e10vk
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended
December 31, 2009
Commission file number
1-04851
THE SHERWIN-WILLIAMS
COMPANY
(Exact name of registrant as
specified in its charter)
OHIO
(State or other jurisdiction of
incorporation or organization)
34-0526850
(I.R.S. Employer Identification No.)
101 West Prospect Avenue, Cleveland, Ohio
(Address of principal executive
offices)
44115-1075
(Zip Code)
(216) 566-2000
Registrants telephone number,
including area code
Securities registered pursuant to
Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Common Stock, Par Value $1.00
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New York Stock Exchange
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Securities registered pursuant to
Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes x No o
Indicate by check mark if the Registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes
o
No
x
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
o
Indicate by check mark whether the Registrant has submitted
electronically and posted on its corporate website, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such
shorter period that the Registrant was required to submit and
post such
files). Yes x No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form
10-K. o
Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer x
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Accelerated
filer o
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Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Smaller reporting
company o
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Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
At January 31, 2010, 109,565,728 shares of common stock
were outstanding, net of treasury shares. The aggregate market
value of common stock held by non-affiliates of the Registrant
at June 30, 2009 was $6,231,518,290 (computed by reference
to the price at which the common stock was last sold on such
date).
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of our Annual Report to Shareholders for the fiscal
year ended December 31, 2009 (2009 Annual
Report) are incorporated by reference into Parts I,
II and IV of this report.
Portions of our Proxy Statement for the 2010 Annual Meeting of
Shareholders (Proxy Statement) to be filed with the
Securities and Exchange Commission within 120 days of our
fiscal year ended December 31, 2009 are incorporated by
reference into Part III of this report.
THE
SHERWIN-WILLIAMS COMPANY
Table of Contents
PART
I
ITEM
1. BUSINESS
Introduction
The Sherwin-Williams Company, founded in 1866 and incorporated
in Ohio in 1884, is engaged in the development, manufacture,
distribution and sale of paint, coatings and related products to
professional, industrial, commercial and retail customers
primarily in North and South America with additional operations
in the Caribbean region, Europe and Asia. Our principal
executive offices are located at 101 West Prospect Avenue,
Cleveland, Ohio 44115-1075, telephone (216) 566-2000. As
used in this report, the terms Sherwin-Williams,
Company, we and our mean The
Sherwin-Williams Company and its consolidated subsidiaries
unless the context indicates otherwise.
Available
Information
We make available free of charge on or through our website our
Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, and
amendments to these reports, as soon as reasonably practicable
after we electronically file such material with, or furnish such
material to, the Securities and Exchange Commission. You may
access these documents on the Investor Relations
page of our website at www.sherwin.com.
We also make available free of charge on our website our
Corporate Governance Guidelines, our Director Independence
Standards, our Business Ethics Policy and the charters of our
Audit Committee, our Compensation and Management Development
Committee, and our Nominating and Corporate Governance
Committee. You may access these documents in the Corporate
Governance section on the Investor Relations
page of our website at www.sherwin.com.
Basis of
Reportable Segments
We report our segment information in the same way that
management internally organizes our business for assessing
performance and making decisions regarding allocation of
resources in accordance with the Segment Reporting Topic of the
Financial Accounting Standards Board Accounting Standards
Codification (ASC). We have three reportable operating segments:
Paint Stores Group, Consumer Group and Global Finishes Group
(collectively, the Reportable Operating Segments).
Factors considered in determining our Reportable Operating
Segments include the nature of the business activities,
existence of managers responsible for the operating and
administrative activities and information presented to our Board
of Directors. We report all other business activities and
immaterial operating segments that are not reportable in the
Administrative segment. For more information about the
Reportable Operating Segments, see pages 5 through 7 of our 2009
Annual Report, which is incorporated herein by reference.
The Companys chief operating decision maker
(CODM) has been identified as the Chief Executive Officer
because he has final authority over performance assessment and
resource allocation decisions. Because of the diverse operations
of the Company, the CODM regularly receives discrete financial
information about each Reportable Operating Segment as well as a
significant amount of additional financial information about
certain divisions, business units or subsidiaries of the
Company. The CODM uses all such financial information for
performance assessment and resource allocation decisions. The
CODM evaluates the performance of and allocates resources to the
Reportable Operating Segments based on profit or loss before
income taxes and cash generated from operations. The accounting
policies of the Reportable Operating Segments are the same as
those described in Note 1 of the Notes to Consolidated
Financial Statements on pages 44 through 50 of our 2009
Annual Report, which is incorporated herein by reference.
Paint
Stores Group
The Paint Stores Group consisted of 3,354 company-operated
specialty paint stores in the United States, Canada, Puerto
Rico, Virgin Islands, Trinidad and Tobago, St. Maarten and
Jamaica at December 31, 2009. Each store in this segment is
engaged in the related business activity of selling paint,
coatings and related products to end-
1
use customers. The Paint Stores Group markets and sells
Sherwin-Williams®
branded architectural paint and coatings, industrial and marine
products, original equipment manufacturer (OEM)
product finishes and related items. These products are produced
by manufacturing facilities in the Consumer and Global Finishes
Groups. In addition, each store sells selected purchased
associated products. During 2009, this segment opened 8 net new
stores, consisting of 53 new stores opened (44 in the United
States, 7 in Canada, 1 in Jamaica and 1 in St. Maarten) and 45
stores closed (in the United States). In 2008, this segment
opened 21 net new stores (14 in the United States). In
2007, there were 172 stores acquired and 107 net new stores
opened (81 in the United States). The loss of any single
customer would not have a material adverse effect on the
business of this segment. A map on page 10 of our 2009 Annual
Report, which is incorporated herein by reference, shows the
number of paint stores and their geographic locations.
Consumer
Group
The Consumer Group develops, manufactures and distributes a
variety of paint, coatings and related products to third party
customers primarily in the United States and Canada and the
Paint Stores Group. Approximately 51 percent of the total
sales of the Consumer Group in 2009, including inter-segment
transfers, represented products sold through the Paint Stores
Group. Sales and marketing of certain controlled brand and
private labeled products is performed by a direct sales staff.
The products distributed through third party customers are
intended for resale to the ultimate end-user of the product. The
Consumer Group had sales to certain customers that,
individually, may be a significant portion of the sales of the
segment. However, the loss of any single customer would not have
a material adverse effect on the overall profitability of the
segment. This segment incurred most of the Companys
capital expenditures related to ongoing environmental compliance
measures.
Global
Finishes Group
The Global Finishes Group develops, licenses, manufactures,
distributes and sells a variety of architectural paint and
coatings, industrial and marine products, automotive finishes
and refinish products, OEM coatings and related products in
North and South America, Europe and Asia. This segment meets the
demands of its customers for a consistent worldwide product
development, manufacturing and distribution presence and
approach to doing business. This segment licenses certain
technology and trade names worldwide.
Sherwin-Williams®
and other controlled brand products are distributed through the
Paint Stores Group and this segments 539 company-operated
branches and by a direct sales staff and outside sales
representatives to retailers, dealers, jobbers, licensees and
other third party distributors. During 2009, this segment opened
18 new branches (8 in the United States, 1 in Canada, 6 in South
America and 3 in India) and closed 20 (1 in South America, 15 in
the United States and 4 in Mexico) for a net reduction of 2
branches. At December 31, 2009, the Global Finishes Group
consisted of operations in the United States, subsidiaries in
14 foreign countries, 4 foreign joint ventures and
income from licensing agreements in 16 foreign countries. A map
on page 10 of our 2009 Annual Report, which is incorporated
herein by reference, shows the number of branches and their
geographic locations.
Administrative
Segment
The Administrative segment includes the administrative expenses
of the Companys corporate headquarters site. Also included
in the Administrative segment was interest expense, interest and
investment income, certain expenses related to closed facilities
and environmental-related matters, and other expenses which were
not directly associated with the Reportable Operating Segments.
The Administrative segment did not include any significant
foreign operations. Also included in the Administrative segment
was a real estate management unit that is responsible for the
ownership, management, and leasing of non-retail properties held
primarily for use by the Company, including the Companys
headquarters site, and disposal of idle facilities. Sales of
this segment represented external leasing revenue of excess
headquarters space or leasing of facilities no longer used by
the Company in its primary businesses. Gains and losses from the
sale of property were not a significant operating factor in
determining the performance of the Administrative segment.
2
Segment
Financial Information
For financial information regarding our Reportable Operating
Segments, including net external sales, segment profit,
identifiable assets and other information by segment, see
Note 19 of the Notes to Consolidated Financial Statements
on pages 75 through 77 of our 2009 Annual Report, which is
incorporated herein by reference.
Domestic
and Foreign Operations
Financial and other information regarding domestic and foreign
operations is set forth in Note 19 of the Notes to
Consolidated Financial Statements on page 76 of our 2009
Annual Report, which is incorporated herein by reference.
Additional information regarding risks attendant to foreign
operations is set forth on page 29 of our 2009 Annual
Report under the caption Market Risk of
Managements Discussion and Analysis of Financial
Condition and Results of Operation, which is incorporated
herein by reference.
Business
Developments
For additional information regarding our business and business
developments, see pages 5 through 10 of our 2009 Annual
Report and the Letter to Shareholders on
pages 1 through 4 of our 2009 Annual Report, which is
incorporated herein by reference.
Raw
Materials and Products Purchased for Resale
Raw materials and fuel supplies are generally available from
various sources in sufficient quantities that none of the
Reportable Operating Segments anticipate any significant
sourcing problems during 2010. There are sufficient suppliers of
each product purchased for resale that none of the Reportable
Operating Segments anticipate any significant sourcing problems
during 2010.
Seasonality
The majority of the sales for the Reportable Operating Segments
traditionally occur during the second and third quarters. There
is no significant seasonality in sales for the Administrative
segment.
Working
Capital
In order to meet increased demand during the second and third
quarters, the Company usually builds its inventories during the
first quarter. Working capital items (inventories and accounts
receivable) are generally financed through short-term
borrowings, which include the use of lines of credit and the
issuance of commercial paper. For a description of the
Companys liquidity and capital resources, see
pages 19 through 30 of our 2009 Annual Report under
the caption Financial Condition, Liquidity and Cash
Flow of Managements Discussion and Analysis
of Financial Condition and Results of Operations, which is
incorporated herein by reference.
Trademarks
and Trade Names
Customer recognition of our trademarks and trade names
collectively contribute significantly to our sales. The major
trademarks and trade names used by each Reportable Operating
Segment are set forth below.
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Paint Stores
Group: Sherwin-Williams®,
ProMar®,
SuperPaint®,
A-100®,
PrepRite®,
Classic
99®,
ProGreen®,
Harmony®,
Woodscapes®,
Deckscapes®,
Cashmere®,
ProClassic®,
Duration®,
Duron®,
Columbiatm
and
MABtm.
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Consumer
Group: Thompsons®
WaterSeal®,
Dutch
Boy®,
Cuprinol®,
Pratt &
Lambert®,
Martin
Senour®,
H&C®,
Rubberset®,
Dupli-Color®,
Minwax®,
White
Lightning®,
Krylon®,
Purdy®,
Bestt
Liebco®,
Accurate
Dispersionstm,
DobcoTM,
RonsealTM,
Tri-Flow®,
Kool
Seal®,
Snow
Roof®,
AltaxTM,
Sprayon®,
Uniflex®
and
VHT®.
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Global Finishes
Group: Sherwin-Williams®,
Martin
Senour®,
Lazzuril®,
Excelo®,
Baco®,
Planet
Color®,
Ultra-Cure®,
Dutch
Boy®,
Krylon®,
Kem
Tone®,
Kem
Aqua®,
Pratt &
Lambert®,
Minwax®,
Sher-Wood®,
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Powdura®,
Polane®,
ColorginTM,
SumareTM,
AndinaTM,
MarsonTM,
Thompsons®
WaterSeal®,
Metalatex®,
Euronavy®,
Inchemtm,
Novacortm,
Loxon®,
Napkotm,
AWX®
and
Ultratm.
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Patents
Although patents and licenses are not of material importance to
our business as a whole or any segment, the Global Finishes
Group derives a portion of its income from the licensing of
technology, trademarks and trade names to foreign companies.
Backlog
and Productive Capacity
Backlog orders are not significant in the business of any
Reportable Operating Segment since there is normally a short
period of time between the placing of an order and shipment. We
believe that sufficient productive capacity currently exists to
fulfill our needs for paint, coatings and related products
through 2010.
Research
and Development
For information regarding our costs of research and development
included in technical expenditures, see Note 1 of the Notes
to Consolidated Financial Statements on page 47 of our 2009
Annual Report, which is incorporated herein by reference.
Competition
We experience competition from many local, regional, national
and international competitors of various sizes in the
manufacture, distribution and sale of our paint, coatings and
related products. We are a leading manufacturer and retailer of
paint, coatings and related products to professional,
industrial, commercial and retail customers, however, our
competitive position varies for our different products and
markets.
In the Paint Stores Group, competitors include other paint and
wallpaper stores, mass merchandisers, home centers, independent
hardware stores, hardware chains and manufacturer-operated
direct outlets. Product quality, product innovation, breadth of
product line, technical expertise, service and price determine
the competitive advantage for this segment.
In the Consumer Group, domestic and foreign competitors include
manufacturers and distributors of branded and private labeled
paint and coatings products. Technology, product quality,
product innovation, breadth of product line, technical
expertise, distribution, service and price are the key
competitive factors for this segment.
The Global Finishes Group has numerous competitors in its
domestic and foreign markets with broad product offerings and
several others with niche products. Key competitive factors for
this segment include technology, product quality, product
innovation, breadth of product line, technical expertise,
distribution, service and price.
The Administrative segment has many competitors consisting of
other real estate owners, developers and managers in areas in
which this segment owns property. The main competitive factors
are the availability of property and price.
Employees
We employed 29,220 persons at December 31, 2009.
Environmental
Compliance
For additional information regarding environmental-related
matters, see pages 22 through 24 of our 2009 Annual Report
under the caption Environmental-Related Liabilities
of Managements Discussion and Analysis of Financial
Condition and Results of Operations and Notes 1, 9
and 14 of the Notes to Consolidated Financial Statements on
pages 46, 63 through 65, and 72, respectively, of our 2009
Annual Report, which is incorporated herein by reference.
4
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in Managements
Discussion and Analysis of Financial Condition and Results of
Operations, Business and elsewhere in this
report constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are based upon
managements current expectations, estimates, assumptions
and beliefs concerning future events and conditions and may
discuss, among other things, anticipated future performance
(including sales and earnings), expected growth, future business
plans and the costs and potential liability for
environmental-related matters and the lead pigment and
lead-based paint litigation. Any statement that is not
historical in nature is a forward-looking statement and may be
identified by the use of words and phrases such as
expects, anticipates,
believes, will, will likely
result, will continue, plans to
and similar expressions.
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 our control, that could cause actual
results to differ materially from such statements and from our
historical results and experience. These risks, uncertainties
and other factors include such things as:
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the duration and severity of the current negative global
economic and financial conditions;
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general business conditions, strengths of retail and
manufacturing economies and the growth in the coatings industry;
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competitive factors, including pricing pressures and product
innovation and quality;
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changes in raw material and energy supplies and pricing;
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changes in our relationships with customers and suppliers;
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our ability to attain cost savings from productivity initiatives;
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our ability to successfully integrate past and future
acquisitions into our existing operations, as well as the
performance of the businesses acquired;
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risks and uncertainties associated with our ownership of Life
Shield Engineered Systems, LLC;
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changes in general domestic economic conditions such as
inflation rates, interest rates, tax rates, unemployment rates,
higher labor and healthcare costs, recessions, and changing
government policies, laws and regulations;
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risks and uncertainties associated with our expansion into and
our operations in Asia, Mexico, South America and other foreign
markets, including general economic conditions, inflation rates,
recessions, foreign currency exchange rates, foreign investment
and repatriation restrictions, legal and regulatory constraints,
civil unrest and other external economic and political factors;
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the achievement of growth in developing markets, such as Asia,
Mexico and South America;
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increasingly stringent domestic and foreign governmental
regulations including those affecting health, safety and the
environment;
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inherent uncertainties involved in assessing our potential
liability for environmental-related activities;
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other changes in governmental policies, laws and regulations,
including changes in accounting policies and standards and
taxation requirements (such as new tax laws and new or revised
tax law interpretations);
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the nature, cost, quantity and outcome of pending and future
litigation and other claims, including the lead pigment and
lead-based paint litigation, and the effect of any legislation
and administrative regulations relating thereto; and
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unusual weather conditions.
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Readers are cautioned that it is not possible to predict or
identify all of the risks, uncertainties and other factors that
may affect future results and that the above list should not be
considered to be a complete list. Any forward-
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looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
ITEM
1A. RISK FACTORS
Described below and elsewhere in this report and other documents
that we file from time to time with the Securities and Exchange
Commission are risks, uncertainties and other factors that can
adversely affect our business, results of operations, cash flow,
liquidity or financial condition.
Adverse
changes in general business and economic conditions in the
United States and worldwide may adversely affect our results of
operations, cash flow, liquidity or financial
condition.
Adverse changes in general business and economic conditions in
the United States and worldwide may reduce the demand for some
of our products and adversely affect our results of operations,
cash flow, liquidity or financial condition. Higher inflation
rates, interest rates, tax rates and unemployment rates, higher
labor and healthcare costs, recessions, changing governmental
policies, laws and regulations, and other economic factors that
adversely affect the demand for our paint, coatings and related
products could adversely affect our results of operations, cash
flow, liquidity or financial condition.
The
duration and severity of the current global economic and
financial downturn may adversely affect our results of
operations, cash flow, liquidity or financial
condition.
A protracted continuation or worsening of the current global
economic and financial conditions may adversely impact our net
sales, the collection of accounts receivable, funding for
working capital needs, expected cash flow generation from
current and acquired businesses, and our investments, which may
adversely impact our results of operations, cash flow, liquidity
or financial condition.
We finance a portion of our sales through trade credit. The
current global economic and financial conditions have caused
some customers to be less profitable and have increased our
exposure to credit risk. In addition, due to the tightening of
credit markets, some customers who require financing for their
businesses have not been able to obtain necessary financing.
Continuation of these conditions could limit our ability to
collect our accounts receivable, which could adversely affect
our results of operations, cash flow, liquidity or financial
condition.
We generally fund a portion of our seasonal working capital
needs and obtain funding for other general corporate purposes
through short-term borrowings backed by our revolving credit
facility and other financing facilities. If any of the banks in
these credit and financing facilities are unable to perform on
their commitments, which could adversely affect our ability to
fund seasonal working capital needs and obtain funding for other
general corporate purposes, our cash flow, liquidity or
financial condition could be adversely impacted.
Although we currently have available credit facilities to fund
our current operating needs, we cannot be certain that we will
be able to replace our existing credit facilities or refinance
our existing debt when necessary. Our cost of borrowing and
ability to access the capital markets are affected not only by
market conditions, but also by our debt and credit ratings
assigned by the major credit rating agencies. Downgrades in
these ratings will increase our cost of borrowing and could have
an adverse effect on our access to the capital markets,
including our access to the commercial paper market. An
inability to access the capital markets could have a material
adverse effect on our results of operations, cash flow,
liquidity or financial condition.
We have goodwill and intangible assets recorded on our balance
sheet. We periodically evaluate the recoverability of the
carrying value of our goodwill and intangible assets whenever
events or changes in circumstances indicate that such value may
not be recoverable. Impairment assessment involves judgment as
to assumptions regarding future sales and cash flows and the
impact of market conditions on those assumptions. Future events
and changing market conditions may impact our assumptions and
may result in changes in our estimates of future sales and cash
flows that may result in us incurring substantial impairment
charges, which would adversely affect our results of operations
or financial condition.
6
We hold investments in equity and debt securities in some of our
defined benefit pension plans. A decrease in the value of plan
assets resulting from a general financial downturn may cause a
negative pension plan investment performance, which may
adversely affect our results of operations, cash flow, liquidity
or financial condition.
Economic
downturns in cyclical segments of the economy may reduce the
demand for some of our products and adversely affect our sales,
earnings, cash flow or financial condition.
Portions of our business involve the sale of paint, coatings and
related products to segments of the economy that are cyclical in
nature, particularly segments relating to construction, housing
and manufacturing. Our sales to these segments are affected by
the levels of discretionary consumer and business spending in
these segments. During economic downturns in these segments, the
levels of consumer and business discretionary spending may
decrease. This decrease in spending will likely reduce the
demand for some of our products and may adversely affect our
sales, earnings, cash flow or financial condition.
During the past three years, the U.S. homebuilding industry
experienced a significant and sustained decrease in demand for
new homes and an oversupply of new and existing homes available
for sale. During this same time period, the U.S. real
estate industry also experienced a significant decrease in
existing home turnover. The commercial and industrial building
and maintenance sectors also began to experience a significant
decline in 2008. The downturn in each of these segments has
contributed to an unprecedented decline in the demand for some
of our products and adversely affected our sales and earnings.
We cannot predict the duration or severity of the downturn in
these segments. Continued downturn in these segments will
continue to reduce the demand for some of our products and may
adversely impact sales, earnings and cash flow.
Increases
in the cost of raw materials and energy may adversely affect our
earnings or cash flow.
We purchase raw materials and energy for use in the
manufacturing, distribution and sale of our products. Factors
such as adverse weather conditions, including hurricanes, and
other disasters can disrupt raw material and fuel supplies and
increase our costs. Although raw materials and energy supplies
are generally available from various sources in sufficient
quantities, unexpected shortages and increases in the cost of
raw materials and energy, or any deterioration in our
relationships with or the financial viability of our suppliers,
may have an adverse effect on our earnings or cash flow in the
event we are unable to offset higher costs in a timely manner by
sufficiently decreasing our operating costs or raising the
prices of our products. Many of our paint and coatings products
utilize petroleum based derivatives, minerals (including
titanium dioxide) and metals.
Although
we have an extensive customer base, the loss of any of our
largest customers could adversely affect our sales, earnings or
cash flow.
We have a large and varied customer base due to our extensive
distribution network. During 2009, no individual customer
accounted for sales totaling more than ten percent of our sales.
However, we have some customers that, individually, purchase a
large amount of products from us. Although our broad
distribution channels would help to minimize the impact of the
loss of any one customer, the loss of any of these large
customers could have an adverse effect on our sales, earnings or
cash flow.
Adverse
weather conditions may temporarily reduce the demand for some of
our products and could have a negative effect on our sales,
earnings or cash flow.
From time to time, adverse weather conditions in certain parts
of the United States have had an adverse effect on our sales of
paint, coatings and related products. For example, unusually
cold and rainy weather, especially during the exterior painting
season, could have an adverse effect on sales of our exterior
paint products. An adverse effect on sales may cause a reduction
in our earnings or cash flow.
Increased
competition may reduce our sales, earnings or cash flow
performance.
We face substantial competition from many international,
national, regional and local competitors of various sizes in the
manufacture, distribution and sale of our paint, coatings and
related products. Some of our competitors are larger than us and
have greater financial resources to compete. Other competitors
are smaller and may be able to
7
offer more specialized products. Technology, product quality,
product innovation, breadth of product line, technical
expertise, distribution, service and price are the key
competitive factors for our business. Competition in any of
these areas may reduce our sales and adversely affect our
earnings or cash flow by resulting in decreased sales volumes,
reduced prices and increased costs of manufacturing,
distributing and selling our products.
Our
results of operations, cash flow or financial condition may be
negatively impacted if we do not successfully integrate past and
future acquisitions into our existing operations and if the
performance of the businesses we acquire do not meet our
expectations.
We have historically made strategic acquisitions of businesses
in the paint and coatings industry and will likely acquire
additional businesses in the future as part of our long term
growth strategy. These acquisitions involve challenges and
risks. In the event that we do not successfully integrate these
acquisitions into our existing operations so as to realize the
expected return on our investment, our results of operations,
cash flow or financial condition could be adversely affected.
Risks
and uncertainties associated with our expansion into and our
operations in Asia, Mexico, South America and other foreign
markets could adversely affect our results of operations, cash
flow, liquidity or financial condition.
Net external sales of our consolidated foreign subsidiaries
totaled approximately $1.03 billion in 2009, or 14.5% of
our total consolidated net sales. Sales outside of the United
States make up an important part of our current business and
future strategic plans. Our results of operations, cash flow,
liquidity or financial condition could be adversely affected by
a variety of international factors, including general economic
conditions, inflation rates, recessions, foreign currency
exchange rates, foreign currency exchange controls, interest
rates, foreign investment and repatriation restrictions, legal
and regulatory constraints, civil unrest, difficulties in
staffing and managing foreign operations and other external
economic and political factors. Our inability to successfully
manage the risks and uncertainties relating to these factors
could adversely affect our results of operations, cash flow,
liquidity or financial condition.
In many foreign countries, it is acceptable to engage in certain
business practices that we are prohibited from engaging in
because of regulations that are applicable to us, such as the
Foreign Corrupt Practices Act. Although we have internal control
policies and procedures designed to ensure compliance with these
regulations, there can be no assurance that our policies and
procedures will prevent a violation of these regulations. Any
violation could cause an adverse effect on our results of
operations, cash flow or financial condition.
Fluctuations
in foreign currency exchange rates could adversely affect our
results of operations, cash flow, liquidity or financial
condition.
Because of our international operations, we are exposed to risk
associated with interest rates and value changes in foreign
currencies, which may adversely affect our business.
Historically, our reported net sales, earnings, cash flow and
financial condition have been subjected to fluctuations in
foreign exchange rates. Our primary exchange rate exposure is
with the euro, the British pound, the Argentine peso, the
Brazilian real, the Chilean peso, the Canadian dollar and the
Mexican peso against the U.S. dollar. While we actively
manage the exposure of our foreign currency risk as part of our
overall financial risk management policy, we believe we may
experience losses from foreign currency exchange rate
fluctuations, and such losses could adversely affect our sales,
earnings, cash flow, liquidity or financial condition.
We are
subject to a wide variety of complex domestic and foreign laws
and regulations, for which compliance could adversely affect our
results of operations, cash flow or financial
condition.
We are subject to a wide variety of complex domestic and foreign
laws and regulations, and legal compliance risks, including
securities laws, tax laws, employment and pension-related laws,
competition laws, U.S. and foreign export and trading laws,
and laws governing improper business practices. We are affected
by new laws and regulations, and changes to existing laws and
regulations, including interpretations by courts and regulators.
From time to time, our Company, our operations and the
industries in which we operate are being reviewed or
investigated by regulators, which could lead to enforcement
actions or the assertion of private litigation claims and
damages.
8
Although we believe that we have adopted appropriate risk
management and compliance programs to mitigate these risks, the
global and diverse nature of our operations means that
compliance risks will continue to exist. Investigations,
examinations and other proceedings, the nature and outcome of
which cannot be predicted, will likely arise from time to time.
These investigations, examinations and other proceedings could
subject us to significant liability and require us to take
significant accruals or pay significant settlements, fines and
penalties, which could have a material adverse effect on our
results of operations, cash flow or financial condition.
We are subject to tax laws and regulations in the United States
and multiple foreign jurisdictions. We are affected by changes
in tax laws and regulations, as well as changes in related
interpretations and other tax guidance. In the ordinary course
of our business, we are subject to examinations and
investigations by various tax authorities. In addition to
existing examinations and investigations, there could be
additional examinations and investigations in the future, and
existing examinations and investigations could be expanded.
For non-income tax risks, we estimate material loss
contingencies and accrue for such loss contingencies as required
by U.S. generally accepted accounting principles based on
our assessment of contingencies where liability is deemed
probable and reasonably estimable in light of the facts and
circumstances known to us at a particular point in time.
Subsequent developments may affect our assessment and estimates
of the loss contingency. In the event the loss contingency is
ultimately determined to be significantly higher than currently
accrued, the recording of the additional liability may result in
a material adverse effect on our results of operations or
financial condition for the annual or interim period during
which such additional liability is accrued. In those cases where
no accrual is recorded because it is not probable that a
liability has been incurred and cannot be reasonably estimated,
any potential liability ultimately determined to be attributable
to us may result in a material adverse effect on our results of
operations, cash flow or financial condition for the annual or
interim period during which such liability is accrued or paid.
For income tax risks, we recognize tax benefits based on our
assessment that a tax benefit has a greater than 50% likelihood
of being sustained upon ultimate settlement with the applicable
taxing authority that has full knowledge of all relevant facts.
For those income tax positions where we assess that there is not
a greater than 50% likelihood that such tax benefits will be
sustained, we do not recognize a tax benefit in our financial
statements. Subsequent events may cause us to change our
assessment of the likelihood of sustaining a
previously-recognized benefit which could result in a material
adverse effect on our results of operations, cash flow or
financial position for the annual or interim period during which
such liability is accrued or paid.
We are
required to comply with numerous complex and increasingly
stringent domestic and foreign health, safety and environmental
laws and regulations, the cost of which is likely to increase
and may adversely affect our results of operations, cash flow or
financial condition.
Our operations are subject to various domestic and foreign
health, safety and environmental laws and regulations. These
laws and regulations not only govern our current operations and
products, but also impose potential liability on us for our past
operations. We expect health, safety and environmental laws and
regulations to impose increasingly stringent requirements upon
our industry and us in the future. Our costs to comply with
these laws and regulations may increase as these requirements
become more stringent in the future, and these increased costs
may adversely affect our results of operations, cash flow or
financial condition.
We are
involved with environmental investigation and remediation
activities at some of our currently and formerly owned sites, as
well as a number of third-party sites, for which our ultimate
liability may exceed the current amount we have
accrued.
We are involved with environmental investigation and remediation
activities at some of our currently and formerly owned sites and
a number of third-party sites. We accrue for estimated costs of
investigation and remediation activities at these sites for
which commitments or
clean-up
plans have been developed and when such costs can be reasonably
estimated based on industry standards and professional judgment.
These estimated costs are based on currently available facts
regarding each site. We continuously assess our potential
liability for investigation and remediation activities and
adjust our environmental-related accruals as information becomes
available upon which more accurate costs can be reasonably
estimated. Due to the uncertainties surrounding environmental
investigation and remediation activities, our liability may
result in costs that are significantly higher than currently
accrued and may have an adverse affect on our earnings.
9
The
nature, cost, quantity and outcome of pending and future
litigation, such as litigation arising from the historical
manufacture and sale of lead pigments and lead-based paint,
could have a material adverse effect on our results of
operations, cash flow, liquidity and financial
condition.
In the course of our business, we are subject to a variety of
claims and lawsuits, including litigation relating to product
liability and warranty, personal injury, environmental,
intellectual property, commercial, contractual and antitrust
claims that are inherently subject to many uncertainties
regarding the possibility of a loss to us. These uncertainties
will ultimately be resolved when one or more future events occur
or fail to occur confirming the incurrence of a liability or the
reduction of a liability. In accordance with the Contingencies
Topic of the ASC, we accrue for these contingencies by a charge
to income when it is both probable that one or more future
events will occur confirming the fact of a loss and the amount
of the loss can be reasonably estimated. In the event that a
loss contingency is ultimately determined to be significantly
higher than currently accrued, the recording of the additional
liability may result in a material impact on our results of
operations, liquidity or financial condition for the annual or
interim period during which such additional liability is
accrued. In those cases where no accrual is recorded because it
is not probable that a liability has been incurred and cannot be
reasonably estimated, any potential liability ultimately
determined to be attributable to us may result in a material
impact on our results of operations, liquidity or financial
condition for the annual or interim period during which such
liability is accrued. In those cases where no accrual is
recorded or exposure to loss exists in excess of the amount
accrued, the Contingencies Topic of the ASC requires disclosure
of the contingency when there is a reasonable possibility that a
loss or additional loss may have been incurred even if the
possibility may be remote.
Our past operations included the manufacture and sale of lead
pigments and lead-based paints. Along with other companies, we
are a defendant in a number of legal proceedings, including
individual personal injury actions, purported class actions and
actions brought by various counties, cities, school districts
and other government-related entities, arising from the
manufacture and sale of lead pigments and lead-based paints. The
plaintiffs are seeking recovery based upon various legal
theories, including negligence, strict liability, breach of
warranty, negligent misrepresentations and omissions, fraudulent
misrepresentations and omissions, concert of action, civil
conspiracy, violations of unfair trade practice and consumer
protection laws, enterprise liability, market share liability,
public nuisance, unjust enrichment and other theories. The
plaintiffs seek various damages and relief, including personal
injury and property damage, costs relating to the detection and
abatement of lead-based paint from buildings, costs associated
with a public education campaign, medical monitoring costs and
others. We are also a defendant in legal proceedings arising
from the manufacture and sale of non-lead-based paints which
seek recovery based upon various legal theories, including the
failure to adequately warn of potential exposure to lead during
surface preparation when using non-lead-based paint on surfaces
previously painted with lead-based paint. We believe that the
litigation brought to date is without merit or subject to
meritorious defenses and are vigorously defending such
litigation. We expect that additional lead pigment and
lead-based paint litigation may be filed against us in the
future asserting similar or different legal theories and seeking
similar or different types of damages and relief.
Notwithstanding our views on the merits, litigation is
inherently subject to many uncertainties, and we ultimately may
not prevail. Adverse court rulings, such as the jury verdict
against us and other defendants in the State of Rhode Island
action and the Wisconsin State Supreme Courts
determination that Wisconsins risk contribution theory may
apply in the lead pigment litigation, or determinations of
liability, among other factors, could affect the lead pigment
and lead-based paint litigation against us and encourage an
increase in the number and nature of future claims and
proceedings. In addition, from time to time, various legislation
and administrative regulations have been enacted, promulgated or
proposed to impose obligations on present and former
manufacturers of lead pigments and lead-based paints respecting
asserted health concerns associated with such products or to
overturn the effect of court decisions in which we and other
manufacturers have been successful.
Due to the uncertainties involved, management is unable to
predict the outcome of the lead pigment and lead-based paint
litigation, the number or nature of possible future claims and
proceedings, or the effect that any legislation
and/or
administrative regulations may have on the litigation or against
us. In addition, management cannot reasonably determine the
scope or amount of the potential costs and liabilities related
to such litigation, or any such legislation and regulations. We
have not accrued any amounts for such litigation. Any potential
liability that may result from such litigation or such
legislation and regulations cannot reasonably be estimated. In
the event any significant liability is determined to be
attributable to us relating to such litigation, the recording of
the liability
10
may result in a material impact on net income for the annual or
interim period during which such liability is accrued.
Additionally, due to the uncertainties associated with the
amount of any such liability
and/or the
nature of any other remedy which may be imposed in such
litigation, any potential liability determined to be
attributable to us arising out of such litigation may have a
material adverse effect on our results of operations, cash flow,
liquidity or financial condition. An estimate of the potential
impact on our results of operations, cash flow, liquidity or
financial condition cannot be made due to the aforementioned
uncertainties.
We discuss the risks and uncertainties related to litigation,
including the lead pigment and lead-based paint litigation, in
more detail on page 18 of our 2009 Annual Report under the
caption Litigation and Other Contingent Liabilities,
and pages 26 through 29 of our 2009 Annual Report under the
caption Litigation of Managements
Discussion and Analysis of Financial Condition and Results of
Operations and in Note 10 of the Notes to
Consolidated Financial Statements on pages 65 through 68 of
our 2009 Annual Report.
The
costs or potential liability ultimately determined to be
attributable to us through our ownership of Life Shield could
have an adverse effect on our results of operations, cash flow,
liquidity or financial condition.
We own Life Shield Engineered Systems, LLC. Life Shield develops
and manufactures blast and fragment mitigating systems and
ballistic resistant systems. The blast and fragment mitigating
systems and ballistic resistant systems create a potentially
higher level of product liability for us than is normally
associated with coatings and related products we manufacture,
distribute and sell. Depending upon the extent of any potential
liability ultimately determined to be attributable to us
relating to Life Shield, such liability could have an adverse
effect on our results of operations, cash flow, liquidity or
financial condition. We discuss these risks and uncertainties in
more detail on pages 25 and 26 of our 2009 Annual Report under
the caption Contingent Liabilities of
Managements Discussion and Analysis of Financial
Condition and Results of Operations.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None.
ITEM
2. PROPERTIES
We own our world headquarters located in Cleveland, Ohio, which
includes the world headquarters for the Paint Stores Group,
Consumer Group and Global Finishes Group. Our principal
manufacturing and distribution facilities are located as set
forth below. We believe our manufacturing and distribution
facilities are well-maintained and are suitable and adequate,
and have sufficient productive capacity, to meet our current
needs.
CONSUMER
GROUP
Manufacturing Facilities
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Andover, Kansas
Baltimore, Maryland
Bedford Heights, Ohio
Beltsville, Maryland
Chicago, Illinois
Cincinnati, Ohio
Coffeyville, Kansas
Crisfield, Maryland
Ennis, Texas
Fernley, Nevada
Flora, Illinois
Fort Erie, Ontario, Canada
Garland, Texas
Greensboro, North Carolina
|
|
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
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|
Grodzisk Wielkopolski, Poland
Holland, Michigan
Homewood, Illinois
Lawrenceville, Georgia
Memphis, Tennessee
Morrow, Georgia
Norfolk, Virginia
Orlando, Florida
Portland, Oregon
Sheffield, England
South Holland, Illinois
Szamotuly, Poland
Terre Haute, Indiana
Victorville, California
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|
Leased
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Owned
Owned
Owned
Owned
Owned
|
11
Distribution Facilities
|
|
|
|
|
|
|
Buford, Georgia
Effingham, Illinois
Fredericksburg, Pennsylvania
Reno, Nevada
Sheffield, England
|
|
Leased
Leased
Owned
Leased
Owned
|
|
Swaffham, England
Szamotuly, Poland
Waco, Texas
Winter Haven, Florida
|
|
Leased
Owned
Leased
Owned
|
GLOBAL
FINISHES GROUP
Manufacturing Facilities
|
|
|
|
|
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|
Arlington, Texas
Binh Duong Province, Vietnam
Buenos Aires, Argentina
Columbus, Ohio
Dongguan, China
Greensboro, North Carolina
Grimsby, Ontario, Canada
Grove City, Ohio
Manchester, Georgia
Monterrey, Mexico (2)
Montevideo City, Uruguay
|
|
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
|
|
Mumbai (Paloja), India
Ontario, California
Pasir Gudang, Johor, Malaysia
Richmond, Kentucky
Rockford, Illinois
Santiago, Chile
Sao Paulo, Brazil (3)
Shanghai, China
Texcoco, Mexico
Vallejo, Mexico
Zhao Qing, China
|
|
Owned
Leased
Owned
Owned
Leased
Owned
Owned
Leased
Owned
Owned
Leased
|
Distribution Facilities
|
|
|
|
|
|
|
Buenos Aires, Argentina
Guadalajara, Mexico
Hermosilla, Mexico
Lima, Peru
Maceio, Brazil
Mechelen, Belgium
Mexico City, Mexico
Monterrey, Mexico (3)
Montevideo City, Uruguay
Perpignan, France
|
|
Owned
Leased
Leased
Leased
Leased
Leased
Owned
Owned
Owned
Leased
|
|
Richmond, Kentucky
Santiago, Chile
Santiago, Chile
Sao Paulo, Brazil (3)
Shanghai, China
Texcoco, Mexico
Tijuana, Mexico
Valencia, Venezuela
Vallejo, Mexico
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|
Owned
Leased
Owned
Owned
Owned
Owned
Leased
Leased
Owned
|
The operations of the Paint Stores Group included a
manufacturing and distribution facility in Jamaica and 3,354
company-operated specialty paint stores, of which 215 were
owned, in the United States, Canada, Puerto Rico, Virgin
Islands, Trinidad and Tobago, St. Maarten and Jamaica at
December 31, 2009. These paint stores are divided into four
separate operating divisions that are responsible for the sale
of predominantly architectural, industrial maintenance and
related products through the paint stores located within their
geographical region. At the end of 2009:
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|
the Mid Western Division operated 888 paint stores
primarily located in the midwestern and upper west coast states;
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|
the Eastern Division operated 799 paint stores along the
upper east coast and New England states and Canada;
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|
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|
the Southeastern Division operated a manufacturing and
distribution facility in Jamaica and 868 paint stores
principally covering the lower east and gulf coast states,
Puerto Rico, Jamaica, Trinidad and Tobago, St. Maarten
and Virgin Islands; and
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|
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|
the South Western Division operated 799 paint stores
in the central plains and the lower west coast states.
|
In 2009, the Paint Stores Group opened 8 net new paint
stores, consisting of 53 new stores opened (44 in the United
States) and 45 stores closed (in the United States).
12
The Global Finishes Group operated 252 branches in the
United States, of which 9 were owned, at December 31, 2009.
The Global Finishes Group also operated 287 branches, of which 7
were owned, at December 31, 2009, consisting of branches in
Mexico (106), Brazil (84), Chile (48), Canada (26),
Uruguay (10), Argentina (5), India (5) and
Peru (3). During 2009, the Global Finishes Group opened 18
new branches (8 in the United States, 1 in Canada, 6 in
South America and 3 in India) and closed 20 (15 in the United
States, 4 in Mexico and 1 in South America).
All real property within the Administrative segment is owned by
us. For additional information regarding real property within
the Administrative segment, see the information set forth in
Item 1 of this report, which is incorporated herein by
reference.
For additional information regarding real property leases, see
Note 18 of the Notes to Consolidated Financial Statements
on page 75 of our 2009 Annual Report, which is incorporated
herein by reference.
ITEM
3. LEGAL PROCEEDINGS
For information regarding environmental-related matters and
other legal proceedings, see pages 22 through 24, and 26
through 29, of our 2009 Annual Report under the captions
Environmental-Related Liabilities and
Litigation of Managements Discussion and
Analysis of Financial Condition and Results of Operations
and Notes 1, 9, 10 and 14 of the Notes to Consolidated
Financial Statements on pages 46, 63 through 65, 65 through
68, and 72, respectively, of our 2009 Annual Report, which is
incorporated herein by reference.
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|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
No matters were submitted to a vote of our security holders
during the fourth quarter of 2009.
13
EXECUTIVE
OFFICERS OF THE REGISTRANT
The following is the name, age and present position of each of
our executive officers at February 17, 2010, as well as all
prior positions held by each during the last five years and the
date when each was first elected or appointed as an executive
officer. Executive officers are generally elected annually by
the Board of Directors and hold office until their successors
are elected and qualified or until their earlier death,
resignation or removal.
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Date When
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|
First Elected
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Name
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Age
|
|
|
Present Position
|
|
or Appointed
|
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|
Christopher M. Connor
|
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53
|
|
|
Chairman and Chief Executive Officer, Director
|
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|
1994
|
|
John G. Morikis
|
|
|
46
|
|
|
President and Chief Operating Officer
|
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|
1999
|
|
Sean P. Hennessy
|
|
|
52
|
|
|
Senior Vice President Finance and Chief Financial
Officer
|
|
|
2001
|
|
Thomas E. Hopkins
|
|
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52
|
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|
Senior Vice President Human Resources
|
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|
1997
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Timothy A. Knight
|
|
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45
|
|
|
Senior Vice President Corporate Planning and
Development
|
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|
2005
|
|
Thomas W. Seitz
|
|
|
61
|
|
|
Senior Vice President Strategic Excellence
Initiatives
|
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|
1999
|
|
Louis E. Stellato
|
|
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59
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Senior Vice President, General Counsel and Secretary
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1989
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Robert J. Wells
|
|
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52
|
|
|
Senior Vice President Corporate Communications and
Public Affairs
|
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|
2006
|
|
John L. Ault
|
|
|
63
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|
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Vice President Corporate Controller
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1987
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|
George E. Heath
|
|
|
44
|
|
|
President, Global Finishes Group
|
|
|
2008
|
|
Steven J. Oberfeld
|
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|
57
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|
|
President, Paint Stores Group
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2006
|
|
Mr. Connor has served as Chairman since April 2000 and Chief
Executive Officer since October 1999. Mr. Connor served as
President from July 2005 to October 2006. Mr. Connor has
served as a Director since October 1999 and has been employed
with the Company since January 1983.
Mr. Morikis has served as President and Chief Operating Officer
since October 2006. Mr. Morikis served as President, Paint
Stores Group from October 1999 to October 2006. Mr. Morikis
has been employed with the Company since December 1984.
Mr. Hennessy has served as Senior Vice President
Finance and Chief Financial Officer since August 2001.
Mr. Hennessy has been employed with the Company since
September 1984.
Mr. Hopkins has served as Senior Vice President
Human Resources since February 2002. Mr. Hopkins has been
employed with the Company since September 1981.
Mr. Knight has served as Senior Vice President
Corporate Planning and Development since February 2007.
Mr. Knight served as President, Global Group from August
2005 to February 2007 and President & General Manager,
Diversified Brands Division from February 2002 to August 2005.
Mr. Knight has been employed with the Company since
December 1994.
Mr. Seitz has served as Senior Vice President
Strategic Excellence Initiatives since February 2007.
Mr. Seitz served as President, Consumer Group from August
2005 to February 2007 and President & General Manager,
Consumer Division from January 2001 to August 2005. Mr. Seitz
has been employed with the Company since June 1970.
Mr. Stellato has served as Senior Vice President, General
Counsel and Secretary since February 2009. Mr. Stellato
served as Vice President, General Counsel and Secretary from
July 1991 to February 2009. Mr. Stellato has been
employed with the Company since July 1981.
14
Mr. Wells has served as Senior Vice President
Corporate Communications and Public Affairs since February 2009.
Mr. Wells served as Vice President Corporate
Communications and Public Affairs from January 2006 to February
2009 and Vice President Corporate Planning and
Communication from July 2002 to January 2006. Mr. Wells has
been employed with the Company since May 1998.
Mr. Ault has served as Vice President Corporate
Controller since January 1987. Mr. Ault has been
employed with the Company since June 1976.
Mr. Heath has served as President, Global Finishes Group since
September 2008. Mr. Heath served as President & General
Manager, Chemical Coatings Division from November 2005 to
September 2008 and Vice President, Marketing of Chemical
Coatings Division from May 2004 to November 2005. Mr. Heath
has been employed with the Company since May 2004.
Mr. Oberfeld has served as President, Paint Stores Group since
October 2006. Mr. Oberfeld served as President &
General Manager, South Western Division, Paint Stores Group from
September 1992 to October 2006. Mr. Oberfeld has been employed
with the Company since October 1984.
PART
II
|
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ITEM 5. |
MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Our common stock is listed on the New York Stock Exchange and
traded under the symbol SHW. The number of shareholders of
record at January 31, 2010 was 9,113.
Information regarding market prices and dividend information
with respect to our common stock is set forth on page 79 of
our 2009 Annual Report, which is incorporated herein by
reference. The performance graph set forth on page 9 of our
2009 Annual Report is incorporated herein by reference. The
information with respect to securities authorized for issuance
under the Companys equity compensation plans is set forth
under the caption Equity Compensation Plan
Information in our Proxy Statement, which is incorporated
herein by reference.
Issuer
Purchases of Equity Securities
The following table sets forth a summary of the Companys
purchases of common stock during the fourth quarter of 2009.
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Total Number
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Maximum Number
|
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of Shares
|
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|
of Shares
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Total
|
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Purchased as
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That May
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Number of
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Average Price
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Part of
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Yet Be
|
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|
Shares
|
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Paid Per
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Publicly
|
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Purchased Under
|
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Period
|
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Purchased
|
|
|
Share
|
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Announced Plan
|
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|
the Plan
|
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|
October 1 October 31
|
|
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|
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|
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|
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Share repurchase
program(1)
|
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392,937
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$
|
57.25
|
|
|
|
392,937
|
|
|
|
14,479,458
|
|
November 1 November 30
|
|
|
|
|
|
|
|
|
|
|
|
|
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Share repurchase
program(1)
|
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1,890,709
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|
$
|
59.94
|
|
|
|
1,890,709
|
|
|
|
12,588,749
|
|
December 1 December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share repurchase
program(1)
|
|
|
1,838,749
|
|
|
$
|
61.86
|
|
|
|
1,838,749
|
|
|
|
10,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share repurchase
program(1)
|
|
|
4,122,395
|
|
|
$
|
60.54
|
|
|
|
4,122,395
|
|
|
|
10,750,000
|
|
|
|
(1) |
All shares were purchased through the Companys publicly
announced share repurchase program. On October 19, 2007,
the Board of Directors of the Company authorized the Company to
purchase, in the aggregate, 30,000,000 shares of its common
stock and rescinded the previous authorization limit. The
Company had remaining authorization at December 31, 2009 to
purchase 10,750,000 shares. There is no expiration date
specified for the program. The Company intends to repurchase
stock under the program in the future.
|
15
ITEM
6. SELECTED FINANCIAL DATA
(millions of dollars, except
per common share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
7,094
|
|
|
$
|
7,980
|
|
|
$
|
8,005
|
|
|
$
|
7,810
|
|
|
$
|
7,191
|
|
Net income
|
|
|
436
|
|
|
|
477
|
|
|
|
616
|
|
|
|
576
|
|
|
|
463
|
|
Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,324
|
|
|
$
|
4,416
|
|
|
$
|
4,855
|
|
|
$
|
4,995
|
|
|
$
|
4,369
|
|
Long-term debt
|
|
|
783
|
|
|
|
304
|
|
|
|
293
|
|
|
|
292
|
|
|
|
487
|
|
Ratio of earnings to fixed charges (a)
|
|
|
5.6
|
x
|
|
|
5.6
|
x
|
|
|
7.0
|
x
|
|
|
7.0
|
x
|
|
|
6.7
|
x
|
Per Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income basic
|
|
$
|
3.84
|
|
|
$
|
4.08
|
|
|
$
|
4.84
|
|
|
$
|
4.31
|
|
|
$
|
3.39
|
|
Net income diluted
|
|
|
3.78
|
|
|
|
4.00
|
|
|
|
4.70
|
|
|
|
4.19
|
|
|
|
3.28
|
|
Cash dividends
|
|
|
1.42
|
|
|
|
1.40
|
|
|
|
1.26
|
|
|
|
1.00
|
|
|
|
.82
|
|
|
|
(a) |
For purposes of calculating the ratio of earnings to fixed
charges, earnings represents income before income taxes and
minority interest plus fixed charges. Fixed charges consist of
interest expense, net, including amortization of discount and
financing costs and the portion of operating rental expense
which management believes is representative of the interest
component of rent expense. The following schedule includes the
figures used to calculate the ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Earnings
|
|
$
|
623
|
|
|
$
|
714
|
|
|
$
|
913
|
|
|
$
|
834
|
|
|
$
|
656
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
40
|
|
|
|
66
|
|
|
|
72
|
|
|
|
67
|
|
|
|
50
|
|
Interest component of rent expense
|
|
|
94
|
|
|
|
90
|
|
|
|
81
|
|
|
|
72
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed charges
|
|
|
134
|
|
|
|
156
|
|
|
|
153
|
|
|
|
139
|
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings and fixed charges
|
|
$
|
757
|
|
|
$
|
870
|
|
|
$
|
1,066
|
|
|
$
|
973
|
|
|
$
|
771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM
7.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
The information required by this item is set forth on
pages 13 through 35 of our 2009 Annual Report under the
caption Managements Discussion and Analysis of
Financial Condition and Results of Operations, which is
incorporated herein by reference.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
We are exposed to market risk associated with interest rates,
foreign currency and commodity fluctuations. We occasionally
utilize derivative instruments as part of our overall financial
risk management policy, but do not use derivative instruments
for speculative or trading purposes. The Company entered into
foreign currency option and forward currency exchange contracts
and commodity swaps during 2009 to hedge against value changes
in foreign currency and commodities. There were no contracts
outstanding at December 31, 2009. Foreign currency option
and forward contracts are described in Note 14 of the Notes
to Consolidated Financial Statements on page 72 of our 2009
Annual Report. Commodity swaps are described in Note 1 of
the Notes to Consolidated Financial Statements on page 45
of our 2009 Annual Report. We believe we may experience
continuing losses from foreign currency and commodity price
fluctuations. However, we do not expect currency translation,
transaction, commodity price fluctuations or hedging contract
losses to have a material adverse effect on our financial
condition, results of operations or cash flows.
16
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Information required by this item is set forth on pages 38
through 77 of our 2009 Annual Report under the captions
Report of Management on the Consolidated Financial
Statements, Report of the Independent Registered
Public Accounting Firm on the Consolidated Financial
Statements, Statements of Consolidated Income,
Consolidated Balance Sheets, Statements of
Consolidated Cash Flows, Statements of Consolidated
Shareholders Equity and Comprehensive Income, and
Notes to Consolidated Financial Statements, which is
incorporated herein by reference. Unaudited quarterly data is
set forth in Note 17 of the Notes to Consolidated Financial
Statements on pages 74 and 75 of our 2009 Annual Report,
which is incorporated herein by reference.
|
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
None.
|
|
ITEM 9A.
|
CONTROLS
AND PROCEDURES
|
Disclosure
Controls and Procedures
As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the
participation of our Chairman and Chief Executive Officer and
our Senior Vice President Finance and Chief
Financial Officer, of the effectiveness of our disclosure
controls and procedures pursuant to Rule 13a-15 and
Rule 15d-15 of the Securities Exchange Act of 1934, as
amended (Exchange Act). Based upon that evaluation,
our Chairman and Chief Executive Officer and our Senior Vice
President Finance and Chief Financial Officer
concluded that as of the end of the period covered by this
report our disclosure controls and procedures were effective to
ensure that information required to be disclosed by us in
reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms,
and accumulated and communicated to our management including our
Chairman and Chief Executive Officer and our Senior Vice
President Finance and Chief Financial Officer, to
allow timely decisions regarding required disclosure.
Internal
Control Over Financial Reporting
The Report of Management on Internal Control over
Financial Reporting is set forth on page 36 of our
2009 Annual Report, which is incorporated herein by reference.
The Report of the Independent Registered Public Accounting
Firm on Internal Control over Financial Reporting is set
forth on page 37 of our 2009 Annual Report, which is
incorporated herein by reference.
There were no changes in our internal control over financial
reporting identified in connection with the evaluation that
occurred during the period covered by this report that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER
INFORMATION
None.
17
PART
III
|
|
ITEM 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Directors
The information regarding our directors is set forth under the
captions Election of Directors (Proposal 1) and
Experience, Qualifications, Attributes and Skills of
Directors and Nominees in our Proxy Statement, which is
incorporated herein by reference.
There were no material changes to the procedures by which
security holders may recommend nominees to our Board of
Directors during 2009. Please refer to the information set forth
under the caption Board Meetings and Committee
Membership Nominating and Corporate Governance
Committee in our Proxy Statement, which is incorporated
herein by reference.
Executive
Officers
The information regarding our executive officers is set forth
under the caption Executive Officers of the
Registrant in Part I of this report, which is incorporated
herein by reference.
Section
16(a) Beneficial Ownership Reporting Compliance
The information regarding compliance with Section 16 of the
Securities Exchange Act of 1934 is set forth under the caption
Section 16(a) Beneficial Ownership Reporting
Compliance in our Proxy Statement, which is incorporated
herein by reference.
Audit
Committee
The information regarding the Audit Committee of our Board of
Directors and the information regarding audit committee
financial experts are set forth under the caption Board
Meetings and Committee Membership in our Proxy Statement,
which is incorporated herein by reference.
Code of
Ethics
We have adopted a Business Ethics Policy, which applies to all
of our directors, officers and employees. Our Business Ethics
Policy includes additional ethical obligations for our senior
financial management (which includes our chief executive
officer, our chief financial officer, and the controller,
treasurer and principal financial and accounting personnel in
our operating groups and corporate departments). Please refer to
the information set forth under the caption Corporate
Governance Business Ethics Policy in our Proxy
Statement, which is incorporated herein by reference. Our
Business Ethics Policy is available in the Corporate
Governance section on the Investor Relations
page of our website at www.sherwin.com.
We intend to disclose on our website any amendment to, or waiver
from, a provision of our Business Ethics Policy that applies to
our directors and executive officers, including our principal
executive officer, principal financial officer, principal
accounting officer or controller, or any persons performing
similar functions, and that is required to be publicly disclosed
pursuant to the rules of the Securities and Exchange Commission.
|
|
ITEM 11.
|
EXECUTIVE
COMPENSATION
|
The information required by this item is set forth on
pages 35 through 48 of our Proxy Statement and under the
captions Compensation Committee Report,
Compensation Risk Assessment, Compensation
Discussion and Analysis, 2009 Director Compensation
Table and Director Compensation Program in our
Proxy Statement, which is incorporated herein by reference.
18
|
|
ITEM 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The information regarding security ownership of certain
beneficial owners and management is set forth under the captions
Security Ownership of Management and Security
Ownership of Certain Beneficial Owners in our Proxy
Statement, which is incorporated herein by reference.
The information regarding securities authorized for issuance
under the Companys equity compensation plans is set forth
under the caption Equity Compensation Plan
Information in our Proxy Statement, which is incorporated
herein by reference.
|
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
The information required by this item is set forth under the
captions Certain Relationships and Transactions with
Related Persons, and Independence of Directors
in our Proxy Statement, which is incorporated herein by
reference.
|
|
ITEM 14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
The information required by this item is set forth under the
caption Matters Relating to the Independent Registered
Public Accounting Firm in our Proxy Statement, which is
incorporated herein by reference.
19
PART
IV
|
|
ITEM 15.
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
|
|
|
|
|
|
|
(a)
|
|
(1)
|
|
Financial Statements
|
|
|
|
|
The following consolidated financial statements of the Company
included in our 2009 Annual Report are incorporated by reference
in Item 8.
|
|
|
|
|
(i)
|
|
Report of Management on the Consolidated Financial Statements
(page 38 of our 2009 Annual Report);
|
|
|
|
|
(ii)
|
|
Report of the Independent Registered Public Accounting Firm on
the Consolidated Financial Statements (page 39 of our 2009
Annual Report);
|
|
|
|
|
(iii)
|
|
Statements of Consolidated Income for the years ended
December 31, 2009, 2008 and 2007 (page 40 of our 2009
Annual Report);
|
|
|
|
|
(iv)
|
|
Consolidated Balance Sheets at December 31, 2009, 2008 and
2007 (page 41 of our 2009 Annual Report);
|
|
|
|
|
(v)
|
|
Statements of Consolidated Cash Flows for the years ended
December 31, 2009, 2008 and 2007 (page 42 of our 2009
Annual Report);
|
|
|
|
|
(vi)
|
|
Statements of Consolidated Shareholders Equity and
Comprehensive Income for the years ended December 31, 2009,
2008 and 2007 (page 43 of our 2009 Annual Report); and
|
|
|
|
|
(vii)
|
|
Notes to Consolidated Financial Statements for the years ended
December 31, 2009, 2008 and 2007 (pages 44
through 77 of our 2009 Annual Report).
|
|
|
(2)
|
|
Financial Statement Schedule
|
|
|
|
|
|
|
Schedule II Valuation and Qualifying Accounts and
Reserves for the years ended December 31, 2009, 2008 and
2007 is set forth below. All other schedules for which provision
is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been
omitted.
|
Valuation
and Qualifying Accounts and Reserves
(Schedule II)
Changes in the allowance for doubtful accounts were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(thousands of dollars)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Beginning balance
|
|
$
|
40,760
|
|
|
$
|
29,593
|
|
|
$
|
23,072
|
|
Amount acquired through acquisitions
|
|
|
92
|
|
|
|
91
|
|
|
|
7,513
|
|
Bad debt expense
|
|
|
36,219
|
|
|
|
59,157
|
|
|
|
37,070
|
|
Uncollectible accounts written off, net of recoveries
|
|
|
(32,316
|
)
|
|
|
(48,081
|
)
|
|
|
(38,062
|
)
|
|
Ending balance
|
|
$
|
44,755
|
|
|
$
|
40,760
|
|
|
$
|
29,593
|
|
|
|
Bad debt expense and uncollectible accounts written off
increased in 2008 primarily due to increased activity in
accounts doubtful of collection.
|
|
|
|
|
|
|
|
|
(3)
|
|
Exhibits
|
|
|
|
|
|
|
See the Exhibit Index on pages 22 through 25 of this
report.
|
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on February 24, 2010.
THE SHERWIN-WILLIAMS COMPANY
L. E. Stellato, Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on
February 24, 2010.
|
|
|
|
|
|
* C. M. Connor
C.
M. Connor
|
|
Chairman and Chief Executive Officer, Director (Principal
Executive Officer)
|
|
|
|
|
|
|
* S. P. Hennessy
S.
P. Hennessy
|
|
Senior Vice President Finance and Chief Financial
Officer (Principal Financial Officer)
|
|
|
|
|
|
|
* J. L. Ault
J.
L. Ault
|
|
Vice President Corporate Controller
(Principal Accounting Officer)
|
|
|
|
|
|
|
* A. F. Anton
A.
F. Anton
|
|
Director
|
|
|
|
|
|
|
* J. C. Boland
J.
C. Boland
|
|
Director
|
|
|
|
|
|
|
* D. F. Hodnik
D.
F. Hodnik
|
|
Director
|
|
|
|
|
|
|
* T. G. Kadien
T.
G. Kadien
|
|
Director
|
|
|
|
|
|
|
* S. J. Kropf
S.
J. Kropf
|
|
Director
|
|
|
|
|
|
|
* G. E.
McCullough
G.
E. McCullough
|
|
Director
|
|
|
|
|
|
|
* A. M. Mixon,
III
A.
M. Mixon, III
|
|
Director
|
|
|
|
|
|
|
* C. E. Moll
C.
E. Moll
|
|
Director
|
|
|
|
|
|
|
* R. K. Smucker
R.
K. Smucker
|
|
Director
|
|
|
|
|
|
|
* J. M. Stropki,
JR.
J.
M. Stropki, Jr.
|
|
Director
|
|
|
|
|
|
* |
The undersigned, by signing his name hereto, does sign this
report on behalf of the designated officers and directors of The
Sherwin-Williams Company pursuant to Powers of Attorney executed
on behalf of each such officer and director and filed as
exhibits to this report.
|
|
|
|
By: /s/ L. E.
Stellato
L.
E. Stellato, Attorney-in-fact
|
|
February 24, 2010
|
21
EXHIBIT
INDEX
|
|
|
|
|
3.
|
|
(a)
|
|
Amended and Restated Articles of Incorporation of the Company,
as amended through July 26, 2006, filed as Exhibit 3
to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006, and incorporated
herein by reference.
|
|
|
(b)
|
|
Regulations of the Company, as amended and restated
April 28, 2004, filed as Exhibit 3 to the
Companys Current Report on Form 8-K dated
June 10, 2004, and incorporated herein by reference.
|
4.
|
|
(a)
|
|
Indenture between the Company and The Bank of New York Mellon
(as successor to Chemical Bank), as trustee, dated as of
February 1, 1996, filed as Exhibit 4(a) to Form S-3
Registration Statement Number 333-01093, dated
February 20, 1996, and incorporated herein by reference.
|
|
|
(b)
|
|
First Supplemental Indenture between the Company and The Bank of
New York Mellon, as trustee, dated as of December 21, 2009
(filed herewith).
|
|
|
(c)
|
|
Indenture between Sherwin-Williams Development Corporation, as
issuer, the Company, as guarantor, and Harris Trust and Savings
Bank, as trustee, dated June 15, 1986, filed as Exhibit
4(b) to Form
S-3
Registration Statement Number
33-6626,
dated June 20, 1986, and incorporated herein by reference.
|
|
|
(d)
|
|
Credit Agreement, dated as of January 8, 2010, among the
Company, the Lenders party thereto, JPMorgan Chase Bank, N.A.
and Citibank, N.A., as co-documentation agents, Bank of America,
N.A., as administrative agent, and Wells Fargo Bank, N.A., as
syndication agent, filed as Exhibit 4.1 to the
Companys Current Report on Form 8-K dated
January 8, 2010, and incorporated herein by reference.
|
|
|
(e)
|
|
Second Amendment and Restatement Agreement, dated as of
December 8, 2005, in respect of the Five-Year Competitive
Advance and Revolving Credit Facility Agreement, dated as of
July 19, 2004, as amended and restated as of July 20,
2005, among the Company, JPMorgan Chase Bank, N.A., as
administrative agent, and the Lenders party thereto filed as
Exhibit 4 to the Companys Current Report on
Form 8-K dated December 8, 2005, and incorporated herein by
reference.
|
|
|
(f)
|
|
Modification, dated as of March 15, 2006, to the Second
Amended and Restated Credit Agreement, dated as of
December 8, 2005, by and among the Company, the Lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative
agent, filed as Exhibit 4 to the Companys Current
Report on
Form 8-K
dated March 15, 2006, and incorporated herein by reference.
|
|
|
(g)
|
|
First Amendment, dated as of May 30, 2008, to the Second
Amended and Restated Five-Year Competitive Advance and Revolving
Credit Facility Agreement, dated as of December 8, 2005, by
and among the Company, the Lenders from time to time party
thereto, and JPMorgan Chase Bank, N.A., as administrative agent,
filed as Exhibit 4 to the Companys Current Report on
Form 8-K dated May 30, 2008, and incorporated herein
by reference.
|
|
|
(h)
|
|
Five Year Credit Agreement, dated as of May 23, 2006, by
and among the Company, Citicorp USA, Inc., as administrative
agent and issuing bank, the Lenders party thereto, and JPMorgan
Chase Bank, N.A., as paying agent, filed as Exhibit 4.1 to
the Companys Current Report on Form 8-K dated May 23,
2006, and incorporated herein by reference.
|
|
|
(i)
|
|
Agreement for Letter of Credit, dated as of May 23, 2006,
by and between the Company and Citibank, N.A. filed as
Exhibit 4.2 to the Companys Current Report on
Form 8-K
dated May 23, 2006, and incorporated herein by reference.
|
|
|
(j)
|
|
Five Year Credit Agreement Amendment, dated as of July 24,
2006, by and among the Company, Citicorp USA, Inc., as
administrative agent and issuing bank, the Lenders party
thereto, and JPMorgan Chase Bank, N.A., as paying agent, filed
as Exhibit 4 to the Companys Current Report of
Form 8-K
dated July 24, 2006, and incorporated herein by reference.
|
|
|
(k)
|
|
Five Year Credit Agreement, dated as of April 26, 2007, by and
among the Company, Citicorp USA, Inc., as administrative agent
and issuing bank, the Lenders party thereto, and The Bank of New
York Mellon, as paying agent, filed as Exhibit 4.1 to the
Companys Current Report on Form 8-K dated April 26, 2007,
and incorporated herein by reference.
|
|
|
(l)
|
|
Agreement for Letter of Credit, dated as of April 26, 2007, by
and between the Company and Citibank, N.A. filed as Exhibit 4.2
to the Companys Current Report on Form 8-K dated April 26,
2007, and incorporated herein by reference.
|
22
|
|
|
|
|
|
|
(m)
|
|
Five Year Credit Agreement, dated as of August 28, 2007, by and
among the Company, Citicorp USA, Inc., as administrative agent
and issuing bank, the Lenders party thereto, and The Bank of New
York Mellon, as paying agent, filed as Exhibit 4.1 to the
Companys Current Report on Form 8-K dated August 28, 2007,
and incorporated herein by reference.
|
|
|
(n)
|
|
Agreement for Letter of Credit, dated as of August 28, 2007, by
and between the Company and Citibank, N.A. filed as Exhibit 4.2
to the Companys Current Report on Form 8-K dated August
28, 2007, and incorporated herein by reference.
|
|
|
(o)
|
|
Five Year Credit Agreement Amendment No. 1, dated as of
September 17, 2007, by and among the Company, Citicorp USA,
Inc., as administrative agent and issuing bank, the Lenders
party thereto, and The Bank of New York Mellon, as paying agent,
filed as Exhibit 4 to the Companys Current Report on Form
8-K dated September 17, 2007, and incorporated herein by
reference.
|
|
|
(p)
|
|
Five Year Credit Agreement Amendment No. 2, dated as of
September 25, 2007, by and among the Company, Citicorp USA,
Inc., as administrative agent and issuing bank, the Lenders
party thereto, and The Bank of New York Mellon, as paying agent,
filed as Exhibit 4 to the Companys Current Report on Form
8-K dated September 25, 2007, and incorporated herein by
reference.
|
10.
|
|
*(a)
|
|
Form of Director, Executive Officer and Corporate Officer
Indemnity Agreement filed as Exhibit 10(a) to the Companys
Annual Report on Form 10-K for the fiscal year ended December
31, 1997, and incorporated herein by reference.
|
|
|
*(b)
|
|
Summary of Compensation Payable to Non-Employee Directors (filed
herewith).
|
|
|
*(c)
|
|
Summary of Base Salary and Annual Incentive Compensation Payable
to Named Executive Officers (filed herewith).
|
|
|
*(d)
|
|
Forms of Amended and Restated Severance Agreements (filed
herewith).
|
|
|
*(e)
|
|
Schedule of Executive Officers who are Parties to the
Amended and Restated Severance Agreements in the forms referred
to in Exhibit 10(d) (filed herewith).
|
|
|
*(f)
|
|
The Sherwin-Williams Company 2005 Deferred Compensation Savings
and Pension Equalization Plan (as Amended and Restated) (filed
herewith).
|
|
|
*(g)
|
|
The Sherwin-Williams Company 2005 Key Management Deferred
Compensation Plan (as Amended and Restated) (filed herewith).
|
|
|
*(h)
|
|
The Sherwin-Williams Company Director Deferred Fee Plan (1997
Amendment and Restatement), dated April 23, 1997, filed as
Exhibit 10(a) to the Companys Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1997, and
incorporated herein by reference.
|
|
|
*(i)
|
|
2004-1 Amendment to The Sherwin-Williams Company Director
Deferred Fee Plan (1997 Amendment and Restatement) filed as
Exhibit 10(d) to the Companys Current Report on Form 8-K
dated July 20, 2005, and incorporated herein by reference.
|
|
|
*(j)
|
|
The Sherwin-Williams Company 2005 Director Deferred Fee Plan (as
Amended and Restated) (filed herewith).
|
|
|
*(k)
|
|
The Sherwin-Williams Company Executive Disability Income Plan
filed as Exhibit 10(g) to the Companys Annual Report
on Form 10-K for the fiscal year ended December 31,
1991, and incorporated herein by reference.
|
|
|
*(l)
|
|
Amendment Number One to The Sherwin-Williams Company Executive
Disability Income Plan (filed herewith).
|
|
|
*(m)
|
|
The Sherwin-Williams Company 2008 Amended and Restated Executive
Life Insurance Plan (filed herewith).
|
|
|
*(n)
|
|
The Sherwin-Williams Company 1994 Stock Plan, as amended and
restated in its entirety, effective July 26, 2000, filed as
Exhibit 10(b) to the Companys Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2000, and
incorporated herein by reference.
|
|
|
*(o)
|
|
The Sherwin-Williams Company 2003 Stock Plan, dated
January 1, 2003, filed as Exhibit 10(a) to the
Companys Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2002, and
incorporated herein by reference.
|
23
|
|
|
|
|
|
|
*(p)
|
|
Form of Restricted Stock Grant under The Sherwin-Williams
Company 2003 Stock Plan filed as Exhibit 10(a) to the
Companys Current Report on
Form 8-K
dated February 2, 2005, and incorporated herein by
reference.
|
|
|
*(q)
|
|
Form of Stock Option Grant under The Sherwin-Williams Company
2003 Stock Plan filed as Exhibit 10(b) to the
Companys Current Report on
Form 8-K
dated February 2, 2005, and incorporated herein by
reference.
|
|
|
*(r)
|
|
The Sherwin-Williams Company 1997 Stock Plan for Nonemployee
Directors, dated April 23, 1997, filed as
Exhibit 10(b) to the Companys Quarterly Report
on
Form 10-Q
for the quarterly period ended March 31, 1997, and
incorporated herein by reference.
|
|
|
*(s)
|
|
Form of Stock Option Grant under The Sherwin-Williams Company
1997 Stock Plan for Nonemployee Directors filed as
Exhibit 10(b) to the Companys Quarterly Report on
Form 10-Q for the quarterly period ended September 30,
2004, and incorporated herein by reference.
|
|
|
*(t)
|
|
The Sherwin-Williams Company 2006 Equity and Performance
Incentive Plan filed as Exhibit 10(b) to the Companys
Current Report on Form 8-K dated April 19, 2006, and
incorporated herein by reference.
|
|
|
*(u)
|
|
Form of Nonqualified Stock Option Award under The
Sherwin-Williams Company 2006 Equity and Performance Incentive
Plan filed as Exhibit 10(y) to the Companys Annual
Report on Form 10-K for the fiscal year ended
December 31, 2007, and incorporated herein by reference.
|
|
|
*(v)
|
|
Form of Incentive Stock Option Award under The Sherwin-Williams
Company 2006 Equity and Performance Incentive Plan filed as
Exhibit 10(z) to the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2007,
and incorporated herein by reference.
|
|
|
*(w)
|
|
Form of Restricted Stock Grant (Performance-Based) under The
Sherwin-Williams Company 2006 Equity and Performance Incentive
Plan filed as Exhibit 10(c) to the Companys Current
Report on Form 8-K dated April 19, 2006, and
incorporated herein by reference.
|
|
|
*(x)
|
|
Form of Restricted Stock Grant (Performance-Based) under The
Sherwin-Williams Company 2006 Equity and Performance Incentive
Plan filed as Exhibit 10(aa) to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31,
2007, and incorporated herein by reference.
|
|
|
*(y)
|
|
Form of Restricted Stock Grant (Performance-Based) under The
Sherwin-Williams Company 2006 Equity and Performance Incentive
Plan filed as Exhibit 10(aa) to the Companys Annual
Report on Form 10-K for the fiscal year ended
December 31, 2008, and incorporated herein by reference.
|
|
|
*(z)
|
|
Form of Restricted Stock Grant (Performance and Time-Based)
under The Sherwin-Williams Company 2006 Equity and Performance
Incentive Plan filed as Exhibit 10(a) to the Companys
Current Report on Form 8-K dated February 16, 2010, and
incorporated herein by reference.
|
|
|
*(aa)
|
|
The Sherwin-Williams Company 2006 Stock Plan for Nonemployee
Directors filed as Exhibit 10(c) to the Companys Current
Report on Form 8-K dated April 19, 2006, and incorporated herein
by reference.
|
|
|
*(bb)
|
|
Form of Restricted Stock Grant under The Sherwin-Williams
Company 2006 Stock Plan for Nonemployee Directors filed as
Exhibit 10(d) to the Companys Current Report on Form 8-K
dated July 19, 2006, and incorporated herein by reference.
|
|
|
*(cc)
|
|
Form of Individual Grantor Trust Participation Agreement filed
as Exhibit 10(a) to the Companys Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2003, and
incorporated herein by reference.
|
|
|
*(dd)
|
|
The Sherwin-Williams Company Business Travel Accident Insurance
Plan filed as Exhibit 10(z) to the Companys Annual Report
on Form 10-K for the fiscal year ended December 31, 2004,
and incorporated herein by reference.
|
|
|
*(ee)
|
|
The Sherwin-Williams Company 2007 Executive Performance Bonus
Plan filed as Exhibit 10(a) to the Companys Current
Report on
Form 8-K
dated February 21, 2007, and incorporated herein by
reference.
|
13.
|
|
|
|
Our 2009 Annual Report, portions of which are incorporated
herein by reference (filed herewith). With the exception of
those portions of our 2009 Annual Report which are specifically
incorporated by reference in this report, our 2009 Annual Report
shall not be deemed filed as part of this report.
|
24
|
|
|
|
|
21.
|
|
|
|
Subsidiaries (filed herewith).
|
23.
|
|
|
|
Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm (filed herewith).
|
24.
|
|
(a)
|
|
Powers of Attorney (filed herewith).
|
|
|
(b)
|
|
Certified Resolution Authorizing Signature by Power of Attorney
(filed herewith).
|
31.
|
|
(a)
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer (filed herewith).
|
|
|
(b)
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer (filed herewith).
|
32.
|
|
(a)
|
|
Section 1350 Certification of Chief Executive Officer
(filed herewith).
|
|
|
(b)
|
|
Section 1350 Certification of Chief Financial Officer
(filed herewith).
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
*Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of
Form 10-K.
|
25