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, February 3, 2005 - The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the fourth quarter and year ended December
31, 2004. Consolidated net sales increased 16.7 percent in the fourth quarter to
$1.50 billion from $1.28 billion in last year's fourth quarter and increased
13.1 percent in the full year to $6.11 billion from $5.41 billion in 2003. The
net sales results include the operations of three acquisitions not yet fully
annualized in the fourth quarter of 2004 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
$128.0 million, or 10.0 percent, in the fourth quarter and $222.6 million, or
4.1 percent, in the full year 2004.
Diluted net income per common share increased 18.8 percent in the
fourth quarter of 2004 to $.57 per share from $.48 per share in 2003 and
increased 20.4 percent to $2.72 per share for the full year 2004 from $2.26 per
share a year ago. Diluted net income per common share in the fourth quarter and
in the full year was favorably impacted by approximately $.08 per common share
related to the reduction in the annual effective tax rate resulting from the
favorable effects of recent tax legislation. The acquisitions had a slightly
favorable impact on diluted net income per common share in the fourth quarter
and increased diluted net income per common share $.04 per share for the year.
Net income increased 16.5 percent in the fourth quarter of 2004 to
$82.5 million from $70.8 million in last year's fourth quarter and increased
18.4 percent for the full year 2004 to $393.3 million from $332.1 million in
2003. A reduction in the annual effective tax rate resulting from the favorable
effects of recent tax legislation increased fourth quarter net income by
approximately $11.6 million. Acquisitions increased consolidated net income $.7
million, or 1.0 percent, in the fourth quarter and $4.7 million, or 1.4 percent,
for the full year 2004.
Paint Stores Segment net sales increased 22.8 percent in the fourth
quarter to $1.02 billion and 14.6 percent for the year to $3.98 billion. The
increased net sales in both periods were due primarily to continuing strong
domestic architectural paint sales to contractor and DIY customers and
improvement of industrial maintenance and product finishes sales. The
acquisition of Duron, Inc. added approximately 11.0 percent to this Segment's
fourth quarter net sales and 3.5 percent to the full year net sales. Net sales
from stores opened
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more than twelve calendar months increased 10.9 percent in the fourth quarter
and 10.1 percent for the full year. The Paint Stores Segment's operating profit
increased 5.0 percent during the quarter to $115.3 million and 19.0 percent to
$480.2 million for the full year. The operating profit increases in the quarter
and full year were due primarily to increased sales volume and strong selling,
general and administrative expense control partially offset by significantly
increased raw material costs.
Consumer Segment net sales increased 5.2 percent to $261.5 million in
the fourth quarter and 9.0 percent to $1.30 billion for the year compared to the
same periods in 2003. Acquisitions increased net sales in the fourth quarter by
12.1 percent. This increase was partially offset by sales declines resulting
from the elimination of a paint program with a customer, a negative impact of
3.9 percent on net sales due to the impairment of a customer sales incentive
program and inventory adjustments at some of our retail customers. For the full
year, acquisitions increased net sales 7.2 percent and new product programs
contributed further to the increase. Compared to the same periods last year,
operating profit of this Segment decreased $15.9 million in the fourth quarter,
or 52.8 percent, to $14.2 million and decreased $11.3 million for the year, or
5.7 percent, to $187.7 million. The operating profit declines in the fourth
quarter and year were primarily due to the fourth quarter impact of an
additional $7.8 million charge for the impairment of certain assets and sharply
increasing raw material costs that could not be offset by acquisition operating
profits and favorable manufacturing absorption related to unit volume increases.
Automotive Finishes Segment net sales increased 15.7 percent in the
fourth quarter to $131.7 million and 12.6 percent for the year to $514.3 million
versus comparable periods last year. Currency exchange fluctuations in 2004
relative to last year had only a minor impact on net sales of this Segment in
the fourth quarter and full year. Increased net sales in the fourth quarter were
primarily due to improving domestic sales and the April 2004 acquisition of a
majority interest in an automotive coatings company in China. The net sales gain
for the year was primarily due to new product introductions, improving
international sales and the China acquisition. Operating profit in this Segment
increased 3.1 percent in the quarter to $15.0 million and 10.8 percent for the
year to $58.1 million. There was no significant impact on operating profit in
the fourth quarter or the year due to currency exchange fluctuations. Operating
profit for the fourth quarter and the year improved despite rising raw material
costs, particularly in the fourth quarter. The operating profit improvements
were primarily due to the sales volume increases, sales of higher margin new
products and profits of the China acquisition along with improvements in the
international business units earlier in the year and the domestic business units
in the fourth quarter.
International Coatings Segment net sales, stated in U. S. dollars,
decreased 5.5 percent to $85.5 million in the fourth quarter but increased 11.7
percent to $318.6 million for the year compared to a year ago. Sales results for
the fourth quarter and full year 2004 were impacted by favorable currency
exchange fluctuations. Also impacting fourth quarter comparisons was the change
of a Brazilian subsidiary's fiscal year to a calendar year basis during the
fourth quarter of 2003, which added an additional month to last year's results.
The net impact of the additional month sales partially offset by the favorable
currency exchange fluctuations accounted for a reduction of $7.9 million, or 8.8
percent, in net sales for the Segment in the fourth quarter of 2004. For the
full year 2004, favorable currency exchange fluctuations more than offset the
fiscal year change increasing net sales by $9.9 million, or 3.5 percent. Sales
in local currency continued to build during each quarter of 2004 and continued
to be positively impacted during the fourth quarter by improving sales trends in
South America and the United Kingdom. Operating profit in U. S. dollars in the
fourth quarter was $7.6 million compared to $4.8 million in the fourth quarter
last year due primarily to volume increases and expense control. The increase in
operating profit in 2003 due to the fiscal year change being greater than the
favorable currency exchange fluctuations in 2004 resulted in the increase in
fourth quarter operating income being slightly negatively impacted. For the full
year 2004, the Segment realized an operating profit of $18.0 million compared to
$8.4 million in 2003. This increase in operating profit was primarily due to the
net sales gain, operating efficiencies
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related to additional manufacturing volume, tight expense control and favorable
currency exchange fluctuations. There was no significant impact on operating
profit for the year from the 2003 fiscal year change.
The Company purchased 1,450,000 shares of its common stock in the
fourth quarter, bringing the total purchased to 6,600,000 shares in 2004. The
Company had remaining authorization at December 31, 2004 to purchase 10,400,000
shares.
Commenting on the results for the fourth quarter and year 2004,
Christopher M. Connor, Chairman and Chief Executive Officer, said, "We are
pleased that we were able to report record earnings of $2.72 per share in spite
of rapidly rising raw material costs. This improvement was due to significant
volume gains, control of operating expenses and the benefits of effective tax
planning. Though significant raw material cost increases have adversely impacted
our gross margins, in the fourth quarter we have announced and are implementing
price increases and have taken other actions that will stabilize our margins for
the 2005 year. Operating results will be further enhanced by the launching of
new products, pursuit of new customers, opening paint stores and automotive
branches and increasing the productivity of our operations to improve sales and
operating income in all segments of our business.
"We continue to be encouraged by the strong sales in our Paint Stores
Segment in all three paint categories - architectural, industrial maintenance
and product finishes. We are pleased that this strong sales performance
generated improved operating profit and margin for the full year. We are also
encouraged by the first four months of the Duron acquisition and believe that
Duron will increasingly contribute to both sales and operating profits in the
future.
"In the Consumer Segment, the acquisitions made since the third quarter
of 2003 favorably impacted both the net sales and operating profit of this
Segment. We are pleased with the performance of all these acquisitions and we
see more upside potential from Paint Sundry Brands. We are concerned about the
sluggish paint sales in this Segment and the short-term, negative impact on
margins by selling prices not increasing at the same pace as raw material costs.
In spite of all the good efforts of our Consumer Segment management team to
effectively control overhead and SG&A costs, operating profit declined. We are
optimistic this Segment will manage through raw material cost increases and
improve sales by continuing to introduce new products and attract new customers.
"We are encouraged with the strengthening of both the domestic and
international automotive markets in which our Automotive Finishes Segment does
business and with their new product introductions and new branch openings. We
continue to be pleased with the steady improvements in sales and operational
performance of our International Coatings business units.
"We anticipate that first quarter 2005 net sales will increase in the
low double digits versus the first quarter of 2004, partially due to the
recently completed acquisitions. We estimate diluted net income per common share
in the first quarter will be in the range of $.48 to $.53 per share compared to
$.35 per share earned in the first quarter of 2004. A lower effective tax rate
in the first quarter of 2005 compared to the rate used in last year's first
quarter and a favorable tax ruling expected in the first quarter of 2005 will
increase diluted net income per common share approximately $.07 per share for
the quarter. We expect that the recently completed acquisitions will be
accretive to first quarter diluted net income per common share. For the full
year 2005, we expect net sales will also increase in the low double digits over
2004. With annual sales at that level, we estimate diluted net income per common
share for 2005 will be in the range of $3.00 to $3.10 per share compared to
$2.72 per share earned in 2004. For the full year 2005, we expect the annual
effective tax rate to approximate the annual rate recognized in 2004 and the
recent acquisitions will contribute to full year diluted net income per share."
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The Company will conduct a conference call to discuss its financial
results for the fourth quarter and year 2004, and its outlook for the first
quarter and full year 2005, at 11:00 a.m. ET on Thursday, February 3, 2005. 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 February 3rd 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, February 14, 2005
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 December 31, Twelve months ended December 31,
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Thousands of dollars, except per share data 2004 2003 2004 2003
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Net sales $ 1,499,183 $ 1,284,539 $ 6,113,789 $ 5,407,764
Cost of goods sold 834,361 675,406 3,412,378 2,952,469
Gross profit 664,822 609,133 2,701,411 2,455,295
Percent to net sales 44.3% 47.4% 44.2% 45.4%
Selling, general and administrative expenses 542,863 477,056 2,068,936 1,881,664
Percent to net sales 36.2% 37.1% 33.8% 34.8%
Interest expense 10,961 9,197 39,948 38,742
Interest and net investment income (1,259) (3,002) (5,533) (6,668)
Other expense - net 11,222 14,339 17,865 18,631
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Income before income taxes and
minority interest 101,035 111,543 580,195 522,926
Income taxes 17,956 40,714 185,662 190,868
Minority interest 594 1,279
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Net income $ 82,485 $ 70,829 $ 393,254 $ 332,058
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Net income per common share:
Basic $ 0.59 $ 0.49 $ 2.79 $ 2.29
Diluted $ 0.57 $ 0.48 $ 2.72 $ 2.26
Average shares and equivalents outstanding - basic 139,670,200 143,612,240 140,801,836 144,846,933
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Average shares and equivalents outstanding - diluted 144,261,741 146,772,748 144,735,589 147,005,276
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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.