2005 Annual Report - Investor Relations - Sherwin-Williams

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (thousands of dollars unless otherwise indicated) NOTE 18 – SUBSEQUENT EVENTS Litigation During September 2002, a jury trial commenced in the first phase of an action brought by the State of Rhode Island against the Company and the other defendants. The sole issue before the court in this first phase was whether lead pigment in paint constitutes a public nuisance under Rhode Island law. In October 2002, the court declared a mistrial as the jury, which was split four to two in favor of the defendants, was unable to reach a unanimous decision. The State of Rhode Island retried the case and on February 22, 2006, the jury returned a verdict, finding that (i) the cumulative presence of lead pigment in paints and coatings on buildings in the State of Rhode Island constitutes a public nuisance, (ii) the Company, along with two other defendants, caused or substantially contributed to the creation of the public nuisance, and (iii) the Company and two other defendants should be ordered to abate the public nuisance. The Court will determine the scope of the abatement remedy. Various other matters remain before the Court. The Company intends to appeal the jury's verdict. The Company’s revolving credit agreement provides that one or more judgments against the Company or any subsidiary for the payment of money in excess of $75,000 and not covered by insurance constitutes a default. Such a judgment would become an event of default if it remains undischarged for a period of 60 days during which the execution of the judgment is not stayed, vacated or bonded pending appeal. If a default or an event of default occurs, the lenders may terminate any borrowing commitments. If an event of default occurs at the end of such 60 day period, the lenders may accelerate the payment of any borrowings outstanding and such event of default may also constitute an event of default under other borrowing facilities. This was the first legal proceeding against the Company to go to trial relating to the Company's lead pigment and lead-based paint litigation. The Company cannot reasonably determine the impact that the State of Rhode Island decision and determination of liability will have on the number or nature of present or future claims and proceedings against the Company. The Company believes it is possible that additional legal proceedings could be scheduled for trial in 2006 and in subsequent years in other jurisdictions. Due to the uncertainties involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceedings, or the effect that any such litigation may have on the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation. The Company has not accrued any amounts for such litigation. Any potential liability that may result from such litigation cannot reasonably be estimated. In the event any significant liability is determined to be attributable to the Company relating to such litigation, the recording of the liability may result in a material impact on net income for the annual or interim period during which such liability is accrued. Additionally, due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made due to the aforementioned uncertainties. Debt (Unaudited) At February 28, 2006, borrowings outstanding under the domestic commercial paper program totaled $850,000 and cash and cash equivalents totaled $648,000. The higher levels of borrowing and holding of cash were undertaken by the Company primarily to maintain maximum financial flexibility during the period between the Rhode Island jury verdict and final determination of the issues remaining before the Court. An increase of $133,610 in domestic short-term borrowings net of cash from December 31, 2005 through February 28, 2006 was due to the normal seasonality of the Company’s business and the need to invest in working capital prior to the primary selling season and collecting accounts receivable. 72
SHAREHOLDER INFORMATION Annual Meeting The annual meeting of shareholders will be held in the Landmark Conference Center, 927 Midland Building, 101 Prospect Avenue, N.W., Cleveland, Ohio on Wednesday, April 19, 2006 at 9:00 A.M., local time. Investor Relations Robert J. Wells The Sherwin-Williams Company 101 Prospect Avenue, N.W. Cleveland, Ohio 44115-1075 Internet: www.sherwin.com Dividend Reinvestment Program A dividend reinvestment program is available to shareholders of common stock. For information, contact our transfer agent, The Bank of New York. Form 10-K The Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission, is available without charge. To obtain a copy, contact the Investor Relations Office. Certifications The Company filed with the Securities and Exchange Commission, as Exhibit 31 to the Company’s Annual Report on Form 10-K for the 2005 fiscal year, certifications of its Chief Executive Officer and Chief Financial Officer regarding the quality of the Company’s public disclosure. The Company also submitted to the New York Stock Exchange the previous year’s certification of its Chief Executive Officer certifying that he was not aware of any violation by the Company of the New York Stock Exchange corporate governance listing standards. Independent Registered Public Accounting Firm Ernst & Young LLP Cleveland, Ohio Stock Trading Sherwin-Williams Common Stock—Symbol, SHW—is traded on the New York Stock Exchange. Transfer Agent & Registrar The Bank of New York Investor Services Department P.O. Box 11258 New York, NY 10286-1258 1-866-537-8703 E-mail address: shareowners@bankofny.com Stock Transfer Website: www.stockbny.com Headquarters The Sherwin-Williams Company 101 Prospect Avenue, N.W. Cleveland, Ohio 44115-1075 (216) 566-2000 COMMON STOCK TRADING STATISTICS 2005 2004 2003 2002 2001 High........................................ $ 48.84 $ 45.61 $ 34.77 $ 33.24 $ 28.23 Low......................................... 40.47 32.95 24.42 21.75 19.73 Close December 31 ................. 45.42 44.63 34.74 28.25 27.50 Shareholders of record ............ 10,625 11,056 11,472 11,936 12,687 Shares traded (thousands) ....... 206,115 175,664 143,702 193,256 162,219 QUARTERLY STOCK PRICES AND DIVIDENDS 2005 2004 Quarter High Low Dividend Quarter High Low Dividend 1st $ 46.51 $ 42.25 $ .205 1st $ 38.54 $ 32.95 $ .17 2nd 47.26 41.38 .205 2nd 41.63 35.55 .17 3rd 48.84 40.92 .205 3rd 44.11 37.95 .17 4th 46.67 40.47 .205 4th 45.61 40.36 .17 73
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The Sherwin-Williams Company 2005 A
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ON THE COVER: In 1890, the original
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LETTER TO SHAREHOLDERS portion of t
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This past year, we realigned our ma
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PAINT STORES SEGMENT to maximize co
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CONSUMER SEGMENT Williamsburg Color
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AUTOMOTIVE FINISHES SEGMENT The lau
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INTERNATIONAL COATINGS SEGMENT to t
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STRENGTH IN NUMBERS IN ADDITION TO
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COMMITTED TO FINANCIAL EXCELLENCE F
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FINANCIAL SUMMARY (millions of doll
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Page 77 and 78: 2005 BOARD OF DIRECTORS 1 SUSAN J.
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2005 Annual Report - Investor Relations - Sherwin-Williams

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