EXHIBIT 99
[LOGO] FOR IMMEDIATE RELEASE
CONTACT: CONWAY G. IVY
SENIOR VICE PRESIDENT, CORPORATE
PLANNING AND DEVELOPMENT
216-566-2102
NEWS:
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The Sherwin-Williams Company - 101 Prospect Avenue, N.W.,
Cleveland, Ohio 44115 - (216) 566-2140
CLEVELAND, OHIO, April 22, 2003 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the first quarter ended March 31, 2003.
Consolidated net sales for the quarter decreased $0.7 million, or 0.1 percent,
to $1.148 billion. A continuing poor domestic industrial sector, harsh weather,
changes in the buying patterns of some retail customers and weak currency
exchange rates adversely impacted first quarter sales. Income for the quarter
declined $4.0 million, or 11.5 percent, to $30.8 million from $34.8 million in
2002 before cumulative effect of change in accounting principle. Excluding a
charge of $9.0 million included in cost of goods sold in the first quarter of
2002 due to the recorded impairment of long-lived assets, gross profit for the
first quarter 2003 was essentially flat with last year in dollars and as a
percent of sales. Increased selling, general and administrative expenses to
maintain customer service in our stores and to invest in the Asia/Pacific market
adversely impacted income before income taxes and cumulative effect of change in
accounting principle. Diluted income per common share for the quarter was $.21
per share compared to $.23 per share before cumulative effect of change in
accounting principle in 2002. In the first quarter of 2002, the Company recorded
an after-tax transitional impairment charge of $183.1 million, or $1.21 per
share, as a cumulative effect of change in accounting principle for indefinite
lived intangible assets and goodwill.
Net sales in the Paint Stores Segment increased 2.9 percent to $716.3 million in
the first quarter of 2003 from $695.9 million in 2002 due to strong
architectural paint sales that were partially offset by weak industrial
maintenance and product finishes sales. Architectural paint sales to painting
contractors and do-it-yourself customers in the first quarter of 2003 increased
over the comparable quarter last year. During the first quarter, sales from
stores open for more than twelve calendar months were flat with last year's
first quarter due primarily to the impact of weak industrial coatings sales. The
Paint Stores Segment operating profit declined $10.1 million to $29.9 million
during the first three months of 2003. This Segment's operating profit decline
from the first quarter of 2002 was due primarily to expenses incurred to
maintain superior customer service, incremental expenses associated with new and
acquired stores, increased pension expense and increased utility costs. This
Segment opened eight net new stores during the quarter.
Net sales of the Consumer Segment in the first quarter decreased 4.5 percent to
$266.2 million from $278.8 million last year. The sales shortfall was due
primarily to changes by some of the Segment's
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largest retail customers in their ordering or promotional patterns, the
readjustment of store count by a major retailer, the impact of harsh weather and
stringent inventory control relating to the slow domestic economy. Operating
profit of this Segment decreased $4.1 million to $39.1 million in the quarter
from $43.2 million in the first quarter of 2002. The operating profit decrease
was due primarily to lower sales volume and the related manufacturing absorption
and increased pension expense compared to a year ago.
First quarter net sales in the Automotive Finishes Segment decreased 4.6 percent
to $106.4 million from $111.6 million last year. The sales decrease was due
primarily to unfavorable currency exchange rates. Excluding the effects of
currency exchange fluctuations relative to last year, net sales for this Segment
were up slightly for the quarter. Domestically, a reduction in the number of
repairable vehicles restrained growth in collision repair sales while the slowly
recovering automotive market continued to curtail OEM sales. Operating profit of
this Segment for the first quarter of 2003 went down $1.3 million to $10.1
million from last year's $11.4 million. This Segment's operating profit was
negatively impacted by lower sales volume and manufacturing absorption and
increased pension expense compared to last year.
Net sales in the International Coatings Segment were down $3.6 million to $57.8
million in the first three months of 2003 from $61.4 million a year ago. The
sales decrease in U.S. dollars of 5.9 percent was due primarily to unfavorable
currency exchange rates. Excluding the effects of currency exchange fluctuations
relative to last year, net sales for the Segment increased 9.5 percent for the
quarter. The International Coatings Segment realized an operating loss during
the first quarter of 2003 of $0.3 million compared to an operating loss of $8.5
million a year ago. Excluding a charge of $9.0 million to operating profit in
the first quarter of 2002 due to the recorded impairment of long-lived assets,
the Segment realized a reduction of $0.8 million in operating profit for the
first quarter of 2003. This reduction in the operating profit from last year,
excluding the impairment charge, was due primarily to significant currency rate
fluctuations that adversely affected gross margins as a result of purchasing
many required raw materials on a U.S. dollar denominated basis.
Commenting on the first quarter results, Christopher M. Connor, Chairman and
Chief Executive Officer, said, "We were encouraged by the strength of the Paint
Stores Segment's architectural paint sales and disappointed by the continuing
weakness of the industrial maintenance and product finishes markets. We are
confident that the Paint Stores Segment's higher pension and utility costs will
be offset by productivity gains. This Segment will continue to incur higher
expenses relating to its ongoing investment pattern in new stores, its
investment in the Asia/Pacific market and maintenance of excellent customer
service. In the Consumer Segment, we believe that the first quarter sales
decline was caused by the combination of a weak economy, uncertainty amid the
war in Iraq and harsh weather that slowed consumer traffic at many of our retail
customers. As these factors begin to dissipate, we believe we will see sales
improvements in this Segment. The cost containment efforts implemented over the
past few years in the Consumer Segment maintained operating profit at the same
percentage of sales before the impact of additional pension expense. Soft
domestic economic conditions and the trend of insurance companies to reduce the
number of vehicles that are authorized for repair continued to hamper sales of
the Automotive Finishes Segment. The International Coatings Segment continued to
improve local operations in spite of lingering poor economic conditions.
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As we discussed in our 2002 annual report, an additional hurdle for us in 2003
is the added cost to our operations of our defined benefit pension plans. We
anticipate that the consolidated net pension expense, which was a credit to
operations of $23.0 million for the full year 2002, will be a charge to
operations of $1.0 million for the full year 2003, resulting in an incremental
cost to our operations of $24.0 million. We have considered this impact in
determining our expected operating results for the year.
We continue to manage the net of accounts receivable, inventories and accounts
payable significantly below last year's level. Our total debt at March 31, 2003
is $116.5 million below total debt at the same time a year ago. We continued our
open market purchases of the Company's common stock, acquiring 2,552,000 shares
in the first quarter of 2003, and had remaining authorization at March 31, 2003
to purchase 7,748,000 shares.
We expect that achieving improved year-over-year sales and profit comparisons
for our Company will continue to be challenging as we anticipate a long, slow
recovery in the industrial and OEM markets. We plan to continue launching new
products, opening stores, promoting our new color system, enhancing the shopping
experience in our stores and increasing the productivity of operations to
improve sales and operating income. We anticipate that second quarter sales will
be flat to up in the low single digits over last year's second quarter. With
sales at that level, we expect diluted net income per common share for the
second quarter to be in the range of $.73 to $.78 per share compared to $.70 per
share last year. For the year 2003, we expect sales will increase 2.0 to 3.5
percent over 2002. This range is lower than our previous estimate due to the
lingering soft domestic economic conditions and the increasing uncertainty of
the timing and strength of the eventual economic recovery. We have reduced our
expectations for diluted net income per common share for the year, reflecting
our lower sales estimates, to a range of $2.08 to $2.24 per share compared to
$2.04 per share earned last year before cumulative effect of change in
accounting principle."
The Company will conduct a conference call to discuss its financial results for
the first quarter and its outlook for the second quarter and full year 2003 at
11:00 a.m. EDT on April 22, 2003. The conference call will be webcast
simultaneously in the listen only mode by CCBN. To listen to the webcast, please
go to the Sherwin-Williams website, http://www.sherwin.com, click on Investor
Relations, then choose Press Releases and click on "webcast" following the
reference to the April 22nd release. For those who cannot listen to the live
broadcast, an archived replay will be available at http://www.sherwin.com
beginning approximately one hour after the call ends and will be available until
Thursday, May 1, 2003 at 5:00 p.m. EDT.
The Sherwin-Williams Company, founded in 1866, is one of the world's leading
companies engaged in the manufacture, distribution and sale of coatings and
related products to professional, industrial, commercial and retail customers.
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This press release contains certain "forward-looking statements", as defined
under U.S. federal securities laws, with respect to sales, earnings and other
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matters. These forward-looking statements are based upon management's current
expectations, estimates, assumptions and beliefs concerning future events and
conditions. Readers are cautioned not to place undue reliance on any
forward-looking statements. 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 and from the Company's historical results and experience. These
risks, uncertainties and other factors include such things as: general business
conditions, strengths of retail and manufacturing economies and the growth in
the coatings industry; changes in the Company's relationships with customers and
suppliers; changes in raw material availability and pricing; unusual weather
conditions; and other risks, uncertainties and factors described from time to
time in the Company's reports filed with the Securities and Exchange Commission.
Since it is not possible to predict or identify all of the risks, uncertainties
and other factors that may affect future results, the above list should not be
considered a complete list. Any forward-looking statement speaks only as of the
date on which such statement is made, and the Company undertakes no obligation
to update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
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THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES
Statements of Consolidated Income (Unaudited)
Three months ended March 31,
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Thousands of dollars, except per share data 2003 2002
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Net sales $ 1,148,461 $ 1,149,178
Cost of goods sold 646,697 657,074
Gross profit 501,764 492,104
Percent to net sales 43.7% 42.8%
Selling, general and administrative expenses 440,450 422,186
Percent to net sales 38.4% 36.7%
Interest expense 10,091 10,692
Interest and net investment income (1,490) (789)
Other expense - net 4,206 3,910
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Income before income taxes and cumulative
effect of change in accounting principle 48,507 56,105
Income taxes 17,705 21,320
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Income before cumulative effect
of change in accounting principle 30,802 34,785
Cumulative effect of change in accounting
principle - net of income taxes of $64,476 (183,136)
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Net income (loss) $ 30,802 $ (148,351)
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Income per share:
Basic:
Before cumulative effect of
change in accounting principle $ 0.21 $ 0.23
Cumulative effect of change in accounting
principle - net of income taxes (1.21)
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Net income (loss) $ 0.21 $ (0.98)
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Diluted:
Before cumulative effect of
change in accounting principle $ 0.21 $ 0.23
Cumulative effect of change in accounting
principle - net of income taxes (1.21)
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Net income (loss) $ 0.21 $ (0.98)
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Average shares and equivalents outstanding - basic 145,841,044 151,693,590
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Average shares and equivalents outstanding - diluted 147,960,358 151,693,590
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Additional information regarding the Company's financial results can be found on
the Internet at "www.sherwin.com", Investor Relations page.