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OHIO
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34-0526850
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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101 West Prospect Avenue, Cleveland, Ohio
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44115-1075
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, Par Value $1.00
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New York Stock Exchange
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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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
®
, Mason's Select
®
and HGTV HOME
®
by Sherwin-Williams.
|
•
|
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
®
, AcromaPro
®
, 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
®
, Krylon
®
, Kem Tone
®
, Minwax
®
and Pratt & Lambert
®
.
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•
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general business conditions, strengths of retail and manufacturing economies and the growth in the coatings industry;
|
•
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competitive factors, including pricing pressures and product innovation and quality;
|
•
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changes in raw material and energy supplies and pricing;
|
•
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changes in our relationships with customers and suppliers;
|
•
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our ability to attain cost savings from productivity initiatives;
|
•
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our ability to successfully integrate past and future acquisitions into our existing operations, as well as the performance of the businesses acquired;
|
•
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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;
|
•
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risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets, including general economic conditions, inflation rates, recessions, foreign currency exchange rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest and other external economic and political factors;
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•
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the achievement of growth in foreign markets, such as Asia, Europe and South America;
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•
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increasingly stringent domestic and foreign governmental regulations, including those affecting health, safety and the environment;
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•
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inherent uncertainties involved in assessing our potential liability for environmental-related activities;
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•
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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);
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•
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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
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•
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unusual weather conditions.
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CONSUMER GROUP
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||||||
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||||||
Manufacturing Facilities
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||||||
Andover, Kansas
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Owned
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Homewood, Illinois
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Owned
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Arlington, Texas
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Owned
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Lawrenceville, Georgia
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Owned
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Baltimore, Maryland
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Owned
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Manchester, Georgia
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Owned
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Bedford Heights, Ohio
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Owned
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Memphis, Tennessee
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Owned
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Beltsville, Maryland
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Owned
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Morrow, Georgia
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Owned
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Chicago, Illinois
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Owned
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Ontario, California
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Leased
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Cincinnati, Ohio
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Owned
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Orlando, Florida
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Owned
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Columbus, Ohio
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Owned
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Plymouth, United Kingdom
|
|
Leased
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Crisfield, Maryland
|
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Leased
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Portland, Oregon
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Leased
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Elkhart, Indiana
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Owned
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Rexdale, Ontario, Canada
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Owned
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Ennis, Texas
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Owned
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Richmond, Kentucky
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Owned
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Fernley, Nevada
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Owned
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Rockford, Illinois
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Leased
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Flora, Illinois
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Owned
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San Diego, California
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Owned
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Fort Erie, Ontario, Canada
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Owned
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Sheffield, United Kingdom
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Owned
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Garland, Texas
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Owned
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South Holland, Illinois
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Owned
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Greensboro, North Carolina (2)
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Owned
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Szamotuly, Poland
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Owned
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Grimsby, Ontario, Canada
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Owned
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Vancouver, British Columbia, Canada
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Owned
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Grove City, Ohio
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Owned
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Victorville, California
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Owned
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Holland, Michigan
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Owned
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||||||
Distribution Facilities
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||||||
Aurora, Colorado
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Leased
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Richmond, Kentucky
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Owned
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Buford, Georgia
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Leased
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Shawinigan, Quebec, Canada
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Leased
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Effingham, Illinois
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Leased
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Sheffield, United Kingdom
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Owned
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Fredericksburg, Pennsylvania
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Owned
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Swaffham, United Kingdom
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Leased
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Moreno Valley, California
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Leased
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Szamotuly, Poland
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Owned
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Plymouth, United Kingdom
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Leased
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Waco, Texas
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Leased
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Reno, Nevada
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Leased
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Winter Haven, Florida
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Owned
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•
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the Mid Western Division operated
1,046
paint stores primarily located in the midwestern and upper west coast states;
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•
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the Eastern Division operated
823
paint stores along the upper east coast and New England states;
|
•
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the Canada Division operated
198
paint stores throughout Canada;
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•
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the Southeastern Division operated a manufacturing and distribution facility in Jamaica and
1,054
paint stores principally covering the lower east and gulf coast states, Puerto Rico, Jamaica, Trinidad and Tobago, St. Maarten, Virgin Islands, Curacao, Aruba and St. Lucia; and
|
•
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the South Western Division operated
965
paint stores in the central plains and the lower west coast states.
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Name
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Age
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Present Position
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Date When
First Elected
or Appointed
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Christopher M. Connor
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59
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Executive Chairman, Director
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1994
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John G. Morikis
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52
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President and Chief Executive Officer, Director
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1999
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Sean P. Hennessy
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58
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Senior Vice President – Finance and Chief Financial Officer
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2001
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Thomas P. Gilligan
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55
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Senior Vice President – Human Resources
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2016
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Catherine M. Kilbane
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52
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Senior Vice President, General Counsel and Secretary
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2013
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Timothy A. Knight
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51
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Senior Vice President – Corporate Planning, Development and Administration
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2015
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Allen J. Mistysyn
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47
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Senior Vice President – Corporate Controller
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2010
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Robert J. Wells
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58
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Senior Vice President – Corporate Communications and Public Affairs
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2006
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Joel D. Baxter
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55
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President & General Manager, Global Supply Chain Division, Consumer Group
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2016
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Robert J. Davisson
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55
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President, The Americas Group
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2010
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David B. Sewell
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47
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President, Global Finishes Group
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2014
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Period
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Total
Number of
Shares
Purchased
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Average Price
Paid per
Share
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Total Number
of Shares
Purchased as
Part of a
Publicly
Announced Plan
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Maximum Number
of Shares
that May
Yet Be
Purchased Under
the Plan
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||||
October 1 – October 31
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Share repurchase program (a)
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12,650,000
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|||
Employee transactions (b)
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638
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$239.10
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–
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November 1 – November 30
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Share repurchase program (a)
|
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1,000,000
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269.20
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1,000,000
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11,650,000
|
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Employee transactions (b)
|
|
1,114
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|
|
268.69
|
|
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–
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December 1 – December 31
|
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|
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||||
Share repurchase program (a)
|
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11,650,000
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Total
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||||
Share repurchase program (a)
|
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1,000,000
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$269.20
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1,000,000
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11,650,000
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|
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Employee transactions (b)
|
|
1,752
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|
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$257.91
|
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–
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(a)
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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. At a meeting held on October 21, 2015, the Board of Directors authorized the Company to purchase an additional 10,000,000 shares of the Company's stock for Treasury purposes. The Company had remaining authorization at
December 31, 2015
to purchase
11,650,000
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.
|
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2015
|
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2014
|
|
2013
|
|
2012
|
|
2011
|
|
||||||||||
Operations
|
|
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|
||||||||||
Net sales
|
|
$
|
11,339
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|
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$
|
11,130
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$
|
10,186
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|
|
$
|
9,534
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|
|
$
|
8,766
|
|
|
Net income
|
|
1,054
|
|
|
866
|
|
|
753
|
|
|
631
|
|
|
442
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|
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|||||
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||||||||||
Financial Position
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||||||||||
Total assets
|
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$
|
5,792
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|
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$
|
5,706
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|
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$
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6,383
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|
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$
|
6,235
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|
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$
|
5,229
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Long-term debt
|
|
1,920
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|
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1,123
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|
1,122
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1,632
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|
639
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|
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|||||
Ratio of earnings to fixed charges (a)
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9.1x
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7.7x
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7.4x
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7.2x
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6.3x
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|||||
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Per Common Share Data
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||||||||||
Net income — basic
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$
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11.38
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$
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8.95
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$
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7.41
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$
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6.15
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$
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4.22
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Net income — diluted
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11.16
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8.78
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7.26
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6.02
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4.14
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|||||
Cash dividends
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2.68
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2.20
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2.00
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1.56
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1.46
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(a)
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For purposes of calculating the ratio of earnings to fixed charges, earnings represent 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:
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|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
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||||||||||
Income before income taxes
|
|
$
|
1,549
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$
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1,258
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$
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1,086
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$
|
907
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$
|
742
|
|
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Fixed charges:
|
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||||||||||
Interest expense, net
|
|
62
|
|
|
64
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|
|
63
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|
|
43
|
|
|
42
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|||||
Interest component of rent expense
|
|
130
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|
|
125
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|
|
108
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|
|
103
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|
|
97
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|||||
Total fixed charges
|
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192
|
|
|
189
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|
|
171
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|
|
146
|
|
|
139
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|||||
Earnings
|
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$
|
1,741
|
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$
|
1,447
|
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$
|
1,257
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$
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1,053
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$
|
881
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|
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(a)(1)
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Financial Statements
|
(i)
|
Report of Management on the Consolidated Financial Statements (page
40
of our
2015
Annual Report);
|
(ii)
|
Report of the Independent Registered Public Accounting Firm on the Consolidated Financial Statements (page
41
of our
2015
Annual Report);
|
(iii)
|
Statements of Consolidated Income and Comprehensive Income for the years ended
December 31, 2015
,
2014
and
2013
(page
42
of our
2015
Annual Report);
|
(iv)
|
Consolidated Balance Sheets at
December 31, 2015
,
2014
and
2013
(page
43
of our
2015
Annual Report);
|
(v)
|
Statements of Consolidated Cash Flows for the years ended
December 31, 2015
,
2014
and
2013
(page
44
of our
2015
Annual Report);
|
(vi)
|
Statements of Consolidated Shareholders’ Equity for the years ended
December 31, 2015
,
2014
and
2013
(page
45
of our
2015
Annual Report); and
|
(vii)
|
Notes to Consolidated Financial Statements for the years ended
December 31, 2015
,
2014
and
2013
(pages
46
through
75
of our
2015
Annual Report).
|
(2)
|
Financial Statement Schedule
|
(thousands of dollars)
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning balance
|
$
|
53,770
|
|
|
$
|
54,460
|
|
|
$
|
47,667
|
|
Amount acquired through acquisitions
|
|
|
|
|
896
|
|
|||||
Bad debt expense
|
30,393
|
|
|
34,810
|
|
|
31,192
|
|
|||
Uncollectible accounts written off, net of recoveries
|
(34,743
|
)
|
|
(35,500
|
)
|
|
(25,295
|
)
|
|||
Ending balance
|
$
|
49,420
|
|
|
$
|
53,770
|
|
|
$
|
54,460
|
|
(3)
|
Exhibits
|
THE SHERWIN-WILLIAMS COMPANY
|
||
|
|
|
By:
|
/
S
/
|
C
ATHERINE
M. K
ILBANE
|
|
|
Catherine M. Kilbane, Secretary
|
*
|
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 24, 2016
|
|
|
Catherine M. Kilbane, Attorney-in-fact
|
|
|
3.
|
(a)
|
Amended and Restated Articles of Incorporation of the Company, as amended through February 18, 2015, filed as Exhibit 3 to the Company's Current Report on Form 8-K dated February 18, 2015, 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)
|
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)
|
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)
|
Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated July 31, 2015, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 28, 2015, and incorporated herein by reference.
|
|
|
|
|
(g)
|
First Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated July 31, 2015, (including Form of Note), filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated July 28, 2015, and incorporated herein by reference.
|
|
|
|
|
(h)
|
Second Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated July 31, 2015, (including Form of Note), filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated July 28, 2015, and incorporated herein by reference.
|
|
|
|
|
(i)
|
Credit Agreement, dated as of July 16, 2015, by and among the Company, Sherwin-Williams Canada Inc., Sherwin-Williams Luxembourg S.à r.l. and Sherwin-Williams UK Holding Limited, as borrowers, the lenders party thereto, Bank of America, N.A., as domestic administrative agent, Bank of America, National Association, as Canadian administrative agent, JPMorgan Chase Bank, N.A., Citibank, N.A. and U.S. Bank National Association, as co-documentation agents, and Wells Fargo Bank, National Association, as syndication agent, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 15, 2015, 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.
|
|
|
|
10.
|
*(a)
|
Summary of Compensation Payable to Non-Employee Directors (filed herewith).
|
|
|
|
|
*(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) above (filed herewith).
|
|
|
|
|
*(e)
|
The Sherwin-Williams Company 2005 Deferred Compensation Savings and Pension Equalization Plan (Amended and Restated Effective as of January 1, 2016) (filed herewith).
|
|
|
|
|
*(f)
|
The Sherwin-Williams Company 2005 Key Management Deferred Compensation Plan (Amended and Restated Effective as of January 1, 2016) (filed herewith).
|
|
|
|
|
*(g)
|
The Sherwin-Williams Company Director Deferred Fee Plan (1997 Amendment and Restatement) 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.
|
|
|
|
|
*(h)
|
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.
|
|
|
|
|
*(i)
|
The Sherwin-Williams Company 2005 Director Deferred Fee Plan (Amended and Restated Effective as of January 1, 2016) (filed herewith).
|
|
|
|
|
*(j)
|
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.
|
|
|
|
|
*(k)
|
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.
|
|
|
|
|
*(l)
|
Summary of The Sherwin-Williams Company Revised Executive Disability Plan filed as Exhibit 10(o) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and incorporated herein by reference.
|
|
|
|
|
*(m)
|
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.
|
|
|
|
|
*(n)
|
The Sherwin-Williams Company 2003 Stock Plan 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.
|
|
|
|
|
*(o)
|
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.
|
|
|
|
|
*(p)
|
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.
|
|
|
|
|
*(q)
|
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.
|
|
|
|
|
*(r)
|
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.
|
|
|
|
|
*(s)
|
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.
|
|
|
|
|
*(t)
|
First Amendment to The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of April 21, 2010) filed as Exhibit 10(w) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
|
|
|
|
*(u)
|
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.
|
|
|
|
|
*(v)
|
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 quarterly period ended June 30, 2012, and incorporated herein by reference.
|
|
|
|
|
*(w)
|
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(z) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, 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 February 17, 2015) (filed herewith).
|
|
|
|
|
*(y)
|
Form of Restricted Stock Grant 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.
|
|
|
|
|
*(z)
|
Form of Restricted Stock Grant 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 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.
|
|
|
|
|
*(aa)
|
The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of February 17, 2015) filed as Exhibit 10(dd) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
|
|
|
|
*(bb)
|
Form of Restricted Stock Units Award Agreement under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of February 17, 2015) filed as Exhibit 10(ee) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
|
|
|
|
*(cc)
|
Form of Restricted Stock Units Award Agreement under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of February 17, 2015) (filed herewith).
|
|
|
|
|
*(dd)
|
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.
|
|
|
|
|
*(ee)
|
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 April 20, 2010, and incorporated herein by reference.
|
|
|
|
|
*(ff)
|
The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of February 17, 2015) filed as Exhibit 10(hh) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
|
|
|
|
*(gg)
|
Form of Restricted Stock Units Award Agreement under The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors (Amended and Restated as of February 17, 2015) filed as Exhibit 10(ii) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
|
|
|
|
*
|
Management contract or compensatory plan or arrangement.
|
•
|
An annual cash retainer of $110,000;
|
•
|
An additional annual cash retainer of $25,000 for the Lead Director;
|
•
|
An additional annual cash retainer of $21,000 for the chair of the Audit Committee;
|
•
|
An additional annual cash retainer of $21,000 for the chair of the Compensation and Management Development Committee;
|
•
|
An additional annual cash retainer of $15,000 for the chair of the Nominating and Corporate Governance Committee; and
|
•
|
A meeting fee of $1,750 for each Board or Committee meeting attended in excess of twelve meetings during a calendar year. For purposes of calculating the number of meetings during a calendar year, any Board and Committee meetings held within 24 hours shall constitute one meeting.
|
|
|
Incentive Award as a Percentage of Base Salary
|
||||||
Named Executive Officer
|
|
Minimum
|
|
Target
|
|
Maximum
|
||
Christopher M. Connor
|
|
0
|
|
135
|
|
|
270
|
|
John G. Morikis
|
|
0
|
|
135
|
|
|
270
|
|
Sean P. Hennessy
|
|
0
|
|
80
|
|
|
160
|
|
Robert J. Davisson
|
|
0
|
|
80
|
|
|
160
|
|
Steven J. Oberfeld
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
1.1
|
Account
shall mean the account or accounts established for a particular Participant pursuant to Article 3 of the Plan.
|
1.2
|
Administration Committee
shall have the meaning given to such term under the Qualified SPP, or shall refer to such person or persons to whom the Administrative Committee has delegated any responsibility or power pursuant to Article XIX of the Qualified SPP.
|
1.3
|
Affiliated Group
shall mean the Company and all entities with which the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language "at least 50 percent" is used instead of "at least 80 percent" each place it appears in Section 1563(a)(1), (2), and (3) of the Code, and in applying Treasury Regulation § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, "at least 50 percent" is used instead of "at least 80 percent" each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of "service recipient" contained in Section 409A of the Code.
|
1.4
|
Base Salary
shall mean the Participant's annual base salary excluding incentive and discretionary bonuses and other non-regular forms of compensation, determined before reductions for contributions to or deferrals under any pension, deferred compensation or other benefit plans sponsored by the Company.
|
1.5
|
Beneficiary
shall mean the person(s) or entity designated as such in accordance with Article 10 of the Plan.
|
1.6
|
Bonus
shall mean amounts paid to the Participant by the Company annually in the form of a discretionary or incentive compensation or any other bonus designated by the Administration Committee, determined before reductions for contributions to or deferrals under any pension, deferred compensation or other benefit plans sponsored by the Company.
|
1.7
|
Code
shall mean the Internal Revenue Code of 1986, as amended.
|
1.8
|
Company
shall mean The Sherwin-Williams Company.
|
1.9
|
Company Match Contributions
shall mean contributions credited by the Company to a Participant’s Account pursuant to Section 2.2 of the Plan.
|
1.10
|
Company Makeup Contributions
shall mean makeup contributions credited by the Company to a Participant’s Account pursuant to Section 2.3 of the Plan.
|
1.11
|
Crediting Rate
shall mean the notional gains and losses credited on the Participant’s Account balance which are based on the Participant’s choice among the investment alternatives made available by the Administration Committee pursuant to Article 3 of the Plan.
|
1.12
|
Designated Participant
shall mean a Participant designated on
Exhibit A
attached hereto as eligible to receive benefits pursuant to Section 2.4 of this Plan.
|
1.13
|
Disability
shall mean the condition whereby a Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under any accident and health plan covering employees of the Company.
|
1.14
|
Eligible Compensation
shall mean, with respect to any Plan Year, the portion of a Participant’s Base Salary and Bonus payable to the Participant during such Plan Year that exceeds the limit in effect for such Plan Year under Section 401(a)(17) of the Code.
|
1.15
|
Eligible Executive
shall mean any management employee of the Company, its subsidiaries or affiliates as may be designated by the Administration Committee to be eligible to participate in the Plan.
|
1.16
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended.
|
1.17
|
Financial Hardship
shall mean a severe financial hardship resulting from the Participant’s or the Participant’s dependent’s (as defined in Section 152(a) of the Code) sudden and unexpected illness or accident, the Participant’s sudden and unexpected property casualty loss, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, which is not covered by insurance and may not be relieved by cessation of Plan deferrals or by the liquidation of the Participant’s assets provided that such liquidation would not cause a severe Financial Hardship, and which is determined to qualify as a Financial Hardship by the Administration Committee. Cash needs arising from foreseeable events such as the purchase of a residence or education expenses for children shall not, alone, be considered a Financial Hardship.
|
1.18
|
Participant
shall mean an Eligible Executive who has been credited with a Company Match Contribution, Company Makeup Contribution or other benefit pursuant to Article 2 of the Plan.
|
1.19
|
Participant Election Form
shall mean the agreement, in a form acceptable to the Administration Committee, to make an election regarding the time or form of payment of a Participant's benefits, submitted by the Participant to the Administration Committee on a timely basis pursuant to Articles 2 and 4 of the Plan. The Participant Election Form may be submitted in an electronic form according to procedures established by the Administration Committee.
|
1.20
|
Plan Year
shall mean the calendar year.
|
1.21
|
Qualified Plans
shall mean the Qualified PIP, Qualified SEPIP and the Qualified SPP.
|
1.22
|
Qualified PIP
shall mean The Sherwin-Williams Company Salaried Employees’ Revised Pension Investment Plan, as it may be amended from time to time.
|
1.23
|
Qualified SEPIP
shall mean The Sherwin-Williams Company Salaried Employees’ Pension Investment Plan, as it may be amended from time to time.
|
1.24
|
Qualified SPP
shall mean The Sherwin-Williams Company Employee Stock Purchase and Savings Plan, as it may be amended from time to time.
|
1.25
|
Retirement
shall mean Termination of Employment on or after the Retirement Eligibility Date, other than as a result of the Participant's death.
|
1.26
|
Retirement Eligibility Date
shall mean the date on which the Participant attains age fifty-five (55).
|
1.27
|
Settlement Date
shall mean the date by which a lump sum payment shall be made or the date by which installment payments shall commence. The Settlement Date shall be on or about the first of the month that is at least ninety (90) days following the occurrence of the event triggering the payout; provided, however, that if the event triggering the payout is the Participant's Retirement, the Settlement Date shall be on or about the last day of January of the Plan Year following the year in which the Participant's Retirement occurs. Notwithstanding the foregoing, with respect to any Participant who is a Specified Employee, to the extent required by Section 409A of the Code, the Settlement Date shall be on or about the first business day following the first of the month which is no less than six (6) months from the Participant’s Termination of Employment.
|
1.28
|
Specified Employee
shall mean a Participant who is a “Key Employee” as determined by the Company pursuant to Section 416 of the Code and Treasury Regulation § 1.409A-1(i).
|
1.29
|
Statutory Limitations
shall mean any statutory or regulatory limitations imposed by one or more of Sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k) or 415 or any other limitation on contributions or benefits in the Code. The impact of such limits on the Participant for purposes of this Plan shall be determined by the Administration Committee based upon reasonable estimates and shall be final and binding as of the date the Company Makeup Contribution is credited to the Participant’s Account. No subsequent adjustments shall be made to increase a Company Makeup Contribution under this Plan as a result of any adjustments ultimately required under the Qualified Plans due to actual employee contributions or other factors.
|
1.30
|
Termination of Employment
shall mean the date of the Participant’s separation from service (within the meaning of Treasury Regulation § 1.409A-1(h)) with the Affiliated Group for any reason whatsoever, whether voluntary or involuntary, including as a result of the Participant’s Retirement or death. Upon a sale or other disposition of the assets of the Company or any other member of the Affiliated Group to an unrelated purchaser, the Company reserves the right, to the extent permitted by Section 409A of the Code, to determine whether Participants providing services to the purchaser after and in connection with such transaction have experienced a Termination of Employment.
|
1.31
|
Valuation Date
shall mean the date through which earnings are credited and shall, if a business day, be the date on which the payout or other event triggering the valuation occurs; or if not a business day, the next succeeding business day.
|
2.1
|
Elective Deferral
. Effective beginning with Plan Year 2010, no Participant may elect to defer any Base Salary or Bonus under the Plan for such Plan Year or any subsequent Plan Year. Any Base Salary and Bonus
|
2.2
|
Company Match Contributions
.
|
(i)
|
The Company shall credit a Company Match Contribution to this Plan on behalf of each Participant with respect to each Plan Year. The amount of the Company Match Contribution shall equal one hundred percent (100%) of the first six percent (6%) of any amount that would have been deferred under the Qualified SPP had the amount deferred not been limited by the applicable annual dollar limitations as set forth under Internal Revenue Code Sections 401(a)(17), 402(g)(1) and 415(c).
|
(ii)
|
In addition to the Company Match Contribution amount determined in accordance with Section 2.2(i), the Company may make an additional discretionary Company Match Contribution on behalf of a Participant with respect to any Plan Year, provided that the maximum amount of the additional discretionary Company Match Contribution that the Company may credit to a Participant's Account under this Section 2.2(ii) for any Plan Year is (a) minus (b), where (a) and (b) are as follows:
|
(a)
|
One hundred percent (100%) of the first six percent (6%) of the Participant's Eligible Compensation for the Plan Year.
|
(b)
|
The total amount of the Company Match Contribution credited to the Participant's Account for the Plan Year pursuant to Section 2.2(i).
|
2.3
|
Qualified PIP or Qualified SEPIP Makeup Contribution
. The Company shall credit a Company Makeup Contribution under this Plan to the Account of each Participant for each Plan Year. The Qualified PIP or Qualified SEPIP Makeup Contribution shall equal the total Company contributions that would have been made to Qualified PIP or Qualified SEPIP, as applicable, on behalf of the Participant absent any Statutory Limitations. The Qualified PIP or Qualified SEPIP Makeup Contribution shall be reduced by the amount of Company contributions actually credited to the Participant under Qualified PIP or Qualified SEPIP for such Plan Year.
|
2.4
|
Crediting of Accrued Benefit
. To the extent a Designated Participant accrues a benefit pursuant to the final average pay formula applicable to certain participants covered by Appendix B of the Qualified SEPIP, such Designated Participant shall be entitled to a benefit hereunder equal to the total accrued benefit the Designated Participant would have been entitled to receive based upon such formula absent any Statutory Limitations, reduced by the amount of benefits actually payable from the Qualified SEPIP pursuant to the formula specified in Appendix B thereof.
|
3.1
|
Participant Accounts
. Solely for recordkeeping purposes an Account shall be maintained for each Participant and shall be credited with the Participant’s Company Match Contributions and Company Makeup Contributions on or before March 15 of the Plan Year following the Plan Year to which the Company Match Contributions and Company Makeup Contributions relate, provided that the Participant is continuously
|
3.2
|
Crediting Rate
. The Crediting Rate on amounts in a Participant’s Account shall be based on the Participant’s choice among the investment alternatives made available from time to time by the Administration Committee. The Administration Committee shall establish a procedure by which a Participant may elect to have the Crediting Rate based on one or more investment alternatives and by which the Participant may change investment elections at least quarterly. The Administration Committee may provide only one investment option for a particular class of contributions and may establish a separate subaccount for such contributions which shall be paid out at the same time and under the same circumstances as the Participant's Account. The Participant’s Account balance shall reflect the investments selected by the Participant. If an investment selected by a Participant sustains a loss, the Participant’s Account shall be reduced to reflect such loss. The Participant’s choice among investments shall be solely for purposes of calculation of the Crediting Rate. If the Participant fails to elect an investment alternative the Crediting Rate shall be based on the investment alternative selected for this purpose by the Administration Committee. The Company shall have no obligation to set aside or invest funds as directed by the Participant and, if the Company elects to invest funds as directed by the Participant, the Participant shall have no more right to such investments than any other unsecured general creditor of the Company. During payout, the Participant’s Account shall continue to be credited at the Crediting Rate selected by the Participant from among the investment alternatives or rates made available by the Administration Committee for such purpose.
|
3.3
|
Statement of Accounts
. The Administration Committee shall provide each Participant with statements at least annually setting forth the Participant’s Account balance as of the end of each Plan Year.
|
4.1
|
Retirement Benefits Attributable to Account
. In the event of the Participant’s Retirement, the Participant shall be entitled to receive an amount equal to the total balance of the Participant’s Account credited with notional earnings as provided in Article 3 through the Valuation Date. The benefits shall be paid in a single lump sum on the Settlement Date following Retirement unless the Participant makes a timely election pursuant to the provisions of this Article 4 and other applicable provisions of the Plan to have the benefits paid in substantially level annual installments over a specified period of not more than fifteen (15) years. Except as otherwise provided herein, payments shall be made or commence on the Settlement Date following Retirement. Notwithstanding the foregoing, a Participant may elect, at any time at least twelve (12) months prior to the intended effective date of such change, to change the time form of payment of benefits to installments over a specified period of not more than fifteen (15) years, provided that any such change must, to the extent required by Section 409A of the Code, defer payment, or the commencement of payment, for at least an additional five (5) years after the date payment would otherwise be made or commence pursuant to this Section 4.1. If benefits are payable in the form of annual installments pursuant to this Section 4.1, annual payments will be made commencing on the Settlement Date following Retirement (or the applicable anniversary thereof) and shall continue on each anniversary thereof until the number of annual installments specified in the Participant's timely election has been paid. The amount of each such installment payment for a Plan Year shall be determined by dividing the Participant's Account balance, determined on or about the first day of the calendar quarter preceding the first installment payment date of that Plan Year, by the number of installment payments remaining, without regard to anticipated earnings.
|
4.2
|
Retirement Benefits Attributable to Accrued Benefit
. Notwithstanding anything herein to the contrary, a Designated Participant or his Beneficiary shall receive a distribution of his accrued benefit credited pursuant to Section 2.4 hereof in the form of a single life annuity, with annual annuity payments commencing on the Settlement Date following the later of Termination of Employment or the Participant's Retirement Eligibility Date. Notwithstanding the foregoing, a Designated Participant may elect, at any time prior to the Settlement Date, to receive his accrued benefit credited pursuant to Section 2.4 hereof in the form of any other actuarially equivalent (within the meaning of Treasury Regulation § 1.409A-2(b)(2)(ii)) form of annuity permitted under the Qualified SEPIP.
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4.3
|
Termination Benefit
. Upon Termination of Employment other than by reason of Retirement or death, the Company shall pay to the Participant a termination benefit equal to the balance on Termination of Employment of the Participant’s Account credited with notional earnings as provided in Article 3 through the Valuation Date. The termination benefits shall be paid in a single lump sum on the Settlement Date following Termination of Employment.
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4.4
|
Cash-Out Limit
. Notwithstanding the foregoing, in the event the sum of all benefits payable to the Participant under the Plan and any other plan or arrangement that is aggregated with the Plan (or, as applicable, aggregated with a portion of the Plan) pursuant to Treasury Regulation § 1.409A-1(c) is less than or equal to the applicable dollar amount then in effect under section 402(g)(1)(B) of the Code, the Company may, in its sole discretion, elect to pay such benefits in a single lump sum as provided in Treasury Regulation § 1.409A-3(j)(4)(v).
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5.1
|
Death Benefit
. In the event of Termination of Employment as a result of the Participant's death, the Company shall pay to the Participant’s Beneficiary a death benefit equal to the total balance of the Participant’s Account as of the date of the Participant’s death credited with notional earnings as provided in Article 3 through the Valuation Date and any accrued benefit credited to such Participant pursuant to Section 2.4 hereof. The death benefit shall be paid in the same form as the Participant's Retirement benefit would have been paid under Article 4 and such payment shall be made or commence on the Settlement Date following the Participant's death, without regard to any 5-year deferral that may have been applicable to benefits that would have been paid under Article 4.
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5.2
|
Cash-Out Limit
. Notwithstanding the foregoing, in the event the sum of all benefits payable to a Beneficiary under the Plan and any other plan or arrangement that is aggregated with the Plan (or, as applicable, aggregated with a portion of the Plan) pursuant to Treasury Regulation § 1.409A-1(c) is less than or equal to the applicable dollar amount then in effect under section 402(g)(1)(B) of the Code, the Company may, in its sole discretion, elect to pay such benefits in a single lump sum as provided in Treasury Regulation § 1.409A-3(j)(4)(v).
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8.1
|
Amendment and Termination in General
. The Company may, at any time, amend or terminate the Plan, except that
(i) no such amendment or termination may reduce a Participant’s Account balance or benefit credited under Section 2.4 of the Plan, and (ii) no such amendment or termination may result in the acceleration of payment of any benefits to any Participant, Beneficiary or other person, except as may be permitted under Section 409A of the Code.
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8.2
|
Payment of Benefits Following Termination
. In the event that the Plan is terminated, a Participant's benefits shall be distributed to the Participant or Beneficiary on the dates on which the Participant or Beneficiary would otherwise receive benefits hereunder without regard to the termination of the Plan. Notwithstanding the preceding sentence, and to the extent permitted under Section 409A of the Code, the Company, by action taken by its Board of Directors or its designee, may terminate the Plan and accelerate the payment of Participants' benefits subject to the following conditions:
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(i)
|
Company's Discretion
. The termination does not occur "proximate to a downturn in the financial health" of the Company (within the meaning of Treasury Regulation §1.409A-3(j)(4)(ix)), and all other arrangements required to be aggregated with the Plan (or any portion thereof) under Section 409A of the Code are also terminated and liquidated. In such event, the entire benefits of all Participants shall be paid at the time and pursuant to the schedule specified by the Company, so long as all payments are required to be made no earlier than twelve (12) months, and no later than twenty-four (24) months, after the date the Board of Directors or its designee irrevocably approves the termination of the Plan. Notwithstanding the foregoing, any payment that would otherwise be paid pursuant to the terms of the Plan prior to the twelve (12) month anniversary of the date that the Board of Directors or its designee irrevocably approves the termination of the Plan shall continue to be paid in accordance with the terms of the Plan. If the Plan is terminated pursuant to this Section 8.2(i), the Company shall be prohibited from adopting a new plan or arrangement that would be aggregated with this Plan (or any portion thereof) under Section 409A of the Code within three (3) years following the date that the Board of Directors or its designee irrevocably approves the termination and liquidation of the Plan.
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(ii)
|
Change of Control
. The termination occurs pursuant to an irrevocable action of the Board of Directors or its designee that is taken within the thirty (30) days preceding or the twelve (12) months following a Change of Control (as defined in Article 11), and all other plans sponsored by the Company (determined immediately after the Change of Control) that are required to be aggregated with this Plan under Section 409A of the Code are also terminated with respect to each participant therein who experienced the Change of Control (each a "Change of Control Participant"). In such event, the entire benefits of each Participant under the Plan and each Change in Control Participant under all aggregated plans shall be paid at the time and pursuant to the schedule specified by the Company, so
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(iii)
|
Dissolution; Bankruptcy Court Order
. The termination occurs within twelve (12) months after a corporate dissolution taxed under Section 331 of the Code, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A). In such event, the entire benefits of each Participant shall be paid at the time and pursuant to the schedule specified by the Company, so long as all payments are required to be made by the latest of: (A) the end of the calendar year in which the Plan termination occurs, (B) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (C) the first calendar year in which payment is administratively practicable.
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(iv)
|
Other Events
. The termination occurs upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance.
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9.1
|
Beneficiary Designation
. The Participant shall have the right, at any time, to designate any person or persons as Beneficiary (both primary and contingent) to whom payment under the Plan shall be made in the event of the Participant’s death. The Beneficiary designation shall be effective when it is submitted in writing to and acknowledged by the Administration Committee during the Participant’s lifetime on a form prescribed by the Administration Committee.
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9.2
|
Revision of Designation
. The submission of a new Beneficiary designation shall cancel all prior Beneficiary designations. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of a Beneficiary designation shall revoke such designation, unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant’s new spouse has previously been designated as Beneficiary.
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9.3
|
Successor Beneficiary
. If the primary Beneficiary dies prior to complete distribution of the benefits provided in Article 5, the remaining Account balance shall be paid to the contingent Beneficiary elected by the Participant.
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9.4
|
Absence of Valid Designation
. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant’s benefits, then the Administration Committee shall direct the distribution of such benefits to the relevant estate.
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10.1
|
Administration
. The Plan shall be administered by the Administration Committee, which shall have the exclusive right and full discretion (i) to interpret the Plan, (ii) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or admissions), (iii) to make, amend and rescind such rules as it deems necessary for the proper administration of the Plan and (iv) to make all other determinations necessary or advisable for the administration of the Plan, including determinations regarding eligibility for benefits payable under the Plan. All interpretations of the Administration Committee with respect to any matter hereunder shall be final, conclusive and binding on all persons affected thereby. No member of the Administration Committee shall be liable for any determination, decision, or action made in good faith with respect to the Plan. The Company will indemnify and hold harmless the members of the Administration Committee from and against any and all liabilities, costs, and expenses incurred by such persons as a result of any act, or omission, in connection with the performance of such persons’ duties, responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal acts of such persons.
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10.2
|
Claims Procedure
. Any Participant, former Participant or Beneficiary may file a written claim with the Administration Committee setting forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement to such benefit. The Administration Committee shall determine the validity of the claim and communicate a decision to the claimant promptly and, in any event, not later than ninety (90) days after the date of the claim. The claim may be deemed by the claimant to have been denied for purposes of further review described below in the event a decision is not furnished to the claimant within such ninety (90) day period. If additional information is necessary to make a determination on a claim, the claimant shall be advised of the need for such additional information within forty-five (45) days after the date of the claim. The claimant shall have up to one hundred and eighty (180) days to supplement the claim information, and the claimant shall be advised of the decision on the claim within forty-five (45) days after the earlier of the date the supplemental information is supplied or the end of the one hundred and eighty (180) day period. Every claim for benefits which is denied shall be denied by written notice setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the denial, (ii) specific reference to any provisions of the Plan (including any internal rules, guidelines, protocols, criteria, etc.) on which the denial is based, (iii) description of any additional material or information that is necessary to process the claim, and (iv) an explanation of the procedure for further reviewing the denial of the claim.
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10.3
|
Review Procedures
. Within sixty (60) days after the receipt of a denial on a claim, a claimant or his/her authorized representative may file a written request for review of such denial. Such review shall be undertaken by the Administration Committee and shall be a full and fair review. The claimant shall have the right to review all pertinent documents. The Administration Committee shall issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision shall be rendered as soon as possible but not later than one hundred and twenty (120) days after receipt of the claimant’s request for review. The decision on review shall be in writing and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant with specific reference to any provisions of the Plan on which the decision is based.
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(i)
|
Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the foregoing, if any one person or group is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a Change of Control. Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person acquires ownership of more than 50% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change of Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company's acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change of Control shall then occur.
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(ii)
|
Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting power of the Company. Notwithstanding the foregoing, if any one person or group is considered to own 30% or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a Change of Control. Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person acquires ownership of more than 30% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change of Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company's acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change of Control shall then occur.
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(iii)
|
A majority of the Company’s Board of Directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by at least two-thirds (2/3) of the members of the Board of Directors prior to the date of such appointment or election.
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(iv)
|
Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a Change of Control if such transfer is to (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (b) an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (c) a person or group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company, or (d) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in clause (c) of this sentence.
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12.1
|
Nonassignability
. No amount payable to a Participant or Beneficiary under the Plan will be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process by a Participant or Beneficiary, and any attempt to do so will be void; nor will any benefit be void; nor will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled thereto. However, (i) the withholding of taxes from Plan benefit payments, or (ii) the direct deposit of benefit payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation) shall not be construed as an assignment or alienation.
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12.2
|
No Right to Company Assets
. The benefits paid under the Plan shall be paid from the general funds of the Company, and the Participant and any Beneficiary shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder and the Plan constitutes a mere promise by the Company to make benefit payments in the future.
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12.3
|
Protective Provisions
. The Participant shall cooperate with the Company by furnishing any and all information requested by the Administration Committee in order to facilitate the payment of benefits hereunder, and taking such other actions as may be requested by the Administration Committee. If the Participant refuses to so cooperate, the Company shall have no further obligation to the Participant under the Plan.
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12.4
|
Section 16b Eligible Executives
. In the event any Eligible Executive subject to Rule 16b issued under the Securities Exchange Act of 1934 (or any successor rule to the same effect) has, at any time, a Crediting Rate based upon an investment alternative consisting of or the value of which is determined based upon the value of the Company’s common stock or any security into which such common stock may be changed by reason of: (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company; (b) any merger, consolidation, separation, reorganization or partial or complete liquidation; or (c) any other corporate transaction or event having an effect similar to the foregoing,, unless the transaction is otherwise exempt under Rule 16b-3, no transaction with respect to the portion of the Participant’s Account attributable to such investment alternative shall be permitted pursuant to this Plan until a date which is not less than six (6) months and one (1) day from the date on which the investment alternative was selected or transferred within the Participant’s Account.
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12.5
|
Withholding
. The Participant shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security, Medicare or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may be required, including, without limitation, by the reduction of other amounts payable to the Participant.
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12.6
|
Assumptions and Methodology
. The Administration Committee shall establish the actuarial assumptions and method of calculation used in determining the present or future value of benefits, earnings, payments, fees, expenses or any other amounts required to be calculated under the terms of the Plan. Such
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12.7
|
Trust
. The Company shall be responsible for the payment of all benefits under the Plan. At its discretion, the Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan; provided, however, that no such trust shall be funded if the funding thereof would result in taxable income to a Participant (i) due to the assets of such a trust being located or transferred outside of the United States; (ii) due to the assets of such a trust being restricted to the provision of benefits under the Plan in connection with a change in the employer's financial health; (iii) due to the assets being set aside, reserved or transferred to such a trust during any restricted period (as defined in Section 409A(b)(3)(B) of the Code); or (iv) as otherwise provided pursuant to Section 409A(b) of the Code. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors. Benefits paid to the Participant from any such trust or trusts shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan. Neither the establishment of the Plan or trust or any modification thereof, or the creation of any fund or account, or the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Company or any officer or employee thereof, except as provided by law or by any Plan provision. The amounts in the Accounts shall remain the sole property of the Company unless and until required to be distributed in accordance with the provisions of the Plan, and shall not constitute a trust or be deemed to be held in trust for the benefit of any Participant or Beneficiary hereunder or their personal representative. The Company does not in any way guarantee the trust or any Participant’s benefit from loss or depreciation. In no event shall the Company’s employees, officers, directors or stockholders be liable to any person on account of any claim arising by reason of the provisions of the Plan or of any instrument or instruments implementing its provisions, or for the failure of any Participant, Beneficiary or other person to be entitled to any particular tax consequences with respect to the Plan, the trust(s) or any contribution thereto or distribution therefrom.
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13.1
|
Successors of the Company
. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
|
13.2
|
Employment Not Guaranteed
. Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to continued employment with the Company.
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13.3
|
Gender, Singular and Plural
. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
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13.4
|
Captions
. The captions of the articles, paragraphs and sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
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13.5
|
Validity
. In the event any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
|
13.6
|
Waiver of Breach
. The waiver by the Company of any breach of any provision of the Plan shall not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant.
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13.7
|
Notice
. Any notice or filing required or permitted to be given to the Company or the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or sent by first class mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Administration Committee, and in the case of the Participant, to the last known address of the Participant indicated on the employment records of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Notices to the Company may be permitted by electronic communication according to specifications established by the Administration Committee.
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13.8
|
Errors in Benefit Statement or Distributions
. In the event an error is made in a benefit statement, such error shall be corrected on the next benefit statement following the date such error is discovered.
|
13.9
|
ERISA Plan
. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
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13.10
|
Applicable Law
. In the event any provision of, or legal issue relating to, this Plan is not fully preempted by ERISA, such issue or provision shall be governed by the laws of the State of Ohio.
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13.11
|
Effect of Legislative or Regulatory Changes
. Notwithstanding anything in this Plan to the contrary, in the event of the enactment of any legislation or regulations which, in the sole discretion of the Company, have an unfavorable impact on the Company and/or Participants, the Company shall have the unilateral right to amend the Plan in whatever manner it deems appropriate to mitigate the effects of such legislation or regulations, without the necessity of obtaining further Board approval.
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13.12
|
Section 409A of the Code
.
|
(i)
|
In General
. It is intended that the Plan comply with the provisions of Section 409A of the Code, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to Participants or Beneficiaries. The Plan shall be construed, administered and governed in a manner that effects such intent.
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(ii)
|
Discretionary Acceleration of Payments
. To the extent permitted by Section 409A of the Code, the Administration Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan as provided in this Section. The provisions of this Section are intended to comply with the exception to accelerated payments under Treasury Regulation §1.409A-3(j) and shall be interpreted and administered accordingly.
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(a)
|
Domestic Relations Orders.
The Administration Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).
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(b)
|
Conflicts of Interest.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent necessary for any federal officer or employee in the executive branch to comply with an ethics agreement with the federal government. Additionally, the Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan the to the extent reasonably necessary to avoid the violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is
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(c)
|
Employment Taxes.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code, where applicable, on compensation deferred under the Plan (the FICA or RRTA amount). Additionally, the Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment, to pay the income tax at source on wages imposed under Section 3401 of the Code or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA or RRTA amount, and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the FICA or RRTA amount, and the income tax withholding related to such FICA or RRTA amount.
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(d)
|
Cash-Out Limit.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Sections 4.4 and 5.2 hereof.
|
(e)
|
Payment Upon Income Inclusion Under Section 409A.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan at any time the Plan fails to meet the requirements of Section 409A of the Code. The payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.
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(f)
|
Certain Payments to Avoid a Nonallocation Year under Section 409(p).
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to prevent the occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock ownership plan next following the plan year in which such payment is made, provided that the amount paid may not exceed 125 percent of the minimum amount of payment necessary to avoid the occurrence of a nonallocation year.
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(g)
|
Payment of State, Local, or Foreign Taxes.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the participant (the state, local, or foreign tax amount). Such payment may not exceed the amount of such taxes due as a result of participation in the Plan. The payment may be made in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by payment directly to the participant. Additionally, the Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the income tax at source on wages imposed under Section 3401 of the Code as a result of such payment and to pay the additional income tax at source on wages imposed under Section 3401 of the Code attributable to such additional wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the state, local, and foreign tax amount, and the income tax withholding related to such state, local, and foreign tax amount.
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(h)
|
Certain Offsets.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as satisfaction of a debt of the Participant to the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code), where such debt is incurred in the ordinary course of the service relationship between the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) and the Participant, the entire amount of reduction in any of the taxable years of the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.
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(i)
|
Bona Fide Disputes as to a Right to a Payment.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan where such payment occurs as part of a settlement between the Participant and the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) of an arm’s length, bona fide dispute as to the Participant's right to the deferred amount.
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(j)
|
Plan Terminations and Liquidations.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Section 8.2 hereof.
|
(k)
|
Other Events and Conditions.
A payment may be accelerated upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance.
|
(iii)
|
Delay of Payments
. To the extent permitted under Section 409A of the Code, the Administration Committee may, in its sole discretion, delay payment under any of the following circumstances, provided that the Administration Committee treats all payments to similarly situated Participants on a reasonably consistent basis:
|
(a)
|
Federal Securities Laws or Other Applicable Law
. A payment may be delayed where the Administration Committee reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided that the delayed payment is made at the earliest date at which the Administration Committee reasonably anticipates that the making of the payment will not cause such violation. For purposes of the preceding sentence, the making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.
|
(b)
|
Payments Subject to Section 162(m) of the Code
. A payment may be delayed to the extent that the Administration Committee reasonably anticipates that if the payment were made as scheduled, the Company's deduction with respect to such payment would not be permitted due
|
(c)
|
Other Events and Conditions
. A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance.
|
|
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By:
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/s/
|
|
|
|
|
Catherine M. Kilbane, Senior Vice President,
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|
|
|
|
General Counsel and Secretary
|
•
|
Tom Coy
|
•
|
Tom Seitz
|
•
|
Mark R. Henderson
|
|
|
By:
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/s/
|
|
|
|
|
Catherine M. Kilbane, Senior Vice President,
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|
|
|
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General Counsel and Secretary
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1.
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PURPOSE
. The purpose of The Sherwin-Williams Company 2005 Director Deferred Fee Plan (the "Plan") is to provide non-employee Directors of the Company with the opportunity to defer taxation of all or a portion of such Director's Board Retainer and/or Meeting Fees and to help build loyalty to the Company through increased opportunity to invest in Company Common Stock. The terms of the Plan, amended and restated as set forth herein, apply to amounts .deferred under the Plan after December 31, 2015. Notwithstanding anything to the contrary contained herein, amounts deferred under the Plan on or before December 31, 2015 shall be governed by the terms of the Plan effective at the time of deferral, provided that, all amounts that were deferred and vested under the Plan prior to January 1, 2005 and any additional amounts that are not subject to Section 409A of the Code shall continue to be subject solely to the terms of the separate Plan in effect on October 3, 2004.
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2.
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DEFINITIONS
. The following terms when used herein with initial capital letters shall have the following respective meanings unless the text clearly indicates otherwise:
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(a)
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Administration Committee
. "Administration Committee" shall have the meaning given to such term under the Qualified Plan.
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(b)
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Board of Directors
. "Board of Directors" means the Board of Directors of the Company.
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(c)
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Board Retainer
. "Board Retainer" means the compensation payable monthly to Directors.
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(d)
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Code
. "Code" means the Internal Revenue Code of 1986, as amended.
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(e)
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Common Stock
. "Common Stock" means the common stock of the Company or any security into which such Common Stock may be changed by reason of: (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (ii) any merger, consolidation, separation, reorganization or partial or complete liquidation, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing.
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(f)
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Common Stock Account
. "Common Stock Account" means the bookkeeping account established and maintained under this Plan which is credited with Common Stock in accordance with Section 5(b).
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(g)
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Company
. "Company" means The Sherwin-Williams Company, an Ohio corporation or its successor(s) in interest.
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(h)
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Deferred Cash Account
. "Deferred Cash Account" means the bookkeeping account established and maintained under this Plan which is valued in accordance with Section 5(a).
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(i)
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Deferred Compensation
. "Deferred Compensation" means the amount of the Board Retainer and/or Meeting Fee of the Participant deferred pursuant to this Plan.
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(j)
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Director
. "Director" means a member of the Board of Directors.
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(k)
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Eligible Director
. "Eligible Director" means a Director who is not an employee of the Company or a Subsidiary.
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(l)
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Fair Market Value
. "Fair Market Value" of Common Stock means the average between the highest and the lowest quoted selling price of the Company's Common Stock on the New York Stock Exchange or any successor exchange.
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(m)
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Fees
. "Fees" means the compensation payable to Directors for their services as a director, including the Board Retainer and Meeting Fee.
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(n)
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Meeting Fee
. "Meeting Fee" means the compensation payable at the time of a meeting to a Director for each meeting of the Board of Directors or committee of the Board of Directors that such Director attends and/or chairs.
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(o)
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Participant
. "Participant" means an Eligible Director who has elected to participate in the Plan.
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(p)
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Payment Date
. "Payment Date" means (i) with respect to the payment of a Board Retainer, the first business day of each calendar month or (ii) with respect to the payment of a Meeting Fee, the date on which a meeting of the Board of Directors or a committee of the Board of Directors was held.
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(q)
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Plan
. "Plan" means the plan set forth in this instrument, and known as "The Sherwin-Williams Company 2005 Director Deferred Fee Plan", amended and restated effective as of January 1, 2016.
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(r)
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Plan Year
. "Plan Year" means a calendar year.
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(s)
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Qualified Plan
. "Qualified Plan" means The Sherwin-Williams Company Employee Stock Purchase and Savings Plan, as amended from time to time, or any successor plan.
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(t)
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Shadow Stock
. "Shadow Stock" means a unit of interest equivalent to a share of Common Stock.
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(u)
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Shadow Stock Account
. "Shadow Stock Account" means the bookkeeping account established and maintained under this Plan credited with Shadow Stock in accordance with Section 5(c).
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(v)
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Subsidiary
. Any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if, at the time of the time of investment in the Common Stock, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
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(w)
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Trust
. "Trust" means one or more trust funds established for the purpose of (i) providing a source from which to pay benefits under the Plan and (ii) purchasing and holding assets, including shares of Common Stock. Any such trust funds shall be subject to the claims of the Company's creditors in the event of the Company's
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(x)
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Unforeseeable Emergency
. "Unforeseeable Emergency" means a severe financial hardship arising from (i) the illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code), (ii) loss of the Participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The determination of whether a Participant has incurred an Unforeseeable Emergency shall be made by the Administration Committee, in its sole discretion, in accordance with Section 409A of the Code and Treasury Regulations thereunder.
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3.
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ELIGIBILITY
. An Eligible Director shall become a Participant upon satisfaction of the following: (i) the later of the effective date of the Plan or the date such Director becomes an Eligible Director; and (ii) completion of an Election (as defined in Section 4).
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4.
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ELECTION PROCEDURE
. An Eligible Director wishing to participate in the Plan must file a written notice on the Notice of Election form electing to defer payment for a Plan Year of all or a portion of his Fees as a Director ("Election"). Any such Election shall be effective only with respect to Fees earned after the effective date of the Election. Any such Election will continue in effect until the Director modifies or terminates such Election effective as of the beginning of a subsequent Plan Year.
An effective Election may be terminated or modified for any subsequent Plan Year by filing either a new Notice of Election form to effect modifications, or a Notice of Termination form to effect terminations, on or before the December 31st immediately preceding the Plan Year for which such modification or termination is to become effective.
An Election shall not be effective until receipt of the fully and properly completed Notice of Election form by the Secretary of the Company. A fully and properly completed Notice of Election form must indicate: (i) the percentage of Fees to be deferred; (ii) manner of payment upon distribution; (iii) payment commencement date; and (iv) deemed investment election. Once effective for a Plan Year, an Election is irrevocable and may not be changed for that Plan Year. No subsequent election may change the manner of payment, the payment commencement date or the deemed investment of the Fees previously deferred. An Election shall apply to Fees payable with respect to each subsequent Plan Year, unless terminated or modified as described herein. A person for whom an effective Election is terminated may thereafter file a new Notice of Election form, in the manner described above, for future Plan Years for which he is eligible to participate in the Plan.
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5.
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INVESTMENT ACCOUNTS
. The amount of a Participant's Deferred Compensation pursuant to an Election shall be deemed credited to the investment options specified in this Section 5 in the manner elected by the Participant. A Participant's election as to the investment options in which his Deferred Compensation for a Plan Year shall be deemed to be invested shall be irrevocable with respect to Deferred Compensation and deemed earnings
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(a)
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DEFERRED CASH ACCOUNT
. Each Participant's Deferred Cash Account shall accrue interest computed using the Fidelity Government Money Market Fund. The interest shall be computed on the actual balance in each Participant's Deferred Cash Account during the previous calendar quarter.
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(b)
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COMMON STOCK ACCOUNT
. The Participant's Common Stock Account shall be credited with that quantity of Common Stock equal to the number of full and fractional shares (to the nearest thousandths) which could have been purchased by the Trust with the portion of Deferred Compensation a Participant has elected to allocate to the Common Stock Account based on the Fair Market Value of such Common Stock on each Payment Date. There will be credited to each Participant's Common Stock Account amounts equal to the cash dividends, and other distributions, paid on shares of issued and outstanding Common Stock represented by the Participant's Common Stock Account which the Participant would have received had he been a record owner of shares of Common Stock equal to the amount of Common Stock in his Common Stock Account at the time of payment of such cash dividends or other distributions. The Participant's Common Stock Account shall be credited with a quantity of shares of Common Stock and fractions thereof (to the nearest thousandths) that could have been purchased with the dividends or other distributions based on the Fair Market Value of Common Stock on the date of payment of such dividends or other distributions.
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(c)
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SHADOW STOCK ACCOUNT
. The Participant's Shadow Stock Account shall be credited with a quantity of Shadow Stock units and fractions thereof (to the nearest thousandths) equal to the value of Common Stock that could have been purchased with the portion of the Deferred Compensation credited to the Shadow Stock Account on each Payment Date based on the Fair Market Value of Common Stock on such Payment Date. There will be credited to each Participant's Shadow Stock Account amounts equal to the cash dividends, and other distributions, paid on shares of issued and outstanding Common Stock represented by the Participant's Shadow Stock Account which the Participant would have received had he been a record owner of a number of shares of Common Stock equal to the amount of Shadow Stock in his Shadow Stock Account at the time of payment of such cash dividends or other distributions. The Participant's Shadow Stock Account shall be credited with a quantity of Shadow Stock units and fractions thereof (to the nearest thousandths) that could have been purchased with the dividends or other distributions based on the Fair
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6.
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DEPOSITS TO THE TRUST
. The Company shall transfer to the Trust, within sixty (60) days of the date Fees would otherwise be paid, amounts which a Participant has directed to be deferred in accordance with the Plan. In addition, as of the first day of each calendar quarter, the Company shall deposit into the Trust the following cash amounts accrued during the immediately preceding calendar quarter: (i) all accrued interest on Participants' Deferred Cash Accounts; (ii) an amount equal to cash dividends and other distributions paid on shares of Common Stock represented by units of Shadow Stock and shares of Common Stock credited to Participants' Shadow Stock Accounts and Common Stock Accounts; (iii) an amount equal to the appreciation in the value of a unit of Shadow Stock multiplied times the number of units of Shadow Stock credit to Participants' Shadow Stock Accounts; and (iv) an amount equal to the appreciation in the value of a share of Common Stock multiplied by the number of shares of Common Stock credited to Participants' Common Stock Accounts. Notwithstanding the foregoing, the Trust shall not be funded if the funding thereof would result in taxable income to a Participant (i) due to the assets of the Trust being located or transferred outside of the United States; (ii) due to the assets of the Trust being restricted to the provision of benefits under the Plan in connection with a change in the employer's financial health; (iii) due to the assets being set aside, reserved or transferred to the Trust during any restricted period (as defined in Section 409A(b)(3)(B) of the Code); or (iv) as otherwise provided pursuant to Section 409A(b) of the Code.
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7.
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PAYMENT OF DEFERRED COMPENSATION
.
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(a)
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Amount of Payment
. The benefit that a Participant will receive from the Company in accordance with the Plan shall be: (i) the number of full shares of Common Stock credited to the Participant's Common Stock Account; and (ii) cash equal to the sum of (I) the amount credited to the Participant's Deferred Cash Account; (II) the Fair Market Value of the fractional shares (to the nearest thousandths) of Common Stock on the date such fractional shares were credited to the Participant's Common Stock Account; and (III) the value of the Shadow Stock units and fractions thereof (to the nearest thousandths) credited to the Participant's Shadow Stock Account. The value of a Participant's Deferred Cash Account, fractional shares of Common Stock and Shadow Stock Account shall be determined by the Company as of the end of the calendar quarter immediately preceding the calendar quarter in which a Participant is entitled to a distribution hereunder in accordance with Section 7(c) below. Notwithstanding the preceding sentence to the contrary, in the event of a Change of Control or termination and liquidation of the Plan as provided in Sections 9 and 13, respectively, the value of a Participant's Deferred Cash Account, Shadow Stock Account and Common Stock Account shall be determined by the Company immediately following such an event.
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(b)
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Manner of Payment
. A Participant's Deferred Compensation for a Plan Year, as adjusted for deemed earnings or losses thereon, will be paid by the Company to him
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(c)
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Payment Commencement Date
. Payments of Deferred Compensation and earnings thereon shall commence within two (2) business days following the first business day of the first calendar quarter beginning after the earlier of the date the Participant elected to receive payment in accordance with Section 4 or the date the Participant ceases to be a Director.
Notwithstanding a Participant's manner of payment election hereunder, if a Participant ceases to be a Director as a result of the Participant's death, the Company shall pay to the Participant's beneficiary or beneficiaries a lump sum on the first business day of the first calendar quarter beginning after the Participant's death.
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(d)
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Unforeseeable Emergency
. In the event a Participant has elected to receive distribution from the plan in the form of installment payments, the Administration Committee may, nonetheless, upon request of the Participant, in its sole discretion, accelerate payment of all or any portion of the Participant's remaining account under the Plan, if the Administration Committee determines that the Participant has experienced an Unforeseeable Emergency. The amount of any such accelerated payment shall be limited to the amount necessary to alleviate the Unforeseeable Emergency.
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8.
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BENEFICIARIES
. A Participant may, by executing and delivering to the Secretary of the Company prior to the Participant's death a Beneficiary Election form, designate a beneficiary or beneficiaries to whom distribution of his interest under this Plan shall be made in the event of his death prior to the full receipt of his interest under this Plan, and he may designate the portions to be distributed to each such designated beneficiary if there is more than one. Any such designation may be revoked or changed by the Participant at any time and from time to time by filing, prior to the Participant's death, with the Secretary of the Company an
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9.
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CHANGE OF CONTROL
. In the event of a Change of Control, the amounts to which Participants are entitled under this Plan shall be immediately distributed in a lump sum cash payment to Participants within ninety (90) days following the date of such Change of Control. For purposes of this Plan, a Change of Control shall be deemed to occur on the date of any of the following events:
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(a)
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Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the foregoing, if any one person or group is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a Change of Control. Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person acquires ownership of more than 50% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change of Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company's acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change of Control shall then occur.
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(b)
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Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting power of the Company. Notwithstanding the foregoing, if any one person or group is considered to own 30% or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a Change of Control. Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person acquires ownership of more than 30% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change of Control would occur as a result of such an acquisition by the Company (if not for the operation of
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(c)
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A majority of the Company’s Board of Directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by at least two-thirds (2/3) of the members of the Board of Directors prior to the date of such appointment or election.
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(d)
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Any one person or more than one person acting as a group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a Change of Control if such transfer is to (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (iii) a person or group (within the meaning of the Treasury Regulation § 1.409A-3(i)(5)(v)(B)) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company, or (iv) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in clause (iii) of this sentence.
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10.
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NON-ASSIGNABILITY
. Neither a Participant nor any beneficiary designated by him shall have any right to, directly or indirectly, alienate, assign or encumber any amount that is or may be payable hereunder.
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11.
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ADMINISTRATION OF PLAN
. Full discretionary power and authority to construe, interpret and administer the Plan shall be vested in the Administration Committee. The Administration Committee shall have the power and authority to allocate among themselves and to delegate any responsibility or power reserved to it hereunder to any person or persons or any committee of the Board of Directors, as it may, in its sole discretion, deem
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12.
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GOVERNING LAW
. To the extent not preempted by federal law, the provisions of this Plan shall be interpreted and construed in accordance with the laws of the State of Ohio.
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13.
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AMENDMENT/TERMINATION
.
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(a)
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Amendment and Termination in General
. The Board of Directors may amend, suspend or terminate this Plan at any time; provided that no such amendment, suspension or termination shall adversely effect the amounts in any then-existing account. Further, no amendment, suspension or termination of the Plan may result in the acceleration of payment of any benefits to any Participant, beneficiary or other person, except as may be permitted under Section 409A of the Code.
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(b)
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Payment of Benefits Following Termination
. In the event that the Plan is terminated, a Participant's benefits shall be distributed to the Participant or beneficiary on the dates on which the Participant or beneficiary would otherwise receive benefits hereunder without regard to the termination of the Plan. Notwithstanding the preceding sentence, and to the extent permitted under Section 409A of the Code, the Board of Directors may terminate the Plan and accelerate the payment of Participants' benefits subject to the following conditions:
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(i)
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Company's Discretion
. The termination does not occur "proximate to a downturn in the financial health" of the Company (within the meaning of Treasury Regulation §1.409A-3(j)(4)(ix)), and all other arrangements required to be aggregated with the Plan under Section 409A of the Code are also terminated and liquidated. In such event, the entire benefits of all Participants shall be paid at the time and pursuant to the schedule specified by the Company, so long as all payments are required to be made no earlier than twelve (12) months, and no later than twenty-four (24) months, after the date the Board of Directors irrevocably approves the termination of the Plan. Notwithstanding the foregoing, any payment that would otherwise be paid pursuant to the terms of the Plan prior to the twelve (12) month anniversary of the date that the Board of Directors irrevocably approves the termination of the Plan shall continue to be paid in accordance with the terms of the Plan. If the Plan is terminated pursuant to this Section 13(b)(i), the Company shall be prohibited from adopting a new plan or arrangement that would be aggregated with this Plan under Section 409A of the Code within three (3) years following the date that the Board of Directors irrevocably approves the termination and liquidation of the Plan.
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(ii)
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Change of Control
. The termination occurs pursuant to an irrevocable action of the Board of Directors that is taken within the thirty (30) days
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(iii)
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Dissolution; Bankruptcy Court Order
. The termination occurs within twelve (12) months after a corporate dissolution taxed under Section 331 of the Code, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A). In such event, the entire benefits of each Participant shall be paid at the time and pursuant to the schedule specified by the Company, so long as all payments are required to be made by the latest of: (A) the end of the calendar year in which the Plan termination occurs, (B) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (C) the first calendar year in which payment is administratively practicable.
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(iv)
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Other Events
. The termination occurs upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
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14.
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SECTION 409A OF THE CODE
.
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(a)
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It is intended that the Plan comply with the provisions of Section 409A of the Code, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to Participants or beneficiaries. The Plan shall be construed, administered and governed in a manner that effects such intent. In furtherance of that intent, to the extent necessary to comply with Section 409A of the Code: (i) a Participant will be deemed to cease to be a Director on the
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(b)
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Discretionary Acceleration of Payments
. To the extent permitted by Section 409A of the Code, the Administration Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan as provided in this Section. The provisions of this Section are intended to comply with the exception to accelerated payments under Treasury Regulation §1.409A-3(j) and shall be interpreted and administered accordingly.
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(i)
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Domestic Relations Orders.
The Administration Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).
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(ii)
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Conflicts of Interest.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent necessary for any federal officer or employee in the executive branch to comply with an ethics agreement with the federal government. Additionally, the Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan the to the extent reasonably necessary to avoid the violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the Participant to participate in activities in the normal course of his or her position in which the Participant would otherwise not be able to participate under an applicable rule).
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(iii)
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Limited Cash-Outs.
The Administration Committee may, in its sole discretion, require a mandatory lump sum payment of amounts deferred under the Plan that do not exceed the applicable dollar amount under Section 402(g)(1)(B) of the Code, provided that the payment results in the termination and liquidation of the entirety of the Participant's interest under the Plan, including all agreements, methods, programs or other arrangements that are aggregated with the Plan pursuant to Treasury Regulation § 1.409A-1(c).
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(iv)
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Payment Upon Income Inclusion Under Section 409A.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan at any time the Plan fails to meet the requirements of Section 409A of the Code. The payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.
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(v)
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Cancellation of Deferral Election Due to Unforeseeable Emergency
. The Administration Committee may, in its sole discretion, cancel a Participant's deferral election due an Unforeseeable Emergency.
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(vi)
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Certain Payments to Avoid a Nonallocation Year under Section 409(p).
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to prevent the occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock ownership plan next following the plan year in which such payment is made, provided that the amount paid may not exceed 125 percent of the minimum amount of payment necessary to avoid the occurrence of a nonallocation year.
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(vii)
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Payment of State, Local, or Foreign Taxes.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the Participant (the state, local, or foreign tax amount). Such payment may not exceed the amount of such taxes due as a result of participation in the Plan. The payment may be made in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by payment directly to the Participant.
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(viii)
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Cancellation of Deferral Election Due to Disability
. The Administration Committee may, in its sole discretion, cancel a Participant's deferral election in the event that a Participant incurs a disability, provided that such cancellation occurs by the later of the end of the calendar year in which the Participant incurs a disability or the 15th day of the third month following the dated the Participant incurs a disability. For purposes of this Section 14(b)(viii), a disability refers to any medically determinable physical or mental impairment resulting in the Participant's inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months.
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(ix)
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Certain Offsets.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as satisfaction of a debt of the Participant to the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code), where such debt is incurred in the ordinary course of the service relationship between the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) and the Participant, the entire amount of reduction in any of the taxable years of the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.
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(x)
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Bona Fide Disputes as to a Right to a Payment.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan where such payment occurs as part of a settlement between the Participant and the Company (or any entity which would be considered to be a single employer with the Company under Sections 414(b) or 414(c) of the Code) of an arm’s length, bona fide dispute as to the Participant's right to the deferred amount.
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(xi)
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Plan Terminations and Liquidations.
The Administration Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Section 13(b) hereof.
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(xii)
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Other Events and Conditions.
A payment may be accelerated upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance.
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(c)
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Delay of Payments
. To the extent permitted under Section 409A of the Code, the Administration Committee may, in its sole discretion, delay payment under any of the following circumstances, provided that the Administration Committee treats all payments to similarly situated Participants on a reasonably consistent basis:
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(i)
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Federal Securities Laws or Other Applicable Law
. A payment may be delayed where the Administration Committee reasonably anticipates that the making of the payment will violate federal securities laws or other applicable
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(ii)
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Other Events and Conditions
. A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance.
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Grantee:
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|
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Date of Grant:
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|
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|
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Date of Vesting:
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|
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|
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Target number of Performance-Based EPS RSUs (“Target EPS RSUs”):
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|
|||
Target number of Performance-Based RONAE RSUs (“Target RONAE RSUs”):
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|||
Total number of Performance-Based Restricted Stock Units (“Total RSUs”):
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Cumulative EPS
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Vesting Percentage
|
Equal to or greater than
|
200%
|
|
175%
|
|
150%
|
|
125%
|
|
100%
|
|
88%
|
|
75%
|
|
63%
|
|
50%
|
|
38%
|
|
25%
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Less than
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0%
|
Year 1 EPS
|
$9.00
|
Year 2 EPS
|
$9.40
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Year 3 EPS
|
$10.00
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Cumulative EPS
|
$28.40
|
Year 1 RONAE
|
21.00%
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Year 2 RONAE
|
21.50%
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Year 3 RONAE
|
22.00%
|
Average Annual RONAE
|
21.50%
|
Financial Summary
|
|
|
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Reports of Management and the Independent Registered Public Accounting Firm
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Consolidated Financial Statements and Notes
|
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|
Cautionary Statement Regarding Forward-Looking Information
|
|
|
|
Shareholder Information
|
|
|
|
Corporate Officers and Operating Management
|
19
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
11,339
|
|
|
$
|
11,130
|
|
|
$
|
10,186
|
|
|
$
|
9,534
|
|
|
$
|
8,766
|
|
Cost of goods sold
|
5,780
|
|
|
5,965
|
|
|
5,569
|
|
|
5,328
|
|
|
5,021
|
|
|||||
Selling, general and administrative expenses
|
3,914
|
|
|
3,823
|
|
|
3,468
|
|
|
3,260
|
|
|
2,961
|
|
|||||
Impairments and dissolution
|
|
|
|
|
|
|
4
|
|
|
5
|
|
||||||||
Interest expense
|
62
|
|
|
64
|
|
|
63
|
|
|
43
|
|
|
42
|
|
|||||
Income before income taxes
|
1,549
|
|
|
1,258
|
|
|
1,086
|
|
|
907
|
|
|
742
|
|
|||||
Net income
|
1,054
|
|
|
866
|
|
|
753
|
|
|
631
|
|
|
442
|
|
|||||
Financial Position
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable - net
|
$
|
1,114
|
|
|
$
|
1,131
|
|
|
$
|
1,098
|
|
|
$
|
1,033
|
|
|
$
|
990
|
|
Inventories
|
1,019
|
|
|
1,034
|
|
|
971
|
|
|
920
|
|
|
927
|
|
|||||
Working capital - net
|
517
|
|
|
(114
|
)
|
|
630
|
|
|
1,273
|
|
|
99
|
|
|||||
Property, plant and equipment - net
|
1,042
|
|
|
1,021
|
|
|
1,021
|
|
|
966
|
|
|
957
|
|
|||||
Total assets
|
5,792
|
|
|
5,706
|
|
|
6,383
|
|
|
6,235
|
|
|
5,229
|
|
|||||
Long-term debt
|
1,920
|
|
|
1,123
|
|
|
1,122
|
|
|
1,632
|
|
|
639
|
|
|||||
Total debt
|
1,963
|
|
|
1,805
|
|
|
1,722
|
|
|
1,705
|
|
|
993
|
|
|||||
Shareholders’ equity
|
868
|
|
|
996
|
|
|
1,775
|
|
|
1,792
|
|
|
1,517
|
|
|||||
Per Common Share Information
|
|
|
|
|
|
|
|
|
|
||||||||||
Average shares outstanding (thousands)
|
92,197
|
|
|
96,190
|
|
|
100,898
|
|
|
101,715
|
|
|
103,471
|
|
|||||
Book value
|
$
|
9.41
|
|
|
$
|
10.52
|
|
|
$
|
17.72
|
|
|
$
|
17.35
|
|
|
$
|
14.61
|
|
Net income - diluted (1)
|
11.16
|
|
|
8.78
|
|
|
7.26
|
|
|
6.02
|
|
|
4.14
|
|
|||||
Net income - basic (1)
|
11.38
|
|
|
8.95
|
|
|
7.41
|
|
|
6.15
|
|
|
4.22
|
|
|||||
Cash dividends
|
2.68
|
|
|
2.20
|
|
|
2.00
|
|
|
1.56
|
|
|
1.46
|
|
|||||
Financial Ratios
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on sales
|
9.3
|
%
|
|
7.8
|
%
|
|
7.4
|
%
|
|
6.6
|
%
|
|
5.0
|
%
|
|||||
Asset turnover
|
2.0
|
x
|
|
2.0
|
x
|
|
1.6
|
x
|
|
1.5
|
x
|
|
1.7
|
x
|
|||||
Return on assets
|
18.2
|
%
|
|
15.2
|
%
|
|
11.8
|
%
|
|
10.1
|
%
|
|
8.4
|
%
|
|||||
Return on equity (2)
|
105.8
|
%
|
|
48.8
|
%
|
|
42.0
|
%
|
|
41.6
|
%
|
|
27.5
|
%
|
|||||
Dividend payout ratio (3)
|
30.5
|
%
|
|
30.3
|
%
|
|
33.2
|
%
|
|
37.7
|
%
|
|
34.7
|
%
|
|||||
Total debt to capitalization
|
69.3
|
%
|
|
64.4
|
%
|
|
49.2
|
%
|
|
48.8
|
%
|
|
39.6
|
%
|
|||||
Current ratio
|
1.2
|
|
|
1.0
|
|
|
1.2
|
|
|
1.7
|
|
|
1.0
|
|
|||||
Interest coverage (4)
|
26.1
|
x
|
|
20.6
|
x
|
|
18.3
|
x
|
|
22.2
|
x
|
|
18.4
|
x
|
|||||
Net working capital to sales
|
4.6
|
%
|
|
(1.0
|
)%
|
|
6.2
|
%
|
|
13.3
|
%
|
|
1.1
|
%
|
|||||
Effective income tax rate (5)
|
32.0
|
%
|
|
31.2
|
%
|
|
30.7
|
%
|
|
30.4
|
%
|
|
40.4
|
%
|
|||||
General
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
$
|
234
|
|
|
$
|
201
|
|
|
$
|
167
|
|
|
$
|
157
|
|
|
$
|
154
|
|
Total technical expenditures (6)
|
150
|
|
|
155
|
|
|
144
|
|
|
140
|
|
|
130
|
|
|||||
Advertising expenditures
|
338
|
|
|
299
|
|
|
263
|
|
|
247
|
|
|
227
|
|
|||||
Repairs and maintenance
|
99
|
|
|
96
|
|
|
87
|
|
|
83
|
|
|
78
|
|
|||||
Depreciation
|
170
|
|
|
169
|
|
|
159
|
|
|
152
|
|
|
151
|
|
|||||
Amortization of intangible assets
|
28
|
|
|
30
|
|
|
29
|
|
|
27
|
|
|
30
|
|
|||||
Shareholders of record (total count)
|
6,987
|
|
|
7,250
|
|
|
7,555
|
|
|
7,954
|
|
|
8,360
|
|
|||||
Number of employees (total count)
|
40,706
|
|
|
39,674
|
|
|
37,633
|
|
|
34,154
|
|
|
32,988
|
|
|||||
Sales per employee (thousands of dollars)
|
$
|
279
|
|
|
$
|
281
|
|
|
$
|
271
|
|
|
$
|
279
|
|
|
$
|
266
|
|
Sales per dollar of assets
|
1.96
|
|
|
1.95
|
|
|
1.60
|
|
|
1.53
|
|
|
1.68
|
|
(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.
|
(5)
|
Based on income before income taxes.
|
(6)
|
See
Note 1
, page
49
of this report, for a description of technical expenditures.
|
20
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
21
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
22
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
23
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
24
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
25
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
26
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
27
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
28
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(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
|
|
$
|
1,927,688
|
|
|
$
|
3,154
|
|
|
$
|
700,818
|
|
|
$
|
315
|
|
|
$
|
1,223,401
|
|
Operating leases
|
|
1,420,549
|
|
|
317,843
|
|
|
501,728
|
|
|
318,078
|
|
|
282,900
|
|
|||||
Short-term borrowings
|
|
39,462
|
|
|
39,462
|
|
|
|
|
|
|
|
||||||||
Interest on Long-term debt
|
|
1,147,842
|
|
|
62,828
|
|
|
115,652
|
|
|
106,160
|
|
|
863,202
|
|
|||||
Purchase obligations
(a)
|
|
52,052
|
|
|
52,052
|
|
|
|
|
|
|
|
||||||||
Other contractual obligations
(b)
|
|
212,965
|
|
|
93,572
|
|
|
52,072
|
|
|
44,956
|
|
|
22,365
|
|
|||||
Total contractual cash obligations
|
|
$
|
4,800,558
|
|
|
$
|
568,911
|
|
|
$
|
1,370,270
|
|
|
$
|
469,509
|
|
|
$
|
2,391,868
|
|
(a)
|
Relate to open purchase orders for raw materials at
December 31, 2015
.
|
(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.
|
29
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
|
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
|
|
$
|
45,407
|
|
|
$
|
45,407
|
|
|
|
|
|
|
|
||||||
Surety bonds
|
|
64,470
|
|
|
64,470
|
|
|
|
|
|
|
|
||||||||
Other commercial commitments
|
|
17,747
|
|
|
17,747
|
|
|
|
|
|
|
|
||||||||
Total commercial commitments
|
|
$
|
127,624
|
|
|
$
|
127,624
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(thousands of dollars)
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at January 1
|
$
|
27,723
|
|
|
$
|
26,755
|
|
|
$
|
22,710
|
|
Charges to expense
|
43,484
|
|
|
37,879
|
|
|
33,265
|
|
|||
Settlements
|
(39,329
|
)
|
|
(36,911
|
)
|
|
(29,220
|
)
|
|||
Balance at December 31
|
$
|
31,878
|
|
|
$
|
27,723
|
|
|
$
|
26,755
|
|
30
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
||||||||||
(thousands of dollars)
|
2015
|
|
2014
|
|
2013
|
||||||
Net operating cash
|
$
|
1,447,463
|
|
|
$
|
1,081,528
|
|
|
$
|
1,083,766
|
|
Capital expenditures
|
(234,340
|
)
|
|
(200,545
|
)
|
|
(166,680
|
)
|
|||
Cash dividends
|
(249,647
|
)
|
|
(215,263
|
)
|
|
(204,978
|
)
|
|||
Free cash flow
|
$
|
963,476
|
|
|
$
|
665,720
|
|
|
$
|
712,108
|
|
31
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
32
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|||||||||
(thousands of dollars)
|
2015
|
|
2014
|
|
Change
|
|||||
Net Sales:
|
|
|
|
|
|
|||||
Paint Stores Group
|
$
|
7,208,951
|
|
|
$
|
6,851,581
|
|
|
5.2
|
%
|
Consumer Group
|
1,577,955
|
|
|
1,420,757
|
|
|
11.1
|
%
|
||
Global Finishes Group
|
1,916,300
|
|
|
2,080,854
|
|
|
-7.9
|
%
|
||
Latin America Coatings Group
|
631,015
|
|
|
771,378
|
|
|
-18.2
|
%
|
||
Administrative
|
5,083
|
|
|
4,963
|
|
|
2.4
|
%
|
||
Net sales
|
$
|
11,339,304
|
|
|
$
|
11,129,533
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|||||
|
Year Ended December 31,
|
|||||||||
(thousands of dollars)
|
2015
|
|
2014
|
|
Change
|
|||||
Income Before Income Taxes:
|
|
|
|
|
|
|||||
Paint Stores Group
|
$
|
1,433,504
|
|
|
$
|
1,201,420
|
|
|
19.3
|
%
|
Consumer Group
|
308,833
|
|
|
252,859
|
|
|
22.1
|
%
|
||
Global Finishes Group
|
201,881
|
|
|
201,129
|
|
|
0.4
|
%
|
||
Latin America Coatings Group
|
18,494
|
|
|
40,469
|
|
|
-54.3
|
%
|
||
Administrative
|
(413,746
|
)
|
|
(437,651
|
)
|
|
5.5
|
%
|
||
Income before
income taxes
|
$
|
1,548,966
|
|
|
$
|
1,258,226
|
|
|
23.1
|
%
|
33
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
34
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
||||||||||
(thousands of dollars)
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
Interest expense
|
61,791
|
|
|
64,205
|
|
|
62,714
|
|
|||
Income taxes
|
495,117
|
|
|
392,339
|
|
|
333,397
|
|
|||
Depreciation
|
170,323
|
|
|
169,087
|
|
|
158,763
|
|
|||
Amortization
|
28,239
|
|
|
29,858
|
|
|
29,031
|
|
|||
EBITDA
|
$
|
1,809,319
|
|
|
$
|
1,521,376
|
|
|
$
|
1,336,466
|
|
|
Year Ended December 31,
|
|||||||||
(thousands of dollars)
|
2014
|
|
2013
|
|
Change
|
|||||
Net Sales:
|
|
|
|
|
|
|||||
Paint Stores Group
|
$
|
6,851,581
|
|
|
$
|
6,002,143
|
|
|
14.2
|
%
|
Consumer Group
|
1,420,757
|
|
|
1,341,689
|
|
|
5.9
|
%
|
||
Global Finishes Group
|
2,080,854
|
|
|
2,004,530
|
|
|
3.8
|
%
|
||
Latin America Coatings Group
|
771,378
|
|
|
832,450
|
|
|
-7.3
|
%
|
||
Administrative
|
4,963
|
|
|
4,720
|
|
|
5.1
|
%
|
||
Net sales
|
$
|
11,129,533
|
|
|
$
|
10,185,532
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|||||
|
Year Ended December 31,
|
|||||||||
(thousands of dollars)
|
2014
|
|
2013
|
|
Change
|
|||||
Income Before Income Taxes:
|
|
|
|
|
|
|||||
Paint Stores Group
|
$
|
1,201,420
|
|
|
$
|
990,523
|
|
|
21.3
|
%
|
Consumer Group
|
252,859
|
|
|
242,061
|
|
|
4.5
|
%
|
||
Global Finishes Group
|
201,129
|
|
|
170,591
|
|
|
17.9
|
%
|
||
Latin America Coatings Group
|
40,469
|
|
|
38,645
|
|
|
4.7
|
%
|
||
Administrative
|
(437,651
|
)
|
|
(355,862
|
)
|
|
-23.0
|
%
|
||
Income before
income taxes
|
$
|
1,258,226
|
|
|
$
|
1,085,958
|
|
|
15.9
|
%
|
35
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
36
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
|
|
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
37
|
38
|
39
|
40
|
41
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
||||||
Net sales
|
$
|
11,339,304
|
|
|
$
|
11,129,533
|
|
|
$
|
10,185,532
|
|
Cost of goods sold
|
5,780,078
|
|
|
5,965,049
|
|
|
5,568,966
|
|
|||
|
|
|
|
|
|
||||||
Gross profit
|
5,559,226
|
|
|
5,164,484
|
|
|
4,616,566
|
|
|||
Percent to net sales
|
49.0
|
%
|
|
46.4
|
%
|
|
45.3
|
%
|
|||
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
3,913,518
|
|
|
3,822,966
|
|
|
3,467,681
|
|
|||
Percent to net sales
|
34.5
|
%
|
|
34.3
|
%
|
|
34.0
|
%
|
|||
|
|
|
|
|
|
||||||
Other general expense - net
|
30,268
|
|
|
37,482
|
|
|
2,519
|
|
|||
Interest expense
|
61,791
|
|
|
64,205
|
|
|
62,714
|
|
|||
Interest and net investment income
|
(1,399
|
)
|
|
(2,995
|
)
|
|
(3,242
|
)
|
|||
Other expense (income) - net
|
6,082
|
|
|
(15,400
|
)
|
|
936
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
1,548,966
|
|
|
1,258,226
|
|
|
1,085,958
|
|
|||
Income taxes
|
495,117
|
|
|
392,339
|
|
|
333,397
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
11.38
|
|
|
$
|
8.95
|
|
|
$
|
7.41
|
|
Diluted
|
$
|
11.16
|
|
|
$
|
8.78
|
|
|
$
|
7.26
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(128,245
|
)
|
|
(103,441
|
)
|
|
(46,748
|
)
|
|||
|
|
|
|
|
|
||||||
Employee benefit plans:
|
|
|
|
|
|
||||||
Net actuarial gains (losses) and prior service costs
|
|
|
|
|
|
||||||
arising during period
(1)
|
7,974
|
|
|
(56,536
|
)
|
|
85,051
|
|
|||
Less: amortization of net actuarial losses and
|
|
|
|
|
|
||||||
prior service costs included in Net pension costs
(2)
|
5,847
|
|
|
8,980
|
|
|
10,933
|
|
|||
|
13,821
|
|
|
(47,556
|
)
|
|
95,984
|
|
|||
|
|
|
|
|
|
||||||
Unrealized net (losses) gains on available-for-sale securities:
|
|
|
|
|
|
||||||
Unrealized holding (losses) gains
|
|
|
|
|
|
||||||
arising during period
(3)
|
(1,191
|
)
|
|
366
|
|
|
134
|
|
|||
Less: reclassification adjustments for losses (gains)
|
|
|
|
|
|
||||||
included in net income
(4)
|
478
|
|
|
(283
|
)
|
|
(25
|
)
|
|||
|
(713
|
)
|
|
83
|
|
|
109
|
|
|||
|
|
|
|
|
|
||||||
Other comprehensive (loss) income
|
(115,137
|
)
|
|
(150,914
|
)
|
|
49,345
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
938,712
|
|
|
$
|
714,973
|
|
|
$
|
801,906
|
|
42
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
205,744
|
|
|
$
|
40,732
|
|
|
$
|
744,889
|
|
Accounts receivable, less allowance
|
1,114,275
|
|
|
1,130,565
|
|
|
1,097,751
|
|
|||
Inventories:
|
|
|
|
|
|
||||||
Finished goods
|
840,603
|
|
|
841,784
|
|
|
779,057
|
|
|||
Work in process and raw materials
|
177,927
|
|
|
191,743
|
|
|
191,758
|
|
|||
|
1,018,530
|
|
|
1,033,527
|
|
|
970,815
|
|
|||
Deferred income taxes
|
87,883
|
|
|
109,087
|
|
|
104,496
|
|
|||
Other current assets
|
232,442
|
|
|
252,869
|
|
|
240,766
|
|
|||
Total current assets
|
2,658,874
|
|
|
2,566,780
|
|
|
3,158,717
|
|
|||
|
|
|
|
|
|
||||||
Goodwill
|
1,143,333
|
|
|
1,158,346
|
|
|
1,178,687
|
|
|||
Intangible assets
|
255,371
|
|
|
289,127
|
|
|
313,299
|
|
|||
Deferred pension assets
|
244,882
|
|
|
250,144
|
|
|
302,446
|
|
|||
Other assets
|
447,533
|
|
|
420,625
|
|
|
407,975
|
|
|||
Property, plant and equipment:
|
|
|
|
|
|
||||||
Land
|
119,530
|
|
|
125,691
|
|
|
125,131
|
|
|||
Buildings
|
696,202
|
|
|
698,202
|
|
|
715,096
|
|
|||
Machinery and equipment
|
2,026,617
|
|
|
1,952,037
|
|
|
1,838,590
|
|
|||
Construction in progress
|
81,082
|
|
|
59,330
|
|
|
62,563
|
|
|||
|
2,923,431
|
|
|
2,835,260
|
|
|
2,741,380
|
|
|||
Less allowances for depreciation
|
1,881,569
|
|
|
1,814,230
|
|
|
1,719,997
|
|
|||
|
1,041,862
|
|
|
1,021,030
|
|
|
1,021,383
|
|
|||
Total Assets
|
$
|
5,791,855
|
|
|
$
|
5,706,052
|
|
|
$
|
6,382,507
|
|
|
|
|
|
|
|
||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Short-term borrowings
|
$
|
39,462
|
|
|
$
|
679,436
|
|
|
$
|
96,551
|
|
Accounts payable
|
1,157,561
|
|
|
1,042,182
|
|
|
998,484
|
|
|||
Compensation and taxes withheld
|
338,256
|
|
|
360,458
|
|
|
337,637
|
|
|||
Accrued taxes
|
81,146
|
|
|
86,744
|
|
|
79,504
|
|
|||
Current portion of long-term debt
|
3,154
|
|
|
3,265
|
|
|
502,948
|
|
|||
Other accruals
|
522,280
|
|
|
508,581
|
|
|
513,433
|
|
|||
Total current liabilities
|
2,141,859
|
|
|
2,680,666
|
|
|
2,528,557
|
|
|||
|
|
|
|
|
|
||||||
Long-term debt
|
1,920,196
|
|
|
1,122,715
|
|
|
1,122,373
|
|
|||
Postretirement benefits other than pensions
|
248,523
|
|
|
277,892
|
|
|
268,874
|
|
|||
Other long-term liabilities
|
613,367
|
|
|
628,309
|
|
|
688,168
|
|
|||
|
|
|
|
|
|
||||||
Shareholders’ equity:
|
|
|
|
|
|
||||||
Common stock - $1.00 par value:
|
|
|
|
|
|
||||||
92,246,525, 94,704,173 and 100,129,380 shares outstanding
|
|
|
|
|
|
||||||
at December 31, 2015, 2014 and 2013, respectively
|
115,761
|
|
|
114,525
|
|
|
112,902
|
|
|||
Preferred stock - convertible, no par value:
|
|
|
|
|
|
||||||
40,406 shares outstanding at December 31, 2013
|
|
|
|
|
40,406
|
|
|||||
Unearned ESOP compensation
|
|
|
|
|
(40,406
|
)
|
|||||
Other capital
|
2,330,426
|
|
|
2,079,639
|
|
|
1,847,801
|
|
|||
Retained earnings
|
3,228,876
|
|
|
2,424,674
|
|
|
1,774,050
|
|
|||
Treasury stock, at cost
|
(4,220,058
|
)
|
|
(3,150,410
|
)
|
|
(1,639,174
|
)
|
|||
Cumulative other comprehensive loss
|
(587,095
|
)
|
|
(471,958
|
)
|
|
(321,044
|
)
|
|||
Total shareholders’ equity
|
867,910
|
|
|
996,470
|
|
|
1,774,535
|
|
|||
|
|
|
|
|
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
5,791,855
|
|
|
$
|
5,706,052
|
|
|
$
|
6,382,507
|
|
43
|
|
Year Ended December 31,
|
||||||||||
Operating Activities
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
Adjustments to reconcile net income to net operating cash:
|
|
|
|
|
|
||||||
Depreciation
|
170,323
|
|
|
169,087
|
|
|
158,763
|
|
|||
Amortization of intangible assets
|
28,239
|
|
|
29,858
|
|
|
29,031
|
|
|||
Provisions for environmental-related matters
|
31,071
|
|
|
36,046
|
|
|
(2,751
|
)
|
|||
Provisions for qualified exit costs
|
9,761
|
|
|
13,578
|
|
|
4,682
|
|
|||
Deferred income taxes
|
4,976
|
|
|
(19,038
|
)
|
|
27,775
|
|
|||
Defined benefit pension plans net cost
|
6,491
|
|
|
990
|
|
|
20,641
|
|
|||
Stock-based compensation expense
|
72,342
|
|
|
64,735
|
|
|
58,004
|
|
|||
Net (decrease) increase in postretirement liability
|
(6,645
|
)
|
|
(718
|
)
|
|
5,233
|
|
|||
Decrease in non-traded investments
|
65,144
|
|
|
63,365
|
|
|
57,261
|
|
|||
(Gain) loss on disposition of assets
|
(803
|
)
|
|
1,436
|
|
|
5,207
|
|
|||
Other
|
6,711
|
|
|
203
|
|
|
(27,214
|
)
|
|||
Change in working capital accounts:
|
|
|
|
|
|
||||||
(Increase) in accounts receivable
|
(56,873
|
)
|
|
(80,252
|
)
|
|
(41,473
|
)
|
|||
(Increase) decrease in inventories
|
(40,733
|
)
|
|
(101,112
|
)
|
|
25,031
|
|
|||
Increase in accounts payable
|
160,111
|
|
|
78,603
|
|
|
34,685
|
|
|||
Increase in accrued taxes
|
4,606
|
|
|
13,187
|
|
|
11,314
|
|
|||
(Decrease) increase in accrued compensation and taxes withheld
|
(13,128
|
)
|
|
29,513
|
|
|
24,435
|
|
|||
Increase (decrease) in refundable income taxes
|
19,230
|
|
|
(36,601
|
)
|
|
13,244
|
|
|||
DOL settlement accrual
|
|
|
|
|
(80,000
|
)
|
|||||
Other
|
(955
|
)
|
|
(20,029
|
)
|
|
43,804
|
|
|||
Costs incurred for environmental-related matters
|
(11,995
|
)
|
|
(9,676
|
)
|
|
(12,539
|
)
|
|||
Costs incurred for qualified exit costs
|
(11,200
|
)
|
|
(10,882
|
)
|
|
(7,419
|
)
|
|||
Other
|
(43,059
|
)
|
|
(6,652
|
)
|
|
(16,509
|
)
|
|||
Net operating cash
|
1,447,463
|
|
|
1,081,528
|
|
|
1,083,766
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures
|
(234,340
|
)
|
|
(200,545
|
)
|
|
(166,680
|
)
|
|||
Acquisitions of businesses, net of cash acquired
|
|
|
|
|
(79,940
|
)
|
|||||
Proceeds from sale of assets
|
11,300
|
|
|
1,516
|
|
|
3,045
|
|
|||
Increase in other investments
|
(65,593
|
)
|
|
(111,021
|
)
|
|
(94,739
|
)
|
|||
Net investing cash
|
(288,633
|
)
|
|
(310,050
|
)
|
|
(338,314
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
||||||
Net (decrease) increase in short-term borrowings
|
(630,226
|
)
|
|
591,423
|
|
|
31,634
|
|
|||
Proceeds from long-term debt
|
797,514
|
|
|
1,474
|
|
|
473
|
|
|||
Payments of long-term debt
|
|
|
(500,661
|
)
|
|
(10,932
|
)
|
||||
Payments of cash dividends
|
(249,647
|
)
|
|
(215,263
|
)
|
|
(204,978
|
)
|
|||
Proceeds from stock options exercised
|
89,990
|
|
|
100,069
|
|
|
69,761
|
|
|||
Income tax effect of stock-based compensation exercises and vesting
|
89,691
|
|
|
68,657
|
|
|
47,527
|
|
|||
Treasury stock purchased
|
(1,035,291
|
)
|
|
(1,488,663
|
)
|
|
(769,271
|
)
|
|||
Other
|
(42,384
|
)
|
|
(24,111
|
)
|
|
(17,522
|
)
|
|||
Net financing cash
|
(980,353
|
)
|
|
(1,467,075
|
)
|
|
(853,308
|
)
|
|||
Effect of exchange rate changes on cash
|
(13,465
|
)
|
|
(8,560
|
)
|
|
(9,845
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
165,012
|
|
|
(704,157
|
)
|
|
(117,701
|
)
|
|||
Cash and cash equivalents at beginning of year
|
40,732
|
|
|
744,889
|
|
|
862,590
|
|
|||
Cash and cash equivalents at end of year
|
$
|
205,744
|
|
|
$
|
40,732
|
|
|
$
|
744,889
|
|
Taxes paid on income
|
$
|
335,119
|
|
|
$
|
310,039
|
|
|
$
|
200,748
|
|
Interest paid on debt
|
48,644
|
|
|
67,306
|
|
|
61,045
|
|
44
|
|
Common
Stock
|
|
Preferred
Stock
|
|
Unearned
ESOP
Compen-sation
|
|
Other
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Cumulative
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||||||
Balance at January 1, 2013
|
$
|
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
|
|
||||||||
Net income
|
|
|
|
|
|
|
|
|
865,887
|
|
|
|
|
|
|
865,887
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(150,914
|
)
|
|
(150,914
|
)
|
||||||||||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
|
(1,488,663
|
)
|
|
|
|
(1,488,663
|
)
|
||||||||||||||
Redemption of preferred stock
|
|
|
(40,406
|
)
|
|
40,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Stock options exercised
|
1,423
|
|
|
|
|
|
|
98,646
|
|
|
|
|
(22,573
|
)
|
|
|
|
77,496
|
|
||||||||||||
Income tax effect of stock compensation
|
|
|
|
|
|
|
68,657
|
|
|
|
|
|
|
|
|
68,657
|
|
||||||||||||||
Restricted stock and stock option grants
(net activity)
|
200
|
|
|
|
|
|
|
64,535
|
|
|
|
|
|
|
|
|
64,735
|
|
|||||||||||||
Cash dividends -- $2.20 per common share
|
|
|
|
|
|
|
|
|
(215,263
|
)
|
|
|
|
|
|
(215,263
|
)
|
||||||||||||||
Balance at December 31, 2014
|
114,525
|
|
|
—
|
|
|
—
|
|
|
2,079,639
|
|
|
2,424,674
|
|
|
(3,150,410
|
)
|
|
(471,958
|
)
|
|
996,470
|
|
||||||||
Net income
|
|
|
|
|
|
|
|
|
1,053,849
|
|
|
|
|
|
|
1,053,849
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(115,137
|
)
|
|
(115,137
|
)
|
||||||||||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
|
(1,035,291
|
)
|
|
|
|
(1,035,291
|
)
|
||||||||||||||
Stock options exercised
|
1,134
|
|
|
|
|
|
|
88,856
|
|
|
|
|
(34,357
|
)
|
|
|
|
55,633
|
|
||||||||||||
Income tax effect of stock compensation
|
|
|
|
|
|
|
89,691
|
|
|
|
|
|
|
|
|
89,691
|
|
||||||||||||||
Restricted stock and stock option grants
(net activity)
|
102
|
|
|
|
|
|
|
72,240
|
|
|
|
|
|
|
|
|
72,342
|
|
|||||||||||||
Cash dividends -- $2.68 per common share
|
|
|
|
|
|
|
|
|
(249,647
|
)
|
|
|
|
|
|
(249,647
|
)
|
||||||||||||||
Balance at December 31, 2015
|
$
|
115,761
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,330,426
|
|
|
$
|
3,228,876
|
|
|
$
|
(4,220,058
|
)
|
|
$
|
(587,095
|
)
|
|
$
|
867,910
|
|
45
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
December 31,
|
||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||||||
Publicly traded debt
|
$
|
1,918,568
|
|
|
$
|
1,960,169
|
|
|
$
|
1,120,924
|
|
|
$
|
1,160,280
|
|
|
$
|
1,620,646
|
|
|
$
|
1,614,739
|
|
Non-traded debt
|
4,782
|
|
|
4,555
|
|
|
5,056
|
|
|
4,812
|
|
|
4,675
|
|
|
4,430
|
|
46
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
Fair Value at
December 31, 2015 |
|
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)
|
$
|
23,662
|
|
|
$
|
2,295
|
|
|
$
|
21,367
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||
Deferred compensation plan liability
(b)
|
$
|
35,150
|
|
|
$
|
35,150
|
|
|
|
|
|
(a)
|
The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is
$24,585
.
|
(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.
|
47
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
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%
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at January 1
|
$
|
27,723
|
|
|
$
|
26,755
|
|
|
$
|
22,710
|
|
Charges to expense
|
43,484
|
|
|
37,879
|
|
|
33,265
|
|
|||
Settlements
|
(39,329
|
)
|
|
(36,911
|
)
|
|
(29,220
|
)
|
|||
Balance at December 31
|
$
|
31,878
|
|
|
$
|
27,723
|
|
|
$
|
26,755
|
|
48
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
49
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Percentage of total
inventories on LIFO
|
78
|
%
|
|
76
|
%
|
|
75
|
%
|
|||
Excess of FIFO over
LIFO
|
$
|
251,060
|
|
|
$
|
331,867
|
|
|
$
|
337,214
|
|
Increase in net
income due to LIFO |
49,658
|
|
|
3,230
|
|
|
12,299
|
|
|||
Increase in net
income per common share due to LIFO |
.53
|
|
|
.03
|
|
|
.12
|
|
50
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
Goodwill
|
Paint Stores
Group
|
|
Consumer
Group
|
|
Global
Finishes
Group
|
|
Latin America
Coatings Group
|
|
Consolidated
Totals
|
||||||||||
Balance at January 1, 2013
(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
|
|
|||||
Currency and other adjustments
|
(1,866
|
)
|
|
(1,145
|
)
|
|
(17,287
|
)
|
|
(43
|
)
|
|
(20,341
|
)
|
|||||
Balance at December 31, 2014
(a)
|
285,434
|
|
|
702,206
|
|
|
161,011
|
|
|
9,695
|
|
|
1,158,346
|
|
|||||
Currency and other adjustments
|
(28
|
)
|
|
(1,135
|
)
|
|
(13,801
|
)
|
|
(49
|
)
|
|
(15,013
|
)
|
|||||
Balance at December 31, 2015
(a)
|
$
|
285,406
|
|
|
$
|
701,071
|
|
|
$
|
147,210
|
|
|
$
|
9,646
|
|
|
$
|
1,143,333
|
|
(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
|
|
|||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average amortization period
|
8 years
|
|
|
12 years
|
|
|
11 years
|
|
|
|
|
|
|||||||
Gross
|
$
|
123,863
|
|
|
$
|
312,119
|
|
|
$
|
435,982
|
|
|
|
|
|
||||
Accumulated amortization
|
(95,008
|
)
|
|
(228,921
|
)
|
|
(323,929
|
)
|
|
|
|
|
|||||||
Net value
|
$
|
28,855
|
|
|
$
|
83,198
|
|
|
$
|
112,053
|
|
|
$
|
143,318
|
|
|
$
|
255,371
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average amortization period
|
8 years
|
|
|
12 years
|
|
|
11 years
|
|
|
|
|
|
|||||||
Gross
|
$
|
126,258
|
|
|
$
|
317,005
|
|
|
$
|
443,263
|
|
|
|
|
|
||||
Accumulated amortization
|
(88,384
|
)
|
|
(215,518
|
)
|
|
(303,902
|
)
|
|
|
|
|
|||||||
Net value
|
$
|
37,874
|
|
|
$
|
101,487
|
|
|
$
|
139,361
|
|
|
$
|
149,766
|
|
|
$
|
289,127
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
51
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
(Thousands of dollars)
Exit Plan |
|
Balance at December 31, 2014
|
|
Provisions in
Cost of goods sold or SG&A |
|
Actual
expenditures charged to accrual |
|
Balance at December 31, 2015
|
||||||||
Paint Stores Group stores shutdown in 2015:
|
|
|
|
|
|
|
|
|
||||||||
Other qualified exit costs
|
|
|
|
$
|
168
|
|
|
$
|
(156
|
)
|
|
$
|
12
|
|
||
Global Finishes Group stores shutdown in 2015:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
|
|
1,341
|
|
|
(245
|
)
|
|
1,096
|
|
|||||
Other qualified exit costs
|
|
|
|
6,988
|
|
|
(4,238
|
)
|
|
2,750
|
|
|||||
Paint Stores Group stores shutdown in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Other qualified exit costs
|
|
$
|
280
|
|
|
142
|
|
|
(238
|
)
|
|
184
|
|
|||
Consumer Group facilities shutdown in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
2,732
|
|
|
466
|
|
|
(2,753
|
)
|
|
445
|
|
||||
Other qualified exit costs
|
|
781
|
|
|
6
|
|
|
(735
|
)
|
|
52
|
|
||||
Global Finishes Group exit of business in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
104
|
|
|
326
|
|
|
|
|
430
|
|
|||||
Other qualified exit costs
|
|
1,080
|
|
|
324
|
|
|
(1,051
|
)
|
|
353
|
|
||||
Paint Stores Group facility shutdown in 2013:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
654
|
|
|
|
|
(654
|
)
|
|
|
||||||
Other qualified exit costs
|
|
1,205
|
|
|
|
|
(411
|
)
|
|
794
|
|
|||||
Global Finishes Group stores shutdown in 2013:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
28
|
|
|
|
|
(28
|
)
|
|
|
||||||
Other qualified exit costs
|
|
138
|
|
|
|
|
(138
|
)
|
|
|
||||||
Severance and other qualified exit costs for facilities shutdown prior to 2013
|
|
1,514
|
|
|
|
|
(553
|
)
|
|
961
|
|
|||||
Totals
|
|
$
|
8,516
|
|
|
$
|
9,761
|
|
|
$
|
(11,200
|
)
|
|
$
|
7,077
|
|
52
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
Exit Plan
|
|
Balance at December 31, 2013
|
|
Provisions in
Cost of goods sold or SG&A |
|
Actual
expenditures charged to accrual |
|
Balance at December 31, 2014
|
||||||||
Paint Stores Group stores shutdown in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Other qualified exit costs
|
|
|
|
$
|
280
|
|
|
|
|
$
|
280
|
|
||||
Consumer Group facilities shutdown in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
|
|
4,028
|
|
|
$
|
(1,296
|
)
|
|
2,732
|
|
||||
Other qualified exit costs
|
|
|
|
781
|
|
|
|
|
781
|
|
||||||
Global Finishes Group exit of business in 2014:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
|
|
2,500
|
|
|
(2,396
|
)
|
|
104
|
|
|||||
Other qualified exit costs
|
|
|
|
2,267
|
|
|
(1,187
|
)
|
|
1,080
|
|
|||||
Paint Stores Group facility shutdown in 2013:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
$
|
977
|
|
|
2,126
|
|
|
(2,449
|
)
|
|
654
|
|
|||
Other qualified exit costs
|
|
|
|
1,499
|
|
|
(294
|
)
|
|
1,205
|
|
|||||
Consumer Group facilities shutdown in 2013:
|
|
|
|
|
|
|
|
|
|
|||||||
Severance and related costs
|
|
598
|
|
|
97
|
|
|
(695
|
)
|
|
|
|
||||
Global Finishes Group stores shutdown in 2013:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
33
|
|
|
|
|
(5
|
)
|
|
28
|
|
|||||
Other qualified exit costs
|
|
220
|
|
|
|
|
(82
|
)
|
|
138
|
|
|||||
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
|
|
244
|
|
|
|
|
(51
|
)
|
|
193
|
|
|||||
Global Finishes Group facilities shutdown in 2012:
|
|
|
|
|
|
|
|
|
||||||||
Severance and related costs
|
|
2,177
|
|
|
|
|
(1,863
|
)
|
|
314
|
|
|||||
Other qualified exit costs
|
|
83
|
|
|
|
|
|
|
83
|
|
||||||
Other qualified exit costs for facilities shutdown prior to 2012
|
|
1,365
|
|
|
|
|
(441
|
)
|
|
924
|
|
|||||
Totals
|
|
$
|
5,820
|
|
|
$
|
13,578
|
|
|
$
|
(10,882
|
)
|
|
$
|
8,516
|
|
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
|
|
53
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
54
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
Domestic
Defined Benefit Pension Plans
|
|
Foreign
Defined Benefit Pension Plans
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Net pension costs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service costs
|
$
|
21,120
|
|
|
$
|
21,342
|
|
|
$
|
23,176
|
|
|
$
|
5,071
|
|
|
$
|
5,261
|
|
|
$
|
5,039
|
|
Interest costs
|
24,535
|
|
|
26,266
|
|
|
18,444
|
|
|
8,719
|
|
|
10,422
|
|
|
7,940
|
|
||||||
Expected returns on plan assets
|
(52,095
|
)
|
|
(51,293
|
)
|
|
(42,937
|
)
|
|
(9,296
|
)
|
|
(10,836
|
)
|
|
(7,487
|
)
|
||||||
Amortization of prior service costs
|
1,310
|
|
|
1,837
|
|
|
1,823
|
|
|
|
|
|
|
|
|||||||||
Amortization of actuarial losses
|
1,962
|
|
|
|
|
13,147
|
|
|
1,910
|
|
|
1,413
|
|
|
1,716
|
|
|||||||
Ongoing pension (credits) costs
|
(3,168
|
)
|
|
(1,848
|
)
|
|
13,653
|
|
|
6,404
|
|
|
6,260
|
|
|
7,208
|
|
||||||
Settlement costs (credits)
|
|
|
|
|
|
|
3,255
|
|
|
(3,422
|
)
|
|
(220
|
)
|
|||||||||
Net pension (credits) costs
|
(3,168
|
)
|
|
(1,848
|
)
|
|
13,653
|
|
|
9,659
|
|
|
2,838
|
|
|
6,988
|
|
||||||
Other changes in plan assets and projected benefit
obligation recognized in Cumulative other comprehensive loss (before taxes):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial losses (gains) arising during the year
|
15,359
|
|
|
47,785
|
|
|
(90,669
|
)
|
|
1,907
|
|
|
21,792
|
|
|
(5,487
|
)
|
||||||
Prior service costs during the year
|
|
|
2,242
|
|
|
1,756
|
|
|
|
|
|
|
|
||||||||||
Amortization of prior service costs
|
(1,310
|
)
|
|
(1,837
|
)
|
|
(1,823
|
)
|
|
|
|
|
|
|
|||||||||
Amortization of actuarial losses
|
(1,962
|
)
|
|
|
|
(13,147
|
)
|
|
(1,910
|
)
|
|
(1,413
|
)
|
|
(1,716
|
)
|
|||||||
Exchange rate (loss) gain recognized during year
|
|
|
|
|
|
|
(5,830
|
)
|
|
(7,988
|
)
|
|
819
|
|
|||||||||
Total recognized in Cumulative other
comprehensive loss
|
12,087
|
|
|
48,190
|
|
|
(103,883
|
)
|
|
(5,833
|
)
|
|
12,391
|
|
|
(6,384
|
)
|
||||||
Total recognized in net pension costs (credits)
and Cumulative other comprehensive loss
|
$
|
8,919
|
|
|
$
|
46,342
|
|
|
$
|
(90,230
|
)
|
|
$
|
3,826
|
|
|
$
|
15,229
|
|
|
$
|
604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
Fair Value at
December 31,
2015
|
|
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)
|
$
|
13,475
|
|
|
|
|
$
|
13,475
|
|
|
|
||||
Equity investments
(b)
|
688,799
|
|
|
$
|
372,033
|
|
|
316,766
|
|
|
|
||||
Fixed income investments
(c)
|
290,470
|
|
|
141,448
|
|
|
149,022
|
|
|
|
|||||
Other assets
(d)
|
28,200
|
|
|
|
|
16,361
|
|
|
$
|
11,839
|
|
||||
|
$
|
1,020,944
|
|
|
$
|
513,481
|
|
|
$
|
495,624
|
|
|
$
|
11,839
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Value at
December 31,
2014
|
|
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)
|
$
|
14,846
|
|
|
|
|
$
|
14,846
|
|
|
|
||||
Equity investments
(b)
|
739,358
|
|
|
$
|
404,542
|
|
|
334,816
|
|
|
|
||||
Fixed income investments
(c)
|
285,042
|
|
|
141,529
|
|
|
143,513
|
|
|
|
|||||
Other assets
(d)
|
44,470
|
|
|
|
|
28,436
|
|
|
$
|
16,034
|
|
||||
|
$
|
1,083,716
|
|
|
$
|
546,071
|
|
|
$
|
521,611
|
|
|
$
|
16,034
|
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
|
(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.
|
(c)
|
This category includes government and corporate bonds that track primarily to the Barclays Capital Aggregate Bond Index.
|
(d)
|
This category consists of venture capital funds.
|
|
Balance at
December 31,
2014
|
|
Dispositions
|
|
Net Realized and Unrealized Gains
|
|
Balance at
December 31,
2015
|
||||||||
Other assets
|
$
|
16,034
|
|
|
$
|
(5,928
|
)
|
|
$
|
1,733
|
|
|
$
|
11,839
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at
December 31,
2013
|
|
Dispositions
|
|
Net Realized and Unrealized Gains
|
|
Balance at
December 31,
2014
|
||||||||
Other assets
|
$
|
17,941
|
|
|
$
|
(4,320
|
)
|
|
$
|
2,413
|
|
|
$
|
16,034
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at
January 1,
2013
|
|
Dispositions
|
|
Net Realized and Unrealized Gains
|
|
Balance at
December 31,
2013
|
||||||||
Other assets
|
$
|
18,850
|
|
|
$
|
(4,068
|
)
|
|
$
|
3,159
|
|
|
$
|
17,941
|
|
56
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
Domestic
Defined Benefit Pension Plans
|
|
Foreign
Defined Benefit Pension Plans
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Accumulated benefit obligations
at end of year
|
$
|
621,873
|
|
|
$
|
648,480
|
|
|
$
|
577,736
|
|
|
$
|
172,426
|
|
|
$
|
203,610
|
|
|
$
|
187,670
|
|
Projected benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balances at beginning of year
|
$
|
653,338
|
|
|
$
|
582,036
|
|
|
$
|
466,827
|
|
|
$
|
234,524
|
|
|
$
|
222,996
|
|
|
$
|
168,758
|
|
Service costs
|
21,120
|
|
|
21,342
|
|
|
23,176
|
|
|
5,071
|
|
|
5,261
|
|
|
5,039
|
|
||||||
Interest costs
|
24,535
|
|
|
26,266
|
|
|
18,444
|
|
|
8,719
|
|
|
10,422
|
|
|
7,940
|
|
||||||
Actuarial (gains) losses
|
(40,602
|
)
|
|
68,748
|
|
|
(5,488
|
)
|
|
(3,045
|
)
|
|
32,551
|
|
|
5,939
|
|
||||||
Acquisitions of businesses and other
|
|
|
2,242
|
|
|
113,174
|
|
|
1,072
|
|
|
(6,692
|
)
|
|
39,622
|
|
|||||||
Settlements
|
|
|
|
|
|
|
(18,707
|
)
|
|
(3,370
|
)
|
|
|
||||||||||
Effect of foreign exchange
|
|
|
|
|
|
|
(17,211
|
)
|
|
(18,987
|
)
|
|
1,549
|
|
|||||||||
Benefits paid
|
(33,600
|
)
|
|
(47,296
|
)
|
|
(34,097
|
)
|
|
(8,569
|
)
|
|
(7,657
|
)
|
|
(5,851
|
)
|
||||||
Balances at end of year
|
624,791
|
|
|
653,338
|
|
|
582,036
|
|
|
201,854
|
|
|
234,524
|
|
|
222,996
|
|
||||||
Plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balances at beginning of year
|
896,071
|
|
|
870,386
|
|
|
703,563
|
|
|
187,645
|
|
|
184,963
|
|
|
133,013
|
|
||||||
Actual returns on plan assets
|
(3,866
|
)
|
|
72,256
|
|
|
128,117
|
|
|
4,844
|
|
|
20,240
|
|
|
20,316
|
|
||||||
Acquisitions of businesses and other
|
|
|
725
|
|
|
72,803
|
|
|
11,424
|
|
|
7,328
|
|
|
36,106
|
|
|||||||
Settlements
|
|
|
|
|
|
|
(18,707
|
)
|
|
(3,370
|
)
|
|
|
||||||||||
Effect of foreign exchange
|
|
|
|
|
|
|
(14,298
|
)
|
|
(13,859
|
)
|
|
1,379
|
|
|||||||||
Benefits paid
|
(33,600
|
)
|
|
(47,296
|
)
|
|
(34,097
|
)
|
|
(8,569
|
)
|
|
(7,657
|
)
|
|
(5,851
|
)
|
||||||
Balances at end of year
|
858,605
|
|
|
896,071
|
|
|
870,386
|
|
|
162,339
|
|
|
187,645
|
|
|
184,963
|
|
||||||
Excess (deficient) plan assets over
projected benefit obligations
|
$
|
233,814
|
|
|
$
|
242,733
|
|
|
$
|
288,350
|
|
|
$
|
(39,515
|
)
|
|
$
|
(46,879
|
)
|
|
$
|
(38,033
|
)
|
Assets and liabilities recognized in the
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred pension assets
|
$
|
233,814
|
|
|
$
|
242,733
|
|
|
$
|
288,350
|
|
|
$
|
11,068
|
|
|
$
|
7,411
|
|
|
$
|
14,096
|
|
Other accruals
|
|
|
|
|
|
|
(1,442
|
)
|
|
(810
|
)
|
|
(1,126
|
)
|
|||||||||
Other long-term liabilities
|
|
|
|
|
|
|
|
(49,141
|
)
|
|
(53,480
|
)
|
|
(51,003
|
)
|
||||||||
|
$
|
233,814
|
|
|
$
|
242,733
|
|
|
$
|
288,350
|
|
|
$
|
(39,515
|
)
|
|
$
|
(46,879
|
)
|
|
$
|
(38,033
|
)
|
Amounts recognized in Cumulative other
comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial losses
|
$
|
(120,454
|
)
|
|
$
|
(107,057
|
)
|
|
$
|
(59,272
|
)
|
|
$
|
(41,741
|
)
|
|
$
|
(47,574
|
)
|
|
$
|
(35,183
|
)
|
Prior service costs
|
(5,138
|
)
|
|
(6,448
|
)
|
|
(6,043
|
)
|
|
|
|
|
|
|
|||||||||
|
$
|
(125,592
|
)
|
|
$
|
(113,505
|
)
|
|
$
|
(65,315
|
)
|
|
$
|
(41,741
|
)
|
|
$
|
(47,574
|
)
|
|
$
|
(35,183
|
)
|
Weighted-average assumptions used to
determine projected benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
4.40
|
%
|
|
3.95
|
%
|
|
4.65
|
%
|
|
4.20
|
%
|
|
3.92
|
%
|
|
4.89
|
%
|
||||||
Rate of compensation increase
|
3.14
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.70
|
%
|
|
4.31
|
%
|
||||||
Weighted-average assumptions used to
determine net pension costs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
3.95
|
%
|
|
4.65
|
%
|
|
3.73
|
%
|
|
3.92
|
%
|
|
4.89
|
%
|
|
4.58
|
%
|
||||||
Expected long-term rate of
return on assets
|
6.00
|
%
|
|
6.00
|
%
|
|
6.00
|
%
|
|
4.84
|
%
|
|
5.58
|
%
|
|
5.67
|
%
|
||||||
Rate of compensation increase
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.70
|
%
|
|
4.31
|
%
|
|
4.08
|
%
|
57
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
Postretirement Benefits Other than Pensions
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Benefit obligation:
|
|
|
|
|
|
||||||
Balance at beginning of year - unfunded
|
$
|
295,149
|
|
|
$
|
286,651
|
|
|
$
|
338,134
|
|
Service cost
|
2,485
|
|
|
2,434
|
|
|
3,061
|
|
|||
Interest cost
|
11,182
|
|
|
12,782
|
|
|
12,183
|
|
|||
Actuarial (gain) loss
|
(19,370
|
)
|
|
27,757
|
|
|
(50,593
|
)
|
|||
Plan amendments
|
(9,269
|
)
|
|
(19,043
|
)
|
|
(2,503
|
)
|
|||
Benefits paid
|
(16,794
|
)
|
|
(15,432
|
)
|
|
(13,631
|
)
|
|||
Balance at end of year - unfunded
|
$
|
263,383
|
|
|
$
|
295,149
|
|
|
$
|
286,651
|
|
Liabilities recognized in the Consolidated Balance Sheets:
|
|
|
|
|
|
||||||
Postretirement benefits other than pensions
|
$
|
(248,523
|
)
|
|
$
|
(277,892
|
)
|
|
$
|
(268,874
|
)
|
Other accruals
|
(14,860
|
)
|
|
(17,257
|
)
|
|
(17,777
|
)
|
|||
|
$
|
(263,383
|
)
|
|
$
|
(295,149
|
)
|
|
$
|
(286,651
|
)
|
Amounts recognized in Cumulative other comprehensive loss:
|
|
|
|
|
|
||||||
Net actuarial losses
|
$
|
(15,664
|
)
|
|
$
|
(36,044
|
)
|
|
$
|
(8,287
|
)
|
Prior service credits
|
25,784
|
|
|
21,043
|
|
|
2,503
|
|
|||
|
$
|
10,120
|
|
|
$
|
(15,001
|
)
|
|
$
|
(5,784
|
)
|
Weighted-average assumptions used to determine benefit obligation:
|
|
|
|
|
|
||||||
Discount rate
|
4.30
|
%
|
|
3.90
|
%
|
|
4.60
|
%
|
|||
Health care cost trend rate - pre-65
|
6.00
|
%
|
|
7.00
|
%
|
|
7.50
|
%
|
|||
Health care cost trend rate - post-65
|
5.00
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|||
Prescription drug cost increases
|
11.50
|
%
|
|
6.50
|
%
|
|
7.00
|
%
|
|||
Employer Group Waiver Plan (EGWP) trend rate
|
11.50
|
%
|
|
8.00
|
%
|
|
|
||||
Weighted-average assumptions used to determine net periodic benefit cost:
|
|
|
|
|
|
||||||
Discount rate
|
3.90
|
%
|
|
4.60
|
%
|
|
3.70
|
%
|
|||
Health care cost trend rate - pre-65
|
7.00
|
%
|
|
7.50
|
%
|
|
8.00
|
%
|
|||
Health care cost trend rate - post-65
|
6.50
|
%
|
|
6.50
|
%
|
|
8.00
|
%
|
|||
Prescription drug cost increases
|
6.50
|
%
|
|
7.00
|
%
|
|
8.00
|
%
|
58
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
Postretirement Benefits Other than Pensions
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net periodic benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
2,485
|
|
|
$
|
2,434
|
|
|
$
|
3,061
|
|
Interest cost
|
11,182
|
|
|
12,782
|
|
|
12,183
|
|
|||
Amortization of actuarial losses
|
1,011
|
|
|
|
|
3,934
|
|
||||
Amortization of prior service credit
|
(4,529
|
)
|
|
(503
|
)
|
|
(328
|
)
|
|||
Net periodic benefit cost
|
10,149
|
|
|
14,713
|
|
|
18,850
|
|
|||
Other changes in projected benefit obligation recognized in
Cumulative other comprehensive loss (before taxes):
|
|
|
|
|
|
||||||
Net actuarial (gain) loss
|
(19,370
|
)
|
|
27,757
|
|
|
(50,593
|
)
|
|||
Prior service credit arising during the year
|
(9,269
|
)
|
|
(19,043
|
)
|
|
(2,503
|
)
|
|||
Amortization of actuarial losses
|
(1,011
|
)
|
|
|
|
(3,934
|
)
|
||||
Amortization of prior service credit
|
4,529
|
|
|
503
|
|
|
328
|
|
|||
Total recognized in Cumulative other comprehensive loss
|
(25,121
|
)
|
|
9,217
|
|
|
(56,702
|
)
|
|||
Total recognized in net periodic benefit cost and
Cumulative other comprehensive loss
|
$
|
(14,972
|
)
|
|
$
|
23,930
|
|
|
$
|
(37,852
|
)
|
59
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
Due Date
|
|
2015
|
|
2014
|
|
2013
|
||||||
1.35% Senior Notes
|
2017
|
|
$
|
699,643
|
|
|
$
|
699,460
|
|
|
$
|
699,277
|
|
3.45% Senior Notes
|
2025
|
|
399,774
|
|
|
|
|
|
|||||
4.55% Senior Notes
|
2045
|
|
397,634
|
|
|
|
|
|
|||||
4.00% Senior Notes
|
2042
|
|
298,645
|
|
|
298,595
|
|
|
298,545
|
|
|||
7.375% Debentures
|
2027
|
|
119,372
|
|
|
119,369
|
|
|
119,366
|
|
|||
7.45% Debentures
|
2097
|
|
3,500
|
|
|
3,500
|
|
|
3,500
|
|
|||
2.02% to 8.00% Promissory Notes
|
Through 2029
|
|
1,628
|
|
|
1,791
|
|
|
1,685
|
|
|||
|
|
|
$
|
1,920,196
|
|
|
$
|
1,122,715
|
|
|
$
|
1,122,373
|
|
60
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
61
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
62
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
63
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
64
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
65
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
Common Shares
in Treasury
|
|
Common Shares
Outstanding
|
||
Balance at January 1, 2013
|
8,352,904
|
|
|
103,270,067
|
|
Shares tendered as payment for option rights exercised
|
2,697
|
|
|
(2,697
|
)
|
Shares issued for exercise of option rights
|
|
|
1,127,942
|
|
|
Shares tendered in connection with grants of restricted stock
|
116,897
|
|
|
(116,897
|
)
|
Net shares issued for grants of restricted stock
|
|
|
150,965
|
|
|
Treasury stock purchased
|
4,300,000
|
|
|
(4,300,000
|
)
|
Balance at December 31, 2013
|
12,772,498
|
|
|
100,129,380
|
|
Shares tendered as payment for option rights exercised
|
7,229
|
|
|
(7,229
|
)
|
Shares issued for exercise of option rights
|
|
|
1,423,395
|
|
|
Shares tendered in connection with grants of restricted stock
|
108,352
|
|
|
(108,352
|
)
|
Net shares issued for grants of restricted stock
|
|
|
191,979
|
|
|
Treasury stock purchased
|
6,925,000
|
|
|
(6,925,000
|
)
|
Balance at December 31, 2014
|
19,813,079
|
|
|
94,704,173
|
|
Shares tendered as payment for option rights exercised
|
14,542
|
|
|
(14,542
|
)
|
Shares issued for exercise of option rights
|
|
|
1,133,050
|
|
|
Shares tendered in connection with grants of restricted stock
|
111,433
|
|
|
(111,433
|
)
|
Net shares issued for grants of restricted stock
|
|
|
110,277
|
|
|
Treasury stock purchased
|
3,575,000
|
|
|
(3,575,000
|
)
|
Balance at December 31, 2015
|
23,514,054
|
|
|
92,246,525
|
|
66
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
2015
|
|
2014
|
|
2013
|
Risk-free interest rate
|
1.37%
|
|
1.47%
|
|
1.37%
|
Expected life of option rights
|
5.05 years
|
|
5.10 years
|
|
5.10 years
|
Expected dividend yield
of stock
|
1.13%
|
|
1.19%
|
|
1.32%
|
Expected volatility of stock
|
.245
|
|
.223
|
|
.281
|
67
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||||||||||||||
|
Optioned
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|
Optioned
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|
Optioned
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||||||||||||
Outstanding beginning
of year
|
5,699,892
|
|
|
$
|
117.31
|
|
|
|
|
6,484,592
|
|
|
$
|
96.25
|
|
|
|
|
6,748,126
|
|
|
$
|
79.39
|
|
|
|
||||||
Granted
|
697,423
|
|
|
241.84
|
|
|
|
|
672,565
|
|
|
224.65
|
|
|
|
|
898,728
|
|
|
179.67
|
|
|
|
|||||||||
Exercised
|
(1,133,287
|
)
|
|
79.41
|
|
|
|
|
(1,421,045
|
)
|
|
70.71
|
|
|
|
|
(1,127,942
|
)
|
|
61.46
|
|
|
|
|||||||||
Forfeited
|
(43,632
|
)
|
|
193.60
|
|
|
|
|
(31,617
|
)
|
|
158.92
|
|
|
|
|
(33,278
|
)
|
|
115.24
|
|
|
|
|||||||||
Expired
|
(890
|
)
|
|
87.59
|
|
|
|
|
(4,603
|
)
|
|
86.66
|
|
|
|
|
(1,042
|
)
|
|
79.73
|
|
|
|
|||||||||
Outstanding end of year
|
5,219,506
|
|
|
$
|
141.58
|
|
|
$
|
616,866
|
|
|
5,699,892
|
|
|
$
|
117.31
|
|
|
$
|
830,647
|
|
|
6,484,592
|
|
|
$
|
96.25
|
|
|
$
|
563,554
|
|
Exercisable at end of year
|
3,807,351
|
|
|
$
|
110.96
|
|
|
$
|
565,934
|
|
|
4,095,246
|
|
|
$
|
87.79
|
|
|
$
|
717,691
|
|
|
4,424,674
|
|
|
$
|
71.86
|
|
|
$
|
492,689
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Outstanding at beginning
of year
|
655,276
|
|
|
749,382
|
|
|
919,748
|
|
Granted
|
112,494
|
|
|
201,412
|
|
|
172,406
|
|
Vested
|
(290,901
|
)
|
|
(294,438
|
)
|
|
(334,750
|
)
|
Forfeited
|
(9,125
|
)
|
|
(1,080
|
)
|
|
(8,022
|
)
|
Outstanding at end of year
|
467,744
|
|
|
655,276
|
|
|
749,382
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Provisions for environmental
matters - net
|
$
|
31,071
|
|
|
$
|
36,046
|
|
|
$
|
(2,751
|
)
|
(Gain) loss on disposition of
assets |
(803
|
)
|
|
1,436
|
|
|
5,207
|
|
|||
Net expense of exit or disposal
activities |
|
|
|
|
63
|
|
|||||
Total
|
$
|
30,268
|
|
|
$
|
37,482
|
|
|
$
|
2,519
|
|
68
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Dividend and royalty income
|
$
|
(3,668
|
)
|
|
$
|
(4,864
|
)
|
|
$
|
(5,904
|
)
|
Net expense from
financing activities
|
11,091
|
|
|
11,367
|
|
|
9,829
|
|
|||
Foreign currency transaction
related losses |
9,503
|
|
|
3,603
|
|
|
7,669
|
|
|||
Other income
|
(23,880
|
)
|
|
(37,524
|
)
|
|
(22,684
|
)
|
|||
Other expense
|
13,036
|
|
|
12,018
|
|
|
12,026
|
|
|||
Total
|
$
|
6,082
|
|
|
$
|
(15,400
|
)
|
|
$
|
936
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||||||
Exit costs, environ-mental and other
similar items
|
$
|
63,851
|
|
|
$
|
56,441
|
|
|
$
|
45,322
|
|
Employee related and benefit items
|
141,974
|
|
|
141,670
|
|
|
109,254
|
|
|||
Other items
|
116,302
|
|
|
112,149
|
|
|
105,904
|
|
|||
Total deferred
tax assets
|
322,127
|
|
|
310,260
|
|
|
260,480
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
||||||
Depreciation and
amortization
|
241,101
|
|
|
227,765
|
|
|
214,696
|
|
|||
LIFO inventories
|
89,330
|
|
|
67,835
|
|
|
60,122
|
|
|||
Other items
|
33,433
|
|
|
44,378
|
|
|
68,709
|
|
|||
Total deferred
tax liabilities
|
363,864
|
|
|
339,978
|
|
|
343,527
|
|
|||
Net deferred tax
liabilities
|
$
|
41,737
|
|
|
$
|
29,718
|
|
|
$
|
83,047
|
|
69
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
399,677
|
|
|
$
|
308,283
|
|
|
$
|
229,997
|
|
Foreign
|
30,145
|
|
|
53,045
|
|
|
42,543
|
|
|||
State and local
|
60,319
|
|
|
50,049
|
|
|
33,082
|
|
|||
Total current
|
490,141
|
|
|
411,377
|
|
|
305,622
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
13,505
|
|
|
(14,974
|
)
|
|
30,384
|
|
|||
Foreign
|
(10,752
|
)
|
|
(7,361
|
)
|
|
(9,041
|
)
|
|||
State and local
|
2,223
|
|
|
3,297
|
|
|
6,432
|
|
|||
Total deferred
|
4,976
|
|
|
(19,038
|
)
|
|
27,775
|
|
|||
Total provisions for
income taxes
|
$
|
495,117
|
|
|
$
|
392,339
|
|
|
$
|
333,397
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Domestic
|
$
|
1,440,511
|
|
|
$
|
1,113,528
|
|
|
$
|
969,790
|
|
Foreign
|
108,455
|
|
|
144,698
|
|
|
116,168
|
|
|||
|
$
|
1,548,966
|
|
|
$
|
1,258,226
|
|
|
$
|
1,085,958
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory federal
income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Effect of:
|
|
|
|
|
|
|||
State and local
income taxes
|
2.6
|
|
|
2.8
|
|
|
2.4
|
|
Investment vehicles
|
(1.6
|
)
|
|
(2.5
|
)
|
|
(2.1
|
)
|
Domestic production
activities
|
(2.2
|
)
|
|
(2.5
|
)
|
|
(2.2
|
)
|
Other - net
|
(1.8
|
)
|
|
(1.6
|
)
|
|
(2.4
|
)
|
Effective tax rate
|
32.0
|
%
|
|
31.2
|
%
|
|
30.7
|
%
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning
of year
|
$
|
31,560
|
|
|
$
|
30,997
|
|
|
$
|
28,119
|
|
Additions based on
tax positions related
to the current year
|
4,228
|
|
|
3,370
|
|
|
3,480
|
|
|||
Additions for tax
positions of prior
years
|
8,450
|
|
|
4,428
|
|
|
5,059
|
|
|||
Reductions for tax
positions of prior
years
|
(4,862
|
)
|
|
(2,349
|
)
|
|
(3,378
|
)
|
|||
Settlements
|
(968
|
)
|
|
(4,089
|
)
|
|
(103
|
)
|
|||
Lapses of Statutes
of Limitations
|
(4,535
|
)
|
|
(797
|
)
|
|
(2,180
|
)
|
|||
Balance at end of year
|
$
|
33,873
|
|
|
$
|
31,560
|
|
|
$
|
30,997
|
|
70
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Basic
|
|
|
|
|
|
||||||
Average common shares outstanding
|
92,197,207
|
|
|
96,190,101
|
|
|
100,897,512
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
Less net income allocated to unvested restricted shares
|
(4,462
|
)
|
|
(4,892
|
)
|
|
(4,596
|
)
|
|||
Net income allocated to common shares
|
$
|
1,049,387
|
|
|
$
|
860,995
|
|
|
$
|
747,965
|
|
Net income per common share
|
$
|
11.38
|
|
|
$
|
8.95
|
|
|
$
|
7.41
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Average common shares outstanding
|
92,197,207
|
|
|
96,190,101
|
|
|
100,897,512
|
|
|||
Stock options and other contingently issuable shares
(a)
|
1,826,885
|
|
|
1,885,334
|
|
|
2,151,359
|
|
|||
Average common shares outstanding assuming dilution
|
94,024,092
|
|
|
98,075,435
|
|
|
103,048,871
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
1,053,849
|
|
|
$
|
865,887
|
|
|
$
|
752,561
|
|
Less net income allocated to unvested restricted shares
assuming dilution
|
(4,386
|
)
|
|
(4,804
|
)
|
|
(4,509
|
)
|
|||
Net income allocated to common shares assuming dilution
|
$
|
1,049,463
|
|
|
$
|
861,083
|
|
|
$
|
748,052
|
|
Net income per common share
|
$
|
11.16
|
|
|
$
|
8.78
|
|
|
$
|
7.26
|
|
(a)
|
Stock options and other contingently issuable shares excludes
34,463
,
608,477
and
842,354
shares at
December 31, 2015
,
2014
and
2013
, respectively, due to their anti-dilutive effect.
|
|
2015
|
||||||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full Year
|
||||||||||
Net sales
|
$
|
2,450,284
|
|
|
$
|
3,132,139
|
|
|
$
|
3,152,285
|
|
|
$
|
2,604,596
|
|
|
$
|
11,339,304
|
|
Gross profit
|
1,132,449
|
|
|
1,529,986
|
|
|
1,574,552
|
|
|
1,322,239
|
|
|
5,559,226
|
|
|||||
Net income
|
131,404
|
|
|
349,937
|
|
|
374,491
|
|
|
198,017
|
|
|
1,053,849
|
|
|||||
Net income per common share - basic
|
1.41
|
|
|
3.78
|
|
|
4.04
|
|
|
2.15
|
|
|
11.38
|
|
|||||
Net income per common share - diluted
|
1.38
|
|
|
3.70
|
|
|
3.97
|
|
|
2.12
|
|
|
11.16
|
|
|
2014
|
||||||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full Year
|
||||||||||
Net sales
|
$
|
2,366,556
|
|
|
$
|
3,042,995
|
|
|
$
|
3,150,570
|
|
|
$
|
2,569,412
|
|
|
$
|
11,129,533
|
|
Gross profit
|
1,065,901
|
|
|
1,409,653
|
|
|
1,470,955
|
|
|
1,217,975
|
|
|
5,164,484
|
|
|||||
Net income
|
115,457
|
|
|
291,447
|
|
|
326,240
|
|
|
132,743
|
|
|
865,887
|
|
|||||
Net income per common share - basic
|
1.16
|
|
|
3.00
|
|
|
3.42
|
|
|
1.40
|
|
|
8.95
|
|
|||||
Net income per common share - diluted
|
1.14
|
|
|
2.94
|
|
|
3.35
|
|
|
1.37
|
|
|
8.78
|
|
71
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
2016
|
$
|
317,843
|
|
2017
|
275,411
|
|
|
2018
|
226,317
|
|
|
2019
|
179,874
|
|
|
2020
|
138,204
|
|
|
Later years
|
282,900
|
|
|
Total minimum lease payments
|
$
|
1,420,549
|
|
72
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
73
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
(millions of dollars)
|
2015
|
||||||||||||||||||||||
|
Paint Stores
Group
|
|
Consumer
Group
|
|
Global
Finishes
Group
|
|
Latin America
Coatings
Group
|
|
Administrative
|
|
Consolidated
Totals
|
||||||||||||
Net external sales
|
$
|
7,209
|
|
|
$
|
1,578
|
|
|
$
|
1,916
|
|
|
$
|
631
|
|
|
$
|
5
|
|
|
$
|
11,339
|
|
Intersegment transfers
|
|
|
2,736
|
|
|
5
|
|
|
40
|
|
|
(2,781
|
)
|
|
|
||||||||
Total net sales and
intersegment transfers
|
$
|
7,209
|
|
|
$
|
4,314
|
|
|
$
|
1,921
|
|
|
$
|
671
|
|
|
$
|
(2,776
|
)
|
|
$
|
11,339
|
|
Segment profit
|
$
|
1,434
|
|
|
$
|
309
|
|
|
$
|
202
|
|
|
$
|
18
|
|
|
|
|
$
|
1,963
|
|
||
Interest expense
|
|
|
|
|
|
|
|
|
$
|
(62
|
)
|
|
(62
|
)
|
|||||||||
Administrative expenses and other
|
|
|
|
|
|
|
|
|
(352
|
)
|
|
(352
|
)
|
||||||||||
Income before income taxes
|
$
|
1,434
|
|
|
$
|
309
|
|
|
$
|
202
|
|
|
$
|
18
|
|
|
$
|
(414
|
)
|
|
$
|
1,549
|
|
Reportable segment margins
|
19.9
|
%
|
|
7.2
|
%
|
|
10.5
|
%
|
|
2.7
|
%
|
|
|
|
|
||||||||
Identifiable assets
|
$
|
1,685
|
|
|
$
|
1,925
|
|
|
$
|
814
|
|
|
$
|
352
|
|
|
$
|
1,016
|
|
|
$
|
5,792
|
|
Capital expenditures
|
119
|
|
|
61
|
|
|
21
|
|
|
14
|
|
|
19
|
|
|
234
|
|
||||||
Depreciation
|
64
|
|
|
47
|
|
|
25
|
|
|
8
|
|
|
26
|
|
|
170
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2014
|
||||||||||||||||||||||
|
Paint Stores
Group
|
|
Consumer
Group
|
|
Global
Finishes
Group
|
|
Latin America
Coatings
Group
|
|
Administrative
|
|
Consolidated
Totals
|
||||||||||||
Net external sales
|
$
|
6,852
|
|
|
$
|
1,421
|
|
|
$
|
2,081
|
|
|
$
|
771
|
|
|
$
|
5
|
|
|
$
|
11,130
|
|
Intersegment transfers
|
|
|
2,745
|
|
|
8
|
|
|
40
|
|
|
(2,793
|
)
|
|
|
||||||||
Total net sales and
intersegment transfers
|
$
|
6,852
|
|
|
$
|
4,166
|
|
|
$
|
2,089
|
|
|
$
|
811
|
|
|
$
|
(2,788
|
)
|
|
$
|
11,130
|
|
Segment profit
|
$
|
1,201
|
|
|
$
|
253
|
|
|
$
|
201
|
|
|
$
|
40
|
|
|
|
|
$
|
1,695
|
|
||
Interest expense
|
|
|
|
|
|
|
|
|
$
|
(64
|
)
|
|
(64
|
)
|
|||||||||
Administrative expenses and other
|
|
|
|
|
|
|
|
|
(373
|
)
|
|
(373
|
)
|
||||||||||
Income before income taxes
|
$
|
1,201
|
|
|
$
|
253
|
|
|
$
|
201
|
|
|
$
|
40
|
|
|
$
|
(437
|
)
|
|
$
|
1,258
|
|
Reportable segment margins
|
17.5
|
%
|
|
6.1
|
%
|
|
9.6
|
%
|
|
4.9
|
%
|
|
|
|
|
||||||||
Identifiable assets
|
$
|
1,602
|
|
|
$
|
1,883
|
|
|
$
|
874
|
|
|
$
|
427
|
|
|
$
|
920
|
|
|
$
|
5,706
|
|
Capital expenditures
|
87
|
|
|
45
|
|
|
16
|
|
|
8
|
|
|
45
|
|
|
201
|
|
||||||
Depreciation
|
58
|
|
|
48
|
|
|
28
|
|
|
9
|
|
|
26
|
|
|
169
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
74
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(thousands of dollars unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2013
|
||||||||||||||||||||||
|
Paint Stores
Group
|
|
Consumer
Group
|
|
Global
Finishes
Group
|
|
Latin America
Coatings
Group
|
|
Administrative
|
|
Consolidated
Totals
|
||||||||||||
Net external sales
|
$
|
6,002
|
|
|
$
|
1,342
|
|
|
$
|
2,005
|
|
|
$
|
832
|
|
|
$
|
5
|
|
|
$
|
10,186
|
|
Intersegment transfers
|
|
|
2,409
|
|
|
9
|
|
|
39
|
|
|
(2,457
|
)
|
|
|
||||||||
Total net sales and
intersegment transfers
|
$
|
6,002
|
|
|
$
|
3,751
|
|
|
$
|
2,014
|
|
|
$
|
871
|
|
|
$
|
(2,452
|
)
|
|
$
|
10,186
|
|
Segment profit
|
$
|
991
|
|
|
$
|
242
|
|
|
$
|
170
|
|
|
$
|
39
|
|
|
|
|
$
|
1,442
|
|
||
Interest expense
|
|
|
|
|
|
|
|
|
$
|
(63
|
)
|
|
(63
|
)
|
|||||||||
Administrative expenses and other
|
|
|
|
|
|
|
|
|
(293
|
)
|
|
(293
|
)
|
||||||||||
Income before income taxes
|
$
|
991
|
|
|
$
|
242
|
|
|
$
|
170
|
|
|
$
|
39
|
|
|
$
|
(356
|
)
|
|
$
|
1,086
|
|
Reportable segment margins
|
16.5
|
%
|
|
6.5
|
%
|
|
8.4
|
%
|
|
4.5
|
%
|
|
|
|
|
||||||||
Identifiable assets
|
$
|
1,668
|
|
|
$
|
1,762
|
|
|
$
|
964
|
|
|
$
|
485
|
|
|
$
|
1,504
|
|
|
$
|
6,383
|
|
Capital expenditures
|
73
|
|
|
40
|
|
|
15
|
|
|
7
|
|
|
32
|
|
|
167
|
|
||||||
Depreciation
|
55
|
|
|
45
|
|
|
29
|
|
|
10
|
|
|
20
|
|
|
159
|
|
75
|
76
|
Annual Meeting
The annual meeting of shareholders
will be held in the Landmark
Conference Center, 927 Midland
Building, 101 W. Prospect Avenue,
Cleveland, Ohio on Wednesday,
April 20, 2016 at 9:00 A.M.,
local time.
Headquarters
101 W. Prospect Avenue
Cleveland, Ohio 44115-1075 (216) 566-2000 www.sherwin.com
Investor Relations
Robert J. Wells
Senior Vice President - Corporate
Communications and Public Affairs
The Sherwin-Williams Company 101 W. Prospect Avenue Cleveland, Ohio 44115-1075 |
|
Independent Registered
Public Accounting Firm
Ernst & Young LLP
Cleveland, Ohio
Stock Trading
Sherwin-Williams Common Stock—
Symbol, SHW—is traded on the
New York Stock Exchange.
Dividend Reinvestment Program
A dividend reinvestment program is
available to shareholders of common
stock. For information, contact
Wells Fargo Shareowner Services.
Form 10-K
The Company’s Annual Report on
Form 10-K, filed with the Securities
and Exchange Commission, is
available without charge. To obtain
a copy, contact Investor Relations.
|
|
Transfer Agent & Registrar
Our transfer agent, Wells Fargo
Shareowner Services, maintains the
records for our registered shareholders
and can help with a wide variety of
shareholder related services, including
the direct deposit of dividends and
online access to your account. Contact:
Wells Fargo Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874
www.shareowneronline.com
1-800-468-9716 Toll-free
651-450-4064 outside the United States
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
High
|
$
|
292.44
|
|
|
$
|
266.25
|
|
|
$
|
195.32
|
|
|
$
|
159.80
|
|
|
$
|
90.42
|
|
Low
|
218.94
|
|
|
174.29
|
|
|
153.94
|
|
|
90.21
|
|
|
69.47
|
|
|||||
Close December 31
|
259.60
|
|
|
263.04
|
|
|
183.50
|
|
|
153.82
|
|
|
89.27
|
|
|||||
Shareholders of record
|
6,996
|
|
|
7,250
|
|
|
7,555
|
|
|
7,954
|
|
|
8,360
|
|
|||||
Shares traded (thousands)
|
195,560
|
|
|
152,913
|
|
|
186,854
|
|
|
282,397
|
|
|
286,276
|
|
2015
|
|
2014
|
||||||||||||||||||||||||
Quarter
|
|
High
|
|
Low
|
|
Dividend
|
|
Quarter
|
|
High
|
|
Low
|
|
Dividend
|
||||||||||||
1st
|
|
$
|
290.89
|
|
|
$
|
260.87
|
|
|
$
|
.670
|
|
|
1st
|
|
$
|
208.63
|
|
|
$
|
174.29
|
|
|
$
|
.550
|
|
2nd
|
|
292.44
|
|
|
274.93
|
|
|
.670
|
|
|
2nd
|
|
208.00
|
|
|
188.25
|
|
|
.550
|
|
||||||
3rd
|
|
285.07
|
|
|
218.94
|
|
|
.670
|
|
|
3rd
|
|
222.53
|
|
|
201.47
|
|
|
.550
|
|
||||||
4th
|
|
277.56
|
|
|
231.92
|
|
|
.670
|
|
|
4th
|
|
266.25
|
|
|
202.01
|
|
|
.550
|
|
77
|
Corporate Officers
|
|
Operating Management
|
|
|
|
|
|
|
|
Christopher M. Connor, 59*
|
|
Joel D. Baxter, 55*
|
|
Dennis H. Karnstein, 49
|
Executive Chairman
|
|
President & General Manager
|
|
President & General Manager
|
|
|
Global Supply Chain Division
|
|
Product Finishes Division
|
John G. Morikis, 52*
|
|
Consumer Group
|
|
Global Finishes Group
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Paul R. Clifford, 52
|
|
Cheri M. Phyfer, 44
|
Sean P. Hennessy, 58*
|
|
President & General Manager
|
|
President & General Manager
|
Senior Vice President - Finance and
|
|
Canada Division
|
|
Diversified Brands Division
|
Chief Financial Officer
|
|
The Americas Group
|
|
Consumer Group
|
|
|
|
|
|
Thomas P. Gilligan, 55*
|
|
Robert J. Davisson, 55*
|
|
Ronald B. Rossetto, 49
|
Senior Vice President -
|
|
President
|
|
President & General Manager
|
Human Resources
|
|
The Americas Group
|
|
Protective & Marine Coatings Division
|
|
|
|
|
Global Finishes Group
|
Thomas E. Hopkins, 58*
|
|
Brian L. Gallagher, 44
|
|
|
Senior Vice President -
|
|
President & General Manager
|
|
David B. Sewell, 47*
|
Special Projects
|
|
Eastern Division
|
|
President
|
|
|
The Americas Group
|
|
Global Finishes Group
|
Catherine M. Kilbane, 52*
|
|
|
|
|
Senior Vice President, General
|
|
Pablo Garcia-Casas, 55
|
|
Todd V. Wipf, 51
|
Counsel and Secretary
|
|
President & General Manager
|
|
President & General Manager
|
|
|
Latin America Division
|
|
Southeastern Division
|
Timothy A. Knight, 51*
|
|
The Americas Group
|
|
The Americas Group
|
Senior Vice President -
|
|
|
|
|
Corporate Planning, Development
|
|
Monty J. Griffin, 55
|
|
|
and Administration
|
|
President & General Manager
|
|
|
|
|
South Western Division
|
|
|
Allen J. Mistysyn, 47*
|
|
The Americas Group
|
|
|
Senior Vice President -
|
|
|
|
|
Corporate Controller
|
|
Thomas C. Hablitzel, 53
|
|
|
|
|
President & General Manager
|
|
|
Robert J. Wells, 58*
|
|
Automotive Division
|
|
|
Senior Vice President - Corporate
|
|
Global Finishes Group
|
|
|
Communications and Public Affairs
|
|
|
|
|
|
|
Peter J. Ippolito, 51
|
|
|
Jeffrey J. Miklich, 41
|
|
President & General Manager
|
|
|
Vice President and Treasurer
|
|
Mid Western Division
|
|
|
|
|
The Americas Group
|
|
|
Jane M. Cronin, 48
|
|
|
|
|
Vice President - Corporate Audit
|
|
|
|
|
and Loss Prevention
|
|
|
|
|
|
|
|
|
|
Michael T. Cummins, 57
|
|
|
|
|
Vice President - Taxes and
|
|
|
|
|
Assistant Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
Executive Officer as defined by the Securities Exchange Act of 1934
|
78
|
Subsidiary
|
State of
|
|
Incorporation
|
|
|
Comex North America, Inc.
|
DE
|
Contract Transportation Systems Co.
|
DE
|
CTS National Corporation
|
DE
|
Omega Specialty Products & Services LLC
|
OH
|
Sherwin-Williams Realty Holdings, Inc.
|
IL
|
SWIMC, Inc.
|
DE
|
The Sherwin-Williams Acceptance Corporation
|
NV
|
Subsidiary
|
Country of
|
|
Incorporation
|
|
|
Compania Sherwin-Williams, S.A. de C.V.
|
Mexico
|
Geocel Limited
|
UK
|
Jiangsu Pulanna Coating Co., Ltd.
|
China
|
Oy Sherwin-Williams Finland Ab
|
Finland
|
Pinturas Condor S.A.
|
Ecuador
|
Pinturas Industriales S.A.
|
Uruguay
|
Productos Quimicos y Pinturas, S.A. de C.V.
|
Mexico
|
Przedsiêbiorstwo Altax Sp. z o.o
|
Poland
|
PT Sherwin-Williams Indonesia
|
Indonesia
|
Quetzal Pinturas, S.A. de C.V.
|
Mexico
|
Ronseal (Ireland) Limited
|
Ireland
|
Sherwin-Williams Argentina I.y C.S.A.
|
Argentina
|
Sherwin-Williams Aruba VBA
|
Aruba
|
Sherwin-Williams (Australia) Pty. Ltd.
|
Australia
|
Sherwin-Williams Automotive Mexico S. de R.L. de C.V.
|
Mexico
|
Sherwin-Williams Balkan S.R.L.
|
Romania
|
Sherwin-Williams Bel
|
Belarus
|
Sherwin-Williams (Belize) Limited
|
Belize
|
Sherwin-Williams Benelux NV
|
Belgium
|
Sherwin-Williams Canada Inc.
|
Canada
|
Sherwin-Williams (Caribbean) N.V.
|
Curacao
|
Sherwin-Williams Cayman Islands Limited
|
Grand Cayman
|
Sherwin-Williams Chile S.A.
|
Chile
|
Sherwin-Williams Coatings India Private Limited
|
India
|
Sherwin-Williams Coatings S.a r.l.
|
Luxembourg
|
Sherwin Williams Colombia S.A.S.
|
Colombia
|
Sherwin-Williams Czech Republic spol. s r.o
|
Czech Republic
|
Sherwin-Williams Denmark A/S
|
Denmark
|
Sherwin-Williams Deutschland GmbH
|
Germany
|
Sherwin-Williams Diversified Brands (Australia) Pty Ltd
|
Australia
|
Sherwin-Williams Diversified Brands Limited
|
UK
|
Sherwin-Williams do Brasil Industria e Comercio Ltda.
|
Brazil
|
Sherwin-Williams France Finishes SAS
|
France
|
Sherwin-Williams HK Limited
|
Hong Kong
|
Sherwin-Williams (Ireland) Limited
|
Ireland
|
Sherwin-Williams Italy S.r.l.
|
Italy
|
Sherwin-Williams Luxembourg Investment Management
Company S.a r.l.
|
Luxembourg
|
Sherwin-Williams (Malaysia) Sdn. Bhd.
|
Malaysia
|
Sherwin-Williams (Nanatong) Company Limited
|
China
|
Sherwin-Williams Norway AS
|
Norway
|
Sherwin-Williams Paints Limited Liability Company
|
Russia
|
Sherwin-Williams Peru S.R.L.
|
Peru
|
Sherwin-Williams Pinturas de Venezuela S.A.
|
Venezuela
|
Sherwin-Williams Poland Sp. z o.o
|
Poland
|
Sherwin-Williams Protective & Marine Coatings
|
UK
|
Sherwin-Williams (S) Pte. Ltd.
|
Singapore
|
Sherwin-Williams Services (Malaysia) Sdn. Bhd.
|
Malaysia
|
Sherwin-Williams (Shanghai) Limited
|
China
|
Sherwin-Williams Spain Coatings S.L.
|
Spain
|
Sherwin-Williams Sweden AB
|
Sweden
|
Sherwin-Williams (Thailand) Co., Ltd.
|
Thailand
|
Sherwin-Williams UK Automotive Limited
|
UK
|
Sherwin-Williams Uruguay S.A.
|
Uruguay
|
Sherwin-Williams (Vietnam) Limited
|
Vietnam
|
Sherwin-Williams (West Indies) Limited
|
Jamaica
|
SWIPCO - Sherwin Williams do Brasil Propriedade
Intelectual Ltda.
|
Brazil
|
TOB Becker Acroma Ukraine
|
Ukraine
|
UAB Sherwin-Williams Baltic
|
Lithuania
|
ZAO Sherwin-Williams
|
Russia
|
Sherwin-Williams (South China) Co., Ltd.
|
China
|
Registration Number
|
Description
|
333-205897
333-166365
|
The Sherwin-Williams Company Form S-3 Registration Statement
The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (as Amended and Restated as of February 17, 2015) Form S-8 Registration Statement
|
333-152443
|
The Sherwin-Williams Company Employee Stock Purchase and Savings Plan Form S-8 Registration Statement
|
333-133419
|
The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan and The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors Form S-8 Registration Statement
|
333-129582
|
The Sherwin-Williams Company 2005 Deferred Compensation Savings and Pension Equalization Plan, The Sherwin-Williams 2005 Key Management Deferred Compensation Plan and The Sherwin-Williams Company 2005 Director Deferred Fee Plan Form S-8 Registration Statement
|
333-105211
|
The Sherwin-Williams Company Employee Stock Purchase and Savings Plan Form S-8 Registration Statement
|
333-101229
|
The Sherwin-Williams Company 2003 Stock Plan Form S-8 Registration Statement
|
333-66295
|
The Sherwin-Williams Company Deferred Compensation Savings Plan, The Sherwin-Williams Company Key Management Deferred Compensation Plan and The Sherwin-Williams Company Director Deferred Fee Plan Form S-8 Registration Statement
|
Signature
|
|
|
|
Title
|
|
|
|
|
|
/s/ John G. Morikis
|
|
|
|
President and Chief Executive Officer, Director
(Principal Executive Officer)
|
John G. Morikis
|
|
|
|
|
|
|
|
|
|
/s/ Christopher M. Connor
|
|
|
|
Executive Chairman, Director
|
Christopher M. Connor
|
|
|
|
|
|
|
|
|
|
/s/ Sean P. Hennessy
|
|
|
|
Senior Vice President – Finance and Chief Financial Officer
(Principal Financial Officer)
|
Sean P. Hennessy
|
|
|
|
|
|
|
|
|
|
/s/ Allen J. Mistysyn
|
|
|
|
Senior Vice President – Corporate Controller
(Principal Accounting Officer)
|
Allen J. Mistysyn
|
|
|
|
|
|
|
|
|
|
/s/ Arthur F. Anton
|
|
|
|
Director
|
Arthur F. Anton
|
|
|
|
|
|
|
|
|
|
/s/ David F. Hodnik
|
|
|
|
Director
|
David F. Hodnik
|
|
|
|
/s/ Thomas G. Kadien
|
|
|
|
Director
|
Thomas G. Kadien
|
|
|
|
|
|
|
|
|
|
/s/ Richard J. Kramer
|
|
|
|
Director
|
Richard J. Kramer
|
|
|
|
|
|
|
|
|
|
/s/ Susan J. Kropf
|
|
|
|
Director
|
Susan J. Kropf
|
|
|
|
|
|
|
|
|
|
/s/ Christine A. Poon
|
|
|
|
Director
|
Christine A. Poon
|
|
|
|
|
|
|
|
|
|
/s/ Richard K. Smucker
|
|
|
|
Director
|
Richard K. Smucker
|
|
|
|
|
|
|
|
|
|
/s/ John M. Stropki
|
|
|
|
Director
|
John M. Stropki
|
|
|
|
|
|
|
|
|
|
/s/ Matthew Thornton III
|
|
|
|
Director
|
Matthew Thornton III
|
|
|
|
|
|
|
|
|
|
/s/ Steven H. Wunning
|
|
|
|
Director
|
Steven H. Wunning
|
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of The Sherwin-Williams Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 24, 2016
|
|
|
/s/ John G. Morikis
|
|
|
|
|
John G. Morikis
President and Chief
Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of The Sherwin-Williams Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 24, 2016
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/s/ Sean P. Hennessy
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Sean P. Hennessy
Senior Vice President – Finance and
Chief Financial Officer
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Dated:
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February 24, 2016
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/s/ John G. Morikis
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John G. Morikis
President and Chief
Executive Officer
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Dated:
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February 24, 2016
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/s/ Sean P. Hennessy
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Sean P. Hennessy
Senior Vice President – Finance and
Chief Financial Officer
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