The Sherwin-Williams Company Reports 2005 Year-End Financial Results

Diluted net income per common share in 2005 increased 20.6% to$3.28 per share from $2.72 per share in 2004. Acquisitions increaseddiluted net income per common share approximately $.14 per share forthe year 2005. Diluted net income per common share was $.54 per sharein the fourth quarter compared to $.57 per share a year ago. In 2004,fourth quarter results were favorably impacted by approximately $.08per share related to a reduction in the 2004 effective tax rate.Improved operating results in the fourth quarter of 2005 werepartially offset by an asset impairment charge of $22.0 million, orapproximately $.10 per share, due to an anticipated reduction in theCompany's business at a major retailer beginning in 2006. Acquisitionshad no impact on diluted net income per common share in the fourthquarter of 2005.

Paint Stores Segment net sales increased 21.9% in the year to$4.85 billion and 16.2% in the fourth quarter to $1.18 billion dueprimarily to continuing strong domestic architectural paint sales tocontractor and DIY customers. Net sales from stores opened more thantwelve calendar months increased 13.6% in the full year and 14.8% inthe fourth quarter. The acquisition of Duron, Inc. in September 2004added approximately 6.7% to this Segment's full year 2005 net sales.The Paint Stores Segment's operating profit increased 23.4% to $592.5million in the full year and 22.9% to $141.8 million in the quarterdue primarily to increased sales volume and strong expense controlpartially offset by significantly increased raw material costs.

Consumer Segment net sales increased 7.7% to $1.40 billion in theyear and 11.4% to $291.3 million in the fourth quarter compared to2004. Acquisitions increased net sales 7.7% in the full year and 2.2%in the fourth quarter. Net sales in the fourth quarter of 2004 werereduced by a charge representing 3.9% of net sales due to theimpairment of a customer sales incentive program. The remainingincrease in net sales during the fourth quarter of 2005 was dueprimarily to sales to existing customers representing purchases thathad been postponed in the third quarter due to managed inventorylevels. Operating profit of this Segment decreased $18.6 million, or9.9%, to $169.1 million for the year and decreased $14.1 million to$.2 million in the fourth quarter. Operating profits of both periodswere adversely impacted by increased raw material costs and the fourthquarter asset impairment charge.

Automotive Finishes Segment net sales increased 7.1% to $550.8million in the year versus 2004 and were essentially flat with lastyear in the fourth quarter at $131.8 million. The net sales gain forthe year was due primarily to new product introductions and stronginternational sales. The comparison of fourth quarter net sales wasnegatively impacted by the disposition in the third quarter of 2005 ofthe majority interest in a joint venture in China that had sales ofapproximately $7.1 million in the fourth quarter last year. Currencyexchange fluctuations in 2005 relative to last year increased netsales by 2.8% in both the fourth quarter and full year. Operatingprofit of this Segment in the year declined $.8 million, or 1.4%, to$57.2 million. This included a third quarter 2005 loss of $7.9 millionsustained in the disposition of the China joint venture. Operatingprofit increased 1.1% in the fourth quarter to $15.2 million. Thedisposition of the China joint venture negatively impacted the fourthquarter operating profit comparison by 8.7%. Currency exchangefluctuations favorably impacted operating profit in the year by 5.0%and in the fourth quarter by 6.1%.

International Coatings Segment net sales, stated in U. S. dollars,increased 21.8% to $388.0 million in the year and 19.1% to $101.8million in the fourth quarter compared to last year. Sales resultswere favorably impacted by currency exchange fluctuations of 9.8% inthe full year and 5.9% in the fourth quarter. Sales in local currencyin the year and fourth quarter were positively impacted by pricingimprovements in South America, partially offset by lower volume salesin the United Kingdom resulting from a difficult retail environment.Operating profit for this Segment, in U. S. dollars, increased in theyear by 30.6% to $23.6 million from $18.0 million in 2004 andincreased 3.7% in the fourth quarter to $7.8 million from $7.6 millionlast year. The increases in operating profits were due primarily tonet sales gains, operating efficiencies related to additionalmanufacturing volume, tight expense control and favorable currencyexchange fluctuations in South America. Operating profit of the UnitedKingdom businesses increased in the year on lower net sales and salesvolume. However, in the fourth quarter, lower operating profits in theUnited Kingdom partially offset the increases in operating profit inSouth America.

The Company purchased 2,050,000 shares of its common stock in thefourth quarter, bringing the total purchased to 8,076,000 shares in2005. The Company had remaining authorization at December 31, 2005 topurchase 18,421,000 shares.

Commenting on the financial results, Christopher M. Connor,Chairman, President and Chief Executive Officer, said, "We are pleasedthat in 2005 we were able to report record sales of nearly $7.2billion and record earnings of $3.28 per share. We are encouraged bythe continuing double-digit sales gains achieved by our Paint StoresSegment and by the improvement of our International Coatings andAutomotive Finishes Segments. We remain vigilant concerning theoperations of our Consumer Segment, which are vulnerable to thefluctuating buying patterns of our customers. Though significant rawmaterial cost increases in late 2004 and throughout 2005 had anadverse impact on our gross margins, we were able to implement certainprice increases and take other actions in the fourth quarter thatbegan to stabilize our ongoing gross margins.

"In the first quarter of 2006, we anticipate achieving a highsingle to low double digit percentage increase in consolidated netsales versus the first quarter of 2005. We estimate diluted net incomeper common share in the first quarter of 2006 will be in the range of$.56 to $.61 per share compared to $.58 per share earned in the firstquarter of 2005. In the first quarter of 2006, the Company will recordan additional expense relating to its stock option plans and we expectour effective tax rate to be higher than in the first quarter of 2005.These items are expected to reduce diluted net income per share by$.08 per share in the first quarter of 2006. For the full year 2006,we expect to achieve a high single to low double digit percentageincrease in consolidated net sales over 2005. With annual sales atthat level, we estimate diluted net income per common share for 2006will be in the range of $3.60 to $3.75 per share, including anestimated $.08 per share charge in the year for the additional expenserelating to stock options, compared to $3.28 per share earned in 2005.For the full year 2006, we expect the annual effective tax rate to beslightly higher than the annual rate recognized in 2005."

The Company will conduct a conference call to discuss consolidatedfinancial results and operating segment results for the fourth quarterand year 2005, and its outlook for the first quarter and full year2006, at 11:00 a.m. ET on Thursday, January 26, 2006. The conferencecall will be webcast simultaneously. To listen to the webcast on theSherwin-Williams website, www.sherwin.com, click on Press Room, thenchoose Corporate Press Releases in the Corporate Information box andclick on the webcast icon following the reference to the January 26threlease. The webcast will also be available at Vcall's InvestorCalendar website, www.investorcalendar.com. An archived replay of thelive webcast will be available at www.sherwin.com beginningapproximately two hours after the call ends and will be availableuntil Wednesday, February 8, 2006 at 5:00 p.m. ET.

The Sherwin-Williams Company, founded in 1866, is one of theworld's leading companies engaged in the manufacture, distribution andsale of coatings and related products to professional, industrial,commercial and retail customers.

This press release contains certain "forward-looking statements,"as defined under U.S. federal securities laws, with respect to sales,earnings and other matters. These forward-looking statements are basedupon management's current expectations, estimates, assumptions andbeliefs concerning future events and conditions. Readers are cautionednot 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 the controlof the Company, that could cause actual results to differ materiallyfrom such statements and from the Company's historical results andexperience. These risks, uncertainties and other factors include suchthings as: general business conditions, strengths of retail andmanufacturing economies and the growth in the coatings industry;changes in the Company's relationships with customers and suppliers;changes in raw material availability and pricing; unusual weatherconditions; and other risks, uncertainties and factors described fromtime to time in the Company's reports filed with the Securities andExchange Commission. Since it is not possible to predict or identifyall of the risks, uncertainties and other factors that may affectfuture results, the above list should not be considered a completelist. Any forward-looking statement speaks only as of the date onwhich such statement is made, and the Company undertakes no obligationto update or revise any forward-looking statement, whether as a resultof new information, future events or otherwise.
The Sherwin-Williams Company and Subsidiaries
Statements of Consolidated Income (Unaudited)

Thousands of Three months ended Twelve months ended
dollars, December 31, December 31,
except per -------------------------- --------------------------
share data 2005 2004 2005 2004
------------ ------------ ------------ ------------

Net sales $ 1,710,030 $ 1,499,183 $ 7,190,661 $ 6,113,789
Cost of goods
sold 968,350 834,361 4,110,296 3,412,378
Gross profit 741,680 664,822 3,080,365 2,701,411
Percent to
net sales 43.4% 44.3% 42.8% 44.2%
Selling,
general and
administrative
expenses 589,043 542,863 2,326,220 2,068,936
Percent to
net sales 34.4% 36.2% 32.4% 33.8%
Goodwill
impairment 22,000 22,000
Interest expense 11,974 10,961 49,586 39,948
Interest and
net investment
income (1,505) (1,259) (4,595) (5,533)
Other expense -
net 10,158 11,222 30,939 17,865
------------ ------------ ------------ ------------
Income before
income taxes
and minority
interest 110,010 101,035 656,215 580,195
Income taxes 34,875 17,956 191,601 185,662
Minority
interest 594 1,356 1,279
------------ ------------ ------------ ------------

Net income $ 75,135 $ 82,485 $ 463,258 $ 393,254
------------ ------------ ------------ ------------
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Net income per
common share:
Basic $ 0.56 $ 0.59 $ 3.39 $ 2.79

Diluted $ 0.54 $ 0.57 $ 3.28 $ 2.72

Average shares
and equivalents
outstanding -
basic 134,411,691 139,670,200 136,816,868 140,801,836
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Average shares
and equivalents
outstanding -
diluted 138,159,319 144,261,741 141,078,932 144,735,589
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Additional information regarding the Company's financial results can
be found on the Internet at "www.sherwin.com", click on Press Room,
then choose Corporate Press Releases in the Corporate Information box
and click on the January 26th release.