Industry News

Valspar Makes Non-Cash EPS Adjustment For Huarun Minority Interest

Published on 2007-04-10. Author : SpecialChem

MINNEAPOLIS, -- As previously announced, The Valspar Corporation (NYSE-VAL) purchased an 80 percent interest in Huarun Paints Holdings Company Limited (Huarun Paints) for approximately $290 million on July 26, 2006. Of the remaining 20 percent minority interest shares held in Huarun Paints, most are subject to put/call rights that permit Valspar to acquire full ownership of those shares within the next five years.

Subsequent to its first quarter earnings release, and in consultation with its auditors, Valspar determined that current accounting guidance for this type of put/call instrument requires earnings per share available to common shareholders to be presented at $0.18 per diluted share for the first quarter of 2007. This non-cash adjustment of $0.05 per diluted share has no impact on first quarter net income or the first quarter balance sheet. All non-cash adjustments for redemption of the subject minority shares will be reversed in the quarter in which the puts or calls are exercised and will result in an increase in earnings per share at that time.

The company is reconfirming its full year guidance of $1.80 to $1.90, excluding an anticipated non-cash adjustment of $0.18. Including the non-cash adjustment, full year guidance would be $1.62 to $1.72. Inclusion of the non-cash adjustment assumes that Valspar will not purchase the subject minority shares in fiscal 2007. If Valspar were to purchase subject minority shares in fiscal 2007, all non-cash adjustments would be reversed.

"The value of the Huarun Paints business and the growth platform it provides for Valspar in China are outstanding, and Huarun's performance continues to exceed expectations," said William L. Mansfield, Valspar president and chief executive officer. "Valspar's fundamentals are sound, our overall business performance is consistent with our first quarter discussion with investors, and we remain on track to achieve our long-term business objectives."

This press release 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, but are not limited to, dependence of internal earnings growth on economic conditions and growth in the domestic and international coatings industry; risks related to any future acquisitions, including risks of adverse changes in the results of acquired businesses and the assumption of unforeseen liabilities; 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; risks of disruptions in business resulting from the Company´s relationships with customers and suppliers; unusual weather conditions adversely affecting sales; changes in raw materials pricing and availability; delays in passing along cost increases to customers; 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.

Source: Valspar

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