10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Period Ended March 31, 2016

or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to

Commission file number 1-04851

THE SHERWIN-WILLIAMS COMPANY

(Exact name of registrant as specified in its charter)

OHIO	34-0526850
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
101 West Prospect Avenue, Cleveland, Ohio	44115-1075
(Address of principal executive offices)	(Zip Code)

(216) 566-2000

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one:)

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $1.00 Par Value – 92,495,113 shares as of March 31, 2016.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27
Item 4. Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5. Other Information	33
Item 6. Exhibits	34
SIGNATURES	35
INDEX TO EXHIBITS	36
EX-2.1
EX-4.1
EX-4.2
EX-4.3
EX-10.1
EX-31(a)
EX-31(b)
EX-32(a)
EX-32(b)
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABEL LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Thousands of dollars, except per share data

	Three Months Ended March 31,
	2016			2015
Net sales	$	2,574,024		$	2,450,284
Cost of goods sold	1,312,279			1,317,835
Gross profit	1,261,745			1,132,449
Percent to net sales	49.0		%	46.2		%
Selling, general and administrative expenses	1,002,355			929,197
Percent to net sales	38.9		%	37.9		%
Other general expense (income) - net	17,554			(1,673		)
Interest expense	25,732			12,351
Interest and net investment income	(487		)	(422		)
Other expense (income) - net	226			(245		)
Income before income taxes	216,365			193,241
Income taxes	69,237			61,837
Net income	$	147,128		$	131,404
Net income per common share:
Basic	$	1.61		$	1.42
Diluted	$	1.57		$	1.38
Average shares outstanding - basic	91,475,860			92,740,059
Average shares and equivalents outstanding - diluted	93,548,234			95,278,725
Comprehensive income	$	166,138		$	75,057

See notes to condensed consolidated financial statements.

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THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Thousands of dollars

	March 31, 2016			December 31, 2015			March 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	70,548		$	205,744		$	64,013
Accounts receivable, less allowance	1,290,749			1,114,275			1,234,612
Inventories:
Finished goods	972,037			840,603			981,334
Work in process and raw materials	175,324			177,927			179,916
	1,147,361			1,018,530			1,161,250
Deferred income taxes	97,562			87,883			107,869
Other current assets	282,405			230,748			196,832
Total current assets	2,888,625			2,657,180			2,764,576
Goodwill	1,147,047			1,143,333			1,149,121
Intangible assets	250,574			255,371			277,919
Deferred pension assets	246,035			244,882			250,463
Other assets	449,003			436,309			412,335
Property, plant and equipment:
Land	120,568			119,530			121,626
Buildings	704,594			696,202			691,541
Machinery and equipment	2,071,637			2,026,617			1,946,261
Construction in progress	89,839			81,082			63,419
	2,986,638			2,923,431			2,822,847
Less allowances for depreciation	1,929,613			1,881,569			1,824,415
	1,057,025			1,041,862			998,432
Total Assets	$	6,038,309		$	5,778,937		$	5,852,846
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings	$	128,675		$	39,462		$	1,405,369
Accounts payable	1,152,923			1,157,561			1,174,840
Compensation and taxes withheld	284,860			338,256			249,707
Accrued taxes	115,403			81,146			77,602
Current portion of long-term debt	2,179			3,154			3,143
Other accruals	578,521			522,280			468,384
Total current liabilities	2,262,561			2,141,859			3,379,045
Long-term debt	1,908,774			1,907,278			1,116,337
Postretirement benefits other than pensions	250,168			248,523			278,771
Other long-term liabilities	615,983			613,367			609,521
Shareholders’ equity:
Common stock—$1.00 par value:
92,495,113, 92,246,525 and 93,186,295 shares outstanding
at March 31, 2016, December 31, 2015 and March, 31, 2015, respectively	116,043			115,761			115,118
Other capital	2,390,389			2,330,426			2,187,144
Retained earnings	3,298,270			3,228,876			2,493,469
Treasury stock, at cost	(4,235,794		)	(4,220,058		)	(3,798,254		)
Cumulative other comprehensive loss	(568,085		)	(587,095		)	(528,305		)
Total shareholders' equity	1,000,823			867,910			469,172
Total Liabilities and Shareholders’ Equity	$	6,038,309		$	5,778,937		$	5,852,846

See notes to condensed consolidated financial statements.

3

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

Thousands of dollars

	Three Months Ended
	March 31, 2016			March 31, 2015
OPERATING ACTIVITIES
Net income	$	147,128		$	131,404
Adjustments to reconcile net income to net operating cash:
Depreciation	42,895			42,500
Amortization of intangible assets	5,782			6,905
Stock-based compensation expense	15,765			18,079
Amortization of credit facility and debt issuance costs	6,656			1,083
Provisions for qualified exit costs	1,126			761
Provisions for environmental-related matters	18,029			1,050
Defined benefit pension plans net cost	6,992			1,787
Net increase in postretirement liability	961			(111		)
Other	(147		)	(3,785		)
Change in working capital accounts - net	(298,341		)	(254,221		)
Costs incurred for environmental-related matters	(5,036		)	(2,875		)
Costs incurred for qualified exit costs	(2,868		)	(1,966		)
Other	(18,749		)	4,321
Net operating cash	(79,807		)	(55,068		)
INVESTING ACTIVITIES
Capital expenditures	(51,999		)	(42,903		)
Proceeds from sale of assets	988			6,677
Increase in other investments	(10,526		)	(56		)
Net investing cash	(61,537		)	(36,282		)
FINANCING ACTIVITIES
Net increase in short-term borrowings	85,770			731,733
Payments of long-term debt	—			(96		)
Payments for credit facility and debt issuance costs	(41,850		)	—
Payments of cash dividends	(77,734		)	(62,609		)
Proceeds from stock options exercised	19,717			37,494
Income tax effect of stock-based compensation exercises and vesting	24,762			52,632
Treasury stock purchased	—			(614,911		)
Other	(16,597		)	(33,108		)
Net financing cash	(5,932		)	111,135
Effect of exchange rate changes on cash	12,080			3,496
Net (decrease) increase in cash and cash equivalents	(135,196		)	23,281
Cash and cash equivalents at beginning of year	205,744			40,732
Cash and cash equivalents at end of period	$	70,548		$	64,013
Income taxes paid	$	23,155		$	16,044
Interest paid	30,552			9,381

See notes to condensed consolidated financial statements.

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THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Periods ended March 31, 2016 and 2015

NOTE 1—BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

There have been no significant changes in critical accounting policies since December 31, 2015. Accounting estimates were revised as necessary during the first three months of 2016 based on new information and changes in facts and circumstances. Certain amounts in the 2015 condensed consolidated financial statements have been reclassified to conform to the 2016 presentation.

The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2015.

The consolidated results for the three months endedMarch 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.

NOTE 2—IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2016, the Company adopted the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires companies to present debt issuance costs associated with a debt liability as a deduction from the carrying amount of that debt liability on the balance sheet rather than being capitalized as an asset. The adoption of this ASU did not have a material effect on the Company's results of operations, financial condition or liquidity.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting,” which changes certain aspects of share-based compensation accounting, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. The Company is currently in the process of evaluating the impact of this standard.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which consists of a comprehensive lease accounting standard. Under the new standard, assets and liabilities arising from most leases will be recognized on the balance sheet. Leases will be classified as either operating or financing, and the lease classification will determine whether expense is recognized on a straight line basis (operating leases) or based on an effective interest method (financing leases). The new standard is effective for interim and annual periods beginning after December 15, 2018.  A modified retrospective transition approach is required with certain practical expedients available.  The Company is currently in the process of evaluating the impact of this standard.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance for certain aspects of recognition, measurement and disclosure of financial instruments. The standard is effective for interim and annual periods beginning after December 31, 2017, and early adoption is not permitted. The Company is in the process of evaluating the impact of the standard.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which eliminates the requirement for separate presentation of current and non-current portions of deferred tax. All deferred tax assets and deferred tax liabilities will be presented as non-current on the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2016. Either retrospective or prospective presentation can be used. The Company will adopt ASU

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No. 2016-17 as required. The ASU will not have a material effect on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which consists of a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The issuance of ASU No. 2015-14 in August 2015 delays the effective date of the standard to interim and annual periods beginning after December 15, 2017. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard.

NOTE 3—DIVIDENDS

Dividends paid on common stock during the first quarter of 2016 and 2015 were $.84 per common share and $.67 per common share, respectively.

NOTE 4—CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS

The following tables summarize the changes in Cumulative other comprehensive loss for the three months ended March 31, 2016 and 2015:

(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net (Losses) Gains on Available-for-Sale Securities			Unrealized Net Losses on Cash Flow Hedges			Total Cumulative Other Comprehensive (Loss) Income
Balance at December 31, 2015	$	(482,629	)	$	(104,346	)	$	(120	)				$	(587,095	)
Amounts recognized in Other comprehensive loss (1)	33,546						(42		)	$	(14,682	)	18,822
Amounts reclassified from Other comprehensive loss (2)				168			20						188
Net change	33,546			168			(22		)	(14,682		)	19,010
Balance at March 31, 2016	$	(449,083	)	$	(104,178	)	$	(142	)	$	(14,682	)	$	(568,085	)

⁽¹⁾ Net of taxes of $25 for unrealized net losses on available-for-sale securities and $9,075 for unrealized net losses on cash flow hedges.

⁽²⁾ Net of taxes of $(3) for pension and other postretirement benefit adjustments and $(12) for realized losses on the sale of available-for-sale securities.

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(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net Gains (Losses) on Available-for-Sale Securities			Total Cumulative Other Comprehensive Loss
Balance at December 31, 2014	$	(354,384	)	$	(118,167	)	$	593		$	(471,958	)
Amounts recognized in Other comprehensive loss (3)	(56,776		)				(132		)	(56,908		)
Amounts reclassified from Other comprehensive loss (4)				570			(9		)	561
Net change	(56,776		)	570			(141		)	(56,347		)
Balance at March 31, 2015	$	(411,160	)	$	(117,597	)	$	452		$	(528,305	)

⁽³⁾ Net of taxes of $81 for unrealized net losses on available-for-sale securities.

⁽⁴⁾ Net of taxes of $(206) for pension and other postretirement benefit adjustments and $4 for realized gains on the sale of available-for-sale securities.

NOTE 5—PRODUCT WARRANTIES

Changes in the Company’s accrual for product warranty claims during the first three months of 2016 and 2015, including customer satisfaction settlements, were as follows:

(Thousands of dollars)
	2016			2015
Balance at January 1	$	31,878		$	27,723
Charges to expense	5,541			5,146
Settlements	(5,135		)	(6,721		)
Balance at March 31	$	32,284		$	26,148

For further details on the Company’s accrual for product warranty claims, see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

NOTE 6—EXIT OR DISPOSAL ACTIVITIES

Liabilities associated with exit or disposal activities are recognized as incurred in accordance with the Exit or Disposal Cost Obligations Topic of the ASC. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with the Property, Plant and Equipment Topic of the ASC, and if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value.

In the three months ended March 31, 2016, seven stores in the Paint Stores Group, one branch in the Global Finishes Group and one facility in the Consumer Group were closed due to lower demand or redundancy.

The following table summarizes the activity and remaining liabilities associated with qualified exit costs at March 31, 2016:

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(Thousands of dollars)
Exit Plan	Balance at December 31, 2015		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Balance at March 31, 2016
Consumer Group facilities shutdown in 2016:
Severance and related costs			$	116				$	116
Paint Stores Group stores shutdown in 2015:
Other qualified exit costs	$	12			$	(12	)
Global Finishes Group exit of a business in 2015:
Severance and related costs	1,096				(130		)	966
Other qualified exit costs	2,750		580		(1,654		)	1,676
Paint Stores Group stores shutdown in 2014:
Other qualified exit costs	184				(93		)	91
Consumer Group facilities shutdown in 2014:
Severance and related costs	445				(42		)	403
Other qualified exit costs	52				(39		)	13
Global Finishes Group exit of business in 2014:
Severance and related costs	430				(430		)
Other qualified exit costs	353		430		(247		)	536
Other qualified exit costs for facilities shutdown prior to 2014	1,755				(221		)	1,534
Totals	$	7,077	$	1,126	$	(2,868	)	$	5,335

For further details on the Company’s exit or disposal activities, see Note 5 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

NOTE 7—HEALTH CARE, PENSION AND OTHER BENEFITS

Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:

(Thousands of dollars)	Domestic Defined Benefit Pension Plans						Foreign Defined Benefit Pension Plans						Postretirement Benefits Other than Pensions
	2016			2015			2016			2015			2016			2015
Three Months Ended March 31:
Net periodic benefit cost (credit):
Service cost	$	5,489		$	5,754		$	1,341		$	1,325		$	561		$	621
Interest cost	6,643			6,237			2,080			2,271			2,752			2,795
Expected return on assets	(12,567		)	(13,024		)	(1,846		)	(2,431		)
Amortization of:
Prior service cost (credit)	301			327									(1,645		)	(1,132		)
Actuarial loss	1,152			843			361			485						253
Settlement costs							4,038
Net periodic benefit cost (credit)	$	1,018		$	137		$	5,974		$	1,650		$	1,668		$	2,537

The settlement charge recognized in the first quarter of 2016 relates to the wind up of an acquired Canada plan. For further details on the Company’s health care, pension and other benefits, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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NOTE 8—OTHER LONG-TERM LIABILITIES

The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are determined based on currently available facts regarding each site. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided. At March 31, 2016, the unaccrued maximum of the estimated range of possible outcomes is $84.5 million higher than the minimum.

The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.

Included in Other long-term liabilities at March 31, 2016 and 2015 were accruals for extended environmental-related activities of $143.4 million and $112.9 million, respectively. Estimated costs of current investigation and remediation activities of $22.5 million and $16.9 million are included in Other accruals at March 31, 2016 and 2015, respectively.

Three of the Company’s currently and formerly owned manufacturing sites account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at March 31, 2016. At March 31, 2016, $129.5 million, or 78.0 percent of the total accrual, related directly to these three sites. In the aggregate unaccrued maximum of $84.5 million at March 31, 2016, $61.2 million, or 72.4 percent, related to the three manufacturing sites. While environmental investigations and remedial actions are in different stages at these sites, additional investigations, remedial actions and monitoring will likely be required at each site.

Management cannot presently estimate the ultimate potential loss contingencies related to these sites or other less significant sites until such time as a substantial portion of the investigation at the sites is completed and remedial action plans are developed. In the event any future loss contingency significantly exceeds the current amount accrued, the recording of the ultimate liability may result in a material impact on net income for the annual or interim period during which the additional costs are accrued. Management does not believe that any potential liability ultimately attributed to the Company for its environmental-related matters will have a material adverse effect on the Company’s financial condition, liquidity, or cash flow due to the extended period of time during which environmental investigation and remediation takes place. An estimate of the potential impact on the Company’s operations cannot be made due to the aforementioned uncertainties.

Management expects these contingent environmental-related liabilities to be resolved over an extended period of time. Management is unable to provide a more specific time frame due to the indefinite amount of time to conduct investigation activities at any site, the indefinite amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indefinite amount of time necessary to conduct remediation activities.

For further details on the Company’s Other long-term liabilities, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

NOTE 9 – LITIGATION

In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with the Contingencies Topic of the ASC, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or

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exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred.

Lead pigment and lead-based paint litigation. The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint. The Company believes that the litigation brought to date is without merit or subject to meritorious defenses and is vigorously defending such litigation. The Company has not settled any material lead pigment or lead-based paint litigation. The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief.

Notwithstanding the Company’s views on the merits, litigation is inherently subject to many uncertainties, and the Company ultimately may not prevail. Adverse court rulings or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings. In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful.

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 legislation and/or administrative regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations. The Company has not accrued any amounts for such litigation. With respect to such litigation, including the public nuisance litigation, the Company does not believe that it is probable that a loss has occurred, and it is not possible to estimate the range of potential losses as there is no prior history of a loss of this nature and there is no substantive information upon which an estimate could be based. In addition, any potential liability that may result from any changes to legislation and regulations 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.

Public nuisance claim litigation. The Company and other companies are or were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island, the City of St. Louis, Missouri, various cities and counties in the State of New Jersey, various cities in the State of Ohio and the State of Ohio, the City of Chicago, Illinois, the City of Milwaukee, Wisconsin and the County of Santa Clara, California and other public entities in the State of California. Except for the Santa Clara County, California proceeding, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

The proceedings initiated by the State of Rhode Island included two jury trials. At the conclusion of the second trial, 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 Company and two other defendants appealed and, on July 1, 2008, the Rhode Island Supreme Court, among other determinations, reversed the judgment of abatement with respect to the Company and two other defendants. The Rhode Island Supreme Court’s decision reversed the public nuisance liability judgment against the Company on the basis that the complaint failed to state a public nuisance claim as a matter of law.

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The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara. In the original complaint, the plaintiffs asserted various claims including fraud and concealment, strict product liability/failure to warn, strict product liability/design defect, negligence, negligent breach of a special duty, public nuisance, private nuisance, and violations of California’s Business and Professions Code. A number of the asserted claims were resolved in favor of the defendants through pre-trial proceedings. The named plaintiffs in the Fourth Amended Complaint, filed on March 16, 2011, are the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura, the Cities of Oakland and San Diego and the City and County of San Francisco. The Fourth Amended Complaint asserted a sole claim for public nuisance, alleging that the presence of lead pigments for use in paint and coatings in, on and around residences in the plaintiffs’ jurisdictions constitutes a public nuisance. The plaintiffs sought the abatement of the alleged public nuisance that exists within the plaintiffs’ jurisdictions. A trial commenced on July 15, 2013 and ended on August 22, 2013. The court entered final judgment on January 27, 2014, finding in favor of the plaintiffs and against the Company and two other defendants (ConAgra Grocery Products Company and NL Industries, Inc.). The final judgment held the Company jointly and severally liable with the other two defendants to pay $1.15 billion into a fund to abate the public nuisance. The Company strongly disagrees with the judgment. On February 18, 2014, the Company filed a motion for new trial and a motion to vacate the judgment. The court denied these motions on March 24, 2014. On March 28, 2014, the Company filed a notice of appeal to the Sixth District Court of Appeal for the State of California. The filing of the notice of appeal effects an automatic stay of the judgment without the requirement to post a bond. The appeal is fully briefed, and the parties are waiting for the Sixth District Court of Appeal to set a date for oral argument. The date for oral argument is at the discretion of the Sixth District Court of Appeal. The Company expects the Sixth District Court of Appeal to issue its ruling within 90 days following oral argument. The Company believes that the judgment conflicts with established principles of law and is unsupported by the evidence. The Company has had a favorable history with respect to lead pigment and lead-based paint litigation, particularly other public nuisance litigation, and accordingly, the Company believes that it is not probable that a loss has occurred and it is not possible to estimate the range of potential loss with respect to the case.

Litigation seeking damages from alleged personal injury. The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries. These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages allegedly incurred by the children’s parents or guardians. These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs. These proceedings include purported claims by individuals, groups of individuals and class actions.

The plaintiff in Thomas v. Lead Industries Association, et al., initiated an action in state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999. The claims against the Company and the other defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability. Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff. The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result. The plaintiff appealed and, on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the Company and other defendants.

Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation. Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts. However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v. American Cyanamid, et al., on November 15, 2010, the District Court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive. The District Court's decision in Gibson v. American Cyanamid, et al., was appealed by the plaintiff to the United States Court of Appeals for the Seventh Circuit. On July 24, 2014, the United States Court of Appeals for the Seventh Circuit reversed the judgment and remanded the case back to the District Court for further proceedings. On January 16, 2015, the defendants filed a petition for certiorari in the United States Supreme Court seeking that Court's review of the Seventh Circuit's decision, and on May 18, 2015, the United States Supreme Court denied the defendants' petition. Also, in Yasmine Clark v. The Sherwin-Williams Company, et al., the Wisconsin Circuit Court, Milwaukee County, on March 25, 2014, held that the application to a pending case of Section 895.046 of the Wisconsin Statutes (which clarifies the application of the risk contribution theory) is unconstitutional as a violation of the plaintiff’s right to due process of law under the Wisconsin Constitution. On August 21, 2014, the Wisconsin Court of Appeals granted defendants' petition to hear the issue as an interlocutory appeal. On September 29, 2015, the Wisconsin Court of Appeals certified the appeal to the Wisconsin Supreme

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Court for its determination. Oral argument before the Wisconsin Supreme Court occurred on April 5, 2016. On April 15, 2016, the Wisconsin Supreme Court published its decision, deciding in a 3 to 3 split decision to remand the case back to the Wisconsin Court of Appeals for its consideration.

Insurance coverage litigation. The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to primarily determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company. The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, is currently stayed and inactive. The liability insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, has been dismissed. An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities. The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual. Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition. As previously stated, however, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

Litigation related to Consorcio Comex. As previously disclosed, the Company entered into a definitive Stock Purchase Agreement (as subsequently amended and restated, the “Purchase Agreement”), with Avisep, S.A. de C.V. (“Avisep”) and Bevisep, S.A. de C.V. (“Bevisep”) to, among other things, acquire the Mexico business of Consorcio Comex, S.A. de C.V. (the "Acquisition"). Under the terms of the Purchase Agreement, either the Company or Avisep and Bevisep had the right to terminate the Purchase Agreement in the event that the closing of the Acquisition did not occur on or prior to March 31, 2014 and such party was not in material breach of the Purchase Agreement.

On April 3, 2014, the Company sent notice to Avisep and Bevisep that the Company was terminating the Purchase Agreement. On April 3, 2014, the Company filed a complaint for declaratory judgment in the Supreme Court of the State of New York, New York County, requesting the court to declare that the Company had used commercially reasonable efforts as required under the Purchase Agreement and has not breached the Purchase Agreement. On August 7, 2014, the case was removed by Avisep and Bevisep to the United States District Court for the Southern District of New York. On September 24, 2014, Avisep and Bevisep filed a motion to dismiss the case, including for lack of personal jurisdiction. Oral argument on the motion to dismiss before the District Court occurred on January 27, 2016. On January 29, 2016, the District Court entered a judgment dismissing the case without prejudice for lack of personal jurisdiction. On April 11, 2014, Avisep and Bevisep initiated an arbitration proceeding against the Company in the International Court of Arbitration contending that the Company breached the Purchase Agreement by terminating the Purchase Agreement and not utilizing commercially reasonable efforts under the Purchase Agreement, which allegedly caused Avisep and Bevisep to incur damages. On June 1, 2015, Avisep and Bevisep filed their statement of claim in the arbitration alleging damages of approximately $85 million. On August 31, 2015, the Company filed its memorial in support of its statement of defense in the arbitration. The hearing on the merits in the arbitration commenced on April 11, 2016 and ended on April 19, 2016. The Company expects the arbitration tribunal to issue its decision by the end of the third quarter of 2016. The Company continues to believe that the claims are without merit and will continue to vigorously defend against such claims.

NOTE 10—OTHER

Other general expense (income) - net

Included in Other general expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Provisions for environmental matters - net	$	18,029		$	1,050
Gain on disposition of assets	(475		)	(2,723		)
Total	$	17,554		$	(1,673	)

Provisions for environmental matters - net represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with the

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Offsetting Subtopic of the Balance Sheet Topic of the ASC. See Note 8 for further details on the Company’s environmental-related activities.

The gain on disposition of assets represents net realized gains associated with the disposal of fixed assets previously used in the conduct of the primary business of the Company.

Other expense (income) - net

Included in Other expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Dividend and royalty income	$	(1,166	)	$	(1,081	)
Net expense from banking activities	2,263			2,967
Foreign currency transaction related losses	1,690			1,138
Other income	(4,880		)	(5,497		)
Other expense	2,319			2,228
Total	$	226		$	(245	)

Foreign currency transaction related losses represent net realized losses on U.S. dollar-denominated liabilities of foreign subsidiaries and net realized and unrealized losses from foreign currency option and forward contracts. There were no material foreign currency option and forward contracts outstanding at March 31, 2016 and 2015.

Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no other items within the other income or other expense caption that were individually significant.

NOTE 11—INCOME TAXES

The effective tax rate was 32.0 percent for the first quarter of 2016 and 2015. The major components of the Company's effective tax rate were consistent for the first quarter of 2016 compared to the first quarter of 2015.

At December 31, 2015, the Company had $33.9 million in unrecognized tax benefits, the recognition of which would have an effect of $30.0 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2015 was $3.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to federal audits of partnership investments and expiring statutes in foreign and state jurisdictions.

The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2015, the Company had accrued $8.6 million for the potential payment of income tax interest and penalties.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2015 during the first three months of 2016.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As of March 31, 2016, there were no examinations being conducted by the IRS, however, the statute of limitations has not expired for the 2012, 2013 and 2014 tax years.

As of March 31, 2016, the Company is subject to non-U.S. income tax examinations for the tax years of 2008 through 2015. In addition, the Company is subject to state and local income tax examinations for the tax years 2005 through 2015.

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NOTE 12—NET INCOME PER COMMON SHARE

(Thousands of dollars except per share data)	Three Months Ended March 31,
	2016		2015
Basic
Average common shares outstanding	91,475,860		92,740,059
Net income	$	147,128	$	131,404
Basic net income per common share	$	1.61	$	1.42
Diluted
Average common shares outstanding	91,475,860		92,740,059
Stock options and other contingently issuable shares (1)	1,517,487		2,005,070
Non-vested restricted stock grants	554,887		533,596
Average common shares outstanding assuming dilution	93,548,234		95,278,725
Net income	$	147,128	$	131,404
Diluted net income per common share	$	1.57	$	1.38

⁽¹⁾  Stock options and other contingently issuable shares excluded 34,208 and 12,414 shares due to their anti-dilutive effect for the three months ended March 31, 2016 and 2015, respectively.

Prior to 2016, the Company used the two-class method of calculating basic and diluted earnings per share as time-based restricted shares were considered a separate class of participating securities since they received non-forfeitable dividends. The time-based restricted shares represented less than 1% of outstanding shares, and therefore the difference between basic and diluted earnings per share under the two-class method and treasury stock method was not significant. Starting in 2016, there will be no additional grants of time-based restricted shares. Accordingly, 2016 basic and diluted earnings per share are calculated using the treasury stock method, and the 2015 calculations are presented under the treasury stock method for comparability.

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NOTE 13—REPORTABLE SEGMENT INFORMATION

The Company reports segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC. The Company has determined that it has four reportable operating segments: Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group (individually, a "Reportable Segment" and collectively, the “Reportable Segments”).

(Thousands of dollars)	Three Months Ended March 31, 2016
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group			Administrative			Consolidated Totals
Net external sales	$	1,615,307	$	378,086	$	454,166	$	125,187		$	1,278		$	2,574,024
Intersegment transfers			613,630		1,956		8,693			(624,279		)
Total net sales and intersegment transfers	$	1,615,307	$	991,716	$	456,122	$	133,880		$	(623,001	)	$	2,574,024
Segment profit	$	253,534	$	63,964	$	48,582	$	(928	)				$	365,152
Interest expense										$	(25,732	)	(25,732		)
Administrative expenses and other										(123,055		)	(123,055		)
Income before income taxes	$	253,534	$	63,964	$	48,582	$	(928	)	$	(148,787	)	$	216,365

	Three Months Ended March 31, 2015
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group		Administrative			Consolidated Totals
Net external sales	$	1,461,505	$	351,690	$	469,556	$	166,231	$	1,302		$	2,450,284
Intersegment transfers			607,538		1,774		10,069		(619,381		)
Total net sales and intersegment transfers	$	1,461,505	$	959,228	$	471,330	$	176,300	$	(618,079	)	$	2,450,284
Segment profit	$	176,576	$	55,406	$	38,900	$	9,500				$	280,382
Interest expense									$	(12,351	)	(12,351		)
Administrative expenses and other									(74,790		)	(74,790		)
Income before income taxes	$	176,576	$	55,406	$	38,900	$	9,500	$	(87,141	)	$	193,241

In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs. International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses which were not directly associated with the Reportable Segments. The Administrative segment did not include any significant foreign operations. Also included in the Administrative segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.

Net external sales and segment profit of all consolidated foreign subsidiaries were $400.7 million and $10.2 million, respectively, for the first quarter of 2016, and $456.5 million and $18.3 million, respectively, for the first quarter of 2015. Long-lived assets of these subsidiaries totaled $509.8 million and $513.8 million at March 31, 2016 and March 31, 2015, respectively. Domestic operations accounted for the remaining net external sales, segment profits and long-lived assets. No single geographic area outside the United States was significant relative to consolidated net external sales, income before taxes, or consolidated long-lived assets.

Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all periods presented.

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NOTE 14—FAIR VALUE MEASUREMENTS

The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. It does not expand the use of fair value measurements. The Company did not have any fair value measurements for its non-financial assets and liabilities during the first quarter. The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:

(Thousands of dollars)
			Quoted Prices
			in Active				Significant
	Fair Value at		Markets for		Significant Other		Unobservable
	March 31,		Identical Assets		Observable Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Deferred compensation plan asset (1)	$	23,949	$	2,673	$	21,276
Liabilities:
Interest rate lock liability (2)	$	23,757			$	23,757
Deferred compensation plan liability (3)	35,116		$	35,116
Total liabilities	$	58,873	$	35,116	$	23,757

⁽¹⁾  The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $24,803.

⁽²⁾ The interest rate lock liability is measured at the present value of the expected future cash flows using market-based observable inputs.

⁽³⁾ The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.

NOTE 15—DEBT

The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.

(Thousands of dollars)	March 31, 2016				March 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Publicly traded debt	$	1,906,160	$	1,943,160	$	1,114,578	$	1,165,804
Non-traded debt	4,793		4,476		4,902		4,655

In March 2016, the Company entered into a $9.3 billion senior unsecured bridge term loan facility (Bridge Loan) as committed financing for the Valspar acquisition as disclosed in Note 17. No balances were drawn against this facility as of March 31, 2016. Debt issuance costs of $60.1 million related to this facility were incurred and recorded in Other current assets. Of this amount, $5.9 million was amortized and included in Interest expense for three months ended March 31, 2016.

In March 2016, in anticipation of a probable issuance of new long-term fixed rate debt within the next twelve months, the Company entered into a series of interest rate lock agreements (collectively, the interest rate locks) on a combined notional amount of $1.7 billion. The objective of the interest rate locks is to hedge the variability in the future semi-annual payments on

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the anticipated debt attributable to changes in the benchmark interest rate (U.S. Treasury) during the hedge periods. The future semi-annual interest payments are exposed to interest rate risk due to changes in the benchmark interest rate from the inception of the hedge to the time of issuance. The interest rate locks were evaluated for hedge accounting treatment and were designated as cash flow hedges. Therefore, the interest rate locks are recognized at fair value on the Consolidated Balance Sheet, and changes in fair value (to the extent effective) are recognized in Cumulative other comprehensive loss. Amounts recognized in Cumulative other comprehensive loss will be reclassified to Interest expense in periods following the settlement of the interest rate locks. The Company will evaluate hedge effectiveness each period until settlement. At March 31, 2016, an interest rate lock liability of $23.8 million was included in Other accruals, and the related pretax loss of $23.8 million was recognized in Cumulative other comprehensive loss.

NOTE 16—NON-TRADED INVESTMENTS

The Company has invested in the U.S. affordable housing and historic renovation real estate markets. These non-traded investments have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the ASC, the investments are not consolidated. For affordable housing investments entered into prior to the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized. For affordable housing investments entered into on or after the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the proportional amortization method. Under the proportional amortization method, the initial cost of the investments is amortized to income tax expense in proportion to the tax credits and other tax benefits received. The carrying amount of the affordable housing and historic renovation investments, included in Other assets, was $202.8 million and $223.8 million at March 31, 2016 and 2015, respectively. The liability for estimated future capital contributions to the investments was $178.9 million and $196.8 million at March 31, 2016 and 2015, respectively.

NOTE 17—ACQUISITIONS

On March 19, 2016, the Company and the Valspar Corporation (Valspar) entered into a definitive agreement under which the Company will acquire Valspar for $113 per share in an all cash transaction, or a value of approximately $9.5 billion and assumption of Valspar debt. The transaction is subject to certain conditions and shareholder and regulatory approvals. If in connection with obtaining the required regulatory approvals, the parties are required to divest assets of Valspar or the Company representing, in the aggregate, more than $650 million in net sales, then the per share consideration will be $105 in cash. The Company is not required to consummate the acquisition if regulatory authorities require the divestiture of assets of Valspar or the Company representing, in the aggregate, more than $1.5 billion. Valspar's architectural coatings assets in Australia are excluded from the calculation of the $650 million and/or $1.5 billion threshold if such assets are required to be divested. During the three months ended March 31, 2016, the Company incurred SG&A expenses of $31.0 million associated with the anticipated acquisition of Valspar. The acquisition will expand Sherwin-Williams diversified array of brands and technologies, expand its global platform and add new capabilities in the packaging and coil segments.

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Item 2. MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

SUMMARY

The Sherwin-Williams Company, founded in 1866, and its consolidated wholly owned subsidiaries (collectively, the “Company”) are engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region, Europe and Asia. The Company is structured into four reportable segments—Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group (collectively, the “Reportable Segments”)—and an Administrative segment in the same way it is internally organized for assessing performance and making decisions regarding allocation of resources. See pages 8 through 17 and Note 18, on pages 72 through 75, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning the Reportable Segments.

The Company’s financial condition, liquidity and cash flow continued to be strong through the first three months of 2016 primarily due to improved operating results in our Paint Stores, Consumer and Global Finishes Groups. Net working capital increased$1.241 billion at March 31, 2016 compared to the end of the first quarter of 2015 due to a significant decrease in short-term borrowings due to repayment of short-term borrowings with proceeds from debt issued in July 2015. Short-term borrowings decreased$1.277 billion, current portion of long-term debt decreased$1.0 million, long-term debt increased$792.4 million, and cash and cash equivalents increased$6.5 million. The Company has been able to arrange sufficient short-term borrowing capacity at reasonable rates, and the Company continues to have sufficient total available borrowing capacity to fund its current operating needs. Net operating cash decreased$24.7 million in the first three months of 2016 to a cash usage of $79.8 million from a cash usage of $55.1 million in 2015 primarily due to an increase in working capital accounts.

Consolidated net sales increased5.1 percent in the first quarter of 2016 to $2.574 billion from $2.450 billion in the first quarter of 2015 due primarily to higher paint sales volume in our Paint Stores and Consumer Groups. Consolidated gross profit as a percent of consolidated net sales increased in the first quarter to 49.0 percent from 46.2 percent in 2015 due primarily to increased paint volume and improved operating efficiency. Selling, general and administrative expenses (SG&A) increased as a percent of consolidated net sales to 38.9 percent from 37.9 percent in the first quarter of 2015 primarily due to timing of net new store openings and costs associated with the anticipated acquisition of Valspar (Acquisition costs).

Interest expense increased$13.4 million in the first quarter of 2016 due to interest on debt issued in July 2015 and amortization of credit facility costs incurred in March 2016. The effective income tax rate for the first quarter of 2016 and 2015 was 32.0 percent. Diluted net income per common share increased to $1.57 per share for the first quarter of 2016, including Acquisition costs and amortization of credit facility costs incurred in March 2016 of $.24 per share, from $1.38 per share a year ago.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation and fair presentation of the consolidated unaudited interim financial statements and accompanying notes included in this report are the responsibility of management. The financial statements and footnotes have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and contain certain amounts that were based upon management’s best estimates, judgments and assumptions that were believed to be reasonable under the circumstances. Management considered the impact of the uncertain economic environment and utilized certain outside sources of economic information when developing the basis for their estimates and assumptions. The impact of the global economic conditions on the estimates and assumptions used by management was believed to be reasonable under the circumstances. Management used assumptions based on historical results, considering the current economic trends, and other assumptions to form the basis for determining appropriate carrying values of assets and liabilities that were not readily available from other sources. Actual results could differ from those estimates. Also, materially different amounts may result under materially different conditions, materially different economic trends or from using materially different assumptions. However, management believes that any materially different amounts resulting from materially different conditions or material changes in facts or circumstances are unlikely to significantly impact the current valuation of assets and liabilities that were not readily available from other sources.

A comprehensive discussion of the Company’s critical accounting policies and management estimates and significant accounting policies followed in the preparation of the financial statements is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 1, on pages 46 through 49, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. There have been no significant changes in critical accounting policies, management estimates or accounting policies followed since the year ended December 31, 2015.

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FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW

Overview

The Company’s financial condition, liquidity and cash flow continued to be strong through the first three months of 2016 primarily due to improved operating results in our Paint Stores, Consumer and Global Finishes Groups. Net working capital increased$1.241 billion at March 31, 2016 compared to the end of the first quarter of 2015 due to a significant decrease in short-term borrowings due to a repayment of short-term borrowings. Cash and cash equivalents increased$6.5 million, accounts receivable increased $56.1 million while inventories decreased$13.9 million. Accounts payable decreased$21.9 million and all other current liabilities increased$183.1 million from March 31, 2015, including Acquisition costs and credit facility costs totaling $49.3 million and interest rate lock liability of $23.8 million both included in other accruals. Accrued taxes and compensation and taxes withheld liabilities also increased primarily due to timing. Short-term borrowings decreased$1.277 billion and long-term debt increased$792.4 million due to repayment of short-term borrowings with proceeds from debt issued in July 2015. In March 2016, the Company entered into a $9.300 billion senior unsecured bridge term loan facility as committed financing for the acquisition of Valspar Corporation (Valspar) as disclosed in Note 17. No balances were drawn against this facility as of March 31, 2016. Debt issuance costs of $60.1 million related to this facility were incurred and recorded in Other current assets. Of this amount, $5.9 million was amortized and included in Interest expense for three months ended March 31, 2016. The Company continues to maintain sufficient short-term borrowing capacity at reasonable rates, and the Company has sufficient cash on hand and total available borrowing capacity to fund its current operating needs. In the first three months of 2016, accounts receivable increased$176.5 million when normal seasonal trends typically require significant growth in this category and inventories increased$128.8 million. Accounts payable decreased$4.6 million and all other current liabilities increased$36.1 million, including Acquisition costs and credit facility costs totaling $49.3 million and interest rate lock liability of $23.8 million both included in other accruals partially offset by decreased compensation and taxes withheld liabilities, while short-term borrowings increased$89.2 million. The Company’s current ratio was 1.28 at March 31, 2016 compared to 0.82 at March 31, 2015 and 1.24 at December 31, 2015. Total debt at March 31, 2016decreased$485.2 million to $2.040 billion from $2.525 billion at March 31, 2015 and decreased as a percentage of total capitalization to 67.1 percent from 84.3 percent at the end of the first quarter last year. Total debt increased$89.7 million from December 31, 2015 and decreased as a percentage of total capitalization from 69.2 percent to 67.1 percent. At March 31, 2016, the Company had remaining short-term borrowing ability of $2.001 billion. Net operating cash decreased$24.7 million in the first three months of 2016 to a cash usage of $79.8 million from a cash usage of $55.1 million in 2015. In the twelve month period from April 1, 2015 through March 31, 2016, the Company generated net operating cash of $1.423 billion.

Net Working Capital, Debt and Other Long-Term Assets and Liabilities

Cash and cash equivalents decreased$135.2 million during the first three months of 2016. Cash and cash equivalents on hand and increased total net debt funded cash requirements for increased sales and normal seasonal increases in working capital, capital expenditures of $52.0 million, and payments of cash dividends of $77.7 million. At March 31, 2016, the Company’s current ratio was 1.28 compared to 1.24 at December 31, 2015 and 0.82 a year ago. The increase from a year ago resulted primarily from the decrease in short-term borrowings.

Goodwill and intangible assets decreased$1.1 million from December 31, 2015 and decreased$29.4 million from March 31, 2015. The net decrease during the first three months of 2016 was due to amortization of $5.8 million partially offset by foreign currency translation of $4.7 million. The net decrease over the twelve month period from March 31, 2015 resulted from amortization of $27.1 million and foreign currency translation of $4.3 million partially offset by capitalization of software of $1.9 million. See Note 4, on pages 50 and 51, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning goodwill and intangible assets.

Deferred pension assets increased$1.2 million during the first three months of 2016 and decreased$4.4 million from March 31, 2015. The decrease in the last twelve months was due to decreases in the fair market value of equity securities held by the Company’s defined benefit pension plans partially offset by decreased projected benefit obligations resulting from changes in actuarial assumptions. See Note 6, on pages 54 through 59, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning the Company’s benefit plan assets.

Other assets at March 31, 2016increased$12.7 million in the first three months of 2016 primarily due to affordable housing and historic renovation investments and increased$36.7 million from a year ago primarily due to increased long-term deposits and other investments partially offset by decreased affordable housing and historic renovation investments.

Net property, plant and equipment increased$15.2 million in the first three months of 2016 and increased$58.6 million in the twelve months since March 31, 2015. The increase in the first three months was primarily due to capital expenditures of $52.0 million and changes in currency translation rates of $6.6 million partially offset by depreciation expense of $42.9 million and and sale or disposition of fixed assets of $0.6 million. Since March 31, 2015, capital expenditures of $243.4 million were

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partially offset by depreciation expense of $170.7 million, changes in currency translation rates of $7.0 million and dispositions or sale of assets with remaining net book value of $7.1 million. Capital expenditures during the first three months of 2016 primarily represented expenditures associated with improvements and normal equipment replacement in manufacturing and distribution facilities in the Consumer Group, normal equipment replacement in the Paint Stores and Global Finishes Groups, and information systems hardware in the Administrative Segment.

At March 31, 2016, short-term borrowings and commercial paper outstanding under the Company's five-year $1.350 billion credit agreement were $34.3 million and $65.0 million with weighted average interest rates of 1.1% and 0.5%, respectively. Foreign programs short-term borrowings were $29.4 million with a weighted average interest rate of 15.3%. The Company had unused capacity of $1.251 billion at March 31, 2016 under the credit agreement. In March 2016, in anticipation of a probable issuance of new long-term fixed rate debt, the Company entered into a series of interest rate lock agreements (collectively, the interest rate locks) on a combined notional amount of $1.7 billion. The objective of the interest rate locks is to hedge the variability in the future semi-annual payments on the anticipated debt attributable to changes in the benchmark interest rate (U.S. Treasury) during the hedge periods. The future semi-annual interest payments are exposed to interest rate risk due to changes in the benchmark interest rate from the inception of the hedge to the time of issuance. The interest rate locks were evaluated for hedge accounting treatment and were designated as cash flow hedges. Therefore, the interest rate locks are recognized at fair value on the Consolidated Balance Sheet, and changes in fair value (to the extent effective) are recognized in Cumulative other comprehensive loss. Amounts recognized in Cumulative other comprehensive loss will be reclassified to Interest expense in periods following the settlement of the interest rate locks. The Company will evaluate hedge effectiveness each period until settlement. At March 31, 2016, an interest rate lock liability of $23.8 million was included in Other accruals, and the related pretax loss of $23.8 million was recognized in Cumulative other comprehensive loss. See Note 7, on page 60, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning the Company’s debt.

Long-term liabilities for postretirement benefits other than pensions did not change significantly from December 31, 2015 and decreased$28.6 million from March 31, 2015. The decrease in the liability was due to the decrease in the actuarially determined postretirement benefit obligation resulting from changes in actuarial assumptions. See Note 6, on pages 54 through 59, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning the Company’s benefit plan obligations.

Other long-term liabilities at March 31, 2016increased$2.6 million in the first three months of 2016 primarily due to increased environmental provisions and an increase in long-term commitments related to affordable housing and historic renovation real estate properties partially offset by a decrease in non-current deferred tax liabilities, and increased$6.5 million from a year ago primarily due to an increase in accruals for extended environmental-related liabilities partially offset by a decrease in long-term commitments related to affordable housing and historic renovation real estate properties and non-current deferred tax liabilities.

Environmental-Related Liabilities

The operations of the Company, like those of other companies in the same industry, are subject to various federal, state and local environmental laws and regulations. These laws and regulations not only govern current operations and products, but also impose potential liability on the Company for past operations. Management expects environmental laws and regulations to impose increasingly stringent requirements upon the Company and the industry in the future. Management believes that the Company conducts its operations in compliance with applicable environmental laws and regulations and has implemented various programs designed to protect the environment and promote continued compliance.

Depreciation of capital expenditures and other expenses related to ongoing environmental compliance measures were included in the normal operating expenses of conducting business. The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during the first three months of 2016. Management does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations in 2016. See Note 8 for further information on environmental-related long-term liabilities.

Contractual Obligations, Commercial Commitments and Warranties

Short-term borrowings increased$89.2 million to $128.7 million at March 31, 2016 from $39.5 million at December 31, 2015. Total long-term debt increased$0.5 million to $1.911 billion at March 31, 2016 from $1.910 billion at December 31, 2015, and increased$791.5 million from $1.119 billion at March 31, 2015. On March 19, 2016, the Company and Valspar entered into a definitive agreement under which the Company will acquire Valspar for $113 per share in an all cash transaction. The transaction is subject to certain conditions and shareholder and regulatory approvals. See Note 17 for more information. In March 2016, in anticipation of a probable issuance of new long-term fixed rate debt, the Company entered into a series of interest rate lock agreements on a combined notional amount of $1.7 billion. See Note 15 for more information. There have

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been no other significant changes to the Company’s contractual obligations and commercial commitments in the first quarter of 2016 as summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Changes to the Company’s accrual for product warranty claims in the first three months of 2016 are disclosed in Note 5.

Litigation

See Note 9 for information concerning litigation.

Shareholders’ Equity

Shareholders’ equity increased$132.9 million to $1.001 billion at March 31, 2016 from $867.9 million at December 31, 2015 and increased$531.7 million from $469.2 million at March 31, 2015. The increase in Shareholders’ equity for the first three months of 2016 resulted primarily from net income of $147.1 million, an increase in Other capital of $60.0 million, resulting primarily from stock option exercises, and a decrease in Cumulative other comprehensive loss of $19.0 million partially offset by cash dividends paid on common stock of $77.7 million. Since March 31, 2015, net income of $1.070 billion and an increase in Other capital of $203.2 million more than offset purchases of treasury stock for $420.4 million, cash dividends paid on common stock of $264.8 million, and an increase in Cumulative other comprehensive loss of $39.8 million in twelve months. During the first three months of 2016, the Company did not purchase any shares of its common stock for treasury purposes through open market purchases. The Company purchased 1.58 million shares of its common stock since March 31, 2015 for treasury. The Company acquires its common stock for general corporate purposes, and depending on its cash position and market conditions, it may acquire additional shares in the future. The Company had remaining authorization at March 31, 2016 to purchase 11.65 million shares of its common stock. In February 2016, the Board of Directors increased the quarterly cash dividend from $.67 per common share to $.84 per common share. This quarterly dividend will result in an annual dividend for 2016 of $3.36 per common share or a 30.1 percent payout of 2015 diluted net income per common share.

Cash Flow

Net operating cash decreased$24.7 million in the first three months of 2016 to a cash usage of $79.8 million from a cash usage of $55.1 million in 2015 primarily due to an increase in cash used for working capital of $44.1 million partially offset by an increase in net income of $15.7 million. Net investing cash usageincreased$25.3 million in the first three months of 2016 to a usage of $61.5 million from a usage of $36.3 million in 2015 primarily due to increased cash used for other investments and higher capital expenditures. Net financing cash usage increased $117.1 million to a usage of $5.9 million in the first three months of 2016 from a source of $111.1 million in 2015 primarily due to net decreases in short-term borrowings of $646.0 million, and payments for credit facility and debt issuance costs in 2016 of $41.9 million partially offset by decreases in treasury stock purchases of $614.9 million in the first three months of 2016. In the twelve month period from April 1, 2015 through March 31, 2016, the Company generated net operating cash of $1.423 billion, used$313.9 million in investing activities and used$1.097 billion in financing activities. In that same period, the Company invested $243.4 million in capital additions and improvements, received long-term debt net proceeds of $797.6 million, decreased short-term borrowings by $1.276 billion, purchased $420.4 million in treasury stock and paid $264.8 million in cash dividends to its shareholders of common stock.

Market Risk

The Company is exposed to market risk associated with interest rate, foreign currency and commodity fluctuations. The Company occasionally utilizes derivative instruments as part of its overall financial risk management policy, but does not use derivative instruments for speculative or trading purposes. In the first three months of 2016, the Company entered into forward currency exchange contracts with maturity dates of less than twelve months to hedge against value changes in foreign currency. The Company believes it may be exposed to continuing market risk from foreign currency exchange rate and commodity price fluctuations. However, the Company does not expect that foreign currency exchange rate and commodity price fluctuations or hedging contract losses will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Financial Covenant

Certain borrowings contain a consolidated leverage covenant. The covenant states the Company’s leverage ratio is not to exceed 3.50 to 1.00. The leverage ratio is defined as the ratio of total indebtedness (the sum of Short-term borrowings, Current portion of long-term debt and Long-term debt) at the reporting date to consolidated “Earnings Before Interest, Taxes, Depreciation, and Amortization” (EBITDA) for the twelve month period ended on the same date. Refer to the “Results of Operations” caption below for a reconciliation of EBITDA to Net income. At March 31, 2016, the Company was in compliance with the covenant. The Company’s Notes, Debentures and revolving credit agreements contain various default and cross-

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default provisions. In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result. See Note 7, on page 60, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for more information concerning the Company’s debt and related covenant.

RESULTS OF OPERATIONS

Shown below are net sales and income before taxes by segment for the first quarter:

(Thousands of dollars)	Three Months Ended March 31,
	2016		2015		Change
Net Sales:
Paint Stores Group	$	1,615,307	$	1,461,505	10.5	%
Consumer Group	378,086		351,690		7.5	%
Global Finishes Group	454,166		469,556		-3.3	%
Latin America Coatings Group	125,187		166,231		-24.7	%
Administrative	1,278		1,302		-1.8	%
Total	$	2,574,024	$	2,450,284	5.1	%

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015			Change
Income Before Income Taxes:
Paint Stores Group	$	253,534		$	176,576		43.6	%
Consumer Group	63,964			55,406			15.4	%
Global Finishes Group	48,582			38,900			24.9	%
Latin America Coatings Group	(928		)	9,500			-109.8	%
Administrative	(148,787		)	(87,141		)	-70.7	%
Total	$	216,365		$	193,241		12.0	%

Consolidated net sales increased in the first quarter of 2016 due primarily to higher paint sales volume in our Paint Stores and Consumer Groups, partially offset by unfavorable currency translation rate changes that decreased consolidated net sales 2.8 percent in the quarter.

Net sales of all consolidated foreign subsidiaries were down12.2 percent to $400.7 million in the quarter versus $456.5 million in the same period last year. The decrease in net sales for all consolidated foreign subsidiaries in the quarter was due primarily to a 13.9 percentnegative impact of foreign translation rate changes. Net sales of all operations other than consolidated foreign subsidiaries were up9.0 percent to $2.173 billion in the quarter as compared to $1.994 billion in the same period last year.

Net sales in the Paint Stores Group increased in the first quarter due primarily to higher architectural paint sales volume. Net sales from stores open for more than twelve calendar months increased9.4 percent in the quarter compared to last year’s comparable period. Sales of non-paint products increased by 11.1 percent over last year's first quarter. A discussion of changes in volume versus pricing for sales of products other than paint is not pertinent due to the wide assortment of general merchandise sold. Net sales of the Consumer Group increased in the first quarter due primarily to the new paint program launch at a national retailer. Net sales in the Global Finishes Group stated in U.S. dollars decreased in the first quarter due primarily to unfavorable currency translation rate changes, which decreased net sales by 4.7 percent in the quarter. Net sales in the Latin America Coatings Group stated in U.S. dollars decreased in the first quarter, which can primarily be attributed to unfavorable currency translation rate changes and volume declines partially offset by selling price increases. Currency translation rate changes decreased net sales by 22.2 percent in the quarter. Net sales in the Administrative segment, which primarily consist of external leasing revenue of excess headquarters space and leasing of facilities no longer used by the Company in its primary business, were essentially flat in the first quarter.

Consolidated gross profit increased$129.3 million in the first quarter of 2016 compared to the same period in 2015. As a percent of sales, consolidated gross profit increased to 49.0 percent in the quarter from 46.2 percent in the first quarter of 2015. The percent to sales and dollar increases were primarily due to increased paint sales volume.

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The Paint Stores Group’s gross profit was higher than last year by $122.0 million in the first quarter due to higher paint sales volume. The Paint Stores Group’s gross profit margins increased in the quarter compared to the same period last year for that same reason. The Consumer Group’s gross profit increased by $15.1 million in the quarter compared to the same period last year primarily due to increased sales volume, improved manufacturing volumes and operating efficiency. The Consumer Group's gross profit margins increased as a percent of sales for the first quarter compared to the same period last year for those same reasons. The Global Finishes Group’s gross profit increased$5.2 million in the first quarter compared to the same period last year, when stated in U.S. dollars, primarily due to decreasing raw material costs and good cost control partially offset by unfavorable currency translation rate changes. The Global Finishes Group’s gross profit margins were up as a percent of sales in the quarter compared to the same period last year due primarily for those same reasons. The Latin America Coatings Group’s gross profit decreased by $12.8 million in the first quarter from the same period in the prior year, when stated in U.S. dollars, primarily due to increasing raw material costs and unfavorable currency translation rate changes partially offset by selling price increases. The Administrative segment’s gross profit decreased by $0.2 million in the first quarter compared to the same period last year.

Selling, general and administrative expenses (SG&A) increased$73.2 million in the first quarter of 2016 versus last year due primarily to increased expenses to support higher sales levels and net new store openings as well as the impact from expenses

of $31.0 million in the quarter associated with the anticipated acquisition of Valspar. As a percent of sales, consolidated SG&A increased slightly to 38.9 percent in the quarter of 2016 from 37.9 percent in the first quarter of 2015 primarily due to those same reasons.

The Paint Stores Group’s SG&A increased$45.0 million in the first quarter due primarily to net new store openings and general comparable store expenses to support higher sales levels. The Consumer Group’s SG&A was up$6.2 million in the quarter compared to the same period last year primarily due to general expenses to support higher sales levels. The Global Finishes Group’s SG&A decreased$5.2 million in the quarter primarily due to currency translation rate changes. The Latin America Coatings Group’s SG&A decreased$3.1 million in the first quarter due to currency translation rate changes partially offset by timing of spending. The Administrative segment’s SG&A increased$30.3 million in the first quarter primarily due to costs associated with the anticipated acquisition of Valspar.

Other general expense—net increased$19.2 million in the first quarter primarily due to increased provisions in the quarter for environmental expenses in the Administrative segment.

Other expense (income) —net increased$0.5 million in the first quarter as compared to 2015 primarily due to foreign currency transaction related losses.

Consolidated income before income taxes increased$23.1 million in the first quarter due to higher segment profits in Paint Stores, Consumer and Global Finishes Groups partially offset by lower segment profits in Latin America Coatings Groups.

The effective income tax rate was flat at 32.0 percent for the first quarter of 2016 and 2015.

Net income for the quarter increased$15.7 million to $147.1 million from $131.4 million in the first quarter of 2015. Diluted net income per common share increased13.8 percent from $1.38 per share in the first quarter of 2015 to $1.57 per share in the first quarter of 2016, including Acquisition costs and amortization of credit facility costs incurred in March 2016 of $.24 per share.

Management considers a measurement that is not in accordance with U.S. generally accepted accounting principles a useful measurement of the operational profitability of the Company. Some investment professionals also utilize such a measurement as an indicator of the value of profits and cash that are generated strictly from operating activities, putting aside working capital and certain other balance sheet changes. For this measurement, management increases net income for significant non-operating and non-cash expense items to arrive at an amount known as “Earnings Before Interest, Taxes, Depreciation and Amortization” (EBITDA). The reader is cautioned that the following value for EBITDA should not be compared to other entities unknowingly. EBITDA should not be considered an alternative to net income or cash flows from operating activities as an indicator of operating performance or as a measure of liquidity. The reader should refer to the determination of net income and cash flows from operating activities in accordance with U.S. generally accepted accounting principles disclosed in the Statements of Consolidated Income and Comprehensive Income and Statements of Consolidated Cash Flows. EBITDA as used by management is calculated as follows:

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(Thousands of dollars)	Three Months Ended March 31,
	2016		2015
Net income	$	147,128	$	131,404
Interest expense	25,732		12,351
Income taxes	69,237		61,837
Depreciation	42,895		42,500
Amortization	5,782		6,905
EBITDA	$	290,774	$	254,997

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and the lead pigment and lead-based paint litigation. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "believe," "expect," "may," "will," "should," "project," "could," "plan," "goal," "potential," "seek," "intend" or "anticipate" or the negative thereof or comparable terminology.

Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside our control that could cause actual results to differ materially from such statements and from our historical results and experience. These risks, uncertainties and other factors include such things as:

• general business conditions, strengths of retail and manufacturing economies and the growth in the coatings industry;

• legal, regulatory and other matters that may affect the timing of our ability to complete the planned acquisition of The Valspar Corporation, or Valspar, if at all, including the potential for regulatory authorities to require divestitures in connection with the proposed transaction;

• our ability to successfully integrate past and future acquisitions into our existing operations, including Valspar, as well as the performance of the businesses acquired;

• risks inherent in the achievement of cost synergies and the timing thereof for the planned acquisition of Valspar;

• competitive factors, including pricing pressures and product innovation and quality;

• changes in raw material and energy supplies and pricing;

• changes in our relationships with customers and suppliers;

• our ability to attain cost savings from productivity initiatives;

• changes in general domestic economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions, and changing government policies, laws and regulations;

• risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets, including general economic conditions, inflation rates, recessions, foreign currency exchange rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest and other external economic and political factors;

• the achievement of growth in foreign markets, such as Asia, Europe and South America;

• increasingly stringent domestic and foreign governmental regulations, including those affecting health, safety and the environment;

• inherent uncertainties involved in assessing our potential liability for environmental-related activities;

• other changes in governmental policies, laws and regulations, including changes in accounting policies and standards and taxation requirements (such as new tax laws and new or revised tax law interpretations);

• the nature, cost, quantity and outcome of pending and future litigation and other claims, including the lead pigment and lead-based paint litigation, and the effect of any legislation and administrative regulations relating thereto; and

• unusual weather conditions.

Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered to be a complete list. Any forward-looking statement speaks only

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as of the date on which such statement is made, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk associated with interest rate, foreign currency and commodity fluctuations. The Company occasionally utilizes derivative instruments as part of its overall financial risk management policy, but does not use derivative instruments for speculative or trading purposes. The Company enters into option and forward currency exchange contracts and commodity swaps to hedge against value changes in foreign currency and commodities. The Company believes it may experience continuing losses from foreign currency translation and commodity price fluctuations. However, the Company does not expect currency translation, transaction, commodity price fluctuations or hedging contract losses to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. There were no material changes in the Company’s exposure to market risk since the disclosure included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Item 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Senior Vice President—Finance and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President—Finance and Chief Financial Officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and accumulated and communicated to our management including our President and Chief Executive Officer and our Senior Vice President—Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

For information with respect to certain environmental-related matters and legal proceedings, see the information included under the captions entitled “Environmental-Related Liabilities” and “Litigation” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 8 and 9 of the “Notes to Condensed Consolidated Financial Statements,” which is incorporated herein by reference.

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Item1A. Risk Factors

A discussion of our risk factors can be found in Item 1A, Risk Factors, in our annual report on Form 10-K for the fiscal year ended December 31, 2015. The information below includes additional risks relating to our previously announced plans to acquire The Valspar Corporation, or Valspar. The risks described below and in other documents that we file from time to time with the Securities and Exchange Commission could materially and adversely affect our business, results of operations, cash flow, liquidity or financial condition.

Our planned acquisition of Valspar may not occur at all, may not occur in the expected time frame or may involve the divestiture of certain businesses, which may negatively affect the trading prices of our stock and our future business and financial results.

On March 19, 2016, we and Viking Merger Sub, Inc., one of our wholly owned subsidiaries, which we refer to as Merger Sub, entered into an Agreement and Plan of Merger, or Merger Agreement, with Valspar, pursuant to which, among other things and subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into Valspar. As a result of the planned acquisition of Valspar, Merger Sub will cease to exist, and Valspar will survive as a wholly owned subsidiary of ours.

Completion of the planned acquisition of Valspar is not assured and is subject to the satisfaction or waiver of customary closing conditions, including, among others: the adoption of the Merger Agreement by Valspar’s stockholders; the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and the receipt of other required antitrust approvals.

The planned acquisition of Valspar is subject to risks and uncertainties, including the risk that the necessary regulatory approvals will not be obtained, the risk that the parties to the Merger Agreement may be required to divest certain businesses or assets in connection with the planned acquisition or that other closing conditions will not be satisfied. For example, in connection with obtaining the required regulatory approvals, the Company and/or Valspar may be required to divest assets of their respective businesses. We are not required to consummate the planned acquisition of Valspar if antitrust authorities require the divestiture of assets of Valspar or us representing, in the aggregate, more than $1.5 billion in net sales, which for purposes of such calculation uses net sales for the applicable Valspar assets calculated as of October 30, 2015, with certain exclusions. In addition, if these divested businesses represent, in the aggregate, less than $1.5 billion in net sales but more than $650 million in net sales, which for purposes of such calculation uses net sales for the applicable Valspar assets calculated as of October 30, 2015 (subject to certain exclusions), then the per share consideration paid to Valspar stockholders in connection with the planned acquisition will be $105 in cash instead of $113 in cash. If the planned acquisition of Valspar is not completed, if there are significant delays in completing the planned acquisition or if the planned acquisition involves the divestiture of certain businesses, it could negatively affect the trading prices of our common stock and our future business and financial results and could result in our failure to realize certain synergies relating to such acquisition.

Our obligation to complete the planned acquisition of Valspar is not subject to a financing condition.

Our obligation to complete the planned acquisition of Valspar is not subject to a financing condition. We have obtained committed financing for $9.3 billion to pay a substantial portion of the purchase price for the acquisition of Valspar. If any of the banks in the committed financing facilities are unable to perform their commitments, we may be required to finance a portion of the purchase price of the planned acquisition at interest rates higher than currently expected.

We may not realize the growth opportunities and cost synergies that are anticipated from the planned acquisition of Valspar.

The benefits that are expected to result from the planned acquisition of Valspar will depend, in part, on our ability to realize the anticipated growth opportunities and cost synergies as a result of the planned acquisition. Our success in realizing these growth opportunities and cost synergies, and the timing of this realization, depends on whether the Company or Valspar are required to divest assets of their respective business and on the successful integration of Valspar. There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition as sizable as Valspar. The process of integrating operations could cause an interruption of, or loss of momentum in, our and Valspar’s activities. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our company, service existing customers, attract new customers, and develop new products or strategies. If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer. There can be no assurance that we will successfully or cost-effectively integrate Valspar. The failure to do so could have a material adverse effect on our business, financial condition, and results of operations.

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Even if we are able to integrate Valspar successfully, this integration may not result in the realization of the full benefits of the growth opportunities and cost synergies that we currently expect from this integration, and we cannot guarantee that these benefits will be achieved within anticipated time frames or at all. For example, we may not be able to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with the integration of Valspar. While it is anticipated that certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately, and may exceed current estimates. Accordingly, the benefits from the planned acquisition may be offset by costs incurred to, or delays in, integrating the businesses.

We will incur a substantial amount of debt to complete the planned acquisition of Valspar. To service our debt, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. We also depend on the business of our subsidiaries to satisfy our cash needs. If we cannot generate the required cash, we may not be able to make the necessary payments required under our indebtedness.

At March 31, 2016, we had total debt of approximately $2.0 billion. We have the ability under our existing credit facilities to incur substantial additional indebtedness in the future, and we plan to incur significant additional indebtedness in the event we complete the planned acquisition of Valspar. We expect to incur up to $9.3 billion of debt to complete the acquisition of Valspar. Our ability to make payments on our debt, fund our other liquidity needs, and make planned capital expenditures will depend on our ability to generate cash in the future. Our historical financial results have been, and we anticipate that our future financial results will be, subject to fluctuations. Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs and make planned capital expenditures.

The degree to which we are currently leveraged and will be leveraged following the completion of the planned acquisition could have important consequences for shareholders. For example, it could:

• require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes;

• increase our vulnerability to adverse economic or industry conditions;

• limit our ability to obtain additional financing in the future to enable us to react to changes in our business; or

• place us at a competitive disadvantage compared to businesses in our industry that have less debt.

Additionally, any failure to comply with covenants in the instruments governing our debt could result in an event of default which, if not cured or waived, would have a material adverse effect on us.

A significant portion of our operations are conducted through our subsidiaries. As a result, our ability to generate sufficient cash flow for our needs is dependent to some extent on the earnings of our subsidiaries and the payment of those earnings to us in the form of dividends, loans or advances and through repayment of loans or advances from us. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on our debt or to provide us with funds to meet our cash flow needs, whether in the form of dividends, distributions, loans or other payments. In addition, any payment of dividends, loans or advances by our subsidiaries could be subject to statutory or contractual restrictions. Payments to us by our subsidiaries will also be contingent upon our subsidiaries’ earnings and business considerations. Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors. In addition, even if we are a creditor of any of our subsidiaries, our rights as a creditor would be subordinate to any security interest in the assets of our subsidiaries and any indebtedness of our subsidiaries senior to that held by us. Finally, changes in the laws of foreign jurisdictions in which we operate may adversely affect the ability of some of our foreign subsidiaries to repatriate funds to us.

Our results of operations, cash flow or financial condition may be negatively impacted if we do not successfully integrate future acquisitions into our existing operations and if the performance of the businesses we acquire do not meet our expectations.

We have historically made strategic acquisitions of businesses in the paint and coatings industry and will likely acquire additional businesses in the future as part of our long-term growth strategy. The success of future acquisitions, including Valspar, depends in large part on our ability to integrate the operations and personnel of the acquired companies and manage challenges that may arise as a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets. In the event that we do not successfully integrate such future acquisitions into our existing operations so as to realize the expected return on our investment, our results of operations, cash flow or financial condition could be adversely affected.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

A summary of the repurchase activity for the Company’s first quarter is as follows:

Period		Total Number of Shares Purchased	Average Price Paid Per Share		Number of Shares Purchased as Part of a Publicly Announced Plan	Number of Shares That May Yet Be Purchased Under the Plan
January 1 - January 31
	Share repurchase program (1)					11,650,000
	Employee transactions (2)	1,385	$	248.77
February 1 - February 28
	Employee transactions (2)	59,916	257.52
March 1 - March 31
Total
	Share repurchase program (1)					11,650,000
	Employee transactions (2)	61,301	$	257.32		NA

⁽¹⁾  All shares were purchased through the Company’s publicly announced share repurchase program. There is no expiration date specified for the program. The Company had remaining authorization at March 31, 2016 to purchase 11,650,000 shares.

⁽²⁾  All shares were delivered to satisfy the exercise price and/or tax withholding obligations by employees who exercised stock options or had shares of restricted stock vest.

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Item 5. Other Information.

During the three months ended March 31, 2016, the Audit Committee of the Board of Directors of the Company approved permitted non-audit services to be performed by Ernst & Young LLP, the Company’s independent registered public accounting firm. These non-audit services were approved within categories related to domestic advisory tax and tax compliance services and international tax compliance.

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Item 6. Exhibits.

*2.1	Agreement and Plan of Merger, among The Sherwin-Williams Company, Viking Merger Sub, Inc., and The Valspar Corporation, dated as of March 19, 2016, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 19, 2016, and incorporated herein by reference.
4.1	364-Day Bridge Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, the lenders party thereto, Citibank, N.A., as administrative agent, and Citigroup Global Markets Inc., as sole lead arranger and sole bookrunner, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
4.2	Term Loan Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, the lenders party thereto, Citibank, N.A., as administrative agent, and Wells Fargo Bank, National Association, Morgan Stanley Senior Funding, Inc. and PNC Bank, National Association, as co-syndication agents, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
4.3	Amendment No. 1 to Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, Sherwin-Williams Canada Inc., Sherwin-Williams Luxembourg S.à r.l. and Sherwin-Williams UK Holding Limited, as borrowers, the lenders party thereto, Bank of America, N.A., as domestic administrative agent, and Bank of America, National Association, as Canadian administrative agent, filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
10.1	The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of April 20, 2016) (filed herewith).
31(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31(b)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32(a)	Section 1350 Certification of Chief Executive Officer (furnished herewith).
32(b)	Section 1350 Certification of Chief Financial Officer (furnished herewith).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Certain exhibits and schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE SHERWIN-WILLIAMS COMPANY
April 27, 2016	By:	/s/ Allen J. Mistysyn
		Allen J. Mistysyn
		Senior Vice President-Corporate Controller
April 27, 2016	By:	/s/ Catherine M. Kilbane
		Catherine M. Kilbane
		Senior Vice President, General
		Counsel and Secretary

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INDEX TO EXHIBITS
Exhibit No.	Exhibit Description
*2.1	Agreement and Plan of Merger, among The Sherwin-Williams Company, Viking Merger Sub, Inc., and The Valspar Corporation, dated as of March 19, 2016, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 19, 2016, and incorporated herein by reference.
4.1	364-Day Bridge Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, the lenders party thereto, Citibank, N.A., as administrative agent, and Citigroup Global Markets Inc., as sole lead arranger and sole bookrunner, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
4.2	Term Loan Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, the lenders party thereto, Citibank, N.A., as administrative agent, and Wells Fargo Bank, National Association, Morgan Stanley Senior Funding, Inc. and PNC Bank, National Association, as co-syndication agents, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
4.3	Amendment No. 1 to Credit Agreement, dated as of April 13, 2016, by and among The Sherwin-Williams Company, Sherwin-Williams Canada Inc., Sherwin-Williams Luxembourg S.à r.l. and Sherwin-Williams UK Holding Limited, as borrowers, the lenders party thereto, Bank of America, N.A., as domestic administrative agent, and Bank of America, National Association, as Canadian administrative agent, filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated April 13, 2016, and incorporated herein by reference.
10.1	The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of April 20, 2016) (filed herewith).
31(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31(b)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32(a)	Section 1350 Certification of Chief Executive Officer (furnished herewith).
32(b)	Section 1350 Certification of Chief Financial Officer (furnished herewith).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Certain exhibits and schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request

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EX-10.1

EXHIBIT 10.1

THE SHERWIN-WILLIAMS COMPANY

2006 Stock Plan For Nonemployee Directors

(Amended and Restated as of April 20, 2016)

1.    Purpose. The purpose of this 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of April20, 2016) is to attract and retain Nonemployee Directors of The Sherwin-Williams Company who are important to the success and growth of the business of the Company and to help align the economic interests between such Nonemployee Directors and the shareholders of The Sherwin-Williams Company.

2.    Definitions. As used in this Plan,

(a)    “Appreciation Right” means a right granted pursuant to Section 5 of this Plan.

(b)    “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of an Appreciation Right.

(c)    “Board” means the Board of Directors of the Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 8 of this Plan, such committee (or subcommittee).

(d)    “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(e)    “Common Stock” means Common Stock, par value $1.00 each, of the Company or any security into which such shares of Common Stock may be changed by reason of any transaction or event of the type referred to in Section 9 of this Plan.

(f)    “Company” means The Sherwin-Williams Company, an Ohio corporation, and its successors.

(g)    “Date of Grant” means the date specified by the Board on which a grant of Option Rights or Appreciation Rights, or a grant or sale of Restricted Stock or Restricted Stock Units, will become effective (which date will not be earlier than the date on which the Board takes action with respect thereto).

(h)    “Effective Date” has the meaning set forth in Section 13.

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(i)    “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence that sets forth the terms and conditions of Option Rights, Appreciation Rights, or a grant or sale of Restricted Stock or Restricted Stock Units. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Board, need not be signed by a representative of the Company or a Participant.

(j)    “Market Value Per Share” means, as of any particular date, the average of the highest and lowest reported sales prices of the Common Stock during normal trading hours on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed. If there is no regular public trading market for such Common Stock, the Market Value Per Share of the Common Stock shall be determined by the Board. The Board is authorized to adopt another methodology, provided such method is in compliance with the fair market value pricing rules set forth in Section 409A of the Code. Notwithstanding any other provision of this Section 2(j) or any other provision of this Plan, the “Market Value Per Share” will be such price per share of Common Stock, rounded to two decimal points.

(k)    “Nonemployee Director” means a member of the Board of Directors of the Company, who is not an employee of the Company or any Subsidiary.

(l)    “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

(m)    “Option Price” means the purchase price payable on exercise of an Option Right.

(n)    “Option Right” means the right to purchase shares of Common Stock upon exercise of an option granted pursuant to Section 4 of this Plan.

(o)    “Participant” means a person who is selected by the Board to receive benefits under this Plan and who is at the time a Nonemployee Director or has at the time of grant of an award been approved for election to the Board by the Board with any such grant to be effective on or after the date such person commences service with the Board.

(p)    “Plan” means The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors, as may be amended or amended and restated from time to time.

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(q)    “Restricted Stock” means shares of Common Stock granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfer has expired.

(r)    “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.

(s)    “Restricted Stock Unit” means an award made pursuant to Section 7 of this Plan of the right to receive shares of Common Stock or cash at the end of a specified period.

(t)    “Spread” means the excess of the Market Value Per Share on the date when an Appreciation Right is exercised over the Base Price provided for in the Appreciation Right.

(u)    “Subsidiary” means a corporation, company or other entity (i) at least 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but at least 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.

3.    Shares Subject to this Plan.

(a)    Maximum Shares Available Under Plan.

(i)    Subject to adjustment as provided in Section 9 of this Plan, the number of shares of Common Stock that may be issued or transferred (A) upon the exercise of Option Rights or Appreciation Rights; (B) as Restricted Stock and released from substantial risks of forfeiture thereof; (C) in payment of Restricted Stock Units; or (D) in payment of dividend equivalents paid with respect to Restricted Stock Units will not exceed, in the aggregate, 200,000 shares of Common Stock, plus any shares of Common Stock relating to awards that expire or are forfeited or are cancelled under this Plan. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

(ii)    Shares of Common Stock covered by an award granted under this Plan shall not be counted as used unless and until they are actually issued and delivered to a Participant. Without limiting the generality of the foregoing, upon payment in cash of the benefit provided by any

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award granted under this Plan, any shares of Common Stock that were covered by that award, to the extent unissued, will be available for issue hereunder. Notwithstanding anything to the contrary contained herein: (A) shares of Common Stock tendered in payment of the Option Price of a Option Right shall not be added to the aggregate plan limit described above; (B) shares of Common Stock that are repurchased by the Company with Option Right proceeds shall not be added to the aggregate plan limit described above; and (C) all shares of Common Stock covered by an Appreciation Right, to the extent that it is exercised and settled in shares of Common Stock, and whether or not shares of Common Stock are actually issued to the Participant upon exercise of the right, shall be considered issued or transferred pursuant to this Plan.

(b)    Restricted Stock and Restricted Stock Units Limit. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment pursuant to Section 9 of this Plan, the aggregate number of shares of Common Stock issued as Restricted Stock (and released from substantial risks of forfeiture) or Restricted Stock Units shall not exceed 200,000.

(c) Notwithstanding anything in this Section 3, or elsewhere in this Plan to the contrary, and subject to adjustment pursuant to Section 9 of this Plan, no Participant will receive in any calendar year, award(s) under the Plan having an aggregate maximum value, calculated as of their respective grant dates, in excess of $500,000.

4.    Option Rights. The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of options to purchase shares of Common Stock. Each such grant will be subject to all of the requirements contained in the following provisions:

(a)    Each grant will specify the number of shares of Common Stock to which it pertains subject to the limitations set forth in Section 3 of this Plan.

(b)    Each grant will specify an Option Price per share, which may not be less than the Market Value Per Share on the Date of Grant.

(c)    Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of shares of Common Stock owned by the Optionee having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment, or (iv) by such other methods as may be approved by the Board.

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(d)    To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.

(e)    Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.

(f)    Each grant will specify the period or periods of continuous service by the Optionee with the Company that is necessary before the Option Rights or installments thereof will become exercisable. A grant of Option Rights may provide for the earlier exercise of such Option Rights in the event of death or disability of the Participant.

(g)    No Option Right will be exercisable more than 10 years from the Date of Grant.

(h)    Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award shall be subject to this Plan and shall contain such terms and provisions, consistent with this Plan, as the Board may approve.

5.    Appreciation Rights. The Board may also, from time to time and upon such terms and conditions as it may determine, authorize the granting of Appreciation Rights to any Participant. An Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. Each grant of Appreciation Rights will be subject to all of the requirements contained in the following provisions:

(a)    Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in cash, in shares of Common Stock or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives.

(b)    Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant.

(c)    Any grant may specify waiting periods before exercise and permissible exercise dates or periods.

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(d)    Any grant may specify that such Appreciation Right may be exercised only in the event of, or earlier in the event of, death or disability of the Participant.

(e)    Each grant of Appreciation Rights will specify a Base Price, which may not be less than the Market Value Per Share on the Date of Grant.

(f)    Successive grants may be made to the same Participant regardless of whether any Appreciation Rights previously granted to the Participant remain unexercised.

(g)    No Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.

(h)    Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, and contain such other terms and provisions, consistent with this Plan, as the Board may approve.

6.    Restricted Stock. The Board may also, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale will be subject to all of the requirements contained in the following provisions:

(a)    Each such grant or sale will constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer referenced hereinafter.

(b)    Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value Per Share at the Date of Grant.

(c)    Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Board at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture, including in the event of death or disability of the Participant.

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(d)    Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).

(e)    Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional shares of Restricted Stock, which may be subject to the same restrictions as the underlying award.

(f)    Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless otherwise directed by the Board, (i) all certificates representing shares of Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares or (ii) all shares of Restricted Stock shall be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such shares of Restricted Stock.

7.    Restricted Stock Units. The Board may also, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants. Each such grant or sale will be subject to all of the requirements contained in the following provisions:

(a)    Each such grant or sale will constitute the agreement by the Company to deliver shares of Common Stock or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Restriction Period as the Board may specify.

(b)    Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value Per Share at the Date of Grant.

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(c)    Each such grant or sale will be subject to a Restriction Period, as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of death or disability of the Participant.

(d)    During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current, deferred or contingent basis, either in cash or in additional shares of Common Stock.

(e)    Each grant or sale will specify the time and manner of payment of Restricted Stock Units that have been earned. Any grant or sale may specify that the amount payable with respect thereto may be paid by the Company in cash, in shares of Common Stock or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives.

(f)    Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve.

8.    Administration of this Plan.

(a)    This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation and Management Development Committee or any other committee of the Board (or a subcommittee thereof), as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee.

(b)    The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Stock or Restricted Stock Units and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document will be final, binding and conclusive upon all persons. The Board may adopt, amend and rescind such rules and regulations as it deems necessary, desirable or appropriate in administering the Plan, and the Board may act at a meeting, in a written action without meeting or by having actions otherwise taken pursuant to a delegation of duties by the Board.

8

9.    Adjustments. The Board shall make or provide for such adjustments in the numbers of shares of Common Stock covered by outstanding Option Rights, Appreciation Rights and Restricted Stock Units granted hereunder, in the Option Price and Base Price provided in outstanding Appreciation Rights, and in the kind of shares covered thereby, as the Board, in its sole discretion, shall determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board, in its discretion, shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it shall determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each Option Right or Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with any such transaction or event or change of control, the Company shall not be required to make any payment to the person holding such Option Right or Appreciation Right upon surrender of such Option Right or Appreciation Right, and may cancel such Option Right or Appreciation Right. Such surrender shall take place as of the date of the change of control or such other date as the Board may specify. The Board shall also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Board in its sole discretion shall determine is appropriate to reflect any transaction or event described in this Section 9.

10.    Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Board may provide for such special terms for awards to Participants who are foreign nationals or who reside outside of the United States of America as the Board may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect

9

unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Company.

11.    Transferability.

(a)    No Option Right or Appreciation Right granted under this Plan shall be transferable by the Participant except by will or the laws of descent and distribution. Except as otherwise determined by the Board, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and/or court supervision.

(b)    The Board may specify at the Date of Grant that part or all of the shares of Common Stock that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights or upon the termination of the Restriction Period applicable to Restricted Stock Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.

12.    Compliance with Section 409A of the Code.

(a)    To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder shall be construed and administrated in a manner such that the grant either (i) qualifies for an exemption from the requirements of Section 409A of the Code or (ii) satisfies the requirements of Section 409A of the Code. If a grant under this Plan is subject to Section 409A of the Code, then (i) distributions shall only be made in a manner and upon an event permitted under Section 409A of the Code, (ii) payments to be made upon termination of employment shall only be made upon a “separation from service” under Section 409A of the Code, (iii) unless the grant agreement specifies otherwise, each installment payment shall be treated as a separate payment for purposes of Section 409A of the Code, (iv) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution is made except as permitted in accordance with Section 409A of the Code, and (v) any distribution to a Participant who is a “specified employee” (as defined in Section 409A) upon such Participant’s separation from service shall be postponed for six months, if and to the extent required by Section 409A of the Code. Any reference in this Plan to Section 409A of the Code will also include any regulations

10

or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

(b)    Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants of deferred compensation hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants of deferred compensation hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its affiliates.

(c)    Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes, interest and/or penalties under Section 409A of the Code), and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes, interest and/or penalties.

13.    Effective Date. The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors first became effective on April 20, 2006, the date immediately following the date it was approved by shareholders. The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of April 20, 2016) shall be effective upon its approval by the Company’s shareholders at its Annual Meeting of Shareholders to be held on April 20, 2016 (or, if the vote on the Plan is postponed, such other date on which a shareholders’ meeting to vote to approve the Plan occurs).

14.    Amendments.

(a)    The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements

11

for participation in this Plan or (iv) must otherwise be approved by the shareholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the shares of Common Stock are not traded on the New York Stock Exchange, the principal national securities exchange upon which the shares of Common Stock are traded or quoted, then, such amendment will be subject to shareholder approval and will not be effective unless and until such approval has been obtained.

(b)    Except in connection with a corporate transaction or event described in Section 9 of this Plan, the Board will not, without the approval of the shareholders of the Company, authorize the amendment of any outstanding Option Right to reduce the Option Price or any outstanding Appreciation Rights to reduce the Base Price. Furthermore, no Option Right or Appreciation Rights will be cancelled and replaced with awards having a lower Option Price or Base Price, as applicable, or for cash, without approval of the shareholders of the Company. This Section 14(b) is intended to prohibit the repricing of “underwater” Option Rights and/or Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 9 of this Plan. Notwithstanding any provision of the Plan to the contrary, this Section 14(b) may not be amended without shareholder approval.

(c)    Subject to Section 14(b) hereof, the Board may amend the terms of any award theretofore granted under this Plan prospectively or retroactively. Subject to Section 9 above, no such amendment shall impair the rights of any Participant without his or her consent. Notwithstanding the foregoing, the Board may make minor amendments to this Plan and/or the terms of any award which do not adversely impair the rights of a Participant or significantly increase the cost to the Company. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.

15.  Governing Law. This Plan and all grants and awards and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio, without giving effect to the conflict of law provisions thereof.

16.    Miscellaneous Provisions.

(a)    The Company will not be required to issue any fractional shares of Common Stock pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement of fractions in cash.

12

(b)    Neither this Plan nor a grant of an award under this Plan will confer upon any Participant any right with respect to continuance of service as Director with the Company, nor will it interfere in any way with any right the Company would otherwise have to terminate such Participant’s service at any time.

(c)    Unless otherwise determined by the Board, if a Nonemployee Director subsequently becomes an employee of the Company or a Subsidiary while remaining a member of the Board, any Option Rights, Appreciation Rights, Restricted Stock or Restricted Stock Units held under the Plan by such individual at the time of such commencement of employment will not be effected hereby.

(d)    No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

(e)    No Participant shall have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.

(f)    The Board may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive compensation otherwise payable by the Company to the Participant.

(g)    Participants shall provide the Company with a written election form setting forth the name and contact information of the person who will have beneficial ownership rights upon the death of the Participant.

(h)    If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the Board, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board, it shall be stricken and the remainder of this Plan shall remain in full force and effect.

13

EX-31.A

EXHIBIT 31(a)

CERTIFICATION

I, John G. Morikis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Sherwin-Williams Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2016	/s/ John G. Morikis
		John G. Morikis
		President and Chief Executive Officer

EX-31.B

EXHIBIT 31(b)

CERTIFICATION

I, Sean P. Hennessy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Sherwin-Williams Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2016	/s/ Sean P. Hennessy
		Sean P. Hennessy
		Senior Vice President-Finance and
		Chief Financial Officer

EX-32.A

EXHIBIT 32(a)

SECTION 1350 CERTIFICATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Sherwin-Williams Company (the "Company") for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John G. Morikis, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 27, 2016	/s/ John G. Morikis
		John G. Morikis
		President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Sherwin-Williams Company and will be retained by The Sherwin-Williams Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B

EXHIBIT 32(b)

SECTION 1350 CERTIFICATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Sherwin-Williams Company (the "Company") for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sean P. Hennessy, Senior Vice President-Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 27, 2016	/s/ Sean P. Hennessy
		Sean P. Hennessy
		Senior Vice President-Finance and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Sherwin-Williams Company and will be retained by The Sherwin-Williams Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2016 shares
Document and Entity Information [Abstract]
Entity Registrant Name	SHERWIN WILLIAMS CO
Entity Central Index Key	0000089800
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	92,495,113

XML

Statements of Consolidated Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Net sales	$ 2,574,024	$ 2,450,284
Cost of goods sold	1,312,279	1,317,835
Gross profit	$ 1,261,745	$ 1,132,449
Percent to net sales	49.00%	46.20%
Selling, general and administrative expenses	$ 1,002,355	$ 929,197
Percent to net sales	38.90%	37.90%
Other general expense (income) - net	$ 17,554	$ (1,673)
Interest expense	25,732	12,351
Interest and net investment income	(487)	(422)
Other expense (income) - net	226	(245)
Income before income taxes	216,365	193,241
Income taxes	69,237	61,837
Net income	$ 147,128	$ 131,404
Net income per common share:
Basic (in dollars per share)	$ 1.61	$ 1.42
Diluted (in dollars per share)	$ 1.57	$ 1.38
Average shares outstanding - basic	91,475,860	92,740,059
Average shares and equivalents outstanding - diluted	93,548,234	95,278,725
Comprehensive income	$ 166,138	$ 75,057

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015
Current assets:
Cash and cash equivalents	$ 70,548	$ 205,744	$ 64,013
Accounts receivable, less allowance	1,290,749	1,114,275	1,234,612
Inventories:
Finished goods	972,037	840,603	981,334
Work in process and raw materials	175,324	177,927	179,916
Total net inventory	1,147,361	1,018,530	1,161,250
Deferred income taxes	97,562	87,883	107,869
Other current assets	282,405	230,748	196,832
Total current assets	2,888,625	2,657,180	2,764,576
Goodwill	1,147,047	1,143,333	1,149,121
Intangible assets	250,574	255,371	277,919
Deferred pension assets	246,035	244,882	250,463
Other assets	449,003	436,309	412,335
Property, plant and equipment:
Land	120,568	119,530	121,626
Buildings	704,594	696,202	691,541
Machinery and equipment	2,071,637	2,026,617	1,946,261
Construction in progress	89,839	81,082	63,419
Total gross property, plant and equipment	2,986,638	2,923,431	2,822,847
Less allowances for depreciation	1,929,613	1,881,569	1,824,415
Total net property, plant and equipment	1,057,025	1,041,862	998,432
Total Assets	6,038,309	5,778,937	5,852,846
Current liabilities:
Short-term borrowings	128,675	39,462	1,405,369
Accounts payable	1,152,923	1,157,561	1,174,840
Compensation and taxes withheld	284,860	338,256	249,707
Accrued taxes	115,403	81,146	77,602
Current portion of long-term debt	2,179	3,154	3,143
Other accruals	578,521	522,280	468,384
Total current liabilities	2,262,561	2,141,859	3,379,045
Long-term debt	1,908,774	1,907,278	1,116,337
Postretirement benefits other than pensions	250,168	248,523	278,771
Other long-term liabilities	615,983	613,367	609,521
Shareholders’ equity:
Common stock - $1.00 par value 92,495,113, 92,246,525 and 93,186,295 shares outstanding at March 31, 2016, December 31, 2015 and March 31, 2015 respectively	116,043	115,761	115,118
Other capital	2,390,389	2,330,426	2,187,144
Retained earnings	3,298,270	3,228,876	2,493,469
Treasury stock, at cost	(4,235,794)	(4,220,058)	(3,798,254)
Cumulative other comprehensive loss	(568,085)	(587,095)	(528,305)
Total shareholders' equity	1,000,823	867,910	469,172
Total Liabilities and Shareholders’ Equity	$ 6,038,309	$ 5,778,937	$ 5,852,846

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 1	$ 1	$ 1
Common stock, shares outstanding	92,495,113	92,246,525	93,186,295

XML

Condensed Statements of Consolidated Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES
Net income	$ 147,128	$ 131,404
Adjustments to reconcile net income to net operating cash:
Depreciation	42,895	42,500
Amortization of intangible assets	5,782	6,905
Stock-based compensation expense	15,765	18,079
Amortization of credit facility and debt issuance costs	6,656	1,083
Provisions for qualified exit costs	1,126	761
Provisions for environmental-related matters	18,029	1,050
Defined benefit pension plans net cost	6,992	1,787
Net increase in postretirement liability	961	(111)
Other	(147)	(3,785)
Change in working capital accounts - net	(298,341)	(254,221)
Costs incurred for environmental-related matters	(5,036)	(2,875)
Costs incurred for qualified exit costs	(2,868)	(1,966)
Other	(18,749)	4,321
Net operating cash	(79,807)	(55,068)
INVESTING ACTIVITIES
Capital expenditures	(51,999)	(42,903)
Proceeds from sale of assets	988	6,677
Increase in other investments	(10,526)	(56)
Net investing cash	(61,537)	(36,282)
FINANCING ACTIVITIES
Net increase in short-term borrowings	85,770	731,733
Payments of long-term debt	0	(96)
Payments for credit facility and debt issuance costs	(41,850)	0
Payments of cash dividends	(77,734)	(62,609)
Proceeds from stock options exercised	19,717	37,494
Income tax effect of stock-based compensation exercises and vesting	24,762	52,632
Treasury stock purchased	0	(614,911)
Other	(16,597)	(33,108)
Net financing cash	(5,932)	111,135
Effect of exchange rate changes on cash	12,080	3,496
Net (decrease) increase in cash and cash equivalents	(135,196)	23,281
Cash and cash equivalents at beginning of year	205,744	40,732
Cash and cash equivalents at end of period	70,548	64,013
Income taxes paid	23,155	16,044
Interest paid	$ 30,552	$ 9,381

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

There have been no significant changes in critical accounting policies since December 31, 2015. Accounting estimates were revised as necessary during the first three months of 2016 based on new information and changes in facts and circumstances. Certain amounts in the 2015 condensed consolidated financial statements have been reclassified to conform to the 2016 presentation.

The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2015.

The consolidated results for the three months endedMarch 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.

XML

Impact of Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2016, the Company adopted the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires companies to present debt issuance costs associated with a debt liability as a deduction from the carrying amount of that debt liability on the balance sheet rather than being capitalized as an asset. The adoption of this ASU did not have a material effect on the Company's results of operations, financial condition or liquidity.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting,” which changes certain aspects of share-based compensation accounting, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. The Company is currently in the process of evaluating the impact of this standard.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which consists of a comprehensive lease accounting standard. Under the new standard, assets and liabilities arising from most leases will be recognized on the balance sheet. Leases will be classified as either operating or financing, and the lease classification will determine whether expense is recognized on a straight line basis (operating leases) or based on an effective interest method (financing leases). The new standard is effective for interim and annual periods beginning after December 15, 2018.  A modified retrospective transition approach is required with certain practical expedients available.  The Company is currently in the process of evaluating the impact of this standard.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance for certain aspects of recognition, measurement and disclosure of financial instruments. The standard is effective for interim and annual periods beginning after December 31, 2017, and early adoption is not permitted. The Company is in the process of evaluating the impact of the standard.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which eliminates the requirement for separate presentation of current and non-current portions of deferred tax. All deferred tax assets and deferred tax liabilities will be presented as non-current on the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2016. Either retrospective or prospective presentation can be used. The Company will adopt ASU No. 2016-17 as required. The ASU will not have a material effect on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which consists of a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The issuance of ASU No. 2015-14 in August 2015 delays the effective date of the standard to interim and annual periods beginning after December 15, 2017. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard.

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Dividends

3 Months Ended

Mar. 31, 2016

Dividends [Abstract]

DIVIDENDS

DIVIDENDS

Dividends paid on common stock during the first quarter of 2016 and 2015 were $.84 per common share and $.67 per common share, respectively.

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Changes in Cumulative Other Comprehensive Loss

3 Months Ended

Mar. 31, 2016

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS

CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS

The following tables summarize the changes in Cumulative other comprehensive loss for the three months ended March 31, 2016 and 2015:

(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net (Losses) Gains on Available-for-Sale Securities			Unrealized Net Losses on Cash Flow Hedges			Total Cumulative Other Comprehensive (Loss) Income
Balance at December 31, 2015	$	(482,629	)	$	(104,346	)	$	(120	)				$	(587,095	)
Amounts recognized in Other comprehensive loss (1)	33,546						(42		)	$	(14,682	)	18,822
Amounts reclassified from Other comprehensive loss (2)				168			20						188
Net change	33,546			168			(22		)	(14,682		)	19,010
Balance at March 31, 2016	$	(449,083	)	$	(104,178	)	$	(142	)	$	(14,682	)	$	(568,085	)

⁽¹⁾ Net of taxes of $25 for unrealized net losses on available-for-sale securities and $9,075 for unrealized net losses on cash flow hedges.

⁽²⁾ Net of taxes of $(3) for pension and other postretirement benefit adjustments and $(12) for realized losses on the sale of available-for-sale securities.

(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net Gains (Losses) on Available-for-Sale Securities			Total Cumulative Other Comprehensive Loss
Balance at December 31, 2014	$	(354,384	)	$	(118,167	)	$	593		$	(471,958	)
Amounts recognized in Other comprehensive loss (3)	(56,776		)				(132		)	(56,908		)
Amounts reclassified from Other comprehensive loss (4)				570			(9		)	561
Net change	(56,776		)	570			(141		)	(56,347		)
Balance at March 31, 2015	$	(411,160	)	$	(117,597	)	$	452		$	(528,305	)

⁽³⁾ Net of taxes of $81 for unrealized net losses on available-for-sale securities.

⁽⁴⁾ Net of taxes of $(206) for pension and other postretirement benefit adjustments and $4 for realized gains on the sale of available-for-sale securities.

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Product Warranties

3 Months Ended

Mar. 31, 2016

Product Warranties Disclosures [Abstract]

PRODUCT WARRANTIES

PRODUCT WARRANTIES

Changes in the Company’s accrual for product warranty claims during the first three months of 2016 and 2015, including customer satisfaction settlements, were as follows:

(Thousands of dollars)
	2016			2015
Balance at January 1	$	31,878		$	27,723
Charges to expense	5,541			5,146
Settlements	(5,135		)	(6,721		)
Balance at March 31	$	32,284		$	26,148

For further details on the Company’s accrual for product warranty claims, see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Exit or Disposal Activities

3 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

EXIT OR DISPOSAL ACTIVITIES

EXIT OR DISPOSAL ACTIVITIES

Liabilities associated with exit or disposal activities are recognized as incurred in accordance with the Exit or Disposal Cost Obligations Topic of the ASC. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with the Property, Plant and Equipment Topic of the ASC, and if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value.

In the three months ended March 31, 2016, seven stores in the Paint Stores Group, one branch in the Global Finishes Group and one facility in the Consumer Group were closed due to lower demand or redundancy.

The following table summarizes the activity and remaining liabilities associated with qualified exit costs at March 31, 2016:

(Thousands of dollars)
Exit Plan	Balance at December 31, 2015		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Balance at March 31, 2016
Consumer Group facilities shutdown in 2016:
Severance and related costs			$	116				$	116
Paint Stores Group stores shutdown in 2015:
Other qualified exit costs	$	12			$	(12	)
Global Finishes Group exit of a business in 2015:
Severance and related costs	1,096				(130		)	966
Other qualified exit costs	2,750		580		(1,654		)	1,676
Paint Stores Group stores shutdown in 2014:
Other qualified exit costs	184				(93		)	91
Consumer Group facilities shutdown in 2014:
Severance and related costs	445				(42		)	403
Other qualified exit costs	52				(39		)	13
Global Finishes Group exit of business in 2014:
Severance and related costs	430				(430		)
Other qualified exit costs	353		430		(247		)	536
Other qualified exit costs for facilities shutdown prior to 2014	1,755				(221		)	1,534
Totals	$	7,077	$	1,126	$	(2,868	)	$	5,335

For further details on the Company’s exit or disposal activities, see Note 5 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Health Care, Pension and Other Benefits

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

HEALTH CARE, PENSION AND OTHER BENEFITS

HEALTH CARE, PENSION AND OTHER BENEFITS

Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:

(Thousands of dollars)	Domestic Defined Benefit Pension Plans						Foreign Defined Benefit Pension Plans						Postretirement Benefits Other than Pensions
	2016			2015			2016			2015			2016			2015
Three Months Ended March 31:
Net periodic benefit cost (credit):
Service cost	$	5,489		$	5,754		$	1,341		$	1,325		$	561		$	621
Interest cost	6,643			6,237			2,080			2,271			2,752			2,795
Expected return on assets	(12,567		)	(13,024		)	(1,846		)	(2,431		)
Amortization of:
Prior service cost (credit)	301			327									(1,645		)	(1,132		)
Actuarial loss	1,152			843			361			485						253
Settlement costs							4,038
Net periodic benefit cost (credit)	$	1,018		$	137		$	5,974		$	1,650		$	1,668		$	2,537

The settlement charge recognized in the first quarter of 2016 relates to the wind up of an acquired Canada plan. For further details on the Company’s health care, pension and other benefits, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Other Long-Term Liabilities

3 Months Ended

Mar. 31, 2016

Environmental Remediation Obligations [Abstract]

OTHER LONG-TERM LIABILITIES

OTHER LONG-TERM LIABILITIES

The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are determined based on currently available facts regarding each site. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided. At March 31, 2016, the unaccrued maximum of the estimated range of possible outcomes is $84.5 million higher than the minimum.

The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.

Included in Other long-term liabilities at March 31, 2016 and 2015 were accruals for extended environmental-related activities of $143.4 million and $112.9 million, respectively. Estimated costs of current investigation and remediation activities of $22.5 million and $16.9 million are included in Other accruals at March 31, 2016 and 2015, respectively.

Three of the Company’s currently and formerly owned manufacturing sites account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at March 31, 2016. At March 31, 2016, $129.5 million, or 78.0 percent of the total accrual, related directly to these three sites. In the aggregate unaccrued maximum of $84.5 million at March 31, 2016, $61.2 million, or 72.4 percent, related to the three manufacturing sites. While environmental investigations and remedial actions are in different stages at these sites, additional investigations, remedial actions and monitoring will likely be required at each site.

Management cannot presently estimate the ultimate potential loss contingencies related to these sites or other less significant sites until such time as a substantial portion of the investigation at the sites is completed and remedial action plans are developed. In the event any future loss contingency significantly exceeds the current amount accrued, the recording of the ultimate liability may result in a material impact on net income for the annual or interim period during which the additional costs are accrued. Management does not believe that any potential liability ultimately attributed to the Company for its environmental-related matters will have a material adverse effect on the Company’s financial condition, liquidity, or cash flow due to the extended period of time during which environmental investigation and remediation takes place. An estimate of the potential impact on the Company’s operations cannot be made due to the aforementioned uncertainties.

Management expects these contingent environmental-related liabilities to be resolved over an extended period of time. Management is unable to provide a more specific time frame due to the indefinite amount of time to conduct investigation activities at any site, the indefinite amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indefinite amount of time necessary to conduct remediation activities.

For further details on the Company’s Other long-term liabilities, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Litigation

3 Months Ended

Mar. 31, 2016

Loss Contingency, Information about Litigation Matters [Abstract]

LITIGATION

LITIGATION

In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with the Contingencies Topic of the ASC, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred.

Lead pigment and lead-based paint litigation. The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint. The Company believes that the litigation brought to date is without merit or subject to meritorious defenses and is vigorously defending such litigation. The Company has not settled any material lead pigment or lead-based paint litigation. The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief.

Notwithstanding the Company’s views on the merits, litigation is inherently subject to many uncertainties, and the Company ultimately may not prevail. Adverse court rulings or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings. In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful.

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 legislation and/or administrative regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations. The Company has not accrued any amounts for such litigation. With respect to such litigation, including the public nuisance litigation, the Company does not believe that it is probable that a loss has occurred, and it is not possible to estimate the range of potential losses as there is no prior history of a loss of this nature and there is no substantive information upon which an estimate could be based. In addition, any potential liability that may result from any changes to legislation and regulations 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.

Public nuisance claim litigation. The Company and other companies are or were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island, the City of St. Louis, Missouri, various cities and counties in the State of New Jersey, various cities in the State of Ohio and the State of Ohio, the City of Chicago, Illinois, the City of Milwaukee, Wisconsin and the County of Santa Clara, California and other public entities in the State of California. Except for the Santa Clara County, California proceeding, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

The proceedings initiated by the State of Rhode Island included two jury trials. At the conclusion of the second trial, 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 Company and two other defendants appealed and, on July 1, 2008, the Rhode Island Supreme Court, among other determinations, reversed the judgment of abatement with respect to the Company and two other defendants. The Rhode Island Supreme Court’s decision reversed the public nuisance liability judgment against the Company on the basis that the complaint failed to state a public nuisance claim as a matter of law.

The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara. In the original complaint, the plaintiffs asserted various claims including fraud and concealment, strict product liability/failure to warn, strict product liability/design defect, negligence, negligent breach of a special duty, public nuisance, private nuisance, and violations of California’s Business and Professions Code. A number of the asserted claims were resolved in favor of the defendants through pre-trial proceedings. The named plaintiffs in the Fourth Amended Complaint, filed on March 16, 2011, are the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura, the Cities of Oakland and San Diego and the City and County of San Francisco. The Fourth Amended Complaint asserted a sole claim for public nuisance, alleging that the presence of lead pigments for use in paint and coatings in, on and around residences in the plaintiffs’ jurisdictions constitutes a public nuisance. The plaintiffs sought the abatement of the alleged public nuisance that exists within the plaintiffs’ jurisdictions. A trial commenced on July 15, 2013 and ended on August 22, 2013. The court entered final judgment on January 27, 2014, finding in favor of the plaintiffs and against the Company and two other defendants (ConAgra Grocery Products Company and NL Industries, Inc.). The final judgment held the Company jointly and severally liable with the other two defendants to pay $1.15 billion into a fund to abate the public nuisance. The Company strongly disagrees with the judgment. On February 18, 2014, the Company filed a motion for new trial and a motion to vacate the judgment. The court denied these motions on March 24, 2014. On March 28, 2014, the Company filed a notice of appeal to the Sixth District Court of Appeal for the State of California. The filing of the notice of appeal effects an automatic stay of the judgment without the requirement to post a bond. The appeal is fully briefed, and the parties are waiting for the Sixth District Court of Appeal to set a date for oral argument. The date for oral argument is at the discretion of the Sixth District Court of Appeal. The Company expects the Sixth District Court of Appeal to issue its ruling within 90 days following oral argument. The Company believes that the judgment conflicts with established principles of law and is unsupported by the evidence. The Company has had a favorable history with respect to lead pigment and lead-based paint litigation, particularly other public nuisance litigation, and accordingly, the Company believes that it is not probable that a loss has occurred and it is not possible to estimate the range of potential loss with respect to the case.

Litigation seeking damages from alleged personal injury. The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries. These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages allegedly incurred by the children’s parents or guardians. These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs. These proceedings include purported claims by individuals, groups of individuals and class actions.

The plaintiff in Thomas v. Lead Industries Association, et al., initiated an action in state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999. The claims against the Company and the other defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability. Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff. The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result. The plaintiff appealed and, on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the Company and other defendants.

Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation. Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts. However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v. American Cyanamid, et al., on November 15, 2010, the District Court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive. The District Court's decision in Gibson v. American Cyanamid, et al., was appealed by the plaintiff to the United States Court of Appeals for the Seventh Circuit. On July 24, 2014, the United States Court of Appeals for the Seventh Circuit reversed the judgment and remanded the case back to the District Court for further proceedings. On January 16, 2015, the defendants filed a petition for certiorari in the United States Supreme Court seeking that Court's review of the Seventh Circuit's decision, and on May 18, 2015, the United States Supreme Court denied the defendants' petition. Also, in Yasmine Clark v. The Sherwin-Williams Company, et al., the Wisconsin Circuit Court, Milwaukee County, on March 25, 2014, held that the application to a pending case of Section 895.046 of the Wisconsin Statutes (which clarifies the application of the risk contribution theory) is unconstitutional as a violation of the plaintiff’s right to due process of law under the Wisconsin Constitution. On August 21, 2014, the Wisconsin Court of Appeals granted defendants' petition to hear the issue as an interlocutory appeal. On September 29, 2015, the Wisconsin Court of Appeals certified the appeal to the Wisconsin Supreme Court for its determination. Oral argument before the Wisconsin Supreme Court occurred on April 5, 2016. On April 15, 2016, the Wisconsin Supreme Court published its decision, deciding in a 3 to 3 split decision to remand the case back to the Wisconsin Court of Appeals for its consideration.

Insurance coverage litigation. The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to primarily determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company. The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, is currently stayed and inactive. The liability insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, has been dismissed. An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities. The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual. Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition. As previously stated, however, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

Litigation related to Consorcio Comex. As previously disclosed, the Company entered into a definitive Stock Purchase Agreement (as subsequently amended and restated, the “Purchase Agreement”), with Avisep, S.A. de C.V. (“Avisep”) and Bevisep, S.A. de C.V. (“Bevisep”) to, among other things, acquire the Mexico business of Consorcio Comex, S.A. de C.V. (the "Acquisition"). Under the terms of the Purchase Agreement, either the Company or Avisep and Bevisep had the right to terminate the Purchase Agreement in the event that the closing of the Acquisition did not occur on or prior to March 31, 2014 and such party was not in material breach of the Purchase Agreement.

On April 3, 2014, the Company sent notice to Avisep and Bevisep that the Company was terminating the Purchase Agreement. On April 3, 2014, the Company filed a complaint for declaratory judgment in the Supreme Court of the State of New York, New York County, requesting the court to declare that the Company had used commercially reasonable efforts as required under the Purchase Agreement and has not breached the Purchase Agreement. On August 7, 2014, the case was removed by Avisep and Bevisep to the United States District Court for the Southern District of New York. On September 24, 2014, Avisep and Bevisep filed a motion to dismiss the case, including for lack of personal jurisdiction. Oral argument on the motion to dismiss before the District Court occurred on January 27, 2016. On January 29, 2016, the District Court entered a judgment dismissing the case without prejudice for lack of personal jurisdiction. On April 11, 2014, Avisep and Bevisep initiated an arbitration proceeding against the Company in the International Court of Arbitration contending that the Company breached the Purchase Agreement by terminating the Purchase Agreement and not utilizing commercially reasonable efforts under the Purchase Agreement, which allegedly caused Avisep and Bevisep to incur damages. On June 1, 2015, Avisep and Bevisep filed their statement of claim in the arbitration alleging damages of approximately $85 million. On August 31, 2015, the Company filed its memorial in support of its statement of defense in the arbitration. The hearing on the merits in the arbitration commenced on April 11, 2016 and ended on April 19, 2016. The Company expects the arbitration tribunal to issue its decision by the end of the third quarter of 2016. The Company continues to believe that the claims are without merit and will continue to vigorously defend against such claims.

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Other

3 Months Ended

Mar. 31, 2016

Other Income and Expenses [Abstract]

OTHER

OTHER

Other general expense (income) - net

Included in Other general expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Provisions for environmental matters - net	$	18,029		$	1,050
Gain on disposition of assets	(475		)	(2,723		)
Total	$	17,554		$	(1,673	)

Provisions for environmental matters - net represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with the Offsetting Subtopic of the Balance Sheet Topic of the ASC. See Note 8 for further details on the Company’s environmental-related activities.

The gain on disposition of assets represents net realized gains associated with the disposal of fixed assets previously used in the conduct of the primary business of the Company.

Other expense (income) - net

Included in Other expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Dividend and royalty income	$	(1,166	)	$	(1,081	)
Net expense from banking activities	2,263			2,967
Foreign currency transaction related losses	1,690			1,138
Other income	(4,880		)	(5,497		)
Other expense	2,319			2,228
Total	$	226		$	(245	)

Foreign currency transaction related losses represent net realized losses on U.S. dollar-denominated liabilities of foreign subsidiaries and net realized and unrealized losses from foreign currency option and forward contracts. There were no material foreign currency option and forward contracts outstanding at March 31, 2016 and 2015.

Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no other items within the other income or other expense caption that were individually significant.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective tax rate was 32.0 percent for the first quarter of 2016 and 2015. The major components of the Company's effective tax rate were consistent for the first quarter of 2016 compared to the first quarter of 2015.

At December 31, 2015, the Company had $33.9 million in unrecognized tax benefits, the recognition of which would have an effect of $30.0 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2015 was $3.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to federal audits of partnership investments and expiring statutes in foreign and state jurisdictions.

The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2015, the Company had accrued $8.6 million for the potential payment of income tax interest and penalties.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2015 during the first three months of 2016.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As of March 31, 2016, there were no examinations being conducted by the IRS, however, the statute of limitations has not expired for the 2012, 2013 and 2014 tax years.

As of March 31, 2016, the Company is subject to non-U.S. income tax examinations for the tax years of 2008 through 2015. In addition, the Company is subject to state and local income tax examinations for the tax years 2005 through 2015.

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Net Income Per Common Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE

(Thousands of dollars except per share data)	Three Months Ended March 31,
	2016		2015
Basic
Average common shares outstanding	91,475,860		92,740,059
Net income	$	147,128	$	131,404
Basic net income per common share	$	1.61	$	1.42
Diluted
Average common shares outstanding	91,475,860		92,740,059
Stock options and other contingently issuable shares (1)	1,517,487		2,005,070
Non-vested restricted stock grants	554,887		533,596
Average common shares outstanding assuming dilution	93,548,234		95,278,725
Net income	$	147,128	$	131,404
Diluted net income per common share	$	1.57	$	1.38

⁽¹⁾  Stock options and other contingently issuable shares excluded 34,208 and 12,414 shares due to their anti-dilutive effect for the three months ended March 31, 2016 and 2015, respectively.

Prior to 2016, the Company used the two-class method of calculating basic and diluted earnings per share as time-based restricted shares were considered a separate class of participating securities since they received non-forfeitable dividends. The time-based restricted shares represented less than 1% of outstanding shares, and therefore the difference between basic and diluted earnings per share under the two-class method and treasury stock method was not significant. Starting in 2016, there will be no additional grants of time-based restricted shares. Accordingly, 2016 basic and diluted earnings per share are calculated using the treasury stock method, and the 2015 calculations are presented under the treasury stock method for comparability.

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Reportable Segment Information

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

REPORTABLE SEGMENT INFORMATION

REPORTABLE SEGMENT INFORMATION

The Company reports segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC. The Company has determined that it has four reportable operating segments: Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group (individually, a "Reportable Segment" and collectively, the “Reportable Segments”).

(Thousands of dollars)	Three Months Ended March 31, 2016
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group			Administrative			Consolidated Totals
Net external sales	$	1,615,307	$	378,086	$	454,166	$	125,187		$	1,278		$	2,574,024
Intersegment transfers			613,630		1,956		8,693			(624,279		)
Total net sales and intersegment transfers	$	1,615,307	$	991,716	$	456,122	$	133,880		$	(623,001	)	$	2,574,024
Segment profit	$	253,534	$	63,964	$	48,582	$	(928	)				$	365,152
Interest expense										$	(25,732	)	(25,732		)
Administrative expenses and other										(123,055		)	(123,055		)
Income before income taxes	$	253,534	$	63,964	$	48,582	$	(928	)	$	(148,787	)	$	216,365

	Three Months Ended March 31, 2015
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group		Administrative			Consolidated Totals
Net external sales	$	1,461,505	$	351,690	$	469,556	$	166,231	$	1,302		$	2,450,284
Intersegment transfers			607,538		1,774		10,069		(619,381		)
Total net sales and intersegment transfers	$	1,461,505	$	959,228	$	471,330	$	176,300	$	(618,079	)	$	2,450,284
Segment profit	$	176,576	$	55,406	$	38,900	$	9,500				$	280,382
Interest expense									$	(12,351	)	(12,351		)
Administrative expenses and other									(74,790		)	(74,790		)
Income before income taxes	$	176,576	$	55,406	$	38,900	$	9,500	$	(87,141	)	$	193,241

In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs. International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses which were not directly associated with the Reportable Segments. The Administrative segment did not include any significant foreign operations. Also included in the Administrative segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.

Net external sales and segment profit of all consolidated foreign subsidiaries were $400.7 million and $10.2 million, respectively, for the first quarter of 2016, and $456.5 million and $18.3 million, respectively, for the first quarter of 2015. Long-lived assets of these subsidiaries totaled $509.8 million and $513.8 million at March 31, 2016 and March 31, 2015, respectively. Domestic operations accounted for the remaining net external sales, segment profits and long-lived assets. No single geographic area outside the United States was significant relative to consolidated net external sales, income before taxes, or consolidated long-lived assets.

Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all periods presented.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. It does not expand the use of fair value measurements. The Company did not have any fair value measurements for its non-financial assets and liabilities during the first quarter. The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:

(Thousands of dollars)
			Quoted Prices
			in Active				Significant
	Fair Value at		Markets for		Significant Other		Unobservable
	March 31,		Identical Assets		Observable Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Deferred compensation plan asset (1)	$	23,949	$	2,673	$	21,276
Liabilities:
Interest rate lock liability (2)	$	23,757			$	23,757
Deferred compensation plan liability (3)	35,116		$	35,116
Total liabilities	$	58,873	$	35,116	$	23,757

⁽¹⁾  The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $24,803.

⁽²⁾ The interest rate lock liability is measured at the present value of the expected future cash flows using market-based observable inputs.

⁽³⁾ The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.

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Debt

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

DEBT

DEBT

The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.

(Thousands of dollars)	March 31, 2016				March 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Publicly traded debt	$	1,906,160	$	1,943,160	$	1,114,578	$	1,165,804
Non-traded debt	4,793		4,476		4,902		4,655

In March 2016, the Company entered into a $9.3 billion senior unsecured bridge term loan facility (Bridge Loan) as committed financing for the Valspar acquisition as disclosed in Note 17. No balances were drawn against this facility as of March 31, 2016. Debt issuance costs of $60.1 million related to this facility were incurred and recorded in Other current assets. Of this amount, $5.9 million was amortized and included in Interest expense for three months ended March 31, 2016.

In March 2016, in anticipation of a probable issuance of new long-term fixed rate debt within the next twelve months, the Company entered into a series of interest rate lock agreements (collectively, the interest rate locks) on a combined notional amount of $1.7 billion. The objective of the interest rate locks is to hedge the variability in the future semi-annual payments on the anticipated debt attributable to changes in the benchmark interest rate (U.S. Treasury) during the hedge periods. The future semi-annual interest payments are exposed to interest rate risk due to changes in the benchmark interest rate from the inception of the hedge to the time of issuance. The interest rate locks were evaluated for hedge accounting treatment and were designated as cash flow hedges. Therefore, the interest rate locks are recognized at fair value on the Consolidated Balance Sheet, and changes in fair value (to the extent effective) are recognized in Cumulative other comprehensive loss. Amounts recognized in Cumulative other comprehensive loss will be reclassified to Interest expense in periods following the settlement of the interest rate locks. The Company will evaluate hedge effectiveness each period until settlement. At March 31, 2016, an interest rate lock liability of $23.8 million was included in Other accruals, and the related pretax loss of $23.8 million was recognized in Cumulative other comprehensive loss.

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Non-Traded Investments

3 Months Ended

Mar. 31, 2016

Non-Traded Investments [Abstract]

NON-TRADED INVESTMENTS

NON-TRADED INVESTMENTS

The Company has invested in the U.S. affordable housing and historic renovation real estate markets. These non-traded investments have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the ASC, the investments are not consolidated. For affordable housing investments entered into prior to the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized. For affordable housing investments entered into on or after the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the proportional amortization method. Under the proportional amortization method, the initial cost of the investments is amortized to income tax expense in proportion to the tax credits and other tax benefits received. The carrying amount of the affordable housing and historic renovation investments, included in Other assets, was $202.8 million and $223.8 million at March 31, 2016 and 2015, respectively. The liability for estimated future capital contributions to the investments was $178.9 million and $196.8 million at March 31, 2016 and 2015, respectively.

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Acquisitions

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

On March 19, 2016, the Company and the Valspar Corporation (Valspar) entered into a definitive agreement under which the Company will acquire Valspar for $113 per share in an all cash transaction, or a value of approximately $9.5 billion and assumption of Valspar debt. The transaction is subject to certain conditions and shareholder and regulatory approvals. If in connection with obtaining the required regulatory approvals, the parties are required to divest assets of Valspar or the Company representing, in the aggregate, more than $650 million in net sales, then the per share consideration will be $105 in cash. The Company is not required to consummate the acquisition if regulatory authorities require the divestiture of assets of Valspar or the Company representing, in the aggregate, more than $1.5 billion. Valspar's architectural coatings assets in Australia are excluded from the calculation of the $650 million and/or $1.5 billion threshold if such assets are required to be divested. During the three months ended March 31, 2016, the Company incurred SG&A expenses of $31.0 million associated with the anticipated acquisition of Valspar. The acquisition will expand Sherwin-Williams diversified array of brands and technologies, expand its global platform and add new capabilities in the packaging and coil segments.

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting Policy

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Inventory Policy

The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2015.

New Accounting Pronouncements Policy

Effective January 1, 2016, the Company adopted the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires companies to present debt issuance costs associated with a debt liability as a deduction from the carrying amount of that debt liability on the balance sheet rather than being capitalized as an asset. The adoption of this ASU did not have a material effect on the Company's results of operations, financial condition or liquidity.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting,” which changes certain aspects of share-based compensation accounting, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. The Company is currently in the process of evaluating the impact of this standard.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which consists of a comprehensive lease accounting standard. Under the new standard, assets and liabilities arising from most leases will be recognized on the balance sheet. Leases will be classified as either operating or financing, and the lease classification will determine whether expense is recognized on a straight line basis (operating leases) or based on an effective interest method (financing leases). The new standard is effective for interim and annual periods beginning after December 15, 2018.  A modified retrospective transition approach is required with certain practical expedients available.  The Company is currently in the process of evaluating the impact of this standard.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance for certain aspects of recognition, measurement and disclosure of financial instruments. The standard is effective for interim and annual periods beginning after December 31, 2017, and early adoption is not permitted. The Company is in the process of evaluating the impact of the standard.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which eliminates the requirement for separate presentation of current and non-current portions of deferred tax. All deferred tax assets and deferred tax liabilities will be presented as non-current on the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2016. Either retrospective or prospective presentation can be used. The Company will adopt ASU No. 2016-17 as required. The ASU will not have a material effect on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which consists of a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The issuance of ASU No. 2015-14 in August 2015 delays the effective date of the standard to interim and annual periods beginning after December 15, 2017. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard.

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Changes in Cumulative Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2016

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Changes in Cumulative Other Comprehensive Loss

The following tables summarize the changes in Cumulative other comprehensive loss for the three months ended March 31, 2016 and 2015:

(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net (Losses) Gains on Available-for-Sale Securities			Unrealized Net Losses on Cash Flow Hedges			Total Cumulative Other Comprehensive (Loss) Income
Balance at December 31, 2015	$	(482,629	)	$	(104,346	)	$	(120	)				$	(587,095	)
Amounts recognized in Other comprehensive loss (1)	33,546						(42		)	$	(14,682	)	18,822
Amounts reclassified from Other comprehensive loss (2)				168			20						188
Net change	33,546			168			(22		)	(14,682		)	19,010
Balance at March 31, 2016	$	(449,083	)	$	(104,178	)	$	(142	)	$	(14,682	)	$	(568,085	)

⁽¹⁾ Net of taxes of $25 for unrealized net losses on available-for-sale securities and $9,075 for unrealized net losses on cash flow hedges.

⁽²⁾ Net of taxes of $(3) for pension and other postretirement benefit adjustments and $(12) for realized losses on the sale of available-for-sale securities.

(Thousands of dollars)	Foreign Currency Translation Adjustments			Pension and Other Postretirement Benefit Adjustments			Unrealized Net Gains (Losses) on Available-for-Sale Securities			Total Cumulative Other Comprehensive Loss
Balance at December 31, 2014	$	(354,384	)	$	(118,167	)	$	593		$	(471,958	)
Amounts recognized in Other comprehensive loss (3)	(56,776		)				(132		)	(56,908		)
Amounts reclassified from Other comprehensive loss (4)				570			(9		)	561
Net change	(56,776		)	570			(141		)	(56,347		)
Balance at March 31, 2015	$	(411,160	)	$	(117,597	)	$	452		$	(528,305	)

⁽³⁾ Net of taxes of $81 for unrealized net losses on available-for-sale securities.

⁽⁴⁾ Net of taxes of $(206) for pension and other postretirement benefit adjustments and $4 for realized gains on the sale of available-for-sale securities.

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Product Warranties (Tables)

3 Months Ended

Mar. 31, 2016

Product Warranties Disclosures [Abstract]

Company's accrual for product warranty claims

Changes in the Company’s accrual for product warranty claims during the first three months of 2016 and 2015, including customer satisfaction settlements, were as follows:

(Thousands of dollars)
	2016			2015
Balance at January 1	$	31,878		$	27,723
Charges to expense	5,541			5,146
Settlements	(5,135		)	(6,721		)
Balance at March 31	$	32,284		$	26,148

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Exit or Disposal Activities (Tables)

3 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

Summary of activity and remaining liabilities associated with qualified exit costs

The following table summarizes the activity and remaining liabilities associated with qualified exit costs at March 31, 2016:

(Thousands of dollars)
Exit Plan	Balance at December 31, 2015		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Balance at March 31, 2016
Consumer Group facilities shutdown in 2016:
Severance and related costs			$	116				$	116
Paint Stores Group stores shutdown in 2015:
Other qualified exit costs	$	12			$	(12	)
Global Finishes Group exit of a business in 2015:
Severance and related costs	1,096				(130		)	966
Other qualified exit costs	2,750		580		(1,654		)	1,676
Paint Stores Group stores shutdown in 2014:
Other qualified exit costs	184				(93		)	91
Consumer Group facilities shutdown in 2014:
Severance and related costs	445				(42		)	403
Other qualified exit costs	52				(39		)	13
Global Finishes Group exit of business in 2014:
Severance and related costs	430				(430		)
Other qualified exit costs	353		430		(247		)	536
Other qualified exit costs for facilities shutdown prior to 2014	1,755				(221		)	1,534
Totals	$	7,077	$	1,126	$	(2,868	)	$	5,335

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Health Care, Pension and Other Benefits (Tables)

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Components of net periodic benefit costs for pension and other employee benefit plans

Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:

(Thousands of dollars)	Domestic Defined Benefit Pension Plans						Foreign Defined Benefit Pension Plans						Postretirement Benefits Other than Pensions
	2016			2015			2016			2015			2016			2015
Three Months Ended March 31:
Net periodic benefit cost (credit):
Service cost	$	5,489		$	5,754		$	1,341		$	1,325		$	561		$	621
Interest cost	6,643			6,237			2,080			2,271			2,752			2,795
Expected return on assets	(12,567		)	(13,024		)	(1,846		)	(2,431		)
Amortization of:
Prior service cost (credit)	301			327									(1,645		)	(1,132		)
Actuarial loss	1,152			843			361			485						253
Settlement costs							4,038
Net periodic benefit cost (credit)	$	1,018		$	137		$	5,974		$	1,650		$	1,668		$	2,537

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Other (Tables)

3 Months Ended

Mar. 31, 2016

Other Income and Expenses [Abstract]

Other general expense (income) - net

Included in Other general expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Provisions for environmental matters - net	$	18,029		$	1,050
Gain on disposition of assets	(475		)	(2,723		)
Total	$	17,554		$	(1,673	)

Other expense (income) - net

Included in Other expense (income) - net were the following:

(Thousands of dollars)	Three Months Ended March 31,
	2016			2015
Dividend and royalty income	$	(1,166	)	$	(1,081	)
Net expense from banking activities	2,263			2,967
Foreign currency transaction related losses	1,690			1,138
Other income	(4,880		)	(5,497		)
Other expense	2,319			2,228
Total	$	226		$	(245	)

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Net Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Computation of net income per common share

(Thousands of dollars except per share data)	Three Months Ended March 31,
	2016		2015
Basic
Average common shares outstanding	91,475,860		92,740,059
Net income	$	147,128	$	131,404
Basic net income per common share	$	1.61	$	1.42
Diluted
Average common shares outstanding	91,475,860		92,740,059
Stock options and other contingently issuable shares (1)	1,517,487		2,005,070
Non-vested restricted stock grants	554,887		533,596
Average common shares outstanding assuming dilution	93,548,234		95,278,725
Net income	$	147,128	$	131,404
Diluted net income per common share	$	1.57	$	1.38

⁽¹⁾  Stock options and other contingently issuable shares excluded 34,208 and 12,414 shares due to their anti-dilutive effect for the three months ended March 31, 2016 and 2015, respectively.

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Reportable Segment Information (Tables)

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Reportable segment information

(Thousands of dollars)	Three Months Ended March 31, 2016
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group			Administrative			Consolidated Totals
Net external sales	$	1,615,307	$	378,086	$	454,166	$	125,187		$	1,278		$	2,574,024
Intersegment transfers			613,630		1,956		8,693			(624,279		)
Total net sales and intersegment transfers	$	1,615,307	$	991,716	$	456,122	$	133,880		$	(623,001	)	$	2,574,024
Segment profit	$	253,534	$	63,964	$	48,582	$	(928	)				$	365,152
Interest expense										$	(25,732	)	(25,732		)
Administrative expenses and other										(123,055		)	(123,055		)
Income before income taxes	$	253,534	$	63,964	$	48,582	$	(928	)	$	(148,787	)	$	216,365

	Three Months Ended March 31, 2015
	Paint Stores Group		Consumer Group		Global Finishes Group		Latin America Coatings Group		Administrative			Consolidated Totals
Net external sales	$	1,461,505	$	351,690	$	469,556	$	166,231	$	1,302		$	2,450,284
Intersegment transfers			607,538		1,774		10,069		(619,381		)
Total net sales and intersegment transfers	$	1,461,505	$	959,228	$	471,330	$	176,300	$	(618,079	)	$	2,450,284
Segment profit	$	176,576	$	55,406	$	38,900	$	9,500				$	280,382
Interest expense									$	(12,351	)	(12,351		)
Administrative expenses and other									(74,790		)	(74,790		)
Income before income taxes	$	176,576	$	55,406	$	38,900	$	9,500	$	(87,141	)	$	193,241

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Financial assets and liabilities measured at fair value on a recurring basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:

(Thousands of dollars)
			Quoted Prices
			in Active				Significant
	Fair Value at		Markets for		Significant Other		Unobservable
	March 31,		Identical Assets		Observable Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Deferred compensation plan asset (1)	$	23,949	$	2,673	$	21,276
Liabilities:
Interest rate lock liability (2)	$	23,757			$	23,757
Deferred compensation plan liability (3)	35,116		$	35,116
Total liabilities	$	58,873	$	35,116	$	23,757

⁽¹⁾  The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $24,803.

⁽²⁾ The interest rate lock liability is measured at the present value of the expected future cash flows using market-based observable inputs.

⁽³⁾ The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.

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Debt (Tables)

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Carrying amount and fair value of debt

The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.

(Thousands of dollars)	March 31, 2016				March 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Publicly traded debt	$	1,906,160	$	1,943,160	$	1,114,578	$	1,165,804
Non-traded debt	4,793		4,476		4,902		4,655

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Dividends (Details) - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Dividends [Abstract]
Dividends paid per common share (in dollars per share)	$ 0.84	$ 0.67

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Changes in Cumulative Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016		Mar. 31, 2015
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance		$ 867,910
Ending balance		1,000,823		$ 469,172
Tax benefit for unrealized net losses on available-for-sale securities before reclassifications		25		81
Tax benefit for unrealized losses on cash flow hedges		9,075
Tax benefit related to pension and other postretirement benefit plans		(3)		(206)
Tax expense (benefit) for realized gains (losses) on the sale of available-for-sale securities for amounts reclassified from other comprehensive loss		(12)		4
Foreign Currency Translation Adjustments [Member]
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance		(482,629)		(354,384)
Amounts recognized in other comprehensive loss		$ 33,546	[1]	(56,776)	[2]
Amounts reclassified from other comprehensive loss	[3]
Net change		$ 33,546		(56,776)
Ending balance		(449,083)		(411,160)
Pension and Other Postretirement Benefit Adjustments [Member]
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance		(104,346)		(118,167)
Amounts reclassified from other comprehensive loss		168	[3]	570	[4]
Net change		168		570
Ending balance		(104,178)		(117,597)
Unrealized Net (Losses) Gains on Available-for-Sale Securities [Member]
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance		(120)		593
Amounts recognized in other comprehensive loss		(42)	[1]	(132)	[2]
Amounts reclassified from other comprehensive loss		20	[3]	(9)	[4]
Net change		(22)		(141)
Ending balance		(142)		452
Unrealized Net Losses on Cash Flow Hedges [Member]
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Amounts recognized in other comprehensive loss	[1]	(14,682)
Net change		(14,682)
Ending balance		(14,682)
Total Cumulative Other Comprehensive (Loss) Income [Member]
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance		(587,095)		(471,958)
Amounts recognized in other comprehensive loss		18,822	[1]	(56,908)	[2]
Amounts reclassified from other comprehensive loss		188	[3]	561	[4]
Net change		19,010		(56,347)
Ending balance		$ (568,085)		$ (528,305)

[1] Net of taxes of $25 for unrealized net losses on available-for-sale securities and $9,075 for unrealized net losses on cash flow hedges.

[2] Net of taxes of $81 for unrealized net losses on available-for-sale securities.

[3] Net of taxes of $(3) for pension and other postretirement benefit adjustments and $(12) for realized losses on the sale of available-for-sale securities.

[4] Net of taxes of $(206) for pension and other postretirement benefit adjustments and $4 for realized gains on the sale of available-for-sale securities.

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Product Warranties (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Company's accrual for product warranty claims
Balance at January 1	$ 31,878	$ 27,723
Charges to expense	5,541	5,146
Settlements	(5,135)	(6,721)
Balance at March 31	$ 32,284	$ 26,148

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Exit or Disposal Activities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) facility branch store	Mar. 31, 2015 USD ($)
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	$ 7,077
Provisions in Cost of goods sold or SG&A	1,126	$ 761
Actual expenditures charged to accrual	(2,868)	$ (1,966)
Balance at March 31, 2016	$ 5,335
Consumer Group [Member]
Exit or Disposal Activities (Textual) [Abstract]
Facilities closed | facility	1
Paint Stores Group [Member]
Exit or Disposal Activities (Textual) [Abstract]
Stores closed | store	7
Global Finishes Group [Member]
Exit or Disposal Activities (Textual) [Abstract]
Branches closed | branch	1
Severance and related costs [Member] | Consumer Group [Member] | Stores Shut Down in 2016 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Provisions in Cost of goods sold or SG&A	$ 116
Balance at March 31, 2016	116
Severance and related costs [Member] | Consumer Group [Member] | Facilities Shutdown in 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	445
Actual expenditures charged to accrual	(42)
Balance at March 31, 2016	403
Severance and related costs [Member] | Global Finishes Group [Member] | Exit of Business in 2015 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	1,096
Actual expenditures charged to accrual	(130)
Balance at March 31, 2016	966
Severance and related costs [Member] | Global Finishes Group [Member] | Exit of Business in 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	$ 430
Provisions in Cost of goods sold or SG&A
Actual expenditures charged to accrual	$ (430)
Other qualified exit costs [Member] | Facilities Shutdown Prior to 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	1,755
Actual expenditures charged to accrual	(221)
Balance at March 31, 2016	1,534
Other qualified exit costs [Member] | Consumer Group [Member] | Facilities Shutdown in 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	52
Actual expenditures charged to accrual	(39)
Balance at March 31, 2016	13
Other qualified exit costs [Member] | Paint Stores Group [Member] | Stores Shut Down in 2015 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	12
Actual expenditures charged to accrual	(12)
Other qualified exit costs [Member] | Paint Stores Group [Member] | Stores Shutdown In 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	184
Actual expenditures charged to accrual	(93)
Balance at March 31, 2016	91
Other qualified exit costs [Member] | Global Finishes Group [Member] | Exit of Business in 2015 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	2,750
Provisions in Cost of goods sold or SG&A	580
Actual expenditures charged to accrual	(1,654)
Balance at March 31, 2016	1,676
Other qualified exit costs [Member] | Global Finishes Group [Member] | Exit of Business in 2014 [Member]
Summary of activity and remaining liabilities associated with qualified exit costs
Balance at December 31, 2015	353
Provisions in Cost of goods sold or SG&A	430
Actual expenditures charged to accrual	(247)
Balance at March 31, 2016	$ 536

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Health Care, Pension and Other Benefits (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Domestic Defined Benefit Pension Plans [Member]
Net periodic benefit cost (credit):
Service cost	$ 5,489	$ 5,754
Interest cost	6,643	6,237
Expected return on assets	(12,567)	(13,024)
Amortization of:
Prior service cost (credit)	301	327
Actuarial loss	1,152	843
Net periodic benefit cost (credit)	1,018	137
Foreign Defined Benefit Pension Plans [Member]
Net periodic benefit cost (credit):
Service cost	1,341	1,325
Interest cost	2,080	2,271
Expected return on assets	(1,846)	(2,431)
Amortization of:
Actuarial loss	361	485
Settlement costs	4,038
Net periodic benefit cost (credit)	5,974	1,650
Postretirement Benefits Other than Pensions [Member]
Net periodic benefit cost (credit):
Service cost	561	621
Interest cost	2,752	2,795
Amortization of:
Prior service cost (credit)	(1,645)	(1,132)
Actuarial loss		253
Net periodic benefit cost (credit)	$ 1,668	$ 2,537

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Other Long-Term Liabilities (Details) $ in Millions	Mar. 31, 2016 USD ($) ManufacturingSite	Mar. 31, 2015 USD ($)
Other Long-Term Liabilities (Textual) [Abstract]
Amount by which unaccrued maximum of estimated range exceeds minimum	$ 84.5
Accruals for extended environmental-related activities	143.4	$ 112.9
Estimated costs of current investigation and remediation activities included in other accruals	$ 22.5	$ 16.9
Number of manufacturing sites accounting for the majority of the accrual for environmental-related activities | ManufacturingSite	3
Accruals for environmental-related activities of two sites	$ 129.5
Percentage of accrual for environmental-related activities related to two sites	78.00%
Amount of unaccrued maximum related to two sites	$ 61.2
Percentage of aggregate unaccrued maximum related to two sites	72.40%

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Litigation (Details) $ in Millions	Jun. 01, 2015 USD ($)	Jan. 27, 2014 USD ($) defendant	Jul. 01, 2008 jury_trial defendant
Trial by Jury, State of Rhode Island [Member]
Loss Contingencies [Line Items]
Number of jury trials | jury_trial			2
Number of additional defendants | defendant			2
Santa Clara County, California Proceeding [Member]
Loss Contingencies [Line Items]
Number of additional defendants | defendant		2
Amount payable jointly and severally for litigation | $		$ 1,150
Pending Litigation [Member] | Avisep and Bevisep v.s. The Sherwin-Williams Company [Member]
Loss Contingencies [Line Items]
Damages sought | $	$ 85

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Other (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) contract option_plan	Mar. 31, 2015 USD ($) contract option_plan
Other general expense (income ) - net
Provisions for environmental matters - net	$ 18,029	$ 1,050
Gain on disposition of assets	(475)	(2,723)
Total	17,554	(1,673)
Other expense (income) - net
Dividend and royalty income	(1,166)	(1,081)
Net expense from banking activities	2,263	2,967
Foreign currency transaction related losses	1,690	1,138
Other income	(4,880)	(5,497)
Other expense	2,319	2,228
Total	$ 226	$ (245)
Number of foreign currency options outstanding | option_plan	0	0
Number of foreign forward contracts outstanding | contract	0	0

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Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Effective tax rate (percent)	32.00%	32.00%
Unrecognized tax benefits			$ 33,900,000
Unrecognized tax benefits adjusted			30,000,000
Amount of unrecognized tax benefits where significant change is reasonably possible			3,500,000
Accrued income tax interest and penalties			$ 8,600,000
Increase (decrease) in accrued income tax interest and penalties	$ 0

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Net Income Per Common Share (Details) $ / shares in Units, $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2016 USD ($) $ / shares shares	Mar. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2015 class
Basic
Average common shares outstanding (in shares)		91,475,860	92,740,059
Net income | $		$ 147,128	$ 131,404
Basic net income per common share (in dollars per share) | $ / shares		$ 1.61	$ 1.42
Diluted
Average common shares outstanding (in shares)		91,475,860	92,740,059
Stock options and other contingently issuable shares (in shares)	[1]	1,517,487	2,005,070
Non-vested restricted stock grants (in shares)		554,887	533,596
Average common shares outstanding assuming dilution (in shares)		93,548,234	95,278,725
Net income | $		$ 147,128	$ 131,404
Diluted net income per common share (in dollars per share) | $ / shares		$ 1.57	$ 1.38
Average common shares outstanding, anti-dilutive (in shares)		34,208	12,414
Classes of participating securities | class				2
Percent restricted shares representing outstanding shares (less than)				1.00%

[1] Stock options and other contingently issuable shares excluded 34,208 and 12,414 shares due to their anti-dilutive effect for the three months ended March 31, 2016 and 2015, respectively.

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Reportable Segment Information - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Reportable segment information
Total net sales and intersegment transfers	$ 2,574,024	$ 2,450,284
Segment profit	365,152	280,382
Interest expense	(25,732)	(12,351)
Administrative expenses and other	(123,055)	(74,790)
Income before income taxes	216,365	193,241
Paint Stores Group [Member]
Reportable segment information
Total net sales and intersegment transfers	1,615,307	1,461,505
Consumer Group [Member]
Reportable segment information
Total net sales and intersegment transfers	378,086	351,690
Global Finishes Group [Member]
Reportable segment information
Total net sales and intersegment transfers	454,166	469,556
Latin America Coatings Group [Member]
Reportable segment information
Total net sales and intersegment transfers	125,187	166,231
Administrative [Member]
Reportable segment information
Total net sales and intersegment transfers	1,278	1,302
Intersegment Transfers [Member]
Reportable segment information
Total net sales and intersegment transfers	(624,279)	(619,381)
Intersegment Transfers [Member] | Consumer Group [Member]
Reportable segment information
Total net sales and intersegment transfers	613,630	607,538
Intersegment Transfers [Member] | Global Finishes Group [Member]
Reportable segment information
Total net sales and intersegment transfers	1,956	1,774
Intersegment Transfers [Member] | Latin America Coatings Group [Member]
Reportable segment information
Total net sales and intersegment transfers	8,693	10,069
Operating Segments [Member] | Paint Stores Group [Member]
Reportable segment information
Total net sales and intersegment transfers	1,615,307	1,461,505
Segment profit	253,534	176,576
Income before income taxes	253,534	176,576
Operating Segments [Member] | Consumer Group [Member]
Reportable segment information
Total net sales and intersegment transfers	991,716	959,228
Segment profit	63,964	55,406
Income before income taxes	63,964	55,406
Operating Segments [Member] | Global Finishes Group [Member]
Reportable segment information
Total net sales and intersegment transfers	456,122	471,330
Segment profit	48,582	38,900
Income before income taxes	48,582	38,900
Operating Segments [Member] | Latin America Coatings Group [Member]
Reportable segment information
Total net sales and intersegment transfers	133,880	176,300
Segment profit	(928)	9,500
Income before income taxes	(928)	9,500
Administrative and Intersegment Transfers [Member]
Reportable segment information
Total net sales and intersegment transfers	(623,001)	(618,079)
Segment Reconciling Items [Member]
Reportable segment information
Interest expense	(25,732)	(12,351)
Administrative expenses and other	(123,055)	(74,790)
Income before income taxes	$ (148,787)	$ (87,141)

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Reportable Segment Information - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) segment	Mar. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	4
Reportable Segment Information (Textual) [Abstract]
Net external sales	$ 2,574,024	$ 2,450,284
Segment profit	365,152	280,382
Foreign Countries [Member]
Reportable Segment Information (Textual) [Abstract]
Net external sales	400,700	456,500
Segment profit	10,200	18,300
Long-lived assets	$ 509,800	$ 513,800

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Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] $ in Thousands	Mar. 31, 2016 USD ($)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets:
Deferred compensation plan asset	$ 2,673	[1]
Liabilities:
Deferred compensation plan liability	35,116	[2]
Total liabilities	35,116
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Deferred compensation plan asset	21,276	[1]
Liabilities:
Interest rate lock liability	23,757	[3]
Total liabilities	23,757
Fair Value Measurements (Textual) [Abstract]
Cost basis of the investment funds	24,803
Estimate of Fair Value Measurement [Member]
Assets:
Deferred compensation plan asset	23,949	[1]
Liabilities:
Interest rate lock liability	23,757	[3]
Deferred compensation plan liability	35,116	[2]
Total liabilities	$ 58,873

[1] The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $24,803.

[2] The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.

[3] The interest rate lock liability is measured at the present value of the expected future cash flows using market-based observable inputs.

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Debt (Details) - USD ($)		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Financial Instruments
Amortization of debt issuance costs		$ 6,656,000	$ 1,083,000
Designated as Hedging Instrument [Member] | Interest Rate Contract [Member] | Cash Flow Hedging [Member]
Financial Instruments
Notional amount of interest rate locks		1,700,000,000
Interest rate lock liability, pretax loss recognized in cumulative other comprehensive loss		23,800,000
Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | Interest Rate Contract [Member] | Cash Flow Hedging [Member]
Financial Instruments
Interest rate lock liability	[1]	23,800,000
Bridge Loan [Member] | Line of Credit [Member] | Senior Unsecured Bridge Term Loan [Member]
Financial Instruments
Maximum borrowing capacity		9,300,000,000
Bridge Loan [Member] | Line of Credit [Member] | Senior Unsecured Bridge Term Loan [Member] | Other Current Assets [Member]
Financial Instruments
Debt issuance costs		60,100,000
Bridge Loan [Member] | Line of Credit [Member] | Senior Unsecured Bridge Term Loan [Member] | Interest Expense [Member]
Financial Instruments
Amortization of debt issuance costs		5,900,000
Publicly Traded Debt [Member]
Financial Instruments
Carrying Amount		1,906,160,000	1,114,578,000
Fair Value		1,943,160,000	1,165,804,000
Non-traded debt [Member]
Financial Instruments
Carrying Amount		4,793,000	4,902,000
Fair Value		$ 4,476,000	$ 4,655,000

[1] The interest rate lock liability is measured at the present value of the expected future cash flows using market-based observable inputs.

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Non-Traded Investments (Details) - USD ($) $ in Millions	Mar. 31, 2016	Mar. 31, 2015
Non Traded Investments (Textual) [Abstract]
Carrying amount of the investments, included in other assets	$ 202.8	$ 223.8
Liability for estimated future capital contributions to the investments	$ 178.9	$ 196.8

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Acquisitions (Details) - Valspar Corporation [Member] - USD ($)		3 Months Ended
	Mar. 19, 2016	Mar. 31, 2016
Business Acquisition [Line Items]
Share price (in dollars per share)	$ 113
Enterprise value	$ 9,500,000,000
Acquisition expenses incurred		$ 31,000,000
Required Regulatory Approvals of Antitrust Authorities [Member]
Business Acquisition [Line Items]
Share price (in dollars per share)	$ 105
Contingent consideration arrangements, basis for change in share price, net sales equivalent of potentially divested assets, amount (more than)	$ 650,000,000
Contingent consideration arrangements, basis for acquisition cancellation, divested assets, amount (more than)	$ 1,500,000,000