The Sherwin-Williams Company (SHW) 10-Q 31 Jul 09 2009 Q2 Quarterly report Financial data

Statements of Consolidated Inco

Statements of Consolidated Income (USD $)
In Thousands, except Share data, unless otherwise specified	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Net sales	$1,947,827	$2,229,545	$3,498,504	$4,011,227
Cost of goods sold	1,052,485	1,256,642	1,922,556	2,257,816
Gross profit	895,342	972,903	1,575,948	1,753,411
Percent to net sales	0.46	0.436	0.45	0.437
Selling, general and administrative expenses	653,001	676,984	1,261,849	1,328,691
Percent to net sales	0.335	0.304	0.361	0.331
Other general expense - net	3,051	1,280	13,456	1,395
Impairment of trademarks and goodwill	0	23,912	0	23,912
Interest expense	10,356	18,133	22,558	35,806
Interest and net investment income	(659)	(878)	(1,295)	(1,394)
Other income - net	(2,530)	(2,700)	(3,636)	(4,200)
Income before income taxes	232,123	256,172	283,016	369,201
Income taxes	74,100	84,489	87,714	119,572
Net income	$158,023	$171,683	$195,302	$249,629
Basic net income per common share	1.37	1.48	1.69	2.12
Diluted net income per common share	1.35	1.45	1.66	2.07
Average shares outstanding - basic	115,196,891	116,220,461	115,571,760	117,859,378
Average shares and equivalents outstanding - diluted	117,294,437	118,684,720	117,487,051	120,379,140

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands, except Share data	Jun. 30, 2009	Dec. 31, 2008	Jun. 30, 2008
Current assets
Cash and cash equivalents	$49,259	$26,212	$45,574
Accounts receivable, less allowance	908,660	769,985	1,092,306
Finished goods	681,418	749,405	799,043
Work in process and raw materials	88,574	114,795	121,595
Total inventory	769,992	864,200	920,638
Deferred income taxes	98,848	97,568	105,138
Other current assets	151,012	151,240	203,973
Total current assets	1,977,771	1,909,205	2,367,629
Goodwill	1,011,284	1,006,712	1,000,184
Intangible assets	300,423	299,963	329,810
Deferred pension assets	215,648	215,637	408,872
Other assets	154,681	124,117	154,463
Property, plant and equipment
Land	86,714	85,485	84,189
Buildings	593,022	580,216	578,634
Machinery and equipment	1,522,054	1,564,221	1,570,915
Construction in progress	17,062	26,560	62,322
Total gross property, plant and equipment	2,219,392	2,256,482	2,296,060
Less allowances for depreciation	1,377,089	1,396,357	1,391,241
Total net property, plant and equipment	842,303	860,125	904,819
Total Assets	4,502,110	4,415,759	5,165,777
Current liabilities
Short-term borrowings	499,201	516,438	933,574
Accounts payable	704,747	738,093	874,161
Compensation and taxes withheld	172,836	194,787	178,129
Accrued taxes	117,484	58,510	169,316
Current portion of long-term debt	10,519	13,570	11,427
Other accruals	398,943	415,338	403,503
Total current liabilities	1,903,730	1,936,736	2,570,110
Long-term debt	291,025	303,727	294,479
Postretirement benefits other than pensions	250,090	248,603	264,327
Other long-term liabilities	323,267	321,045	371,332
Shareholders' equity
Common stock - $1 par value	227,964	227,147	226,526
Preferred stock - convertible, no par value	216,753	216,753	216,753
Unearned ESOP compensation	(216,753)	(216,753)	(216,753)
Other capital	1,042,120	1,016,362	939,499
Retained earnings	4,358,169	4,245,141	4,099,831
Treasury stock, at cost	(3,526,189)	(3,472,384)	(3,417,448)
Cumulative other comprehensive loss	(368,066)	(410,618)	(182,879)
Total shareholders' equity	1,733,998	1,605,648	1,665,529
Total Liabilities and Shareholders' Equity	$4,502,110	$4,415,759	$5,165,777
Common stock, shares outstanding	116,286,155	117,035,117	117,461,490
Preferred stock, shares outstanding	216,753	216,753	216,753

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (USD $)
In Thousands	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
OPERATING ACTIVITIES
Net income	$195,302	$249,629
Depreciation	73,200	71,148
Amortization of intangibles and other assets	12,196	10,674
Impairment of trademarks and goodwill	0	23,912
Stock-based compensation expense	11,247	18,303
Provisions for qualified exit costs	9,668	0
Provisions for environmental-related matters	9,151	711
Defined benefit pension plans net cost (credit)	16,482	(3,968)
Net increase in postretirement liability	1,300	1,502
Other noncash adjustments to net income	4,175	(429)
Change in working capital accounts - net	(39,684)	(96,994)
Costs incurred for environmental-related matters	(14,797)	(6,470)
Costs incurred for qualified exit costs	(4,041)	(2,600)
Other	(7,775)	(2,618)
Net operating cash	266,424	262,800
INVESTING ACTIVITIES
Capital expenditures	(40,896)	(70,885)
Acquisitions of businesses, net of cash acquired	(14,058)	(14,677)
Proceeds from sale of assets	1,504	3,681
Increase in other investments	(38,418)	(23,367)
Net investing cash	(91,868)	(105,248)
FINANCING ACTIVITIES
Net (decrease) increase in short-term borrowings	(17,680)	273,255
Net decrease in long-term debt	(19,581)	(2,842)
Payments of cash dividends	(83,190)	(83,175)
Proceeds from stock options exercised	12,337	17,942
Income tax effect of stock-based compensation exercises and vesting	2,847	6,505
Treasury stock purchased	(49,367)	(337,984)
Other	(4,259)	(4,999)
Net financing cash	(158,893)	(131,298)
Effect of exchange rate changes on cash	7,384	(8,005)
Net increase in cash and cash equivalents	23,047	18,249
Cash and cash equivalents at beginning of year	26,212	27,325
Cash and cash equivalents at end of period	49,259	45,574
Income taxes paid	26,876	15,641
Interest paid	$24,197	$18,097

BASIS OF PRESENTATION

BASIS OF PRESENTATION
	6 Months Ended Jun. 30, 2009
BASIS OF PRESENTATION (BasisOfPresentation)
BASIS OF PRESENTATION	Note ABASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP 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. There have been no significant changes in critical accounting policies since December 31, 2008. Accounting estimates were revised as necessary during the first six months of 2009 based on new information and changes in facts and circumstances. The Company uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on managements estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include managements estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2008. The consolidated results for the three and six months ended June 30, 2009 are not necessarily indicative of the results to be expected for the year ending December 31, 2009. The Company has evaluated events and transactions occurring subsequent to June 30, 2009 through July 31, 2009, the date of the issuance of the financial statements, in accordance with Financial Accounting Standards (FAS) No. 165, Subsequent Events. During this period, there were no recognized subsequent events requiring recognition in the financial statements, and no non-recognized subsequent events requiring disclosure.

IMPACT OF RECENTLY ISSUED ACCOU

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
	6 Months Ended Jun. 30, 2009
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (ImpactOfRecentlyIssuedAccountingPronouncements)
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	Note BIMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 2009, the Financial Accounting Standards Board (FASB) issued FAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. The statement makes the FASB Accounting Standards Codification (the Codification) the single source of authoritative US accounting and reporting standards, but it does not change U.S. GAAP. The statement is effective for interim and annual periods ending after September 15, 2009. The Company will adopt the statement as required, and the financial statements for the interim period ending September 30, 2009 will reflect the Codification references. The statement will have no impact on the Companys results of operations, financial condition or liquidity. In June 2009, the FASB issued FAS No. 166, Accounting for Transfers of Financial Assets and FAS No. 167, Amendments to FASB Interpretation (FIN) No. 46(R). FAS No. 166 removes the concept of a qualifying special-purpose entity (SPE) from FAS No. 140 and eliminates the exception for qualifying SPEs from the consolidation guidance of FIN No. 46(R). FAS No. 167 changes the analysis that must be performed to determine the primary beneficiary of a variable interest entity (VIE), amends certain guidance in FIN No. 46(R) for determining whether an entity is a VIE and requires enhanced disclosures about involvement with VIEs. Both statements are effective for periods beginning on or after January 1, 2010. The Company is currently evaluating the impact the statements will have on its results of operations, financial condition, liquidity, or disclosures. The impact or additional disclosure is not expected to be significant. In May 2009, the FASB issued FAS No. 165, Subsequent Events. FAS No. 165 defines subsequent events as events or transactions that occur after the balance sheet date, but before the financial statements are issued. It defines two types of subsequent events: recognized subsequent events, which provide additional evidence about conditions that existed at the balance sheet date, and non-recognized subsequent events, which provide evidence about conditions that did not exist at the balance sheet date, but arose before the financial statements were issued. Recognized subsequent events are required to be recognized in the financial statements, and non-recognized subsequent events are required to be disclosed. The statement requires entities to disclose the date through which subsequent events have been evaluated, and the basis for that date. FAS No. 165 is consistent with current practice and does not have any impact on the Companys results of operations, financial condition or liquidity. See Note A for the required disclosure. In April 2009, the FASB issued three fair value-related FASB Staff Positions (FSP): (i) FSP FAS No. 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS No. 115-2), (ii) FSP FAS No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset and Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS

DIVIDENDS

DIVIDENDS
	6 Months Ended Jun. 30, 2009
DIVIDENDS DISCLOSURE
DIVIDENDS	Note CDIVIDENDS Dividends paid on common stock during each of the first two quarters of 2009 and 2008 were $.355 per common share and $.35 per common share, respectively.

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME
	6 Months Ended Jun. 30, 2009
COMPREHENSIVE INCOME (ComprehensiveIncome)
COMPREHENSIVE INCOME	Note DCOMPREHENSIVE INCOME Comprehensive income is summarized as follows: (Thousands of dollars) Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 Net income $ 158,023 $ 171,683 $ 195,302 $ 249,629 Foreign currency translation adjustments 42,205 8,059 33,324 15,664 Amortization of net prior service costs and net actuarial losses, net of taxes (1) 4,676 461 9,315 2,035 Adjustments of marketable equity securities and derivative instruments used in cash flow hedges, net of taxes (2) (132) (1,972) (87) (1,973) Comprehensive income $ 204,772 $ 178,231 $ 237,854 $ 265,355 (1) The tax effect of amortization of net prior service costs and net actuarial losses was $(2,900) and $(5,790) for the three and six months ended June 30, 2009 and $(288) and $(1,271) for the three and six months ended June 30, 2008. (2) The tax effect of adjustments of marketable equity securities and derivative instruments used in cash flow hedges was $69 and $34 for the three and six months ended June 30, 2009 and $769 and $770 for the three and six months ended June 30, 2008.

PRODUCT WARRANTIES

PRODUCT WARRANTIES
	6 Months Ended Jun. 30, 2009
PRODUCT WARRANTIES (ProductWarranties)
PRODUCT WARRANTIES	Note EPRODUCT WARRANTIES Changes in the Company's accrual for product warranty claims during the first six months of 2009 and 2008, including customer satisfaction settlements, were as follows: (Thousands of dollars) 2009 2008 Balance at January 1 $ 18,029 $ 19,596 Charges to expense 9,191 13,033 Settlements (10,829) (15,032) Balance at June 30 $ 16,391 $ 17,597 For further details on the Companys accrual for product warranty claims, see Note 1 to the Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

EXIT OR DISPOSAL ACTIVITIES

EXIT OR DISPOSAL ACTIVITIES
	6 Months Ended Jun. 30, 2009
EXIT OR DISPOSAL ACTIVITIES (ExitOrDisposalActivities)
EXIT OR DISPOSAL ACTIVITIES	Note FEXIT OR DISPOSAL ACTIVITIES Liabilities associated with exit or disposal activities are recognized as incurred in accordance with FAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with FAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and, if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value. In the first six months of 2009, 24 stores in the Paint Stores Group, 3 manufacturing facilities in the Consumer Group, and 1 manufacturing facility and 13 branches in the Global Finishes Group were closed due to lower demand or redundancy. Provisions of $5.2 million for qualified exit costs resulting from the closure of these facilities were recorded in Cost of goods sold and Selling, general and administrative expenses in the first six months. Provisions of $1 million, $2.5 million and $1.7 million were charged to the Paint Stores Group, Consumer Group and Global Finishes Group, respectively. In addition, there were adjustments to prior provisions related to manufacturing facilities, distribution facilities, stores and branches closed in 2008. Adjustments to prior provisions of $4.5 million were recorded in Cost of goods sold, Selling, general and administrative expense or Other general expense-net in the first six months of 2009. Adjustments of $3.4 million, $0.9 million and $0.2 million were charged to the Paint Stores Group, Consumer Group and Global Finishes Group, respectively. During 2008, four manufacturing and three distribution facilities, five administrative offices and 92 stores and branches were closed. The closure and disposal of two manufacturing facilities and two administrative offices in the Paint Stores Group were planned at the time of acquisition. The total qualified exit costs for the acquired facilities, included as part of the purchase price allocations in accordance with FAS No. 141, were $1.7 million. One additional manufacturing and two distribution facilities and 79 stores in the Paint Stores Group, one manufacturing and one distribution facility in the Consumer Group, and three administrative offices and 14 branches in the Global Finishes Group were closed due to excess capacity or redundancy. Provisions of $7.1 million for qualified exit costs resulting from the closure of these facilities were recorded in Cost of goods sold or Selling, general and administrative expenses in 2008. Of the total provisions, $5.5 million was charged to the Paint Stores Group, $0.9 million was charged to the Consumer Group and $0.7 million was charged to the Global Finishes Group. The following table summarizes the activity and remaining liabilities ass

HEALTH CARE, PENSION AND OTHER

HEALTH CARE, PENSION AND OTHER BENEFITS
	6 Months Ended Jun. 30, 2009
HEALTH CARE, PENSION AND OTHER BENEFITS (HealthCarePensionAndOtherBenefits)
HEALTH CARE, PENSION AND OTHER BENEFITS	Note GHEALTH CARE, PENSION AND OTHER BENEFITS Shown below are the components of the Companys net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions: (Thousands of dollars) Domestic Defined Foreign Defined Postretirement Benefits Benefit Pension Plans Benefit Pension Plans Other than Pensions 2009 2008 2009 2008 2009 2008 Three months ended June 30: Net periodic benefit cost (credit): Service cost $ 3,760 $ 4,905 $ 333 $ 645 $ 847 $ 927 Interest cost 4,632 4,570 803 1,080 3,924 4,085 Expected return on assets (9,222) (13,220) (494) (673) Amortization of: Prior service cost (credit) 359 189 13 16 (164) (158) Actuarial loss 7,208 268 86 241 71 54 Net periodic benefit cost (credit) $ 6,737 $ (3,288) $ 741 $ 1,309 $ 4,678 $ 4,908 Six months ended June 30: Net periodic benefit cost (credit): Service cost $ 9,076 $ 9,811 $ 639 $ 1,282 $ 1,695 $ 1,854 Interest cost 9,249 9,139 1,538 2,152 7,848 8,170 Expected return on assets (18,423) (26,439) (947) (1,340) Amortization of: Prior service cost (credit) 746 377 24 31 (328) (317) Actuarial loss 14,416 537 164 482 143 107 Net periodic benefit cost (credit) $ 15,064 $ (6,575) $ 1,418 $ 2,607 $ 9,358 $ 9,814 For further details on the Companys health care, pension and other benefits, see Note 6 to the Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

OTHER LONG-TERM LIABILITIES

OTHER LONG-TERM LIABILITIES
	6 Months Ended Jun. 30, 2009
OTHER LONG-TERM LIABILITIES (OtherLongTermLiabilities)
OTHER LONG-TERM LIABILITIES	NOTE HOTHER LONG-TERM LIABILITIES The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third-party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are determined based on currently available facts regarding each site. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided. At June 30, 2009, the unaccrued maximum of the estimated range of possible outcomes is $112.7 million higher than the minimum. The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site. Included in Other long-term liabilities at June 30, 2009 and 2008 were accruals for extended environmental-related activities of $123.7 million and $128.8 million, respectively. Estimated costs of current investigation and remediation activities of $52.6 million and $60.4 million are included in Other accruals at June 30, 2009 and 2008, respectively. Five of the Companys currently and formerly owned manufacturing sites account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at June 30, 2009. At June 30, 2009, $133.6 million, or 75.8 percent of the total accrual, related directly to these five sites. In the aggregate unaccrued maximum of $112.7 million at June 30, 2009, $75.2 million, or 66.7 percent, related to the five manufacturing sites. While environmental investigations and remedial actions are in different stages at these sites, additional investigations, remedial actions and monitoring will likely be required at each site. Management cannot presently estimate the ultimate potential loss contingencies related to these sites or other less significant sites until such time as a substantial portion of the investigation at the sites is completed and remedial action plans are developed. In the event any future loss contingency significantly exceeds the current amount accrued, the recording of the ultimate liability may result in a material impact on net income for the annual or interim period during which the additional costs are accrued. Management does not believe that

LITIGATION

LITIGATION
	6 Months Ended Jun. 30, 2009
LITIGATION (Litigation)
LITIGATION	Note ILITIGATION In the course of its business, the Company is subject to a variety of claims and lawsuits, including litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with FAS No. 5, Accounting for Contingencies, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Companys loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Companys results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Companys results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, FAS No. 5 requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred if even the possibility may be remote. Lead pigment and lead-based paint litigation. The Company's past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs are seeking recovery based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company is also a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints which seek recovery

OTHER

OTHER (INCOME) EXPENSE
	6 Months Ended Jun. 30, 2009
OTHER (INCOME) EXPENSE (OtherIncomeExpense)
OTHER (INCOME) EXPENSE	Note JOTHER (INCOME) EXPENSE Other general expense net Included in Other general expense - net were the following: Three months ended Six months ended (Thousands of dollars) June 30, June 30, 2009 2008 2009 2008 Provisions for environmental matters - net $ 2,950 $ 711 $ 9,151 $ 711 Loss on disposition of assets 372 569 1,101 684 Adjustments to prior provisions for qualified exit costs (271) 3,204 Total expense $ 3,051 $ 1,280 $ 13,456 $ 1,395 Provisions for environmental mattersnet represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with FASB Interpretation (FIN) No. 39, Offsetting of Amounts Related to Certain Contracts an Interpretation of APB Opinion No. 10 and FASB Statement No. 105. See Note H for further details on the Companys environmental-related activities. The loss on disposition of assets represents net realized losses associated with the disposal of fixed assets previously used in the conduct of the primary business of the Company. The adjustments to prior provisions for qualified exit costs represent site specific increases or decreases to accrued qualified exit costs as information becomes available upon which more accurate amounts can be reasonably estimated. See Note F for further details on the Companys exit or disposal activities. Other income net Included in Other income - net were the following: Three months ended Six months ended (Thousands of dollars) June 30, June 30, 2009 2008 2009 2008 Dividend and royalty income $ (614) $ (2,730) $ (1,571) $ (3,544) Net expense from financing and investing activities 1,267 1,673 1,683 2,898 Foreign currency related gains (868) (164) (969) (1,769) Other income (3,604) (2,734) (5,516) (3,992) Other expense 1,289 1,255 2,737 2,207 Total income $ (2,530) $ (2,700) $ (3,636) $ (4,200) The net expense from financing and investing activities includes the net loss relating to the change in the Companys investment in certain long-term asset funds and financing fees. Foreign currency related gains included foreign currency transaction gains and losses and realized and unrealized net gains from foreign currency option and forward contracts. The Company had foreign currency option and forward contracts outstanding at June 30, 2009 and 2008. All of the outstanding contracts had maturity dates of less than twelve months and were undesignated hedges wi

INCOME TAXES

INCOME TAXES
	6 Months Ended Jun. 30, 2009
INCOME TAXES (IncomeTaxes)
INCOME TAXES	Note KINCOME TAXES The effective tax rates were 31.9 percent and 31.0 percent for the second quarter and the first sixth months of 2009, respectively, and 33.0 percent and 32.4 percent for the second quarter and the first six months of 2008, respectively. The decrease in the effective tax rates for the 2009 periods compared to 2008 were due to the relative effect that various favorable adjustments had on the second quarter and the first six months of 2009 compared to 2008. At December 31, 2008, the Company had $38.1 million in unrecognized tax benefits, the recognition of which would have an effect of $32.4 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2008 was $7.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised of items related to assessed state income tax audits, state settlement negotiations currently in progress and expiring statutes in foreign jurisdictions. The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2008, the Company had accrued $15.6 million for the potential payment of income tax interest and penalties. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Internal Revenue Service (IRS) commenced an examination of the Companys U.S. income tax returns for the 2006 and 2007 tax years in the fourth quarter of 2008. Fieldwork is anticipated to be completed prior to December 31, 2009. At this time, the Company cannot determine if an additional payment may be due. The IRS substantially completed the audit of the 2004 and 2005 tax years. The Company has paid $1.3 million to date related to the audit. The 2004 and 2005 audit remains open as it relates to the Companys ESOP. As of June 30, 2009, the Company is subject to non-U.S. income tax examinations for the tax years of 2002 through 2008. In addition, the Company is subject to state and local income tax examinations for the tax years 1992 through 2008. There were no significant changes to any of these amounts during the second quarter of 2009.

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE
	6 Months Ended Jun. 30, 2009
NET INCOME PER COMMON SHARE (NetIncomePerCommonShare)
NET INCOME PER COMMON SHARE	Note L NET INCOME PER COMMON SHARE Three months ended June 30, Six months ended June 30, (Thousands of dollars except per share data) 2009 2008 2009 2008 Basic Average common shares outstanding 115,196,891 116,220,461 115,571,760 117,859,378 Net income $ 158,023 $ 171,683 $ 195,302 $ 249,629 Net income per common share $ 1.37 $ 1.48 $ 1.69 $ 2.12 Diluted Average common shares outstanding 115,196,891 116,220,461 115,571,760 117,859,378 Non-vested restricted stock grants 996,912 1,167,400 1,075,568 1,163,600 Stock options and other contingently issuable shares (1) 1,100,634 1,296,859 839,723 1,356,162 Average common shares assuming dilution 117,294,437 118,684,720 117,487,051 120,379,140 Net income $ 158,023 $ 171,683 $ 195,302 $ 249,629 Net income per common share $ 1.35 $ 1.45 $ 1.66 $ 2.07 (1) Stock options and other contingently issuable shares excludes 3.1 million and 3.2 million shares for the three months ended June 30, 2009 and June 30, 2008, respectively, and 4.9 million and 3.2 million for the six months ended June 30, 2009 and June 30, 2008, respectively, due to their anti-dilutive effect. Basic and diluted earnings per share are calculated in accordance with FAS No. 128, Earnings per Share. In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which clarifies EITF No. 03-6, Participating Securities and the Two-Class Method Under FAS No. 128. Under the FSP, unvested share-based payment awards that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are considered participating securities, and the two-class method of computing earnings per share is required for all periods presented. Under the Companys restricted stock award program, non-forfeitable dividends are paid on unvested shares of restricted stock. As clarified by EITF No. 03-6-1, these restricted stock grants are considered participating securities and the two-class method of computing earnings per share is required. The Company has calculated basic and diluted earnings per share under both the treasury stock method and the two-class method. For the three and six months ended June 30, 2009 and 2008, there was not a significant difference in the per share amounts calculated under the two methods, and the treasury stock method continues to be disclosed.

REPORTABLE SEGMENT INFORMATION

REPORTABLE SEGMENT INFORMATION
	6 Months Ended Jun. 30, 2009
REPORTABLE SEGMENT INFORMATION (ReportableSegmentInformation)
REPORTABLE SEGMENT INFORMATION	Note MREPORTABLE SEGMENT INFORMATION The Company reports segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with FAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." (Thousands of dollars) Three months ended June 30, 2009 Paint Stores Group Consumer Group Global Finishes Group Administrative Consolidated Totals Net external sales $ 1,170,039 $ 366,488 $ 409,691 $ 1,609 $ 1,947,827 Intersegment transfers 356,532 48,033 (404,565) Total net sales and intersegment transfers $ 1,170,039 $ 723,020 $ 457,724 $ (402,956) $ 1,947,827 Segment profit $ 193,488 $ 66,085 $ 31,157 $ 290,730 Interest expense $ (10,356) (10,356) Administrative expenses and other (48,251) (48,251) Income before income taxes $ 193,488 $ 66,085 * $ 31,157 $ (58,607) $ 232,123 Three months ended June 30, 2008 Paint Stores Group Consumer Group Global Finishes Group Administrative Consolidated Totals Net external sales $ 1,355,033 $ 383,932 $ 488,858 $ 1,722 $ 2,229,545 Intersegment transfers 480,350 42,273 (522,623) Total net sales and intersegment transfers $ 1,355,033 $ 864,282 $ 531,131 $ (520,901) $ 2,229,545 Segment profit $ 210,444 $ 58,848 $ 48,030 $ 317,322 Interest expense $ (18,133) (18,133) Administrative expenses and other (43,017) (43,017) Income before income taxes $ 210,444 $ 58,848 * $ 48,030 $ (61,150) $ 256,172 * Segment profit includes $5,252 and $7,534 of mark-up on intersegment transfers realized as a result of external sales by the Paint Stores Group during the second quarters of 2009 and 2008, respectively. Six months ended June 30, 2009 Paint Stores Group Consumer Group Global Finishes Group Administrative Consolidated Totals Net external sales $ 2,068,447 $ 654,640 $ 772,202 $ 3,215 $ 3,498,504 Intersegment transfers 627,345 82,783 (710,128) Total net sales and intersegment transfers $ 2,068,447 $ 1,281,985 $ 854,985 $ (706,913) $ 3,498,504 Segment profit $ 250,068 $ 96,289 $ 36,462 $ 382,819 Interest expense $ (22,558) (22,558) Administr

ACQUISITIONS

ACQUISITIONS
	6 Months Ended Jun. 30, 2009
ACQUISITIONS (Acquisitions)
ACQUISITIONS	NOTE N - ACQUISITIONS During the first quarter of 2009, the Company closed a definitive agreement to acquire Altax Sp. zo.o. (Altax). Headquartered in Poznan, Poland, Altax is a leading innovator of protective woodcare coatings and serves multiple channels, including industrial, professional and DIY. Included in the Consumer Group, the acquisition provides a platform for growth in Central Europe. The aggregate consideration paid for Altax was $11.8 million, net of cash acquired, including the assumption of certain financial obligations. The acquisition was accounted for as a purchase and the valuation resulted in the recognition of goodwill and intangible assets. In December 2008, the Company closed a definitive agreement to acquire Euronavy-Tintas Maritimas e Industriais S.A. of Portugal (Euronavy). Headquartered in Lisbon, Portugal, Euronavy is a leading innovator of marine and protective coatings applied to ships, off shore platforms, storage tanks, steel, concrete and flooring. Included in the Global Finishes Group, the acquisition strengthens the Companys global platform of protective and marine coatings. Results of operations were included in the consolidated financial statements starting in 2009. In September 2008, the Company purchased certain assets of the Wagman Primus Group, LP (Wagman). The acquired assets are related to imported raw materials of brushes and foreign manufactured applicators and will allow greater flexibility and control in the importation of applicators and related products for the Consumer Group. Results of operations were included in the consolidated financial statements since the date of acquisition. In July 2008, the Company acquired the liquid coatings subsidiaries of Inchem Holdings International Limited (Inchem). Headquartered in Singapore, Inchem produces coatings applied to wood and plastic products in Asia. These waterborne, solvent-based, and ultraviolet curable coatings are applied to furniture, cabinets, flooring and electronic products. The coatings are made and sold in China, Vietnam and Malaysia and distributed to 15 other Asian countries. This acquisition strengthens the Global Finishes Groups product offering throughout Asia. Results of operations were included in the consolidated financial statements since the date of acquisition. In February 2008, the Company acquired Becker Powder Coatings, Inc. (Becker), a subsidiary of Sweden-based AB Wilh. Headquartered in Columbus, Ohio, Becker produces powder coatings applied to appliances, metal furniture, fixtures, equipment and electronic products manufactured throughout North America. This acquisition strengthens Global Finishes Groups position in the powder coatings market. Results of operations were included in the consolidated financial statements since the date of acquisition. The aggregate consideration paid for Euronavy, Inchem, Wagman and Becker was $64.1 million, net of cash acquired, including acquisition costs and the assumption of certain financial obligations. The acquisitions were accounted for as purchases and resulted in the recognition of intangible assets. The Euronavy, Inchem and Becker acquisition

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS
	6 Months Ended Jun. 30, 2009
FAIR VALUE MEASUREMENTS (FairValueMeasurements)
FAIR VALUE MEASUREMENTS	NOTE O FAIR VALUE MEASUREMENTS As of January 1, 2009, FAS No. 157, Fair Value Measurements, applies to both the Companys financial assets and liabilities and non-financial assets and liabilities. FAS No. 157 provides guidance for using fair value to measure assets and liabilities and only applies when other standards require or permit the fair value measurement of assets and liabilities. It does not expand the use of fair value measurements. The Company did not have any fair value measurements for its non-financial assets and liabilities during the second quarter. The following table presents the Companys financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy: (Thousands of dollars) Fair Value at Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2009 (Level 1) (Level 2) (Level 3) Assets: Deferred compensation plan asset (A) $ 15,860 $ 15,860 Total assets at fair value $ 15,860 $ 15,860 Liabilities: Net currency derivative liability (B) $ 422 $ 422 Deferred compensation plan liability (C) 18,054 $ 18,054 Total liabilities at fair value $ 18,476 $ 18,054 $ 422 (A) The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company's executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under FAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." They are valued using quoted market prices multiplied by the number of shares. (B) The net currency derivative liability represents the fair value of foreign currency swaps. The swaps are valued using the banks' proprietary models. (C) The deferred compensation plan liability is the Company's liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS
	6 Months Ended Jun. 30, 2009
FINANCIAL INSTRUMENTS (FinancialInstruments)
FINANCIAL INSTRUMENTS	NOTE P FINANCIAL INSTRUMENTS The table below summarizes the carrying amount and fair value of the Companys publicly traded debt and non-publicly traded debt in accordance with FSP FAS No. 107-1, Interim Disclosures About Fair Value of Financial Instruments. The fair values of the Companys publicly traded debt are based on quoted market prices. The fair values of the Companys non-traded debt are estimated using discounted cash flow analyses, based on the Companys current incremental borrowing rates for similar types of borrowing arrangements. (Thousands of dollars) June 30, 2009 Carrying Amount Fair Value Publicly traded debt $ 268,519 $ 327,839 Non-traded debt 33,025 30,499

Document Information

Document Information
	6 Months Ended Jun. 30, 2009
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
In Thousands, except Share data	6 Months Ended Jun. 30, 2009	Jun. 30, 2008
Entity Information [Line Items]
Entity Registrant Name	The Sherwin-Williams Company
Entity Central Index Key	0000089800
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$5,359,930
Entity Common Stock, Shares Outstanding	116,286,155