-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nt4NVL4/IWah640pvnaT5SI//mA50mxsBNGwy4HcTGtUMgYLIlEPwaWpVwO8LQlw giBxUuGpaQIeWQKl4Mix6A== 0000950152-95-002597.txt : 19951119 0000950152-95-002597.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950152-95-002597 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHERWIN WILLIAMS CO CENTRAL INDEX KEY: 0000089800 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 340526850 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04851 FILM NUMBER: 95591012 BUSINESS ADDRESS: STREET 1: 101 PROSPECT AVE NW CITY: CLEVELAND STATE: OH ZIP: 44115 BUSINESS PHONE: 2165662200 10-Q 1 THE SHERWIN-WILLIAMS COMPANY 10-Q 1 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 September 30, 1995 ------------------ or [ ] 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 1-4851 ------ THE SHERWIN-WILLIAMS COMPANY ----------------------------------------------------------- (Exact name of registrant as specified in its charter) OHIO 34-0526850 ------------------------------ -------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 Prospect Avenue, N.W., 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 ____ --- 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 -- 84,958,330 shares as of October 31, 1995. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) Thousands of dollars, except per share data
Three months ended Sept. 30, Nine months ended Sept. 30, ---------------------------- --------------------------- 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------------------------ Net sales $ 911,387 $ 876,743 $ 2,532,912 $ 2,396,431 Costs and expenses: Cost of goods sold 520,889 499,214 1,461,908 1,378,237 Selling, general and administrative expenses 273,970 261,595 809,630 765,146 Interest expense 612 824 1,821 2,522 Interest and net investment income (2,997) (1,999) (7,623) (5,231) Other (52) 3,143 2,274 6,330 - ------------------------------------------------------------------------------------------------------------------ 792,422 762,777 2,268,010 2,147,004 - ------------------------------------------------------------------------------------------------------------------ Income before income taxes 118,965 113,966 264,902 249,427 Income taxes 44,017 42,737 98,014 93,535 - ------------------------------------------------------------------------------------------------------------------ Net income $ 74,948 $ 71,229 $ 166,888 $ 155,892 ================================================================================================================== Net income per share $ 0.87 $ 0.83 $ 1.95 $ 1.79 ==================================================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3 THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) Thousands of dollars
SEPT. 30, Dec. 31, Sept. 30, 1995 1994 1994 - ------------------------------------------------------------------------------------------------------------------ ASSETS Current assets Cash and cash equivalents $ 211,308 $ 251,415 $ 147,570 Short-term investments 5,000 Accounts receivable, less allowance 417,218 310,984 388,636 Inventories: Finished goods 391,819 396,299 380,123 Work in process and raw materials 73,694 62,921 63,064 - ------------------------------------------------------------------------------------------------------------------ 465,513 459,220 443,187 Other current assets 183,885 167,005 170,112 - ------------------------------------------------------------------------------------------------------------------ Total current assets 1,282,924 1,188,624 1,149,505 Deferred pension assets 231,671 225,962 223,118 Other assets 152,346 138,243 146,619 Property, plant and equipment 964,313 892,553 880,981 Less allowances for depreciation and amortization 521,723 483,351 476,277 - ------------------------------------------------------------------------------------------------------------------ 442,590 409,202 404,704 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 2,109,531 $ 1,962,031 $ 1,923,946 ================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 262,587 $ 258,930 $ 241,110 Compensation and taxes withheld 77,675 79,110 73,743 Other accruals 224,175 218,240 203,326 Accrued taxes 53,684 40,768 41,024 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 618,121 597,048 559,203 Long-term debt 22,711 20,465 20,484 Postretirement benefits other than pensions 175,264 172,114 167,825 Other long-term liabilities 114,699 119,060 119,932 Shareholders' equity Common stock - $1.00 par value: 85,105,727, 84,825,830 and 85,544,337 shares outstanding at Sept. 30, 1995, December 31, 1994 and Sept. 30, 1994, respectively 100,933 100,370 100,280 Other capital 168,626 159,562 156,581 Retained earnings 1,222,065 1,096,066 1,077,369 Cumulative foreign currency translation adjustment (20,375) (20,006) (20,175) Treasury stock, at cost (292,513) (282,648) (257,553) - ------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 1,178,736 1,053,344 1,056,502 - ------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 2,109,531 $ 1,962,031 $ 1,923,946 ==================================================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 4 THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) Thousands of dollars
Nine months ended Sept. 30, -------------------------- 1995 1994 - --------------------------------------------------------------------------------------------- OPERATIONS Net income $ 166,888 $ 155,892 Non-cash adjustments: Depreciation and amortization 45,987 43,536 Amortization of intangible assets 10,152 9,800 Increase in deferred pension assets (5,709) (8,535) Other 11,359 13,195 Change in current assets and liabilities-net (94,898) (108,287) Costs incurred for disposition of operations (3,766) (4,106) Other (9,053) (5,014) - --------------------------------------------------------------------------------------------- Net operating cash 120,960 96,481 INVESTING Capital expenditures (74,967) (56,930) Short-term investments (5,000) 39,700 Acquisition of assets (33,896) (9,197) Other (6,075) 562 - --------------------------------------------------------------------------------------------- Net investing cash (119,938) (25,865) FINANCING Payments of long-term debt (784) (19,183) Payments of cash dividends (40,890) (36,381) Treasury stock acquired (9,865) (103,053) Proceeds from stock options exercised 7,794 4,822 Other 2,616 657 - --------------------------------------------------------------------------------------------- Net financing cash (41,129) (153,138) - --------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (40,107) (82,522) Cash and cash equivalents at beginning of period 251,415 230,092 - --------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 211,308 $ 147,570 ============================================================================================= Taxes paid on income $ 86,348 $ 96,159 Interest paid on debt 1,447 2,280
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 5 THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Periods ended September 30, 1995 and 1994 NOTE A--BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K for the fiscal year ended December 31, 1994. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated results for the three months and nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 1995. NOTE B--DIVIDENDS Dividends paid on common stock during each of the first three quarters of 1995 and 1994 were $.16 per share and $.14 per share, respectively. NOTE C--INVESTMENT IN LIFE INSURANCE The Company invests in broad-based corporate owned life insurance. The cash surrender value of the policies, net of policy loans, are included in Other Assets. The net expense associated with such investment is included in Other Costs and Expenses. Such expense is immaterial to income before income taxes. NOTE D--OTHER COSTS AND EXPENSES Significant items included in other costs and expenses are as follows:
Three months ended Nine months ended Thousands of dollars Sept. 30, Sept. 30, ------------------------- ------------------------- 1995 1994 1995 1994 ------ -------- ------- -------- Dividend and royalty income $1,032 $ 941 $ 8,848 $ 6,377 Provisions for environmental remediation (3,000) (2,000) Provisions for disposition and termination of operations (1,500) Net expense of financing and investing activities (2,388) (4,554) (6,815) (9,821)
The net expense of financing and investing activities represents the realized gains or losses associated with disposing of fixed assets, the net gain or loss associated with the investment of certain long-term asset funds, the net pre-tax expense associated with the Company's investment in broad-based corporate owned life insurance and, in 1994, the premium associated with the retirement of $13,100,000 principal of outstanding 9.875 percent debentures. NOTE E--RECLASSIFICATION Certain amounts in the 1994 financial statements have been reclassified to conform with the 1995 presentation. 6 NOTE F--COMPUTATION OF NET INCOME PER SHARE
Three months ended Nine months ended Thousands of dollars, except per share data Sept. 30, Sept. 30, ------------------------------ ------------------------------ 1995 1994 1995 1994 ---------- ---------- ---------- ----------- Fully Diluted Average shares outstanding 85,219,169 85,525,316 85,160,079 86,638,453 Options - treasury stock method 547,742 563,310 556,301 593,639 Assumed conversion of 6.25% Convertible Subordinated Debentures 68,174 5,295 72,967 ---------- ---------- ---------- ----------- Average fully diluted shares 85,766,911 86,156,800 85,721,675 87,305,059 ========== ========== ========== =========== Net income $ 74,948 $ 71,229 $ 166,888 $ 155,892 Add 6.25% Convertible Subordinated Debentures interest - net of tax 1 6 ---------- ---------- ---------- ----------- Net income applicable to fully diluted shares $ 74,948 $ 71,230 $ 166,888 $ 155,898 ========== ========== ========== =========== Net income per share $ 0.87 $ 0.83 $ 1.95 $ 1.79 ========== ========== ========== =========== Primary Average shares outstanding 85,219,169 85,525,316 85,160,079 86,638,453 Options - treasury stock method 539,280 551,898 546,236 582,671 ---------- ---------- ---------- ----------- Average shares and equivalents 85,758,449 86,077,214 85,706,315 87,221,124 ========== ========== ========== =========== Net income $ 74,948 $ 71,229 $ 166,888 $ 155,892 ========== ========== ========== =========== Net income per share $ 0.87 $ 0.83 $ 1.95 $ 1.79 ========== ========== ========== ===========
All 6.25% Convertible Subordinated Debentures outstanding at December 31, 1994 were converted to common stock during the first quarter of 1995 without incurring further interest. 7 NOTE G--BUSINESS SEGMENTS Net External Sales/Operating Profit (Loss) - -----------------------------------------
Three months ended Sept. 30, Nine months ended Sept. 30, -------------------------------------------- -------------------------------------------------- Thousands of dollars 1995 1994 1995 1994 --------------------- -------------------- ----------------------- ------------------------ NET OPERATING Net Operating NET OPERATING Net Operating EXTERNAL PROFIT External Profit EXTERNAL PROFIT External Profit SALES (LOSS) Sales (Loss) SALES (LOSS) Sales (Loss) --------- --------- --------- -------- ----------- --------- ----------- ---------- Paint Stores $ 610,854 $ 59,308 $ 578,351 $ 53,093 $ 1,633,949 $ 112,414 $ 1,515,359 $ 99,613 Coatings 297,011 68,793 294,714 72,388 888,631 179,744 870,252 179,002 Other 3,522 3,128 3,678 2,470 10,332 9,031 10,820 7,409 --------- --------- --------- -------- ----------- --------- ----------- ---------- Segment totals $ 911,387 131,229 $ 876,743 127,951 $ 2,532,912 301,189 $ 2,396,431 286,024 ========= ========= =========== =========== Corporate expenses-net (12,264) (13,985) (36,287) (36,597) --------- -------- --------- ---------- Income before income taxes $ 118,965 $ 113,966 $ 264,902 $ 249,427 ========= ========= ========= ========== ====================================================================================================================================
Intersegment Transfers - ----------------------
Three months ended Sept. 30, Nine months ended Sept. 30, -------------------------------- ------------------------------------ Thousands of dollars 1995 1994 1995 1994 --------- -------- --------- ---------- Coatings $ 205,368 $ 208,423 $ 556,928 $ 557,475 Other 4,673 4,545 13,821 13,190 --------- -------- --------- ---------- Segment totals $ 210,041 $ 212,968 $ 570,749 $ 570,665 ========= ========= ========= ========== ====================================================================================================================================
Operating profit is total revenue, including realized profit on intersegment transfers, less operating costs and expenses. Export sales, sales of foreign subsidiaries, and sales to any individual customer were each less than 10% of consolidated sales to unaffiliated customers during all periods presented. Intersegment transfers are accounted for at values comparable to normal unaffiliated customer sales. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Consolidated net sales increased 4.0 percent in the third quarter and 5.7 percent in the first nine months over the comparable 1994 periods. Wholesale volume gains in the Paint Stores Segment led to sales increases of 5.6 and 7.8 percent over last year for the quarter and nine months, respectively. Wholesale customers include professional painter, contractor, industrial and commercial maintenance accounts. Sales to retail customers continue to decline from last year. Comparable-store sales were up 4.5 percent in the third quarter and 7.3 percent in the first nine months. Sales in the Coatings Segment increased 0.8 and 2.1 percent over last year in the third quarter and year-to-date, respectively. Reduced retail demand continues to adversely affect a portion of the sales in this segment. Revenue generated by real estate operations in the Other Segment decreased slightly for the third quarter and year-to-date due primarily to the disposition of certain revenue- generating properties during late 1994. Consolidated gross profit as a percent of sales declined to 42.8 percent from 43.1 percent for the third quarter and to 42.3 percent from 42.5 percent for the first nine months. Margins in the Paint Stores Segment increased from last year primarily due to gallon sales improvement combined with successful implementation of selling price increases to partially offset increased raw material costs. The Coatings Segment's margins decreased from last year for the third quarter and year-to-date primarily due to increased raw material costs combined with lower production volume. Consolidated selling, general and administrative expenses as a percent of sales were higher than last year for the third quarter and year-to-date. SG&A expenses as a percent of sales were below last year in the Paint Stores Segment due primarily to careful containment of SG&A spending throughout 1995. The Coatings Segment's SG&A expenses as a percent of sales were higher than last year due primarily to lower-than-planned sales and increased market penetration costs earlier in the year for new customers in the Consumer Brands Division. Interest expense continues to decline from 1994 due to the normal maturities of long-term debt and the acquisition of certain outstanding long-term debentures during 1994. Net investment income was above last year for the third quarter and first nine months due to increased investment yields in 1995 combined with lower cash balances in 1994 which resulted from the purchase of common stock for treasury purposes. Other expenses decreased in the third quarter and first nine months from 1994. Year-to-date dividend income exceeded last year due to increased amounts received from certain unconsolidated subsidiaries of the Company. The net expense of financing and investing activities is lower than last year for the third quarter due primarily to a 1994 loss associated with long-term investments offset somewhat by increased 1995 expenses related to the Company's investment in broad-based corporate owned life insurance. In addition to these factors, it is also lower for the first nine months due to the 1994 premium associated with the acquisition of long-term debt. Net income for the third quarter of 1995 increased to $74,948,000 or $.87 per share from $71,229,000 or $.83 per share in 1994. Net income for the first nine months of 1995 increased to $166,888,000 or $1.95 per share from $155,892,000 or $1.79 per share in 1994. 9 FINANCIAL CONDITION - ------------------- The Company's financial position continues to be strong at the end of the third quarter of 1995. Cash and cash equivalents decreased $40.1 million since year end. The primary uses of cash during the first nine months of 1995 were capital expenditures of $75 million, cash dividends of $40.9 million, acquisitions of assets of $33.9 million and normal operating needs for seasonally higher accounts receivable and inventories. Our current ratio increased to 2.08 from 2.06 at the end of the third quarter primarily due to increased cash, receivables and inventories. Since September 30, 1994, cash and cash equivalents increased $63.7 million primarily due to cash generated by operations of $275 million being offset by treasury stock acquisitions of $35 million, capital expenditures of $96.7 million, payments of cash dividends totaling $52.9 million, acquisitions of assets of $33.9 million and normal working capital needs. Short-term borrowings have not been utilized during 1995. The Company believes that sufficient cash flows should be generated from operations to remain in an investment position for the remainder of the year. Capital expenditures during the first nine months of 1995 represented primarily the cost of remerchandising, remodeling or relocating paint stores, the construction or expansion of distribution centers and the continued upgrade at manufacturing and research facilities. We do not anticipate the need for any external financing to support our capital programs. During the third quarter of 1995, approximately 200,000 shares of our own stock were acquired through open market purchases. In addition, approximately 83,400 shares were received in exchange from the exercise of stock options during the first nine months. We acquire our own stock for general corporate purposes and, depending upon our cash position and market conditions, we may acquire additional shares of stock in the future. The Company and certain other companies are defendants in lawsuits arising from the manufacture and sale of lead pigments and lead paints. It is possible that additional lawsuits may be filed against the Company in the future with similar allegations. The various existing lawsuits seek damages for personal injuries and property damage, along with costs incurred to abate the lead related paint from buildings. The Company believes that such lawsuits are without merit and is vigorously defending them. The Company does not believe that any potential liability which may ultimately be determined to be attributable to the Company arising out of such lawsuits will have a material adverse effect on the Company's business or financial condition. The operations of the Company, like those of other companies in our industry, are subject to various federal, state and local environmental laws and regulations. These laws and regulations not only govern our current operations and products, but also impose potential liability on the Company for past operations which were conducted utilizing practices and procedures that were considered acceptable under the laws and regulations existing at that time. The Company expects the environmental laws and regulations to impose increasingly stringent requirements upon the Company and our industry in the future. The Company believes it conducts its operations in compliance with applicable environmental laws and regulations and has implemented various programs designed to protect the environment and ensure continued compliance. The Company is involved with environmental compliance and remediation activities at some of its current and former sites. The Company, together with other parties, has also been designated a potentially responsible party under federal and state environmental protection laws for the remediation of hazardous waste at a number of third-party sites, primarily Superfund sites. In general, these laws provide that potentially responsible parties may be held jointly and severally liable for investigation and remediation costs regardless of fault. The Company may be similarly designated with respect to additional third-party sites in the future. 10 Although the Company continuously assesses its potential liability for remediation activities with respect to its past operations and third-party sites, any potential liability ultimately determined to be attributable to the Company is subject to a number of uncertainties including, among others, the number of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributable to other parties, the nature and magnitude of the wastes involved, and the method and extent of remediation. The Company has accrued for certain environmental remediation activities relating to its past operations and third-party sites, including Superfund sites, for which commitments or clean-up plans have been developed or for which costs or minimum costs can be reasonably estimated. These environmental-related accruals are adjusted as information becomes available upon which more accurate costs can be reasonably estimated. In the opinion of the Company's management, any potential liability ultimately attributed to the Company for its environmental-related matters will not have a material adverse effect on the Company's financial condition, liquidity or cash flow. PART II. OTHER INFORMATION Item 1. Legal Proceeding. ----------------- The civil administrative action instituted against the Company by the United States Environmental Protection Agency on September 27, 1994 was settled by the Company on August 31, 1995. Under the terms of the settlement, the Company agreed to pay a fine of $105,000 and further agreed to conduct an internal audit of certain relevant records of its Specialty Division to ensure compliance of such division with the Emergency Planning and Community Right to Know Act. Item 5. Other Information. ------------------ See attached Press Release. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits (11) Computation of Net Income Per Share -- See Note F to Condensed Consolidated Financial Statements (Unaudited). (27) Financial Data Schedule for the period ended September 30, 1995. (99) Press Release dated November 6, 1995. (b) Reports on Form 8-K None. 11 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 November 13, 1995 By: /s/ J.L. Ault ------------- J.L. Ault Vice President-Corporate Controller November 13, 1995 By: /s/ L.E. Stellato ----------------- L.E. Stellato Vice President, General Counsel and Secretary EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE PERIOD ENDED SEPT. 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000089800 THE SHERWIN-WILLIAMS COMPANY 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 211,308 5,000 431,220 14,002 465,513 1,282,924 964,313 521,723 2,109,531 618,121 22,711 100,933 0 0 1,077,803 2,109,531 2,532,912 2,532,912 1,461,908 1,461,908 2,274 7,822 1,821 264,902 98,014 166,888 0 0 0 166,888 1.95 1.95
EX-99 3 EXHIBIT 99 1 FOR IMMEDIATE RELEASE Contact: Conway G. Ivy SHERWIN Vice President, Corporate WILLIAMS Planning and Development (R) NEWS: 216-566-2102 - ------------------------------------------------------------------------------------------------------- The Sherwin-Williams Company - 101 Prospect Avenue, N.W. - Cleveland, Ohio 44115 - (216) 566-2140
CLEVELAND, Ohio, November 6, 1995--The Sherwin-Williams Company (NYSE; SHW) and Pratt & Lambert United, Inc. (NYSE; PLU) of Buffalo, New York, today jointly announced that they had signed a merger agreement providing for Sherwin-Williams to acquire all of the outstanding shares of Pratt & Lambert United for a cash price of $35.00 per share, or a total purchase price of approximately $400 million. Sherwin-Williams also entered into an agreement with holders of approximately 40 percent of Pratt & Lambert United's common stock,who have granted an option to Sherwin-Williams to purchase their shares for $35.00 per share. Under the terms of the merger agreement, Sherwin-Williams will promptly commence a cash tender offer for all outstanding common shares of Pratt & Lambert United. Shares not purchased in the tender offer will be acquired in a subsequent merger at $35.00 per share as soon as practicable after the completion of the tender offer. Pratt & Lambert United is principally engaged in the development, production and sale of coatings and adhesives to the dealer, mass merchandiser, home center and specialty markets. Pratt & Lambert merged with United Coatings in August 1994, creating a company with approximately $500 million in annual sales. The Company has nearly 2,000 employees. In announcing the agreement, John G. Breen, Chairman and Chief Executive Officer of Sherwin-Williams said, "We are pleased about the prospect of Pratt & Lambert United joining The Sherwin-Williams Company. Pratt & Lambert has been a great quality brand for independent dealers since 1849. United Coatings has been an excellent supplier to the mass merchant market. The combination of these two organizations into Sherwin-Williams will enchance our dedication, abilities and commitment to serving consumers and customers utilizing these distribution channels. Pratt & Lambert United's specialty business should also provide new growth opportunities for us. Through the merging of our efforts we expect this acquisition to add significant shareholder value in years to come." Joseph J. Castiglia, Pratt & Lambert United's president and chief executive officer said, "This transaction will position Pratt & Lambert United as an important contributor to the nation's most successful paint company." The information agent for the tender offer will be Beacon Hill Partners, Inc. (1-800-755-5001). ### -----END PRIVACY-ENHANCED MESSAGE-----