(President)
-------------------------------
Michael P. Sullivan, Director
Annual Report on Form 10-K
Item 14(a)(1) and (2), (c) and (d)
Financial Statements and
Financial Statement Schedules
Certain Exhibits
Year ended October 28, 1994
THE VALSPAR CORPORATION
Minneapolis, Minnesota
The Valspar Corporation
Form 10-K--Item 14(a)(1) and (2) and Item 14(d)
Index to Financial Statements and Financial Statement Schedules
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 28, 1994:
Pages in Annual Report
Report of Independent Auditors......................................................................20
Financial Statements:
Consolidated Balance Sheets--October 28, 1994 and October 29, 1993...............................11
Consolidated Statements of Income--Years ended October 28, 1994,
October 29, 1993 and October 30, 1992.........................................................12
Consolidated Statements of Changes in Stockholders' Equity--
Years ended October 28, 1994, October 29, 1993 and October 30, 1992...........................12
Consolidated Statements of Cash Flows--Years ended October 28, 1994,
October 29, 1993 and October 30, 1992.........................................................13
Notes to Consolidated Financial Statements....................................................14-19
Selected Quarterly Financial Data (Unaudited).......................................................19
The following consolidated financial statement schedules should be read in
conjunction with the consolidated financial statements referred to above:
Financial Statement Schedules:
Years ended October 28, 1994, October 29, 1993 and October 30, 1992
Schedule. Page
VIII Valuation and Qualifying Accounts and Reserves...............................F-3
IX Short-Term Borrowings........................................................F-4
The Valspar Corporation
Schedule VIII--Valuation and Qualifying Accounts and Reserves
COL. A COL. B COL. C COL. C COL. D COL. E
Additions
(1) (2)
Charged to Expense Charged to
Balance at Beginning or Other Deductions Balance at
Description of Period (Income) Accounts--Describe --Describe End of Period
Deducted from asset accounts:
Allowance for doubtful
accounts:
Year ended October 28, 1994 $985,000 $(112,000) $ 358,000 (1) $835,000
(433,000) (2)
113,000 (3)
Year ended October 29, 1993 953,000 201,000 451,000 (1) 985,000
(282,000) (2)
Year ended October 30, 1992 971,000 571,000 843,000 (1) 953,000
(254,000) (2)
(1) Uncollectible accounts written off.
(2) Recoveries on accounts previously written off.
(3) Amount spun off to McWhorter Technologies, Inc. on April 29, 1994
(See Note B in Annual Report).
The Valspar Corporation
Schedule IX--Short-Term Borrowings
COL. A COL. B COL. C COL. D COL. E COL. F
Maximum Average Weighted
Amount Amount Average
Balance Weighted Outstanding Outstanding Interest Rate
Category of Aggregate at End Average During the During the During the
Short-Term Borrowings of Period Interest Rate Period Period (2) Period (3)
Notes payable to banks (1):
Year ended October 28, 1994 $15,000,000 5.1% $108,000,000 (4) $46,700,000 4.7%
Year ended October 29, 1993 3,500,000 3.5% 44,200,000 18,899,000 3.5%
Year ended October 30, 1992 22,100,000 3.5% 57,807,000 39,585,000 5.8%
(1) Notes payable to banks represent borrowings under lines of credit borrowing
arrangements which have no termination date but are reviewed annually for
renewal. See also Note E to consolidated financial statements.
(2) The average amount outstanding during the period was computed by dividing
the total of daily outstanding principal balances by the number of days in
the Registrant's fiscal year.
(3) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term debt
outstanding.
(4) This amount includes McWhorter borrowing of $42,700,000 as of April 29,
1994.
INDEX TO EXHIBITS FILED WITH THIS REPORT
THE VALSPAR CORPORATION
Exhibit
No. Description
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 and February
26, 1992, and to Article Eleven dated February 25, 1987
3(b)3 BY-LAWS--as amended to and including February 25, 1987
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 **
10(d)5 THE VALSPAR CORPORATION DEFERRED BONUS AND STOCK SALE
PLAN--as amended August 12, 1987, December 21, 1988 and
December 12, 1990 **
10(e)4 THE VALSPAR CORPORATION 1982 INCENTIVE STOCK OPTION PLAN--as amended February 25,
1987 **
10(f)4 THE VALSPAR CORPORATION NONQUALIFIED STOCK
OPTION PLAN **
10(g)6 THE VALSPAR CORPORATION 1991 STOCK OPTION PLAN **
10(h)6 THE VALSPAR CORPORATION LEVERAGED EQUITY PURCHASE PLAN **
10(i)7 THE VALSPAR CORPORATION KEY EMPLOYEE ANNUAL BONUS PLAN **
10(j)8 THE VALSPAR CORPORATION RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS--as
amended December 14, 1994**
10(k)7 THE VALSPAR CORPORATION ANNUAL BONUS PLAN **
10(l)7 THE VALSPAR CORPORATION INCENTIVE BONUS PLAN **
10(m)+ DISTRIBUTION AGREEMENT REGARDING McWHORTER SPIN-OFF
10(n)+ ENVIRONMENTAL MATTERS AGREEMENT
10(o)+ TECHNOLOGY LICENSE AGREEMENT
10(p)+ TAX SHARING AGREEMENT
10(q)+ MASTER TOLLING AGREEMENT
10(r)+ SALE AND PURCHASE OF ASSETS AGREEMENT BETWEEN CARGILL, INCORPORATED AND McWHORTER,
INC. DATED AS OF MAY 19, 1993, AS SUBSEQUENTLY MODIFIED AND AMENDED
10(s)+ AGREEMENT CONTAINING CONSENT ORDER EXECUTED AS OF
SEPTEMBER 30, 1993 BY THE FEDERAL TRADE COMMISSION, THE
VALSPAR CORPORATION AND McWHORTER, INC.
10(t)+ $60,000,000 CREDIT AGREEMENT DATED AS OF FEBRUARY 1, 1994 AMONG McWHORTER, INC.,
McWHORTER TECHNOLOGIES, INC., THE BANKS LISTED THEREIN AND WACHOVIA BANK OF
GEORGIA, N.A., AS AGENT
10(u)+ LEASE AGREEMENT BETWEEN McWHORTER TECHNOLOGIES, INC. AND THE VALSPAR CORPORATION
FOR THE LEASE TO McWHORTER OF OFFICE AND LABORATORY SPACE IN MINNEAPOLIS, MINNESOTA
10(v)+ LEASE AGREEMENT BETWEEN McWHORTER TECHNOLOGIES, INC. AND THE VALSPAR CORPORATION
FOR THE LEASE TO VALSPAR OF MANUFACTURING, WAREHOUSING, LABORATORY AND OFFICE SPACE
IN PHILADELPHIA, PENNSYLVANIA
13* 1994 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed
filed with the Commission)
22* Subsidiaries of the Registrant
23(a)* Consent of Independent Auditors--Ernst & Young LLP
23(b)* Consent of Independent Auditors--Deloitte & Touche LLP
28(a)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Stock Ownership Trust for Salaried Employees
28(b)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Stock Ownership Trust for Hourly Employees
28(c)* Financial Statements for the Years Ended October 28, 1994 and October 29, 1993 and
Independent Auditors' Report--Valspar Profit Sharing Retirement Plan
------------------------
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 30, 1987.
4 As filed with Form 10-K for the period ended October 27, 1989.
5 As filed with Form 10-K for the period ended October 26, 1990.
6 As filed with Form 10-K for the period ended October 25, 1991.
7 As filed with Form 10-K for the period ended October 30, 1992.
8 Plan filed with Form 10-K for the period ended October 30, 1992; amendment
filed with this Form-10-K.
* As filed with this Form 10-K.
** Compensatory Plan or arrangement required to be filed pursuant to Item
14(c) of Form 10-K.
+ Incorporated by reference to Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.11,
10.12, 10.13, 10.14 and 10.15, respectively to Form S-1 Registration
Statement of McWhorter (Commission File No. 33-75726), as declared
effective on April 4, 1994.