Document 93yqXBYwRzR9j7LR8ZZQ5rXq5

Annual Report 1949 Th e Sh e r w in -Wil l ia ms Co . N15359 S-W 000233 Th e Sh e r w in -Wil l ia ms Co. A. W. STEUDEL PRESIDENT To ike Stockholders: We present herewith the Consolidated Balance Sheet and Con solidated Income and Surplus accounts of The Sherwin-Williams Company for the fiscal year ended August 31, 1949. The earnings before Federal Income Tax and Special Reserves are $14,845,411.43. The provision for estimated Federal Income Tax is $4,400,000.00. The amount set aside for the Pension Plan this year is $2,300,000.00. Another $500,000.00 lias been added to the reserve against the Company's foreign investments. The final consolidated net earnings after these deductions are $7,645,411.43. These net earnings, after allowing for Preferred Dividends, are equivalent to $5.73 per share on the present outstanding 1,277,854 shares of Common Stock. Last year $1,000,000.00 was set aside as a reserve against the Company's foreign investments. This was prompted by the exchange restrictions that had developed in several countries, notably Argentina and Brazil. In view of the fact that there has been no improvement in the situation, it has been considered advisable to increase this reserve by $500,000.00, bringing the total reserve to $1,500,000.00. Again, as was said last year, these foreign, subsidiaries showed good profits in the respective currencies of their own countries. Every effort was made during the year to reduce the inventory to a minimum consistent with efficient operations. The inventory , was priced on the basis of lower of cost or market, less allowance of $1,648,000.00. As to this allowance, it was established to reduce the Inventory prices of certain .r.aterials, contained in finished goods as well as in raw material term, to, amounts' equivalent to a lastnn, firstout basis, based on prices during 1945. This year the allowance has been, reduced to the amount required. The sales volume was 7.6% less than the previous year. Part" of this was due to a substantial reduction in the prices of paint products which went into effect July 1, 1949. Kem-Tone continued to be the dominant wall finish on the market. A new product,, Kem-Glo, was introduced during the year and met with remarkable consumer acceptance. It is a type of enamel that is the result of years of research and makes use of the latest scientific developments in the chemical field. It is intended for use on any surface where the finest and most durable enamel finish is required. It is sold under the slogan "Looks and washes like baked enamel." The Company is carrying on an intensive research program for the constant improvement of its products as well as for the development of new finishes made possible by the latest discoveries in paint technology. The management wishes to pay tribute to the organization for its efficient efforts under difficult conditions. President CONSOLIDATED PROFIT AND LOSS AND SURPLUS THE SHERWIN-WILLIAMS COMPANY AND CONSOLIDATED . SUBSIDIARIES Year ended August 31, 1949 PROFIT AND LOSS Profit from operations for the year ended August 31, 1949, before other income, provision for depreciation and other deductions, and federal taxes on income.. Reduction of allowance for inventory............................ Other income.. . . . . . . ........ ............. 315,472,395.03 1,352,000,00 371,404.20 317.695,959.23 Deductions: Provision for pensions.................................. ..... $2,300,000.00 Provision for depreciation.................................... . . Provision of additional reserve against investments in foreign subsidiaries............................................... Provision for foreign taxes and miscellaneous items. 1;649,176.07 500,000.00 856,733.37 Interest expense............................................................ 257,744.87 Net charge arising from sale or abandonment of depreciable assets....................................................... 86,933.49 Federal taxes on income--estimated: Provision for the year............................. . 4,400,000,00 10,050,587.80 NET PROFIT ................ .......................... $ 7.645,411.43 EARNED SURPLUS Balance at September 1. 1948.................................. Add net profit for the year.......... .......... ........... $32,420,630.81 7,645,411.43 Deduct: $40,066,042.24 Cash dividends declared and paid or provided for during the year: Preferred--$4.00 per share.......... $ 321,218.00 Common--$3.00 per share... . 3.833.566.47 $4,157,784.47 Premium on preferred stock called for redemption... ____24j61_L60 4,182,396,07 BALANCE AT AUGUST 31,1949._..... $35,883,646.17 Note A--Other income includes the amount of $139,584.85 for dividends on capital stock of the unconsolidated Canadian subsidiary. Final statement as to operating results of that subsidiary for the year ended August 31, 1949, was not available at date of issuance of this report. The Company's share of net loss of the other uncon solidated subsidiary, not taken up, amounted to approximately $2,000.00. Note B--Profit and loss accounts of foreign subsidiaries were translated into U. 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We have examined the consolidated balance sheet of The SherwinWilliams Company and its consolidated subsidiaries as of August 51, 1949, and the related consolidated statements of profit and loss and surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accord ingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and summaries of profit and loss and surplus present fairly the consolidated financial position of The Sherwin-Williams Company and its consolidated subsidiaries at August 31, 1949, and the consolidated results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Cleveland, Ohio October 13, 1949 ERNST & ERNST Certified Public Accountants S-W 000243 Th e Sh e r w in - Wil l /a ms Co . 101 Prospect Ave., N. w. Founded In 186d Cleveland, Ohio Manufacturers of Paints, Varnishes, Colors, Stains, Enamets, Lacquers, Lead Products, Dyes, Chemicals, Lithopone, Litharge, Linseed Oib Dry Colors, Insecticides, Herbicides, Waxes, Cleaners, Polishes. Main Plants Cleveland - Chicago - Dayton - Detroit - Newark - Pittsburgh Oakland, Cal. - Bound Brook, N. J. - Gibbsboro, N. J. Dallas - Los Angeles - Coffeyville, Kan. A. D. BALDWIN C. S. EATON M. J. FORTIER GEORGE GUND Directors C. P. 7ARDEN D. A. KOHR C. M. LEMPERLY G. H. ROBERTSON L. H SCHROEDER A. W. STEUDEL H. D. WHITTLESEY THOS. E. WILSON L. W. WOLCOTT Officers A. W. STEUDEL, PntiStni M. J. FORTIER, Viet Pnfidtnt S. B. COOLIDGE, Via Pwid.nl C. M. LEMPERLY, Vie. Pwid.nl : I~ H. SCHROEDER. Via Pa.id.nt .nd Taa.unr N. E. VAN STONE. Via PwiS.nl H. D. WHITTLESEY, Via Pw,d.nl F. J. SQUIRES, SKaUnt : Transfer Agents CLEVELAND TRUST COMPANY Cleveland, Ohio BANKERS TRUST COMPANY New York, N. Y. Registrars CENTRAL NATIONAL BANK Cleveland, Ohio GUARANTY TRUST COMPANY New York. N. Y. S-W 000244 S-W 00024