Valspar Reports Fiscal Second Quarter 2016 Results

Valspar (NYSE:VAL):

Summary Financials
  Fiscal Second Quarter 2016 (Ended April 29, 2016)
Reported

Results
  %

Change
  Adjusted*

Results
  %

Change
  2016   2015   2016   2015  
Net Sales $1,056.8 $1,079.3 (2%) $1,056.8 $1,079.3 (2%)
Gross Profit $401.4 $393.2 2% $406.4 $394.4 3%
EBIT $130.2 $154.2 (16%) $159.4 $156.5 2%
Net Income $80.0 $90.3 (11%) $98.5 $92.2 7%
EPS (diluted) $0.99 $1.09 (9%) $1.22 $1.11 10%

$ millions except EPS

Notes on Net Sales and Volume : Acquisitions added 5% to net sales and 3% to volume for fiscal Q2 2016 (0% and 0% respectively for fiscal Q2 2015). Foreign currency translation negatively impacted net sales by 3% for fiscal Q2 2016 (5% for fiscal Q2 2015).

* Adjusted Results exclude certain items, which are detailed in the "Reconciliation of Non-GAAP Financial Measures" included in this release. In addition to restructuring and other charges, the excluded items include $18 million of costs incurred in connection with the proposed merger with The Sherwin-Williams Company.

CEO Comment

"Our results in the second quarter were highlighted by new business wins, growth in adjusted EBIT in both Paints and Coatings and 10 percent growth in adjusted EPS. Coatings segment performance continues to show the strength of our diversified portfolio, with solid volume growth in the Coil, Wood and Packaging product lines. In the Paints segment, sales and adjusted EBIT increased led by the impact of the Quest acquisition," said Gary E. Hendrickson, chairman and chief executive officer.

"The previously announced combination of Sherwin-Williams and Valspar will create significant value for our customers, employees and other stakeholders. We are confident this transaction will accelerate many of the operating initiatives already underway at Valspar. We look forward to positioning Valspar to enter its next phase of growth and to continue to work closely with Sherwin-Williams to obtain the necessary approvals to seamlessly close this transaction," Hendrickson added.

Coatings Segment Results

Fiscal second quarter 2016 net sales in the Coatings segment decreased 4 percent to $587 million. This includes the effects of foreign currency translation that negatively impacted net sales by 4 percent. Acquisitions added 1 percent to net sales in the quarter. Volumes increased 2 percent in the fiscal second quarter of 2016. Volume growth from the Coil, Wood and Packaging product lines was partially offset by lower volume in the General Industrial product line. Acquisitions added 1 percent to volume in the quarter. The Coatings segment adjusted earnings before interest and taxes (adjusted EBIT) of $113 million increased 4 percent, as the benefits from productivity initiatives and cost/price were partially offset by the impact of currency translation. Adjusted EBIT as a percent of net sales increased to 19.3% from 17.8% in the prior year.

Paints Segment Results

Fiscal second quarter 2016 net sales in the Paints segment increased 1 percent to $407 million. This includes the effects of foreign currency translation that negatively impacted net sales by 2 percent. Acquisitions added 11 percent to net sales in the quarter. Volume declined 6 percent in the fiscal second quarter of 2016, as lower volume in Asia and North America were partially offset by acquisitions which added 6 percent to volume in the quarter. Paints segment adjusted EBIT of $53 million increased 12 percent, driven by the impact of the Quest acquisition and the benefits from productivity initiatives and cost/price. Adjusted EBIT as a percent of net sales increased to 13.0% from 11.7% in the prior year.

Dividends and Share Repurchases

During the quarter, the company paid a quarterly dividend of $0.33 per common share outstanding, or $26 million. Valspar is a member of the S&P High Yield Dividend Aristocrats®, which is comprised of companies increasing dividends every year for at least 20 consecutive years. The company suspended share repurchases in the fiscal second quarter of 2016 and for the balance of the fiscal year.

Proposed Merger with The Sherwin-Williams Company

On March 20, 2016, Sherwin-Williams and Valspar announced that they had entered into a definitive agreement pursuant to which Sherwin-Williams will acquire Valspar for $113 per share in an all-cash transaction, or an enterprise value of approximately $11.3 billion. The transaction is expected to close by the end of Q1 calendar year 2017, and is subject to the approval of Valspar shareholders and customary closing conditions, including regulatory approvals.

Given the complementary nature of the businesses and the benefits this transaction will provide to customers, Sherwin-Williams and Valspar believe that no or minimal divestitures should be required to complete the transaction. Under the terms of the merger agreement, in what both companies believe to be the unlikely event that divestitures are required of businesses totaling more than $650 million of Valspar's 2015 revenues, the transaction price would be adjusted to $105 in cash per Valspar share. Sherwin-Williams would have the right to terminate the transaction in the event that required divestitures exceed $1.5 billion of Valspar's 2015 revenues. These provisions provide Sherwin-Williams and Valspar with greater closing certainty.

Fiscal 2016 Guidance and Earnings Conference Call

In light of the proposed merger transaction, the company is withdrawing its financial and earnings guidance for fiscal 2016. In addition, the company will not hold a conference call to discuss quarterly financial results. Valspar will continue to post its supplemental quarterly slide presentation on http://investors.valspar.com and the company's investor relations team is available to answer questions.

Valspar: If it matters, we're on it.®

Valspar is a global leader in the coatings industry providing customers with innovative, high-quality products and value-added services. Our 11,100 employees worldwide deliver advanced coatings solutions with best-in-class appearance, performance, protection and sustainability to customers in more than 100 countries. Valspar offers a broad range of superior coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets. Founded in 1806, Valspar is headquartered in Minneapolis. Valspar's reported net sales in fiscal 2015 were $4.4 billion and its shares are traded on the New York Stock Exchange (symbol: VAL). For more information, visit www.valspar.com and follow @valspar on Twitter.

Additional Information and Where to Find it

Valspar has filed with the SEC a preliminary proxy statement, and amendment thereto, in connection with the contemplated transactions. The definitive proxy statement will be sent or given to Valspar stockholders and will contain important information about the contemplated transactions. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE PROXY STATEMENT (INCLUDING THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE. Investors and security holders may obtain a free copy of the preliminary proxy statement and the definitive proxy statement (when it is available) and other documents filed with the SEC.

Certain Information Concerning Participants

Valspar and Sherwin-Williams and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Valspar investors and security holders in connection with the contemplated transactions. Information about Valspar's directors and executive officers is set forth in its proxy statement for its 2016 Annual Meeting of Stockholders and its most recent annual report on Form 10-K.

Information about Sherwin-Williams' directors and executive officers is set forth in its proxy statement for its 2016 Annual Meeting of Stockholders and its most recent annual report on Form 10-K. These documents may be obtained for free at the SEC's website at  www.sec.gov. Additional information regarding the interests of participants in the solicitation of proxies in connection with the contemplated transactions is included in the preliminary proxy statement and will be included in the proxy statement that Valspar intends to file with the SEC.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a safe harbor for forward-looking statements. Forward-looking statements are based on management's current expectations, estimates, assumptions and beliefs about future events, conditions and financial performance. Forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside our control and could cause actual results to differ materially from such statements. Any statement that is not historical in nature is a forward-looking statement. We may identify forward-looking statements with words and phrases such as "expect," "project," "forecast," "outlook," "estimate," "anticipate," "believe," "could," "may," "will," "plan to," "intend," "should" and similar words or expressions. These risks, uncertainties and other factors include, but are not limited to, deterioration in general economic conditions, both domestic and international, that may adversely affect our business; fluctuations in availability and prices of raw materials, including raw material shortages and other supply chain disruptions, and the inability to pass along or delays in passing along raw material cost increases to our customers; dependence of internal sales and earnings growth on business cycles affecting our customers and growth in the domestic and international coatings industry; market share loss to, and pricing or margin pressure from, larger competitors with greater financial resources; significant indebtedness that restricts the use of cash flow from operations for acquisitions and other investments; dependence on acquisitions for growth, and risks related to future acquisitions, including adverse changes in the results of acquired businesses, the assumption of unforeseen liabilities and disruptions resulting from the integration of acquisitions; risks and uncertainties associated with operating in foreign markets, including achievement of profitable growth in developing markets; impact of fluctuations in foreign currency exchange rates on our financial results; loss of business with key customers; damage to our reputation and business resulting from product claims or recalls, litigation, customer perception and other matters; our ability to respond to technology changes and to protect our technology; possible interruption, failure or compromise of the information systems we use to operate our business; changes in governmental regulation, including more stringent environmental, health and safety regulations; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; unusual weather conditions adversely affecting sales; changes in accounting policies and standards and taxation requirements such as new tax laws or revised tax law interpretations; the nature, cost and outcome of pending and future litigation and other legal proceedings; civil unrest and the outbreak of war and other significant national and international events; risks relating to our merger with Sherwin-Williams including, the failure to obtain Valspar stockholder approval of the proposed transaction, the possibility that the closing conditions to the contemplated transactions may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval; delay in closing the transaction or the possibility of non-consummation of the transaction; the potential for regulatory authorities to require divestitures in connection with the proposed transaction and the possibility that Valspar stockholders consequently receive $105 per share instead of $113 per share; the occurrence of any event that could give rise to termination of the merger agreement; the risk that stockholder litigation in connection with the contemplated transactions may affect the timing or occurrence of the contemplated transactions or result in significant costs of defense, indemnification and liability; risks inherent in the achievement of cost synergies and the timing thereof; risks related to the disruption of the transaction to Valspar and its management; the effect of announcement of the transaction on Valspar's ability to retain and hire key personnel and maintain relationships with customers, suppliers and other third parties; and other factors set forth in the risk factors section of our Annual Report on Form 10-K for the fiscal year ended October 30, 2015, as well as Valspar's Quarterly Reports on Form 10-Q and other documents filed by Valspar with the Securities and Exchange Commission. We caution investors not to place undue reliance on any such forward-looking statements, which speak only as of the date on which such statements were made. We undertake no obligation to subsequently revise any forward-looking statement to reflect new information, events or circumstances after the date of such statement, except as required by law.
 
THE VALSPAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)For the Three and Six Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands, except per share amounts)
       
Three Months Ended Six Months Ended
    April 29,2016   May 1,2015 April 29,2016   May 1,2015
 
Net Sales $ 1,056,797 $ 1,079,289 $ 1,942,553 $ 2,093,958
Cost of Sales 650,430 684,856 1,217,124 1,361,384
Restructuring Charges - Cost of Sales     4,926     1,230     5,361     6,079
Gross Profit     401,441     393,203     720,068     726,495
Research and Development 35,591 32,037 68,119 64,639
Selling, General and Administrative 210,602 204,237 402,545 393,878
Restructuring Charges - Operating Expenses 4,972 1,020 5,406 2,714
Proposed Merger-related Charges - Operating Expenses 18,240 18,240
Acquisition-related Charges - Operating Expenses     1,111         1,125    
Operating Expenses     270,516     237,294     495,435     461,231
Gain on Sale of Certain Assets                 48,001
Income From Operations     130,925     155,909     224,633     313,265
Interest Expense 22,789 20,241 45,204 36,556
Other (Income) Expense, Net     751     1,694     1,366     729
Income Before Income Taxes 107,385 133,974 178,063 275,980
Income Taxes     27,358     43,660     45,605     81,692
Net Income   $ 80,027   $ 90,314   $ 132,458   $ 194,288
                 
Average Number of Shares O/S - basic 78,955,687 80,826,518 78,858,226 81,275,572
Average Number of Shares O/S - diluted     80,878,849     82,871,129     80,739,760     83,366,627
                 
Net Income per Common Share - basic $ 1.01 $ 1.12 $ 1.68 $ 2.39
Net Income per Common Share - diluted   $ 0.99   $ 1.09   $ 1.64   $ 2.33
 

THE VALSPAR CORPORATION SEGMENT INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)For the Three and Six Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands)
   
Three Months Ended Six Months Ended
    April 29,2016   May 1,2015   April 29,2016   May 1,2015
   

Coatings Segment
Net Sales $ 587,436 $ 614,821 $ 1,130,999 $ 1,217,878
Earnings Before Interest and Taxes (EBIT) 112,372 108,022 208,919 243,631
 
Key Metrics (GAAP):
Sales Growth (4.5%) (1.0%) (7.1%) 2.6%
EBIT, % of Net Sales 19.1% 17.6% 18.5% 20.0%
 
Key Metrics (non-GAAP) 1:
Adjusted EBIT $ 113,443 $ 109,578 $ 210,195 $ 200,539
Adjusted EBIT, % of Net Sales 19.3% 17.8% 18.6% 16.5%

 

Paints Segment
Net Sales $ 407,060 $ 402,979 $ 698,157 $ 765,502
EBIT 42,742 46,571 46,561 71,900
 
Key Metrics (GAAP):
Sales Growth 1.0% (15.4%) (8.8%) (9.1%)
EBIT, % of Net Sales 10.5% 11.6% 6.7% 9.4%
 
Key Metrics (non-GAAP) 1:
Adjusted EBIT $ 52,721 $ 47,274 $ 57,218 $ 75,793
Adjusted EBIT, % of Net Sales 13.0% 11.7% 8.2% 9.9%
 

Other and Administrative
Net Sales $ 62,301 $ 61,489 $ 113,397 $ 110,578
EBIT (24,940) (378) (32,213) (2,995)
 
Key Metrics (GAAP):
Sales Growth 1.3% 5.8% 2.5% 4.2%
EBIT, % of Net Sales (40.0%) (0.6%) (28.4%) (2.7%)
 
Key Metrics (non-GAAP) 1:
Adjusted EBIT $

(6,741)
$

(387)
$

(14,014)
$

(3,004)
Adjusted EBIT, % of Net Sales (10.8%) (0.6%) (12.4%) (2.7%)
 

1 The information on this page includes non-GAAP financial measures. Please refer to the "RECONCILIATION OF NON-GAAP FINANCIAL MEASURES" included in this release for detailed information.
 
THE VALSPAR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)As of April 29, 2016 and May 1, 2015(Dollars in thousands)
   
    April 29,2016   May 1,2015
         

Assets
Current Assets:
Cash and Cash Equivalents $ 100,278 $ 146,279
Restricted Cash 734 1,532
Accounts and Notes Receivable, Net 827,903 823,014
Inventories 536,483 494,355
Deferred Income Taxes 33,385 28,621
Prepaid Expenses and Other     121,543     105,333
Total Current Assets     1,620,326     1,599,134
Goodwill 1,296,669 1,081,255
Intangibles, Net 639,408 575,939
Other Assets 130,232 108,881
Long-Term Deferred Income Taxes 10,229 6,570
Property, Plant & Equipment, Net     649,607     607,081
Total Assets   $ 4,346,471   $ 3,978,860
 

Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt $ 333,100 $ 273,840
Current Portion of Long-Term Debt 101 162,502
Trade Accounts Payable 533,741 550,361
Income Taxes Payable 21,503 47,829
Other Accrued Liabilities     393,282     367,475
Total Current Liabilities     1,281,727     1,402,007
Long Term Debt, Net of Current Portion 1,707,042 1,350,005
Deferred Income Taxes 238,173 215,789
Other Long-Term Liabilities     151,316     139,693
Total Liabilities     3,378,258     3,107,494
Stockholders' Equity     968,213     871,366
Total Liabilities and Stockholders' Equity   $ 4,346,471   $ 3,978,860
 
THE VALSPAR CORPORATION SELECTED INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)For the Three and Six Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands)
       
Three Months Ended Six Months Ended
    April 29,2016   May 1,2015 April 29,2016   May 1,2015
 
Depreciation and Amortization $ 24,662 $ 21,591 $ 47,683 $ 45,492
 
Capital Expenditures 38,414 23,360 62,531 41,199
 
Dividends Paid 26,092 24,377 52,155 48,951
 
THE VALSPAR CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)For the Three Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands, except per share amounts)
       
The following information provides reconciliations of non-GAAP financial measures from operations, which are presented in the accompanying news release, to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies. The following tables reconcile gross profit, operating expenses, net income and net income per common share - diluted (GAAP financial measures) and earnings before interest and taxes (EBIT) for the periods presented to adjusted gross profit, adjusted operating expenses, adjusted net income, adjusted net income per common share - diluted and adjusted EBIT (non-GAAP financial measures) for the periods presented.
 
Three Months EndedApril 29, 2016 Three Months EndedMay 1, 2015
    Dollars   % of Net Sales   Dollars   % of Net Sales
 

Coatings Segment
EBIT $ 112,372 19.1 % $ 108,022 17.6 %
Restructuring Charges - Cost of Sales 2 0.0 % 561 0.1 %
Restructuring Charges - Operating Expense 173 0.0 % 995 0.2 %
Acquisition-related Charges - Operating Expense 896 0.2 % 0.0 %
Gain on Sale of Certain Assets     0.0 %     0.0 %
Adjusted EBIT 1 $ 113,443 19.3 % $ 109,578 17.8 %
 

Paints Segment
EBIT $ 42,742 10.5 % $ 46,571 11.6 %
Restructuring Charges - Cost of Sales 4,924 1.2 % 669 0.2 %
Restructuring Charges - Operating Expense 4,840 1.2 % 34 0.0 %
Acquisition-related Charges - Operating Expense   215   0.1 %     0.0 %
Adjusted EBIT 1 $ 52,721 13.0 % $ 47,274 11.7 %
 

Other and Administrative
EBIT $ (24,940 ) (40.0 %) $ (378 ) (0.6 %)
Restructuring Charges - Operating Expense (41 ) (0.1 %) (9 ) (0.0 %)
Proposed Merger-related Charges - Operating Expenses   18,240   29.3 %     0.0 %
Adjusted EBIT 1 $ (6,741 ) (10.8 %) $ (387 ) (0.6 %)
 

Total
Gross Profit $ 401,441 38.0 % $ 393,203 36.4 %
Restructuring Charges - Cost of Sales   4,926   0.5 %   1,230   0.1 %
Adjusted Gross Profit 1 $ 406,367 38.5 % $ 394,433 36.5 %
 
Operating Expenses $ 270,516 25.6 % $ 237,294 22.0 %
Restructuring Charges - Operating Expense (4,972 ) (0.5 %) (1,020 ) (0.1 %)
Proposed Merger-related Charges - Operating Expenses (18,240 ) (1.7 %) 0.0 %
Acquisition-related Charges - Operating Expense   (1,111 ) (0.1 %)     0.0 %
Adjusted Operating Expenses 1 $ 246,193 23.3 % $ 236,274 21.9 %
 
EBIT $ 130,174 12.3 % $ 154,215 14.3 %
Restructuring Charges - Total 9,898 0.9 % 2,250 0.2 %
Proposed Merger-related Charges - Total 18,240 1.7 % 0.0 %
Acquisition-related Charges - Total 1,111 0.1 % 0.0 %
Gain on Sale of Certain Assets - Total     0.0 %     0.0 %
Adjusted EBIT 1 $ 159,423 15.1 % $ 156,465 14.5 %
 
1 The data in this schedule has been individually rounded and therefore may not sum.
 
THE VALSPAR CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)For the Six Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands, except per share amounts)
       
Six Months EndedApril 29, 2016 Six Months EndedMay 1, 2015
  Dollars   % of Net Sales   Dollars   % of Net Sales
 

Coatings Segment
EBIT $ 208,919 18.5 % $ 243,631 20.0 %
Restructuring Charges - Cost of Sales 72 0.0 % 2,951 0.2 %
Restructuring Charges - Operating Expense 294 0.0 % 1,958 0.2 %
Acquisition-related Charges - Operating Expense 910 0.1 % 0.0 %
Gain on Sale of Certain Assets     0.0 %   (48,001 ) (3.9 %)
Adjusted EBIT 1 $ 210,195 18.6 % $ 200,539 16.5 %
 

Paints Segment
EBIT $ 46,561 6.7 % $ 71,900 9.4 %
Restructuring Charges - Cost of Sales 5,289 0.8 % 3,128 0.4 %
Restructuring Charges - Operating Expense 5,153 0.7 % 765 0.1 %
Acquisition-related Charges - Operating Expense   215   0.0 %     0.0 %
Adjusted EBIT 1 $ 57,218 8.2 % $ 75,793 9.9 %
 

Other and Administrative
EBIT $ (32,213 ) (28.4 %) $ (2,995 ) (2.7 %)
Restructuring Charges - Operating Expense (41 ) (0.0 %) (9 ) (0.0 %)
Proposed Merger-related Charges - Operating Expenses   18,240   16.1 %     0.0 %
Adjusted EBIT 1 $ (14,014 ) (12.4 %) $ (3,004 ) (2.7 %)
 

Total
Gross Profit $ 720,068 37.1 % $ 726,495 34.7 %
Restructuring Charges - Cost of Sales   5,361   0.3 %   6,079   0.3 %
Adjusted Gross Profit 1 $ 725,429 37.3 % $ 732,574 35.0 %
 
Operating Expenses $ 495,435 25.5 % $ 461,231 22.0 %
Restructuring Charges - Operating Expense (5,406 ) (0.3 %) (2,714 ) (0.1 %)
Proposed Merger-related Charges - Operating Expenses (18,240 ) (0.9 %) 0.0 %
Acquisition-related Charges - Operating Expense   (1,125 ) (0.1 %)     0.0 %
Adjusted Operating Expenses 1 $ 470,664 24.2 % $ 458,517 21.9 %
 
EBIT $ 223,267 11.5 % $ 312,536 14.9 %
Restructuring Charges - Total 10,767 0.6 % 8,793 0.4 %
Proposed Merger-related Charges - Total 18,240 0.9 % 0.0 %
Acquisition-related Charges - Total 1,125 0.1 % 0.0 %
Gain on Sale of Certain Assets - Total     0.0 %   (48,001 ) (2.3 %)
Adjusted EBIT 1 $ 253,399 13.0 % $ 273,328 13.1 %
 
1 The data in this schedule has been individually rounded and therefore may not sum.
       
THE VALSPAR CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)For the Three and Six Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands, except per share amounts)
 
Three Months Ended Six Months Ended
    April 29,2016   May 1,2015   April 29,2016   May 1,2015
 
Net Income $ 80,027 $ 90,314 $ 132,458 $ 194,288
Restructuring charges - Total 1 9,898 2,250 10,767 8,793
Proposed merger-related charges - Total 2 18,240 18,240
Acquisition-related charges - Total 3 1,111 1,125
Gain on sale of certain assets - Total 4               (48,001 )
Total Adjustments 29,249 2,250 30,132 (39,208 )
Income Taxes Impact - Total 5   (10,763 )   (401 )   (11,086 )   7,959  
Adjusted Net Income $ 98,513 $ 92,163 $ 151,504 $ 163,039
 
 
Average Number of Shares O/S - diluted 80,878,849 82,871,129 80,739,760 83,366,627
 
 
Adjusted Net Income per Common Share - diluted $ 1.22 $ 1.11 $ 1.88 $ 1.96
 
 
1 Represents severance and employee benefits, asset-related charges and exit costs related to restructuring activities.
 

2 Represents costs incurred related to the pending merger with The Sherwin-Williams Company including professional services, regulatory fees and employee-related expenses.
 
3 Represents professional fees and acquisition-related charges associated with other acquisition-related activity.
 
4 Represents gain on sale of a non-strategic specialty product offering in our Coatings segment.
 
5 Represents the income taxes impact on the adjustments above.

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