Document NOb5DqJ55gk8BJnddj5waVXV

A f jsjV * O 1963 THE SHERWIN-WILLIAMS COMPANY 00Q7-SWP-034903 THE SHERWIN-WILLIAMS COMPANY AND CONSOLIDATED SUBSIDIARIES ANNUAL REPORT isea 0007-SWP-034904 0007-SWP-000116324 LETTER TO SHAREHOLDERS Herewith ut presentee nr t onsohdatcd Balance "sheet and the Con solidated Income and 'ur:..-.- 'tatementi ol The >herwin-UMIUmi Company and conaolidated subsidiary*' ior the tucal vrar ended August 31. 1363 The consolidated earning* amounted to 513.922.*tb a* compared with SU.488.341 for 1362. Alter deducting $43o."3& for Preterred Dividend*, the earning* for 1363 are equivalent to S3 68 per dure on the praent outiianding 2,36*.332 share* of Common Stock, a* compared w-ithS5 461a*tvear. Consolidated net *aie* amounted to 8291,831,896. This is the highest tales total in the Company's history and is I i+% over the previous high of last year. Principal tales increases were attributable to branch and industrial sales which advanced quite satisfactorily. Some sales were passed up where margins would have been completely unattractive. This was principally in the area of bid business. However, these were more than counterbalanced by the improved mix of sales which produced better --of profit. The Pigments, Colon and Chemicals Division enjoyed the most profitable year in its history. Pension costs returned to a normal figure in contrast to last year's high cost which was earned by a necessary retroactive adjustment in mortality assumption by our actuary. The reduction in the reserve fee pensions and other items is a result of the write-down of the investments in the South American subsidiaries, prior-year tax payments and a reclassification of other items to Current Liabilities. Expenses were well controlled. The only increased expenditures of consilience were in the areas ofadvertising and rereareh and development. Advertising programs and expenditures will be tether enlarged this year to as to maintain the prestige and kadenhip ofour products in the maritetplae* and to stimulate increased retail sate. Heavy emphads has been and is being placed an research and develop ment. This is reamrial in orier to improve cidstiag products, to develop new products so meet the cvet*chaagtog needs afconsumers, profitoiimal pointers and industrial uses, and to assure increased teure earnings. Principal arcompKshments in the research end development area were an improved formula far Super Kem-Teae, further advances in acrylic flnisbm and la organosols te coedag strip metals, the introduction ofAcrylyd, a finish fir mcks with ounaaHag gloss and glass retention characteristics, and continued developmental progress in the field of wood finishes`far appli cation at the fiKMvy. 0007-SWP-034905 > 0007-SWP-000116325 During 1945, we increased the number of our Company-operated branch** end, because of our conunued success in this phase of our opera tion* will further expand our network in 1964. At the same time we expect to expand distribution through independent ly-owned outlets so that our products will be available where'er people want to buy them. Much has been accomplished in the ares of gr *i:er efficiency in manu facturing facilities. The large consolidation at the Chicago paint manufac turing plant is wdl advanced and should be completed by the Summer of 1964. This project will vastly improve material handling, batch sue pro duction, filling operation* quality control and coats in general. In other plants there is a continuing program to upgrade efficiency through the installation of modern equipment and better physical layout* Substantial expenditures wore made for improvements in several chemieai prat rawi and additions an being made to increase capacity of certain products where wo have been unable to meet deound. The applieslion of computers in factories has materially aided pn , duedon planning, pmrrning and quality control. This program will be expanded. Expenditures for plant add!nans during Ac year were 13,125,063. Con tinued additions and improvements will bo made far the purpoae of added production in eshring units and the betterment of corn control, quality com troi and customer service. During the past year the Company formed Tbs Shcrwin-WiUiams Com pany of Puerto Rico, Inc. in San Juan, Puerto lUco and established a paint manufacturing facility which is ju coming into operation. Aim orgonieari by the Company during the past year wm SherwAWUliams (Europe) 5. A. A Antwerp, Belgium. This a sales organisation operating horn a woiehoom stock in a free post. In immediate alms ere further to doratop At mlm of wmblhhed distribute in Europe, to gain additional oam and to mungAon Ae Company's ultimate paddon A that marhe*...................................... The Board of Directors wlAm to exprem its thanks to Ae staff A plant* oScmand bnncfam for thrir cooperation, industry and loyalty which have contributed iamoasoiy to Ah yew's lesulm. (Amn ^ fo Esssd Cleveland, Ohio October 11,1965 AaritfaeS 0007-SWP-034906 0007-SWP-000116326 THE SHERWIN-WILLIAMS COMPANY AND Consolidated Balance Sheets, August , Assets Current Jbeets Cuh 17. S. Trejuury bill*--at c o m Trad* account* receivable. la* allow amfardoubtful account*ofMil,it 1 in 1943 and 1409,760 in 1963. . . . Inveacurie*--principally at lower of em (avenge or fatten, Ant-out method) or market: Finithed oaerchandiie................ Work in proceae, raw material*, and wpplic*................................. To t a l Cnaurr A an . . . tmmtmemU end Other duets Smifai of unconwlidatcd ubtidlary--at eo*t--Note A .... Receivable*, advances and miocdlanaou* other amra............................................. fregmif, FUmt, end gfm(msnt~otL the bad* of COM Land.......................................................... Building*, machinery, and *i|id|iniil . Lew allowance* far depredation. . . . Deferred Gtwgw AdvertUng nock and (uppBw .... 1S6J , S 22.41d.Slg i 10.869J159 fa* 32,906,090 1962 S 21.781.469 10.917.344 32,244,426 S 30,947,714 23.ldd.US S 74,g|4,dd 8141,006414 S 45,912,111 21,543,411 I 47,471,494 l!32,42l,952 I 4,112,764 1,123.110 I 3.303,944 8 4,182,744 1,420.950 8 5,801,724 S 2,131,422 96,444,001 47,044.064 S 51,541,134 2 2,135,124 91,101,784 44.348,094 8 50489,012 1,491,941 1.111,040 t 3,304,941 1201410,419 I 1,401,778 I.32SAI4 8 3,124,792 >192041,481 0007--SWP-034907 0007-SWP-000116327 ,IFANY AND CONSOLIDATED SUBSIDIARIES anet Sktatt, Angutt 31, 1963, and 1962 tiriilMw, Capital Stack,ani Surplus t93 1962 Carnal Lmbilitm 469 Trade accouno payable, compenudon, 364 tad fPucHlinmui intnt . 1 18,080,702 5 15,081,937 Dividend payable om Fettered Stock . 100,282 110,571 626 Depart employea end officer! . . . 1.031.014 1,073,747 Accrued tuo, other than Moral tarn 1,346,437 1,320,345 813 Federal tam on income .... 8.413,166' 6,763,000 681 494 9S3 To t al Guaaurr Lunurni . . . 8 28,979,601 8 24,351,600 For deterad Metal tanta an income. . 8 2,037,000' 8 1,057,000 For pendone and other i 1,311,090 - ---- 4,492,701 ?66 8 3,348,090 8 5,549,701 Capitol Sink mad Surplus 958 724 Capital mxk: Pretend--autfcoeiaed 395,500 dune, par value 8100 par dure: (4,950 dmrm redeemable anna !4 ally at 810S a dmec): 14 Oamaadinf--107,157thaim in 1963 and 110,571 dura 6 in 1912......................... 8 10,715.700 8 11,057,100 2 par vahte 812.50 par dure--NoaaB: 2467,332 Mam-- 778 \ OTW. . . . 33,172,651 33,172,651 314 124,994,377 ' 118,110,429 792 8168,882,728 816X340,180 481 820U10.419 8192441.481 0007-SWP--034 9Q8 0007-SWP-000116328 * THS 1HCTWIN -W1UJAM1 COMPANY AND CONSOLIDATED KSnSUMn CONIOUSATBO INCOME AND EARNED SURPLUS Ym Bndml August 31.1963, and 1969 Intern 1953 1 f 1932 1 Net sale*.......................................................................... 1 S29I.431.S96 5289,423.317 Dividend* received (net) Iron uncooiolidatcd ' Canadian wbddiary--Note A.............. ! 113,224 134,524 MiaceUaneotii.............................................................. 'i 671,033 930.679 j $292,643,173 $286,466,720 Deduction* from income: Coat et product* mid and aeUing, general, and adminitcradue ixpimci................................. Pendoo* .......................................... Depreciation.............................................................. Poififn on MiKcUaacoua.......................................................... 1254031,303 2,170,176 3,964,617 476,106 S00.331 $263,343,433 1232,719,404 2,750,000 3,771,316 421,017 266,640 1239,950,379 Incoim Itmi fuuu Tu b On Incotm 1 29,297,7*0 1 21,536,341 Federal taam on income (iadudinc deferred tame at 1980,000 in 1943 and 11,017,000 in 1942) . . . Xrr In c o h i............................................ 14,273,000 i 15.022.7*0 14,030,000 1 14,466,341 Earnei Snrpbu Balance at beginning of year...................................... Net income tor dm year.............................................. Cadt dividend* doriewd: PNfimd--14.00 a Mam.............................. Ceoaoan--IMOaMmo...................................... laltnro at end et ymr.............................................. 1116,110,429 15,022,740 11^1^3,149 1111.776,726 14,466,341 1126467,069 1 434,794 7,701,994 1 8,136,792 124.994,377 t 434,644 7,701.994 1 6,134,440 1116,110,429 See note* to financial tcatinanta. 0007-SWP-034909 0007-SWP-000116329 NOTES TO FINANCIAL STATEMENTS THB KSRWIN-WnXtAM# COMPANY AND CONSOLIDATED SCBSIDIAKIES August 31.1063 Xote h--L'ltcootoUdated" Subsidise At Auftut 51. I die Compant', equitt in tne urHii,;rtbuced earninet of auch >ultdian amounted to S'.245.000. mcludioy SUS.'""1 applicable to h k eurrent fiscal tear. > Ounny ihe tear. Iwcaiuc of rxchanee rrunctions and currenct devaluauon. , t the coat of inttstacnu in tubndianta in Irani and Arteniina taw reduced, ht > . charyt to a isn't pmioudt provided, to the potential recoverable tax basis and , reclassified to ttuacrllanetaua other assets. Note I--Stock Options: Pursuant to a Plan, approved bt the ihareholders durine the vear. 100.440 ihares of the Cotnpant't Cummon Stock arc reserved for issuance to officers and ket emplotees upon exercise of options which mat he created at prices not less than the bit market value of the shares at date of trim. Options tun foe a ten-vtar period and become excrcuabte after one tear foam date of yrant to the extent of ooe-ftfth of the opstoned sharm atuntallv, Duriny the tear, options were framed for 41.900 shares. None of the options were cxereiiaMe at Aufuat 31.1943. Looy.Tcrm Leassi: Branches and offices of the companies are leased lor various periods raofiap fentraUy from three to ten vean. The annual ranml expense syyrsystss appnaiaaataiv r.500,000. ACCOUNTANTS' REPORT Board of Diftcmn The ShsrwmAVilliami Company Cleveland, Ohio 'Vs have examiord the coowlldased Saaneiai uatementi of The Sherwia'VUliame Compear aad ranmUdkied nibadiariaa for the sear tndad Atnust 31, 19*3. Our ammiaatiM M mad* la ateonlanri with ftnanttv teceptad audidaf standard* aad anmrtlln|l> Inehidad such tem of the accsundny records aad atdi la aar opMaa, the irrampsnyiny halenra shaes and sratemena of inmsna aad iwd atepha pteiiac hirly the mnsollHareii financial position ofTht SharwiaWVUaam Cntapoay aad mmolidaead wbddiaffoa at Auyuat 31. 19*3. and the riwanflriaied taenia of their nperarioas far the year then ttafcd. la conformity with carnally accepted accmintiny principles applied on a baaia cmaimi with that of the prandial year. Cleveland. Ohio Octehor 13,19*3 0007-SWP-034910 0007-SWP-000116330 1 THE SHERWIN-WILLIAMS COMPANY lot Piomcf Avt., N. W., Cuviuun. Onto Minuftturm *f Puna, Varnahca, Colon. St*ini. Enamel* Lacqurn. Zinc Fifteena. Dm. dwiiciK Lithopone, t inirwt Oil. Dry Colon. Iruahaa, Rollor Cooton, Cam, tmacocuia. Mmm Ptmnb aevtUod<ChkafoDaywa*OavlfXewa>fc<Pltnburfh Hubbard, Ohio; Oakland, CaL: Bound brook, X. J.; Gibbabore, X.J.: Daridar, Ohio; Garland, Tcaaa; Loa Anftkr. Cofftwilk, Kan.; San Leandro, Cal.; Montreal. Toronto, Wlanipaf, Vancouver and Gravenhum, Canada ffnwirk Qmkr CWmta. lllinota Oindn S. C. Baw w t m _ __ ft O. Lama J. X. Bau h a* s. Paticorr S. B. Coouooa A. W. tnmi C. A Ounu W. Id. St v ah t C t t*rom B. M. Vm Cure Gooana Conn X. E. Van Sronn t. ,, 1 t. Hanwo C M. Warn, fi ijniaSA AniiB. ,t. D. Waionr . m . ------- A-------- Ogkm A W. Snead,.......................Ciainaaa 4 A Bawd e miv OJw f K. C Bmo w w ...................................... S. B. Coounon . .................................. Vimi K. F. Haanao......................................... Kiwi LHHu............................................... Vial J. S. Paaacorr................................... Pipfimdad _ B. Id. V* Cun............................... Pm Miw - [***<-* N. E. Van St o h o .................................. Vka Aanidwt. A a Lama................................................ . frww W. C. row..................................................... Sh winy V. a Houa............................... Ana. Sttmmy Trwmfm- Am* Cu v b mo Taaar Ctmun, Otvalaad, Ohio Th o r Caw amt . Now York, N. Y. Bfabwi CUmuL Na h o o u . Banc, Chmalaad, Ohio Mmu u n Oo aaaw t t Tnuor Caw/unr, Naw York, X. y. -SWP-034911 0007 0007-SWP-000116331