Document YjvyQkmgXrR4o94mJxmypb6rK

A, lf*I THE SHERWIN-WILLIAMS COMPANY 1967 REPORT TO SHAREHOLDERS 0007-SWP--034970 N21762 CONTENTS 1 Financial Highlights 2 Menage To Shareholders 5 Consolidated Income and Earned Surplus 6 Consolidated Balance Sheets 8 Notes to Financial Statements 9 Source and Application of Funds 9 Accountants' Report 10 Financial Graphs 12 Five-Year Comparison 14 Directors and Officers 15 Principal Products 15 Manufacturing and Research Locations 16 Subsidiary and Licensee Companies 17 Sherwin-Williams of Canada, Ltd. --Financial Statements Annual Meeting December '12,1967 The Annual Meeting of Shareholders will be held at 11 A.M. December 12, 1967, at the Sheraton-Cleveland Hotel, Public Square, Cleveland, Ohio. On or about November 10, 1967, proxy state ments and proxy cards will be sent to share holders entitled to vote at the meeting. TRANSFER AGENTS Th e CLEVELAND Tr u s t Co mp a n y , Cleveland, Ohio Ba n k e r s Tr u s t Co mp a n y , New York, N.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 a n Gu a r a n t y Tr u s t Co mp a n y o p Ne w Yo r k , New York, N.Y. 0007-SWP-034971 0007-SWP-000116391 FINANCIAL HIGHLIGHTS August 31 Net sales................................ ........................................ Income before income taxes........................................ 1967 t $401,714,376 | i1 34,142,971 Income taxes--United States and foreign................ 16,091,621 ! Net income..................................................................... 18,051,350 Cash dividends declared: Preferred..................................................................... Common..................................................................... 278,057 ' 10,585,957 Per Common Share: Net income................................................................. Dividends paid......................................................... Working capital............................................................. 3.35 ' 2.00 1 137,575,300 ' Ratio of current assets to current liabilities. . . . 4.77 to 1 Capital expenditures.................................................... Provisions for depreciation........................................ 25*779,632 i 5,f919.899 11 1966 $386,062,160 38,757,790 17.854,085 20,903,705 --0-- 9,860,431 3.96 1.90 123,374,147 4.57 to 1 11,506,661 4,916,575 0007-SWP-034972 Page 1 0007-SWP-000116392 TO OUR SHAREHOLDERS We present herewith the Consolidated Bal ance Sheet and the Consolidated Income and Earned Surplus Statements of The SherwinWilliams Company and consolidated subsidi aries for the fiscal year ended August 31,1967, together with other financial statistics of interest. The consolidated net earnings amounted to $18,051,350 as compared with $20,903,705 for 1966. This is a decline of 13.6%. After pre ferred dividends, this is equivalent to $3.35 per common share as compared with $3.96 last year. Consolidated net sales amounted to $401,714,376, an increase over the prior year of 4%. As pointed out in previous releases, sales were hampered by a general slowdown in economic activity, continued sluggishness in the housing industry, inventory adjustments and extremely poor painting weather which began in early spring and continued through the summer. V Page 2 E. Colin Baldwin President 0007--SWP-034973 0007-SWP-000116393 The loss of sales in our Pigments, Colors & Chemicals Division deprived us of direct profits and in addition had an adverse effect on the factories which produce these products for both internal use and for sales to customers. We expect a healthy improvement in this sector of our business in fiscal 1968. Operations in the paint end of our business held up remarkably well in the face of the negative factors referred to previously. In fact both sales and earnings slightly exceeded the prior year. Rising costs were also a significant factor in our earnings picture. These were quite wide spread but centered principally around higher freight rates, raw material advances, rising wage and salary rates, start-up costs and in creased depreciation and interest expense. Our major problem has been the difficulty of absorbing these higher costs in an economic atmosphere where sales gains were modest at best. Where necessary and expedient, steps have been taken to improve gross margins so as to lessen our dependence on unit sales increases alone. Our large program for expanding and im proving our facilities is well under way, but slightly behind schedule because of delayed deliveries and the relative scarcity of skilled labor. As a result, our capital expenditures totalled $25,779,632 in contrast to an expected figure ofapproximately $30,000,000. Deprecia tion in 1967 amounted to $5,919,899. This highly desirable--in fact essentialprogram is expected to continue through fiscal 1969 with expenditures in the range of $25,000,000 to $30,000,000 in both 1968 and 1969. Thereafter, capital expenditures are expected to drop to a more normal figure. This program will make virtually all of our plants as modem and efficient as though they were newly constructed. Moreover, it is essential to meet the larger demands which the future unquestionably holds and to main tain our position of leadership in quality of products and our capacity to bring new prod ucts to the market place. Ever increasing amounts have been and are being provided for research, development and quality control. Costs of this insurance for the future were in excess of $11,000,000 in fiscal 1967. With such a large percentage of our profits coming in the last six months of our fiscal year, it is difficult to predict the probable re sults in fiscal 1968 at this time. However, the outlook at present gives us strong reason to feel that many of the negative factors of the past year will either disappear or be alleviated greatly. As a consequence, we are assuming a more favorable economic climate in which sales can rise significantly and result in a much more acceptable level of profit margins. It is with a feeling of deep regret that we report the passing of two of our esteemed di rectors during the year. Mr. George Gund, Chairman of the Board of The Cleveland Trust Company and a long-time member of our Board, passed away in the late fall of 1966. Mr. Wade N. Harris, Chairman of the Board of Midland-Ross Corporation, passed away in August of this year. We are grateful for the exceptional guidance and assistance these Directors gave to those of us responsible for the day-to-day management of the business. 0007--SWP-034974 Page 3 0007-SWP-000116394 Mr. Robert H. Hill, Vice President and Director of Sales, was elected to fill the un expired term of Mr. Gund. Mr. William C. Fine, Assistant Vice President--Finance, was elected at the Board of Directors' meeting on October 19, 1967 to fill the unexpired term of Mr. Harris. After a long career of outstanding service to our Company, Mr. Arthur W. Steudel redred as Chairman of our Board and as an active employee on December 31, 1966. Fortunately his wise counsel is still available to the Com pany as Mr. Steudel has been retained on a consulting basis and continues as an active member of our Board of which he is now Honorary Chairman. Space does not permit a recitation of Mr. Steudel's enormous contri- bution to the growth and profitability of our Company. Suffice it to say that all who have served under his inspiring leadership consider ita mostvaluable and unforgettable experience. The problems of the past year have served to highlight the dedicated effort and loyalty of our entire organization. The Board of Directors and the management wish to express their grateful appreciation for this splendid support. Cleveland, Ohio October 19, 1967 President 0007-SWP-034975 4 STATEMENTS OF CONSOLIDATED INCOME AND EARNED SURPLUS Income Net sales............................................ Dividends, interest, and miscellaneous Deductions from income: Cost of products sold................................................ Selling, general, and administrative expenses . . Pensions.................................................................... Interest........................................................................ Miscellaneous............................................................ In c o me Be f o r e In c o me Ta x e s Income taxes: United States: Payable currently................................................. Deferred................................................................. Foreign........................................................................ Ne t In c o me Provisions for depreciation included in cost and expenses amounted to $5,919,899 in 1967 and 54,916,575 in 1966 Earned Surplus Balance at beginning of year.................................... Earned surplus of merged businesses........................ Net income for the year................................................ Deductions: Cash dividends declared: Preferred................................................................. Common--S2.00 a share in 1967 and $1.90 a share in 1966 ..................................................... Excess of cost over par value of preferred shares redeemed............................................................. Net transfer to capital stock accounts in connection with mergers......................................................... Balance at end of year................................................. See notes to financial statements on page 8. THE SHERWIN-WILLIAMS COMPANY And Consolidated Subsidiaries Year Ended August 31 1967 5401,714,376 1,504,750 5403,219,126 5245,647,333 118,378,594 3,119,119 1,488,054 443,055 S369,076,155 $ 34,142,971 1966 $386,062,160 1,718,765 5387,780,925 5234,188,706 110,848,140 3,055,473 474,498 456,318 5349,023,135 $ 38,757,790 S 14,050,000 1,045,000 996,621 S 16,091,621 5 18,051,350 $ 15,950,000 977,000 927,085 S 17,854,085 5 20,903,705 5151,996,944 --0-- 18,051,350 5170,048,294 5 278,057 10,585,957 --0-- --0-- 5 10,864,014 $159,184,280 5144,078,344 2,345,082 20,903,705 5167,327,131 5 -0- 9,860,431 452,826 5,016,930 5 15,330,187 $151,996,944 0007--SWP--034976 Page 5 j I 0007-SWP-000116396 CONSOLIDATED ULAN'CE SHEETS Assets Current Assets Cash ............................................................. Short-term investments--at cost................. Trade accounts receivable, less allowances of 5612,000 in 1967 and 5665,000 in 1966 . Inventories--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 of The 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 .... Short-term investments allocated for plant and equipment additions..................... Deferred Charges Advertising stock and supplies..................... Prepaid insurance and other items .... m August 31 7967 7966 S 10,498,790 6,975,462 45,659,685 | ' S 78,846,538 ! 32,082,809 ! $110,929,347 5174,063,284 $ 12,998,576 -0- 43,621,172 S 71,420,354 29,922,041 5101,342,395 5157,962,143 5 4,182,766 1,796,049 5 5,978,815 S 4,182,766 1,885,497 5 6,068,263 5 3,587,323 43,517,232 98,952,911 61,708,628 5 84,348,838 25,000,000 5109,348,838 5 2,125,006 2,305,487 5 4,430,493 ' 5293,821,430 5 3,070,236 35,282,740 84,007,458 57,131,829 5 65,228,605 -0S 65,228,605 S 2,092,522 1,939,704 5 4,032,226 5233,291,237 0007-SWP-034977 r 0007-SWP-000116397 Liabilities, Capital Stock, and Surplus Current Liabilities Trade accounts payable................................ Payrolls, compensation, and other accruals Dividend payable on Preferred Stock . . . Taxes, other than income taxes................ Income taxes................................................ To t a l Cu r r en t Lia b il it ie s Long-Term Debt 5.45% Debentures due in 1992 with annual payments of 32,000,000 commencing in 1973 ................................ .................... Reserves For deferred United States income taxes For pensions and other items . . . . Capital Stock and Surplus Capital stock--Notes B and C: Serial Preferred -- authorized 500,000 shares, without par value: $4.00 Cumulative Convertible Preferred, Series A: Outstanding--74,948 shares . . Common -- authorized 7,500,000 shares, par value $6.25 per share: Outstanding -- 5,303,752 shares in 1967 and 5,281,589 shares in 1966 Capital surplus -- Note D........................ Earned surplus............................................ See notes to financial statements on page 8. THE SHERWIN-WILLIAMS COMPANY And Consolidated Subsidiaries August 31 1966 $ 9,009,327 14,339,902 0- - 2,005,133 9,233,634 S 34,587,996 I i Ii -0-- $ 4,578,100 1,623,466 $ 6,201,566 i t $ 7,494,800 33,009,931 0- - 151,996,944 $192,501,675 $233,291,237 0007-SWP-034978 Page 7 0007-SWP-000116398 NOTES TO FINANCIAL STATEMENTS August 31,1967 THE SHERWIN-WILLIAMS COMPANY And Consolidated Subsidiaries Note A--The Sherwin-Williams Company of Canada, Limited: The Company's equity in the consolidated net assets of the Canadian subsidiary amounted to <7,172,894 at August 31, 1967, which includes undistributed earnings since acquisition of <4,468,639. For the year ended August 31, 1967, the Company's equity in undistributed earnings of this subsidiary amounted to $97,063. Note B--Capita] Slock: The Company may redeem the $4.00 Cumulative Convertible Preferred Stock, Series A, commencing in 1972, at $104 a share and at a declining amount each year to $100 a share in 1980 and thereafter. Such preferred shares are convertible, at the option of the holder, into common shares at a base conversion price of $60 per share of common, and 125,000 unissued common shares have been reserved for such conversion. The holders of the preferred shares are entitled to one vote for each share of such stock. Note C--Stock Options: At August 31, 1967, there were 160,810 common shares reserved for issuance to officers and key employees under a stock option plan. Options are granted at prices not less than the fair market value of the shares at date of grant. In genera], the options are exercisable to the extent of one-half or one-fifth of the optioned shares for each full year of employment following the date of grant, and expire five or ten years after date of grant. A summary of the option transactions during the year follows: At beginning of year: Options outstanding .... Reserved for future options . Changes during the year: Options becoming exercisable Options exercised................. Options canceled................. At end of year: Options outstanding .... Reserved for future options . Shares 117,253 51,120 44,870 7,563 3,800 105,890 54,920 Option Prices__________ Per Share Total $40.25 to $49.50 $5,323,663 Market Prices 40.25 to 49.50 40.25 or 45.625 40.25 40.25 to 49.50 2,077,642 306,292 152,950 4,864,421 $1,964,268 393,599 Note D--Capital Surplus: Capital surplus at August 31, 1967, consists principally of the excess of proceeds over par value of common shares issued under the stock option plan. Note E--Leases: Branches, offices and certain warehouses and plants are leased for various periods. The rental expense of leased premises for the year ended August 31, 1967, aggregated approximately $11,300,000. Approximately 85% of these rentals relates to leases expiring in five years or less. Page 8 0007-SWP-034979 0007-SWP-000116399 STATEMENT OF SOURCE AND APPLICATION OF FUNDS Source of Funds From operations: Net income................................................................ Provisions for depreciation.................................... Provisions for deferred United States income taxes Proceeds from the sale of debentures........................ Proceeds from sale of Common Stock issued under stock option plan.................................................... Working capital provided by merged businesses . . Application of Funds Cash dividends declared............................................ Additions to property, plant, and equipment, net of retirements................................................................ Short-term investments allocated for plant and equip ment additions........................................................ Cost of Preferred Stock retired ................................ Other--net.................................................................... Added to (reduction in) working capital................ TheSherwin-VVtlliams Company And Consolidated Subsidiaries Year Ended August 31 1966 520,903,705 4,916,575 977,000 526,797,280 -0-- 397,334 1.027,963 528,222,577 $ 9,860,431 10,798,572 --0-- 8,139,926 155,230 (731,582) 528,222,577 ACCOUNTANTS' Board of Directors The Sherwin-Williams Company Cleveland, Ohio REPORT We have examined the consolidated financial statements of The Shcnvin-Williams Company and con solidated subsidiaries for the year ended August 31.1967. 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 and source and application of funds present fairly the consolidated financial position of The Sherwin-Williams Company and consolidated subsidiaries at August 31, 1967, and the consolidated results of their operations and source and application of funds 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, 1967 Ct~ 0007-SWP-03498Q Page 9 0007-SWP-000116400 EARNINGS AND DIVIDENDS PER COMMON SHARE 3 SR CASH FLOW IN MILLIONS 1963* 1964* 196S 1966 1967 'Earnings and Dividends per Common Share adjusted for the 2 for 1 split effective December 9,1964. Eammgi Dividanda DISPOSITION OF PRE-TAX INCOME IN MILLIONS 1963 1964 1966 1966 Q DEFERRED FEDERAL TAXES DEPRECIATION NET INCOME 1967 CAPITAL EXPENDITURES AND DEPRECIATION IN MILLIONS 1963 1964 1965 1966 1967 TAXES ON INCOME I DIVIDENDS B RETAINED INCOME 1963 1964 1965 1966 1967 I DEPRECIATION CAPITAL EXPENDITURES Page 10 j u M. 0007-SWP--034981 0007-SWP-000116401 DISTRIBUTION OF TOTAL REVENUE YEAR ENDED AUGUST 31.1967 A. 57.35% Materials, services and other costs of doing business B. 31.56% Wages, salaries and employee benefits C. 6.14% Taxes (other than payroll taxes) . 2.70% Dividends to shareholders E. 1.78% Retained in business F. 1.47% Depreciation CONSOLIDATED NET SALES IN MILLIONS 400 300 200 100 1943 1947 1952 1957 1962 1967 0007-SWP--034982 Page u 0007-SWP-000116402 FIVE-YEAR COMPARISON Page 12 Year Ended August 31 Net sales................................................................................ Income before income taxes................................................ Income taxes--United States and foreign........................ Net income............................................................................ Earnings per share of Common Stock................................ Earnings as percent of sales.................................................... Return on invested capital--Common Stock (2)................ Cash dividends declared: Preferred............................................................................ Common............................................................................ Cash dividends per share: Preferred............................................................................ Common............................................................................ Number of shareholders: Preferred............................................................................ Common............................................................................ Preferred and common shareholders* equity.................... Common shareholders' equity............................................ Per share............................................................................ Capital expenditures............................................................ Provisions for depreciation ..................................................... Working capital (current assets less current liabilities) . . Ratio of current assets to current liabilities ....... Total assets............................................................................ Number of employees................................................ .... . . (1) Adjusted for 2 for 1 stock split effective December 9, 1964 (2) Based on common shareholders* equity at beginning of year 0007--SWP-034983 0007-SWP-000116403 THE SHERWIN-U ILHAMS COMPANY and Consolidated Subsidiaries im 5386,062,160 38,757,790 17,854,085 20,903,705 3.96 5.42% 11.76% S -0, 9,860,431 -01.90 96 7,583 $192,501,675 184,707,083 34.97 11,506,661 4,916,575 123,374,147 4.57 to 1 $233,291,237 17,510 1965 $344,783,077 36,759,449 17,494,519 19,264,930 3.66 5.59% 11.31% 1964 $313,518,226 33,619,817 16,552,763 17,067,054 3.24 (1) 5.44% 10.57% 1963 $291,838,896 29,885,814 14,863,074 15,022,740 2.84 (1) 5.15% 9.68% S 379,129 8,754,195 S 406,401 7,708,292 S 436,796 7,701,996 4.00 1.70 (1) 4.00 1.50 (1) 4.00 1.50 (1) 251 7,435 SI 85,828,018 177,756,563 34.47 6,527,549 4,322,747 124,105,729 4.81 to 1 $223,401,726 16.195 255 6,577 5177,438,282 167,031,732 32.47 (1) 9,395,018 4,082,493 116,386,560 4.94 to 1 S210,958,283 15,497 276 6,286 SI 68,882,728 157,631,243 30.70 (I) 5,125,063 3,964,817 112,026,735 4.87 to 1 S201,210,419 15,115 0007-SWP--034984 Pane 13 0007-SWP-000116404 THE SHERWIN-WILLIAMS COMPANY Founded in 1866 EXECUTIVE OFFICES 101 PunsTEcr Av f a v e . X. W., Cl e v e l a n d , Oh io 44115 Directors E. Co l in Ba l d w in President and Chief Executive Officer Jo h n N. Ba u ma n President and Chief Executive Officer White Motor Corporation Ke it h S. Ben s o n President Pickands Mather & Co. Ric h a r d G. Bu l l Vice President SoLLACE B. COOLIDCE, Jr . Vice President Cy r u s S. Ea t o n Chairman of the Board The Chesapeake and Ohio Railway Company Wil l ia m C. Fin e Assistant Vice President--Finance Ro b e r t F. He n n ig Vice President Ro b e r t H. Hil l Vice President He n r y D. Le s t e r Vice President--Finance Jo h n S. Pr e s c o t t Executive Vice President Ro b e r t W. Ra ms d e l l Chairman and Chief Executive Officer The East Ohio Gas Company Ar t h u r W. St e u d e l Honorary Chairman and Consultant Ch a r l e s M. Wh it e Formerly Chairman and Consultant Republic Steel Corporation Jo h n D. Wr ig h t Chairman and Chief Executive Officer TRW Inc. Officers E. Co l in Ba l d w in President and Chief Executive Officer Ric h a r d G. Bu l l Vice President and Corporate Director of Marketing SOLLACE B. COOLIDCE, Jr . Vice President and Director of Auxiliaries Ro b e r t F. He n n ig Vice President and Director of Purchases Ro b e r t H. Hil l Vice President and Director of Sales He n r y D, Les t er Vice President--Finance Sid n e y Lin g Vice President-- International Operations Jo h n S. Pr e s c o t t Executive Vice President and Corporate Director of Manufacturing Wil l ia m C. Fin e Assistant Vice President--Finance Vir o il A. Ho l l is Secretary James F. Co l e Treasurer Al a n D. Ch il d s Assistant Secretary and General Counsel Page 14 0007--SWP-034985 0007-SWP-000116405 4 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 o p o 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 es Ba r iu m Ch e mic a l s Lin s e e d Oil Me t a l Co n t a in e r s Ae r o s o l Sp e c ia l t ie 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 es s o r ies DOMESTIC LAXTS An a h e im, Ca l if o r n ia As h t ab u l a , Oh io Be d f o r d He ig h t s , Oh io 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 ) CoKFEYVII.LE, KANSAS Cr is f ie l d , Ma r y l an d 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 El c in , Il l in o is Fr ie n d s h ip , No r t h Ca r o l in a 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 Los An g e l e s , Ca l if o r n ia Mo r r o w , Ge o r g ia Ne w a r k , Ne w Jer s ey 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 St . Be r n a r d , Oh io Ba y a mo n , Pu e r t o Ric o FOREIGN I ANTS Sa d Pa u l o , Br a z il Gr a v e n h u r s t , Ca n a d a To r o n t o , Ca n a d a Me x ic o Cit y , Me x ic o Va n c o u v e r , Ca n a d a Mo n t r e al , Ca n a d a (t w o ) 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 0007--SWP--034986 P*e l 0007-SWP-000116406 CONSOLIDATED SUBSIDIARIES AND DIVISIONS Ac me Qu a l it y Pain t s , In c ..............................................................................................Detroit,Michigan Ro c er s Pa in t Pr o d u c t s , In c ............................................................. Detroit, Michigan Th e Ca r l Gr a h a m Pa in t & Wa l l p ap e r Co mp a n y ....................... Wichita, Kansas Co mp a n ia Sh e r w in -Wil l ia ms , S.A. d e C.V............................................Mexico City, Mexico Des h l er Pr o d u c t s , In c .......................................................................................... Deshler, Ohio W.W. Law r en c e & Co mp a n y ....................................................... Pittsburgh, 'Pennsylvania Th e Lo w e Br o t h er 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 ...................................... Philadelphia, Pennsylvania Th e Ma r t in -Sen o u r Co mp a n y ..................................................................... Chicago, Illinois Mau mee Ch e mic a l Co mp a n y .................................................................................Toledo, Ohio Ru b b e r s e t Co mpa n y ..............................................................................Crisfield, Maryland Ru bber s et Co mpa n y (Ca n a d a) Limit e d ................................................. Gravenhurst, Canada Sh e r w in -Wil l ia ms (Eu r o pe) 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 p Pu e r t o Ric o , In c .............................San Juan, Puerto Rico Th e Sh e r w in -Wil l ia ms Co . (Wes t In d ies ) Lt d ........................................ Kingston, Jamaica Spr ay o n Pr o d u c t s , In c .........................................................................Bedford Heights, Ohio UNCONSOLIDATED SUBSIDIARIES 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 s ........................... 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 mpa n y Limit e d ....................... .......................Montreal, Canada Th e E. Har r is Co mpan y Limit e d ...................................................... Toronto, Canada Th e Lo w e Br o t h er s Co mpan y , Limit e d ........................................... Toronto, Canada Th e Ma r t in -Sen o u r Co mpan y Limit e d ...........................................Montreal, Canada Th e Win n ip e g Pa in t & Gl as s Co mp a n y , Limit e d ........................... Winnipeg, 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 (50% o w n e d --u n c o n s o l id at ed ) .............................................. Montreal, Canada Page 16 LICENSEES Sh e r w in -Wil l ia ms Ar g e n t in a , In d u s t r ial y Co me r c ia l , S.A. Sh e r w in -Wil l ia ms d e Co l o mbia, S.A. Sh e r w in -Wil l ia ms , Ph il ip p in e s , In c . Sh e r w in -Wil l ia ms d e l Ec u ad o r , S.A. Sh e r w in -Wil l ia ms d e Cen t r o Ame r ic a, S.A. Sh b r w in -Wil l ia ms Per u an a, S_A. Sh e r w in -Wil l ia ms Es pan o l a , S.A. Sh e r w in -Wil l ia ms Ven ezo l an a, C.A. 0007-SWP-034987 0007-SWP-000116407 STATEMENTS OF CONSOLIDATED INCOME AND EARNED SURPLUS THE SHERWIN-WILLIAMS COMPANY OF CANADA, LIMITED AND SUBSIDIARIES (Expressed iri Canadian Dollars) Year Ended August 31 Income Net sales .... Dividends received 1967 $39,040,978 100,000 539,140,978 Deductions from income: Cost of products sold..................................................... Selling, general, and administrative expenses .... Company and government pension cost..................... Interest expense............................................................. Directors' remuneration................................................. In c o me Be f o r e In c o me Ta x e s Income taxes..................................................................... Ne t In c o me j j 525,081,358 11,796,650 542,374 314,268 83,133 537,817,783 5 1,323,195 616,000 5 707,195 Provisions for depreciation included above amount to . 5 429,368 1966 537,368,092 50,000 537,418,092 524,179,728 11,428,493 504,835 285,830 76,092 536,474,978 5 943,114 232,250 S 710,864 5 378,890 Earned Surplus Balance at beginning of year................. Net income for the year............................. Cash dividends declared: Preferred 57.00 per share..................... Common 51.35 per share (1966--51.80) Balance at end of year 510,099,928 707,195 i i 1 510,807,123 : 5 242,200 ' 303,372 i 5 545,572 ! 510,261,551 | i 510,035,760 710,864 510,746,624 5 242,200 404,496 5 646,696 510,099,928 0007--SWP-034988 Ptgc 17 I 0007-SWP-000116408 CONSOLIDATED BALANCE SHEETS August 31 .iwtit 1967 1966 Current Assets Cash.................................................................................................... I Trade accounts receivable lessallowances for doubtful j accounts of SI 56,000 in 1967 and S142,700 in 1966 ... Inventories--principally at thelower ofcost (average or first-in. first-out method) or market: Finished merchandise................................................................. I , Work in process, raw materials and supplies................... Recoverable income taxes................................................................. To t a l Cu r r en t As s et s Investment and Other Assets Common shares of The Carter White Lead Company of Canada Limited (50% owned!--at cost................................ Miscellaneous receivables and advances . . ................... Property, Plant, and Equipment -- on the basis of cost Land......................................................................................................... I1 Buildings................................................................................................ Machinery and equipment................................................................ Less allowances for depreciation.................................................. j Deferred Charges Advertising stock and supplies....................................................... Prepaid insurance and other items.............................................. 3 54,425 7,486,860 7,778,846 2,728,830 *10,507,676 69,310 318,118.271 3 200,000 86,031 $ 286,031 S 607,442 5,606,767 7,B01,614 9,184,549 * 4,831,274 9 281,213 192,364 9 473,577 923,709,153 j 9 52.200 i 7,518,888 7,135,842 2,399,300 9 9,535,142 296,905 917,403,135 9 200,000 : 58,896 9 258,896 ! 3 607,442 j 5,608,777 7,685,494 8,982,477 3 4,919,236 9 188,299 135,880 9 324,179 322,905,446 ACCOU MAMS' REPORT To the Shareholders. The Sherwin-Williams Company of Canada. Limited. We have examined the consolidated financial statement of The Sherwin-Williams Company of Canada, Limited and its subsidiaries for the year ended August 31, 1967, comprising the consolidated balance sheet as at that date and the statements of consolidated income and earned surplus for the year then ended. Our examina tion was made in accordance with generally accepted auditing standards, and accordingly included such tern of the accounting records and such other auditing procedures as we considered necessary in the circumstances. (continued on next page) Page 18 0007--SWP-034989 0007-SWP-000116409 THE SHERWIN-WILLIAMS COMPANY OF CANADA, LIMITED AND SUBSIDIARIES (Expressed in Canadian Dollars) August 31 Liabilities, Capital Stock, and Surplus Current Liabilities Owing to bank........................................................................................ Trade accounts payable...................................................................... Payrolls, compensation, and other accruals................................ Taxes, other than income taxes............................ ........................... Income taxes............................................................................................. To t a l Cu r r e n t Lia b il it ie s Unfunded Pension Costs Reduced to a Net of Tax Basis Deferred Income Taxes........................................................ Capital Stock and Surplus 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 . 1967 $ 1,555,279 4,333,529 757,939 423,467 37,363 $ 7,107,577 1,967,305 688,000 $ 3,460,000 224,720 10,261,551 $13,946,271 $23,709,153 1966 $ 1,849,015 3,505,598 807,104 383,852 42,125 S 6,587,694 2,039,654 493,450 S 3,460,000 224,720 10,099,928 $13,784,648 $22,905,446 In our opinion, the accompanying consolidated financial statement presents fairly the consolidated financial position of The Sherwin-Williams Company of Canada, Limited and its subsidiaries at August 31, 1967, and the consolidated results of their operations for the year then ended, in conformity with generally accepted ac counting principles which have been applied on a basis consistent with that of the preceding year. Montreal, Quebec September 28, 1967 Chartered Accountants 0007-SWP-034990 Page 19 0007-SWP-000116410 Page 20 At Sherwin-Williams, sustained growth is a basic business principle. It will continue to be in the future as the Company continues its historic pattern of expansion and diversification. This approach to improved and increased service is reflected in the continuing expansion of existing facilities and the construction of new plants in a program geared to market potential. It finds further fulfillment in the Company's diversification into areas such as chemi cals that are, at best, only remotely related to paint. The trademarks on the facing page symbolize the broad scope of service the Company provides. Clockwise from the top of the page, the trademarks are those of: The Martin -Senour Co., with head quarters at Chicago; John Lucas & Co., Inc., Philadelphia; The Lowe Brothers Co., Dayton, Ohio; Rogers Paint Products, Inc., Detroit; W. W. Lawrence & Co., Pittsburgh; Acme Quality Paints, Inc., Detroit; Maumee Chemical Co., Toledo, Ohio; Sprayon Products, Inc., Bedford Heights, Ohio; and Rubbcrset Co., Crisfield, Maryland. All of these companies and divisions operate with a great measure of autonomy. They have their own brand names and, in most cases, their own distribution organizations, with the result that the customers benefit from the diversified services provided. 0007-SWP-034991 0007-SWP-000116411 0007-SWP-000116412 I I r* i ! ii . I A msmimwKiwacoidHuir 0007-SWP--034993 0007-SWP-000116413