Document 4DyRGq6x4XZNbo8OLpq5Kb9p

Annual Report 1939 The Sherwin-Williams Co. The Sherwin-Williams Co. 3EORGE a. martin PftOtOKNT To the Stockholders: I submit herewith the Annual Report of The Sherwin-Williams Company for the fiscal year ended August 31, 1939. The Consolidated Balance Sheet and the Consolidated In come and Surplus Statements, as audited by Ernst & Ernst, Certi fied Public Accountants, are set forth in the following pages. The Year's Net Earnings after Depreciation and all other charges, but before Federal Income Taxes, amount to $5,533,237.06. After setting up a reserve for Federal Income Taxes the final Net Profit available for dividendsns $4,463,991.86. After deducting from this the amount paid in Preferred Stock Dividends during the fiscal year, the balance earned on the Com mon Stock is $3,809,234.36, or $5.96 per share. Cash on hand August 31, 1939 amounted to $8,023,450.59, which alone exceeded the entire indebtedness of the Company by $2,901,288.89. The business during the period under review shows a fair gain in sales over the previous year. Business since September first has been somewhat in excess of normal conditions, but, nevertheless, it is our belief that we may look for a reasonably fair volume of sales for some time to come. We are continually enlarging our field for the products we manufacture. We are pleased to advise that through a well-equipped chemical and technical organization we are abreast of the times in scientific developments in the industry, which have contributed to the improvement we show in earnings. Today, as for some time past, we manufacture practically all intermediates and raw materials which enter into the manufacture of our finished products. In addition to the regular extension modernization of our plant, we have in preparation the building S-W 000166 of a Titanium Plant, the total output of which will be consumed by our own Company. In view of the war conditions it seems pertinent to make ref erence to the amount of assets of foreign subsidiaries included in the Balance Sheet. The only important foreign investment is the Company's holding in the Common Stoc of The Sherwin-Williams Company of Canada, Ltd., the amount of which, viz., $3,695,825.00, is set forth in Note A to the Balance Sheet in this report. Outside of Canada the Company has divested itself of its plants in foreign countries except a unit in Cuba. We are, however, erecting in Buenos Aires, Argentina, a modern Paint, Varnish and Lacquer Plant to take care of the business which we have been building up for many years but were losing due to the tariff, money exchange and other new conditions. It affords the Management a great deal of satisfaction to take advantage of this opportunity to express to each and every one in the service of the Institution its appreciation for their loyalty and faithful performance of duty during the trying conditions which presented themselves. O- PrestdnU CONSOLIDATED PROFIT AND LOSS AND SURPLUS THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES Year ended August 31, 1939 PROFIT AND LOSS Profit from operations for the year ended August 31, 1939, before other income, provision for depreciation, other deductions and federal taxes on income....................................... Other income.......................................... 3 6.995,933.69 48.516.98 Deductions: Provision for depreciation - - - - $ 7,044,455.67 $1,015,221.45 Lost on disposal of fixed assets and expenses applicable to non-oper ating properties - 84,203.15 Interest expense.................................. 46,662.53 Provision for doubtful accounts, pen sion payments and sundry items - 363,131.48 Provision for federal taxes on income --estimated ---------- $1,066,965.00 Adjustment of federal income tax provisions for prior years - - - - 4,280.20 1.071,245.20 2.580,463.81 NET PROFIT - ......................... S 4.463,991.86 EARNED SURPLUS Balance at September l, 1938 - - - Add net profit for the year ----- $19,806,970.28 4,463,991.86 Deduct: Cash dividends declared and paid or provided for during the year: Preferred--$6.00 per share - - $ 654,757.50 $24,270,962.14 Common--$2.50 per share - - 1,597.317.50 $2,252,075.00 Premium on preferred stock called for redemption-............................. 24,750.00 2,276.825.00 BALANCE AUGUST 31, 1939- $21,994,157.14 (Note A) Proportionate share of the operating results of unconsolidated Canadian subsidiary has not been redacted in the foregoing statement; final statement aa to such operating reeults for the year ended August 31, 1939, was not availabls st date of issuance of this report. Proportionate share (not significant) of net loss, for the year ended August 31, 1939, of other unconsolidated subsidiary baa been taken up. (Note A) Investment* in securities o f subsidiaries nnt consolidated include (1) investment o f $3,695,825.00 in Canadian a ffilia te stated a t cost w hich waa leas th a n th e proportionate share o f the booh value (including intangibles) o f the net assets o f such affiliate as reported to the Com pany and (2) investm ent in another a ffilia te am ounting lo $1,810.32 which is stated at e q u ity in net assets. N et decrease in e q u ity in C anadian 2h i 11 I 2 * = '2 3 = 2 2 ! S.H 3 3 ^4 fn a 33 C 3 > & rt W ~ 2. vJs* -i 1 a r2 % a> -I 33 n 2 > 1 n CL--5 3 V3 3 O 71 0 1 % = > fZ gt S3 O 4 n C7/*3 G3> af?-* O -3 c ^ OC 5' 3 3-5-2 ' 1M 2! H N3P0 91 , N? o N? o Vl 00 00 90 u VI NP S NP 91 04 00 91 2 '<*< W% 0 -- s * *> 3 3.- ?^2 ovi* ?^ 2: rV3i 1 >T 3 0 n 9 3 94 *91 a'O 04 vj NP 3 0941 90 94 04 NP 04 Vj o91 aa\ 91 < 2) r s. 29 3-- 2; 2^ 32 32.T* n33 23 *3> rf1 * 2 *3 ^ ~1; -2.3 3* < z: 2* ^ 3VJ 5- " 2- 50 ^ *-- k3l --"13 g-m % 33 n 3 < aX t^ * . a3_<2a v 09 . a * 39 9-i. 19 <9 0 90 9vO} 90 NP V <5 0% 00 90 NP 00 **4 U 90 91 - ^ z5. r* 2a ^ E. 3 , "9 H.= Tl3 * 3 *5 _ ^7 5 a 3 5 TL? 2- 2 c -s 2 5~5T* 7 B?<L,i3 l9 ;: ,s ^ 1 Vs? 3O j- ' T"' n a ' z> ?5 5^1 **2; 0 . 3. j# 1 *< - =-$ a ` ""5 3 "3 -- ! 3 l'3 3 2 ` 3s . f) S . ? X, 7 7 --3 * V '1 Si- 0*0 ' fi -*i dft 3> i <6 o S5 > CO ^5 V5 31 00 00 3 NP 04 ^4 04 O3 bi in NP >0 4% 94 94 A 04 NP C/1 w w w o o 2z C/3 o va >> >2H a MW sa CeOw o (8 O 5J 2> zcS ^ >"3 2: t- > o >w 2 O c^> 8* c PJ I CM 93 V9 affiliate since date o f acquisition, not taken up b y parent Com pany, amounted to approsim ately $513,000.00 as o f A ugust 31, 1930, (fin a l statem ent as to operating results for the year ended A ugust 31, 1939, was n o t available a t date o f issuance o f this report), P roportionate share (not significant) o f net losses o f other unconsolidated subsidiary has been taken up. <% sswa ^ M g 91 94 5 ^o lh JSP 91 VO 4h i NP a 91 2 NP CO 91 94 vo NP h* VO 94 N| & 1 ip t > w w CA os\ NN3) NP NP *sOl 2 N S-W 000169 AUDITORS' CERTIFICATE 3oard of Directors, The Sherwin-Williams Company, Cleveland, Ohio. We have examined the consolidated balance sheet of THE SHERWIN-WILLIAMS COMPANY and its consolidated sub sidiaries as of August 31, 1939, and the consolidated statements of income and surplus for the fiscal year then ended, have reviewed the system of internal control and the accounting procedures of the companies and, without making a detailed audit of the trans actions, have examined or tested accounting records of the com panies and other supporting evidence, by methods and to the extent we deemed appropriate. We made tests of trade receivables at representative locations by communication with debtors; our examination of inventories included observation of procedures followed by the companies in ascertaining inventory quantities at the principal locations and examination of certificates obtained by the Comptroller from individuals responsible for inventories at the various locations. In addition thereto, we reviewed inventory records of the companies and made tests of the basis of pricing and of the computations. In our opinion, the accompanying balance sheet and related statements of income and surplus present fairly the consolidated position of THE SHERWIN-WILLIAMS COMPANY and its consolidated subsidiaries at August 31, 1939, and the results of their operations for the fiscal year, in conformity with generally accepted accounting principles applied on a basis consistent with the preceding year. Cleveland, Ohio October 23, 1939 ERNST & ERNST Certified Public Accountants The Sherwin-Williams Co. 101 Prospect Ave.. N\ \V. Fooodcd is 1866 Cleveland, Ohio .Hanufacturers of Paints, Varnishes, Colors, Stains, Enamels, Lacquers, Lead Products. Dyes, Chemicals. Lithopone. Litharge, Linseed Oil, Dry Colors, Insecticides, Coal Tar Products, Disinfectants, Cleaners, Polishes. Alain pLantr Cleveland Chicago - Dayton - Detroit - Newark - Brooklyn - Pittsburgh Gloucester City, N. J. Oakland, Cal. Bound Brook, N. J. - Lincoln Gibbsboro, N. I. - Dallas - Los Angeles - Coffeyville, San. A D. BALDWIN GEO. T. BISHOP HARRIS CREECH C S. EATON Director* EL I. HAIN C P. JARDEN D. A. KOHE GEO. A. MARTIN Z.E. MARTIN A. W. STEUDEL H.D. WHITTLESET L. W. WOLCOTT Officterr GEO. A. MARTIN. fnndmmi H. D. WHITTLESET. Fwt Via.fn.idA. W. STEUDEL. Via.fruid.mt H. J. BAIN. Via-fruidut L EL SCHROEOER. Trmnnr N. E. VAN STONE, Vie-fmridud T. G. MURPHSY, Smcrdm* Trarufer Agent* CLEVELAND TRUST COMPANY Clrwliai, Okas BANKERS TRUST COMPANY New Yack, N. Y. Reguirar* CENTRAL NATIONAL BANK GUARANTY TRUST COMPANY New Yack, N. Y. S-W 000172