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, October 28, 2003 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the third quarter and first nine months
ended September 30, 2003. Consolidated net sales increased 5.4 percent in the
quarter to $1.50 billion from $1.43 billion during the same quarter last year
and 2.3 percent in the first nine months to $4.12 billion from $4.03 billion in
the first three quarters of 2002. Net income increased 8.1 percent in the
quarter to $120.3 million from $111.3 million last year. Income before
cumulative effect of change in accounting principle increased 3.0 percent in the
first nine months to $261.2 million from $253.6 million in the same period last
year. Income before cumulative effect of change in accounting principle was
negatively impacted by a reduction in the net pension credit of $3.8 million
($6.0 million before income taxes) in the third quarter of 2003 compared to 2002
and $11.4 million ($18.0 million before income taxes) during the first nine
months of 2003. Diluted net income per common share increased 12.3 percent in
the quarter to $.82 per share from $.73 per share in 2002 and increased 6.6
percent in the first nine months to $1.77 per share from $1.66 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. Net
income, after cumulative effect of change in accounting principle, for the first
nine months of 2002 was $70.5 million or $.46 per common share.
Net sales in the Paint Stores Segment increased 5.4 percent to $989.0 million in
the quarter and 3.7 percent to $2.64 billion in the nine months versus the
comparable periods last year. Sales from stores open more than twelve calendar
months were up 4.5 percent in the third quarter and 2.7 percent in the first
nine months. The Segment's operating profit increased 0.7 percent to $141.0
million during the quarter and decreased 3.3 percent to $293.6 million in the
first nine months. Operating profit in the third quarter was adversely affected
by a reduction in the net pension credit, continuing increases in health care
costs and the Segment's continuing investment in the Asia/Pacific market. In
addition to these factors effecting third quarter operating profit, year-to-date
profitability was further impacted by incremental expenses associated with new
stores and increased utility costs earlier in the year.
Net sales of the Consumer Segment increased 4.7 percent to $328.9 million in the
third quarter and decreased 0.3 percent to $941.0 million in the first nine
months versus the comparable periods last year. The third quarter sales increase
was due primarily to stronger architectural sales at some of this Segment's
largest retailers and increased sales of aerosol and wood care products.
Operating profit of this Segment increased 5.3 percent to $63.4 million in the
quarter and decreased 0.5 percent to $168.8 million in the first nine months
compared to the same periods last year. Operating profit increased in the
quarter compared to last year due primarily to tight expense control and
manufacturing efficiencies relating to the sales volume increase despite a
reduction in the net pension credit.
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The Automotive Finishes Segment's net sales increased 1.2 percent to $115.1
million in the third quarter but declined 1.8 percent to $342.9 million in the
first nine months versus the comparable periods last year. Sales results for the
third quarter were essentially unaffected by favorable currency exchange
fluctuations relative to last year. However, sales results for the first nine
months relative to last year were negatively impacted by unfavorable currency
exchange fluctuations. Excluding the impact of such fluctuations, net sales for
the Segment increased 0.5 percent for the first nine months. This Segment's
sales increase in the third quarter resulted primarily from sales increases in
the international operating units of the Segment. Operating profit in this
Segment decreased to $12.4 million from $13.2 million in the third quarter and
to $37.8 million from $42.4 million in the first nine months versus last year.
This Segment's operating profit was negatively impacted in the third quarter and
first nine months primarily by low sales volume, related unfavorable
manufacturing absorption and a reduction in the net pension credit compared to
last year.
Net sales in the International Coatings Segment increased 17.1 percent to $68.2
million in the third quarter and 5.3 percent to $194.9 million in the first nine
months versus the comparable periods last year. Excluding the impact on sales
during the third quarter from favorable currency exchange fluctuations relative
to last year, net sales for the Segment increased 12.6 percent in the quarter.
For the first nine months of the year, currency exchange fluctuations had a
negative effect on sales comparisons. Excluding the effect of such currency
fluctuations relative to last year, net sales for the Segment increased 15.1
percent in the first nine months. The poor economic conditions that have existed
in South America show some signs of improving, particularly in Argentina,
although market demand for architectural and product finishes products in the
region continue to be somewhat constrained. Sales in the U.K. were strong
compared to a year ago. Third quarter operating profit for the Segment in U.S.
dollars was $3.2 million compared to a loss of $0.3 million a year ago due
primarily to the favorable impact on profitability from improving currency
exchange rates relating to dollar-denominated raw materials. For the first nine
months, the Segment realized an operating profit of $3.6 million compared to an
operating loss of $5.8 million in the first nine 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 $3.2 million in the first
nine months of 2002. The operating profit for the Segment during the first nine
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 1,472,045 shares of its common stock during the third
quarter of 2003 bringing the total purchased to 5,000,000 shares for the first
nine months. The Company had remaining authorization at September 30, 2003 to
purchase 5,300,000 shares.
Commenting on the Company's operating results for the third quarter and first
nine 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 to both wholesale and retail customers. We
are also encouraged by the improved signs of recovery in the industrial
maintenance market during the third quarter.
"We are pleased with the sales volume increase and improved profitability of the
Consumer Segment during the third quarter. The cost containment efforts
implemented over the past few years in the Consumer Segment helped increase
operating profit in spite of the reduction in the net pension credit.
"Our Automotive Finishes Segment is beginning to see some signs of strengthening
in the international markets in which it does business although domestic sales
continue to be hampered by soft automotive after-market industry conditions. In
the International Coatings Segment, we are pleased with the operational
performance of our U.K. subsidiary, the sales progress of our South American
subsidiaries, stated in local currencies, and our local management teams'
initiation of actions to improve profitability.
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"We anticipate a fourth quarter consolidated sales increase in the mid
single-digits versus last year's fourth quarter. We expect that diluted net
income per common share in the fourth quarter will be in the range of $.39 to
$.47 per share compared to $.38 per share earned in last year's fourth quarter.
We commented on July 22, 2003 that we expected our annual sales would increase
1.5 to 3.0 percent over 2002. With relatively strong third quarter sales, we now
expect our annual sales will finish between 2.5 and 3.5 percent over 2002. With
anticipated annual sales in this range, we expect that diluted net income per
common share for the year will be in the range of $2.16 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 third quarter and its outlook for the fourth quarter and year 2003 at 11:00
a.m. ET on October 28, 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
October 28th 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, November 6, 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.
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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
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 September 30, Nine months ended September 30,
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Thousands of dollars, except per share data 2003 2002 2003 2002
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Net sales $ 1,503,086 $ 1,426,266 $ 4,123,225 $ 4,028,642
Cost of goods sold 824,440 780,974 2,277,063 2,239,435
Gross profit 678,646 645,292 1,846,162 1,789,207
Percent to net sales 45.2% 45.2% 44.8% 44.4%
Selling, general and administrative expenses 480,076 456,101 1,404,608 1,343,804
Percent to net sales 31.9% 32.0% 34.1% 33.4%
Interest expense 9,501 9,001 29,545 29,820
Interest and net investment income (1,255) (1,151) (3,664) (2,891)
Other expense - net 880 1,772 4,292 9,372
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Income before income taxes and cumulative
effect of change in accounting principle 189,444 179,569 411,381 409,102
Income taxes 69,147 68,236 150,154 155,459
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Income before cumulative effect
of change in accounting principle 120,297 111,333 261,227 253,643
Cumulative effect of change in accounting
principle - net of income taxes of $64,476 (183,136)
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Net income $ 120,297 $ 111,333 $ 261,227 $ 70,507
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Income per share:
Basic:
Before cumulative effect of
change in accounting principle $ 0.83 $ 0.74 $ 1.80 $ 1.68
Cumulative effect of change in accounting
principle - net of income taxes (1.21)
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Net income $ 0.83 $ 0.74 $ 1.80 $ 0.47
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Diluted:
Before cumulative effect of
change in accounting principle $ 0.82 $ 0.73 $ 1.77 $ 1.66
Cumulative effect of change in accounting
principle - net of income taxes (1.20)
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Net income $ 0.82 $ 0.73 $ 1.77 $ 0.46
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Average shares and equivalents outstanding-basic 144,486,083 149,771,211 145,258,497 151,085,841
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Average shares and equivalents outstanding-diluted 146,858,309 151,632,200 147,399,678 153,061,879
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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.