Sherwin-Williams Announces Agreement with U.S. Department of Labor

Wed Feb 20, 2013 7:00pm EST

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Reports Subsequent Event to 2012 Fiscal Year Results
CLEVELAND,  Feb. 20, 2013  /PRNewswire/ -- The Sherwin-Williams Company (the
"Company") (NYSE: SHW) announced that is has reached an agreement with the U.S.
Department of Labor (the "DOL") to settle the previously disclosed investigation
of transactions related to the Company's employee stock ownership plan ("ESOP").
 This agreement fully resolves all DOL claims regarding the Company's ESOP
transactions. The DOL had notified the Company, certain current and former
directors of the Company, and the ESOP trustee of potential enforcement claims
asserting breaches of fiduciary obligations and sought compensatory and
equitable remedies, including monetary damages to the ESOP for alleged losses to
the ESOP relating to third-party valuation of the Company's convertible serial
preferred stock.  

The Company believes that the DOL's claims are without merit and strongly
disagrees with the allegation that ESOP plan participants sustained losses of
any kind as a result of these transactions.  The Company's position is supported
by internal audits and audits by an independent third-party and the DOL. 
Following a nine-month negotiation with the DOL, the Company's management and
Board of Directors have decided that it would be in the best interest of the
Company and its shareholders to enter into this agreement to resolve these
claims and avoid potentially costly litigation.   

The Company agreed to resolve all ESOP related claims with the DOL by making a
one-time payment of  $80.0 million  to the ESOP, which will result in an
after-tax charge to earnings of  $49.2 million  ($.47  per diluted common share)
in the Company's fourth quarter and year ended  December 31, 2012. In accordance
with U.S. generally accepted accounting principles, the Company is required to
recognize this agreement as a subsequent event in its 2012 fiscal year results
because the event is related to conditions that existed at the balance sheet
date of  December 31, 2012.  The Company's financial results for the quarter and
year ended  December 31, 2012, as reported on  January 31, 2013, are being
revised to reflect the agreement. The revised condensed consolidated income
statements are attached to this press release. As a result of recording this
accrual, diluted net income per common share decreased  $.47  per share for both
the year and quarter ended  December 31, 2012, resulting in diluted net income
per common share of  $6.02  per share for the year and  $.65  per share for the
quarter. In addition, Cost of goods sold increased  $16.0 million  and Selling,
general and administrative expense increased  $64.0 million  while income tax
expense decreased  $30.8 million  for both the quarter and year ended  December
31, 2012  as a result of recording this accrual. Cash flow from operations
remained at  $887.9 million  for the year ended 2012.  Although this agreement
will not have an effect on full year 2013 earnings guidance issued on  January
31, 2013, cash flow from operations will be impacted when this settlement
payment is made.

Investor Relations Contact:
Bob Wells
Senior Vice President, Corporate Communications and Public Affairs
Sherwin-Williams
Direct:  216.566.2244
rjwells@sherwin.com

Media Contact:
Mike Conway
Director, Corporate Communications
Sherwin-Williams
Direct:  216.515.4393
Pager:  216.422.3751
mike.conway@sherwin.com

The table below details the impact of this adjustment to the revised condensed
consolidated income statements:

 STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)                                                                                                                 
 
                                                                                                                                                             
 
Thousands of dollars, except per share data                                                                                                                  
                                                                                                                                                            
                                                                                                                                                            
                                                                                                                                                            
                                                       Three Months Ended December 31,                      Year Ended December 31,                         
                                                       As Reported                    Revised             As Reported                 Revised           
                                                       2012                           2012                2012                        2012              
                                                                                                                                                        
 Net sales                                             $    2,221,870                 $   2,221,870       $    9,534,462              $    9,534,462    
 Cost of goods sold                                    1,210,362                      1,226,362           5,312,236                   5,328,236         
 Gross profit *                                        1,011,508                      995,508             4,222,226                   4,206,226         
 Percent to net sales                                  45.5%                          44.8%               44.3%                       44.1%             
 Selling, general and administrative expenses *        827,976                        891,976             3,195,648                   3,259,648         
 Percent to net sales                                  37.3%                          40.1%               33.5%                       34.2%             
 Other general (income) expense - net                  (3,998)                        (3,998)             5,248                       5,248             
 Impairment of trademarks and goodwill                 4,086                          4,086               4,086                       4,086             
 Interest expense                                      11,863                         11,863              42,788                      42,788            
 Interest and net investment income                    (953)                          (953)               (2,913)                     (2,913)           
 Other income - net                                    (1,659)                        (1,659)             (9,940)                     (9,940)           
 Income before income taxes                            174,193                        94,193              987,309                     907,309           
 Income taxes *                                        56,978                         26,141              307,112                     276,275           
 Net income                                            $     117,215                  $      68,052       $     680,197               $     631,034     
                                                                                                                                                        
 Net income per common share:                                                                                                                           
 Basic                                                 $           1.14               $           0.66    $           6.63            $           6.15  
 Diluted                                               $           1.12               $           0.65    $           6.49            $           6.02  
                                                                                                                                                        
 Average shares outstanding - basic                    101,816,954                    101,816,954         101,714,901                 101,714,901       
                                                                                                                                                        
 Average shares and equivalents outstanding - diluted  104,133,772                    104,133,772         103,930,429                 103,930,429       
                                                                                                                                                               
 * - Revised amounts include DOL Settlement of $49,163, net of tax (Cost of goods sold $16,000, Selling, general and administrative $64,000, and  Income tax benefit of $30,837), or $.47 per share, for both the Three months and Year ended December 31, 2012. 
                                                                                                                                                               


SOURCE  The Sherwin-Williams Company

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