Document pL0xnB209dyqd61d2KMXr9XE

N 15362 Th e Sh e r w in -Wil l ia ms Co . A. W. STEUDEL , PRESIDENT To the Stockholders: We present herewith the Consolidated Balance Sheet and Consolidated Income and Surplus Accounts of The SherwinWilliams Company for the fiscal year ended August 31, 1954. The earnings before Federal Income Tax and provision for the Pension Plan are $23,814,859. The amount estimated for Federal Income and ExcessProfits Tax is $10,671,835. For the Pension Plan $2,500,000 has been set aside this year. The final consolidated net earnings, after all deductions, are $10,643,021, the highest in the Company's history. These net earnings, after allowing for Preferred Dividends, are equivalent to $7.83 per share on the outstanding 1,277,854 shares of Common Stock. This year also established an all-time record for sales. The increase over last year was 2.47 percent. It is, of course; com mon knowledge that there has been a sharp decline during the year in the production of such items as farm equipment, furni ture, television sets, refrigerators and' household appliances. Consequently, the demand for industrial finishes suffered a marked drop. Also in the railroad and marine field there was a drastic curtailment of buying. Nevertheless, the gain realized in the larger field of the Company's operations, namely, finishes for the home, more than offset this decline. A large part of this gain was contributed by Super Kem-Tone and Kem-Glo, the sales of which surpassed all previous records. These two prod ucts, one a wall finish and the other an all-purpose enamel, have attained an output in their respective fields, far in excess of any other interior finishes ever offered the American market. The Pigment, Color & Chemical Division, which sells pri marily to manufacturers such basic materials as pigments, colors, dyestuffs, chemicals and cans, enjoyed a successful year with a marked gain in sales. Referring to the Company's foreign operations, there have been drastic declines during the year in the value of the cur rencies of two countries, Brazil and Mexico. In the case of Brazil, the official rate is still 18.3 cruzeiros to the dollar* but the free exchange rate at August 31st was about 59 to the dollar. Using this free rate of 59 cruzeiros to the dollar in figuring the net current assets of the Brazilian Company, there still remains an excess of $1,728,000 above the amount at which the investment is carried on the Company^ books. During the past two fiscal years, we were successful in trans ferring into dollars as dividends $788,952, which have been included in the Company's earnings for those years. In Mexico the peso was officially devalued last April from 11.6 cents to 8 cents. Effect has been given to this devaluation by writing down the Company's net current assets to the current peso rate in the consolidated figures. A large new plant, with all modern equipment, has j ust been completed at Mexico City, the entire cost of which has been financed out of the earnings of the Mexican Company. The total amount spent by the Company for plant during the year was $3,580,864. A large part of this was expended in the Chemical Division of the business, including the building of another Phthalic Anhydride unit at Chicago and further expansion c f chemical and color facilities there. , The Company has continued its research and new products development with unabated vigor. Along with improvement in its regular lines of finishes, it has brought out new products, among them "Applikav" which was put on the market last Spring. It was felt that the American public would welcon-.' a pattern that could be applied to the walls of its homes by means of paint instead of being restricted, as in the past, to plain walls only. This has been accomplished by perfecting a roller with which a special form of paint called "Applikav" can easily be rolled over Super Kem-Tone, producing a beautiful decora tive effect, completely washable, in an infinite variety of colors. This type of design roller is manufactured at the Com pany's new plant at Deshler, Ohio. The management expresses its appreciation to the organiza tion for the loyal and intense efforts that have made this year's results possible. President. l- > - rs /. '3 --. > l-` ' 'd: 3 . ; o=?- a za.- c. : C- 3. St' I N-, .3*- a., s 2^t S3' ncn. 2'.. '3 o s aQ 3 o. Sr 5T". .. 3*"* o l - 'SI 5 ' 5'r.- Sc^' 'V-g'ra'-O :-V ' 3=:. . m - O)l ~ ' , jre| ,s*r: > o: :a- 3 -.3 CL>CL-. ra * a 3 ' co i? rqe- r&e ^ . ^Sre, *rVC3I 3 -2. " re ra . 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V| VI Vi 00 --* 'C s 8 H X ra CA X ra I H-i< X \ C O N SO LID ATED BALAN C E SHEET 1--1 r1 t--4 > & CA O o r ra > X *-< > X o o o X GO o r* >--H > H ra Cfl C w 03 HH J--I > pd's-w 1--4 ra 03 000234 CONSOLIDATED INCOME AND SURPLUS THE SHERWIN-WILLIAMS COMPANY AND CONSOLIDATED SUBSIDIARIES Year Ended August 31, 1954 INCOME Profit from operations for the year ended Aug ust 31, 1954, before other income, provision for depreciation and other deductions, and federal taxes on income........ .......... ...................... $25,835,862 Other income: Dividends received on capital stock of uncon solidated subsidiaries--Note A......... . .. $ 726,369 . Unused portion of reserves returned to income 375,985 . -' Miscellaneous ................... 135,565 1,237,919 Other deductions: $27,073,781 Provision for pensions,......................... $ 2,500*000 Provision for depreciation.......... 2,326,005 Provision for foreign taxes and miscellaneous items..................................................................... 640,878 Net charge resulting from sale or abandonment of depreciable assets........... . 160,487 Interest expense................. 131,554 Federal taxes on income: Provision for the year--estimated: Normal tax and surtax....... $11,125,000 Excess profits tax............... 250,000 Adjustments for prior years.. NET INCOME ......... $11,375,000 703,164* ...... 10,671,836 16,430,760 $10,643,021 EARNED SURPLUS Balance at September 1, 1953................... ......... Add net income for the year............ $55,536,244 10,643.021 Deduct: Cash dividends declared and paid or provided for during the year: Preferred--$4.00 per share. $ 635,250 Common--$4.00 per share.. 5,111,431 $ 5,746,681 $66,179,265 Premium on preferred stock redeemed........... 24,750 5,771,431 BALANCE AT AUGUST 31,1954...... ' $60,407,834 Note A--Equity in income for the year ended August 31. 1954, reported by unconsolidated subsidiaries was approximately *980,000 mote than dividends received. Note B---The income accounts of the consolidated foreign subsidiaries (Mexico and Cuba) havebeen translated into U. S. dollars mainly on the basis of rates of exchange in effect at the close of the year. Indicates red figure. AUDITORS' CERTIFICATE Board of Directors, The Sherwin-Williams Company, Cleveland, Ohio. We have examined the consolidated balance sheet of The SherwinWilliams Company and consolidated subsidiaries as of August 31, 1954, and: the related statements of consolidated income and surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing pro cedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and summaries of income and surplus present fairly the consolidated financial position of The Sherwin-Williams Company and consolidated subsidiaries at August 31, 1954, and the consolidated results of their operations for the year then ended, in conformity with generally accepted account ing principles applied on a basis consistent with that of the pre ceding year. ERNST iff ERNST Certified Public Accountants Cleveland, Ohio October 12,1954 Th e Sh e r w in -Wil l ia ms Co . 101 Prospect Ave., N. W. Founded m iS65 Geveiand, Ohio Manufacturers of Paints, Varnishes, Colors, Stains, Enamels, Lacquers, Lead Products, Dyes, Chemicals, Lithopone, Litharge, Linseed Oil, Dry Colors, Cans, Insecticides. Main Plants , Cleveland - Chicago * Dayton - Detroit * Newark Pittsburgh Hubbard, Ohio' Oakland; Cal. - Bound Brook, N. J. - Gibbsboro, N. J. Deshler, Ohio' Dallas - Los: Angeles > Cotfeyville, Kan. A. D. BALDWIN A.H.BURT, : ; S.b ;c o o l id c e C. S. EATON GEORGE CUND Directors C. P. JARDEN. D. A. KOHR ' VC. M.LEMPERLY G. H. ROBERTSON L. H. SCHROEDER A. W.STEUDELV C, M. WHITE H. D. WHITTLESEY THOS. E. WILSON L. W. WOLCOTT Officers A. W. STEUDEL, President A. H. BURT, Vice Freeident S. B. COOLIDGE, Vice President L. H. SCHROEDER, Vtee Prettdent and Treasurer B. M. VAN CLEVE, Vice President . N. E. VAN STONE, Vice President : H. D. WHITTLESEY, Vice President F J. SQUIRES, Secretary Transfer Agents CLEVELAND TRUST COMPANY Cleveland, Ohio BANKERS TRUST COMPANY New York, N. Y. Registrars CENTRAL NATIONAL BANK Cleveland, Ohio GUARANTY TRUST COMPANY New York, N. Y.