Document LpKXX3bz94QXRVwJk38g22zY5

Annual Report 1947 -.7: ^';:;^.;;.^:?;r> a .-;-j '. .: vA;.- ; : . ' 'AA' AA A,"v A-: 'A A :7AAAAAy.A:A/AAAA:A A AA:.' . V1 ;;:>*2:::>,S:'r;: = 1`"I ; - aaa: aaaaaa .. tf.... .... ^. ;t. .X.-A'AAAA'A - ,AA.;: ; .'.'- AAAa A AAAA'A a AAAV.AA : ' : ',. -' ' . ' . A . A' .' Aa AAA,. ... . ,: . . ., . a : . . ' . ... .. . ' ,' . * ' ' a ' 'A:Aa AAA:'^- '. . AAV :-a a .a a . . a...a.' ' o A a: v ' -VAaA-:.,; . . JA A. A .'-VAf. " ' . ',v. .. w" :a- : ...-%**/ , A' ' :. ' ' ~A, :;f. Aa a A-A-AA'A- a ;AAAa ,. .................. . A'.A.A.A..A..A..A..A.Aa a AA'A. AA;, Vi;: I. A;AA A',Aa a AS.Aa a a ;a ;: ............................... ; Av: ." a .,,.. Th e Sh e r w in -Wil l ia ms Co . N15357 Th e Sh e r w in -Wil l ia ms Co. A. W. STEUDEL PBESIOINT To the Stockholders: The consolidated statement of The Sherwin-Williams Company, including its subsidiaries, is herewith submitted for the fiscal year ended August 51, 1947. All previous records were exceeded this year with sales approxi mately 25% ahead of the previous year. Although price increases contributed to this gain to some extent, the physical volume of goods sold was substantially greater. The earnings before Federal Income Taxes and Special Reserves were $22,428,844.80. The amount provided for Federal Income Taxes was $8,020,788.85. Special Reserves consisted of two items, an additional $1,500,000.00 for possible inventory shrinkage and $3,500,000.00 for the initial provision for an Employees' Pension Plan. This leaves as final consolidated net earnings $9,408,055.95. After deducting the Preferred Dividends, the net earnings are equivalent to $7.08 per share on the present outstanding 1,277,854 shares of Common Stock. The split-up of Common Stock which was approved by the stockholders last August increased the out standing Common Stock from 638,927 shares to 1,277,854 shares. Referring to the additional $1,500,000.00 reserve set up for in ventory, this was considered advisable on account of the increase in the total dollar value of inventory since a year ago and the con tinuing abnormal high prices of certain materials. As to the $3,500,000.00 provided for a Pension Reserve, the management and the Board of Directors believe that at this time an Employees' Retirement Plan should be adopted and such a plan is being submitted to the stockholders for approval at the annual meeting of stockholders to be held December 9, 1947. In anticipation of such approval, it was deemed advisable to set up the above-mentioned sum of 53,500,000.00 as a reserve out of the year's earnings. Mention has already been made of increases in prior, -hat were put into effect during the year. It should be stated t: such in creases in the prices of paints and related products were less than the proportionate increases in costs, including raw materials, labor, and manufacturing expense. In other words the gross margin of profit per dollar of sale showed a shrinkage compared with the previous year. The gain in profit was achieved largely by the in crease in the total volume of sales. Although the total year's production of paints was considerably greater than that of the preceding year, output was restricted by shortages in basic raw materials. Oils became more readily avail able during the latter half of the year but such important items as titanium, leaded zinc, synthetic resins, certain basic colors, etc. were and are still in short supply. One of the Company's outstanding products, Kem-Tone, reached a new high in record production and sales, thus establishing it as the largest selling single paint item on the market today. The increase in sales volume was also helped by the new non paint products which were described in our last Annual Report, namely the D. O. T. compounds marketed as Pestroy 10% Powder and Pestroy 6% Liquid Coating and a weed killer sold under the trade name of Weed-No-More. Another new development is an all purpose garden dust for vegetables and flowers packed in a ready to apply container called "Bugblaster." It already enjoys a marked consumer acceptance: and contributed a substantial amount to this division of the business. The Company's Research Labora tories are constantly developing new products which will be market ed from time to time through the Company's extensive distribution facilities. Approximately $4,000,000.00 was expended during the year for plant improvements, in expanding facilities for production and storage and modernizing equipment. The management expresses its appreciation to the organization for the loyal and intense efforts that have made this year's results possible. Jl President CONSOLIDATED PROFIT AND LOSS AND SURPLUS THE SHERWIN-WILLIAMS COMPANY AND CONSOLIDATED SUBSIDIARIES Year ended August 31, 1947 PROFIT AND LOSS Profit from operations for the year ended August 31, 1947, before other income, provision for deprecia tion and other deductions, and federal taxes on income__u_____________ ______________ ______ Other income--------------------------------------------- -- $24,233,152.12 373,196.94 324,606,349.06 Deductions: Provision for pensions $ 3,500.000.00 Provision for possible inventory shrinkage---------- 1,500,000.00 Provision for depreciation-- 1,207,240.62 Pension payments, provision for foreign taxes, and miscellaneous items 611,364.32 Net charge arising from sale or abandonment of depreciable assets 259,940.14 Interest expense------------------------------------------------ 98,959.18 Federal taxes on income--estimated: Provision for the year $8,545,000.00 Less adjustments for prior years. 524,211.15 8,020,788:85 I5.198.295.ll NET PROFIT............................. $ 9.408.055.95 EARNED SURPLUS Balance at September 1, 1946--------------------- --------- $38,127,974.64 Add net profit for the year_______________________ 9,408,055.95 $47,536,030.59 Deduct: _ Cash dividends declared and paid or provided for during the year: Preferred--$4.00 per snare $ 364,598.00 - Common--$6.00 per share (paid on shares outstanding to change set forth )_______ _____________ __ 5,855.562.00 $ 4,193,160.03 Charge resulting from changing each share of common stock (par value $25.00) outstanding into two shares of such common stock---------- Premium on preferred stock called for redemption BALANCE AT AUGUST 31, 1947................. 15,973,175.00 24,750.00 20,196,085.00 $27.359,945.59 Note A---Other income include. the amount of 3132,665.46 for dividends receded horn the un consolidated Canadian subsidiary. Final statement ae to operntinf results of that subsidiary For the year ended August 31. 1947, was not availabia at data of issuance or thia report. The Company s proportionate; snare of net profits of the other nneousolidated subsidiary, not taken up, amounted to approximate!? $128,000.00 ; Note B--Profifandloea accounts o! ford|n lubadfiriw ware translated Sato U. S. dollars mainly on the basia of the areraie rate of exchange in effect duriny the year. 3 "3 i ? |-s Sr3' : 3 a-<* "3 < 2_'3 --'a 2. i.'y *5`a- ' a S *g-3?3 -- =-2 333. y '>S-f.|-0 , a-So^n r? ^ 2-Cis = m>pAm . h--<* Q ^'2 1" S3 I2spS--.S-g .gy*0sCj*3.--3 __.N ** n ffr;,9V1Mii3i!3 'S g o .33:"TM*d!?a*v.a|.-> CC*IJ-d:'OfTtS*9->irS*3 s.a* fifc<-*aaiiS3j-Hr&rt 5-5*y|-3`|^ Si 3 S-S.Q3 3 ** " 3 n g* w a.* o s ^ 3* PtSt^T\.fffii^jW, i'l!S; Srj^TiTSStP':lij'l!H'jr1^i',i*li!-'ffe!fl"i-'Cfi-L' mm5 '^ Wi2fSteia.8: a o 'a". -=--.wi'2--*' 2'r a NH n.S'S'd 0. r 3_ 3 I- s-pfs o- ? s__3* 3a. 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We have examined the consolidated balance sheet of The SherwinWilliams Company and its consolidated subsidiaries as of August 31, 1947, and the consolidated statements of profit and loss and surplus for the year then ended, have reviewed the system of in ternal control and the accounting procedures of the companies and, without making a detailed audit of the transactions, have examined or tested accounting records of the companies and other supporting evidence, by methods and to the extent we deemed appropriate. Our examination was made in accordance with general ly accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. In our opinion, the accompanying balance sheet and related summaries of profit and loss and surplus present fairly the con solidated position of The Sherwin-Williams Company and its con solidated subsidiaries at August 31, 1947, and the consolidated results of their operations for the year, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Cleveland, Ohio October 16, 1947 ERNST & ERNST Certified Public Accountants Th e Sh e r w in -Wil l ia ms Co . 101 Prospect Ave., X. W. Funded m 1366 Cleveland. Ohio Manufacturers of Paints, Varnishes, Colors, Stains, Enamels, Lacquers, Lead Products, Dyes, Chemicals, Lithopone, Litharge, Linseed Oil, 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 -. Coffeyvide, Kan. A. D. BALDWIN C. S. EATON M. T. FORTIER GEORGE GUND Directors C. P. JARDEN 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. President ' H. D. WHITTLESEY. Senior Viet President M. J. FORTIER. Vice President S. B. COOLIDGE, Vice President C. M. LEMPERLY, Vice President L. H. SCHROEDER. Vice President end Treasurer N. EL VAN STONE. Vice President T. G. MURFHEY. Secretary Transfer Agents CLEVELAND TRUST COMPANY ClmludObh BANKERS TRUST COMPANY New York, N. Y. Registrars CENTRAL NATIONAL BANK ClamUacL Ohi. GUARANTY TRUST COMPANY N.w York, N. Y.