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Animal Report 1937 { Th e Sh e r w in -Wil l ia ms Co . Th e Sh e r w in -Wil l ia ms Co. GEORGE A. MARTIN PRESIDENT To the Stockholders: I present herewith the Annual Report of The Sherwin-Williams Company for the fiscal year ended August 31, 1937. The Consolidated Balance Sheet and related Consolidated Income and Surplus Statements have been audited by Ernst & Ernst, Certified Public Accountants, as set forth in their certificate. The earnings for the year, before federal income and undistrib uted profits taxes, are $7,385,095.42. After providing $1,350,140.00 for these taxes, there remains a final net profit of $6,034,955.42. After deducting preferred dividends paid during the year, the amount earned on the common stock is equivalent to $8.41 per share. The volume of sales in dollars was approximately 19% in excess of last year. Federal Taxes, consisting of income, capital stock, undistributed profits, and social security taxes, aggregated $1,823,344.00, which is $642,874.00 more than the previous year. It is interesting to make comparison with the year 1929 when the net earnings of the Com pany were $6,019,475.00 but federal taxes amounted to only $721,786.00 or $1,101,558.00 less than the year just ended. I am especially pleased to report that the Organization has been most loyal throughout the year, and I wish to thank everyone for the faithful and wholehearted service given during the past fiscal year. CONSOLIDATED INCOME AND SURPLUS THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES For the year ended August 31, 1937 SUMMARY OF INCOME Profit from operations for the year ended August 31, 1937, before other income, depreciation, other deductions and federal income and excess profits taxes Other ipcome - - - - - - - - - $ 8.722,305.84 130,585.70 Deductions: $ 8,852,891.54 Provision for depreciation - - - $ 927,861.44 Loss on fixed assets sold or scrapped, provision for doubt ful accounts, etc. ------ 593,657.14 Provision for estimated federal income and excess profits taxes: Normal income and excess | profits taxes - - - - - -$1,145,240.00 Surtax on undistributed profits -------- 204,900.00 $1,350,140.00 Less adjustment of federal income tax provisions for prior years - -- -- -- - 53,722.46 NET INCOME FOR YEAR Earned surplus September 1, 1936 1,296,417.54 2,817,936.12 - $ 6,034,955.42 18,692,262.13 DEDUCTIONS Dividends paid and provided for: Preferred ---------- $ 704,257.50 Common ($6.00 per share) - - 3,803,562.00 $24,727,217.55 Premium on preferred stock called for redemption ------- EARNED SURPLUS AUGUST 31, 1937 $4,507,819.50 24,750.00 4,532,569.50 $20,194,648.05 (Note A) Proportionate share of the operating results of unconsolidated Canadian subsidiary has not been reflected in the foregoing statement; final statement as to such operating results for the year ended August 51, 1937 was not available at date of issuance of this report. Proportionate share (not significant) of net loss of other unconsolidated subsidiary has been taken up. THE c o n s o l id a t ed b a l a n < SHERWIN-WILLIAMS COMPANY As at the close of business Augusl Assets CURRENT ASSETS Cash - - .....................-----$ 4,030,216.27 Notes and acceptances receivable - 227,241.39 Accounts receivable, less reserves (includes accounts amounting to $1,333.54 duefrom unconsolidated Stffisiiiaries) - - -- -- -- - 8,817,696.61 * Inventories--raw materials and sup plies, in process and finished mer chandise stated on basis of lower of cost or market (estimated interjlant and inter-company profits lave been eliminated) - - - - - 19,752,759.85 $32,827,914.12 OTHER ASSETS Notes receivable for properties sold j during 1934--secured by mortgage $ Miscellaneous notes and accounts receivable, claims, advances, etc., less reserves - -- -- -- -- 118,409.82 447,993.98 566,403.80 INVESTMENTS Securities of unconsolidated subsid iaries- - - - - - - - - $ 3,698,555.91 Other securities--at or below cost 62,857.85 3,761,413.76 CURf Acci c< al Prd tc Acc U De Moi si I! RESE For P ir CAPI Pre FIXED ASSETS .Land, buildings, machinery and * equipment at cost to consolidated ,, companies, less reserves for depre ciation ----------- PATENTS AND TRADE MARKS Nominal value - -- -- -- -- DEFERRED Advertising stock, stationery, etc. - $ Prepaid insurance, taxes, etc. - - - 18,253,460.70 1.00 682,308.46 233,656.94 915,965.40 $ 56,325,158.78 Coj si CON5 Bal (Note A) Investments in securities of unconsolidated subsidiaries include (1) vestment of $3,695,825.00 in Canadian affiliate stated at cost which was less than the proportionate share of the book value (including intangibles) of the net assets of such affiliate as reported to the Company and (2) investment amounting to $2,730.91. which f is stated at equity in net assets of such affiliate. Net decrease in equity in Canadian i affiliate since date of acquisition of control, not taken up by parent Company j amounted to approximately $679,000.00 ns of August 31, 1936 (final statement as to j operating res ance of this i consolidated i (Note B) the amount o dealers. LIDATED BALANCE SHEET ILL IA MS COMPANY AND SUBSIDIARIES t the close of bisiness August 31, 1937 l ,827,914.12 Liabilities, Capital Stock and Surplus CURRENT LIABILITIES Accounts payable, etc. (includes ac count amounting to $584.50 pay able to unconsolidated subsidiary) $ 2,911,694.20 Preferred dividend payable Sep tember 1, 1937 - 171,423.75 Accrued federal, state and county taxes, etc..................................... 1,944,357.84 Deposits--officers and employees - Mortgage payable (existing when subsidiary was fully acquired in 1934) -........................ - 547,784.12 140,000.00 $ 5,715,259.91 566,403.80 RESERVES ! For contingencies, maintenance of plants and employers' liability insurance ---------- 853,175.82 ,761,413.76 j '* ,253,460.70 1.00 \f l j i I CAPITAL STOCK Preferred -- authorized 395,500 shares (par value $100.00 each): Outstanding -- series "AAA" 5% cumulative preferred -- 137,139 shares ---------- --- - $13,713,900.00 Common -- authorized 800,000 shares (par value $25.00 each): Outstanding -- 633,927 shares. 15,848,175.00 915,965.40 6,325,158.78 I! ( CONSOLIDATED EARNED SURPLUS Balance August 31, 1937 ----- 20,194,648.05 49,756,723.05 $56,325,158.78 Varies include (1) iuch was less than the he net assets of such ' g to $2,730.91 which i equity in Canadian y parent Company, nal statement as to operating results for year ended August 31, 1937 was not available at date of issu ance of this report). Proportionate snare (not significant) of net losses of other un consolidated subsidiary has been taken up. (Note B) The Companies were reported contingently liable at August ol, 1937 in the amount of $33,149.17 as guarantors of a portion or certain notes discounted by dealers.