SHERWIN WILLIAMS CO (Form: 10-K, Received: 02/27/2014 14:28:26)

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller reporting company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

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

Securities registered pursuant to Section 12(b) of the Act:



Title of each class		Name of each exchange on which registered
Common Stock, Par Value $1.00		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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):

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

At January 31, 2014 , 100,296,737 shares of common stock were outstanding, net of treasury shares. The aggregate market value of common stock held by non-affiliates of the Registrant at June 30, 2013 was $18,007,898,468 (computed by reference to the price at which the common stock was last sold on such date).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our Annual Report to Shareholders for the fiscal year ended December 31, 2013 (“ 2013 Annual Report”) are incorporated by reference into Parts I, II and IV of this report.

Portions of our Proxy Statement for the 2014 Annual Meeting of Shareholders (“Proxy Statement”) to be filed with the Securities and Exchange Commission within 120 days of our fiscal year ended December 31, 2013 are incorporated by reference into Part III of this report.

THE SHERWIN-WILLIAMS COMPANY

Table of Contents



		Page
PART I
Item 1.	Business	1
	Cautionary Statement Regarding Forward-Looking Information	4
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	12
Item 2.	Properties	13
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	15
	Executive Officers of the Registrant	15

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 8.	Financial Statements and Supplementary Data	19
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	19
Item 9A.	Controls and Procedures	19
Item 9B.	Other Information	19

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	20
Item 11.	Executive Compensation	20
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	21
Item 13.	Certain Relationships and Related Transactions, and Director Independence	21
Item 14.	Principal Accountant Fees and Services	21

PART IV
Item 15.	Exhibits and Financial Statement Schedules	22
	Signatures	23
	Exhibit Index	24

PART I

ITEM 1. BUSINESS

Introduction

The Sherwin-Williams Company, founded in 1866 and incorporated in Ohio in 1884, is 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. Our principal executive offices are located at 101 West Prospect Avenue, Cleveland, Ohio 44115-1075, telephone (216) 566-2000. As used in this report, the terms “Sherwin-Williams,” “Company,” “we” and “our” mean The Sherwin-Williams Company and its consolidated subsidiaries unless the context indicates otherwise.

Available Information

We make available free of charge on or through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission. You may access these documents on the “Investor Relations” page of our website at www.sherwin.com.

We also make available free of charge on our website our Corporate Governance Guidelines, our Director Independence Standards, our Code of Conduct and the charters of our Audit Committee, our Compensation and Management Development Committee and our Nominating and Corporate Governance Committee. You may access these documents in the “Corporate Governance” section on the “Investor Relations” page of our website at www.sherwin.com.

Basis of Reportable Segments

We report our segment information in the same way that management internally organizes our business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Reporting Topic of the Financial Accounting Standards Board Accounting Standards Codification (ASC). We have 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”). Factors considered in determining our Reportable Segments include the nature of business activities, the management structure directly accountable to the Company’s chief operating decision maker (CODM) for operating and administrative activities, availability of discrete financial information and information presented to our Board of Directors. We report all other business activities and immaterial operating segments that are not reportable in the Administrative segment. For more information about the Reportable Segments, see pages 6 through 15 of our 2013 Annual Report, which is incorporated herein by reference.

The Company’s CODM has been identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Because of the diverse operations of the Company, the CODM regularly receives discrete financial information about each Reportable Segment as well as a significant amount of additional financial information about certain divisions, business units or subsidiaries of the Company. The CODM uses all such financial information for performance assessment and resource allocation decisions. The CODM evaluates the performance of and allocates resources to the Reportable Segments based on profit or loss before income taxes and cash generated from operations. The accounting policies of the Reportable Segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements on pages 48 through 51 of our 2013 Annual Report, which is incorporated herein by reference.

Paint Stores Group

The Paint Stores Group consisted of 3,908 company-operated specialty paint stores in the United States, Canada, Puerto Rico, Virgin Islands, Trinidad and Tobago, St. Maarten, Jamaica, Curacao and Aruba at December 31, 2013 . Each store in this segment is engaged in the related business activity of selling paint, coatings and related products to end-use customers. The Paint Stores Group markets and sells Sherwin-Williams ^® branded architectural paint and coatings, protective and marine products, original equipment manufacturer (“OEM”) product finishes and related items. These products are produced by manufacturing facilities in the Consumer Group. In addition, each store sells selected purchased associated products. The loss of any single customer would not have a material adverse effect on the business of this segment. During 2013 , this segment acquired 306 stores (226 in the United States and 80 in Canada) and opened 82 net new stores, consisting of 86 new stores opened (75 in the United States, 6 in Canada, 2 in Puerto Rico, 2 in Trinidad and 1 in Jamaica) and 4 stores closed in the United States. During 2012 and 2011 , this segment opened 70 and 60 net new stores, respectively. A map on the cover flap of our 2013 Annual Report, which is incorporated herein by reference, shows the number of paint stores and their geographic locations. The CODM uses discrete financial information about the Paint Stores Group, supplemented with information by geographic region, product type and customer type, to assess performance of and allocate resources to the Paint Stores Group as a whole. In

accordance with ASC 280-10-50-9, the Paint Stores Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

Consumer Group

The Consumer Group develops, manufactures and distributes a variety of paint, coatings and related products to third party customers primarily in the United States and Canada and the Paint Stores Group. Approximately 64 percent of the total sales of the Consumer Group in 2013 were intersegment transfers of products primarily sold through the Paint Stores Group. Sales and marketing of certain controlled brand and private labeled products is performed by a direct sales staff. The products distributed through third party customers are intended for resale to the ultimate end-user of the product. The Consumer Group had sales to certain customers that, individually, may be a significant portion of the sales of the segment. However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment. This segment incurred most of the Company’s capital expenditures related to ongoing environmental compliance measures. The CODM uses discrete financial information about the Consumer Group, supplemented with information by product types and customer, to assess performance of and allocate resources to the Consumer Group as a whole. In accordance with ASC 280-10-50-9, the Consumer Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

Global Finishes Group

The Global Finishes Group develops, licenses, manufactures, distributes and sells a variety of protective and marine products, automotive finishes and refinish products, OEM product finishes and related products in North and South America, Europe and Asia. This segment meets the demands of its customers for a consistent worldwide product development, manufacturing and distribution presence and approach to doing business. This segment licenses certain technology and trade names worldwide. Sherwin-Williams ^® and other controlled brand products are distributed through the Paint Stores Group and this segment’s 300 company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third party distributors. During 2013 , this segment opened 2 new branches ( 1 in the United States and 1 in Canada) and closed 4 ( 2 in the United States and 2 in Canada) for a net decrease of 2 branches. At December 31, 2013 , the Global Finishes Group consisted of operations in the United States, subsidiaries in 34 foreign countries and income from licensing agreements in 16 foreign countries. The CODM uses discrete financial information about the Global Finishes Group, supplemented with information about geographic divisions, business units, and subsidiaries, to assess performance of and allocate resources to the Global Finishes Group as a whole. In accordance with ASC 280-10-50-9, the Global Finishes Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment. A map on the cover flap of our 2013 Annual Report, which is incorporated herein by reference, shows the number of branches and their geographic locations.

Latin America Coatings Group

The Latin America Coatings Group develops, licenses, manufactures, distributes and sells a variety of architectural paint and coatings, protective and marine products, OEM product finishes and related products in North and South America. This segment meets the demands of its customers for consistent regional product development, manufacturing and distribution presence and approach to doing business. Sherwin-Williams ^® and other controlled brand products are distributed through this segment’s 282 company-operated stores and by a direct sales staff and outside sales representatives to retailers, dealers, licensees and other third party distributors. During 2013 , this segment opened 14 new stores ( 12 in South America and 2 in Mexico) and closed 8 ( 7 in South America and 1 in Mexico) for a net increase of 6 stores. At December 31, 2013 , the Latin America Coatings Group consisted of operations from subsidiaries in 9 foreign countries, 4 foreign joint ventures and income from licensing agreements in 7 foreign countries. The CODM uses discrete financial information about the Latin America Coatings Group, supplemented with information about geographic divisions, business units, and subsidiaries, to assess performance of and allocate resources to the Latin America Coatings Group as a whole. In accordance with ASC 280-10-50-9, the Latin America Coatings Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment. A map on the cover flap of our 2013 Annual Report, which is incorporated herein by reference, shows the number of stores and their geographic locations.

Administrative Segment

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.

Segment Financial Information

For financial information regarding our Reportable Segments, including net external sales, segment profit, identifiable assets and other information by Reportable Segment, see Note 18 of the Notes to Consolidated Financial Statements on pages 73 through 76 of our 2013 Annual Report, which is incorporated herein by reference.

Domestic and Foreign Operations

Financial and other information regarding domestic and foreign operations is set forth in Note 18 of the Notes to Consolidated Financial Statements on pages 74 and 75 of our 2013 Annual Report, which is incorporated herein by reference.

Additional information regarding risks attendant to foreign operations is set forth on page 34 of our 2013 Annual Report under the caption “Market Risk” of “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” which is incorporated herein by reference.

Business Developments

For additional information regarding our business and business developments, see pages 6 through 15 of our 2013 Annual Report and the “Letter to Shareholders” on pages 2 through 5 of our 2013 Annual Report, which is incorporated herein by reference.

Raw Materials and Products Purchased for Resale

We believe we generally have adequate sources of raw materials and fuel supplies used in our business. However, consolidation of raw material suppliers and a reduction in raw material manufacturing capacity during the recent recession, along with an increase in global demand for certain raw materials, resulted in increased prices of certain raw materials in 2013 . A continued increase in global demand for certain raw materials and coatings as the global economy recovers may result in increased prices of certain raw materials for the Reportable Segments during 2014 . There are sufficient suppliers of each product purchased for resale that none of the Reportable Segments anticipate any significant sourcing problems during 2014 . See Item 1A Risk Factors for more information regarding cost and sourcing of raw materials.

Seasonality

The majority of the sales for the Reportable Segments traditionally occur during the second and third quarters. There is no significant seasonality in sales for the Administrative segment.

Working Capital

In order to meet increased demand during the second and third quarters, the Company usually builds its inventories during the first quarter. Working capital items (inventories and accounts receivable) are generally financed through short-term borrowings, which include the use of lines of credit and the issuance of commercial paper. For a description of the Company’s liquidity and capital resources, see pages 24 through 34 of our 2013 Annual Report under the caption “Financial Condition, Liquidity and Cash Flow” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

Trademarks and Trade Names

Customer recognition of our trademarks and trade names collectively contribute significantly to our sales. The major trademarks and trade names used by each of the Reportable Segments are set forth below.

•

Paint Stores Group: Sherwin-Williams ^® , ProMar ^® , SuperPaint ^® , A-100 ^® , Duron ^® , MAB ^® , PrepRite ^® , Duration ^® , Duration Home ^® , ProGreen ^® , Harmony ^® , ProClassic ^® , Woodscapes ^® , Deckscapes ^® , Cashmere ^® , HGTV ^® Home by Sherwin-Williams, Emerald ^™ , Duracraft ^™ , Solo ^® , ProIndustrial ^™ , ProPark ^® , Frazee ^® , Parker ^™ Paints, Kwal ^® , Color Wheel ^™ and General Paint ^® .

•

Consumer Group: Dutch Boy ^® , Krylon ^® , Minwax ^® , Thompson’s ^® WaterSeal ^® , Pratt & Lambert ^® , Martin Senour ^® , H&C ^® , White Lightning ^® , Dupli-Color ^® , Rubberset ^® , Purdy ^® , Bestt Liebco ^® , Accurate Dispersions ^™ , Uniflex ^® , VHT ^® , Kool Seal ^® , Snow Roof ^® , Altax ^™ , Tri-Flow ^® , Sprayon ^® , Ronseal ^™ , DuraSeal ^® , Geocel ^® , Conco ^® , Duckback ^® , Superdeck ^® and Mason's Select ^® .

•

Global Finishes Group: Sherwin-Williams ^® , Lazzuril ^® , Excelo ^® , Baco ^® , Planet Color ^® , AWX Performance Plus ^™ , Ultra ^™ , Ultra-Cure ^® , Martin Senour ^® , Kem Aqua ^® , Sher-Wood ^® , Powdura ^® , Polane ^® , Euronavy ^® , Inchem ^® , Sayerlack ^® , Becker Acroma ^® , Firetex ^® , Macropoxy ^® , Oece ^™ , Arti ^™ , Acrolon ^® , Sher-Nar ^® , PermaClad ^® , Heat-Flex ^® , Magnalux ^™ , ATX ^™ , Genesis ^® , Dimension ^® , Finish 1 ^™ , Lanet ^™ , DFL ^™ , Conely ^™ , Envirolastic ^® and Fastline ^™ .


•	Latin America Coatings Group: Sherwin-Williams ^® , Marson ^® , Metalatex ^® , Novacor ^® , Loxon ^® , Colorgin ^® , Andina ^® , Napko ^™ , Martin Senour ^® , Sumare ^® , Condor ^® , Euronavy ^® , Krylon ^® , Kem Tone ^® , Minwax ^® and Pratt & Lambert ^® .

Patents

Although patents and licenses are not of material importance to our business as a whole or any segment, the Global Finishes Group and Latin America Coatings Group derive a portion of their income from the licensing of technology, trademarks and trade names to foreign companies.

Backlog and Productive Capacity

Backlog orders are not significant in the business of any Reportable Segment since there is normally a short period of time between the placing of an order and shipment. We believe that sufficient productive capacity currently exists to fulfill our needs for paint, coatings and related products through 2014 .

Research and Development

For information regarding our costs of research and development included in technical expenditures, see Note 1 of the Notes to Consolidated Financial Statements on pages 50 and 51 of our 2013 Annual Report, which is incorporated herein by reference.

Competition

We experience competition from many local, regional, national and international competitors of various sizes in the manufacture, distribution and sale of our paint, coatings and related products. We are a leading manufacturer and retailer of paint, coatings and related products to professional, industrial, commercial and retail customers, however, our competitive position varies for our different products and markets.

In the Paint Stores Group, competitors include other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets. Product quality, product innovation, breadth of product line, technical expertise, service and price determine the competitive advantage for this segment.

In the Consumer Group, domestic and foreign competitors include manufacturers and distributors of branded and private labeled paint and coatings products. Technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price are the key competitive factors for this segment.

The Global Finishes Group has numerous competitors in its domestic and foreign markets with broad product offerings and several others with niche products. Key competitive factors for this segment include technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price.

In the Latin America Coatings Group, competitors include other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets. Product quality, product innovation, breadth of product line, technical expertise, service and price determine the competitive advantage for this segment.

The Administrative segment has many competitors consisting of other real estate owners, developers and managers in areas in which this segment owns property. The main competitive factors are the availability of property and price.

Employees

We employed 37,633 persons at December 31, 2013 .

Environmental Compliance

For additional information regarding environmental-related matters, see pages 27 and 29 of our 2013 Annual Report under the caption “Environmental-Related Liabilities” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 , 8 and 13 of the Notes to Consolidated Financial Statements on pages 50 , 62 and 69 , respectively, of our 2013 Annual Report, which is incorporated herein by reference.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in “Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Business” 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 “expects,” “anticipates,” “believes,” “will,” “will likely result,” “will continue,” “plans to” and similar expressions.

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;


•	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;


•	our ability to successfully integrate past and future acquisitions into our existing operations, including the pending acquisition of the Comex business in Mexico and the recent acquisitions of the Comex business in the United States and Canada, Geocel Holdings Corporation and Jiangsu Pulanna Coating Co., Ltd., as well as the performance of the businesses acquired;


•	legal, regulatory and other matters that may affect the timing of or our ability to complete the pending acquisition of the Comex business in Mexico;


•	risks and uncertainties associated with our ownership of Life Shield Engineered Systems, LLC;


•	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, Mexico, 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, Mexico 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 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.

ITEM 1A. RISK FACTORS

Described below and elsewhere in this report and other documents that we file from time to time with the Securities and Exchange Commission are risks, uncertainties and other factors that can adversely affect our business, results of operations, cash flow, liquidity or financial condition.

Adverse changes in general business and economic conditions in the United States and worldwide may adversely affect our results of operations, cash flow, liquidity or financial condition.

Adverse changes in general business and economic conditions in the United States and worldwide may reduce the demand for some of our products and adversely affect our results of operations, cash flow, liquidity or financial condition. Higher inflation rates, interest rates, tax rates and unemployment rates, higher labor and healthcare costs, recessions, changing governmental policies, laws and regulations, and other economic factors could adversely affect our results of operations, cash flow, liquidity or financial condition.

A weakening or reversal of the general economic recovery in the United States and other countries and regions in which we do business, or the continuation or worsening of the economic downturn in other countries and regions, may adversely affect our results of operations, cash flow, liquidity or financial condition.

Global economic uncertainty continues to exist. A weakening or reversal of the general economic recovery in the United States and other countries and regions in which we do business, or the continuation or worsening of the economic downturn in other countries and regions, may adversely impact our net sales, the collection of accounts receivable, funding for working

capital needs, expected cash flow generation from current and acquired businesses, and our investments, which may adversely impact our results of operations, cash flow, liquidity or financial condition.

We finance a portion of our sales through trade credit. Credit markets remain tight, and some customers who require financing for their businesses have not been able to obtain necessary financing. A continuation or worsening of these conditions could limit our ability to collect our accounts receivable, which could adversely affect our results of operations, cash flow, liquidity or financial condition.

We generally fund a portion of our seasonal working capital needs and obtain funding for other general corporate purposes through short-term borrowings backed by our revolving credit facility and other financing facilities. If any of the banks in these credit and financing facilities are unable to perform on their commitments, which could adversely affect our ability to fund seasonal working capital needs and obtain funding for other general corporate purposes, our cash flow, liquidity or financial condition could be adversely impacted.

Although we currently have available credit facilities to fund our current operating needs, we cannot be certain that we will be able to replace our existing credit facilities or refinance our existing or future debt when necessary. Our cost of borrowing and ability to access the capital markets are affected not only by market conditions, but also by our debt and credit ratings assigned by the major credit rating agencies. Downgrades in these ratings will increase our cost of borrowing and could have an adverse effect on our access to the capital markets, including our access to the commercial paper market. An inability to access the capital markets could have a material adverse effect on our results of operations, cash flow, liquidity or financial condition.

We have goodwill and intangible assets recorded on our balance sheet. We periodically evaluate the recoverability of the carrying value of our goodwill and intangible assets whenever events or changes in circumstances indicate that such value may not be recoverable. Impairment assessment involves judgment as to assumptions regarding future sales and cash flows and the impact of market conditions on those assumptions. Future events and changing market conditions may impact our assumptions and may result in changes in our estimates of future sales and cash flows that may result in us incurring substantial impairment charges, which would adversely affect our results of operations or financial condition.

We hold investments in equity and debt securities in some of our defined benefit pension plans. A decrease in the value of plan assets resulting from a general financial downturn may cause a negative pension plan investment performance, which may adversely affect our results of operations, cash flow, liquidity or financial condition.

Protracted duration of economic downturns in cyclical segments of the economy may depress the demand for some of our products and adversely affect our sales, earnings, cash flow or financial condition.

Portions of our business involve the sale of paint, coatings and related products to segments of the economy that are cyclical in nature, particularly segments relating to construction, housing and manufacturing. Our sales to these segments are affected by the levels of discretionary consumer and business spending in these segments. During economic downturns in these segments, the levels of consumer and business discretionary spending may decrease, and the recovery of these segments may lag behind the recovery of the overall economy. This decrease in spending will likely reduce the demand for some of our products and may adversely affect our sales, earnings, cash flow or financial condition.

During the recent recession, the U.S. homebuilding industry experienced a significant and sustained decrease in demand for new homes and an oversupply of new and existing homes available for sale. During this same time period, the U.S. real estate industry also experienced a significant decrease in existing home turnover. The commercial and industrial building and maintenance sectors also experienced a significant decline. The downturn in each of these segments contributed to an unprecedented decline in the demand for some of our products. The recovery in new home starts, existing home sales and new commercial construction has been sluggish and erratic in many markets and remain below their pre-recession highs. Challenging market conditions are expected to continue for the foreseeable future and may worsen. A worsening in these segments will reduce the demand for some of our products and may adversely impact sales, earnings and cash flow.

Increases in the cost of raw materials and energy may adversely affect our earnings or cash flow.

We purchase raw materials (including titanium dioxide and proplylene) and energy for use in the manufacturing, distribution and sale of our products. Factors such as adverse weather conditions, including hurricanes, and other disasters can disrupt raw material and fuel supplies and increase our costs. In addition, many raw material suppliers decreased manufacturing capacity during the recent recession. Continued economic recovery has caused and may continue to cause demand pressure on raw material supplies. The decrease in manufacturing capacity, along with strong global demand for certain raw materials, has caused and may continue to cause tight supplies and significant price increases, especially in titanium dioxide and petrochemicals, which are key ingredients used in the manufacture of paint and coatings. Although raw materials and energy supplies (including oil and natural gas) are generally available from various sources in sufficient quantities, unexpected shortages and increases in the cost of raw materials and energy, or any deterioration in our relationships with or the financial viability of our suppliers, may have an adverse effect on our earnings or cash flow in the event we are unable to offset higher

costs in a timely manner by sufficiently decreasing our operating costs or raising the prices of our products. While we have experienced some easing of the prices of certain raw materials recently, raw material pricing has in the past and likely will in the future experience periods of volatility.

Although we have an extensive customer base, the loss of any of our largest customers could adversely affect our sales, earnings or cash flow.

We have a large and varied customer base due to our extensive distribution network. During 2013 , no individual customer accounted for sales totaling more than ten percent of our sales. However, we have some customers that, individually, purchase a large amount of products from us. Although our broad distribution channels help to minimize the impact of the loss of any one customer, the loss of any of these large customers could have an adverse effect on our sales, earnings or cash flow.

Adverse weather conditions may temporarily reduce the demand for some of our products and could have a negative effect on our sales, earnings or cash flow.

From time to time, adverse weather conditions in certain parts of the United States have had an adverse effect on our sales of paint, coatings and related products. For example, unusually cold and rainy weather, especially during the exterior painting season, could have an adverse effect on sales of our exterior paint products. An adverse effect on sales may cause a reduction in our earnings or cash flow.

Increased competition may reduce our sales, earnings or cash flow performance.

We face substantial competition from many international, national, regional and local competitors of various sizes in the manufacture, distribution and sale of our paint, coatings and related products. Some of our competitors are larger than us and have greater financial resources to compete. Other competitors are smaller and may be able to offer more specialized products. Technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price are the key competitive factors for our business. Competition in any of these areas may reduce our sales and adversely affect our earnings or cash flow by resulting in decreased sales volumes, reduced prices and increased costs of manufacturing, distributing and selling our products.

Our pending acquisition of the Comex business in Mexico may not occur, which may negatively affect the trading prices of our stock and our future business and financial results.

On November 9, 2012, we and Sherwin-Williams (Caribbean) N.V., one of our wholly owned subsidiaries, entered into a definitive Stock Purchase Agreement to purchase all of the issued and outstanding shares of Consorcio Comex, S.A. de C.V. and Conaxe, S.A. de C.V., for an aggregate purchase price of approximately $2.34 billion in cash, including assumed debt. Founded in 1952, Comex is a privately held business with operations in Latin America, and at the time, in the United States and Canada. In 2011, Comex had total annual sales of approximately U.S. $1.4 billion.

On July 17, 2013, the Federal Competition Commission of Mexico (the "FCC") informed us that the acquisition of the Comex business in Mexico was not authorized, and a subsequent appeal to the FCC was also denied on October 29, 2013. In the meantime, on September 16, 2013, we completed the acquisition of the Comex business in the United States and Canada. Also on September 16, 2013, the Stock Purchase Agreement for the purchase of the Comex business in Mexico was amended and restated to extend the date by which the agreement can be terminated by either party to March 31, 2014 and to reflect a revised purchase price of approximately $2.25 billion.

The closing of the pending acquisition of the Comex business in Mexico remains subject to the satisfaction or waiver of customary closing conditions, including, among others, the consent, waiver or authorization of the Federal Economic Competition Commission. Completion of the acquisition is not assured, and there is no assurance that it will be completed. The acquisition is subject to risks and uncertainties, including the risk that the necessary regulatory approvals are not obtained or that other closing conditions are not satisfied. If the acquisition is not completed, or if there are significant delays in completing the acquisition, it could negatively affect the trading prices of our common stock and our future business and financial results.

Our obligation to complete the pending acquisition of the Comex business in Mexico is not subject to a financing condition.

Our obligation to complete the pending acquisition of the Comex business in Mexico is not subject to a financing condition. In December 2012, we incurred $1 billion of indebtedness by issuing senior notes due 2017 and 2042, a portion of which we plan to use to pay part of the purchase price of the acquisition. We also plan to pay part of the purchase price of the acquisition by borrowing through existing credit facilities and other financing facilities, which we may refinance by issuing additional long-term debt in the future. If any of the banks in these credit and financing facilities are unable to perform their commitments, we may be required to finance a portion of the purchase price of the acquisition at interest rates higher than currently expected. If we are unable to borrow the necessary funds to complete the acquisition, or if we are not otherwise able to pay the purchase price, we may not be able to complete the acquisition and will be in breach of the purchase agreement.

We may not be able to realize the anticipated benefits and synergies of the pending acquisition of the Comex business in Mexico at all or in the expected time frame.

The success of the pending acquisition of the Comex business in Mexico will depend, in part, on our ability to realize the anticipated benefits and synergies from combining and integrating the Comex business with our existing business during a challenging global economic environment. We may not be able to achieve expected objectives, or may not able to achieve these objectives on a timely basis, and the anticipated benefits and synergies therefore may not be realized fully or at all.

The acquisition involves challenges and risks, including risks that the transaction does not advance our business strategy or that we will not realize a satisfactory return. The challenges include, among others (i) the diversion of the attention of management and other employees to integration matters; (ii) difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining the business of Comex with our existing business; (iii) difficulties in managing the expanded operations of a larger and more complex company with an expanded presence in Latin America; (iv) challenges in keeping existing customers and obtaining new customers; and (v) challenges in retaining key employees and integrating a workforce while maintaining focus on providing high quality customer service. Any integration difficulties could decrease or eliminate the anticipated benefits and synergies of the acquisition and could negatively affect the trading prices of our stock and our future business and financial results.

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 December 31, 2013 and December 31, 2012, we had total debt of approximately $1.7 billion , a significant increase over our total debt of approximately $990 million at December 31, 2011. 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 pending acquisition of the Comex business in Mexico. 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 assure you 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 our 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 pending acquisition of the Comex business in Mexico could have important consequences to 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 past and 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. In 2012, we acquired Geocel Holdings Corporation, which manufactures innovative caulks, sealants, and adhesives specially designed for tough construction and repair applications in commercial, residential, industrial and transport non-automotive markets. Geocel has operations in both the United States and United Kingdom. In 2012, we also acquired Jiangsu Pulanna Coating Co., Ltd., a leading automotive refinishes coatings manufacturer in China. In 2013, we acquired the Comex business in the United States and Canada. These acquisitions, along with the pending acquisition of the Comex business in Mexico, involve challenges and risks. In the event that we do not successfully integrate these 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.

Risks and uncertainties associated with our expansion into and our operations in Asia, Europe, Mexico, South America and other foreign markets could adversely affect our results of operations, cash flow, liquidity or financial condition.

Net external sales of our consolidated foreign subsidiaries totaled approximately 20.9%, 21.5% and 22.6% of our total consolidated net sales in 2013 , 2012 and 2011 , respectively. This percentage is expected to increase in 2014 in the event we complete the pending acquisition of the Comex business in Mexico. Sales outside of the United States make up a growing and significant part of our current business and future strategic plans. Our results of operations, cash flow, liquidity or financial condition could be adversely affected by a variety of international factors, including general economic conditions, inflation rates, recessions, foreign currency exchange rates, foreign currency exchange controls, interest rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, difficulties in staffing and managing foreign operations and other external economic and political factors. Our inability to successfully manage the risks and uncertainties relating to these factors could adversely affect our results of operations, cash flow, liquidity or financial condition.

In many foreign countries, it is acceptable to engage in certain business practices that we are prohibited from engaging in because of regulations that are applicable to us, such as the Foreign Corrupt Practices Act and the UK Bribery Act. Although we have internal control policies and procedures designed to ensure compliance with these regulations, there can be no assurance that our policies and procedures will prevent a violation of these regulations. Any violation could cause an adverse effect on our results of operations, cash flow or financial condition.

Fluctuations in foreign currency exchange rates could adversely affect our results of operations, cash flow, liquidity or financial condition.

Because of our international operations, we are exposed to risk associated with interest rates and value changes in foreign currencies, which may adversely affect our business. Historically, our reported net sales, earnings, cash flow and financial condition have been subjected to fluctuations in foreign exchange rates. Our primary exchange rate exposure is with the euro, the British pound, the Argentine peso, the Brazilian real, the Chilean peso, the Canadian dollar and the Mexican peso against the U.S. dollar. While we actively manage the exposure of our foreign currency risk as part of our overall financial risk management policy, we believe we may experience losses from foreign currency exchange rate fluctuations, and such losses could adversely affect our sales, earnings, cash flow, liquidity or financial condition.

We are subject to a wide variety of complex domestic and foreign laws and regulations, for which compliance could adversely affect our results of operations, cash flow or financial condition.

We are subject to a wide variety of complex domestic and foreign laws and regulations, and legal compliance risks, including securities laws, tax laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, and laws governing improper business practices. We are affected by new laws and regulations, and changes to existing laws and regulations, including interpretations by courts and regulators. From time to time, our Company, our operations and the industries in which we operate are being reviewed or investigated by regulators, which could lead to enforcement actions or the assertion of private litigation claims and damages.

Although we believe that we have adopted appropriate risk management and compliance programs to mitigate these risks, the global and diverse nature of our operations means that compliance risks will continue to exist. Investigations, examinations and other proceedings, the nature and outcome of which cannot be predicted, will likely arise from time to time. These investigations, examinations and other proceedings could subject us to significant liability and require us to take significant accruals or pay significant settlements, fines and penalties, which could have a material adverse effect on our results of operations, cash flow or financial condition.

We are subject to tax laws and regulations in the United States and multiple foreign jurisdictions. We are affected by changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance. In the ordinary course

of our business, we are subject to examinations and investigations by various tax authorities. In addition to existing examinations and investigations, there could be additional examinations and investigations in the future, and existing examinations and investigations could be expanded.

For non-income tax risks, we estimate material loss contingencies and accrue for such loss contingencies as required by U.S. generally accepted accounting principles based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the facts and circumstances known to us at a particular point in time. Subsequent developments may affect our assessment and estimates of the loss contingency. In the event the loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material adverse effect on our results of operations 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 cannot be reasonably estimated, any potential liability ultimately determined to be attributable to us may result in a material adverse effect on our results of operations, cash flow or financial condition for the annual or interim period during which such liability is accrued or paid. For income tax risks, we recognize tax benefits based on our assessment that a tax benefit has a greater than 50% likelihood of being sustained upon ultimate settlement with the applicable taxing authority that has full knowledge of all relevant facts. For those income tax positions where we assess that there is not a greater than 50% likelihood that such tax benefits will be sustained, we do not recognize a tax benefit in our financial statements. Subsequent events may cause us to change our assessment of the likelihood of sustaining a previously-recognized benefit which could result in a material adverse effect on our results of operations, cash flow or financial position for the annual or interim period during which such liability is accrued or paid.

We discuss risks and uncertainties with regard to taxes in more detail in Note 14 of the Notes to Consolidated Financial Statements on pages 70 and 71 of our 2013 Annual Report.

Unauthorized disclosure of sensitive or confidential customer, employee, supplier or Company information, whether through a breach of our computer systems, including cyber attacks or otherwise, could severely harm our business.

As part of our business, we collect, process, and retain sensitive and confidential personal information about our customers, employees and suppliers. Despite the security measures we have in place, our facilities and systems, and those of the retailers, dealers, licensees and other third party distributors with which we do business, may be vulnerable to security breaches, cyber attacks, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer, employee, supplier or Company information, whether by us or by the retailers, dealers, licensees and other third party distributors with which we do business, could result in losses, severely damage our reputation, expose us to the risks of litigation and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition. The regulatory environment related to information security, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs.

We are required to comply with numerous complex and increasingly stringent domestic and foreign health, safety and environmental laws and regulations, the cost of which is likely to increase and may adversely affect our results of operations, cash flow or financial condition.

Our operations are subject to various domestic and foreign health, safety and environmental laws and regulations. These laws and regulations not only govern our current operations and products, but also impose potential liability on us for our past operations. We expect health, safety and environmental laws and regulations to impose increasingly stringent requirements upon our industry and us in the future. Our costs to comply with these laws and regulations may increase as these requirements become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flow or financial condition.

We are involved with environmental investigation and remediation activities at some of our currently and formerly owned sites, as well as a number of third-party sites, for which our ultimate liability may exceed the current amount we have accrued.

We are involved with environmental investigation and remediation activities at some of our currently and formerly owned sites and a number of third-party sites. We accrue for estimated costs of investigation and remediation activities at these 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 based on currently available facts regarding each site. We continuously assess our potential liability for investigation and remediation activities and adjust our environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated. Due to the uncertainties surrounding environmental investigation and remediation activities, our liability may result in costs that are significantly higher than currently accrued and may have an adverse affect on our earnings. We discuss these risks and

uncertainties in more detail on page 23 of our 2013 Annual Report under the caption “Environmental Matters,” pages 27 and 29 of our 2013 Annual Report under the caption “Environmental-Related Liabilities” and in Note 8 of the Notes to Consolidated Financial Statements on pages 62 and 63 of our 2013 Annual Report.

The nature, cost, quantity and outcome of pending and future litigation, such as litigation arising from the historical manufacture and sale of lead pigments and lead-based paint, could have a material adverse effect on our results of operations, cash flow, liquidity and financial condition.

In the course of our business, we are subject to a variety of claims and lawsuits, including 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 us. 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, we accrue 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 a 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 our 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 us may result in a material impact on our 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 even if the possibility may be remote.

Our past operations included the manufacture and sale of lead pigments and lead-based paints. Along with other companies, we are 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 are seeking recovery 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. We are also a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints which 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. We believe that the litigation brought to date is without merit or subject to meritorious defenses and are vigorously defending such litigation. We expect that additional lead pigment and lead-based paint litigation may be filed against us in the future asserting similar or different legal theories and seeking similar or different types of damages and relief.

Notwithstanding our views on the merits, litigation is inherently subject to many uncertainties, and we ultimately may not prevail. Adverse court rulings, such as the court's decision in the Santa Clara County, California proceeding, the jury verdict against us and other defendants in the State of Rhode Island action and the Wisconsin State Supreme Court’s determination that Wisconsin’s risk contribution theory may apply in the lead pigment litigation, or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against us 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 we 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 us. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or any such legislation and regulations. We have 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 such legislation and regulations cannot reasonably be estimated. In the event any significant liability is determined to be attributable to us 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 us arising out of such litigation may have a material adverse effect on our results of operations, cash flow, liquidity or financial condition. An estimate of the potential impact on our results of operations, cash flow, liquidity or financial condition cannot be made due to the aforementioned uncertainties.

A trial commenced in the Santa Clara County, California proceeding 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, and holding 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 has filed a motion for new trial and a motion to vacate the judgment, and will file a notice of appeal at the appropriate time. However, if the appeal process is unsuccessful at reversing the decision or otherwise reducing the amount of the judgment, we and the other defendants will be subject to significant liabilities, costs and expenses to abate the public nuisance in, on and around residences in the plaintiffs' jurisdictions and could encourage an increase in future public nuisance claims and proceedings. Any adverse court rulings or any determinations of liability against us may result in a material impact on our results of operations, liquidity or financial condition.

We discuss the risks and uncertainties related to litigation, including the lead pigment and lead-based paint litigation, in more detail on page 23 of our 2013 Annual Report under the caption “Litigation and Other Contingent Liabilities,” and pages 31 through 34 of our 2013 Annual Report under the caption “Litigation” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 9 of the Notes to Consolidated Financial Statements on pages 63 through 66 of our 2013 Annual Report.

The costs or potential liability ultimately determined to be attributable to us due to our ownership of Life Shield could have an adverse effect on our results of operations, cash flow, liquidity or financial condition.

We own Life Shield Engineered Systems, LLC, which ceased operations in 2012. Life Shield developed and manufactured blast and fragment mitigating systems. The blast and fragment mitigating systems create a potentially higher level of product liability for us than is normally associated with coatings and related products we manufacture, distribute and sell. Depending upon the extent of any potential liability ultimately determined to be attributable to us relating to Life Shield, such liability could have an adverse effect on our results of operations, cash flow, liquidity or financial condition. We discuss these risks and uncertainties in more detail on page 31 of our 2013 Annual Report under the caption “Contingent Liabilities” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We own our world headquarters located in Cleveland, Ohio, which includes the world headquarters for the Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group. Our principal manufacturing and distribution facilities are located as set forth below. We believe our manufacturing and distribution facilities are well-maintained and are suitable and adequate, and have sufficient productive capacity, to meet our current needs.



CONSUMER GROUP

Manufacturing Facilities
Andover, Kansas	Owned	Homewood, Illinois	Owned
Arlington, Texas	Owned	Jeffersonville, Indiana	Owned
Baltimore, Maryland	Owned	Lawrenceville, Georgia	Owned
Bedford Heights, Ohio	Owned	Manchester, Georgia	Owned
Beltsville, Maryland	Owned	Memphis, Tennessee	Owned
Bonham, Texas	Owned	Morrow, Georgia	Owned
Chicago, Illinois	Owned	Ontario, California	Leased
Chico, California	Leased	Orlando, Florida	Owned
Cincinnati, Ohio	Owned	Plymouth, United Kingdom	Leased
Columbus, Ohio	Owned	Portland, Oregon	Leased
Crisfield, Maryland	Leased	Rexdale, Ontario, Canada	Owned
Elkhart, Indiana	Owned	Richmond, Kentucky	Owned
Ennis, Texas	Owned	Rockford, Illinois	Leased
Fernley, Nevada	Owned	San Diego, California	Owned
Flora, Illinois	Owned	Shawinigan, Quebec, Canada	Leased
Fort Erie, Ontario, Canada	Owned	Sheffield, United Kingdom	Owned
Garland, Texas	Owned	South Holland, Illinois	Owned
Greensboro, North Carolina (2)	Owned	Szamotuly, Poland	Owned
Grimsby, Ontario, Canada	Owned	Tacoma, Washington	Leased
Grove City, Ohio	Owned	Vancouver, British Columbia, Canada	Leased
Holland, Michigan	Owned	Victorville, California	Owned

Distribution Facilities
Aurora, Colorado	Leased	Reno, Nevada	Leased
Bonham, Texas	Owned	Richmond, Kentucky	Owned
Brampton, Ontario, Canada	Leased	Shawinigan, Quebec, Canada	Leased
Buford, Georgia	Leased	Sheffield, United Kingdom	Owned
Chico, California	Leased	Swaffham, United Kingdom	Leased
Effingham, Illinois	Leased	Szamotuly, Poland	Owned
Fredericksburg, Pennsylvania	Owned	Tacoma, Washington	Owned
Moreno Valley, California	Leased	Vancouver, British Columbia, Canada	Leased
Orlando, Florida	Owned	Waco, Texas	Leased
Phoenix, Arizona	Owned	Winter Haven, Florida	Owned



GLOBAL FINISHES GROUP

Manufacturing Facilities
Bello, Sweden	Owned	Pianoro, Italy	Owned
Binh Duong Province, Vietnam	Owned	Saint Cheron, France	Owned
Bolton, United Kingdom	Owned	Sao Paulo, Brazil	Owned
Brantford, Ontario, Canada	Owned	Shanghai, China	Leased
Cavezzo, Italy	Owned	Texcoco, Mexico	Owned
Changzhou, China	Leased	Valencia, Spain	Owned
Mariano Comense, Italy	Owned	Wuppertal, Germany	Owned
Marsta, Sweden	Owned	Zhao Qing, China	Leased
Pasir Gudang, Johor, Malaysia	Owned

Distribution Facilities
Bolton, United Kingdom	Owned	Nassjo, Sweden	Leased
Cavezzo, Italy	Leased	Sao Paulo, Brazil	Owned
Changzhou, China	Owned	Shanghai, China	Owned
Guadalajara, Mexico	Leased	Texcoco, Mexico	Owned
Lima, Peru	Leased	Valencia, Venezuela	Leased
Mexico City, Mexico	Owned	Quito, Ecuador	Owned

LATIN AMERICA COATINGS GROUP

Manufacturing Facilities
Buenos Aires, Argentina	Owned	Sao Paulo, Brazil (2)	Owned
Montevideo City, Uruguay	Owned	Sao Paulo, Brazil	Leased
Santiago, Chile	Owned	Quito, Ecuador	Owned
Santiago, Chile (2)	Leased	Vallejo, Mexico	Owned

Distribution Facilities
Buenos Aires, Argentina	Owned	Montevideo City, Uruguay	Owned
Hermosillo, Mexico	Leased	Quito, Ecuador	Owned
Lima, Peru	Leased	Santa Catarina, Brazil	Leased
Machala, Ecuador	Leased	Santiago, Chile	Owned
Maceio, Brazil	Leased	Sao Paulo, Brazil (2)	Owned
Monterrey, Mexico	Owned	Vallejo, Mexico	Owned

The operations of the Paint Stores Group included a manufacturing and distribution facility in Jamaica and 3,908 company-operated specialty paint stores, of which 207 were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Trinidad and Tobago, St. Maarten, Jamaica, Curacao and Aruba at December 31, 2013 . These paint stores are divided into four separate operating divisions that are responsible for the sale of predominantly architectural, protective and marine and related products through the paint stores located within their geographical region. At the end of 2013 :


•	the Mid Western Division operated 999 paint stores primarily located in the midwestern and upper west coast states;


•	the Eastern Division operated 782 paint stores along the upper east coast and New England states;


•	the Canada Division operated 185 paint stores throughout Canada;


•	the Southeastern Division operated a manufacturing and distribution facility in Jamaica and 1,009 paint stores principally covering the lower east and gulf coast states, Puerto Rico, Jamaica, Trinidad and Tobago, St. Maarten, Virgin Islands, Curacao and Aruba; and


•	the South Western Division operated 933 paint stores in the central plains and the lower west coast states.

In 2013 , the Paint Stores Group acquired 306 stores (226 in the United States and 80 in Canada) and opened 82 net new paint stores, consisting of 86 new stores opened (75 in the United States, 6 in Canada, 2 in Puerto Rico, 2 in Trinidad and 1 in Jamaica) and 4 stores closed in the United States.

The Global Finishes Group operated 241 branches in the United States, of which 8 were owned, at December 31, 2013 . The Global Finishes Group also operated 59 branches internationally, of which 7 were owned, at December 31, 2013 , consisting of branches in Canada (24), Europe (16), Chile (14), Mexico (3), Peru (1) and Thailand (1). During 2013 , the Global Finishes Group opened 2 new branches ( 1 in the United States and 1 in Canada) and closed 4 ( 2 in the United States and 2 in Canada) for a net decrease of 2 branches.

The Latin America Coatings Group operated 282 stores, of which 9 were owned, at December 31, 2013 , consisting of stores in Mexico (121), Brazil (88), Chile (40), Ecuador (18), Uruguay (10), Peru (3) and Colombia (2). During 2013 , the Latin America Coatings Group opened 14 new stores ( 12 in South America and 2 in Mexico) and closed 8 ( 7 in South America and 1 in Mexico) for a net increase of 6 stores.

All real property within the Administrative segment is owned by us. For additional information regarding real property within the Administrative segment, see the information set forth in Item 1 of this report, which is incorporated herein by reference.

For additional information regarding real property leases, see Note 17 of the Notes to Consolidated Financial Statements on page 73 of our 2013 Annual Report, which is incorporated herein by reference.

ITEM 3. LEGAL PROCEEDINGS

For information regarding environmental-related matters and other legal proceedings, see pages 27 and 29 , and 31 through 34 , of our 2013 Annual Report under the captions “Environmental-Related Liabilities” and “Litigation” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 , 8 , 9 and 13 of the Notes to Consolidated Financial Statements on pages 50 , 62 and 63 , 63 through 66 and 69 and 70 , respectively, of our 2013 Annual Report, which is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is the name, age and present position of each of our executive officers at February 19, 2014 , as well as all prior positions held by each during the last five years and the date when each was first elected or appointed as an executive officer. Executive officers are generally elected annually by the Board of Directors and hold office until their successors are elected and qualified or until their earlier death, resignation or removal.



Name	Age	Present Position	Date When First Elected or Appointed
Christopher M. Connor	57	Chairman and Chief Executive Officer, Director	1994
John G. Morikis	50	President and Chief Operating Officer	1999
Sean P. Hennessy	56	Senior Vice President – Finance and Chief Financial Officer	2001
Thomas E. Hopkins	56	Senior Vice President – Human Resources	1997
Catherine M. Kilbane	50	Senior Vice President, General Counsel and Secretary	2013
Steven J. Oberfeld	61	Senior Vice President – Corporate Planning and Development	2006
Robert J. Wells	56	Senior Vice President – Corporate Communications and Public Affairs	2006
Robert J. Davisson	53	President, Paint Stores Group	2010
George E. Heath	48	President, Global Finishes Group	2008
Timothy A. Knight	49	President, Latin America Coatings Group	2011
Allen J. Mistysyn	45	Vice President – Corporate Controller	2010

Mr. Connor has served as Chairman since April 2000 and Chief Executive Officer since October 1999. Mr. Connor has served as a Director since October 1999 and has been employed with the Company since January 1983.

Mr. Morikis has served as President and Chief Operating Officer since October 2006. Mr. Morikis has been employed with the Company since December 1984.

Mr. Hennessy has served as Senior Vice President – Finance and Chief Financial Officer since August 2001. Mr. Hennessy has been employed with the Company since September 1984.

Mr. Hopkins has served as Senior Vice President – Human Resources since February 2002. Mr. Hopkins has been employed with the Company since September 1981.

Ms. Kilbane has served as Senior Vice President, General Counsel and Secretary since January 2013. Prior to joining the Company, Ms. Kilbane was Senior Vice President, General Counsel and Secretary of American Greetings Corporation from October 2003 to December 2012. Ms. Kilbane has been employed with the Company since January 2013.

Mr. Oberfeld has served as Senior Vice President – Corporate Planning and Development since November 2010. Mr. Oberfeld served as President, Paint Stores Group from October 2006 to November 2010. Mr. Oberfeld has been employed with the Company since October 1984.

Mr. Wells has served as Senior Vice President – Corporate Communications and Public Affairs since February 2009. Mr. Wells served as Vice President – Corporate Communications and Public Affairs from January 2006 to February 2009. Mr. Wells has been employed with the Company since May 1998.

Mr. Davisson has served as President, Paint Stores Group since November 2010. Mr. Davisson served as President & General Manager, Southeastern Division, Paint Stores Group from October 1999 to November 2010. Mr. Davisson has been employed with the Company since April 1986.

Mr. Heath has served as President, Global Finishes Group since September 2008. Mr. Heath has been employed with the Company since May 2004.

Mr. Knight has served as President, Latin America Coatings Group since November 2010. Mr. Knight served as Senior Vice President – Corporate Planning and Development from February 2007 to November 2010. Mr. Knight has been employed with the Company since December 1994.

Mr. Mistysyn has served as Vice President – Corporate Controller since May 2010. Mr. Mistysyn served as Vice President - Assistant Corporate Controller from August 2009 to May 2010 and Vice President – Controller, Paint and Coatings Division from November 2006 to August 2009. Mr. Mistysyn has been employed with the Company since June 1990.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange and traded under the symbol SHW. The number of shareholders of record at January 31, 2014 was 7,536.

Information regarding market prices and dividend information with respect to our common stock is set forth on pages 78 and 79 of our 2013 Annual Report, which is incorporated herein by reference. The performance graph set forth on page 16 of our 2013 Annual Report is incorporated herein by reference. The information with respect to securities authorized for issuance under the Company’s equity compensation plans is set forth under the caption “Equity Compensation Plan Information” in our Proxy Statement, which is incorporated herein by reference.

Issuer Purchases of Equity Securities

The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of 2013 .



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Plan	Maximum Number of Shares that May Yet Be Purchased Under the Plan
October 1 – October 31
Share repurchase program (a)				13,650,000
November 1 – November 30
Share repurchase program (a)	1,000,000	$185.60	1,000,000	12,650,000
December 1 – December 31
Share repurchase program (a)	500,000	$183.29	500,000	12,150,000
Employee transactions (b)	1,431	178.75		NA
Total
Share repurchase program (a)	1,500,000	$184.83	1,500,000	12,150,000
Employee transactions (b)	1,431	$178.75		NA

(a)

All shares were purchased through the Company’s publicly announced share repurchase program. On October 20, 2011, the Board of Directors of the Company authorized the Company to purchase an additional 20,000,000 shares of its common stock. The Company had remaining authorization at December 31, 2013 to purchase 12,150,000 shares. There is no expiration date specified for the program. The Company intends to repurchase stock under the program in the future.


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

ITEM 6. SELECTED FINANCIAL DATA

(millions of dollars, except per common share data)



	2013		2012		2011		2010		2009
Operations
Net sales	$	10,186	$	9,534	$	8,766	$	7,776	$	7,094
Net income	753		631		442		462		436

Financial Position
Total assets	$	6,383	$	6,235	$	5,229	$	5,169	$	4,324
Long-term debt	1,122		1,632		639		648		783
Ratio of earnings to fixed charges (a)	7.4x		7.2x		6.3x		5.1x		5.6x

Per Common Share Data
Net income — basic	$	7.41	$	6.15	$	4.22	$	4.28	$	3.80
Net income — diluted	7.26		6.02		4.14		4.21		3.78
Cash dividends	2.00		1.56		1.46		1.44		1.42

(a)

For purposes of calculating the ratio of earnings to fixed charges, earnings represents income before income taxes plus fixed charges. Fixed charges consist of interest expense, net, including amortization of discount and financing costs and the portion of operating rental expense which management believes is representative of the interest component of rent expense. The following schedule includes the figures used to calculate the ratios:



	2013		2012		2011		2010		2009
Income before income taxes	$	1,086	$	907	$	742	$	678	$	623
Fixed charges:
Interest expense, net	63		43		42		71		40
Interest component of rent expense	108		103		97		93		94
Total fixed charges	171		146		139		164		134
Earnings	$	1,257	$	1,053	$	881	$	842	$	757

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is set forth on pages 19 through 39 of our 2013 Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk associated with interest rates, foreign currency and commodity fluctuations. We occasionally utilize derivative instruments as part of our overall financial risk management policy, but do not use derivative instruments for speculative or trading purposes. The Company entered into foreign currency option and forward currency exchange contracts during 2013 to hedge against value changes in foreign currency. There were no contracts outstanding at December 31, 2013 . Foreign currency option and forward contracts are described in Note 13 of the Notes to Consolidated Financial Statements on page 70 of our 2013 Annual Report. We believe we may experience continuing losses from foreign currency fluctuations. However, we do not expect currency translation, transaction or hedging contract losses to have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is set forth on pages 42 through 76 of our 2013 Annual Report under the captions “Report of Management on the Consolidated Financial Statements,” “Report of the Independent Registered Public Accounting Firm on the Consolidated Financial Statements,” “Statements of Consolidated Income and Comprehensive Income,” “Consolidated Balance Sheets,” “Statements of Consolidated Cash Flows,” “Statements of Consolidated Shareholders’ Equity,” and “Notes to Consolidated Financial Statements,” which is incorporated herein by reference. Unaudited quarterly data is set forth in Note 16 of the Notes to Consolidated Financial Statements on page 72 of our 2013 Annual Report, which is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure 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 Chairman 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 Chairman 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 Chairman and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

The “Report of Management on Internal Control over Financial Reporting” is set forth on page 40 of our 2013 Annual Report, which is incorporated herein by reference.

The “Report of the Independent Registered Public Accounting Firm on Internal Control over Financial Reporting” is set forth on page 41 of our 2013 Annual Report, which is incorporated herein by reference.

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.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors

The information regarding our directors is set forth under the captions “Proposal 1 — Election of Directors” and “Experiences, Qualifications, Attributes and Skills of Directors and Nominees” in our Proxy Statement, which is incorporated herein by reference.

There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors during 2013 . Please refer to the information set forth under the caption “Board Meetings and Committees” in our Proxy Statement, which is incorporated herein by reference.

Executive Officers

The information regarding our executive officers is set forth under the caption “Executive Officers of the Registrant” in Part I of this report, which is incorporated herein by reference.

Section 16(a) Beneficial Ownership Reporting Compliance

The information regarding compliance with Section 16 of the Securities Exchange Act of 1934 is set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement, which is incorporated herein by reference.

Audit Committee

The information regarding the Audit Committee of our Board of Directors and the information regarding audit committee financial experts are set forth under the caption “Board Meetings and Committees” in our Proxy Statement, which is incorporated herein by reference.

Code of Ethics

We have adopted a Code of Conduct, which applies to all directors, officers and employees of Sherwin-Williams and our subsidiaries wherever located. Our Code of Conduct contains the general guidelines and principles for conducting Sherwin-Williams' business consistent with the highest standards of business ethics. Under our Code of Ethics for Senior Financial Management, our chief executive officer, chief financial officer and senior financial management are responsible for creating and maintaining a culture of high ethical standards and of commitment to compliance throughout our company to ensure the fair and timely reporting of Sherwin-Williams' financial results and condition. Senior financial management includes the controller, the treasurer, the principal financial/accounting personnel in our operating groups and divisions, and all other financial/accounting personnel within our corporate departments and operating groups and divisions with staff supervision responsibilities. Please refer to the information set forth under the caption “Corporate Governance – Code of Conduct” in our Proxy Statement, which is incorporated herein by reference. Our Code of Conduct and Code of Ethics for Senior Financial Management are available in the “Corporate Governance” section on the “Investor Relations” page of our website at www.sherwin.com.

We intend to disclose on our website any amendment to, or waiver from, a provision of our Code of Conduct or Code of Ethics for Senior Financial Management that applies to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, and that is required to be publicly disclosed pursuant to the rules of the Securities and Exchange Commission.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is set forth under the captions “Compensation Committee Report,” “Compensation Risk Assessment,” “ 2013 Director Compensation Table” and “Director Compensation Program” in our Proxy Statement, and under the Executive Compensation section of our Proxy Statement commencing with the information under the caption “Compensation Discussion and Analysis” and continuing through the information under the caption “Estimated Payments upon Termination or Change in Control Table,” which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information regarding security ownership of certain beneficial owners and management is set forth under the captions “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners” in our Proxy Statement, which is incorporated herein by reference.

The information regarding securities authorized for issuance under the Company’s equity compensation plans is set forth under the caption “Equity Compensation Plan Information” in our Proxy Statement, which is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is set forth under the captions “Certain Relationships and Transactions with Related Persons,” and “Independence of Directors” in our Proxy Statement, which is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is set forth under the caption “Matters Relating to the Independent Registered Public Accounting Firm” in our Proxy Statement, which is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)(1)	Financial Statements

The following consolidated financial statements of the Company included in our 2013 Annual Report are incorporated by reference in Item 8.


(i)	Report of Management on the Consolidated Financial Statements (page 42 of our 2013 Annual Report);


(ii)	Report of the Independent Registered Public Accounting Firm on the Consolidated Financial Statements (page 43 of our 2013 Annual Report);


(iii)	Statements of Consolidated Income and Comprehensive Income for the years ended December 31, 2013 , 2012 and 2011 (page 44 of our 2013 Annual Report);


(iv)	Consolidated Balance Sheets at December 31, 2013 , 2012 and 2011 (page 45 of our 2013 Annual Report);


(v)	Statements of Consolidated Cash Flows for the years ended December 31, 2013 , 2012 and 2011 (page 46 of our 2013 Annual Report);


(vi)	Statements of Consolidated Shareholders’ Equity for the years ended December 31, 2013 , 2012 and 2011 (page 47 of our 2013 Annual Report); and


(vii)	Notes to Consolidated Financial Statements for the years ended December 31, 2013 , 2012 and 2011 (pages 48 through 76 of our 2013 Annual Report).


(2)	Financial Statement Schedule

Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2013 , 2012 and 2011 is set forth below. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

Valuation and Qualifying Accounts and Reserves

(Schedule II)

Changes in the allowance for doubtful accounts were as follows:



(thousands of dollars)	2013			2012			2011
Beginning balance	$	47,667		$	51,747		$	59,310
Amount acquired through acquisitions	896			226			462
Bad debt expense	31,192			20,922			25,078
Uncollectible accounts written off, net of recoveries	(25,295		)	(25,228		)	(33,103		)
Ending balance	$	54,460		$	47,667		$	51,747


(3)	Exhibits

See the Exhibit Index on pages 24 through 28 of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2014 .



THE SHERWIN-WILLIAMS COMPANY

By:	/ S /	C ATHERINE M. K ILBANE
		Catherine M. Kilbane, Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 27, 2014 .



* C HRISTOPHER M. C ONNOR		Chairman and Chief Executive Officer, Director (Principal Executive Officer)
Christopher M. Connor
* S EAN P. H ENNESSY		Senior Vice President – Finance and Chief Financial Officer (Principal Financial Officer)
Sean P. Hennessy
* A LLEN J. M ISTYSYN		Vice President – Corporate Controller (Principal Accounting Officer)
Allen J. Mistysyn
* A RTHUR F. A NTON		Director
Arthur F. Anton		Director
* D AVID F. H ODNIK		Director
David F. Hodnik		Director
* T HOMAS G. K ADIEN		Director
Thomas G. Kadien		Director
* R ICHARD J. K RAMER		Director
Richard J. Kramer		Director
* S USAN J. K ROPF		Director
Susan J. Kropf		Director
* R ICHARD K. S MUCKER		Director
Richard K. Smucker		Director
* J OHN M. S TROPKI		Director
John M. Stropki		Director



*	The undersigned, by signing her name hereto, does sign this report on behalf of the designated officers and directors of the Company pursuant to powers of attorney executed on behalf of each such officer and director and filed as an exhibit to this report.



By:	/ S /	C ATHERINE M . K ILBANE	February 27, 2014
		Catherine M. Kilbane, Attorney-in-fact

EXHIBIT INDEX



3.	(a)	Amended and Restated Articles of Incorporation of the Company, as amended through April 17, 2013, filed as Exhibit 3 to the Company's Current Report on Form 8-K dated April 17, 2013, and incorporated herein by reference.

	(b)	Regulations of the Company, as amended and restated April 20, 2011, filed as Exhibit 3 to the Company's Current Report on Form 8-K dated April 20, 2011, and incorporated herein by reference.

4.	(a)	Indenture between the Company and The Bank of New York Mellon (as successor to Chemical Bank), as trustee, dated as of February 1, 1996, filed as Exhibit 4(a) to Form S-3 Registration Statement Number 333-01093 dated February 20, 1996, and incorporated herein by reference.

	(b)	First Supplemental Indenture between the Company and The Bank of New York Mellon, as trustee (including Form of Note), dated as of December 21, 2009, filed as Exhibit 4(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.

	(c)	Form of Second Supplemental Indenture by and between the Company and The Bank of New York Mellon, as trustee (including Form of Note), dated as of December 7, 2012, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 4, 2012, and incorporated herein by reference.

	(d)	Form of Third Supplemental Indenture by and between the Company and The Bank of New York Mellon, as Trustee (including Form of Note), dated as of December 7, 2012, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 4, 2012, and incorporated herein by reference.

	(e)	Indenture between Sherwin-Williams Development Corporation, as issuer, the Company, as guarantor, and Harris Trust and Savings Bank, as trustee, dated June 15, 1986, filed as Exhibit 4(b) to Form S-3 Registration Statement Number 33-6626 dated June 20, 1986, and incorporated herein by reference.

	(f)	Credit Agreement, dated as of July 8, 2011, among the Company, the Lenders party thereto, Bank of America, N.A., as administrative agent, and Wells Fargo Bank, N.A., as syndication agent, and JPMorgan Chase Bank, N.A. and Citibank, N.A., as co-documentation agents, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 8, 2011, and incorporated herein by reference.

	(g)	Credit Agreement, dated as of June 29, 2012, among Sherwin-Williams Canada Inc., as borrower, the Company, as guarantor, the lenders party thereto, KeyBank National Association, as joint lead arranger, sole bookrunner and administrative agent, and PNC Bank National Association, as joint lead arranger and syndication agent, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated June 29, 2012, and incorporated herein by reference.

	(h)	First Amendment Agreement, dated as of March 18, 2013, among Sherwin-Williams Canada Inc., as borrower, the Company, as guarantor, the lenders party thereto, KeyBank National Association, as joint lead arranger, sole book runner and administrative agent, PNC Bank, National Association, as joint lead arranger and syndication agent, and Royal Bank of Canada, as joint lead arranger and documentation agent, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated March 18, 2013, and incorporated herein by reference.

	(i)	Credit Agreement, dated as of September 19, 2012, among Sherwin-Williams Luxembourg S.à r.l., as borrower, the Company, as guarantor, the lenders party thereto, J.P. Morgan Europe Limited, as administrative agent and L/C issuer, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and HSBC Securities (USA) Inc., as joint lead arrangers and bookrunners, and Citigroup Global Markets Inc. and HSBC Securities (USA) Inc., as syndication agents, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated September 19, 2012, and incorporated herein by reference.

	(j)	Five Year Credit Agreement, dated as of January 30, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders from time to time party thereto, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated January 30, 2012, and incorporated herein by reference.

	(k)	Agreement for Letter of Credit, dated as of January 30, 2012, by and between the Company and Citibank, N.A. filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated January 30, 2012, and incorporated herein by reference.

	(l)	Five Year Credit Agreement Amendment No. 1, dated as of February 6, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders from time to time party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated February 6, 2012, and incorporated herein by reference.



	(m)	Five Year Credit Agreement Amendment No. 2, dated as of February 13, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders from time to time party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated February 13, 2012, and incorporated herein by reference.

	(n)	Five Year Credit Agreement Amendment No. 3, dated as of February 27, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders from time to time party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated February 27, 2012, and incorporated herein by reference.

	(o)	Five Year Credit Agreement, dated as of April 23, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated April 23, 2012, and incorporated herein by reference.

	(p)	Agreement for Letter of Credit, dated as of April 23, 2012, by and between the Company and Citibank, N.A. filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated April 23, 2012, and incorporated herein by reference.

	(q)	Five Year Credit Agreement Amendment No. 1, dated as of April 25, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated April 25, 2012, and incorporated herein by reference.

	(r)	Five Year Credit Agreement Amendment No. 2, dated as of May 7, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated May 7, 2012, and incorporated herein by reference.

	(s)	Three Year Credit Agreement, dated as of November 14, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 14, 2012, and incorporated herein by reference.

	(t)	Agreement for Letter of Credit, dated as of November 14, 2012, by and between the Company and Citibank, N.A., filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated November 14, 2012, and incorporated herein by reference.

	(u)	Three Year Credit Agreement Amendment No. 1, dated as of November 26, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated November 26, 2012, and incorporated herein by reference.

	(v)	Three Year Credit Agreement Amendment No. 2, dated as of December 3, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated December 3, 2012, and incorporated herein by reference.

	(w)	Three Year Credit Agreement Amendment No. 3, dated as of December 10, 2012, by and among the Company, Citicorp USA, Inc., as administrative agent and issuing bank, and the lenders party thereto, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated December 10, 2012, and incorporated herein by reference.

10.	*(a)	Summary of Compensation Payable to Non-Employee Directors filed as Exhibit 10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.

	*(b)	Summary of Base Salary and Annual Incentive Compensation Payable to Named Executive Officers (filed herewith).

	*(c)	Forms of Amended and Restated Severance Agreements filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference.

	*(d)	Schedule of Executive Officers who are Parties to the Amended and Restated Severance Agreements in the forms referred to in Exhibit 10(c) (filed herewith).

	*(e)	The Sherwin-Williams Company 2005 Deferred Compensation Savings and Pension Equalization Plan (as Amended and Restated) filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference.

	*(f)	Amendment No. 1 to The Sherwin-Williams Company 2005 Deferred Compensation Savings and Pension Equalization Plan (as Amended and Restated) filed as Exhibit 10(h) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by reference.

	*(g)	Amendment No. 2 to The Sherwin-Williams Company 2005 Deferred Compensation Savings and Pension Equalization Plan (As Amended and Restated) (filed herewith).

	*(h)	The Sherwin-Williams Company 2005 Key Management Deferred Compensation Plan (as Amended and Restated) filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.



	*(i)	The Sherwin-Williams Company Director Deferred Fee Plan (1997 Amendment and Restatement), dated April 23, 1997, filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, and incorporated herein by reference.

	*(j)	2004-1 Amendment to The Sherwin-Williams Company Director Deferred Fee Plan (1997 Amendment and Restatement) filed as Exhibit 10(d) to the Company's Current Report on Form 8-K dated July 20, 2005, and incorporated herein by reference.

	*(k)	The Sherwin-Williams Company 2005 Director Deferred Fee Plan (as Amended and Restated) filed as Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.

	*(l)	Amendment to The Sherwin-Williams Company 2005 Director Deferred Fee Plan (as Amended and Restated), filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.

	*(m)	The Sherwin-Williams Company Executive Disability Income Plan filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, and incorporated herein by reference.

	*(n)	Amendment Number One to The Sherwin-Williams Company Executive Disability Income Plan filed as Exhibit 10(l) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.

	*(o)	Summary of The Sherwin-Williams Company Revised Executive Disability Plan (filed herewith).

	*(p)	The Sherwin-Williams Company 2008 Amended and Restated Executive Life Insurance Plan filed as Exhibit 10(m) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.

	*(q)	The Sherwin-Williams Company 2003 Stock Plan, dated January 1, 2003, filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002, and incorporated herein by reference.

	*(r)	Form of Stock Option Grant under The Sherwin-Williams Company 2003 Stock Plan filed as Exhibit 10(b) to the Company's Current Report on Form 8-K dated February 2, 2005, and incorporated herein by reference.

	*(s)	The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan filed as Exhibit 10(b) to the Company's Current Report on Form 8-K dated April 19, 2006, and incorporated herein by reference.

	*(t)	Form of Nonqualified Stock Option Award under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan filed as Exhibit 10(y) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.

	*(u)	Form of Incentive Stock Option Award under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan filed as Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.

	*(v)	Form of Restricted Stock Grant (Performance and Time-Based) under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan filed as Exhibit 10(a) to the Company's Current Report on Form 8-K dated February 16, 2010, and incorporated herein by reference.

	*(w)	The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(bb) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference.

	*(x)	Forms of Stock Option Award under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(b) to the Company's Current Report on Form 8-K dated April 20, 2010, and incorporated herein by reference.

	*(y)	Forms of Stock Option Award under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.

	*(z)	Form of Restricted Stock Grant (Performance and Time-Based) under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(a) to the Company's Current Report on Form 8-K dated February 15, 2011, and incorporated herein by reference.

	*(aa)	Form of Restricted Stock Grant (Performance and Time-Based) under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10 to the Company's Current Report on Form 8-K dated February 14, 2012, and incorporated herein by reference.



	*(bb)	Form of Restricted Stock Grant (Performance and Time-Based) under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(dd) to the Company's Annual Report on Form-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.

	*(cc)	The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors filed as Exhibit 10(c) to the Company's Current Report on Form 8-K dated April 19, 2006, and incorporated herein by reference.

	*(dd)	Form of Restricted Stock Grant under The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors filed as Exhibit 10(d) to the Company's Current Report on Form 8-K dated July 19, 2006, and incorporated herein by reference.

	*(ee)	Form of Restricted Stock Grant under The Sherwin-Williams 2006 Stock Plan for Nonemployee Directors filed as Exhibit 10(d) to the Company's Current Report on Form 8-K dated April 20, 2010, and incorporated by reference.

	*(ff)	The Sherwin-Williams Company 2007 Executive Performance Bonus Plan (As Amended and Restated Effective January 1, 2012) filed as Exhibit 10(a) to the Company's Current Report on Form 8-K dated April 18, 2012, and incorporated herein by reference.

	**(gg)	Stock Purchase Agreement, dated November 9, 2012, by and among Avisep, S.A. de C.V., Bevisep, S.A. de C.V., Sherwin-Williams (Caribbean) N.V. and the Company filed as Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.

	(hh)	Amendment No. 1 to Stock Purchase Agreement, dated June 24, 2013, by and among Avisep, S.A. de C.V., Bevisep, S.A. de C.V., Sherwin-Williams (Caribbean) N.V. and the Company, filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, and incorporated herein by reference.

	(ii)	Amendment No. 2 to Stock Purchase Agreement, dated August 21, 2013, by and among Avisep, S.A. de C.V., Bevisep, S.A. de C.V., Sherwin-Williams (Caribbean) N.V. and the Company, filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, and incorporated herein by reference.

	**(jj)	Amended and Restated Stock Purchase Agreement, dated September 16, 2013, by and among Avisep, S.A. de C.V., Bevisep, S.A. de C.V., Sherwin-Williams (Caribbean) N.V. and the Company, filed as Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, and incorporated herein by reference.

	**(kk)	Stock Purchase Agreement, dated September 16, 2013, by and among Avisep, S.A. de C.V., Bevisep, S.A. de C.V., Consorcio Comex, S.A. de C.V., SWC Acquisition Corp. and the Company, filed as Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, and incorporated herein by reference.

13.		Our 2013 Annual Report, portions of which are incorporated herein by reference (filed herewith). With the exception of those portions of our 2013 Annual Report which are specifically incorporated by reference in this report, our 2013 Annual Report shall not be deemed “filed” as part of this report.

21.		Subsidiaries (filed herewith).

23.		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).

24.	(a)	Powers of Attorney (filed herewith).

	(b)	Certified Resolution Authorizing Signature by Power of Attorney (filed herewith).

31.	(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).

	(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).

	(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



	*	Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.

	**	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Sherwin-Williams agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request.



	2013			2012			2011			2010			2009
Operations
Net sales	$	10,186		$	9,534		$	8,766		$	7,776		$	7,094
Cost of goods sold	5,569			5,328			5,021			4,295			3,831
Selling, general and administrative expenses	3,468			3,260			2,961			2,728			2,535
Impairments and dissolution				4			5			4			36
Interest expense	63			43			42			71			40
Income before income taxes	1,086			907			742			678			623
Net income	753			631			442			462			436
Financial Position
Accounts receivable - net	$	1,098		$	1,033		$	990		$	917		$	696
Inventories	971			920			927			918			738
Working capital - net	630			1,273			99			150			376
Property, plant and equipment - net	1,021			966			957			952			819
Total assets	6,383			6,235			5,229			5,169			4,324
Long-term debt	1,122			1,632			639			648			783
Total debt	1,722			1,705			993			1,045			818
Shareholders’ equity	1,775			1,792			1,517			1,609			1,491
Per Common Share Information
Average shares outstanding (thousands)	100,898			101,715			103,471			107,022			113,514
Book value	$	17.72		$	17.35		$	14.61		$	15.04		$	13.62
Net income - diluted (1)	7.26			6.02			4.14			4.21			3.78
Net income - basic (1)	7.41			6.15			4.22			4.28			3.80
Cash dividends	2.00			1.56			1.46			1.44			1.42
Financial Ratios
Return on sales	7.4		%	6.6		%	5.0		%	5.9		%	6.1		%
Asset turnover	1.6		x	1.5		x	1.7		x	1.5		x	1.6		x
Return on assets	11.8		%	10.1		%	8.4		%	8.9		%	10.1		%
Return on equity (2)	42.0		%	41.6		%	27.5		%	31.0		%	27.1		%
Dividend payout ratio (3)	33.2		%	37.7		%	34.7		%	38.1		%	35.5		%
Total debt to capitalization	49.2		%	48.8		%	39.6		%	39.4		%	35.4		%
Current ratio	1.2			1.7			1.0			1.1			1.3
Interest coverage (4)	18.3		x	22.2		x	18.4		x	10.6		x	16.6		x
Net working capital to sales	6.2		%	13.3		%	1.1		%	1.9		%	5.3		%
Effective income tax rate (5)	30.7		%	30.4		%	40.4		%	31.8		%	30.0		%
General
Capital expenditures	$	167		$	157		$	154		$	125		$	91
Total technical expenditures (6)	144			140			130			103			102
Advertising expenditures	263			247			227			218			218
Repairs and maintenance	87			83			78			76			69
Depreciation	159			152			151			140			145
Amortization of intangible assets	29			27			30			35			26
Shareholders of record (total count)	7,555			7,954			8,360			8,706			9,151
Number of employees (total count)	37,633			34,154			32,988			32,228			29,220
Sales per employee (thousands of dollars)	$	271		$	279		$	266		$	241		$	243
Sales per dollar of assets	1.60			1.53			1.68			1.50			1.64



(thousands of dollars)	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1–3 Years		3–5 Years		More than 5 Years
Long-term debt	$	1,627,581	$	502,991	$	572	$	700,303	$	423,715
Operating leases	1,220,132		277,599		441,829		256,632		244,072
Short-term borrowings	96,551		96,551
Interest on Long-term debt	543,621		46,409		62,519		53,053		381,640
Purchase obligations ^(a)	129,746		129,746
Other contractual obligations ^(b)	344,800		137,080		94,474		45,825		67,421
Total contractual cash obligations	$	3,962,431	$	1,190,376	$	599,394	$	1,055,813	$	1,116,848



	Amount of Commitment Expiration Per Period
Commercial Commitments	Total		Less than 1 Year		1–3 Years		3–5 Years		More than 5 Years
Standby letters of credit	$	25,896	$	25,896
Surety bonds	36,819		36,819
Other commercial commitments	42,258		42,258
Total commercial commitments	$	104,973	$	104,973	$	—	$	—	$	—



(thousands of dollars)	2013			2012			2011
Balance at January 1	$	22,710		$	22,071		$	23,103
Charges to expense	33,265			28,590			29,957
Settlements	(29,220		)	(27,951		)	(30,989		)
Balance at December 31	$	26,755		$	22,710		$	22,071



	Year Ended December 31,
(thousands of dollars)	2013			2012			2011
Net operating cash	$	1,083,766		$	887,886		$	735,812
Capital expenditures	(166,680		)	(157,112		)	(153,801		)
Cash dividends	(204,978		)	(160,939		)	(153,512		)
Free cash flow	$	712,108		$	569,835		$	428,499



	Incentive Award as a Percentage of Base Salary
Named Executive Officer	Minimum	Target	Maximum
Christopher M. Connor	0	125	250
John G. Morikis	0	75	150
Sean P. Hennessy	0	75	150
Robert J. Davisson	0	60	120
Catherine M. Kilbane	0	60	120


1.	Exhibit A of the Plan is amended to add the following Designated Participant:



THE SHERWIN-WILLIAMS COMPANY

By:	/ S /
		Catherine M. Kilbane, Sr. Vice President
		General Counsel and Secretary



Financial Summary	18

Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Reports of Management and the Independent Registered Public Accounting Firm	40

Consolidated Financial Statements and Notes	44

Cautionary Statement Regarding Forward-Looking Information	77

Shareholder Information	78

Corporate Officers and Operating Management	80


(1)	All earnings per share amounts are presented using the two-class method. See Note 15 .


(2)	Based on net income and shareholders’ equity at beginning of year.


(3)	Based on cash dividends per common share and prior year’s diluted net income per common share.


(4)	Ratio of income before income taxes and interest expense to interest expense.


(6)	See Note 1 , page 50 of this report, for a description of technical expenditures.



	MANAGEMENT’S DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS


^(a)	Relate to open purchase orders for raw materials at December 31, 2013 .


^(b)	Relate primarily to estimated future capital contributions to investments in the U.S. affordable housing and historic renovation real estate partnerships and various other contractual obligations.



	December 31,
	2013			2012			2011
Assets
Current assets:
Cash and cash equivalents	$	744,889		$	862,590		$	32,696
Accounts receivable, less allowance	1,097,751			1,032,508			989,873
Inventories:
Finished goods	779,057			732,359			730,727
Work in process and raw materials	191,758			187,965			196,082
	970,815			920,324			926,809
Deferred income taxes	104,496			126,730			149,207
Other current assets	240,766			207,086			163,008
Total current assets	3,158,717			3,149,238			2,261,593

Goodwill	1,178,687			1,156,005			1,108,008
Intangible assets	313,299			347,553			305,873
Deferred pension assets	302,446			249,911			228,350
Other assets	407,975			366,134			368,898
Property, plant and equipment:
Land	125,131			102,336			105,010
Buildings	715,096			677,944			668,802
Machinery and equipment	1,838,590			1,750,729			1,657,874
Construction in progress	62,563			56,582			41,264
	2,741,380			2,587,591			2,472,950
Less allowances for depreciation	1,719,997			1,621,695			1,516,420
	1,021,383			965,896			956,530
Total Assets	$	6,382,507		$	6,234,737		$	5,229,252

Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings	$	96,551		$	69,035		$	346,313
Accounts payable	998,484			922,999			965,149
Compensation and taxes withheld	337,637			314,892			251,060
Accrued taxes	79,504			52,104			120,555
Current portion of long-term debt	502,948			3,689			7,823
Other accruals	513,433			513,717			471,761
Total current liabilities	2,528,557			1,876,436			2,162,661

Long-term debt	1,122,373			1,632,165			639,231
Postretirement benefits other than pensions	268,874			320,223			297,528
Other long-term liabilities	688,168			614,109			612,913

Shareholders’ equity:
Common stock - $1.00 par value:
100,129,380, 103,270,067 and 103,854,234 shares outstanding
at December 31, 2013, 2012 and 2011, respectively	112,902			111,623			107,454
Preferred stock - convertible, no par value:
40,406, 101,086 and 160,273 shares outstanding
at December 31, 2013, 2012 and 2011, respectively	40,406			101,086			160,273
Unearned ESOP compensation	(40,406		)	(101,086		)	(160,273		)
Other capital	1,847,801			1,673,788			1,297,625
Retained earnings	1,774,050			1,226,467			756,372
Treasury stock, at cost	(1,639,174		)	(849,685		)	(276,654		)
Cumulative other comprehensive loss	(321,044		)	(370,389		)	(367,878		)
Total shareholders’ equity	1,774,535			1,791,804			1,516,919

Total Liabilities and Shareholders’ Equity	$	6,382,507		$	6,234,737		$	5,229,252



	Year Ended December 31,
Operating Activities	2013			2012			2011
Net income	$	752,561		$	631,034		$	441,860
Adjustments to reconcile net income to net operating cash:
Depreciation	158,763			152,217			151,212
Amortization of intangible assets	29,031			26,985			29,692
Impairment of trademarks and goodwill				4,086			5,492
Provisions for environmental-related matters	(2,751		)	6,736			9,100
Provisions for qualified exit costs	4,682			2,734			534
Deferred income taxes	27,775			(10,422		)	16,913
Defined benefit pension plans net cost	20,641			20,309			12,326
Income tax effect of ESOP on other capital							(3,211		)
Stock-based compensation expense	58,004			54,348			48,176
Net increase in postretirement liability	5,233			3,666			6,793
Decrease in non-traded investments	57,261			72,861			62,540
Loss (gain) on disposition of assets	5,207			3,454			(5,469		)
Other	(27,214		)	(18,349		)	3,137
Change in working capital accounts:
(Increase) in accounts receivable	(41,473		)	(33,578		)	(93,697		)
Decrease (increase) in inventories	25,031			19,929			(19,222		)
Increase (decrease) in accounts payable	34,685			(51,124		)	64,053
Increase (decrease) in accrued taxes	11,314			(70,264		)	5,435
Increase (decrease) in accrued compensation and taxes withheld	24,435			63,697			(538		)
Increase (decrease) in refundable income taxes	13,244			(32,967		)	(572		)
DOL settlement accrual	(80,000		)	80,000
Other	43,804			11,000			36,249
Costs incurred for environmental-related matters	(12,539		)	(31,689		)	(30,451		)
Costs incurred for qualified exit costs	(7,419		)	(4,577		)	(6,181		)
Other	(16,509		)	(12,200		)	1,641
Net operating cash	1,083,766			887,886			735,812

Investing Activities
Capital expenditures	(166,680		)	(157,112		)	(153,801		)
Acquisitions of businesses, net of cash acquired	(79,940		)	(99,242		)	(44,436		)
Proceeds from sale of assets	3,045			9,677			12,842
Increase in other investments	(94,739		)	(95,778		)	(92,374		)
Net investing cash	(338,314		)	(342,455		)	(277,769		)

Financing Activities
Net increase (decrease) in short-term borrowings	31,634			(284,839		)	(43,346		)
Proceeds from long-term debt	473			999,697			40,777
Payments of long-term debt	(10,932		)	(14,000		)	(49,881		)
Payments of cash dividends	(204,978		)	(160,939		)	(153,512		)
Proceeds from stock options exercised	69,761			221,126			69,536
Income tax effect of stock-based compensation exercises and vesting	47,527			104,858			12,958
Treasury stock purchased	(769,271		)	(557,766		)	(367,372		)
Other	(17,522		)	(21,559		)	15,631
Net financing cash	(853,308		)	286,578			(475,209		)
Effect of exchange rate changes on cash	(9,845		)	(2,115		)	(8,723		)
Net (decrease) increase in cash and cash equivalents	(117,701		)	829,894			(25,889		)
Cash and cash equivalents at beginning of year	862,590			32,696			58,585
Cash and cash equivalents at end of year	$	744,889		$	862,590		$	32,696
Taxes paid on income	$	200,748		$	223,329		$	196,147
Interest paid on debt	61,045			41,551			42,897



	Common Stock			Preferred Stock			Unearned ESOP Compen-sation			Other Capital			Retained Earnings			Treasury Stock			Cumulative Other Comprehensive Loss			Total
Balance at January 1, 2011	$	231,346		$	216,753		$	(216,753	)	$	1,222,909		$	4,824,489		$	(4,390,983	)	$	(278,321	)	$	1,609,440
Net income													441,860									441,860
Other comprehensive loss																			(89,557		)	(89,557		)
Treasury stock purchased																(367,372		)				(367,372		)
Treasury stock retired	(125,426		)										(4,356,465		)	4,481,891
Redemption of preferred stock				(56,480		)	56,480
Income tax effect of ESOP*										(54,420		)										(54,420		)
Stock options exercised	1,234									68,302						(190		)				69,346
Income tax effect of stock compensation										12,958												12,958
Restricted stock and stock option grants (net activity)	300									47,876												48,176
Cash dividends - $1.46 per common share													(153,512		)							(153,512		)
Balance at December 31, 2011	107,454			160,273			(160,273		)	1,297,625			756,372			(276,654		)	(367,878		)	1,516,919
Net income													631,034									631,034
Other comprehensive loss																			(2,511		)	(2,511		)
Treasury stock purchased																(557,766		)				(557,766		)
Redemption of preferred stock				(59,187		)	59,187
Stock options exercised	3,867									217,259						(15,265		)				205,861
Income tax effect of stock compensation										104,858												104,858
Restricted stock and stock option grants (net activity)	302									54,046												54,348
Cash dividends - $1.56 per common share													(160,939		)							(160,939		)
Balance at December 31, 2012	111,623			101,086			(101,086		)	1,673,788			1,226,467			(849,685		)	(370,389		)	1,791,804
Net income													752,561									752,561
Other comprehensive income																			49,345			49,345
Treasury stock purchased																(769,271		)				(769,271		)
Redemption of preferred stock				(60,680		)	60,680
Stock options exercised	1,128									68,633						(20,218		)				49,543
Income tax effect of stock compensation										47,527												47,527
Restricted stock and stock option grants (net activity)	151									57,853												58,004
Cash dividends - $2.00 per common share													(204,978		)							(204,978		)
Balance at December 31, 2013	$	112,902		$	40,406		$	(40,406	)	$	1,847,801		$	1,774,050		$	(1,639,174	)	$	(321,044	)	$	1,774,535



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(thousands of dollars unless otherwise indicated)



	Fair Value at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Deferred compensation plan asset ^(a)	$	21,660	$	3,759	$	17,901
Liabilities:
Deferred compensation plan liability ^(b)	$	28,607	$	28,607


(b)	The deferred compensation plan liability represents the value of the Company’s liability under its deferred compensation plan based on quoted market prices in active markets for identical assets.



	Useful Life
Finite-lived trademarks	5 years
Non-compete covenants	3 – 5 years
Certain intangible property rights	3 – 20 years



Buildings	2.5% – 20.0%
Machinery and equipment	5.0% – 20.0%
Furniture and fixtures	10.0% – 33.3%
Automobiles and trucks	10.0% – 33.3%



Goodwill	Paint Stores Group			Consumer Group			Global Finishes Group			Latin America Coatings Group			Consolidated Totals
Balance at January 1, 2011 ^(a)	$	286,744		$	689,388		$	115,719		$	10,607		$	1,102,458
Acquisitions							5,039						5,039
Currency and other adjustments	254			(109		)	(408		)	774			511
Balance at December 31, 2011 ^(a)	286,998			689,279			120,350			11,381			1,108,008
Acquisitions				17,357			24,707						42,064
Currency and other adjustments	(214		)	(344		)	7,230			(739		)	5,933
Balance at December 31, 2012 ^(a)	286,784			706,292			152,287			10,642			1,156,005
Acquisitions	1,885						17,963						19,848
Currency and other adjustments	(1,369		)	(2,941		)	8,048			(904		)	2,834
Balance at December 31, 2013 ^(a)	$	287,300		$	703,351		$	178,298		$	9,738		$	1,178,687


(a)	Net of accumulated impairment losses of $8,904 ( $8,113 in the Consumer Group and $791 in the Global Finishes Group).



	Finite-lived intangible assets									Trademarks with indefinite lives		Total intangible assets
	Software			All other			Subtotal			Trademarks with indefinite lives		Total intangible assets
December 31, 2013
Weighted-average amortization period	8 years			10 years			9 years
Gross	$	114,404		$	327,962		$	442,366
Accumulated amortization	(77,018		)	(202,084		)	(279,102		)
Net value	$	37,386		$	125,878		$	163,264		$	150,035	$	313,299
December 31, 2012
Weighted-average amortization period	8 years			12 years			11 years
Gross	$	107,779		$	337,089		$	444,868
Accumulated amortization	(66,106		)	(193,959		)	(260,065		)
Net value	$	41,673		$	143,130		$	184,803		$	162,750	$	347,553
December 31, 2011
Weighted-average amortization period	7 years			13 years			11 years
Gross	$	109,401		$	274,086		$	383,487
Accumulated amortization	(60,030		)	(177,706		)	(237,736		)
Net value	$	49,371		$	96,380		$	145,751		$	160,122	$	305,873



Exit Plan	Balance at December 31, 2012		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Adjustments to prior provisions in Other general expense - net			Balance at December 31, 2013
Paint Stores Group stores shutdown in 2013:
Severance and related costs			$	1,004	$	(27	)				$	977
Consumer Group facilities shutdown in 2013:
Severance and related costs			598								598
Global Finishes Group branches shutdown in 2013:
Severance and related costs			278		(25		)				253
Latin America Coatings Group facilities shutdown in 2013:
Severance and related costs			123								123
Paint Stores Group stores shutdown in 2012:
Other qualified exit costs	$	313			(68		)	$	(1	)	244
Global Finishes Group facilities shutdown in 2012:
Severance and related costs	2,236		2,533		(2,592		)				2,177
Other qualified exit costs	3,430		83		(3,530		)	100			83
Global Finishes Group branches shutdown in 2011:
Other qualified exit costs	290				(222		)				68
Other qualified exit costs for facilities shutdown prior to 2011	2,288				(955		)	(36		)	1,297
Totals	$	8,557	$	4,619	$	(7,419	)	$	63		$	5,820



Exit Plan	Balance at December 31, 2011		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Adjustments to prior provisions in Other general expense - net			Balance at December 31, 2012
Paint Stores Group stores shutdown in 2012:
Other qualified exit costs			$	313							$	313
Global Finishes Group facility shutdown in 2012:
Severance and related costs			3,933		$	(1,697	)				2,236
Other qualified exit costs			3,430								3,430
Consumer Group manufacturing facilities shutdown in 2011:
Severance and related costs	$	197			(133		)	$	(64	)
Paint Stores Group stores shutdown in 2011:
Other qualified exit costs	156				(144		)	(12		)
Global Finishes Group branches shutdown in 2011:
Severance and related costs	129				(134		)	5
Other qualified exit costs	470				(180		)				290
Global Finishes Group branches shutdown in 2010:
Other qualified exit costs	955				(133		)				822
Other qualified exit costs for facilities shutdown prior to 2010	8,493				(2,156		)	(4,871		)	1,466
Totals	$	10,400	$	7,676	$	(4,577	)	$	(4,942	)	$	8,557



Exit Plan	Balance at January 1, 2011		Provisions in Cost of goods sold or SG&A		Actual expenditures charged to accrual			Adjustments to prior provisions in Other general expense - net			Balance at December 31, 2011
Consumer Group manufacturing facilities shutdown in 2011:
Severance and related costs			$	339	$	(142	)				$	197
Paint Stores Group stores shutdown in 2011:
Other qualified exit costs			182		(26		)				156
Global Finishes Group branches shutdown in 2011:
Severance and related costs			316		(187		)				129
Other qualified exit costs			597		(127		)				470
Global Finishes Group branches shutdown in 2010:
Other qualified exit costs	$	1,114			(159		)				955
Paint Stores Group stores shutdown in 2010:
Other qualified exit costs	4							$	(4	)
Paint Stores Group stores shutdown in 2009:
Other qualified exit costs	2,022				(805		)	3			1,220
Global Finishes Group manufacturing facility and branches shutdown in 2009:
Other qualified exit costs	1,820				(918		)	262			1,164
Consumer Group manufacturing facilities shutdown in 2009:
Other qualified exit costs	721				(245		)	(74		)	402
Other qualified exit costs for facilities shutdown prior to 2009	10,366				(3,572		)	(1,087		)	5,707
Totals	$	16,047	$	1,434	$	(6,181	)	$	(900	)	$	10,400



	Domestic Defined Benefit Pension Plans									Foreign Defined Benefit Pension Plans
	2013			2012			2011			2013			2012			2011
Net pension costs:
Service costs	$	23,176		$	19,061		$	17,933		$	5,039		$	3,654		$	3,055
Interest costs	18,444			17,442			18,602			7,940			6,927			5,954
Expected returns on plan assets	(42,937		)	(44,841		)	(46,441		)	(7,487		)	(6,799		)	(5,535		)
Amortization of prior service costs	1,823			1,591			1,635
Amortization of actuarial losses	13,147			22,205			16,865			1,716			1,022			493
Ongoing pension costs	13,653			15,458			8,594			7,208			4,804			3,967
Settlement costs (credits)										(220		)	47			(235		)
Net pension costs	13,653			15,458			8,594			6,988			4,851			3,732
Other changes in plan assets and projected benefit obligation recognized in Cumulative other comprehensive loss (before taxes):
Net actuarial (gains) losses arising during the year	(90,669		)	(26,459		)	48,745			(5,487		)	14,131			15,944
Prior service costs during the year	1,756			2,495			1,195
Amortization of prior service costs	(1,823		)	(1,591		)	(1,635		)
Amortization of actuarial losses	(13,147		)	(22,205		)	(16,865		)	(1,716		)	(1,022		)	(493		)
Exchange rate gain (loss) recognized during year										819			1,464			(387		)
Total recognized in Cumulative other comprehensive loss	(103,883		)	(47,760		)	31,440			(6,384		)	14,573			15,064
Total recognized in net pension costs and Cumulative other comprehensive loss	$	(90,230	)	$	(32,302	)	$	40,034		$	604		$	19,424		$	18,796



	Fair Value at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments at fair value:
Short-term investments ^(a)	$	15,055	$	1,941	$	13,114
Equity investments ^(b)	736,873		419,779		317,094
Fixed income investments ^(c)	255,927		125,377		130,550
Other assets ^(d)	47,494				29,553		$	17,941
	$	1,055,349	$	547,097	$	490,311	$	17,941

	Fair Value at December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments at fair value:
Short-term investments ^(a)	$	68,795			$	68,795
Equity investments ^(b)	490,993		$	243,553	247,440
Fixed income investments ^(c)	239,558		131,276		108,282
Other assets ^(d)	37,230				18,380		$	18,850
	$	836,576	$	374,829	$	442,897	$	18,850

	Fair Value at December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments at fair value:
Short-term investments ^(a)	$	9,408			$	9,408
Equity investments ^(b)	482,694		$	268,307	214,387
Fixed income investments ^(c)	202,939		103,485		99,454
Other assets ^(d)	37,482				16,582		$	20,900
	$	732,523	$	371,792	$	339,831	$	20,900


(a)	This category includes a full range of high quality, short-term money market securities.


(b)	This category includes actively managed equity assets that track primarily to the S&P 500.