2005 Annual Report - Investor Relations - Sherwin-Williams

This past year, we realigned our management structure
and elevated three key executives to oversee
significant portions of our business, reporting to the
Chief Executive Officer. John Morkis will continue in his
role as Group President, Paint Stores Segment. As Group
President, Consumer Segment, Tom Seitz has assumed
responsibility for the entire Consumer business, including
Diversified Brands and Wood Care Divisions. Tim
Knight has been promoted to the new position of Group
President, Global Group,
overseeing all divisions of the
company whose activities
extend beyond the boundaries
of North America. These gentlemen
have proven
themselves to be savvy business
managers and
outstanding leaders over there long tenures with the
company. Each brings an impressive record of accomplishment
to their new role.
LEAD PIGMENT LITIGATION
Given the heightened publicity that lead pigment
litigation has received over the past year, I feel it is
appropriate to offer some perspective.
The historical record is clear that the industry, and
specifically Sherwin-Williams, has always acted responsibly
and within the law. The industry played an
important role in funding research that identified the
risks associated with poorly maintained lead paint and
in disseminating that information to health officials. In
1955, these efforts resulted in the adoption of a voluntary
standard by hundreds of paint companies, which
essentially removed lead from interior residential paint.
Over twenty years later, in 1978, the federal government
banned the use of lead pigments in paint for residential
and most commercial purposes.
We are joined in most of these lead pigment cases
with several other defendants with whom we have
maintained an excellent working relationship. Our
arguments, and more importantly our actions, are solid
and on the right side of the law, and we will continue
to vigorously defend the Company against these misguided
attacks.
Because we recognize that elevated blood lead
levels in children is an important public health issue,
we are working with various community-based
organizations to help address it. Most of these
organizations concentrate their efforts on public
education, training and lead hazard control through
effective property maintenance.
OUTLOOK FOR 2006
We are encouraged by the strength of our business
throughout 2005. Strong demand for architectural
AGAIN NAMED AS ONE OF THE
BEST 100 COMPANIES TO WORK
FOR BY FORTUNE MAGAZINE.
products coupled with positive trends in the global
OEM finishes, industrial maintenance and automotive
refinish markets give us good reason to be optimistic as
we enter 2006.
Raw material cost pressures remain a concern, but a
manageable one. Recent improvements in the availability
of oil, natural gas and petrochemicals have somewhat
tempered the sharp rise in raw material pricing we saw
in 2004 and 2005. Barring an unforeseen political or
natural disaster we would expect this trend to continue
in 2006, resulting in a more stable raw material cost
environment as the year unfolds.
Once again, FORTUNE Magazine named Sherwin-
Williams to their list of the “100 Best Companies to
Work for.” We are committed to the values and principles
that helped us gain this recognition, and we will
continue to foster a work environment that recognizes
and rewards hard work and innovative thinking.
On behalf of the men and women of The Sherwin-
Williams Company around the world, we offer our
thanks and appreciation to our customers, suppliers and
shareholders for their continued trust and confidence.
Christopher M. Connor
Chairman, President and Chief Executive Officer
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