EXHIBIT 99
[LOGO] FOR IMMEDIATE RELEASE
CONTACT: CONWAY G. IVY
SENIOR VICE PRESIDENT, CORPORATE
PLANNING AND DEVELOPMENT
216-566-2102
NEWS:
- --------------------------------------------------------------------------------
The Sherwin-Williams Company - 101 Prospect Avenue, N.W.,
Cleveland, Ohio 44115 - (216) 566-2140
CLEVELAND, OHIO, July 22, 2003 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the second quarter and first six months
ended June 30, 2003. Consolidated net sales increased 1.3 percent in the quarter
to $1.47 billion from $1.45 billion during the same quarter last year and 0.7
percent in the first six months to $2.62 billion from $2.60 billion in the first
half of 2002. Diluted net income per common share increased in the quarter to
$.75 per share from $.70 per share in 2002 and increased in the first six months
to $.95 per share from $.93 per share a year ago, before the cumulative effect
of change in accounting principle. 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. The net loss after cumulative
effect of change in accounting principle for the first six months of 2002 was
$40.8 million, or $.27 per common share.
Net sales in the Paint Stores Segment increased 2.4 percent to $933.8 million in
the quarter and 2.6 percent to $1.65 billion in the six months versus the
comparable periods last year. For the second quarter, good architectural paint
sales gains were partially offset by ongoing sluggishness in industrial
maintenance, marine coatings and product finishes sales. Unusually harsh late
spring weather during the second quarter adversely impacted sales in some
regions of the U.S. Sales from stores open for more than twelve calendar months
were up 1.7 percent in the second quarter and 1.6 percent in the first six
months. The Segment's operating profit decreased 0.8 percent to $122.6 million
during the quarter due primarily to a reduction in net pension credit and the
negative impact on profitability related to the sales volume shortfall in
industrial maintenance, marine coatings and product finishes sales. For the
first six months, operating profit for this Segment decreased 6.8 percent to
$152.6 million due primarily to reduction in the net pension credit, increased
utility costs and incremental expenses associated with new stores.
Net sales of the Consumer Segment decreased 1.4 percent to $346.0 million in the
second quarter and 2.8 percent to $612.1 million in the first six months versus
the comparable periods last year. The second quarter sales shortfall was due
primarily to the readjustment of store count by a major retailer and the impact
of harsh late spring weather in certain regions of the U.S. on sales of
architectural paint and exterior stains. Operating profit of this Segment was
flat at $66.3 million in the quarter and decreased to $105.4 million in the
first six months from $109.4 million last year. Operating profit remained flat
in the quarter compared to last year despite a reduction in the net pension
credit due to tight expense control.
1
The Automotive Finishes Segment's net sales decreased 1.9 percent to $121.3
million in the second quarter and 3.2 percent to $227.7 million in the first six
months versus the comparable periods last year. Excluding the negative effect of
unfavorable currency exchange fluctuations relative to last year, net sales for
the Segment increased 0.5 percent and 0.3 percent for the second quarter and
first six months, respectively. Domestically, a reduction in the number of
repairable vehicles continues to restrain growth in collision repair sales while
the slowly recovering automotive market continued to hamper OEM sales
improvements. Operating profit in this Segment decreased to $15.3 million from
$17.7 million in the second quarter and to $25.4 million from $29.2 million in
the first six months. This Segment's operating profit was negatively impacted in
the second quarter and first six months primarily by lower sales volume, related
manufacturing absorption and the reduction in net pension credit compared to
last year.
Net sales in the International Coatings Segment increased 5.2 percent to $68.8
million in the second quarter and decreased 0.2 percent to $126.6 million in the
first six months versus the comparable periods last year. Excluding the negative
effect of unfavorable currency exchange fluctuations relative to last year, net
sales for the Segment increased 15.0 percent in the second quarter and 15.9
percent in the first six months. Poor economic conditions in South America
continued to constrain architectural and product finishes sales while sales in
the U.K. were strong. Second quarter operating profit for the Segment in U. S.
dollars was $0.6 million compared to $3.0 million a year ago due primarily to
the negative impact on gross margins of competitive pricing pressures in Brazil.
For the first six months, the Segment realized an operating profit of $0.4
million compared to an operating loss of $5.5 million in the first six months of
2002. Excluding a charge of $9.0 million in the first quarter of 2002 due to the
impairment of long-lived assets, operating profit would have been $3.5 million
in the first six months of 2002. The operating profit for the Segment during the
first six months of 2003 was negatively impacted by dollar-denominated raw
material cost increases and a shift in the sales mix to lower margin products in
addition to competitive pricing pressures.
The Company purchased 975,955 shares of its common stock during the second
quarter of 2003 bringing the total purchased to 3,527,955 shares for the first
six months. The Company had remaining authorization at June 30, 2003 to purchase
6,772,045 shares.
Commenting on the Company's operating results for the second quarter and first
six months of 2003, Christopher M. Connor, Chairman and Chief Executive Officer,
said, "We continue to be encouraged by the strength of the Paint Stores
Segment's architectural paint sales. We are disappointed by the ongoing weakness
in the industrial maintenance, marine coatings and product finishes markets that
we had expected would improve during the second quarter. The Paint Stores
Segment will continue to incur higher operating expenses relating to its ongoing
investment in new stores, its investment in the Asia/Pacific market and a
reduced net pension credit.
"In the Consumer Segment, we believe that slow consumer foot traffic at many of
our retail customers, caused in part by economic concerns and poor weather
conditions, impacted our second quarter and year-to-date sales to those
retailers. The cost containment efforts implemented over the past few years in
the Consumer Segment helped maintain operating profit at essentially the same
dollar level in the second quarter this year as last year on lower sales in
spite of the reduction in net pension credit.
2
"Domestically, our Automotive Finishes Segment is beginning to see some signs of
strengthening in selected product lines and distribution channels although their
sales continue to be hampered by soft economic and industry conditions. In the
International Coatings Segment, we are pleased with the operational performance
of our U.K. subsidiary. We are encouraged by the sales progress of our South
American subsidiaries, stated in local currencies, and our local management
teams initiation of actions to improve profitability.
"We anticipate that third quarter consolidated sales increases will be in the
low single-digits versus last year's third quarter. With sales increases at that
level, we expect diluted net income per common share in the third quarter will
be in the range of $.75 to $.80 per share compared to $.73 per share earned in
last year's third quarter. We commented on April 22, 2003 that we expected our
annual sales would increase 2.0 to 3.5 percent over 2002. However, due to the
lingering soft domestic economic conditions, slowly recovering manufacturing
sector and the increasing uncertainty of the timing and strength of the eventual
economic recovery, we are reducing our estimate of annual sales improvement to
1.5 to 3.0 percent over 2002. Representative of our commitment to improve
profitability through cost savings and operating efficiencies, we are
maintaining our expectations established on April 22, 2003 for diluted net
income per common share for the year to be in the 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 second quarter, first six months and its outlook for the third quarter and
year 2003 at 11:00 a.m. ET on July 22, 2003. The conference call will be webcast
simultaneously in the listen only mode by Vcall. 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 July 22nd release. For those who cannot listen to the live
webcast, an archived replay will be available at http://www.sherwin.com
beginning approximately two hours after the call ends. The archived replay will
be available until Thursday, July 31, 2003 at 5:00 p.m. ET.
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.
# # #
- --------------------------------------------------------------------------------
This press release contains certain "forward-looking statements", as defined
under U.S. federal securities laws, with respect to sales, earnings and other
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.
3
THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES
Statements of Consolidated Income (Unaudited)
Three months ended June 30, Six months ended June 30,
---------------------------------- -----------------------------------
Thousands of dollars, except per share data 2003 2002 2003 2002
---------------- ---------------- ---------------- -----------------
Net sales $ 1,471,678 $ 1,453,198 $ 2,620,139 $ 2,602,376
Cost of goods sold 805,926 801,388 1,452,624 1,458,462
Gross profit 665,752 651,810 1,167,515 1,143,914
Percent to net sales 45.2% 44.9% 44.6% 44.0%
Selling, general and administrative expenses 484,082 465,517 924,532 887,703
Percent to net sales 32.9% 32.0% 35.3% 34.1%
Interest expense 9,952 10,127 20,044 20,818
Interest and net investment income (920) (951) (2,410) (1,740)
Other expense - net (794) 3,688 3,412 7,600
---------------- ---------------- ---------------- -----------------
Income before income taxes and cumulative
effect of change in accounting principle 173,432 173,429 221,937 229,533
Income taxes 63,302 65,903 81,007 87,223
---------------- ---------------- ---------------- -----------------
Income before cumulative effect
of change in accounting principle 110,130 107,526 140,930 142,310
Cumulative effect of change in accounting
principle - net of income taxes of $64,476 (183,136)
---------------- ---------------- ---------------- -----------------
Net income (loss) $ 110,130 $ 107,526 $ 140,930 $ (40,826)
================ ================ ================ =================
Income per share:
Basic:
Before cumulative effect of
change in accounting principle $ 0.76 $ 0.71 $ 0.97 $ 0.94
Cumulative effect of change in accounting
principle - net of income taxes (1.21)
---------------- ---------------- ---------------- -----------------
Net income (loss) $ 0.76 $ 0.71 $ 0.97 $ (0.27)
================ ================ ================ =================
Diluted:
Before cumulative effect of
change in accounting principle $ 0.75 $ 0.70 $ 0.95 $ 0.93
Cumulative effect of change in accounting
principle - net of income taxes (1.20)
---------------- ---------------- ---------------- -----------------
Net income (loss) $ 0.75 $ 0.70 $ 0.95 $ (0.27)
================ ================ ================ =================
Average shares and equivalents outstanding - basic 145,448,365 151,792,721 145,644,704 151,743,156
================ ================ ================ =================
Average shares and equivalents outstanding - diluted 147,601,664 154,333,385 147,814,659 153,675,876
================ ================ ================ =================
Additional information regarding the Company's financial results can be found on
the Internet at "www.sherwin.com", Investor Relations page.