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Letter to the Editor
Tuesday August 15
Valspar Reports Q3 Sales and Net Income Up
Coatings company The Valspar Corporation has reported net income for the third quarter ended July 28, 2006 of $52,635,000 or $0.51 per diluted share versus net income of $45,713,000 or $0.44 per diluted share for the comparable period last year. This year's results include expenses associated with Valspar's manufacturing rationalization plan and stock based compensation. Also included in this year's results is a favorable tax adjustment of $0.03 per diluted share. Sales for the quarter increased 9.9 percent to $797,376,000, compared to $725,477,000 last year.Net income for the first nine months of fiscal 2006 was $123,111,000, compared with $96,652,000 for the same period a year ago. Sales for the first nine months increased 10.3 percent to $2,193,957,000 versus sales of $1,988,563,000 for the comparable period a year ago.
Commenting on the third quarter, William L. Mansfield, President and Chief Executive Officer, said, "Our sales growth for the quarter was driven by continued strength in our architectural, industrial and resin product lines. Volume growth, improved manufacturing efficiencies and year-over-year price increases contributed to our margin improvement, but recent raw material cost increases will necessitate additional price initiatives. During the quarter, we increased our investment in promotional and advertising spending for the Cabot Stains brand, which accelerated new business sales growth across Cabot's customer base. On July 26th, we acquired an 80 percent interest in Huarun Paints, a leading Chinese supplier of furniture, decorative wood and architectural coatings. Based on mid-year results, we expect Huarun to achieve full year sales of $200 - $210 million in calendar 2006. We believe our investments in Cabot and China are excellent long term growth vehicles that will generate strong returns for Valspar."
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