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, July 22, 2004 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the second quarter and first six months
ended June 30, 2004. Consolidated net sales increased $146.3 million, or 9.9
percent, to $1.62 billion in the second quarter of 2004 and $317.3 million, or
12.1 percent, to $2.94 billion in the first six months of 2004 versus comparable
periods last year. The net sales gains in the second quarter and first six
months were due primarily to continuing strong domestic architectural paint
sales and improving sales and market conditions in domestic industrial
maintenance and product finishes markets. Net income increased $16.3 million, or
14.8 percent, to $126.4 million in the second quarter and $37.0 million, or 26.2
percent, to $177.9 million in the first six months of 2004. Diluted net income
per common share for the second quarter of 2004 was $.87 per share compared to
$.75 per share in 2003 and $1.22 per share for the first six months versus $.95
per share a year ago.
Net sales in the Paint Stores Segment increased $102.9 million, or 11.0
percent, to $1.04 billion in the quarter and $190.3 million, or 11.5 percent, to
$1.84 billion in the first six months versus the comparable periods last year.
Continuing strong domestic architectural paint sales to contractor and
do-it-yourself (DIY) customers during the second quarter and first six months of
2004 accounted for most of the sales improvement. Industrial maintenance and
product finishes sales continued to improve as the domestic economic environment
continued to strengthen compared to a soft economic environment during the first
two quarters of 2003. Net sales from stores open for more than twelve calendar
months increased 9.9 percent in the second quarter and 10.5 percent in the first
six months. The Paint Stores Segment operating profit increased $21.2 million,
or 17.3 percent, to $143.8 million during the quarter due primarily to the
increased sales volume and strong selling, general and administrative expense
control. These efforts more than offset a lower gross margin caused in part by
increasing raw material costs. For the first six months, this Segment's
operating profit increased $43.8 million, or 28.7 percent, to $196.3 million due
primarily to the incremental sales volume and strong expense control.
Net sales of the Consumer Segment increased $25.8 million, or 7.5
percent, to $371.7 million in the second quarter and $76.8 million, or 12.5
percent, to $688.9 million in the first six months versus the comparable periods
last year. The second quarter and first half net sales gains were due primarily
to continuing strong product programs and acquisitions. Operating profit of this
Segment
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increased $3.6 million, or 5.4 percent, to $70.0 million in the quarter and
$13.7 million, or 13.0 percent, to $119.1 million in the first six months. The
second quarter operating profit increase was due primarily to higher sales
volume and favorable manufacturing absorption related to manufacturing volume
increases that was partially offset by increasing raw material costs. The
increase in operating profit during the first six months was due primarily to
the sales increase and favorable manufacturing absorption that was not impacted
as much by higher raw material costs. Selling, general and administrative
expenses were reduced as a percent of sales in the quarter and six months due to
tight spending control.
The Automotive Finishes Segment's net sales increased $10.2 million, or
8.4 percent, to $131.5 million in the second quarter and $24.1 million, or 10.6
percent, to $251.8 million in the first six months versus the comparable periods
last year. The positive effect of favorable currency exchange fluctuations
relative to last year increased net sales of this Segment by 0.1 percent in the
second quarter and by 1.5 percent for the first six months of 2004. The net
sales gains were primarily due to new product introductions, improving
international sales and the April 2004 acquisition of a majority interest in a
Chinese automotive coatings company. Operating profit in this Segment improved
$0.9 million, or 6.0 percent, to $16.3 million in the second quarter and $2.8
million, or 11.0 percent, to $28.2 million in the first six months. This
Segment's operating profit in the second quarter improved primarily due to the
sales increase, sales of higher margin new products, improvements in the
automotive international businesses and inclusion of the Chinese acquisition.
These benefits more than offset the effect of increasing raw material costs. For
the first six months, operating profit of this Segment improved for the same
reasons as the second quarter although the benefits were not as negatively
impacted by raw material cost increases.
Net sales in the International Coatings Segment, stated in U.S.
dollars, increased $7.3 million, or 10.6 percent, to $76.1 million in the second
quarter and $25.9 million, or 20.4 percent, to $152.5 million in the first six
months versus the comparable periods last year. Favorable currency exchange
fluctuations relative to last year increased net sales for this Segment in U. S.
dollars by 6.9 percent in the second quarter and 13.2 percent in the first six
months. A highly competitive market continued to constrain sales in South
America while sales in the U.K. remained strong. Second quarter operating profit
for the Segment in U.S. dollars was $1.3 million compared to $0.6 million a year
ago due primarily to volume increases and expense control. For the first six
months, the Segment realized an operating profit of $6.0 million compared to
$0.4 million in the first six months of 2003. The first half increase was due
primarily to the net sales gain, operating efficiencies related to additional
manufacturing volume, tight expense control and favorable currency exchange
rates.
The Company purchased 1,500,000 shares of its common stock during the
second quarter of 2004 bringing the total purchased to 3,350,000 shares for the
first six months. The Company had remaining authorization at June 30, 2004 to
purchase 13,673,000 shares.
Commenting on the Company's operating results for the second quarter
and first six months of 2004, 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 also encouraged that
our product finishes and industrial marine coatings businesses continue to
improve.
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"In the Consumer Segment, we believe that many of our retail customers
experienced moderate paint demand due to weather-related issues that impacted
our second quarter and year-to-date sales to those retailers. The cost
containment efforts implemented over the past few years helped the Consumer
Segment improve their operating profit in the second quarter this year in spite
of increasing raw material costs.
"Domestically, our Automotive Finishes Segment's sales continue to
grow in the collision market through new product introductions and the opening
of new branches. We are encouraged by the improving operations of the
international portions of our Automotive Finishes Segment. 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 expect that achieving the same level of year-over-year sales and
profit comparisons as the Company did in the first and second quarters of 2004
will become more challenging in the third and fourth quarters of the year due to
the improved level of sales and profits experienced in the last half of 2003. We
are launching new products, actively pursuing new customers, opening stores,
enhancing the shopping experience in our stores and increasing the productivity
of our operations to improve sales and operating income in all operating
segments of our business. We anticipate that achieving these business goals will
result in increased third quarter net sales in the high single digits versus
last year's third quarter. With net sales increases at that level, we expect
diluted net income per common share in the third quarter will be in the range of
$.88 to $.93 per share compared to $.82 per share earned in last year's third
quarter. We commented on April 29, 2004 that we expected our annual net sales
increase for 2004 would be up in the mid-to-high single digits over 2003 and
diluted net income per common share for 2004 to be in the range of $2.54 to
$2.62 per share. We are raising our expectations of the annual net sales
increase to the high single digits for 2004. With the increased sales
expectations, we are also raising our expectations of diluted net income per
common share for the year 2004 to a range of $2.58 to $2.66 per share compared
to $2.26 per share earned in 2003."
The Company will conduct a conference call to discuss its financial
results for the second quarter and first six months and its outlook for the
third quarter and full year 2004 at 11:00 a.m. ET on July 22, 2004. 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 Sunday, August 1, 2004 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
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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 June 30, Six months ended June 30,
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Thousands of dollars, except per share data 2004 2003 2004 2003
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Net sales $ 1,617,955 $ 1,471,678 $ 2,937,476 $ 2,620,139
Cost of goods sold 896,538 805,926 1,644,433 1,452,624
Gross profit 721,417 665,752 1,293,043 1,167,515
Percent to net sales 44.6% 45.2% 44.0% 44.6%
Selling, general and administrative expenses 514,403 484,082 998,949 924,532
Percent to net sales 31.8% 32.9% 34.0% 35.3%
Interest expense 9,365 9,952 18,752 20,044
Interest and net investment income (1,231) (920) (2,541) (2,410)
Other expense - net 3,706 (794) 3,527 3,412
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Income before income taxes and
minority interest 195,174 173,432 274,356 221,937
Income taxes 68,311 63,302 96,025 81,007
Minority interest 425 425
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Net income $ 126,438 $ 110,130 $ 177,906 $ 140,930
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Net income per common share:
Basic $ 0.89 $ 0.76 $ 1.26 $ 0.97
Diluted $ 0.87 $ 0.75 $ 1.22 $ 0.95
Average shares and equivalents outstanding - basic 141,540,368 145,448,365 141,669,734 145,644,704
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Average shares and equivalents outstanding - diluted 145,904,892 147,601,664 145,550,639 147,814,659
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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.