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 21, 2004 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the third quarter and first nine months
ended September 30, 2004. Diluted net income per common share in the third
quarter increased 12.2 percent to $.92 per share compared to $.82 per share in
2003 and $2.14 per share in the first nine months versus $1.77 per share last
year. Consolidated net sales increased 11.6 percent to $1.7 billion in the third
quarter and 11.9 percent to $4.6 billion in the first nine months versus
comparable periods last year. Net income increased 10.4 percent to $132.9
million in the third quarter and 19.0 percent to $310.8 million in the first
nine months. The financial results include the operations of three acquisitions
completed at various times since the third quarter of 2003 and the operations of
two larger acquisitions, Duron, Inc. and Paint Sundry Brands Corporation,
beginning with the month of September 2004. The acquisitions increased
consolidated net sales 4.0 percent, consolidated net income 2.1 percent and
diluted net income per share $.02 per share in the third quarter. In the first
nine months of 2004, the acquisitions increased consolidated net sales 2.3
percent, net income 1.6 percent and diluted net income per share $.03 per share.
Net sales in the Paint Stores Segment increased 13.0 percent to $1.1
billion in the third quarter and 12.1 percent to $3.0 billion in the first nine
months of 2004 versus the comparable periods last year. Continuing strong
domestic architectural paint sales to contractor and do-it-yourself (DIY)
customers accounted for most of the sales improvement in both periods. The
acquisition of Duron, Inc. also contributed to the increased Paint Stores
Segment sales along with the continued improvement of industrial maintenance and
product finishes sales. Net sales from stores open more than twelve calendar
months increased 8.9 percent in the third quarter and 9.9 percent in the first
nine months. The Paint Stores Segment's operating profit increased 19.6 percent
to $168.5 million during the quarter due primarily to the increased sales volume
and selling, general and administrative expense control. In the first nine
months, this Segment's operating profit increased 24.3 percent to $364.9 million
due primarily to the incremental sales volume and strong expense control.
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Net sales in the Consumer Segment increased 5.1 percent to $345.8
million in the third quarter and 10.0 percent to $1.0 billion in the first nine
months versus the comparable periods last year. The sales increase in the third
quarter was due to the favorable impact of sales from acquisitions that were
partially offset by sales declines due to inventory adjustments at some of our
retail customers and elimination of a paint program with a customer. In the
first nine months of 2004, the increased net sales of this Segment were due
primarily to the favorable impact of sales from acquisitions and increased sales
from new product programs. Operating profit of this Segment decreased 14.3
percent to $54.3 million in the third quarter due primarily to increasing raw
material costs that could not be offset by acquisition operating profits and
favorable manufacturing absorption related to manufacturing volume increases.
Operating profit increased 2.8 percent to $173.5 million in the first nine
months. The increase in operating profit during the first nine months was due
primarily to the sales increase, operating profits related to acquisitions and
favorable manufacturing absorption which more than offset higher raw material
costs. Tight spending control of selling, general and administrative expenses
contributed to operating profits in the quarter and year-to-date periods.
The Automotive Finishes Segment's net sales increased 13.6 percent to
$130.8 million in the third quarter and 11.6 percent to $382.6 million in the
first nine months versus the comparable periods last year. Currency exchange
fluctuations relative to last year had only a minor impact on net sales of this
Segment in the third quarter and first nine 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 foreign automotive
coatings company. Operating profit in this Segment improved 19.7 percent to
$14.8 million in the third quarter and 13.8 percent to $43.1 million in the
first nine months. This Segment's operating profit in the third quarter and
first nine months improved primarily due to the sales increases, sales of higher
margin new products, improvements in the international business units and
profits of the foreign acquisition that more than offset the effect of
increasing raw material costs.
Net sales in the International Coatings Segment, stated in U.S.
dollars, increased 18.2 percent to $80.7 million in the third quarter and 19.7
percent to $233.2 million in the first nine 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 3.8 percent in the
third quarter and 10.0 percent in the first nine months. Sales in local currency
during the third quarter were positively impacted by improving sales trends in
South America and the United Kingdom while, for the first nine months, they were
constrained by competitive market conditions in South America. Third quarter
operating profit for the Segment in U.S. dollars increased 40.6 percent to $4.5
million from $3.2 million a year ago due primarily to volume increases and
expense control. For the first nine months, the Segment realized an operating
profit of $10.5 million compared to $3.6 million in the first nine months of
2003. The first nine months 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 1,800,000 shares of its common stock during the
third quarter of 2004 bringing the total purchased to 5,150,000 shares for the
first nine months. The Company had remaining authorization at September 30, 2004
to purchase 11,873,000 shares.
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Commenting on the Company's operating results for the third quarter and
first nine 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, product finishes and industrial maintenance paint
sales. In it's first month of combined operations with our Paint Stores Segment,
Duron contributed to the strong performance achieved by that Segment.
"In the Consumer Segment, we are concerned about the continuing
moderate paint sales to some of our retail customers. The acquisitions made
since the third quarter of 2003 favorably impacted the net sales and operating
profit of this Segment but could not overcome the sluggishness of the core
business in the third quarter. The cost containment efforts implemented over the
past few years helped the Consumer Segment's operating profit but could not
completely offset the effects of significantly increasing raw material costs.
"Domestically, our Automotive Finishes Segment's sales continue to grow
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 sales and operational progress and are encouraged by our local
management teams' initiation of actions to improve profitability.
"Due to the strong level of sales and profits experienced in the last
half of 2003 and the raw material cost increases we are currently experiencing,
year-over-year consolidated net sales and profit comparisons are more
challenging. We will continue to launch new products, actively pursue new
customers, open stores and increase the productivity of our operations to
improve sales and operating income in all operating segments of our business. We
anticipate that fourth quarter net sales will increase in the low double digits
versus last year's fourth quarter partially helped by the recently completed
acquisitions. With increased net sales at that level, we expect diluted net
income per common share in the fourth quarter will be in the range of $.48 to
$.52 per share compared to $.48 per share earned in last year's fourth quarter.
We commented on July 22, 2004 that we expected our annual net sales increase for
2004 would be in high single digits over 2003 and diluted net income per common
share for the year 2004 to be in the range of $2.58 to $2.66 per share. We now
expect our annual sales increase will be in the low double digits range and
diluted net income per common share for the year 2004 to be in the range of
$2.62 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 third quarter and first nine months and its outlook for the
fourth quarter and full year 2004 at 11:00 a.m. ET on October 21, 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 October 21st 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 Monday, November 1, 2004
at 5:00 p.m. ET.
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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 2004 2003 2004 2003
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Net sales $ 1,677,130 $ 1,503,086 $ 4,614,606 $ 4,123,225
Cost of goods sold 933,585 824,440 2,578,017 2,277,063
Gross profit 743,545 678,646 2,036,589 1,846,162
Percent to net sales 44.3% 45.2% 44.1% 44.8%
Selling, general and administrative expenses 527,124 480,076 1,526,073 1,404,608
Percent to net sales 31.4% 31.9% 33.1% 34.1%
Interest expense 10,235 9,501 28,987 29,545
Interest and net investment income (1,734) (1,255) (4,274) (3,664)
Other expense - net 3,116 880 6,643 4,292
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Income before income taxes and
minority interest 204,804 189,444 479,160 411,381
Income taxes 71,681 69,147 167,706 150,154
Minority interest 260 685
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Net income $ 132,863 $ 120,297 $ 310,769 $ 261,227
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Net income per common share:
Basic $ 0.95 $ 0.83 $ 2.20 $ 1.80
Diluted $ 0.92 $ 0.82 $ 2.14 $ 1.77
Average shares and equivalents outstanding - basic 140,197,680 144,486,083 141,179,050 145,258,497
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Average shares and equivalents outstanding - diluted 144,665,013 146,858,309 145,103,213 147,399,678
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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.