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N21775 ImvalHNtlm The annual meeting of =-i*r,=cers will be held at 10 00* m ic/ 25 1984 at StOuHer* inn on " Scuare Putmc Square Cleveland Ohio HHOwrIln. The Shefwm-Wviiemj Company 101 Prospaet Ave. N w Ciavatand. 0n<o.44its (216) 566-2000 SheiwevtMIkame Common Slock -- Symbol. SHW -- i* traded on tha Na York Stock Exchange. Truataea 5 45% Debentures 9 45% Debentures AmenTruat Company DavMnd. Ohio 6 25% Convertible Subordinated Debentures Central National Bank of Cleveland Cleveland, Ohio Transfer Agent ft HagiaMe AmenTruat Company Cteveland. Ohio Ernst & Wninney Cleveland. Oiso hnraatar fMaUans Dianna McCormick The Sherwin-Williams Company 101 Prospect Ave. N W Cleveland Ohio 44115 PMdand Walawaatmawt Pireareni A dividend reinvestment program is available to shareholders of common stock. For information contact A. 0. Childs. Secretary. The Sherwm-Williams Company 101 Pioapaet Ave.. N.w.. OevMand. Oh 44i 15 The 5hera*i-Wtaks Company teaks and emoev* a best quaHad people avdtaUe -- witnout Kl1aotrhigeinr,ahcaen, dreuasppe. ro.rcaogloer,ocfiaanaydp. erson lli cue-rt '# >9 >9 j p* w tenses Vs. SAP 100 .10 n- x: =? 1 ssrsm* iI I It 1 r Ouerlerfy Cawwnon Ieoh Moia MM Qusnsr 1 2nd 3rd 49 Hgti 0144 31H zm Ow v immi low IMS 2414 2114 23 4*9" LBW Om 12131 Owes MOM % d tvsrage ouuandkig dam Numov ffcvnwt ravnoMM Off word -x Mgn' i nils 2nd 1244 3m ISM 4th 24* LOW S 9*...... 9* 10M 14^1 MS *3144 If* 29* 14MW ae* M41 MB 924* 9W 22 12.016.400 57% 9.590 1991 911* 9M 11 7.042.400 39% 9.999 1M0 110* S* 9* 10.729.000 55% 1596 1979 s V/A 41, CM 9862900 47% 9798 0007-SWP-035393 0007-SWP-000116815 HighHghts '*ousanes oi doMn >c*ei pw sat* *-ao Pecr-we- 3" Net sales Pre-tax income Nei income Per common share Net income -- fully diluted -- pnmaiy Cash dividends Book value Average shares outstanding -- fully diluted -- primary Return on sales Return on common shareholders' equity Effective income tax rate Debt to capitalization Times interest earned Current ratio R&D expenditures Advertising expenditures Number of common shanhotdsra of record Number of employees -- 1983 $1,973,413 101,212 55,412 1982 $1,851,776 76.431 42.931 1981 51.536 807 57.721 31.385 2.25 2.32 .60 16.24 24,73X796 23.61X611 Xl% 11K 45.3% 3X1% Ul 24 tel 91X130 01,300 ' 9441 19459 1 78 2.02 .50 15.19 24,527.846 20.903.326 2.3% 14.8% : 43.6% 36.0% 5.0 x 24 to 1 59,135 51.764 8.590 21,101 1 36 1 53 40 14 34 23.657,360 19.817,338 2.0% 116% 45.6% 43.0% 4.2 x 2.0 to 1 39,766 43.029 8.856 23.507 Who W* Am Sherwin-WiSiamt completed 117 years ol doing business in 1983. Our core business is It* manufacturing, ssWng and distribution of coatings snd nlatod products. Wa also sad prescriptions. haallh and beauty aids, cosmetics and ganarai merchandise through 402Gray Drug and OruQfair stores iniO states. Wa sail Shemrin-WMams labeled architectural coatings, industrial finishes. and associaiod supplies through 1,417 company-operated paintandwallcovering storestn 46 states Wa also manufacture and sad coatings such as Dutch Boy, Kem-Tono. Martin-Senour. Baltimore and Lucas plus private label brands to independent 'drillers. mass marchandnars. and home improvement canters. Wa produce coatings tor originsi equipment manufacturers in a number of industries and special purpose coatings torthe automotive after market. industrial maintenance, and traffic paint markers. t 0007--SWP-03 5394 0007-SWP-000116816 in 1903. earnings por common tit*art increased to $2.32. pri mary, from $2.02 in 1962. and to $225. fully ckluted. compared to $1.78. Nat income increased 29 percent to $55,412,000. compared to 1962*3 $42,931,000. Net sales. at$i.97bon were up 7 percent compared to the previous year's $185 billon. Our goat for return on shareholdars' equity m re cent years nas been 15 percent, wfuch we exceeded m 1983 with a 16.6 per cent return i said m tne 1982 annual report that i expected 1963 to be another tough year As anticipated, our compeMota remained aggressive, and some seg ments of the economy lagged the re covery However. 1983 proved to be a strong year lor Sharwin-Wdams. Overview of 1983 Major accomplishments m 1983 anc early 1984, in adcStion to strengthening our balance sheet and improving saws and profits, included the strengther.ng ofour managementteam, divestiture of the Container Corporation, and the formafion of our joint venture m Canaoa Earlier this year. Mr William B !dredge, an employee for thirty years became group vicepresident m cnarge of the intamatienal Group. Consumer Automotive Aftermarket. Chemical Coatings, and Chemicals divisions Previously vice president of the inter national Group. Mr Boredge was suc ceeded by Mr. Max Duane who hao been general manager of S-W Mexco Mr. Frank E. Butler, who jomeo 'he company in 1957 and was most m- cardy serving aspresidentandgsrera manager of the Chemicals Division, wee promoted to vice president of op erations ter dw Consumer Division Or Asfwk K. Nanda became general man ager of the Chemicals Division after hiving served as the division s wee president of manutaaunng. He joined Sherwm-WiSams in 1959 These inter nal promotions and others indicate the strengthening of our management or- ganzabon. Thequaity ofour managers ensures our future. Mr. Paihck S. Parker, a director since 1975. has decided not to stand for reelecffon at this year's shareholders meeting. Mr. Parker joined our board at a very difficult period m Sherwirv Wiftams'history. We are deeply debted to him for helping us through these past several years and for his strong support of the management group. We will miss his counsel greatly and wish himwell in his new endeavors On November 30. an investment group acquired control of SherwmWKarns Container Corporation, renansng it United States Can Company The dnwstture does not significantly affect our earnings, permits us to con tinue buying cans without interruption of supply, and allows us to reoepioy the sale proceeds to our core ousmess 2 0007--SWP-035395 0007-SWP-000116817 I In January of tms year, we entered into a joint venture with C-l-L Inc This pint venture owns ana manages the decorative paint businesses formerly conducted by S-W Canada. Inc and C-l-L Pami. Inc' a Toronto firm. The partnership was formed to create a stronger business m the highly frag mented Canadian market. Our Paint Stores Omsion proved in 1983 they can successfully manage ihwr retail and wholesale businesses. They gained double digit increases m operating profits for both businesses They did this with more aggressive marketing, cost efficiencies and pro ductivity improvements. For the first time in many years, our net number of stores increassd. The Stone Ofmann has a stronger management teem m place commitied tocapturingthemany opportunities sli* available nr growth. Gray Drug Fair, while contributing to consolidated profits, fel shortof our expectations. Their sales account for 29.3 percent of file company total, yet their operating profit represents only 4 4 percent of segment total profits, when is approximatelyhalfoftheir1962 performance. We have identified many of the problems, and the Ohmon's managers are addressing them. Grey Drug Fair's record so far as a turn around division is not unlike the Pamt Stores' experience m earlier years. As an ihventory-mlensive and sarvieeonsntad business, they must continue improving on the basics of financial controls, merchandise mu and inven tory management. In our Coalings segment, the Con sumer Division increased their opera ting profit and continued improving op erations In 1983. they also created the sales organization for a multi-brand marketing appiosch. With salesmen trained and knowledgeable about the Dutch Boy. Marim-Sartour. Lucas Group, Baltimore and Kem-Tone Unas, the dwisron expects lo increase external salat m 1984. Once agam. the Automotive Aftermarket Division's operating profits were up compared to the previous year while much of this was due m sales increases, they also achieved operating improvements and manufacturing efficiencies The Chemical Coalings Division lowered manufacturing failure costs and fo cused vm merchandise mix on higher margin products to bnng up gross margins. Both this division and the Au tomotive Aftermarket Division rely on strong product Development functions 10 provide customers with high quafity specialty coatings. For the Chemicals Division, cost re ductions and gross margin im provements contributed to their in crease in operating profits. Finally, our International Group achieved a good performance given the currency de valuation in Jamaica and the deconsofidation of our Mexican subsidiary. 1N4 And fctywrf Ws expect 1984 to be a moderate year for the economy. Inflation wifi ap proximate current levels and unem ployment should not increase substan tially except for those industries still in transition. However, ws continue em phasizing tight controls over inventory, sales, and operating expanses. Gov ernment budget deficits, resulting high real interest rates, and international debt problems may renew inflation and stop the business recovery. We expect consumers wHI remain cost-conscious even as disposable in come increasos-When they restore, msmtsin or beautify existing assets, and sstheeountry ingsnsrel repairs its infrastructure, ws want to make it as convenient as possible to "Ask SherwkvWHIiams." One hundred filly newstores wifi make itthat much eaawr tor customers to shop tor paint, wallcoverings and other decorating items at a Shenwn-WiWams store. And as consumers buy more of our prod ucts. our manufactunng operations wdl benefit tram increased volume. it is alsoimportant to offer customers convenience and service m making tneir health and beauty aio purchases America's population continues to age and is more conscious of neaif' anc appearance Aodtng to our nunoer of Gray Drug and Drugfar stores -mportant. However, as the divisicr grows, we must be confident t s nanaging the basics, and this will be bur concentration m 1984 Acquisitions win probably oe working-capital intensive as opposed tofixed-assets intensive And as1 nave said many timas. wa look at acousitions where we already have manage ment expertise and famkarcy /*"i '~e business Ws win also continue to grow through internal development. As *e hawdemonstrated, wswill nomas taie to divest those businesses that oo -a improve our shareholders weairr Looking back at 1983. we accom plished much. At the same time, we recognize that our competitors accom plished a great deal as well For 1984 the best tools wa can provide our people tor increasing sales are new and improved products with good mar keting programs. Our people continue to demonstrate the will to wm and this winning attitude will ensure another successful year m 1984 / John a Braon Chavmjn. PiMidw* Chef Exocutn* Oftcr March 12.1SS4 3 0007-SWP--035396 0007-SWP-000116818 Sherrwin-WllllanM at a glanea by sagmant Paint Stores Stems C - sen Drug Ham Gray Drug Far Mnalaal Owduett Malar Markets Shervmn-MManw labeled arcfikacturd coaling* and mduwnal llnehas. wallcovering*. Hoorcovennga. window treatment*, pert sundrme. spray oqupment. Prdeaarond users (indudng pamer, contractors, industrial mantenanee and commaremi account*), o <m. voumef consumer. man to meoum acted manutocturem ot produce > quwng factory Rnen Preaenpkone. health and beauty aid*, cusmaoce. general nnhandMa- General pubhe. CDaMwga Wm--re. Consumer Division AuBmotrve After market Dmaen Chameal Cgaangs Orwemn ChemcaM Drnaon wtemaoonaJ Group Shenwn-tttdami Canada ShervwrvWema Kawce* Shamera-tMOam Csabbmn Shtrwmwmvm&uir funeonaetaaied) ArcMedutal Inahae funder re wPhWmmMi iir W1>MIMTHmirmgi f AMmOi P^- rtaMi^|uVr Senour. Kem-Tone. OaMmom. Urcaa Groupend pnvete brand MbeM). apedel pupoee mange, cuatom peck* agng of aaroad products, tnabee. iol9fB* idhMvii* ttMk colorctrife. l>o * yonseden. mtkatnei and com- meiew mertenanee acooert*. panbng conbacton Autaffiofet ii/kwha ap--fD *_dumc--t-t--u-n-ctaf irtwiv AaiaMfc. AdiiA Aaekai^ picM odvi for Jv imic mi). AuBmoMm body rfepa. Haem, body btddara. HblMMU|MI flnjtfm tof origM Hupwiwl fnmu Mum. BuimmmieNnw.omriipfOOucn. tOfMl produca, trampoittfton ipbip* mtm, oal ppotfM* nMl Hjmtwt. tom and oB-ioad qMpmm Q>g^lniTndm.MCtfw>fyv foMM ind oomwton Mitttoi. PlMtcs, iuUMf foed. pturmtCM* call and agncJiural chwneiAi wnmiv umiiy.iiouOT wx uBmoftm mpdm toMttse, pen rdriee and a variety ot home dacorndve Heme. eowtecBm. automerm body ahope. oommaicml and aafcmal maaSa- nance acoounts. anginal aqupmam RMndeelumm and <d-youieitam non el ShsrwvviMhaffls Cewv Coroomaon fieeM Nevemeer 30 iN3> tor cam ana etwr itoraiasgww am gewra>r iii Mine Kid*cant query mas end hom e varaiy el eeuieet. Mvee m WDMraa cempaahcewaMaSa'ai Mm end Bed prpnannusguMBngredemerge d nenk nro re anmcnmem There ere no eiaenaeuree neeaMO ter envk dwoMeaidduwnrgrenMyaar j --The bee d anv angle cuaiamer wadd nol nete a maianar adverteeirea onre bueneee d nocompanyor any egmanc 8acmog darners*notsrgnecantxma huenaasd any aagmamdra company _________________ r am net d mmend vnpenance n re buanam d He company How ever. a Mbamraal partdraroomsdr* eeemetonataagrtemia derivedcom etc kpenee d ledv taopr companee kaoW roaiMa d Mae tegmenta are v* ekioae on oagaa M d ea teoen 13 drempon PeatMaaamtaiaaonpaga3itfr*iapoft The mapniyd rapiama am rnrad by ra company The company waves rare mnouo production aeaaea d re Ceingc aagmam am adaouam epamm at a agrtecantiy Rgnar town# ran n *903 Meeaerah aa^t d^motapata^tk evoendkurkk aradtacveadenpagaig Wkia*yaitiicn*es. tatimiakocniomnprrtcomppryianailhanby cuKomen Idial--The company * ene d me na->ad atlendarta a cm m Mad n re Tweer Dane Cevt dr re Mm d erw mvemns a -ae.T-ng n.Ooiewreie.Pembioiie i-mc.* "-* __ r e aadong venom lenra d 'em! yer Mnaa Eiiwumiarta Promcaon c THaj-,'re near Mgaa d daenrary ' The emaon agane re company ai: C" cage Mnoe Corearer Plant by re U S Oee^awa Salary and HaaM* Adtiwrntraton " ceeam# a modeauaa<euadmeMove-se'30 "90 dapoeten d Shamr-Wiiem* Cty*"* Colo ration the audiact madar d me s-iarc* ra queues n ra contarer plant v - > sage aaa. a now re reoonD*ly d ra -* 0007-SWP-035397 0007-SWP-000116819 Diatrlbutton Oomaatttlon OaaaoaiatitY Througn t<4T7'eompany>oparaiad uom in 48 suits Pant and watpaparstores mass martwtars, noma eantan. ndependant hardware atone, hardware cham Maifcai a frag mentedandhighly pnea. qualty and aarwea compettve. Saasond woi me mapr portion of safes occurring in ma tacond and third quanan. 402 retail none ip Ottoman. Honda, inaana. Maryland, Now York. Oho. Pamtyivana, Vigna. Watt Vugnia. and ma Datnct of Columlaa. Drug Obama, food itont and ma martial- Vf VawOrnWl TWtfJQnQ ID ' lirCninOVnQt prang wd n mg i. Saaaontl w*h approximately 29 parcant oi aaleaoeeumng in *M fourth quarter The Stcta* Oman, indtptndtnl (Man. mats mgchtndnan. howt cantata. Mote than 1.000 eoabngamanutacturen at regional and national level. Quady. service and pnea an main cempaawa laden. Seasonal wth the major portion d safes occurring in ma aacond and thvd quMan. 00 SnPMfHIVIMnl MDnOM OVCnNs dMnbuiart ifld jo DMaion nr*a among tour major marint leaden. OuaMyand servicecomp**ve. MOdMtily MMSOfMa Four major oofnptflM uriti trad product cdfring md Mini ml oompratiat udfi nch> pcpAicm. ftodua Mchnehgy,qu% md ndoi ipy oomptftiva Mn No tignievt raaomity. OaocttdainpnaanMw,daMbutanid MP|orchomoalcompaniaLTaefinatogyand Notconaidarvd MBonoL prtna oofflpMMt u>M 9MS WQI, flWWUWl Vw pOOP Companropatattd taw at Mfof. Canada WMrnaeo 74. Bad 5. Mary oompiiftn in aach Mgimivt ranM*fiiv<|i ongnpi pomn gonAoMil onto in Maimo. Cmndi and onaunaai nra, tanwoa ano guraiy Mram. Canadian opontion aaaaonai with to parcant al safes occurring in taoond anti mw quartan: othar operations not dgntifoantiy aaaaonai. Hbu frtawhoblolof halps Monvantnadanangtogan me won* ~vau o*i*ndtlotdame aimmaratouremcnaaed Gray Drug ano Drugtar noma upon oodua same* anoonea You gai a whom M ot raa daaenbaa among mm--moaongauarayOugatoiaorDruglar aort naan* canvananta Handy aaraeaanda rangotaouet aaaoamani m paoaa md nato eaa> anas law lh proofbkiflwpwformanca "'TliaPpoo(amPi1onnanoa'aoanmngpiogram tor Owen Bay naaaaa wad tantun an at aaw dmabay* nw satobay. flaw iwg owicanaa. ana. na d ai. cenawu ouaby the pod d Oiach Boy par tonaanca baa n ma aapananca d protewond panan They partcqain Xa tdmvmq pipgram by aanadi aw eoneurnarwer aueeaaa donaa i uang ouwi Boy Aak Sherwin-Williains ltd vtok Shanm-Wtoarr* adnrtsng and orqmoaon pnoram toreurpamr dorat .1 torgatao tor homaomnan. do+yeurtaim. ma At orotoaaond no* -- nawmg pam-ng aom-jem* tuldaa plml Parian. morenmes th* mxnrwiM camoatgn nyium -a Shawm twain dans attor a areouct area* ana nBawtoogaaea ww t od*> *a ototoaaona ma iwat cuanmar cira *nc *n.*e> arieapi Man tonaama 5 0007-SWP-035398 0007-SWP-000116820 MM Operating Review by Segment /7XS Operattne HlphkohU for 1--a_____________ Stores Onnsion Increased sates iTpercenl and operating profits iQ0 parceni Accomplished this through improved merchandising. stronger promotion -- pameuiarty ol mtencr products -- and operating eMaencies Emphasized benefits of greater supplier responsiveness through the successful Pt**"er for Profit program Made more effective use of flexible hours tor the staffing of stores Remodeled 163 stores, opened 56. relocated 66. dosed 6 The current total ol t.4i7 stores represents foe first net increase m many years Grey Drug Pair IncieasedaeleeT percent but proWs were down 56 percent SGftAcosts eroded e Raised proatatnily of pharmacy eeceons of Grey Drug Fair stores, the fastest growing mertest segment of Pie dMaetn. e Contnued tocueng on core aaaortmant n product toes end on emphasizing convenience forme customer. Expanded and upgraded pnvete label program, especially m vmmms Remodeled 112 Mores, opened X. rebated 6. doaed 9 Consumer DMswi Addad new dMhbuUon at me ream of isebuctumd merkaang program. moeaeed gaaonege hr Dutch Boy end MertxvSenour 12 percent because ol aggmasive marketing end promoOceial eNons. Osnefoedfrorn eMciancisa inrawmaterialspurchasing. Greatervofcxneimpiovad factory operations. Automotive Aftermarket DMeion e Gained market mere in ileet and tmek OEM Pvough new product introduction, e Provided more baiting ter customers snd sales staff m product knowledge end applctpton tachnfouaa. Chancel Coatings Division toaeased piolki 33 percent Pro* performance due to opsresng efficiencies. dacmasing mandactunng fakue cods and mpnjvmg waking capital manage* Developed stafooMhaait reeei mandadunng process. Hdled out skongnaaonaf program for PenwhOed 2500 and Gtes-Oad. bom important near products. toemmenmoftAPAeiae pettei S A!dnBMf|hA AbMMAf^ai used byHas 0007-SWP-035399 0007-SWP-000116821 Ptwlepnwntt lor 1M4 Spend approximate.^ 43 percent nor* o'1 advottitmg. induing strengthening network television adv*n`S"ig Buita on foundation *0 n 1993 to fin* tun* moustnarm*nt*nnc* and chemeai coatings marketing Spend approximatelySi mi*ooon the training of nwiaper* and sates representa tives to meet requirements of new stone and to *n*ur* readmes* m the future Aodtothenumtoerotstoreematcarrythein-stockwaiicovenngprogremandiothe number ol patterns many stone already cany Remodel 140 store*, open ISO. relocate 50 and dost none ______ Lower SG&A costs to attam greater profitability improve inventory sarvte* levels Step up eovewsmg eeeutar program Remercnandis* or sutset remawmg space tti* available from Oruglair's lermmat- ing the apparel business. Remodel Off stores, open 32. relocate 10. cloee 4 * Spend 50 percent more on advertaing. * ExpanOdHtnbutonfireugh eggnetins, competlitvepitang. same* toidadvertismg * impiemsrs me formpstlae earning program created in 1983to increaae product knowledge and aelaa. e Realize benaMa from cepttafaxpandNurea madam the Mtar part of 1983 tor the pamt Mtng and Owhetg area* and bagin Hie rattonafeakon. *** e Contnu* new product(adduction, particUarty m thaflaat and OEM truck rechea. Offer and uurs aasy tooppty ayatoma and superior odor natch, e Engage h i eggreaeweaxpaneion of attribution networktore*tour product kies, e Begm ccnwructinfl reeri mokiactuiing plant at Richmond. Kentucky **. e Introducenew product*to improveend ueereSnahriQ productivity white meetvig EPA ngulaMna ^ SePwMp^BiaiHtnotstpi r iiQfinibiliii feondr mw^iwcpfi^ia^musnetedpapiwvai^lpfplpfi imfntwandoiMnnieniasircwcnopunnt growth Purpose n so concernato on targeted account In toefargwwsto marital segments. e Conenua manufscMmg and opantstg sfltaeoeres, partculariy n raw matanala and mvanory eontoWaaons. Mghttoptol e partatthe I rings swtMliW leftoeyDnnPae. I* mmm the feuetoMiy at sarieue' Our iMipMamtlen firCtoaUmieasangteustonMriThedtvMen'souriomarrents*aon sfacWkM to aepMilinM eeeringt and aeaNpritan agriparenl knew-tm. Thomumda d doNart Yaws sndad Oacarrbar 31. ttB 1BZ 1881 1980 1979 1976 IM Paint Stores Drug SUN* CoafcnQS Chsmcafc ImamaSonal 124,(74 t821,032 $ 615.434 t 582492 3 585,312 5 575.571 177,98 540,648 137,850 . M.M 583,773 568.556 476.965 425,160 393.642 S.R1 11,122 88,801 40.332 118.865 87,SB 115471 60,170 102.132 82.738 >4,020 78.908 Sagmart Mala 11.851.776 S1.S36.807 tl.263.721 81.190.343 11.132.350 Opanltaf |MMM m i I i Pam Storaa. . OrugSloias Coaangt............... Chameala.......... tntamtftonii .......................... .... ........... Sagmart totak .... CvpovNi mpmmm -- nat............... fciiOTCt ttpvm . s 8.717 S 13.842 8 16.178 8 7.605 t 5.779 1 (14.076) MB 13.584 8,IB IMB 74.828 81,OB 45.927 41,362 51.112 a.m 94B (3,732) 18,423 7.567 1.427 M74 7J00 7,008 9471 5,864 2.306 134.18 HUM (17JM) 118.7B [*1.403| (16464) 87.4B Qtjan <18432) 78.426 (8429 (18.552) 61,082 (8480) (19,368) 47.649 (16.842) (21.316) Will 8 78,431 8 87.721 I 48.381 ( 33.438 8 9.599 Parra Sanaa.......... ........................... OrugSlona.......... OoaUnga............... Charnicak............ kmionri....... n [J.. ...--i. .......... Caw**#***- ...................... ... i 17MB BUB bu b jm 8.718 7MJB MbM t 0443 $ 143JB 17S.8B 288,017 7U3B 4M16 71MB 131,171 S M.2S7 $ 188,711 172,734 817,B6 76,408 9MR 7B.821 75417 8 884,438 8 158.342 * 38.130 66.08 51400 0004B 100406 1 7B4B t 165,684 8 178.388 817,m 81,IB 48478 333.821 55453 44.736 5B4B... 813413 121.388 - 40.468 1 711.734 $ 653.799 Patm9anaa.......... .................... . aa DrugSMa.......... Ooainga............... Charrtcak............ kttFMliQflll ....... Stomantttfc .... Corpma............. CaracMMad mala ........................... $ MB I S.7B 8 9.BB 8 UN 5.3B 742 B.1I7 1M1I 144B 1 4.141 14.4B m 701 1.038 9414 0 ..'1488'$' ...2471 8,734 8,514 1.023 4.631 3480 506 11.88 1,162 711 hj b MB 2MB ..... 40.381 4.153 2.711 21115 1.560 10.014 1.253 16439 1.08 i IMB $ 30,845 8 43,072 * 23.704 I 11.167 S 17.274 < rpn anvi.......... ........................... Drug Sanaa.......... Ooainga ....... Chameak ........ MwnaMnal.......... StQfflSN tOMi ... CotperaM.............. ConnfdMd tows ......................... 8.7M 8 8.818 8 MB U.7M 8B 10.901 MB 2M S.B4 242 MB 8 B 9.7B 3,753 B1 8488' 8 8,686 3.188 1.051 5420 8 94B 2,924 1.070 4.775 9.074 1754 1.38 1M44 ... 21 .OB MB 1,887 20.378 1.2B 10400 773 11.827 831 17,18 512 s IMB 8 22.3B 1 21.8B 1 18.879 8 19.456 5 18,439 Opa.^1 Pam Sanaa........ Drug Stoaa ......... Coaanga............... Chamcak............ mamiflonal.......... StgmmMotato . .. 44% 14% 104% 1.1% 7J% U% m 2.8% 8.8% 6.8% 18.8% 8.81 2.8% 5.0% 7.3% (3.1%) 7.2% 4.8% 1.3% 6.5% 114% 10.4% 5.1% 1.0% 12.4%) 65% 7.3% 7.1% 4.3%... ' 8.3% 9.8% 3.0% 34% Twcpnra nwon vntniiBiMn is d mo upon w s w w h w mivm nnm InHtfISQffiSnMWItfM an aeeoimad lor vatuaa earrpanBk'fc noana vMMaM euawnar a 0007-SHP-035401 0007-SWP-000116823 IMS Comparative Data Notes to Segment Tables Th Drug Stores segment consists ot tno assets and operations ot Gray Drug Stores. Inc. acquired aunng the fourth quarter of t98l and additional drug stores acquired during 1983 and "982 The dele contains the results ot operations ot this segment beginning October 3.1981 in addUioh to capital expenditures, progeny, pia xnd equipment acquired by the Paint Stores and Drug Stores seg ments through acquisitions m 1983 totaled Si 733 000 Acqmsuons during 1982 and 1961 ralatadtotheDrug Stores segment totaled $2,960,000 and Sl4.504.000. respectively Effective November30.1983. the company disposec of the SherunrvW*ami Conteiner Corporation, a wholly-owned subs>diary, wtseh was included a* part ot the Coatings segment Operating income is total revenue, inaudmg profit on inter segment transfers, less operating costs end expenses Corpo rate expenses include significant provisions lor disposition and termetation of operations. Identifiable assets by segment include both assets direct; > tdenrted with those operations and an allocable share of ,omuy used assets. Corporate assets consist primarily ot casr m,estmente. neadqusitersproperty, plant andeqixpment. and ceram property under capital leases Export sales, tales of foreign subsrtiana* and saies to an? individual customer were each leaa than i0% of consoiieated safe to unaMfissed customers during a* years presented umisew haw Sam On* SIM Cnisntrrssia - inanM. SflQRMlBMl Effect or u f o van Dser SnerlMOpenSna ineome MQpMn tsn isa isr ISSO ISIS tSN S S I.K7 I SAM sans INI Ltn At# mb WI1MI tan (tat) mat mia ms (toe (use as m MM tMt - IIS* 1.713 -- IM IMS t.ai -- tun ssJTs mas MMB aai !S555-----233?^ mw^egmerx Trsnslsrs t*a sndsd Oesaneai 3i tsa tat seat na im tin stTsjTi aNLiir Birja am.m emsa tutus at at i.8H t.at i.m ns mia tataa tmm s biat t sura* s.im Our euaness segments otter customers quaiuy products suen ss tnoss bearing me registersd tradsmstks Outcn Boy1 ManmSenour*. Kem-fone*. Acme* Rogers* Glaa-Qad*. PanrwOad* and others Other quality paint and pant rawed products ate ofisrsd under the trademarks Baltimore Lucas Group and SuperPanx3 9 0007--SWP--0354 02 0007-SWP-000116824 Mi--mtnft Oiseusslon and Analysis of Plnanelal CondHion and Raautts of Oporatlons wwm c ip u m MUX taw "tr" RMum m Sale* An m mX tat. -e':r~ - F 6 (jng^irnSMI MWM `Ml .. I.. ! ; ' - T *i* : ':* :** : : '< 5 .act c 2:3-::: -3- re .; *? .-.is/a. asts ; : r*-:a-t _. ca -a--i . :e-*a:ac'.'Si i .. ~ --r .' * r- .* I. ; c*r: :>.;< -2"C ' s*. :i s ;3 3*rc*~ :*:rs>iing 1983 Cult Flew The cash poeition improved primarily becane of in creased earnings and the deposition of a whotyowned subsidiary. Nat cash flow provided by operations has anablad the company to fund its capita! needs without axtamal financing, except tor financing in the Sharwin Wiliams Development Corporation CSWOC"), an uneonaoidaad real aeata subsidiary. SWOC purchases and develops properties to be leased to the Paint Stores segment and toothers. Working CapRal No Domestic Short-Term Borrowings Since 1979. The 1963 current ratio of 2.0 has not vanad substantially smce 1979. The LIFO method ofinventory valuation results in a tower reported current ratio. On the FIFO basis, the ratio wouid have baan 22 in 1983:2.4 and 2.2 m 1982 and 1081. respectively The working capital increased $6.5 mlfion was pnmanly dua to the increase n Drug Stores' inventory caused by a $mi `Ml dlstrtoutton Inefficiencies ottsat soma extern by nverlory reductions in the Chemicals segment. These reouctkxw ware associatari with discontinued businesses The dapoaal during November 1983 d the company* whdy-wvned subsidiary, Sharwin-WMamt Container Corporation, also ineraaaed working capital. e Ourcurnrtcaahpoalttonarto anticipated future net cash ftowprovided by operationsshould be sufficienttofinance working capital needs. Capitol EspencffkxwWAoqulelttons/Pfveetkurs e Capital sxpendrtures ware $31.9 million compared to $30.8 million at 1982, excluding fixed assets acquired through acquisitions of $1.7 mllfion in 1983 and $3.0 million in 1982 This increase occurred primarily because of remodekng or adding to the number of paint and drug stores Expenditures tor manufacturing improvements m the Coatings segment ware partially offset by reduced expenditure* m the Chamcaie segment Reported capital expendturea do not include SWOC expenditures, which ware $20.2 mifiion. e SWOCheafinanced itsreal estateactivitieti with revolving cieditboirowingB that ere not guaranteed by the parent company. The dlspoeei of Sherwm-Wilfiams Container Corporation reduced oat fixed assets by $35.9 mikon. UnaaofCredR We have anunused ineotcredit totaling S` 50million a group of eleven banks. Hus credit agreement was en tered into August 31.1963. and expires August 31. 1988 SWOC has a fine of credil from a group of tour banks for $50 million. This agreement was entered into December 22,1983. end expirea December 22.1989. Borrowings under this agreement were $28.5 rrofiion at December 31 0007-SWP-035403 0007-SWP-000116825 J Ae. i * Si4i '*'**&** OOvOTes xrwKi'i-'ss Capital Structure The Ratio of Debt, Including ' Capital Leases, toTotal CapitalWas 32.1% At The End of 1983 Compared To 36.0% in 1982. This ratio in 1961 was 43.0 percent 43.5 psrcsi* in I960. 47.1 percent in 1979. increased profittMty and conversions at 6.25 petcent debentures into common stock contributed to 1983fs im provement In thi* nlio. a We completed the redemptionofattheoutiterxlng $4.40 Cumulative Convertible Preferred Stock. Sanaa with most ol the shares being convertedtocommon stock prior to the redemption data. e During 1903, we repurchased 1,123.074 shares of com mon stock. Depending uponthe compan/s cashposition and market conditions, we may repurchase additional shares in 1964 for genera) corporate purposes In 1962. no sham of common stock ware repurchased. Dividends This is The Fifth I ConsecutiveYear The Dividend Has Increased. The improved financial condition of the company since 1978allowed for reinstatement of thedividend taiem1979 at a quarterly rate oi $.0375 per share and subsequent increases to aquarterly rata ofS15 parsharaduring 1983. On February 15.1964. the board of directors declared a dividend of $.19 per share, an increase of 26.7 percent from the 19B3 level Our current dividend payout ratio of 251 percent is now aimed at a 30 percentlevel of trailing earnings, dapending upon future capital needs. Results sf Opecettsne 1983 vs. 1982____________ ____ NlC Ii Im Net Sales Increased HRRHR 66 percent in 1983. ConeoMafed net sides increased primarily because of a 16.6 parcant Increase in the Paint Stores segment and a 6.9 percent inciaase in the Drug Stores segment. The Coatings segment's increaseol 1.0 percent was ad versely affected by the deposition of the wholly-owned subsidiary in November. Comparable Coatings' sales in creased 2.7 percent comparedto 1962. The Chemicals segment's sales declined 2.2 percent de spite increased volume reflecting the effacts of competi tive pricing. TheInternational segment's lowersales reflect thadeconsotdation of the company s Mexican subsidiary on January 1.1963. Gross Profit Gross profit margins increased to 33.6 percent in 1983 from 31.9 parcant in 1982 ASsegmentsexceptformeDrug&omandintemationai segments, improved grass profit mergers The Paint Stem segment accounted far 54 t percent of me increase in grate profit. Tha Drug Stores segment s margins were lower than in 1982 due to distribution inefficiencies. The Coatings segment gened significantly m margins because of operating efficiencies and a more favorable product mix. The Chemicals segment increased grass profit by curtail ing unprofitable operations, resizing the associated UFO inventory reductions, and by operating efficiencies ii 0007-SWP--035404 0007-SWP-000116826 1 Selling, Gensrat and Administrative Expenses SG&A expenses increased S50.4S5.000. to 28 3 percent ot sales from 27 4 percent >n 1982 Higher advertising and promotional expenses in the Paint Stores segment and higner operating costs in the Drug Stores segment were the mam contnbutors to the increase Coatings segment expenses and other administrative costs increased only modestly Because of continued em phasis on cost containment. Investment tocomefInterest Expense Although pre-tax interest and nei Investment income de creased modestly horn Si 0.7 mSion in 1962 to S10.4 million m 1983. after-tax proceeds increased interest expense declined SI ,569.000 to SI7,385,000 in 1983 because oMhe 1982 exchange of debentures and continuing conversion* ot 6.25 percent debentures for common stock. |hUk kroMolmM*' Net Income Increased Hi 29.1 Percent From 1982. Alt segments, except for Drug Stores and Irtematloinal, contributed to the increase. The Paint Stores and Coatings segments made me major contnbutions to the profit increase. The Pamt Stores' operating profit increased 107.8 percent. The pamt sales portion cttNs mcreasegenerated morevoluma. leading to manufacturing efficiencies tor me Coatings segment. General operating efficiencies also played a-roie in the Coatingssegment's19.7percentoperating profitncrsase. e Net income tor 1983 and 1982 include provisions for dis position and termination of operations. The provision in 1982wasoffset to some extent bythe gamonexchange of debentures tor common stock. Effects of Infletioa e Supplemental information regarding theimpact of inflation upon the company s presented on pages 24 to 26 of this report Houftm ef OporaHone 1982 V3.1981 Not Sates Consolidated net sales increased 20 5 percent during 1982 primarily because of the acqustion ol Gray Drug Par in October 1981 Salas of the Drug Stores segmentatso increased Because of acquisition of drug stores m 1982. Sales m the Pamt Stores segment increased modestly tor the year Sales of the Coatings segment declined 2.6 percent due to softness the markets tor the architectural coatmgs. chemical coatings and containers e The reduced sales ofthe Chemicals segment reflect the affects of businesses discontinued during 1982 and con tinued weak demand for its products. Gross Proftt Gross profit margins increased to 31 9 percent m 1982 from 30.4 percent m 1981 e Chemcals segment gross profit margin improved primar ily duetothecurtailment of certain unprofitableoperations and significant cost reductions. Profit margins improved tor all divisions in the Coatings aagmant, exceptforth*Containersubsidiary, due to con tinued cost reduction actMtios. Selling General and Administrative Expenses SG&A expenses increased as a percentage of sales to 27.4 percent in 1982 from 26.2 percent in 1981 The acquisition of Grey Drug Fair accounted for a major part of the increase. Additional advertising and promotional expenses m the Paint Stores and Coatings segments also coninbuted to the increase. bweattnent tncomaflnlefsst Expense Interest and net investment income declined from 515 2 mHKenin 1961 toSl0.7miionm 1962. Boththetowenngof mveesnerx levels as a result of expenditures tor acquisi tions and lower interest rates caused the deebne !nttrestexpenseincreased modesttyfroi'n$l8.3mlfton m 1961 toS19.0millionm1962beceuse of thedebt acquired in the Gray Drug Fair acquisition. This increase was offset slighlly bytheexchange and conversiono<debenturesfor common stock, winch reduced debt. MM Ineom Net incomeincreasedloS42.9 million, an increase Of36.8 percent from 1981 Acqunition of Gray Drug Fair and the improved perform anceofthe Coatng* and Chemicals segments mereasad net income. Net income tor 1982 and 1981 include provisions for the dispoeiMn and termnation of operations that were offset to some extent by gams on exchanges and repurchases of debentures. 0007--SWP-035405 0007-SWP-000116827 Financial Summary VMnns ol XXIVS SxeeW PW Vvm (Mil Operation* Net sales Cost of goods sold Selling, general and administrative expenses interest expense Income before income taxes Income taxes Net income ......................................... Net cash flow provided by operations ............... nnanoial FoeMen inventonss . ................. ......................... Accounts recwvable -- net ... ................. Working capital........................ ..................... Properly, plant and equipment -- net............... Total assets............................................................... Long-term dsbt...................................................... Common shareholders' equity................................ Total shareholders' equity ..................................... 09r Cmimv m SImt * Data Average number of shares outstanding (thousands) Book value per common share--Wly diluted .... -- primary............. Net income per common share -- fu*y dluted -- -- primary............. Cash dividends declared per common share........ 1M3 1982 1981 1980 1979 1978 *1,173 1,307 MB 17 101 40 M 56 *1.852 1.261 507 19 76 33 43 84 *1.537 1,070 402 18 57 26 31 7 *1.264 868 344 19 48 23 25 79 *1.196 829 323 19 33 16 17 104 SI.132 795 312 21 10 5 5 (9) sm 141 341 1M MO 170 170 071 2)|29 015.01 1124 IJU IM .00 1299 133 331 228 808 196 334 349 20,903 S 14.65 15.10 1.7* 2.02 .50 *335 132 297 240 064 230 284 305 19,617 S 13.80 14.34 1.36 1.53 .40 *237 131 312 211 769 213 263 287 .4 19,535 * 12.91 13.38 1.00 1.22 .30 *242 126 323 204 712 234 243 268 *244 135 317 210 654 242 243 266 21,184 21.594 S 12.31 * 11.25 12.50 11.25 .72 .16 .78 .18 .0379 Return on sates........................................................ Asset turnover.......................................................... Return on assets.................................................... Return on common shareholders' equity -- fully diluted (A)............... -- pnmiry (A)..................... Dividend payout ratio.............................................. Debt to capitatzabon ......................................... Current ratio............................................................. Times interest earned (B)......................................... Working capital as a percentage ol sales............... Effective income tax rale ...................... ........... 2J% Ml 6.0% 16.4% . 15.0% 21.1% 00.1% 2-0 Is 1 1.0 z 17.2% 411% 2.3% 2.1 x 4.8% 13.4% 14.6% 25.0% 36.0% 2.2101 5.0 x 17.0% 43.8% 2.0% 1.9 x 3.6% 10.2% 11.6% 26.1% 43.0% 2.0 to 1 4.2 x 19.3% 45.6% 2.0% 1.7 x 3.2% 1.5% 1.8 x 2.5% .4% 1.8 x .8% 6.5% 9.8% 24.6% 43.6% 2.3 to 1 . 243.76%x . . 48.6% 6.1% 6.8% 4.3% 47.1% 2.9 to 1 2.7 x 27.0% 47.7% 1.8% 1.8% -- 46.6% 3.8 to 1 1.5 x 28.0% 47.8% Capital expenditures............................................... Research and development expenditures............. Advertising expenditures......................................... Provision for dapreention and amortization........... Number of shareholders: Prelerred ............................................................. Common................... ............... Number ol employees ........................................... Sales per employee .... ................... Sales per dollar of assets......................................... 132 10 11 24 40 0.M1 lUH 0101,141 2.10 131 9 52 22 557 6,590 21,101 $87,756 2.08 *43 10 43 22 750 MSS 23.507 *86,377 1.78 *24 9 29 20 865 6.668 16.808 175.186 1.64 *12 *17 77 21 25 19 18 961 9.796 16.872 *70,907 1.68 991 10,611 18,015 *62.856 1.73 (A) Imtl an oawmow rewftolBsn *qi*y m Degmng or ytsr (B) Rsl* of pre-lsx moon* bstoe WM W30T10 mtsrstl expanse the summary snouM os reepmceniuncuon win ins knsneaisiaMnwnitanP none on pagtstS40 or me iseon 13 0007-SWP-035406 I 0007-SWP-000116828 Shareholders The Sherwin-Willtams Company We have prepared the accompanying consoldatod financial statements and related information included herein for the years ended December31.1963.1982 and 1961. The opinion of Ernst & Whinney. the company's Independent auditors, on those financial statements included. The pnmery responsibly tor the integrity of the finenaal mtonnason included in this annual report restswilh management Thisinfor* motion e prepared to accordance wfih goperaly accepted accounting principles. . based upon our best estimates and judgments and giving due consideration to materiality The company maintains accounfing and contrel systems which are daaignad to provide reasonable assurancethat assets are safeguarded from loss c unauthorized use and which produce records adequate for preparatfonctfflnancM information. There are limrtsinharenl in afisystemacf internal cohtwi baaed on therecognition that thecostofsuch aystamaahoiid not exceedthebenefitstobederived. WS botievoour system provides thie appropriate balance. The board of directors pursues its responsibty for these financial swements through the Audit Committee, oompoeed exctosivety of outside director!. The comrnnee meets periodfcefiy with management internal aurfters nd our tadspsndent audRors lodtoetresfieadequacyoffinancisl controls thequafity offinancialreporting and the nature, extent and mutt of lha audit effort. Both the internal audhors and mdapandare audfota hew pifirete and coridanfal aoBaaa to the Audit Committee at all times. J G. Bmv Cheman. fiwdxl CMteaMOlBtr T KCentm. Sana We* WaudML r OMfteNnadOaesr Ji E. warm, Ite riwari. ChalAcoeiasngCMew Sharahofdere and Beard of Directors The SherwinAMKamt Company Cleveland, Ohio Wo have examined the conaofdatad financial statements of The Sharwirv-WHams Company and subasSariaa Isiad to Ram 14(a) of ttw Index on page 33. Our exam* (nations were made to accordance wifi ganarafyaecopted auditing standards and. accordingly, included such tests of the accounfing records and such Other auditing DrocidufM m w a ccfnidMvd MCMuiy in tht eirc^mancM. In our opinion. the conaofdated financial atatamante istad in Dam 14(a) of the index present fgriy the consoldated financiaf portion of The Shorwto-Wama Comparty and subaidiaiiaaaiOoeambar 31.1663.1962 and 1961. and the conaoldatad resufisoftherropareSonsand changaatofinanoai portion tareach ofthethreeyean to the panodended December31,1963. toccntormity with ganarelyacceptedaccount* mg principles appfiod on a conrtrtont basis. OmMOM Unary 1.1S6* u 0007-SWP-035407 0007-SWP-000116829 tatomonio of ConsoMatad Ineomo Ttwmnat oousn. west* mi w* s ms vsr* rvMd CMcwnb*' 31. Net sales ........................................... 1M3 >1,973.445 1982 $1,851,776 1981 $1.536 007 Costs and expenses. Cost o! goods sold........................................................... ............... 1.304,712 Selling.' general and administrative expenses............... .................. 457,443 interest expense............................................................. .................. 17444 interest and net investment income..................................... ........................ (10441) Gam on exchangerpurchase at debentures ...................... Other . ............................................................................ .................. M 1,172473 Income before income taxes ...................................................... Income taxes ............................................................................. .................. 44400 Net income................................................................................... 1.260.732 507.188 18.954 (10.884) (5.091) 4426 1.070.171 402.472 18.332 (15429) (2419) 5.559 1,775.345 1.479.086 78.431 33.500 57.721 26.336 S 42.931 S 31.365 Net income per common there: Fully diluted.......................................................................... S 1.78 S 138 Primary................................................................................. .................. 1 140 S 2.02 $ 1.53 >5 0007--SWP-035408 0007-SWP-000116830 Consolidated Blnc ShMts Thousand ot ooura ^ P"*"1* 0fflen *"* December 3i Assets Current wests Cash and short-tern investments Accounts receivable, less allowance Inventories- Finished goods ... Work in process and raw matenais -- .. . . ... Other current assets . ............................ Total current assets ............. ......................................... ............. Other assets.................................................................................... ............. Property, plant and equipment Land............................................................................................. Buildings .................................................................................... ............... Machinery and equipment............................................................ ............... Construction in progress.............................................................. ............... Less alowancss lor depredation end amortization................... . Total assets....................................................................................... IMS 1160,407 141,366 364,309 37.600 331,606 * 67*634 CMtt 9l947 11*616 37*243 7463 40*461 jOT Ifff 16*663 irnf*r 1982 1981 *139.464 133.260 250.603 48.505 299.308 45.596 617.628 42.235 S 77.530 132.174 278.114 56.776 334 890 37.026 581.620 42.550 *676 12*163 307.609 *058 12.522 126.181 275.356 22870 44*726 220.322 43*929 196.661 22*404 ' 240.268 *88*267 *864.438 Current iabiltiea Accounts payable......................................................................... ............... Compensation and taxes withheld.............................................. ............... Current portion o* long-term debt ................................................ .............. Other aeerualt............................................................................... Accrued taxes.............................................................................. ............... Total current kabifties........................................................................ Long-term debt................................................................................ ............... D6tonid inoomi tm> ......................................... ......................................... Other long-term tiabiMm................................................................... Shareholders* equity Capita) stock; Serial preferred........................................................................ ................ Common..................................................................................... .............. Other capital................................................................................. .............. Retained earnings........................................................................ ................ Cumulative foreign currency translation adjustment.................... Less traamy slock, at cost......................................................... .............. Total shareholders' equity............................ .................... ........... Total kabtktns and shareholders' equity Sm notes lo GMitMMid imest sufesnsms. ................. 6161408 6*616 1*066 6*416 17*907 3*600 MV99 300 10*364 *230 267467 41*766 3*766 37*670 flit tit ST38.443 4*346 10.017 73,455 18,156 26*417 19*220 29.624 26.974 *153.962 42.730 5.589 74.698 7.478 284.477 230.101 29.790 15,050 5.521 73,552 12.728 279.103 (9.9S7) 360,917 12.065 348.632 *86*267 7.545 69.806 2.393 247.485 (2.922) 324.307 19.287 305.020 SB64.438 0007-SWP-035409 0007-SWP-000116831 Statements of Changes In Consolidated Financial Position Thouswat d aours TMIkwMmM roars aroeo Oacamoar 31 1983 1982 1961 Cash provided by (used lort operations Net income Non-cash charges (credits) to net income Depreciation and amortization Noncurrent deferred income taxes Gan from exchange of common stock for debentures Disposition of noncurrent assets Amortization of intangible assets Decrease (increase) in current items 'Capital expendoures ... ............... Obligations under capital leases............................................................... Other ... .............................. 8 55,412 24,220 (3.755) -- 5.044 2,325 17,030 (31,908) (4.155) (5.525) S 42.931 22.395 34 (5.091) 9.157 1.860 36.512 (30:645) (4.32(9 11.029 S 31 385 21.668 3.425 -- 6,347 403 (12.167) (43.072) (2.489) 1.614 Net cash flow provided by operations ................................................ 55,555 63.862 7 114 Cash invested, distributed and other Deetease (increase) in curreni asms from business acquisitions Noncurrent assets from business acquisitions ............................ Cash dividends ............................................................................ Sales (repurchases) d treasury stock ................................................ Net book value of noncurrent assets associated with disposal of subsidiary.................................................... Salas oi property to unoonsdidatad subsidiary........................................... Common stock Issuad in exchange tor debentures.................. ............... Debentures acquired horn exchange of common stock, net of gain ....... Purchase of debentures .............................................................................. Other .............................................................................. ............................. Cash invested, distributed and otirer............................................................. Net increase (decrease) In cash and short-term investments........................ Cash and short-term investments: Beginning d the year................................................................................... K7> (5,190) (14*77) (29,013) 17435 --* -- -- 1,788 04,746) A43 199454 (8.646) (6911) (11.313) 2.262 10.070 8.622 (8443) -- (7.769) (21428) 61.934 77430 (44 370) (9.406) (8907) (3.234) -- -- -- (11.856) (541) (78.314) (71.200) 148.730 End of the year ..................................... ........................................... 9199,407 9139.464 S 77.530 Decrease (increase) in current Asms: Accounts receivable ........................................................................ Inventories . .............................................................................. Other current assets ............................................. .......... Accounts payable.................................................. ........................ Compensation and taxes withheld................. Current portion of long-term debt ................................ ......... Other accruals. ................................................................. Accrued taxes ...................... ............................ Decrease (increase) in current items..................... 9 0499) 02497) 2,730 21410 4497 3472 17431 2492 9 12479 $ (1.086) 35482 (8470) (15.539) 3.616 4.428 (2.835) 12270 S 27.866 S (909) (97.491) (11.277) 40.035 25 Z480 20.636 (10.036) 5(56.537) Sm no<M to eonaoMMd tnancel ssomonw f 17 0007-SWP-035410 0007-SWP-000116832 Statumwits of Consolldatod Sharoholdors' Equity Thousands of ocaars fhm Mhmrmln Win r>iww AMIuMilHEl Balance at January 1 1981 Cumulative translation adjustment Two-for-one stock split Treasury stock acquired Common stock issued Net income Cash dividends declared. Senes A preferred stock -- $4.00 per share Senes B preferred stock -- $4.40 per share Common stock--$.40 per share . Current year translation adjustment.. .... Ssntl..... Pralsnad Stock S 8.583 -- -- -- (1.038) -- _ -- -- Common Stock $34,162 -- 34.537 1.107 --. -- -- -- Balance at December 31, 1981 ... Treasury stock sold ......................... Common stock issued ... Net income.. . .................... Cash dividends declared: Senes A preferred stock -- $4.00 per share . Senes B preferred stock -- $4.40 per share .. Common stock --$.50 per share................... Exchange of stock for debentures....................... Currant year translation adjustment..................... Balance el December 31,1982 .......................... Two-tor-cne stock spfl......................................... Treasury stock acquired/retired......................... Common stock issued......................................... Net rooms........................................................... Cash dividends declared: Sense A preferred stock -- $4.00 per share . Series 8 preferred stock -- $1.10 per share . Common stock -- $.60 par share............... Current year translation adjustment.................... Balance at December 3f. 1983 ........................ 7.545 -- (2.024) -- -- -- -- -- 5,521 -- (> R087) -- 69.806 -- 3.746 -- _ '-- -- -- -- 73,552 74,122 -- ituno -- mmm a-- -- -- 8 $88 -- -- 8188,364 dhtr Caotsi $ 6.000 -- (5.360) -- 1.753 -- -- ' _ -- 2393 582 6,932 -- _ -- -- 2,821 --* 12,728 (12324) -- 6316 -- mmm -- -- t 6320 Rstamsd Esminas $254,184 -- (29.177) -- -- 31.385 CumuWvt Trtnslanon Adiustmsni $-- (1.548) -- -- -- -- Trsasuiy Siec" $(16053) __ (3,234) _ (271) (700) (7,936) -- 247.485 -- -- 42,931 (249) (552) (10.512) -- 279,103 (61388) ($0) w 5M12 -- -- (1.374) (2.922) -- -- -- _ -- (19.287) 1401 --. -- -- (7.085) (9,987) -- -- -- 5.801 -- (12085) -- (28308) 1,204 (102) (107) (13388) -- S2B7327 see -- -- (1,734 -- -- 8(11,741) $09,7*6) S-- new* la ccnsokamd fcwxaal itunwilt 0007-SWP--0354H 0007-SWP-000116833 wmmmmmmmmmAmmmmmmmm NotM to ConoolMotid Financial Statomonts Tlw aanri|llam fit YNH ended OaCsmMr 31. 1983 1982 WO 1981 Note 1 _OgeeWoant Accounting Mdat Consotdason The consoboated financial statsments include all sgnheant subsxSanes 'nier-company accounts and transactions have been eliminated Shctt-tann investments. Short-term investments are stated at the lower ol aggregate cost or market value Property, plant b equipment Property, plant and equipment is stated on the basis of cost. Deprecation is provided principally by the straghMne method. The major classes of assets and tangea of dapredabon rates are as toltows: BUtonge uterweiy tea Equpmvt fivnen aid Mm tea Tiuckt 2% - M% 4% 20% S% - 20% io% - 3M% Intangibles. Intangible assets purchased in acquations am amortized ewer the expected period ol banato. Research end davefopment costs. All maearch and devatopmam costs am charged 10 operator* and wars $10.136.000,8.136.000.and.7ee.txor tsea 1982and 1961. respectively. AMincome percommonshare. AJydMed net Income per cwraTwnthemwascompUsd based onthe average number of shame outstondng and aaeumed the conwnton of the 6^ CbnvertfctoSubordtoated Debentures (afteraddtog to net ncome mternet on the dabanune not of income taxes) and preferred stock, andtoe exerciseofdilutivestockopticne. Fhma/ynet incomepercommonsharewesocmputedbased on the average number of common shares and common sham equivalents outdancing during the yaaraflaradjusting nm moonw ior oMotna nquranwu or mo pwvnM mo c k * Foreign Currency TtaneUen. The financial sUNmants of foreign endues have baen tmneMed to U.S. dotem in eccordsnos with BASBStstsment No. 52. "Foreign Currency Trandaton" Under that Swemenr, tor certain foraign operations, at bilence sheet accounts am trteslstsd at the current exchange rate end income stotamert tame am tranttotortdlheaverage exchange rats lortheyear-Rmillng translafion adjustments am made dimctly to a aaparate oompcnenl of ahamhoMam' equity, tecasstfcwon. Certain amounts m the 1962 and 1961 financial ibtsments ham bean redassitedto contonh tothe 1963 presertation. During February. 1963 and February, 1981. the company's bosid ofduectora authorizedtwo-for-one spitsofthe common stock oumnding sftoctad in the torm of KJO* stock tfwdends. These dvidands worn dwiributed during March of each respectiveyear. Theparvalue oi the additiond shams of common stock issued r connection with these stock splits was cmdkedto common stock and a Mm amount charged to other capital and retamed aammgs Note 3 - Inventories Inventories am staled at the lower ol cost or market Cost is determned principally on the last-m, first-out (UFO) method The following presents the effect on inventories, net income and net inedmeper common sham had the company used the FIFO and average cost methods of inventory valuation adjusted for income taxes at the statutory rate and assuming no otheradjustments. This information is presented to enable toe mader to make comparisons with companies using the FIFO method of inventory valuation. ftouunift oTdbfet. wteWflsrstesaws_________ Ymis ndM Ovct-Kw 31. ieaa isez ibs i RvoifMQt C0 Mill nwMsenUFO Sk m d WO wid wwag* oteawrura Btsacf UFO snnu neons ERtet ct UPO on m room* pflf QMTW Mv 90% 95% 94% 555.425 SSS.9S3 $55949 1.219 2148 *2703 OS 10 BA During 1963 and 1992eeftaninventones were reduced meiMng in iquidaaonsofUFOinventorm earned atthe lower costaof prior years. The affectof toeaelquKiatians increased na income by approrimtay $2,206,000 (lio per common share)and$3,144,000($.l5percommon shem)in 1983and 1982, mspectivefy. The dfopoad of the wholyawnad suDaMaryreduced toeexcess ofFIFOand average cost over UFO In 196a Ne><--Ofepeeflfeii el IINieMy Owned 8ubefidfey During November, 1983, toe company received for its whtdyowned subddtory. Sherwirv\Mams Container Corporation. cash and otoar securities approximating net book value. This subaidary. wheae operations have been nduded in the company's Codings segment, was engaged inthemanufactureofrouxlpaintcans, aswet asobiongand aerosol cane. A summary of the assets and iabititiM transferred Is as follows: ThnewtedaMn CUraniasMis PVRMf* DM M IQMWl * Own im*>ii Orw ato md WbAH* -- not S26.35S 35 ass no 148) <4S) 553 04S Operatingmerits of ttvssubsidiary have been included >n toe company's statements of consofidaied income The following data rated: toe summary's results ol operations wtKhheve been included m each of toe three years endec Oecember3t. toManot of dotes Nat tMt QpMRTip ttOQfflt Nil MOM Bswmmontw sodsd NowinbatW. ieaa S2.B05 1J25 1.000 YMI* ended Oxanwr]' 1982 19S' 1103.211 3AS6 173* Si12170 11 555 62S6 19 0007--SWP-035412 | 0007-SWP-000116834 Hot* S --Acquisition* Throughout 1983 and 1982 the company purchased various retail drug and paini stores at a cost ol approximately $10,747,000 and $15.007000. respectively. The assets acquired consisted primarily of inventory and other assets The results of operations of these stores since the dates of acquisition were not material to consolidated results. Effective October 3. i98i, the company acquired for S55.079.000.through a wholly-owned subsidiary, the outstanding stock of Gray Drug Stores. !nc. ("Gray"). The acquisition was accounted for under the purchase method and. accordingly, in 1981 the operations of Gray since the dateofacquisition (net saleso(S137.B60.000andnet income of S3.444.000 or $.17 per share) were reflected in the statement of consoidated income. FoilouAng is a summary of assettacqured and SabiWes assumed (excluding net current assets of *45,673.000). bnuunoe oretsm Pnpmtf. ptot and *qupnwnt OVwr nonamnl Mini lanpwm MM sew NMM tu,so* X.Sto paeeq IMS Pro forma financial information was prepared in accordance with Accounting Principle Board Opmwn No 16 and was based upon the assumption that Gray was acquired as of January 1.1981. at the same purchase price. In management's opinon. the pro forma financial information is not indicative of resufilqf operations that may have occurred had the acquisition of Gray taken place January 1,1981 or of future results ofoperations ofthecombinedcompanies izider the ownership and operation of the company. Tha following pro forma data for the year ended December 31.1981 reflects adjustments for interest income on short-term investments and gives effect to adjustments muting from the acquisition: meunrx* ef dUfen. MMcrMr Mr* OBH mum . . .. Ndffeom*............................. Net noon* par common how FufeOUM ............ Pnrnwy '* SI 907.000 24.300 99 1 9 i 1 *1 1 iMuMiMfeerdMn fht oomponM rfreomt tMbinBfni Ih i anm Etswkanmg; onme........... rowgi Totrirami bliM tfVOfTV tBM VammcMOmmearSi, iaas ties test 4.414 sioioia term MS S7A431 73BT SS7.721 TbS OOfflpffWHflftflOQflll ibc mprnm m at Mtowc Cunvc 9mm mo local . . fionagn. Mmd MM. haqi Tew nganw W mm S *109* 7300 1473 4*797 . I27w.3B7 6014 30311 S14364 2.600 3.041 lesos (3473) (**> po st ) S 45300 (4471) (340) (4.T1D ASH (SO) *431 The company has recognized the deferred income tax kabiMfea and benefits muting horn tiring difference* between tinancial and tax accounting, relating primarily to depredation and ofeer valuation allowances. It is the company's intortion to leksmt undfeMbufed earrings of foreign aubtidtoriee; accordingly, no defatted income taxes have been provided thereon. At Oecember 31.1983, such undisPibutod eammgs amounted to approximately S3.990.000. lnvestmerttaxciedits(acoountadforbytheflOMMhrough method) aggregated $1,641,000. $3,102,000. and $2,837,000 tor 1983.1982 and 1981, raepeetfvely Thesourceand deferred fex effectof tiring differences is as follows: . TtawandkofOMfe* t*M MM OmmMrSI........ ins we 1981 flapaoMM ... .................. PiQMMon ter dhpoaltafi and temntton rf fljNnflbnt Amr u b itodQmd on matervnt atlt btM feeMdNHHirq OMim (wen eat . twidteornpuhd imekf tw wnouM) 1 4340 RM#> (4083) (347) I1.81B 1(3.997) *3031 (7090) (72) (727) (743) $(4,711) $ 3184 (3348) 69 *736 (631 $ *431 A raorinciiitidn of"the statutory fedem income tax rate and the effective tax rate follows: YmmMM OmmMr 31 IMS we 1961 SwuwytMim................ Shad: SMMhedww i mmi i u c mi fom&mcmm . . FoiMQn QpBflMont tubfHt to vwyvig noons Mr iw Xmimm SMiWt nhMlWfcxIllMS domnMMhmd 4*0* 33 (IQ (1) (4) 4en 33 (41) (32) 55 460% 24 (*9) (11) 11 tram Iwr bam torfehrew lepodnaMPOiM Gen tom tie whang* d common week tordMNnww Ohsr --not . . ahcmiBim ... <231 -- (U am (231 PD 19 toes -- 2t S6* 0007-SWP-035413 0007-SWP-000116835 Substantially at employees ol the company who meet certain requirements as to age and service participate in noncontnbutory pensionplans The companygenerally funds pension costs accrued. Pension expense which represents normal cost, interest on unfunded pnor sennce costs and amortizationof unfunded prior service cost over 30 years was $13 248.000. S1S.713.000and S14 546.000 fa 1983 1982 and 1981, respectively The reduction in pension expense dunng 1903 resulted primarily from favorable fund management experience and a reduction in the number of employees. Increased benefits and additional employees related to business acquisitions resulted in an increase in 1982 of approximately $2,400,000 which was partly offset by decreases attributable to certain actuarial assumption changes and plan amendments. In addrtnn. the company contributed approximately $1.166000. $1.096000 and $174,000 to venous muftiemployarunion retirement plans in 1983 1982 and 1961 respectively The company is presently unable to determine its respective shareofelderthe accumulated plan benefits or net assets available fa benefits under the union plans Actuanal information lor the company s pension plans as of the latest valuation date is presented below T'munh otaoBirs Actuanal piaaant value or eeunutaad pan aanatta. Ve*M Non-Vaaad a Nat aaaan aware* far banana W"wfvljptwflrBeade Mnfife MaBnI*MMdr raa datum an aocumulaad pen Oanata iaas January 1 1982 98- *214912 13169 *226061 saoo-oro S201290 H.98S S2132SS *247876 S'9- '56 -4936 S206 692 S2*' 5J- to S< 8% 1 Baianca a January i.iSBt........................ Seek Itauad icon: Eh mc s i of tfock Gptoni............................................ Crewmen d waMad aack........................................ Ccnvaregn f a4M CenwaSa tkAardnataC OabaMurea TtaaauyMockaeawed ................. . Balwwa a OaeanWw 31. tstl.... So* Uauad upon- OimolMliQffeOni . Crewmen a pmlreee area Crewmen r am ConrenMe StPordnared OaCantaaa Taaaay aaeft aoU ................... Baanra a Oaoambar 31.19S2................. Stock laauad iponr &imo1 <pc h cpicy ... . BldWpllPWcfPWPCfc CfMuBrin et mfcmd nadt ... . ... Oanwwon al UH ComarMa Sutxxdnaad Oreankaae Tweeny aaek aeqwadnaMd ......................... BaancaaOaeanear 3i 1933 Shun Treasury 9w h Outtandno Nar d twi Cunurete Conywttre ftaaaad Stock______ QurrUrere Cqnuaoat. ______fiwief Stoat MOO Sanaa A S440 IUS 1400 SeaaaB Common Stock Sanaa A *440 SS2S SaraaB Common Sloc SSI 2JOO 2*10004 0A37O 170.735 19.S54.052 wan a-- --w nw 277STB w W 0.17 (20.042) aw 107564 SSB4 -- -- 328l O0B -- -- (328.086) .... an 3JB0 ... ' '"Hills ' 19.799866 ---- a> aw 216.H0 (9.444) (47532) 360.346 ---- Oil US -- -- (SS0.724) -- -- 969.724 2B1 2.200 lATsasa 57.750 9S.H1 21956236 <w (143000) <w 342262 (MS -- aw (47,157) (90.026) 901659 aw aw 'warn w 700 783 90 (MOO) 1,123014 (S -- (1123074) sri - mre 1C503 - 22779646 EffectiveApril 161983,theccmpanycalledtorredamptlonall outstanding sharea of la $4.40 Cumulative Convertibla WarredStock. Series B. Theredempifonpricewas SiOOpef sham plua accrued dividends. Subetantiafty al outstanding shareswere oorrvertadirtocommon*tock bythe redemption data. Shares of lh# Sanaa B preferred stock ware convertibla at a base convanren price of S1682S par share of common stock. The aggregate preference of the Series B preferred stock m involuntary liquidation wasappitwmataly $9,518,000 and $14,271,000 at December 31.1982 wtd 1981. raapectivafy. ThesharesofSeries Apraferrad stockam convertible ate base conversion price of $14 4827 per share of common stockbaaed onavaiueof8100per shareof preferred stock fa this purpose. The holders ol the Series A preferred stock are entitiedtoonevoteforaach share. The company may redeem theSenesA preferred stocket$l00 par sham. The aggregate preference of Hie Series A preferred stock m irwoiuntaiy iquidation was approxxnatefy SI .050.000. S5.775.000 and S6720.000at Decamber 31.1983.1982 and 1981 respectively. The excess of theaggregate pncemmvoiuntary liquidation over the eggragale stated value does hoi create Sty restrictions on the distribution of retained earnings An aggregate of 2.125.157,4.103.678 and 5.302.472 shares of common stock at Oacemtaer 31.1983,1982 and 1981. mspaeavaly. ware reserved tor conversion of preferred sock and convertible aubonfineted debentures, and for the company's stock option plan. At December 31.1983. there were 1.500,000 tharefdf aerial preferred stock and 50.000.000shams of oonimon stock authorized torissuance 21 0007-SWP-035414 0007-SWP-000116836 Hoi* -- Stock Purchase and Stock Option Plans Approximately 6.321 employees currently are participating through regular payroll deductions in the company s Employee Stock Purchase and Savings Plan In this employee fund at Oecemeer 31.1983 mere were 3.947.509 shares of common stock, representing approximately 17% of the total number of common shares outstanding The company s contribution charged to operations ounng t983 amounted to approximately S5.921.000 Ounng 1963 the company established The Sherwin-Williams Company Payroll Based Stock Ownership Plan ('PAYSOP") Under this PAYSOP substantially all company employees not covered by a collective bargaining agreement are eligible to partapate equally m the Plan The company's contnbutton to the PAYSOP of approximately Si 204.000for 1983 resulted in a corresponding reduction of applicable income tax tabiibes Shares of oofiipany stock credited to each members account under these employee stock ownership plans are voted by the trustee under confidential instructions From each individual plan member Non-quaiified and incentive stock options nave been granted to certain officers and key employees under the company's stock option plan, at prices not less than fair market value of the snares at date of grant The options generally become exercisable to the extent of one-third of the op&oned shares foreach full yearofemploymentfollowing the date of grant and expire ten years after date of grant Options granted to certain officers in 1979 under related employment contracts carry substantially the same terms as options granted under the stock option plan. A slock appreciation rights plan was approved by the shareholders in 1979: however, no rights have been granted under the plan. Slock Opsen Plan Ogkons euwaneng Bsgvnng el yaw GortM Emratfl CsncMM Ocean* eutuandng and of ysw Eaneew RnarvMI lor Un grand Emobyaa commas Opsone outaanengbspnnm0Ol year . Eneroaad . .......................... Options cotatandmg one of ysar w Swat ________ is m Shan* *fsr _________ei Swot Agmgat* *nct 107S24Q 2I7S50 (220.792) (156676) 916652 223.198 19.031000 4.931.000 (1.6410001 {1.990.000 910.331000 1,100200 349000 619.190) (199-900) 1079040 134040 nun* 99.141,000 3.519000 (1.494.000) (1.1440001 99.091000 1.279,200 179-000 (2274761 (124.3241 1.103600 179.200 999092 Mt'lOQO 1727 000 (t 4070001 1797 3001 S2'4i ooc 194.000 (121.900 72300 S1.0IZOOO 1390000 194000 194000 *1012000 244.000 (90.0001 .....11012000.... ;....194.000 ; 91.270000 >289.000) n .012000 HMs K-Lmm* The company leases stores, warehouses, office space and equipment Ranewal options am avalable on the majority of tosses and, tnder certain conditions, options amt to purchase properties. In soma instances, store leasesrequire thepayment ofcontingent rentals based onsales In excessof specified mnmums. CertaMi properties am subleased with various expiration dates. Property, plant and equipment includes the following amounts tor capital leases which are amortized by toe straight-line method over the lease term- Thousands or o mw s December 31. soaa 19*3 1991 Burtctngs Maennwy ana Equipment $11790 12 371 24 161 919703 12992 28.395 516.753 14.941 31294 Lass auomnce lor amonoation 16.174 3 7.967 19 599 911909 13.795 919.939 Rental expense tor all operating leases was S61.425.000. S52.244.000and S36.472.000 for 1983. 1982 and 1981. respectively. Contingent rentals included in rent expense worn 110,975,000 in 1983. S8.745.000 in 1982. and S2.675.0PP in 1981. Subleese rtntal income tor all years prasantsd was not significant. Following is a schedule, by year and m toe aggregate, of future minimum lease payments under capital leasesand ncncaneelabto operating leases having initial or remaining terms in excess of one year at December 31.1963. Thousands oTiMtos 1994 1995 1989 1997 1994 Uwrysais Total mmmum toass payments ""CaiSiai.... turn 5 6464 9.686 3 707 2 667 2443 13949 3493$ dptiattng Li i mi 1 34 560 28 952 23 671 7 512 '3009 49 353 $166077 Amount npnsanang manat Ekscutory coats Prasant vaua of net mnmum lease payments (11407) 120961 119430 22 0007--SWP--035415 Not* it -- tewg-Ttm DM 'nousanos of aunts 5 45% Dabe-nures e 25% Cat.tr.iDm SLUora-naiac DfOanutfes tConnrtat -no co1--nr stock X S'! 5C1 sra-e Oat 992 J9S 9 45% Oeoaniuat 1999 9373% P-o-MSOrv Note* 0\ Promsaory Now* 525%tot1875% ' tnoutnt Ravanua Boom 9\wimH|New 365CO pmcai rwri css iwnonod isaooiv* oaaadonvnouMa M<a>iWaOl165% S 90% Promuory Naas 512.000 pmeps rout sranomsa oneourt onsd ai> mpuMO tmm* tm tt 159* 8i25%Mo<tgagsNotB. KPSc k c Smu r mi iMrwtad Mean tessd on mpase xme me of is*, flandXy eaymsrss of SS3 Opgwans iviosr apse w mm--tat o h m oofon at S5.728 n 1983. S3JS1 vi 1982 ana 54 099 vi 19B1 1996 1998 IhTreOupi 1986 1992 2002 Smkmg^nd wniiun) i Trutufy Amognl Outstanding Net ofTraasury PiapaywiantsOacamt>a 31Qtctffltjf 31 AffOVlt COmmanca tees 1962 last rees 1982 52000 Payabla cuiranny $11896 513896 1 9.896 * 'MO* S 10 10* S 2210A 2000 2000 3325 2.997 Van Payable eurranily Payable eunwxfy Payable ajnntfy PtyabK ountnoy Payable eunanSy '3521 6.665 -- 15 521 10.665 -- 17 521 5331 -- ... 5265 33.335 *0025 42.003 2629 13225 33.335 43350 45.000 5.969 2035J 40 669 50000 45 000 9 323 1300 Payabla eunamiy * 2254 2427 4523 1.200 Payable cunandy 7.507 8 479 9*70 4281 4.350 4476 $34082 *40.082 <32,746 15704 5175J07 19.882 $198220 2*182 5230.101 Certain covenants under the nota agreements raqurs the company lomaintain specifiedlevatsdworking capital. limit the incurrence of debt lease obligations and investments andrestnctthepaymentofdMdendssnd otherdistributions on the company's stock. The company may. at any time, issue stock dmdands or pay dividends on presently outstanding shares of preferred stock under the terms of the note agreements. At December 31.1963. approximately S89.193.000 was available for cash dividends on common stock Dunng 1962 the company exchanged 766,450 common shares held in treasury for S13.334.000 pnnopal amount of5 45% and 9 45% debentures, resulting in a ginof approximately S5.09l.000 (125 per common share). The company has sufficient debentures in treasury to satisfy most sinking fund reqwrements on public debenture issues through 1981 Maturities of tong-tarm debt exclusive of capital lease obligations and after the above-mentioned reduction for sinking fund raquvemsnts to be satisfied from debentures on deposit with the trustee, are as follows ter the next five years. 1984 -- 99.363,000 1985 --S9.346.000 1956 --S9.061.000 1987-$8,116,000 1988 -- 19.831.000 Interest expense on long-term debt amounted to $11812.000.918^74,000 and $17,147.000 for 1983.1982 and 1981, respectively. There wars no merest charges capitataed during the periods presented. Undsrsciedit agreement vnthtgfoupot eleven banks, the company may borrow i*> to $150,000,000 unoi August 31,1981 Amountsoutstanding uhderthe agreement may be converted into five-year term loana at any time The credit agreement includes certain restrictive covenants regarding working capitallevels and the working capita! ratio There are no compensating balance requirements. Sherwin-Williams Canada. Inc. hadcertain fnesof credit avaiiaWetoitfrom the Bar* of Montieal during the year m the amount bi C911.000.000. At Oeeember 31.1983 there were no borrowings outstanding under these fines of credit 23 0007--SWP--035416 0007-SWP-000116838 1 Mol* 12 -- Dusinoss Segments Business segment information appears on pages 4.5.8 and 9 of this lepofl Note 13 -- Disposition and Termination of Operations The company is continually reevaluating its operating facilities with regard to the long-teim strategic goals established by management and the board o* directors Operations which are not expected to contnbute to the company's future plans are discontinued Summarized below is the financial data related to the decision to dose or sef certain plants and operating units Inventory, property, plant and equipment, and other assets have been reduced to Iheirnet realizable values, while the related costa for severance pay. shutdown expenses and estimated future operating losses to disposal date are included in current liabilities The company expects to complete the closing and sale of the fadkties at various dates through 1985 rhounnta or ooxei ieea 1982 1961 PQnmo accrual -- Jffuary i ftoviaon incrudae n cos oigoodi sold ftwii wKMjdmi r oott vtd apMM -- star Tout wesson Acfcal COM neuriad idjuiimiiU k > pnor accfuaii Sndng accrual -- Otc*mesr31 Ns ataMax picMBon Ns MtMei pOMWn ps eemmen ahai* $33,738 4.520 3.951 8.471 (10.S70) 131.639 S 4.574 $19,773 S 7 798 16571 7.B02 24.263 9. ITS &084 15582 00295) 0257) 133.735 tmoe S19.773 S 5541 $ 1* 5 63 $ 42 Nets 14 --- Iwfletlaw AeocwnUae (Unaudited) In accordance wsh ganerafly accepted accounting pnnopies, financial statement* ham tmdftonaly reported amounts reflecting fsstencal costs, the prices Viet were in effect when the transactions occurred. These historlcsl costs, sspsoafy during periodsofhigh inlteSon. rspreseni doltaiaof varying purchasing powerand may not adequately reflectthe effect of mflebon on a busmess. Presented here, consistent with the requirements d Financial Accounting Standard* Board (FAS8) Statement No 33_ are two estimates, using differing assumptons. oi the effect of changing prices on our primary financial statement*. These estimates induct* adjustments lor the changing prices of inventory, property, plant and equipment and the related expenses of cost of goods sold and depredation. The maior xnpact of inflation on inventory is currently recognized in theprimaryfinancial statamantsthroughthe use of the LIFO method of inventory valuation. AccortSngly. only minor adjustments are required in the supplemental statements However, historical dsprecteiion expanse based on the historical cost of assets understates the cost of repteong capital equipmentat current prices. This higher coat is not presently reflected m the primary Snancial staiemerw. and accounts for the majority of the supplemental statement adjustment. Because these additional costs are not currently deductible for income tax purposes no adjustment of income tax expense nas been made The supplemental statement also does not reflect the operating efficiencies expected to be generated from new assets which would at least partially offset the increased depreciation expense In addition, the company would not necessanly replace the productive capacity which currently exists These calculations involve a substantial number ot management judgments and estimating techniques which have been employed to maintain a reasonable cost of accumulating the data We believe the results may be a reasonable approximation insofar as they express overall trends in costs and reduced purchasing power, however the dateisexperimental and imprecise and is nof indicative of me present or future economic condition of the company In addhon. becauseofvarying assumptionsandeskmates used by each company, we believe comparisons with other companet and Industries should be used with caution This data s not currently used lor internal management evatuatxms and decisions. Constant Dollar Dsta The constant dotar date represents the htstoncal amounts of certain revenues and expenses stated in dollars of the same purchasng power. Under this measurement method, hntprical amounts ofinventory, property, plant and equipment and the rotated cost of goods sold and deprecation expense were adjusted to reflect the increase in the Consumer Pnce Index (CPI-U) since the acquisition date of the assets. The CPI-U is a general index, however, and Is not necessarily representative ot changes n cost tor the company CurrsntCost Thecurrentcost datarepresentsthecurrent cost ol the assets of tha company, reflecting speofic pnce changes ot the assets. Thecurrentcoatof the majority ofthe company s plant and equipment was determined based upon externally generated indicee of the major classes of assets Current costsof propertyand the remaining plantandequipmentwere eatsnated uasigthe CPI-U. Dspraaanonexpense * based on the current costof plan end equpment during the year, and anurias the same daprsaason methods as theseemployed in the primary finanaal statements. The current cost of goods old approximates that used in the primary financial statements under fie UFO inventory method. Purchasing Po*m Gam AsapanuediseiQeure. gain from decline mpurchasing power of net Amounts owed, is also presented. Dunng periods of mflaton. liabilities payable in a fixed dollar amount (monetary iabriWas) wW be repaid in doltais having less purchasing power than when borrowed or incurred This gam m purehaang power has been caleutatad based on the company's net monetary fabiHies during ihe year, adjusted forthe change in the CPUJ tor the year. Although this amount does not raprssant actual funds available for distribution to shareholders. itcan be conadered torepresent thebenefit the company received in terms of purchasmg power by mautammg the net lability position 24 0007-SWP-Q35417 0007-SWP-000116839 Supplemental ttntamsait el Ceweeltdated Income Fa * rw andad Dacamear 31 *963 m Magi 1SS3 dalsn Ttaaamti or CBSvs ncHM'lMias Ne sots Conaand aapansas Coal at gosda sod Saang. gananl and uammimm aicaraas mwa* axpanta WifwtirOftti>rwiin>wweDfri> ,Otm inovr* brio* neom* taxat incomiMi Nfltmeofflt Nai rooma par eornnen dm Gan ton dadna n purcMeng powar oT nai aveum raaad mnaai *> apaciic pnoat d nwmonat ext preparty. pram and aqupman Md dung r year Ellaa d nemaaa n ganeai pae* Mr Memsannagmani pnoiiirdaar innaaw i apaofc paeaa Camanaonal Neoacar Coal ........ ns* ii.8n.aas 1.306.712 567.843 173B5 (10361) aat 101312 45.600 $ 50*12 6 232 Coraunr Ooiar Did 1553 51.973.465 1.317.610 563065 17385 (10351) 864 64,892 5 36.082 5 163 Cunanl Coe ala 1663 51 973 4*5 1 316420 5M657 17365 (10361) 694 82.490 45.600 5 36690 S 153 S 6.370 S <5375 (27 <381 1 lt.<63 Depreciation end amortiialion expense has been allo cated between cost of goods sold end soling, general end administrate* expenses, oonaiatar* with th* presentation in th* primary financial statements. Cost of goods sold has ba*n adjusted tor changes in inventory cost* in addition to d*pr*ciationsnd amortization expense. Selling, general and admnistrative expenses have been adjusted only tor depredation expense. The current coat of net inventory and net property, plant and equipment at December 31. 1B63 was approximately $383,951,000 and $314.007,000 respectively- The current cost of Inventory exceeded the UFO cost of inventory at December 31,1983 by $62,046,000. 25 0007--SWP--03 5418 0007-SWP-000116840 -1 nycTnr Comparison of Soloctod Financial Data Adjusted for Dm Sffoeta at Ctisnpinfl Fricas 1 Avatage <983 douara ascapt mjtoneai oaa Thoustnas at dotes ncror prr j am* DM NS INI Historical cos Consara dote OiwdantB oaclarsd per common jrar* Hijisacweosi Constant date Matte one* oar common pias a taa*-ane HtaoncveoBt Constant aoap Avaiaga conaumar pree n>a< Mar ncoma IkW Htaoncai epa Constant cote Cum* cost Hat ncoms Cotai oar common stun Htaoncaicas Constant dote Cunaneos Total nat aasats HDflCtiCD0 Constant dote Cunanees Soanauaia aqtap par oatnnon anan flWVwB Constant dote Ckaisnteost Total rtarsanamn and ansjrvaaoi atp--r HHMtf CM Ctmtestfete CtaiMcoM . Ettacm* ax tan Hrdoncd cori Carman doMr CunpaoM naaaaa n iw aawal ones ate aar imdaq neiaan n aptotic pncaa Gan Mm OKlna n pueftaamg oewat at nat amounts and ................ .. 1M3 Si 973 485 1973485 SO 00 25 3581 398 4 555.412 39.082 38.890 233 183 153 370.970 538.937 18,24 23.53 2M1 au 37.138 40.917 4638 5408 5656 SI 1.183 8370 Ym Efldtd Oacarnoar 3' 1983 <98< 1980 `979 SI 85> 776 1911403 $1 538807 1683.533 51 263 721 1527 97' S' '98 313 ' 812 '2' so 40 30 337* 52 44 36 06 3200 2248 2891 M2.831 19.880 16811 1100 1186 3734 531355 12.041 9.475 888 1036 3486 534.864 9806 8451 665 955 217 4 517493 (2* 702i <25 4801 203 153 132 75 82 56 43 - 391 88 43 27 26| 348332 857338 575380 1518 3436 3538 306020 570.338 562.807 1434 2764 2735 286876 55<939 555 539 1339 3663 2650 368 -0" 525938 530 09 *350 2547 25 7' 77 TK 38388 jyyif 436% 83.5% 650% 5 4.852 21.888 41.508 44319 468% 708% 763% I 7.749 19.979 39902 43142 498% 747% 515% 5(3098) 9458 40/44 45483 47 7% -1000% -'000% 5 6948 6751 17.083 ........23.701.... 29409 0007-SHP--035419 0007-SWP-000116841 ______________ _______________________ ______ .----------------------------------------------- -------- --------................ ......., .1. IS -- OunrteHy Data (Unaudited) SUMMARY OF QUARTERLY RESULTS OF OPERATIONS mous*xa of oo--rs. ttcapt cm siwvaw* UV Quinvr IMS *SI 2~e 3a 1982 2no 3rd 4ti Hm Sam statu 535.264 530.172 409393 402556 523198 4*1428 434.384 Qr ms Port 5129.743 179,957 183.521 173.552 ttieoa 152.515 152.290 144.630 Nat mama 5 2.219 22.789 23114 7.310 1024 18.015 - 18.81* 5.073 Par Common Sham Puty CMuM Prmaiy $09 $09 91 S3 93 35 31 31 0* 04 75 58 77 99 21 21 The quvteriy common nock price ranges and dagdsnds tor 1963 and 1962 are provided on ihe Shareholder*' Intormalion Page ineide me tarn cover of nt report. 1963 The actuarial valuation determining pennon plan eonuibueons for the 1963 plan yeer was received during Ihe tlwd quarter This valuation resitted in a reduction of the eaamaud pension expense used bythe company in the lint twoquarters TheeHectcithis adjustmentwas recotdedlnthe ttwrd quarter and increased thrd quarter net income by Si.275.0Q0 ($.05 per common sham). Fourth quarter adjustment* ncieaaad net incoma by approximately S2.91S.000 (112 par common share). The adjustments included a prevision of S4.178.000 (118 par common abate) for the deposition and termination of oertain operationsoffsetpdmarly byimeraotyadjuatmantaandothar adjustments related to NghaMhan irtrrwtad proas margins ' 1982 Net Income for the three months ended March 31, 1982 included a gainof $702,000 (104 par common share) from the sale .of property;''.......................... CXHing the second quarter, the company decided to ctoae certain manufacturing operations. Accordingly, net incomeinciudedaprovtswn of $5.230.000($26per common Shan) for coatt associated with these closings. In addition, the second quarter included a gain of 15.091.000 (5.25 per common sham) Own the axchwtge of oommon stock for dabanhaaa. The actuarial vacation datarmining pension plan contributions lor the 1982 plan year was received dunng the third quarter. TNa valuation resulted in a reduction of the estimated penaion expenseused bythecompanyinthe first twoquaneie. TheoffsetofHeadjuaknertwaemcorded'in the third quarter and increased third quarter net income by $640,000 (103 par common than). Fourth quarter adjustments ineneaed netmoome by approixlmamy $1,877,000 (109 par oommen ahan). The acijuaimanis included a prevision of $8,574,000 (141 per common ahan) far the dapoaition and termination of certain mmilQAroei aHMtj^Bwrroeimropsjrfotjvebeyvmwhfwihroarons^vieji^irrosnewarotxifel^opswreoetrtot margins and other inventory adjustments Shemnn-WiMams Devalopmani Corporation ("SWOC") is a wnoHy-owned uneontoidated subsidiary carried on the equity basis-This subwdlaiy owns,develops and leaaas real estate for the company end other*. AtDecember 31.1963 and 1962, a majority ol the squarefootageowned by SWOC was leased to unrelated parties. Under e revreMng credit agreement. Ihe subsktiaiy may borrow up to S50.000.000 until Oecember22.1969. Borrowings underthit agreement may be converted to a ex-year term loan at any time on or beforeOacambar22. I960. The Sherwtn-Wiliiams Company has not gutitanteed this debt, however, the company and SWDC have a maintenance agnemont that requires the companyto make payments to SMOC In amotmfs sufficient to maintain SWOCa fixed charge coverage at specified minimum levels. At December 31,1963 and 1962. SWDC had property, plant and equipment totalling 536.458.000 and $17,247,000. respectively, long-term debt, including capital leasee. amounted to$29,832,000and Si3.020.000at Oaoambar3l. 1963 and 1962. respectively. 27 0007--SWP-035420 0007-SWP-000116842 Not* IT -- Financial ldiM> Marketable teeuritlee |1M(, lehaduie 1) The marketable securities at December31.1983. consist of- Themands or dtMara CnMeMt d dapout ntewchm oraamant* Vvubla on pratmed d o c k Otwr MCunMs Total t 27.000 96,200 21.008 16,199 $160,407 AiMiinte Bwlbli From MaM Fartlec (IMC* Sohoduio II) Included in other assets at December 31.1983 were the following notes receivable from certain officers o the company: Ttaraanttardote* DaMor J G Brian T A. Comma* C A Basra Bitvc* s-- S- Mdton* Daduckona s sao 160 160 a-- - 1660 S - Ending Baanc* taeo ISO ISO 1 MO Each of theee oulstendng amounts repreaant 5.0% Promissory Notes, due July 28.1988, w*h Interest payable amualy. Thera were no amounts reportable under this Schedule tor 1982 and 1981. IfSlMito^FimdVn Property, plant and equipment OaaalfleaMns are disclosed inthe balance sheet. AddKcne and retirements of property, plant and equipment wore as Mows: TTwana* oTflbtei fin andad Deoamtar 31. tom I9S2 1861 Baanrs -- bapming ot year Tottf IddMRft M OOtf AsMWacqumd Imugh aequamna. . Tw narwnma me SaMats Depnte d noy omad Muewy OSwrchangat Balanca--andcTyear . S44A72S aijoa 1.733 (*328) (56.900) (4.701) 640S.431 $436.62* 30.645 2.960 (4*73) (10.430) -- (S.4S6) 6440.726 8303,758 " 43.072 14.S04 (10.4S0) -- -- 0.91U S436.920 The above criangeem property, plant and equipment except lor the disposal of a wholly-owned subsidiary. each constitute lees than 10% ofthe ending balanceol theperiod Other changester s years presented conswt primarily of capitalized leases and the translationof foreign assets to U,S dollars. Total accumulated depreciation and amortization of property, plant and equipment were as follows- ftnuunaorcMire Vun Mad OacanCar 31. IMS 1982 19B1 Balance -- bagmnng ol yaar Total dwrgad n aapanaa Sam to uneonaoMatad subudiry Depoaal ol wnodyermad autwdary Ofrarchangaa Balano* -- and of year 1220322 24.220 (6.500) (24.024) (4.380) S20954S 1196.661 22.395 (369) 14.442) _ 6.077 1220.322 $163,005 21.668 17043) (969) 1196.661 Other changes for aN years presented consist primarily of eapitafzed leases and reserves for the disposition and tenwnatwn of operations. Valuation and QuaMylng Accounts and Reaervaa (KMC, lehaduie VIIH Changes in the allowance for doubtful accounts are astoltowc ThonaMk of dates Bagmng PaMnca . . Bad dabt Mpanaa tWimolacUSa aeoounta eWMn cXI EndflO balvtca.. Viera andad Qacamoar 31 ties isrc tssi esse 4900 32,422 3656 $2025 3640 (4106) <1360 (3.524) tust 132*31 82422 Activity rateted to ether long-term KabiRiet: Thcwandk or dates BaQkvMQ balroa * AddWen id mmtm . . Oaduevontfrom mu m EndnQ badnoa * . Vaara andad Dacanibar 31......... 1BBB 1682 1981 S2SJ74 7.508 (3.644) 630.638 StSjOBO 12.155 1231) S26J74 $11,080 4.127 (157) 213990 Changestootherlong-term iabilties consistprimanlyof adjustments tothe esfimatedyear-orKl liabiSly for pensions. deferred compensation, and other items, as well as redMrfjcaBona of certain Hems to current Millies. lert-Tenw larrawtniW (IM| I iB| mauaeMk or dotes tkm piyUiUln banka m On mmt s i . WpQFaad avanga vaaiaai tm ai Oaeafftar *t Mawiwnamcuvouatanrang any monSrend Avaraoa araemt eurannding dung tna paned ^R^af^^^aa^s avam^^^^ lajamv raw dumg vw panod . Yarn andad Oseancar 3i. 1BBB 1962 1961 S 168 -- 510% -- -- $1996 $10576 _ 6 248 6 3888 -- 200% 165% Short-term borrowings are included m accounts payable on me balance sheet arte pertain solely to foreign subsidiaries The average amount outstanding is the total of month-end outstanding balances divided by twelve months The weighted averageinterest rata is the actual interest on short-tsrm debt divided by average ahon-term debt outstanding. _______ 21 0007--SWP--035421 1 0007-SWP-000116843 li>lmmrtT Ineom* Statement Information (10-IC, Schedule X) ffMunndi or doMn vaars vioad Drmw 3i. iaea isas iwi Mamananca and mean Adwflisng com S29SB3 61 350 S28000 5WS S31.2SS *3 029 Amounts for depreciation and amortization of intangible assets, preoperating costs ana similar deferrals, taxes other than payroll and income taxes, and royalties are not presented because such amounts are each less than 1% of total net sales KxMMt Index Ibeeber 3 Articles of incorporation and by-taws as amended, filed as Exhibit 4(a) and 4(b) to norm 5-3 dated May 17.1952 and incorporated herein by reference Pe* 4. Not Applicable 9. Not Applicable. 10. Not Applicable. 11 Computation of Net Income Per Common Share 29 12. Not Applicable. 13. Not Applicable IB. Not Applicable. 1ft Not Applicable. 22. Subaidiaiiee of the registrant 31 23. Not Applicable. 24. Concert of Independent Auditors. 32 25. Power of Attorney on fie nth the Securities and Exchange Commission 2ft Not Appfeabie. CompHtnMon alNt Swome See Common Mi--fliMM111Seem tOJQ Demands ot doaart. sscset per ears oat Manga dens cuiflandme Optom-Manxy dock mated ..................................................... ................................... ....... Asauned comamon oh Smm A pfttoftid dock . ................. - Sams B onfanad eacfc ...................... 6 29% CwwaiSHa SuboienaMd Oabanusa swags m> dexae asm Nif fecorra UN (Mlfinid dMMfld ItQUNIWtl Add 929% CamsiUs tluboideand Osbsntus* mtsisd no ot taa . . M*xmMSnscmBiiMWMMaOl^eiOaMldVftkO)f UOWtoy mifkdM^mdt rmiwnBM-- NRNCQffll PITCOfWW IhM ................. we 0--ntwr 31. IMS amjH neune itMee VJtt part as.7sa.iee Ml* (A) ssotes earn 20,903.326 792628 429,689 W0.390 i.e29.04 2S.927.8S6 942.031 (A) CIS *43*40 si re Avsragt nmi ouurang Opiom -- asaaury docs maaiod Awaga deiaa aw aqumatana NM NlOOffil Urn pstansd dmdsrd isqummam Nat ncarm sorscaMa in common diataa Nm tfnn d v common dwv (A) Asesmd comanot l prstarrsd iso common diaisi. (B) Incheon would not cause ngntan dkjOon . . .. . .. aizuet seoAir 2M191S16 amaia aoo MM ** 20.903.326 (B) 20.903.326 $42831 801 142,130' S3 02 19S1 19.617336 447616 466,012 1.004.966 1.920.626 23.657360 131.369 (A) 764 S3214B $136 19,617.336 <B> 19.617.336 S31.365 971 $30,414 ' si S3 29 0007-SWP-035422 0007-SWP-000116844 1 Directors and Offlesrs 1 I Board of Plroctora JmvmKMmood, 56 OaumaP 'a*d O'*' Eiacuf* C**ce' TV Uu;~a _ * ' swarca Ccroari s> V* '( KaMtS. Borwon, 65 Rama (><" Enacuava Va<Vearx Aanoufnwn r<J F-n*nc Ogebay Norton Company johnG.Br*on, 49 Ovintt AndMM Oml Ej *c u m OHicar Tn* 9*vwv-W*m Company D.Wayno CaUoway, 46 EMCilMV|4wWy art C**f f*W OOear Paooeo ineoaentrt ThoanooA.Cornmos, 41 Saner vea Praaomi Pnanea Tha 5h*Mm-Wllta<na Company WMfemJ.D* Laneoy, 67 Round larmarty Chairman art Oral Eiacutiw* OKcar Rapubae Seal Corporaten HobartdOohan. 59 Samar vea rtaadam Soane* art Tacnnoegy 0an*Camng Peargia* Corporaaon Alton CHotmaa, 63 Naienal Managng-Panna. JonaiDey R*av4 Ragu*. artmaya J.Hobart Kttpock, 61 Piaidiri Naaenal Cay Bank and Natenal Qay Corporten WtMamaMitchaH, S3 Praaean Cantai Corporation Patricks. Parkor, 54 Chairman ct M Board art CM Eaacuhv* Oacar Parkar-Hanrtn Corporator txscaatlvo OWlooia JohnQ.Bfaon.49 Chairman. tiHdat art Chiat Gaaaamt OHcar ThomasA-Commoa, 41 Saner Me* Ptaodani. finanea f.Thomas KreBno, 42 Saner Wet Praoiknr. Cotpoma naaaartn art Oartapmam CoriA.Battni, SO " Group McaPraadant WWtotnB.Ekhsd0o. 56 Gran Met Paahn AlnaCMkta.53 vet Proidant and Ganarai Count! and Coporai* Sacmary CorwrayOLhnf, 42 vta Praaaan Goiponla nanrang and OaaMopnun Arthur0.Naina. 44 vn mpon IMiAn u m HobartA.Tschonnan, 61 vw nwri. nBMf.vv SfMQMi JamesE.WaBaca, 50 Vtoaftaodant GonaaoM CbrooMr Thomas ft.Hfclicti, 36 Traaauar FrancisC-PtcclriUo, 34 Aaaaan Sacwary am Oscar ofTap* li ThontrtN.BMttt AaaOarn l Ganarai Managar. Conaumar Omaen JooophM.DoVittorio, 49 Praooant 1 Qanaral Managar. Chemical Coamga Omaen We* POMN. wumaaonal Group DwtoLhittM Pianaanr & Ganarai Managar. SMiOMoon AatokK. Nando, 41 Prooaara a Ganarai Managar. Cnarmrati Owen LMnardA.Want.57 Praooort * Ganarai Managar. Putomoaua Mtamorkai 30 0007-SWP--035423 0007-SWP-000116845 Directory of Operations tcJ Subsidiaries Brazil -- Sheiwin-Wlllams do Brasil Industna a Comeroo Uda.. Sto Pauto* ..........' -Canada -- Sharwin-WWiams Canada Inc.. Momraal Mexico -- CompaWa Sherwin-Williams. S.A. da C.V.. M#mj c o C#y* "Caribbean -- Sharwm-WiRiams Cayman Islands Ud., Grand Cayman -- The ShsrwkvWldan* Co l Resources . t-- Untied Kingston, Jamaica -- SherwirvWIMms (Caribbean) NV., Curasao -- ShareinJMIame (West lodes) Ltd. Kingston, Jamaica -- Shenutn-WMams (Barbados) Ud.. Bridgetown. Barbados joint Ventures Canada--BAPCO. Toronto, Canada inland -- F.S.W. Coalings Umitad Outdo -- F.S.W. Prints Ud.. Oubm Japei --MpponShanm-lMilrniCnamlealaCo,UtL, OaaliaPasaa -- Shanrin-VMama da PanamA SA. Panama CKy SaudiArabla --Shew**-WWtama Saudi Arabia Ud, Jeddah ~Zj USA -- Shenwi>o-WWlHiaaammVVDDe*v*etloopment Corporation* -- Contracat Transppoorrttaattiioonn!Syslems Co. -- Gray Drug Fee, Inc. -- The Marshal Drag Company -- Gray Drug Stores, Inc , -GOP. Inc -- Drug Way Stores, Inc. -- Orug Fair, Inc. -- Drug PSir of Pa. Inc <27J AUK*****, . CA* *>*7 7 f. I JrCifAO& - ecu***. $*&** 4*4 ye A a/ 7V*PIctr*4 4 -A Argentina--Sherwin-lMlams Argandna Industrial y CommectaLSA _Nadone laad, Sa Berta -- Ftbrica Nadonal da FVaurat "EspMboL* SA CMa -- PMuraa Andna. &A Colombia--Ftbrica Nadonri da PMuraa, SA Ceata Wca--Shanr*v\Wlama da Costa ffca, SA Dominican RapuMc -- Acabadoa Automotrtcac SA H iisdnr i Itiaraln TWama dsfEcuador FdDries Nauqoal~' _dC0OUtaBrfeA:--------B Salvador --Sherww-WSams da Centro America. SA da CV. Franca -- Astral. SA -- CoraaaSA Haiti -- Parturas Idldaa. SA Honduras -- ShanmnAMKams da Honduras. SA da C.V. inda -- Ganmare Part*. Ltd. Italy -- Vercotac. S.pA Japan -- Atom Chemcri Part. Ud t<ppon Pent Company. Ltd. ^ tabanon--AmarPartsTtadng Satablalimsnta -- Unfrtwt Paint and Chmiml Induct SJLR.L "CH&MPNNT NUOdlTMWUnMQlp. M M9WLLWm9 AUTnOraiPts fuftVl. Para--flhanstn Warns Peruana. SA *>. nHPpm wnipfraWr mappvwi, vie. ^ SP.ou.ua.trht.oA.HM.co.ao---aA.tdaveaini cPerdiMCouattiPngaswP-uT-WYuLutd..lnoi *>*C*.,, Sjpaln--hduabiaa Oubdcaa Pmcdor. SA --GoMlmCarfbbMm. SA --Bertcaa VriantrtL SA SwKzariand -- Kurt Vogataang. AO. Triwan (R.O.C.)--Eastern Part Co, Ud. Thailand -- Bangkok China Part Mg. Co. Ud. Urtied Kingdom -- AuH&VNborg Group MacpharaonIndustrial Coalings. Ltd Vanezueto--CA OulrHca Intagrada -- CA Vanasotana da Ptgmentoe --CA Vanarnlana di PMuraa - Oauricfce Atao Coadnga GmbH COATINGS TM*yo c9u 4 CHEMICALS INTERNATIONAL Anaheim, CA Dasher, OH SaHimora. MO /Gartend. TX Bedford Haights. OH / GravanhursL Canada Chicago. IL / Greensboro. NC Cnsllsld. MD I. Morrow.GA * /SW 6*81-*, Nawaifc. NJ Nbrth Olmsted OH Oakland, CA flfchmond KY Eaatsm MkSCanSal Somtaaaiam Souet Central in 38* 397 2dl fr 33 f `ief 3fo 0M0 p^|p Artec tw Northam 193 SouOiam 9d 403 Chicago. IL OndnoaB, OH CoffayvHa. KS Pone.NJ Jsddah. Saud Arabia rangatSiL Jamaica Madco City. Maioco MontraaL Canada Panama City. Panama S9o Paulo. Brazil Toronto. Canada VlrgMa. Ireland V br nt onpnc om o* & hw snwwm ei Campmt 31 0007--SWP--035424 0007-SWP-000116846 SnartnoKMis era Bora ct Dneciots The Snerwn-WMams Company Oeveleod Oho We content to tne incoipofswsn by reference o Repittri&on StatementNumber2-12077onFOrm $.3 dated Feoniaiy 23.1983 ana Peo-Ehtckve Amendment Nurree 3 to Begetraeor Statement No 2-64247dated July 29 1992 ofourtaped on theconaoMated Inanoal (tatemants mduded o me annual report on Form 10-K ct The Shefem-Wftari* Company lor the yeer ended December 31.1903 Oereena. Orxo Pursuantlothe requirementsol Seaton 13 or 15(d)d the Sacuntiat Excnanga Act of1934. the registrant has duly caused * report to be atoned on its behalf by the undersigned, thereunto duly authorized, m the C(y of Cleveland, and State of Ohio, on tne rah oay of Match. 1984 THE SHERWIN-WILLIAMS COMPANY ^ A 0 CmtJDS_______________' A 0 ChMdt, Secretary ` Pursuant to the raquaemanta of the Securities Exchange Act of 1934. the teport has bean ogned Dow by w fotiowing persona * the capacities attested on March 12 1964 Officers and Ouactota o> The Shaman Warns Company J G. WEEN J O Btaet Chatman at Ota Board Baade* and Cfeat Eocuere Ofloar. T A COMMCS T a Commas J E. WALLACE AEWMaea wfnVr Vw WWWWi rfwCV CMatfinanenf OBeer. Oncer m nrnw, UrVeNrt CfeatAcoeutoig Offoar J. A AUWOOP Ofrecsor K.. Sanson D W CALLOWAY W. J OCtAMCtY W J Oelanooy B C. DOSAH R.C. Oooan A CHOLMtS A C Holms J B. WtXBACK J B. NMpacfc The underegned. by ugrsng he name hereto, does sign lies repeat an behalf of the desv'atedOdcer*and Directors ofThe Shawfln-VWtwns Company pursuant to Powersof Attorney ONKUtod on baha# of each such Offcer and Diractor _ A 0 CHIOS w A D Chtoe. Aaomay-avfact Mero>i2'9*t 32 0007-SWP-035425 form 10-K Annual Report Pursuant to Section 13 or '5(0) ol ina Secunties Exchange Act ot 193* For me Yaar Ended December 31 1983 Commission File Number 1-4451 Securities and Exchange Commission Washington. D C 20549 THI 8H8RW1N-WILLIAM* COMPANY AN OHIO CORPORATION His IMFLOVIR IDENTIFICATION SoiJMMW 101 Prosoect Avenui. N W Cleveland. Ohio 44115 Telephone (2t6) 566-2000 Pomona oftins report ere not required by tie Form 10-K and ere not Tiled" as part of the company's 10-K Only the lections refer enced m ns index below ara incorporated m the 10-K The Securm and Exchange Comrmssron hasnot approved ordisapprovedthisreport or passed upon its accuracy or adequacy Secunties Registered Pursuant to Section 12(d ) of me Act TWO el each aleaa Name el enohawpo w which raglaterad 9 45% Debentures Due 1999 New York Stock Exchange 625% Convertible Subordinated Debentures Due >999 Now York Stock Exchange 5 45% Debentures Due 1992 New York Slock Exchange Common Stock. Par Value S6 25 New York Stock Exchange Secunties Registered Pursuant to Sectpn 12(g) of the Act The Registrant has hied as reports required to be filed by Section 13 ort 5(d) ot me Secunties Exchange Act of 1934 during the precedkig 12 months and has been subject to such Mmg raqwremenis tor the past 90 day* The Hegetrent had 22.945.508 shares of common stock, par value $6.25. outstanding at January 31.1964. These shares were held by 9.739 holdars of record on this dale The aggregate marks! value of me voting stock at January 31.1984. $569999317 excluding the voting stock held by certain executive officers P5 twdea-Feres imWaeerl t Business a. General Owretopmera of Business .. .4 b Nenaeve Descnpeen of Busnets Segments 4-5 c Fmancret Intormaeor About Business Segments 8-9 d Foreign and Domestic Operaaont and Export Sales 9 2 Properoee. - 3i 3 Legal Proceedmgs 4 5 Markettortne Registrant's Common Equity and RsWed Stockholder Matters Inside front oover 6 Sslscted Financial Beta 13 7 Managamant's Dncuraon and Anafyta of Financial Conation and Results ol Operahons 10-12 8 Financial Statements and Supplementary Data Th response to m*s semisajbmtted *1 item ia o< this report 14 ExhrWts. Financial Staiemer* Scftadutae and Raporta on Form 8-K a StatamantsofConaotidated Income tor the Yean Ended December 31. 1983.19B2 and 1981 15 Ccnaotdsiad Balance Shaata N December 31. 1963. 1982 end 1961 16 Statamarta of Changat m ConscSdatad finanoaf Posmon tor lha Years............. Ended December 31. 1983. 1982 and 1961 *7 Statements of Conaosoated Shareholders'Equrty tor me Yaws Ended December 31,1983. 1982 and 1981 . 18 Notaa 10 ConsoWaMd Frtsncw Statsmshts for me Yaant Ended Dacambar 31.1983. 1982 and 1981 19-29 Financial Schedules Nee 1.11. V. VI VIII. IX and X tar the Years Enoad Oacambtr 3V 1983. 1982 and 1981 28-29 b Raoorts on Farm 8-K None Ned during fourth quarter 1983 c Exhibits Exhibit Index 29 Name Number 10.11 12 tnd '3 re mccxporcted by rsference front me definitive Proxy Statement dated March 1 1984 'iied wanthe Sacuntiea and Exchange Commis sion pursuant to Regulation ma itsme Number a and 9 ano an omer sched ules (Noe. M. IV. VII. XI Xii xmt tor whier provdionit madam the appbcaoit ac counting isgutation 01 me Sacunnss ana Exchange Commission are not requ-red under tha related instructions or are neooi'cable and. therefore have been or-ittea 33 0007-SWP-035426 0007-SWP-000116848 0007-SWP-000116849