10-KPeriod: FY2008

SHERWIN WILLIAMS CO Annual Report, Year Ended Dec 31, 2008

Filed February 24, 2009For Securities:SHW

Summary

The Sherwin-Williams Company's 2008 Form 10-K reveals a company navigating a challenging economic environment. Despite a slight decrease in net sales from the previous year to $7.98 billion, the company maintained profitability with a net income of $477 million. This resilience is attributed to its diversified business segments: the extensive Paint Stores Group, the Consumer Group, and the Global Finishes Group, which collectively serve a broad range of professional, industrial, commercial, and retail customers. Key risks highlighted include the ongoing negative global economic and financial conditions, which impact demand for coatings and increase credit risk. Additionally, the company faces risks from fluctuations in raw material and energy prices, increased competition, and potential liabilities related to environmental matters and litigation, particularly concerning historical lead pigment and lead-based paint sales. Despite these challenges, Sherwin-Williams demonstrates a commitment to its growth strategy, including acquisitions and international expansion, while actively managing its financial resources and pursuing cost-saving initiatives.

Financial Highlights

51 data points
Beta

Revenue

$7.98B

43.8% Gross Margin

Net Income

$476.88M

6.0% Net Margin

EPS (Diluted)

$1.33

Total Assets

$4.42B

Cash & Equivalents

$26.21M

Free Cash Flow

$759.03M

Financial Statements
Beta
Revenue$7.98B
Cost of Revenue$4.48B
Gross Profit$3.50B
R&D Expenses$37.47M
SG&A Expenses$2.64B
Interest Expense$31.97M
Net Income$476.88M
EPS (Basic)$1.35
EPS (Diluted)$1.33
Shares Outstanding (Basic)350.51M
Shares Outstanding (Diluted)354.53M

Key Highlights

  • 1Net sales for fiscal year 2008 were $7.98 billion, a slight decrease from $8.01 billion in 2007.
  • 2Net income for 2008 was $477 million, down from $616 million in 2007.
  • 3The company operates through three reportable segments: Paint Stores Group, Consumer Group, and Global Finishes Group.
  • 4Significant risk factors include adverse global economic conditions, fluctuations in raw material costs, increased competition, and potential litigation expenses.
  • 5Sherwin-Williams has an ongoing share repurchase program, with approximately 19.75 million shares remaining authorized for repurchase as of December 31, 2008.
  • 6The company's operations are subject to environmental regulations, with potential liabilities for past and current activities being a noted concern.

Frequently Asked Questions

In 2008, The Sherwin-Williams Company reported net sales of $7.98 billion, a slight decrease from $8.01 billion in 2007. Net income was $477 million, down from $616 million in the prior year. Diluted earnings per share were $4.00.

The company identifies several key risks, including the adverse impact of negative global economic and financial conditions on demand and credit risk, increases in raw material and energy costs, intense competition, potential liabilities from environmental matters, and ongoing litigation related to historical lead pigment and lead-based paint sales. Economic downturns in cyclical sectors like construction and manufacturing are also significant concerns.

The company typically finances its seasonal working capital needs, particularly increased inventories and accounts receivable during peak seasons (Q2 and Q3), through short-term borrowings, including lines of credit and commercial paper. The filing notes that the company generally anticipates sufficient liquidity through its financing facilities.

Sherwin-Williams has a history of strategic acquisitions in the paint and coatings industry and intends to continue acquiring businesses as part of its long-term growth strategy. The company also highlights its expansion into foreign markets, including Asia, Mexico, and South America, as a key component of its future growth, while acknowledging the associated risks.