Document Gm5Rp9YvpZedLJNX4k1jq6k6x

1 96 4 OUR NINETY-EIGHTH YEAR THE SHERWIN-WILLIAMS COMPANY ----- ------------------ ------ ----- ---- --------------- -------- --- ----------- s-w 000367. THE SHERWIN-WILLIAMS COMPANY AND CONSOLIDATED SUBSIDIARIES FINANCIAL HIGHLIGHTS August 31, 1964, and 1963 Net sales. ................................... Income before taxes on income................................ Taxes on income--United States and foreign ... Net income Per share of common stock .................................... 1964 5313,518,226 Il j 33,619,817 i I 16,552,763 iI ' 17,067,054 6.48 Cash dividends declared: Preferred Common............................... Working capital........................................................ Ratio of current assets to current liabilities .... j ' j J j 406,401 7,708,292 116,386,560 4.94 to 1 Expenditures for plant additions............................ 9,395,018 Provision for depreciation........................................ 4,082,493 Shareholders equity: Preferred -- at redemption price of $105 a share Common....................................................... 10,406,550 167,031,732 Outstanding shares at August 31: Preferred............................................................... Common ....................................................... 99,110 2,572,399 Number of shareholders at August 31: Preferred....................................... ....................... Common............................................................... 255 6,577 Number of employees at August 31........................ 15,497 1963 S291,838,896 29,885,814 14,863,074 15,022,740 5.68 436,796 7,701,996 112,026,735 4.87 to 1 5,125,063 3,964,817 11,251,485 157,631,243 107,157 2,567,332 276 6,286 15,115 Page 1 S-W 000368 Page 2 LETTER TO SHAREHOLDERS Herewith are presented the Consolidated Balance Sheet and the Consoli dated Income and Earned Surplus Statements of The Sherwin-Williams Com pany and consolidated subsidiaries for the fiscal year ended August 31, 1964. The consolidated earnings amounted to SI7,067,054 as compared with $13,022,740 for 1963. After deducting $406,401 for Preferred Dividends, the earnings for 1964 are equivalent to $6.48 per share on the 2.572.399 shares of Common Stock outstanding at August 31, as compared with $5.68 last year, an increase of 14.1%. Consolidated net sales amounted to $313,518,226. This is the highest sales total in the Company's history and is 7.43% over the previous high of last year. The generally high level of the economy exerted a constructive influence on sales, as did favorable weather on the Trade Sales sector. The gain in sales was, in the main, consistent throughout all divisions of the business. The increase in final operating margins resulted from the combination of added sales volume and effective cost control in both manufacturing and distribution. The past year witnessed continuing changes and expansion by the Company in marketing and distribution. Further concentration was placed on sales to selected mass marketing outlets and, additionally, a number of contracts were negotiated for the operation of leased paint departments in established outlets. These moves were taken to assure our products being featured and sold where retail traffic is heavy. At the end of the fiscal year the Company and its consolidated subsidiaries were operating 1,934 branches, including the leased paint departments referred to above. Further growth in this area is anticipated during the new year. Among other factors contributing to increased sales during the year was intensified advertising and promotional effort, particularly through the television medium, featuring Super Kem-Tone latex wall paint, Kem-Glo enamel, SWP exterior oil base paint and A-100 latex exterior paint. Special emphasis was also given to promotion directed at professional painting con tractors and architects. To capture an increasing share of the Trade Sales market, we developed and are currently introducing the "Excello" line. This line is designed to attract those "budget-mindeqj" consumers who hesitate to purchase the highest quality paints traditionally associated with the Sherwin-Williams trade-mark. "Excello" paints will be marketed under the Sherwin-Williams name but not under the "Cover-the-Earth" trade-mark. That trade-mark will continue to be reserved to identify the highest quality paints available, while "Excello" will identify the "next-to-the-highest-quality" paints. All S-W 000369 domestic subsidiaries are also taking this dual route to the Trade Sales mar ket. using their established trade-marks and company names in a similar pattern. This broadened approach of two price levels is in keeping with today's merchandising trends. An established paint manufacturer in Peru was licensed to produce our products in that Latin American country. The Puerto Rican company came into production. Sherwin-Williams (Europe,) S.A.. based at Antwerp, con cluded its first s ear of operation and achieved satisfactory progress. The ex pansion of international markets will receive increasing attention in the coming year. Research and development continued to be strongly emphasized. Out lays in this area rose 8.7% over the previous year. In addition to the;iExcello'' line, new products to meet the specialized needs of professional painting contractors and architects also were developed and improvements made in existing products. In Chemical Coatings, further marked progress was made in materials for pre-finishing natural and compounded wood, aluminum and steel, and newly-developed "Therm-O-Clad" insulating varnishes further enhanced our position in the electrical and electronics field. The `'Versatyl" line of flushed colors marketed by the Pigment, Color and Chemical Depart ment met with immediate acceptance in the printing ink industry. Expenditures for plant in the past year were $9,395,018 with a major portion being invested primarily to improve cost efficiency and customer service. A collateral aim and benefit was the addition of needed manufac turing capacity'. The large paint consolidation project at Chicago is prac tically completed and efficiencies in operation are already apparent. Similar but smaller programs were completed at Cleveland, Detroit, Oakland and Garland. A new warehouse at Oakland became fully operative in the summer. Land has been purchased at Newark for an additional facility to relieve present physical limitations at that location. The enlargement of the Phthalocyanine Blue Plant at Chicago is well under way. This will increase the usable capacity of this unit substantially and the advantages will begin to be felt in the new fiscal year. Principal plant expenditures in the coming year will continue to be directed toward modernization and cost efficiencies in manufacturing. Once again the Management expresses its thanks to the entire organiza tion for the loyal effort and enthusiasm that have made this year's results possible. Chairman oj the Board Cleveland, Ohio October 22, 1964 President Page S-W 000370 THE SHERWIN-WILLIAMS COMPANY AN Consolidated Balance Sheets, Aug Assets Current Assets Cash....................................................... U. S, Treasury bills--at cost ..... Trade accounts receivable, less allow- ances for doubtful accounts of S614,652 in 1964 and 5611,611 in 1963. . . . Inventories--principally at lower of cost (average or first-in, first-out method) or market: Finished merchandise.................... Work in process, raw materials, and supplies........................ ... To t a l Cu r r e n t As s et s Investment and Other Assets Common shares ofThe Sherwin-Williams Company of Canada, Limited -- at cost--Note A............ ................... Receivables, advances, and miscellaneous other assets........................................... Property, Plant, and Equipment -- on the basis of cost Land................................................... Buildings........................................... Machinery and equipment................ Less allowances for depreciation. . . Deferred Charges Advertising stock and supplies .... Prepaid insurance and other items. . . * 7964 ] 1963 S 20.882,061 9.359,337 S 22,416.518 10.869,059 34,007,197 32,906,090 S 56.832.031 j S 50,947,T34 ! j24.823,721 23,866,935 S 81,655,752 s 74,814,669 j 5145,904,347 1 5141,006,336 il jI1i1i S 4,182,766 s 4,182,766 ! 1.293,537 $ 5,476,303 i : 1.123.180 s 5,305,946 5 2,458,899 30,885,796 72,654,632 49,749,659 5 56,249,668 s 2,138,422 29,474.023 67,024,780 47,044,069 5 51,593,156 S 1,673,827 5 1.493,941 1,654,138 1,811,040 5 3,327,965 i 5 3,304,981 5210,958,283 5201,210,419 -------:..................... i ' * 4 S-W 000371 vtPANY AND CONSOLIDATED SUBSIDIARIES e Sheets, August 31, 1964, and 1963 18 59 90 - 34. S9 36 36 80 96 56 il 90 31 19 Liabilities, Capital Stock, and Surplus Current Liabilities Trade accounts pavable ...... Payrolls, compensation, and other accruals............................................ Dividend payable on Preferred Stock . Deposits--employees and officers . . . Taxes, other than taxes on income . . Taxes on income .................................... To t a l Cu r r e n t Lia b il it ie s Reserves For deferred federal taxes on income. . For pensions and other items Capital Stock and Surplus Capital stock: Preferred--authorized 395,500 shares, par value SI00 per share: Cumulative Preferred 4% series (4,950 shares redeemable annu ally at $105 a share): Outstanding--99,110 shares in 1964 and 107,157 shares in 1963 ........ Common-authorized 5,000,000 shares, par value $12.50 per share--Note B: Outstanding--2,572,399 shares in 1964 and 2,567,332 shares in 1963--stated capital Earned surplus . . . ........................ See notes to financial statements. 1964 5 5,805,960 11,013,838 99,110 847,243 1,798,093 9,953,543 S 29,517,787 1963 S 7,673,073 9,740,135 108,282 1,031,014 1.890.048 8.537.049 S 28,9"9,601 $ 2,671,100 1,331,114 $ 4,002,214 $ 2,037,000 1,311,090 $ 3,348,090 $ 9,911,000 $ 10,715,700 33,580,544 133,946,738 $177,438,282 $210,958,283 33,172,651 124,994,377 $168,882,728 $201,210,419 S-W 000372 THE SHERWIN-WILLIAMS COMPANY Founded in 1866 EXECUTIVE OFFICES 101 Pr o s p e c t Av e n u e , X. W., Cl e v e l a n d , Oh io 44115 Directors E. C. Ba l d w in J. X. Ba u man S. B. Co o l id c e E. A. Da n ie l s C. S. Ea t o n Ge o r g e Gu n d W. X. Ha r r is R. F. He n n ig H. D. Les t er J. S. Pr e s c o t t A. W. St e u d el VV. M. St u a r t B. M. Va n Cl e v e C. M. Wh it e J. D. Wr ig h t Officers A. W. St e u d e l . E. C. Ba l d w in . S. B. Co o l id g e . R. F. He n n ig R. H. Hil l . , H. D. Le s t e r . . J. S. Pr e s c o t t . B. M. Va n Cl e v e W. C. Fin e . V. A, Ho l l is . . . . Chairman of the Board and Chief Executive Officer ........................ President ....................Vice President ....................Vice President ....................Vice President Vice President and Treasurer ....................Vice President ....................Vice President .................... Secretary . . . . Assistant Secretary Transfer Agents Th e Cl e v el a n d Tr u s t Co mp an y , Cleveland, Ohio Ba n k e r s Tr u s t Co mp an y , Xew York, X.Y. Registrars Ce n t r a l Na t io n a l Ba n k o f Cl e v e l a n d , Cleveland, Ohio Mo r g an Gu a r a n t y Tr u s t Co mp a n y o f Xe w Yo r k , New York, N.Y. Page 8 S-W 000373 PRINCIPAL PRODUCTS Pa in t s , En a me l s . Va r n is h e s , La c q u e r s . St a in s , Zin c Pig me n t s , Dr y Co l o r s . Lit h c p c n e . Or g a n ic Ch e mic a l s , Co a l Ta r a n d Pe t r o l e u m In t e r me d ia t e s , Ba r iu m Ch e mic a l s . Lin s e e d Oil . Me t a l Ca n s , In s e c t ic id e s , Br u s h e s , Ro l l e r s a n d Ot h e r Pa in t in g Ac c e s s o r ie s . DOMESTIC PLANTS Bo u n d Br o o k , Ne w Je r s e y Ch ic a g o , Il l in o is (t w o ) Cl e v e l a n d , Oh io (t w o ) Co f f e y v il l e , Ka n s a s Da y t o n , Oh io De s h l e r , Oh io De t r o it , Mic h ig a n Ea s t Ne w a r k , Ne w Je r s e y Ga r l a n d , Te x a s Gib b s b o r o , Ne w Je r s e y Hu b b a r d , Oh io Lo s An g e l e s , Ca l if o r n ia Ne w a r k , Ne w Je r s e y Oa k l a n d , Ca l if o r n ia Pit t s b u r g h , Pe n n s y l v a n ia Sa n Le a n d r o , Ca l if o r n ia FOREIGN PLANTS Ba y a mo n , Pu e r t o Ric o Bu e n o s Air e s , Ar g e n t in a Gr a v e n h u r s t , Ca n a d a Me x ic o Cit y , Me x ic o Mo n t r e a l , Ca n a d a (t h r e e ) Re d Mil l , Ca n a d a Sa o Pa u l o , Br a z il To r o n t o , Ca n a d a Va n c o u v e r , Ca n a d a Win n ip e g , Ca n a d a RESEARCH CENTER Ch ic a g o , Il l in o is PRINTING DIVISION No r t h Ol ms t e d , Oh io Page 9 S-W 000374  CONSOLIDATED SUBSIDIARIES Ac me Qu a l it y Pa in t s . In c . Detroit'. Michigan Th e Ca r l Gr a h a m Pa in t & Wa l l p a p e r ll'itkita. Kansas Co mp a n t a Sh e r w in -Wil l ia ms . S.A. d e C'.V. Mexico City. Mexico Co mp De s h l e r Pr o d u c t s . In c . Deshler. Ohio Th e Lo w e Br o t h e r s Co mp a n y Dayton. Ohio Jo h n Lu c as & Co mp a n y . In c o r p o r a t e d Phu.iaelphia, Pennsylvania W. W. La w r e n c e & Co mp a n y Pittsburgh, Pennsylvania Th e Ma r t i.v -Se .v o u r Co mp a n y Chicago, Illinois Ro g e r s Pa in t Pr o d u c t s , In c . Detroit. Michigan Ru b b e r s e t Co mp a n y East ,\'ewark. \eit Jersey Ru b b e r s e t Co mp a n y (Ca n a d a i Limit e d Gravenhurst, Canada R. C. Va n Na me In c . Port Richmond, .Yeu.' 1'ork Sh e r w in -Wil l ia ms (Eu r o p e ) So c ie t e An o n y me Antwerp, Belgium Th e Sh e r w in -Wil l ia ms Co . o f Pu e r t o Ric o . In c , Sart Juan, Puerto Rico Th e Sh e r w in -Wil l ia ms Co . (We s t In d ie s ) Lt d . Kingston, Jamaica UNCONSOLIDATED SUBSIDIARIES Sh e r w in -Wil l ia ms Ar g e n t in a , In d u s t r ia l y Co me r c ia l , S.A. Buenos Aires, Argentina Sh e r w in -Wil l ia ms d o Br a s il S/A Tin t a s e Ve r n iz e Sao Paulo, Brazil Th e Sh e r w in -Wil l ia ms Co mp a n y o f Ca n a d a , Limit e d Montreal, Canada Th e Ca n a d a Pa in t Co mp a n y Limit e d Montreal, Canada Th e Ma r t in -Se n o u r Co mp a n y Limit e d Montreal, Canada Th e Win n ip e g Pa in t & Gl a s s Co mp a n y , Limit e i Winnipeg, Canada Th e Lo w e Br o t h e r s Co mp a n y , Limit e d Toronto, Canada Th e E. Ha r r is Co mp a n y Limit e d Toronto, Canada Th e Ca r t e r Wh it e Le a d Co mp a n y o f Ca n a d a Limit e d (50Q o w n e d --u n c o n s o l id a t e d ) Montreal, Canada Page 10 S-W 000375 THE SHERWIN-WILLIAMS COMPANY OF CANADA, LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, AUGUST 31, 1964, AND 1963 (Expressed in Canadian Dollars) Current Assets Assets Cash.............................................. Trade accounts receivable, less allowances for doubtful ac counts of $140,000 in 1964 and $167,300 in 1963 ................ Inventories--principally at lower of cost (average or first-in, first-out method) or market: Finished merchandise ........................ Work in process, raw materials, and supplies.................... To t a l Cu r r e n t As s et s Investments and Other Assets Investment in affiliated company................................................. Miscellaneous receivables and advances..................................... Property, Plant, and Equipment--on the basis of cost Land :.......................... ................................................. Buildings.......................................................................................... Machinery and equipment.............................................................. Less allowances for depreciation................................. Deferred Charges Advertising stock and supplies...................................................... Prepaid insurance and other items............................................. Liabilities, Capital Stock, and Surplus Current Liabilities Trade accounts payable.................................................................. Payrolls, compensation, and miscellaneous items.................... Accrued taxes, other than taxes on income................................. Taxes on income--estimated ..................... Capital Stock and Surplus To t a l Cu r r e n t Lia b il it ie s Capital stock: Preferred shares, 7% cumulative, par value $100 per share: Authorized--40,000 shares Outstanding--34,600 shares..................................... Common shares, no par value: Authorized--225,000 shares Outstanding--224,720 shares. ............................. Earned surplus.................................................................................. 1964 j $ 607,787 | 1963 $ 655,243 6,344,226 ! 6.418,395 1 S 5,790,977 I $ 5,776,885 2,360,818 $ 8.137,703 $15,211,341 $ 200,000 70,007 $ 270,007 $ 625,412 4,365,937 6,884,684 8,192,511 $ 3,683,522 $ 174,297 90,353 $ 264,650 $19,429,520 $ 2,751,797 908,575 165,671 469,723 $ 4,295,766 $ 3,460,000 224,720 11,449,034 $15,133,754 $19,429,520 N'ote--Allowances paid to retired employees under the Company's non-funded, terminable retirement plan are charged to operations at the time of payment. Comparative accounts for the year ended August 31, 1963, have been reclassified to conform with the current year presentation. Page 11 S-W 000376 THE SHERWIN-WILLIAMS COMPANY OF CANADA, LIMITED AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME AND EARNED SURPLUS Years Ended August 31. 1964, and 1963 r. Canadian Dollars' Net sales Dividends received Miscellaneous lucerne _ , ..................................... ......................................... .... Deductions from income: Cost of products sold.....................................> Selling, general, and administrative expenses........................ Allowances paid to retired emplovees--Note......................... Interest expense.......................................................................... Remuneration of officers and directors' fees......................... Legal fees................................................. .... In c o me Be f o r e Ta x e s o s In c o me Taxes on income--estimated ..................................................... Ne t In c o me Provisions for depreciation included above amount to $383,"'26 in 1964 and $373,651 in 1963 Earned Surplus Balance at beginning of vear ...................................................... Net income for the year......................................................... Cash dividends declared: Preferred--$7.00 per share......................................................... Common--$1.30 per share (.1963--$1.00)............................. ' Balance at end of vear.................................................................. Note to financial statements appears on the balance sheet. ms S35.369.~94 45.000 139.016 S35.555.810 j 1 1963 $32,959,135 45,000 51,491 S33.055.626 ; S22.245.419 ! 10.833.643 i , 257,436 i 143.940 ; . I" 3.948 | 29.497 1 $33,683,883 ; : S 1.869,92' | 850.000 I 1 S 1.019.927 $20,400,963 10.539,369 257,002 177,368 161,513 !7,573 $31,553,788 S 1.501,838 685,000 $ 816,858 SI 1,449,034 j . $11,099,116 1,019.927 j 816,838 $12,468,961 ! 1 $11,915,954 $ 242,200 i $ 242,200 292.136 | 224,720 $ 534,336 j $ 466,920 $11,934,625 | $11,449,034 Page 12 AUDITORS' REPORT To the Shareholders, The Sherwin-Williams Company of Canada, Limited We have examined the consolidated balance sheet of The Sherwin -Williams Company of Canada, Limited and its subsidiaries as of August 31. 1964. and the related statements of consolidated income and earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly 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 statements of income and earned surplus present fairly the consolidated financial position of The Sherwin-W'illiams Company of Canada, Limited and its subsidiaries at August 31, 1964, and the consolidated results of their operations for the year then ended, in conformity with generally accepted account ing principles applied on a basis consistent with that of the preceding year and as shown by the books of the Companies. Montreal, Quebec September 25, 1964 Er n s t & Er n s t Chartered Accountants S-W 000377