Sherwin-Williams (SHW) 10-K risk factor changes: FY2019 vs FY2018

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

Higher inflation rates, interest rates, tax rates and unemployment rates, higher labor and healthcare costs, recessions, changing governmental policies, laws and regulations, [added: business disruptions due to cybersecurity incidents, terrorist activity, armed conflict, war, public health crises, fires or other natural disasters,] and other economic factors could also adversely affect demand for some of our [removed: products] [added: products, availability] and [added: cost of raw materials and] our results of operations, cash flow, liquidity or financial condition and that of our customers, vendors and suppliers.

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

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

Although interest rates remain low by historical standards, [removed: this] [added: any] increase may adversely affect the demand for new residential homes, existing home turnover and new non-residential construction.

[removed: Increases] [added: Increases] in the cost of raw materials and energy may adversely affect our earnings or cash [removed: flow.][added: flow.]

[removed: Although raw materials and energy supplies (including oil and natural gas) are generally available from various sources in sufficient quantities, unexpected] shortages and increases in the cost of raw materials and energy, or any deterioration in our relationships with or the financial viability of our suppliers, may have an adverse effect on our earnings or cash flow in the event we are unable to offset higher costs in a timely manner by sufficiently decreasing our operating costs or raising the prices of our products.

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

During [removed: 2018,] [added: 2019,] no individual customer accounted for sales totaling more than ten percent of our sales.

[removed: Increased] [added: Increased] competition may reduce our sales, earnings or cash flow [removed: performance.][added: performance.]

[removed: We] [added: We] require a significant amount of cash to service the substantial amount of debt we have outstanding.

If we cannot generate the required cash, we may not be able to make the necessary payments required under our [removed: indebtedness.][added: indebtedness.]

[removed: Our] [added: Our] results of operations, cash flow or financial condition may be negatively impacted if we do not successfully integrate future acquisitions into our existing operations and if the performance of the businesses we acquire do not meet our [removed: expectations.][added: expectations.]

The success of future acquisitions depends in large part on our ability to integrate the operations and personnel of the acquired companies and manage challenges that may arise as [added: a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets.]

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

Net external sales of our consolidated foreign subsidiaries totaled approximately [removed: 23.0%, 19.8%] [added: 20.6%, 23.0%] and [removed: 14.5%] [added: 19.8%] of our total consolidated net sales in [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] respectively.

Our inability to successfully manage the risks and uncertainties relating to [added: any of] these factors could adversely affect our results of operations, cash flow, liquidity or financial condition.

[removed: Policy] [added: Policy] changes affecting international trade could adversely impact the demand for our products and our competitive [removed: position.][added: position.]

Our business benefits from free trade agreements, [removed: such as the North American Free Trade Agreement and successor agreements,] which may include the United States-Mexico-Canada Agreement, and efforts to withdraw from, or substantially modify such agreements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flow and that of our customers, vendors and suppliers.

Additionally, the results of the United Kingdom’s referendum on European Union membership, [removed: advising for] [added: which resulted in] the [added: United Kingdom's] exit from the European [removed: Union,] [added: Union on January 31, 2020,] has caused and may continue to cause significant volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

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

Our primary exchange rate exposure is with the Euro, the Chinese yuan, the Brazilian real, the Canadian dollar, the British pound, the Mexican [removed: peso and] [added: peso,] the Australian [removed: dollar,] [added: dollar and the Argentine peso,] each against the U.S. dollar.

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

We are subject to a wide variety of complex domestic and foreign laws, rules and regulations, and legal compliance risks, including securities laws, tax laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, data [removed: privacy and security laws, and laws governing improper business practices.]

We are affected by new laws and [added: regulations, and changes to existing laws and regulations, including interpretations by courts and regulators.]

We discuss risks and uncertainties with regard to taxes in more detail in Note [removed: 15 of the Notes] [added: 19] to [added: the] Consolidated Financial Statements [removed: on pages 71 through 73 of our 2018 Annual Report.][added: in Item 8.]

[removed: Adverse] [added: Adverse] weather conditions [added: or impacts of climate change] and natural disasters may temporarily reduce the demand for some of our products and could have a negative effect on our sales, earnings or cash [removed: flow.][added: flow.]

From time to time, adverse weather conditions [added: or impacts of climate change] and natural disasters have had [added: or may have] an adverse effect on our sales of paint, coatings and related products.

[removed: Inability] [added: Inability] to protect or enforce our material trademarks and other intellectual property rights could have an adverse effect on our [removed: business.][added: business.]

[removed: Security] [added: Security] breaches and other disruptions to our information technology infrastructure could interfere with our operations, compromise our information and the information of our customers and suppliers and severely harm our [removed: business.][added: business.]

Despite the security measures we have in place, our facilities and systems, and those of the retailers, dealers, licensees and other third-party suppliers and vendors with which we do business, may be vulnerable to security breaches, [removed: cyber attacks, acts of vandalism or misconduct, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.]

Computer systems are important to production planning, [added: manufacturing,] finance, company operations and customer service, among other business-critical processes.

Despite efforts to prevent disruptions to our computer systems, our systems may be affected by damage or interruption from, among other causes, power outages, system failures, computer viruses and other intrusions, including [added: ransomware and other] cyber attacks.

Additionally, we rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party [removed: vendors, and our business may be adversely affected by service disruptions in or security breaches to such third-party systems.][added: vendors.]

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

Our operations are subject to various domestic and foreign health, safety and environmental laws and [removed: regulations.][added: regulations, including laws and regulations related to climate change.]

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

We discuss these risks and uncertainties in more detail [removed: on page 23 of our 2018 Annual Report under the caption “Environmental Matters,” page 28 of our 2018 Annual Report under] [added: in] the [removed: caption “Environmental-Related Liabilities”] [added: "Environmental Matters"] and [added: "Environmental-Related Liabilities" sections] in [added: Item 7 and in] Note [removed: 9 of the Notes] [added: 10] to [added: the] Consolidated Financial Statements [removed: on pages 62 through 63 of our 2018 Annual Report.][added: in Item 8.]

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

[removed: In the event a loss contingency is ultimately determined to be significantly higher than currently accrued, the recording] of the additional liability may result in a material impact on our results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued.

In addition, environmental and social regulations, including regulations related to climate change, may negatively impact us or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy.

Although raw materials and energy supplies (including oil and natural gas) are generally available from various sources in sufficient quantities, unexpected

At December 31, 2019, we had total debt of approximately $8.7 billion, which is a decrease of $658.5 million since December 31, 2018.

In addition, public health crises (including viral outbreaks, such as the coronavirus) in foreign jurisdictions may temporarily reduce the demand for some of our products and adversely affect the availability and cost of raw materials.

privacy and security laws, and laws governing improper business practices.

cyber attacks, acts of vandalism or misconduct, computer viruses, ransomware, misplaced or lost data, programming and/or human errors or other similar events or intrusions.

If these third-party vendors, as well as our suppliers and other vendors, experience security breaches, cyber attacks, computer viruses, ransomware or other similar events or intrusions, our business may be adversely affected and such events or intrusions may have a material adverse effect on our business, results of operations and financial condition.

In the event a loss contingency is ultimately determined to be significantly higher than currently accrued, the recording

Throughout 2018, interest rates, including mortgage rates, rose and may continue to rise in 2019.

Challenging market conditions are expected to continue for the foreseeable future and may worsen.

We may not realize the growth opportunities and cost synergies that are anticipated from the acquisition of Valspar.

The benefits that are expected to result from the acquisition of Valspar will depend, in part, on our ability to realize the anticipated growth opportunities and additional cost synergies as a result of the acquisition.

Our success in realizing these growth opportunities and additional cost synergies, and the timing of this realization, depends on the successful integration of Valspar.

There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition as sizable as Valspar.

The process of integrating operations could cause an interruption of, or loss of momentum in, our activities.

Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time available to manage our company, service existing customers, attract new customers, and

develop new products or strategies.

If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.

There can be no assurance we will successfully or cost-effectively integrate Valspar.

The failure to do so could have a material adverse effect on our business, financial condition, and results of operations.

Even if we are able to integrate Valspar successfully, this integration may not result in the realization of the full benefits of the growth opportunities and additional cost synergies we currently expect from this integration.

We also cannot guarantee these benefits will be achieved within anticipated time frames or at all.

For example, we may not be able to eliminate all duplicative costs, and we may incur substantial, unanticipated expenses in connection with the Valspar integration.

While we expect certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately, and may exceed current estimates.

Accordingly, the benefits from the acquisition may be offset by costs incurred to, or delays in, integrating the businesses.

At December 31, 2018, we had total debt of approximately $9.3 billion, which is a decrease of $1.2 billion since December 31, 2017 and includes indebtedness incurred to complete the Valspar acquisition.

a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets.

regulations, and changes to existing laws and regulations, including interpretations by courts and regulators.

On December 22, 2017, U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law.

The Tax Act made substantial changes to then-current U.S. tax law, including a reduction in the corporate tax rate, a limitation on deductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the allowance of immediate expensing of capital expenditures, deemed repatriation of foreign earnings and significant changes to the taxation of foreign earnings going forward.

The Tax Act contains numerous, complex provisions impacting U.S. multinational companies, and we continue to review and assess the legislative language and guidance promulgated by regulators to determine the Tax Act's full impact on us.

The full extent of the impact remains uncertain at this time, and our current interpretations of, and assumptions regarding, the Tax Act are subject to additional regulatory or administrative developments, including any regulations or additional guidance promulgated by the U.S. Internal Revenue Service or other regulators.

Further, we can provide no assurance our current interpretations of, and assumptions regarding, the Tax Act and any related regulations or guidance will not be reviewed or investigated by regulators in the future.

As a result, the Tax Act, including any regulations or other guidance promulgated by the U.S. Internal Revenue Service or other regulators, and other tax laws could have significant effects on us, some of which could materially and adversely impact our financial condition, results of operations and cash flow.

For example, during 2018 the impact of Hurricanes Michael and Florence, on our operations in Florida, the Carolinas and neighboring areas, as well as the wildfires in California, resulted in a temporary shutdown of some of our company-operated paint stores, manufacturing facilities and/or distribution centers in the affected regions, resulting in reduced revenues.

the recording of the liability, or additional liability, as applicable, may result in a material impact on net income for the annual or interim period during which such liability is accrued.

(dollars in millions, except as noted and per share data)

Company Background

The Sherwin-Williams Company, founded in 1866, and its consolidated wholly owned subsidiaries (collectively, the Company) are engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region and throughout Europe, Asia and Australia.

The Company is structured into three reportable segments – The Americas Group, Consumer Brands Group and Performance Coatings Group (collectively, the Reportable Segments) – and an Administrative segment in the same way it is internally organized for assessing performance and making decisions regarding allocation of resources.

See Notes 3 and 21 to the Consolidated Financial Statements in Item 8 for additional information regarding the Valspar acquisition and the Company's Reportable Segments, respectively.

RESULTS OF OPERATIONS

The following discussion and analysis addresses comparisons of material changes in the consolidated financial statements for the years ended December 31, 2019 and 2018.

For comparisons of the years ended December 31, 2018 and 2017, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed on February 22, 2019.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| | Year Ended December 31, | | | | | | | | | |

| | 2019 | | | | 2018 | | | | % Change | |

| Net Sales: | | | | | | | | | | |

| The Americas Group | $ | 10,171.9 | | | $ | 9,625.1 | | | 5.7 | % |

| Consumer Brands Group | 2,676.8 | | | | 2,739.1 | | | | (2.3 | )% |

| Performance Coatings Group | 5,049.2 | | | | 5,166.4 | | | | (2.3 | )% |

| Administrative | 2.9 | | | | 3.9 | | | | (25.6 | )% |

| Total | $ | 17,900.8 | | | $ | 17,534.5 | | | 2.1 | % |

Consolidated net sales for 2019 increased due primarily to higher paint sales volume in The Americas Group and selling price increases.

Currency translation rate changes decreased 2019 consolidated net sales by 1.4%.

Net sales of all consolidated foreign subsidiaries decreased 8.7% to $3.679 billion for 2019 versus $4.028 billion for 2018 due primarily to industrial market softness and macroeconomic pressures in China and Australia.

Net sales of all operations other than consolidated foreign subsidiaries increased 5.3% to $14.222 billion for 2019 versus $13.507 billion for 2018.

Net sales in The Americas Group increased due primarily to higher paint sales volume across most end market segments and selling price increases.

Net sales from stores in U.S. and Canada open for more than twelve calendar months increased 5.3% in the year over last year's comparable period.

Currency translation rate changes reduced net sales by 0.9% compared to 2018.

During 2019, The Americas Group opened 94 new stores and closed 32 redundant locations for a net increase of 62 stores, increasing the total number of stores in operation at December 31, 2019 to 4,758 in the United States, Canada, Latin America and the Caribbean.

The Americas Group’s objective is to expand its store base an average of 2% each year, primarily through internal growth.

Sales of products other than paint increased approximately 5.9% over last year.

A discussion of changes in volume versus pricing for sales of products other than paint is not pertinent due to the wide assortment of general merchandise sold.

Net sales of the Consumer Brands Group decreased in 2019 primarily due to the divestiture of the Guardsman insurance business and lower sales outside of North America in some end markets, partially offset by selling price increases and higher volume sales to some of the group's retail customers.

In 2020, the Consumer Brands Group plans to continue promotions of new and existing products and expand its customer base and product assortment at existing customers.

The Performance Coatings Group’s net sales in 2019 decreased due primarily to softer sales outside of North America and unfavorable currency translation rate changes, partially offset by selling price increases.

Currency translation rate changes decreased net sales 2.3% compared to 2018.

In 2019, the Performance Coatings Group opened 3 new branches and closed 4 locations decreasing the total from 282 to 281 branches open in the United States, Canada, Mexico, South America, Europe and Asia at

year-end.

In 2020, the Performance Coatings Group plans to continue expanding its worldwide presence and improving its customer base.

Net sales in the Administrative segment, which primarily consists of external leasing revenue of excess headquarters space and leasing of facilities no longer used by the Company in its primary business, decreased by an insignificant amount in 2019.

Consolidated gross profit increased $617.5 million in 2019 compared to the same period in 2018.

Consolidated gross profit as a percent to consolidated net sales increased to 44.9% in 2019 from 42.3% in 2018.

The information required by this item is set forth on pages 19 through 35 of our 2018 Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

The Company entered into [removed: foreign currency] forward [added: foreign] currency exchange contracts during [removed: 2018] [added: 2019] to hedge against value changes in foreign currency.

There were no material contracts outstanding at December 31, [removed: 2018.][added: 2019.]

[removed: Foreign] [added: Forward foreign] currency [removed: forward] [added: exchange] contracts are described in Note [removed: 14 of the Notes] [added: 18] to [added: the] Consolidated Financial Statements [removed: on page 71 of our 2018 Annual Report.][added: in Item 8.]

See Note [removed: 8 of the Notes] [added: 1] to [added: the] Consolidated Financial Statements [removed: on pages 61 through 62 of our 2018 Annual Report.][added: in Item 8.]

In 2019, the Company entered into a U.S. Dollar to Euro cross currency swap contract to hedge the Company's net investment in its European operations.

This contract has been designated as a net investment hedge and will mature on January 15, 2022.

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The interest rate lock agreements entered into in 2016 were settled during 2017.

You may access these documents on [removed: the “Investor Relations” page of] our [removed: website at www.sherwin.com.][added: Investor Relations website, investors.sherwin-williams.com.]

You may access these documents [removed: in the “Corporate Governance” section] on [removed: the “Investor Relations” page of] our [removed: website at www.sherwin.com.][added: Investor Relations website, investors.sherwin-williams.com.]

The accounting policies of the Reportable Segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements [removed: on pages 45 through 49 of our 2018 Annual Report, which is incorporated herein by reference.][added: in Item 8.]

The Americas Group consisted of [removed: 4,696] [added: 4,758] company-operated specialty paint stores in the United States, Canada, Latin America and the Caribbean region at December 31, [removed: 2018.][added: 2019.]

The Americas Group [removed: company-owned] [added: company-operated] stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products.

At December 31, [removed: 2018,] [added: 2019,] The Americas Group consisted of operations from subsidiaries in 10 foreign countries.

During [removed: 2018,] [added: 2019,] this segment opened [removed: 76] [added: 62] net new stores, consisting of [removed: 91] [added: 94] new stores opened [removed: (74] [added: (83] in the United States, [removed: 16] [added: 7] in Canada, and [removed: 1] [added: 4] in South America) and [removed: 15] [added: 32] stores closed [removed: (1] [added: (6] in the United States, [removed: 2 in Canada, 11] [added: 17] in South America and [removed: 1] [added: 9] in Mexico).

In [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] this segment opened [removed: 101] [added: 76] and [removed: 142] [added: 101] net new stores, respectively.

The [added: CODM uses discrete financial information about The] Americas Group, supplemented with information by geographic region, product type and customer type, to assess performance of and allocate resources to The Americas Group as a whole.

Approximately [removed: 55.82%] [added: 57%] of the total sales of the Consumer Brands Group in [removed: 2018] [added: 2019] were intersegment transfers of products primarily sold through The Americas Group.

At December 31, [removed: 2018,] [added: 2019,] the Consumer Brands Group consisted of operations in the United States and subsidiaries in 6 foreign countries, including company-operated outlets in Australia and New Zealand.

Sherwin-Williams® and other controlled brand products are distributed through The Americas Group and this segment’s [removed: 282] [added: 281] company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.

During [removed: 2018,] [added: 2019,] this segment opened 3 new branches and closed [removed: 11] [added: 4] branches for a net decrease of [removed: 8 branches.][added: 1 branch.]

At December 31, [removed: 2018,] [added: 2019,] the Performance Coatings Group consisted of operations in the United States and subsidiaries in 45 foreign countries.

There are sufficient suppliers of each product purchased for resale that none of the Reportable Segments anticipate any significant sourcing problems during [removed: 2019.][added: 2020.]

For a description of the Company’s liquidity and capital resources, see [removed: pages 25 through 30 of our 2018 Annual Report under] the [removed: caption] “Financial Condition, Liquidity and Cash Flow” [removed: of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.][added: section in Item 7.]

| [removed: •] [added: *•*] | [removed: The] [added: *The] Americas [removed: Group:] [added: Group:*] Sherwin-Williams®, [removed: A-100®,] Cashmere®, Colorgin®, [removed: Condor®, Duracraft®, Duration Home®,] Duration®, Emerald®, Harmony®, [removed: HGTV Home® by Sherwin- Williams,] Kem [removed: Pro®, Kem] Tone®, [removed: Krylon®,] Loxon®, [removed: Marson®,] Metalatex®, [removed: Minwax®,] Novacor®, Paint Shield®, [removed: PrepRite®,] ProClassic®, [removed: ProCraft ®, ProConstructor®,] ProIndustrial™, ProMar®, [removed: ProPark®, Solo®, Sumaré®,] SuperDeck®, SuperPaint®, [removed: Ultra Proteccion®,] Woodscapes® |

| • | [removed: Consumer] [added: *Consumer] Brands [removed: Group: Accurate Dispersions™, Altax™, Bestt Liebco®,] [added: Group:*] Cabot®, [removed: Conco®,] Duckback®, Dupli-Color®, [removed: DuraSeal®,] Dutch Boy®, Geocel®, [removed: Granosite®, H&C®,] HGTV HOME® by Sherwin-Williams, [removed: Huarun™, Kool Seal®,] [added: Huarun®,] Krylon®, Minwax®, Pratt & Lambert®, Purdy®, [removed: Ronseal™, Rubberset®,] [added: Ronseal®,] Solver®, [removed: Sprayon®, SuperDeck®,] Thompson’s® WaterSeal®, [removed: Tri-Flow®, Uniflex®,] Valspar®, [removed: VHT®,] Wattyl®, White Lightning® |

| • | [removed: Performance] [added: *Performance] Coatings [removed: Group:] [added: Group:*] Sherwin-Williams®, Acrolon®, AcromaPro®, [removed: Arti™, ATX™,] [added: ATX®,] AWX Performance Plus™, [removed: Baco®, Conely®,] DeBeer®, [removed: DFL™,] Dimension®, [removed: Duraspar™,] [added: Duraspar®, EcoDex®,] Envirolastic®, Euronavy®, Excelo®, [added: EzDex®,] Fastline®, [removed: Finish 1™,] Firetex®, Fluropon®, [removed: Genesis®,] Heat-Flex®, House of Kolor®, [removed: Huarun™, Inchem®, Inver®,] [added: Huarun®,] Kem Aqua®, [removed: Lanet™,] Lazzuril®, Macropoxy®, [removed: Magnalux™,] Martin Senour®, [removed: Matrix®,] ML Campbell®, [removed: Oece™, PermaClad®,] [added: Perma-Clad®,] Planet Color®, Polane®, Powdura®, [removed: Prospray®,] Sayerlack®, Sher-Wood®, [removed: Ultra-Cure®,] [added: Sumaré®,] Ultra™, [removed: USC®,] ValPure® [removed: V70, Valspar®, Wattyl®] [added: , Valspar®] |

We believe that sufficient productive capacity currently exists to fulfill our needs for paint, coatings and related products through [removed: 2019.][added: 2020.]

We employed [removed: 53,368] [added: 61,111] persons at December 31, [removed: 2018.][added: 2019.]

[removed: CAUTIONARY] [added: CAUTIONARY] STATEMENT REGARDING FORWARD-LOOKING [removed: INFORMATION][added: INFORMATION]

These forward-looking statements are based upon management's current expectations, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and [removed: earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and the lead pigment and lead-based paint litigation.]

| • | our ability to successfully integrate past and future acquisitions into our existing operations, [removed: including Valspar,] as well as the performance of the businesses acquired; |

For more information about the Reportable Segments, see Note 21 to the Consolidated Financial Statements in Item 8.

For additional information regarding environmental-related matters, see Notes 1, 10 and 18 to the Consolidated Financial Statements in Item 8.

earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and the lead pigment and lead-based paint litigation.

| • | adverse weather conditions or impacts of climate change, natural disasters and public health crises. |

For more information about the Reportable Segments, see pages 8 through 15 of our 2018 Annual Report, which is incorporated herein by reference.

A map on the cover flap of our 2018 Annual Report, which is incorporated herein by reference, shows the number of paint stores and their geographic location.

The CODM uses discrete financial information about

A map on the cover flap of our 2018 Annual Report, which is incorporated herein by reference, shows the number of company-operated outlets and their location.

A map on the cover flap of our 2018 Annual Report, which is incorporated herein by reference, shows the number of branches and their geographic locations.

Business Developments

For additional information regarding our business and business developments, see pages 8 through 15 of our 2018 Annual Report and the “Letter to Shareholders” on pages 2 through 7 of our 2018 Annual Report, which is incorporated herein by reference.

| | |

| --- | --- |

For additional information regarding environmental-related matters, see page 28 of our 2018 Annual Report under the caption “Environmental-Related Liabilities” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1, 9 and 14 of the Notes to Consolidated Financial Statements on pages 47, 62 through 63 and 70, respectively, of our 2018 Annual Report, which is incorporated herein by reference.

| • | risks inherent in the achievement of additional anticipated cost synergies resulting from the acquisition of Valspar and the timing thereof; |

| • | adverse weather conditions and natural disasters. |

As previously disclosed in the Company’s Form [removed: 10-Q] [added: 10-K] for the [removed: quarterly period] [added: year] ended [removed: September 30,] [added: December 31,] 2018, the Company received a letter dated September 26, 2018 from the South Coast Air Quality Management District (“SCAQMD”) in California alleging excess emissions from non-compliant coatings and seeking a proposed penalty of approximately $1.5 million.

The Company disputes the allegations in the Complaint and intends to vigorously defend this [removed: matter.][added: matter, if a mutually agreeable settlement cannot be reached.]

For information regarding [added: other] environmental-related matters and other legal proceedings, see [removed: pages 28 and 30 of our 2018 Annual Report under the captions “Environmental-Related Liabilities” and “Litigation” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and] Notes 1, [removed: 9, 10] [added: 10, 11] and [removed: 14 of the Notes] [added: 18] to [added: the] Consolidated Financial Statements [removed: on pages 47, 62 through 63, 63 through 67 and 70, respectively, of our 2018 Annual Report, which is incorporated herein by reference.][added: in Item 8.]

In addition, as previously disclosed in the Company’s Form 10-Q for the quarterly period ended June 30, 2019, on April 4, 2019, SCAQMD notified the Company of its position that the Company was engaging in non-compliant sales of denatured alcohol.

The letter requested information regarding the Company’s sales of denatured alcohol and invited the Company to participate in settlement discussions to resolve the matter.

SCAQMD then issued an additional information request regarding denatured alcohol and other products.

The Company and SCAQMD are involved in discussions to resolve the aforementioned matters cooperatively and efficiently.

The information contained in Note 11 to the Consolidated Financial Statements is incorporated herein by reference.

On September 14, 2018, the California Air Resources Board (“CARB”) issued a Notice of Violation to the Company for several aerosol coatings products that were allegedly labeled incorrectly or otherwise violated CARB rules.

The Company entered into settlement negotiations with CARB in an attempt to resolve the alleged violations.

On January 15, 2019, a settlement conference was held, and an agreement to resolve the alleged violations was reached pursuant to which the Company has agreed to pay a penalty of $220,000 to resolve the matter.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) [removed: OF][added: OF]

[removed: THE] [added: THE] SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

[removed: Commission] [added: Commission] file [removed: number 1-04851][added: number 1-04851]

[removed: THE] [added: THE] SHERWIN-WILLIAMS [removed: COMPANY][added: COMPANY]

| [removed: OHIO] [added: Ohio] | | [removed: 34-0526850] | [added: 34-0526850 |]

| (State or other jurisdiction of incorporation or organization) | | [added: |] (I.R.S. Employer Identification No.) |

| [removed: 101] [added: 101] West Prospect [removed: Avenue, Cleveland, Ohio] [added: Avenue] | | [removed: 44115-1075] | [added: |]

| (Address of principal executive offices) | | [added: |] (Zip Code) |

[removed: (216) 566-2000][added: (216) 566-2000]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: Trading Symbol | | Name] of each exchange on which [removed: registered] [added: registered] |

| [removed: Common] [added: Common] Stock, Par Value [removed: $1.00] [added: $1.00] | | [removed: New] [added: SHW | | New] York Stock [removed: Exchange] [added: Exchange] |

Securities registered pursuant to Section 12(g) of the Act: [added: None]

Yes [removed: x] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: x][added: ☒]

Indicate by check mark whether the [removed: Registrant] [added: registrant] has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T [removed: (§232.405] [added: (§ 232.405] of this chapter) during the preceding 12 months (or for such shorter period that the [removed: Registrant] [added: registrant] was required to submit such files).

| Large accelerated filer | [removed: x] [added: ☒] | | Accelerated filer | [removed: o] [added: ☐] |

| Non-accelerated filer | [removed: o] [added: ☐] | | Smaller reporting company | [removed: o] [added: ☐] |

| Emerging growth company | [removed: o] [added: ☐] | | | |

At January 31, [removed: 2019, 92,718,270] [added: 2020, 92,227,704] shares of common stock were outstanding, net of treasury shares.

The aggregate market value of common stock held by non-affiliates of the Registrant at June [removed: 30, 2018] [added: 28, 2019] was [removed: $37,995,087,928] [added: $42,201,407,338] (computed by reference to the price at which the common stock was last sold on such date).

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of our [added: Proxy Statement for the 2020] Annual [removed: Report to] [added: Meeting of] Shareholders [removed: for] [added: (“Proxy Statement”) to be filed with] the [added: Securities and Exchange Commission within 120 days of our] fiscal year ended December 31, [removed: 2018 (“2018 Annual Report”)] [added: 2019] are incorporated by reference into [removed: Parts I, II and IV] [added: Part III] of this report.

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

| | | [removed: Page] [added: Page] |

[removed: | [PART I](#sF89E411E91A05D3ABE755FBC4CFC590E) | | |][added: PART I]

| Item 1. | [removed: [Business](#sC746D0B5D1845BBDA28CD163F7BF096C)] [added: [Business](#s4C13786BD9B45D80A203A545E19F7844)] | [removed: [1](#sC746D0B5D1845BBDA28CD163F7BF096C)] [added: [1](#s4C13786BD9B45D80A203A545E19F7844)] |

| | [Cautionary Statement Regarding Forward-Looking [removed: Information](#s549EEDB557AC5BCEAB38484051386F59)] [added: Information](#s59A55FA8D7B45777906122BDC21DA7D3)] | [removed: [4](#s549EEDB557AC5BCEAB38484051386F59)] [added: [3](#s59A55FA8D7B45777906122BDC21DA7D3)] |

| Item 1A. | [Risk [removed: Factors](#s5535B10EC6D65C04B63EEB496C2B8F21)] [added: Factors](#sCA47046F12A8544F8413B5777BA621A9)] | [removed: [5](#s5535B10EC6D65C04B63EEB496C2B8F21)] [added: [4](#sCA47046F12A8544F8413B5777BA621A9)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sD7E5A1CBCF0F5482AD230A74E345AA13)] [added: Comments](#sBD0C3CF91BBA5CC8BAD3457D7668B756)] | [removed: [12](#sD7E5A1CBCF0F5482AD230A74E345AA13)] [added: [10](#sBD0C3CF91BBA5CC8BAD3457D7668B756)] |

| Item 2. | [removed: [Properties](#s5DC65C4432FF5F728F883A91D6E169BE)] [added: [Properties](#sDA87D9117F2F548EA0FAD476D528939C)] | [removed: [13](#s5DC65C4432FF5F728F883A91D6E169BE)] [added: [11](#sDA87D9117F2F548EA0FAD476D528939C)] |

| Item 3. | [Legal [removed: Proceedings](#s9937C31B2CE551DB87B9C3A63B36A2DD)] [added: Proceedings](#s64B5F7E953765EA2A80D238753CB435E)] | [removed: [14](#s9937C31B2CE551DB87B9C3A63B36A2DD)] [added: [12](#s64B5F7E953765EA2A80D238753CB435E)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s7796A4DB36795C15AA54955E22F338DF)] [added: Disclosures](#s0B7718789FD556FA96FEFF4D5DBB907C)] | [removed: [14](#s7796A4DB36795C15AA54955E22F338DF)] [added: [12](#s0B7718789FD556FA96FEFF4D5DBB907C)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sDA5968BD117D5374BF8CA30DE92AD5F4)] [added: Securities](#sD62FF0216C7256E29A278A741DBD7AFA)] | [removed: [16](#sDA5968BD117D5374BF8CA30DE92AD5F4)] [added: [14](#sD62FF0216C7256E29A278A741DBD7AFA)] |

| Item 6. | [Selected Financial [removed: Data](#sC601116249CB5EDA8FF7F891F52B017E)] [added: Data](#sC2A4BE37C5B35039B6C3397DBECD4B7D)] | [removed: [17](#sC601116249CB5EDA8FF7F891F52B017E)] [added: [16](#s7822D04563FF5013A27E59982176E105)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s0F13F388E452516DB7FC8B9FDA07FDC0)] [added: Operations](#sCE6029C49E375C87A7AF3387162480F2)] | [removed: [17](#s0F13F388E452516DB7FC8B9FDA07FDC0)] [added: [22](#sCE6029C49E375C87A7AF3387162480F2)] |

| | | | |

| --- | --- | --- | --- |

| | | | |

| Cleveland, | Ohio | | 44115-1075 |

Yes ☒ No ☐

Yes ☒ No ☐

| --- | --- | --- | --- | --- |

| | | | | |

| | | | | |

Yes ☐ No ☒

THE SHERWIN-WILLIAMS COMPANY

| | [Information About Our Executive Officers](#s7B0B6FA7D8EE5EA986A5A8CD977D135D) | [12](#s7B0B6FA7D8EE5EA986A5A8CD977D135D) |

| [PART II](#sC055F433B744580CB1B1BEB81865ECD4) | | |

| [PART IV](#s50B94750AB345758972A1CA4ECB8664D) | | |

| | [Signatures](#sBBC91048FD4E5BE3ACA91178946195DD) | [94](#sBBC91048FD4E5BE3ACA91178946195DD) |

10-K 1 shw-12312018x10k.htm 10-K

| | | |

| --- | --- | --- |

None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

(Check one:)

Portions of our Proxy Statement for the 2019 Annual Meeting of Shareholders (“Proxy Statement”) to be filed with the Securities and Exchange Commission within 120 days of our fiscal year ended December 31, 2018 are incorporated by reference into Part III of this report.

| | [Executive Officers of the Registrant](#s472C4E38C49B57EEB4617834C614E9F5) | [14](#s472C4E38C49B57EEB4617834C614E9F5) |

| [PART II](#s11BD1096FC5E51FF866CE2D0F0D058FD) | | |

| [PART IV](#s4AFBD85184A359E08FB756F0EA9571E9) | | |

| | [Signatures](#s547255BD626E5DD695C7B4F83C8562EB) | [28](#s547255BD626E5DD695C7B4F83C8562EB) |

| Asia | | 1 | [removed: 6] [added: 5] | [removed: 7] [added: 6] | | 1 | 3 | 4 |

| Australia and New Zealand | | | [removed: 4] [added: 3] | [removed: 4] [added: 3] | | 1 | [removed: 5] [added: 4] | [removed: 6] [added: 5] |

| Canada | | [added: 1] | [removed: 3] [added: 2] | 3 | | 1 | | 1 |

| United States | | 5 | [removed: 27] [added: 29] | [removed: 32] [added: 34] | | 8 | 3 | 11 |

| Total | | [removed: 10] [added: 11] | [removed: 50] [added: 49] | 60 | | 17 | [removed: 20] [added: 19] | [removed: 37] [added: 36] |

| Europe | | [removed: 4] [added: 5] | [removed: 19] [added: 20] | [removed: 23] [added: 25] | | 5 | 13 | 18 |

| United States | | 1 | [removed: 12] [added: 9] | [removed: 13] [added: 10] | | 1 | [removed: 12] [added: 9] | [removed: 13] [added: 10] |

| Total | | [removed: 7] [added: 8] | [removed: 43] [added: 40] | [removed: 50] [added: 48] | | 9 | [removed: 37] [added: 34] | [removed: 46] [added: 43] |

The operations of The Americas Group included one manufacturing and distribution facility in Uruguay and [removed: 4,696] [added: 4,758] company-operated specialty paint stores, of which 217 were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. Lucia, Uruguay, Brazil, Chile, Peru, Mexico, Ecuador and Barbados at December 31, [removed: 2018.][added: 2019.]

At the end of [removed: 2018:][added: 2019:]

| • | the Mid Western Division operated [removed: 1,105] [added: 1,125] paint stores primarily located in the midwestern and upper west coast states; |

| • | the Eastern Division operated [removed: 868] [added: 879] paint stores along the upper east coast and New England states; |

| • | the Canada Division operated [removed: 241] [added: 248] paint stores throughout Canada; |

| • | the Southeastern Division operated [removed: 1,117] [added: 1,143] paint stores principally covering the lower east and gulf coast states, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. Lucia and Barbados; |

| • | the South Western Division operated [removed: 1,023] [added: 1,043] paint stores in the central plains and the lower west coast states; and |

| • | the Latin America Division operated [removed: 342] [added: 320] paint stores in Uruguay, Brazil, Chile, Peru, Mexico and Ecuador. |

During [removed: 2018,] [added: 2019,] The Americas Group opened [removed: 76] [added: 62] net new stores, consisting of [removed: 91] [added: 94] new stores opened [removed: (74] [added: (83] in the United States, [removed: 16] [added: 7] in Canada, and [removed: 1] [added: 4] in South America) and [removed: 15] [added: 32] stores closed [removed: (1] [added: (6] in the United States, [removed: 2 in Canada, 11] [added: 17] in South America and [removed: 1] [added: 9] in Mexico).

The Performance Coatings Group operated [removed: 223] [added: 221] branches in the United States, of which 8 were owned, at December 31, [removed: 2018.][added: 2019.]

The Performance Coatings Group also operated [removed: 59] [added: 60] branches internationally, of which 6 were owned, at December 31, [added: 2019, consisting of branches in Canada (21), Europe (16), Chile (11), Mexico (5), Peru (4) and Vietnam (3).]

During [removed: 2018,] [added: 2019,] this segment opened 3 new branches and closed [removed: 11] [added: 4] branches for a net decrease of [removed: (8) branches.][added: 1 branch.]

For additional information regarding real property leases, see Note [removed: 18 of the Notes] [added: 9] to [added: the] Consolidated Financial Statements [removed: on page 74 of our 2018 Annual Report, which is incorporated herein by reference.][added: in Item 8.]

| | | | | | | | | |

| Canada | | | 1 | 1 | | | | |

2018, consisting of branches in Canada (21), Europe (16), Chile (11), Mexico (4), Peru (4) and Vietnam (3).

The following is the name, age and present position of each of our executive officers and all persons chosen to become executive officers, as well as all prior positions held by each [added: person] during the last five years.

| John G. Morikis | [removed: 55] [added: 56] | [removed: Chairman, President] [added: Chairman] and Chief Executive Officer, Director |

| Allen J. Mistysyn | [removed: 50] [added: 51] | Senior Vice President - Finance and Chief Financial Officer |

| Jane M. Cronin | [removed: 51] [added: 52] | Senior Vice President - Corporate Controller |

| Mary L. Garceau | [removed: 46] [added: 47] | Senior Vice President, General Counsel and Secretary |

| Thomas P. Gilligan | [removed: 58] [added: 59] | Senior Vice President - Human Resources |

| [removed: Robert J. Wells] [added: James R. Jaye] | [removed: 61] [added: 53] | Senior Vice President - [added: Investor Relations and] Corporate Communications [removed: and Public Affairs] |

| Joel D. Baxter | [removed: 58] [added: 59] | President & General Manager, Global Supply Chain Division, Consumer Brands Group |

| Aaron M. Erter | [removed: 45] [added: 46] | President, [removed: Consumer Brands] [added: Performance Coatings] Group |

| Peter J. Ippolito | [removed: 54] [added: 55] | President, The Americas Group |

Mr. Morikis has served as Chairman since January 2017 and [removed: President and] Chief Executive Officer since January 2016.

Mr. Morikis served as President [added: from October 2006 to March 2019] and Chief Operating Officer from October 2006 to January 2016.

Mr. Mistysyn served as Senior Vice President - Finance from October 2016 to January [removed: 2017,] [added: 2017 and] Senior Vice President - Corporate Controller from October 2014 to October [removed: 2016, and Vice President - Corporate Controller from May 2010 to October 2014.][added: 2016.]

Mr. Gilligan served as Senior Vice President, Human Resources, The Americas Group from August 2014 to January [removed: 2016 and Senior Vice President, Human Resources, Paint Stores Group from July 2000 to August 2014.][added: 2016.]

Mr. [removed: Wells] [added: Jaye] has served as Senior Vice President - [added: Investor Relations and] Corporate Communications [removed: and Public Affairs] since [removed: February 2009.][added: June 2019.]

Mr. [removed: Wells] [added: Jaye] has been employed with the Company since [removed: May 1998.][added: October 2017.]

Mr. Baxter has served as President & General Manager, Global Supply Chain Division, Consumer Brands Group [removed: (f/k/a Consumer Group)] since September 2008.

Mr. Erter has served as President, [removed: Consumer Brands] [added: Performance Coatings] Group since [removed: August 2017.][added: March 2019.]

Mr. Erter served as [added: President, Consumer Brands Group from August 2017 to March 2019 and] President & General Manager, Consumer Division, Consumer Brands Group from June 2017 to August 2017.

Mr. [removed: Erter was named] [added: Sewell served as] President, Performance Coatings Group [removed: effective] [added: from August 2014 to] March [removed: 1,] 2019.

Mr. Sewell [removed: was named] [added: has served as] President and Chief Operating Officer [removed: of the Company effective] [added: since] March [removed: 1,] 2019.

[removed: PART II][added: PART II]

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| David B. Sewell | 51 | President and Chief Operating Officer |

Mr. Jaye served as Vice President - Investor Relations from October 2017 to June 2019.

Prior to joining the Company, Mr. Jaye served as Senior Director, Communications and Investor Relations at Nordson Corporation, manufacturer of dispensing products and systems, from October 2007 to October 2017.

EXECUTIVE OFFICERS OF THE REGISTRANT

| David B. Sewell | 50 | President, Performance Coatings Group |

| Robert F. Lynch | 58 | President & General Manager, Retail - North America, Consumer Brands Group |

Effective March 1, 2019, Mr. Morikis will serve as Chairman and Chief Executive Officer.

Prior to joining the Company, Ms. Garceau was General Counsel of Thirty-One Gifts LLC from August 2011 to February 2014.

Mr. Sewell has served as President, Performance Coatings Group (f/k/a Global Finishes Group) since August 2014.

Mr. Sewell served as President & General Manager, Product Finishes Division, Global Finishes Group from July 2012 to August 2014.

Mr. Lynch has served as President & General Manager, Retail - North America, Consumer Brands Group since August 2017.

Mr. Lynch served as Senior Vice President, Sales, Automotive Finishes Division, Global Finishes Group from August 2012 to July 2017.

Mr. Lynch has been employed with the Company since October 2000.

Mr. Lynch was named President, Consumer Brands Group effective March 1, 2019 and will become an executive officer at that time.

The number of shareholders of record at January 31, [removed: 2019] [added: 2020] was [removed: 6,219.][added: 5,656.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of [removed: 2018.][added: 2019.]

| Share repurchase program (1) | | [removed: 600,000] [added: 75,000] | | | $ | [removed: 408.30] [added: 569.25] | | | [removed: 600,000] [added: 75,000] | | | [removed: 10,125,000] [added: 8,475,000] | |

| Employee transactions (2) | | [removed: 38] [added: 759] | | | $ | [removed: 389.54] [added: 562.89] | | | | | | N/A | |

| (1) | All shares are purchased through the Company’s publicly announced share repurchase program. There is no expiration date specified for the program. The Company had remaining authorization at December 31, [removed: 2018] [added: 2019] to purchase [removed: 10,125,000] [added: 8,450,000] shares. |

| Share repurchase program (1) | | 250,000 | | | $ | 576.00 | | | 250,000 | | | 8,550,000 | |

| Employee transactions (2) | | 1,282 | | | $ | 593.83 | | | | | | N/A | |

| Share repurchase program (1) | | 25,000 | | | $ | 574.63 | | | 25,000 | | | 8,450,000 | |

| Employee transactions (2) | | 657 | | | $ | 577.32 | | | | | | N/A | |

| Share repurchase program (1) | | 350,000 | | | $ | 574.46 | | | 350,000 | | | 8,450,000 | |

| Employee transactions (2) | | 2,698 | | | $ | 581.11 | | | | | | N/A | |

Comparison of Cumulative Total Return

The following graph compares the cumulative total shareholder return on Sherwin-Williams common stock with the cumulative five-year total return of the companies listed on the Standard & Poor's 500 Stock Index and a peer group of companies selected on a line-of-business basis.

The cumulative five-year total return assumes $100 was invested on December 31, 2014 in Sherwin-Williams common stock, the S&P 500 and the peer group.

The cumulative five-year total return, including reinvestment of dividends, represents the cumulative value through December 31, 2019.


Peer group of companies comprised of the following: Akzo Nobel N.V., BASF SE, Genuine Parts Company, H.B. Fuller Company, The Home Depot, Inc., Lowe's Companies, Inc., Masco Corporation, Newell Brands Inc., PPG Industries, Inc., RPM International Inc., Stanley Black & Decker Inc. and USG Corporation (included through April 2019 when it was acquired by Gebr.

Knauf KG).

The performance graph set forth on page 16 of our 2018 Annual Report is incorporated herein by reference.

| | | | | | | | | | | | | | |

| Employee transactions (2) | | 181 | | | $ | 417.12 | | | | | | N/A | |

| Employee transactions (2) | | 130 | | | $ | 389.51 | | | | | | N/A | |

| Employee transactions (2) | | 349 | | | $ | 403.83 | | | | | | N/A | |

[removed: (millions] [added: | *(millions] of dollars, except per common share [removed: data)][added: data)* | 2019 | | | | 2018 | | | | 2017 (1) | | | | 2016 | | | | 2015 | | |]

| [removed: Operations | |] [added: Operations] | | | | | | | | | | | | | | | | | | | |

| Net income from continuing operations | [removed: | 1,109 | | | | 1,769 | | | | 1,133 | | | | 1,054 |] [added: $] | [added: 1,541.3] | | [removed: 866] | [added: $] | [added: 1,108.7] | |

| [removed: Financial Position | |] [added: Financial Position] | | | | | | | | | | | | | | | | | | | |

| [removed: Per Common] [added: Per] Share [removed: Data | |] [added: Information] | | | | | | | | | | | | | | | | | | | |

| Net income from continuing operations [removed: —] [added: -] diluted [removed: (2)] [added: (5)] | [added: 16.49] | [added: | | |] 11.67 | | | | 18.64 | | | | 11.99 | | | | 11.15 | | | [removed: | 8.77 | | | |]

| Cash dividends | [added: 4.52] | [added: | | |] 3.44 | | | | 3.40 | | | | 3.36 | | | | 2.68 | | | [removed: | 2.20 | | | |]

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Net sales | $ | 17,900.8 | | | $ | 17,534.5 | | | $ | 14,983.8 | | | $ | 11,855.6 | | | $ | 11,339.3 | |

| Cost of goods sold | 9,864.7 | | | | 10,115.9 | | | | 8,265.0 | | | | 5,934.3 | | | | 5,779.7 | | |

| Selling, general and administrative expenses | 5,274.9 | | | | 5,033.8 | | | | 4,797.6 | | | | 4,140.3 | | | | 3,885.7 | | |

| Amortization | 312.8 | | | | 318.1 | | | | 206.8 | | | | 25.4 | | | | 28.2 | | |

| Interest expense | 349.3 | | | | 366.7 | | | | 263.5 | | | | 154.1 | | | | 61.8 | | |

| Income from continuing operations before income taxes (2) | 1,981.8 | | | | 1,359.7 | | | | 1,469.3 | | | | 1,595.2 | | | | 1,549.0 | | |

| Net income from continuing operations (3) | 1,541.3 | | | | 1,108.7 | | | | 1,769.5 | | | | 1,132.7 | | | | 1,053.8 | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Accounts receivable - net | $ | 2,088.9 | | | $ | 2,018.8 | | | $ | 2,104.6 | | | $ | 1,231.0 | | | $ | 1,114.3 | |

| Inventories | 1,889.6 | | | | 1,815.3 | | | | 1,742.5 | | | | 1,068.3 | | | | 1,018.5 | | |

| Working capital - net | 109.8 | | | | 46.8 | | | | 419.8 | | | | 798.1 | | | | 515.2 | | |

| Property, plant and equipment - net | 1,835.2 | | | | 1,776.8 | | | | 1,877.1 | | | | 1,095.9 | | | | 1,041.8 | | |

| Total assets (4) | 20,496.2 | | | | 19,134.3 | | | | 19,899.5 | | | | 6,752.5 | | | | 5,778.9 | | |

| Long-term debt | 8,050.7 | | | | 8,708.1 | | | | 9,885.7 | | | | 1,211.3 | | | | 1,907.3 | | |

| Total debt | 8,685.2 | | | | 9,343.7 | | | | 10,520.6 | | | | 1,952.5 | | | | 1,950.0 | | |

| Shareholders’ equity | 4,123.3 | | | | 3,730.7 | | | | 3,647.9 | | | | 1,878.4 | | | | 867.7 | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Average shares outstanding - diluted (thousands) | 93,447 | | | | 94,988 | | | | 94,927 | | | | 94,488 | | | | 94,543 | | |

| Book value | $ | 44.75 | | | $ | 40.07 | | | $ | 38.86 | | | $ | 20.20 | | | $ | 9.41 | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| Financial Ratios | | | | | | | | | | | | | | |

| Return on sales | 8.6 | % | | 6.3 | % | | 11.8 | % | | 9.6 | % | | 9.3 | % |

| Asset turnover | 0.9 | x | | 0.9 | x | | 0.8 | x | | 1.8 | x | | 2.0 | x |

| Return on assets | 7.5 | % | | 5.8 | % | | 8.9 | % | | 16.8 | % | | 18.2 | % |

| Return on equity (6) | 41.3 | % | | 30.4 | % | | 94.2 | % | | 130.5 | % | | 105.8 | % |

| Dividend payout ratio (7) | 38.7 | % | | 18.5 | % | | 28.4 | % | | 30.1 | % | | 30.6 | % |

| Total debt to capitalization | 67.8 | % | | 71.5 | % | | 74.3 | % | | 51.0 | % | | 69.2 | % |

| Current ratio | 1.0 | | | 1.0 | | | 1.1 | | | 1.3 | | | 1.2 | |

| Interest coverage (8) | 6.7 | x | | 4.7 | x | | 6.6 | x | | 11.4 | x | | 26.1 | x |

| Net working capital to sales | 0.6 | % | | 0.3 | % | | 2.8 | % | | 6.7 | % | | 4.5 | % |

| Effective income tax rate (9) | 22.2 | % | | 18.5 | % | | 25.1 | % | | 29.0 | % | | 32.0 | % |

| | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | |

| Net sales | | $ | 17,534 | | | $ | 14,984 | | | $ | 11,856 | | | $ | 11,339 | | | $ | 11,130 | | |

| Total assets | | $ | 19,134 | | | $ | 19,900 | | | $ | 6,753 | | | $ | 5,779 | | | $ | 5,699 | | |

| Long-term debt | | 8,708 | | | | 9,886 | | | | 1,211 | | | | 1,907 | | | | 1,116 | | | |

| Ratio of earnings to fixed charges (1) | | 3.6x | | | | 4.5x | | | | 6.5x | | | | 9.1x | | | | 7.7x | | | |

| (1) | 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: |

| Income before income taxes | | $ | 1,360 | | | $ | 1,469 | | | $ | 1,595 | | | $ | 1,549 | | | $ | 1,258 | | |

| Fixed charges: | | | | | | | | | | | | | | | | | | | | | |

| Interest expense, net | | 367 | | | | 263 | | | | 154 | | | | 62 | | | | 64 | | | |

| Interest component of rent expense | | 165 | | | | 153 | | | | 138 | | | | 130 | | | | 125 | | | |

| Total fixed charges | | 532 | | | | 416 | | | | 292 | | | | 192 | | | | 189 | | | |

| Earnings | | $ | 1,892 | | | $ | 1,885 | | | $ | 1,887 | | | $ | 1,741 | | | $ | 1,447 | | |

| (2) | Presented under the treasury stock method. |

| | |

| --- | --- |

| | |

| Index to Consolidated Financial Statements | |

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| | Page |

| Report of Management on Internal Control Over Financial Reporting | [36](#s6CD7C44CE0ED52ED9A04D3F16C1783EC) |

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| Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | [37](#sC7406C8D23265740AE72E998942A28E7) |

| | |

| Report of Management on the Consolidated Financial Statements | [38](#s8798045316315BA6805E7D2544008920) |

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| Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements | [39](#s51B603F3F4725FA7BC36C2147EFC5702) |

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| Statements of Consolidated Income | [42](#s71BB6F918C9E5C11AEC13D6ADE6BAAC5) |

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| Statements of Consolidated Comprehensive Income | [43](#s02547CC647F45DD8B11CC7B93A27CCE4) |

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| Consolidated Balance Sheets | [44](#s891B70B785965A37B3E13DBC42E996D8) |

| | |

| Statements of Consolidated Cash Flows | [45](#s82654CF55F1253769E38AC80D53EA9CC) |

| | |

| Statements of Consolidated Shareholders' Equity | [46](#sECD942BEECAB564EBB830FBB201B0BE4) |

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| Notes to Consolidated Financial Statements | [47](#sFE22C8850DD75FA2B1C2DDE1449B5F15) |

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Report of Management

On Internal Control Over Financial Reporting

Shareholders of The Sherwin-Williams Company

We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

We recognize that internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.

Internal control over financial reporting is a process that involves human diligence and is subject to the possibility of human error or the circumvention or the overriding of internal control.

Therefore, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, we believe we have designed into the process safeguards to reduce, though not eliminate, this risk.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Information required by this item is set forth on pages 38 through 77 of our 2018 Annual Report under the captions “Report of Management on the Consolidated Financial Statements,” “Report of the Independent Registered Public Accounting Firm on the Consolidated Financial Statements,” “Statements of Consolidated Income and Comprehensive Income,” “Consolidated Balance Sheets,” “Statements of Consolidated Cash Flows,” “Statements of Consolidated Shareholders’ Equity,” and “Notes to Consolidated Financial Statements,” which is incorporated herein by reference.

Unaudited quarterly data is set forth in Note 17 of the Notes to Consolidated Financial Statements on page 74 of our 2018 Annual Report, which is incorporated herein by reference.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Based upon that evaluation, our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and accumulated and communicated to our management, including our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

The “Report of [added: Management on Internal Control over Financial Reporting” and] the [added: “Report of the] Independent Registered Public Accounting Firm on Internal Control over Financial Reporting” [removed: is] [added: are] set forth [removed: on page 37 of our 2018 Annual Report, which is incorporated herein by reference.][added: in Item 8.]

There were no [added: other] changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During 2019, the Company implemented technology, processes and controls related to the global recording of right-of-use assets and lease liabilities in connection with with the adoption of ASC 842, "Leases" as described in Notes 2 and 9 to the Consolidated Financial Statements in Item 8.

The “Report of Management on Internal Control over Financial Reporting” is set forth on page 36 of our 2018 Annual Report, which is incorporated herein by reference.

[removed: PART III][added: PART III]

The information regarding our directors and director nominees is set forth under the captions “Proposal 1 – Election of Directors” and [removed: “Experiences, Qualifications, Attributes and Skills of Director Nominees”] [added: "Director Compensation"] in our Proxy Statement, which is incorporated herein by reference.

There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors during [removed: 2018.][added: 2019.]

The information regarding our executive officers is set forth under the caption [removed: “Executive Officers of the Registrant”] [added: “Information About Our Executive Officers”] in Part I of this report, which is incorporated herein by reference.

[removed: The information regarding compliance with] [added: To the extent disclosure of any delinquent form under] Section [removed: 16] [added: 16(a)] of the Securities Exchange Act of 1934 is [added: made by the Company, such disclosure will be] set forth under the caption [removed: “Section] [added: “Delinquent Section] 16(a) [removed: Beneficial Ownership Reporting Compliance”] [added: Reports”] in our Proxy Statement, which is incorporated herein by reference.

We have adopted a Code of Conduct, which applies to all [removed: directors, officers] [added: directors] and [removed: employees] [added: employees, including our executive officers,] of Sherwin-Williams and our subsidiaries wherever located.

Our Code of Conduct and Code of Ethics for Senior Financial Management are available [removed: in the “Corporate Governance” section] on [removed: the “Investor Relations” page of] our [removed: website at www.sherwin.com.][added: Investor Relations website, investors.sherwin-williams.com.]

We intend to disclose on our [removed: website at www.sherwin.com] [added: Investor Relations website, investors.sherwin-williams.com,] any amendment to, or waiver from, a provision of our Code of Conduct or Code of Ethics for Senior Financial Management that applies to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, and that is required to be publicly disclosed pursuant to the rules of the Securities and Exchange Commission.

The information required by this item is set forth under the captions [added: “2019 Director Compensation Table,” “Director Compensation Program,”] “Compensation Committee Report,” “Compensation Risk Assessment,” [removed: “2018 Director Compensation Table”] [added: “Compensation Discussion] and [removed: “Director Compensation Program”] [added: Analysis” and “Executive Compensation”] in our Proxy Statement, [removed: and under the "Executive Compensation" section of our Proxy Statement commencing with the information under the caption “Compensation Discussion and Analysis (CD&A)” and continuing through the information under the caption “2018 CEO Pay Ratio,”] which is incorporated herein by reference.

[removed: PART IV][added: PART IV]

Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] is set forth below.

[removed: Valuation] [added: Valuation] and Qualifying Accounts and [removed: Reserves][added: Reserves]

[removed: (Schedule II)][added: (Schedule II)]

| [removed: (thousands] [added: (millions] of dollars) | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Uncollectible accounts written off, net of recoveries | [removed: (45,354] [added: (62.5] | | [removed: )] [added: )] | | [removed: (30,169] [added: (45.3] | | ) | | [removed: (38,839] [added: (30.2] | | ) |

(1) Additions (deductions) did not have a material impact on the Income Statement in [removed: 2018, 2017] [added: 2019, 2018] or [removed: 2016.][added: 2017.]

| 2. | [removed: *(a)] | [Agreement and Plan of Merger, among the Company, Viking Merger Sub, Inc., and The Valspar Corporation, dated as of March 19, 2016, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 19, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516511340/d152999dex21.htm) |

| | (b) | [Regulations of the Company, as amended and restated October 17, 2018, filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 17, 2018, and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/89800/000095012311038503/l42478exv3.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312518301088/d628968dex31.htm)] |

| [removed: 4.] | [removed: (a)] [added: (b)] | [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.](http://www.sec.gov/Archives/edgar/data/89800/0000950152-96-000590.txt) |

| | [removed: (b)] [added: (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.](http://www.sec.gov/Archives/edgar/data/89800/000119312512494770/d449466dex41.htm) |

| | [removed: (c)] [added: (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.](http://www.sec.gov/Archives/edgar/data/89800/000119312512494770/d449466dex42.htm) |

| | [removed: (d)] [added: (e)] | [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.](http://www.sec.gov/Archives/edgar/data/89800/000119312515272190/d15074dex41.htm) |

| | [removed: (e)] [added: (f)] | [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.](http://www.sec.gov/Archives/edgar/data/89800/000119312515272190/d15074dex42.htm) |

| | [removed: (f)] [added: (g)] | [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.](http://www.sec.gov/Archives/edgar/data/89800/000119312515272190/d15074dex43.htm) |

| | [removed: (g)] [added: (h)] | [Third Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated May 16, 2017 (including Form of Note), filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated May 16, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517171590/d362611dex41.htm) |

| | [removed: (h)] [added: (i)] | [Fourth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated May 16, 2017 (including Form of Note), filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated May 16, 2017, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/89800/000119312517171590/d362611dex42.htm). |

| | [removed: (i)] [added: (j)] | [Fifth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated May 16, 2017 (including Form of Note), filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated May 16, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517171590/d362611dex43.htm) |

| | [removed: (j)] [added: (k)] | [Sixth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated May 16, 2017 (including Form of Note), filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K dated May 16, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517171590/d362611dex44.htm) |

| | [removed: (k)] [added: (l)] | [Seventh Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated May 16, 2017 (including Form of Note), filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K dated May 16, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517171590/d362611dex45.htm) |

| | [removed: (l)] [added: (m)] | [Eighth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated June 2, 2017 (including Form of Note), filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated June 2, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex41.htm) |

| | [removed: (m)] [added: (n)] | [Ninth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated June 2, 2017 (including Form of Note), filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated June 2, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex42.htm) |

| | [removed: (n)] [added: (o)] | [Tenth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated June 2, 2017 (including Form of Note), filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated June 2, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex43.htm) |

| | [removed: (o)] [added: (p)] | [Eleventh Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated June 2, 2017 (including Form of Note), filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K dated June 2, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex44.htm) |

| | [removed: (p)] [added: (q)] | [Twelfth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated June 2, 2017 (including Form of Note), filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K dated June 2, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex45.htm) |

| | [removed: (q)] [added: (ll)] | [removed: [Registration Rights] [added: [Continuing] Agreement [removed: by and among the Company, as issuer, and each] [added: for Standby Letters] of [removed: Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, as dealer managers,] [added: Credit,] dated as of [removed: June 2,] [added: September 11,] 2017, [added: by and among the Company and Goldman Sachs Bank USA,] filed as Exhibit [removed: 10.1] [added: 4.2] to the Company’s Current Report on Form 8-K dated [removed: June 2,] [added: September 11,] 2017, and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517193730/d403014dex101.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517281687/d427415dex42.htm)] |

| | [removed: (r)] [added: (t)] | [Credit Agreement, dated as of July 19, 2018, 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, the issuing lenders party thereto and Citibank, N.A., as administrative agent, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 19, 2018, and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312515256549/d58960dex41.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312518221881/d550417dex41.htm)] |

| | [removed: (s)] [added: (v)] | [Credit Agreement, dated as of May 9, 2016, 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 May 9, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516583086/d193656dex41.htm) |

| | [removed: (t)] [added: (w)] | [Agreement for Letter of Credit, dated as of May 9, 2016, 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 May 9, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516583086/d193656dex42.htm) |

| | [removed: (u)] [added: (x)] | [Amendment No. 1 to the Credit Agreement, dated as of May 12, 2016, 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 May 12, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516588294/d165099dex41.htm) |

| | [removed: (v)] [added: (y)] | [Amendment No. 2 to the Credit Agreement, dated as of June 20, 2016, 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 June 20, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516625987/d176864dex41.htm) |

| | [removed: (w)] [added: (z)] | [Amendment No. 3 to the Credit Agreement, dated as of August 1, 2016, 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 August 1, 2016, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312516665989/d233122dex41.htm) |

| | [removed: (x)] [added: (aa)] | [Amendment No. 4 to the Credit Agreement, dated as of January 31, 2017, 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 January 31, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517025101/d278235dex41.htm) |

| | [removed: (y)] [added: (bb)] | [Amendment No. 5 to the Credit Agreement, dated as of February 13, 2017, 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 February 13, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517039530/d266583dex41.htm) |

| | [removed: (z)] [added: (cc)] | [Amendment No. 6 to the Credit Agreement, dated as of February 27, 2017, 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 February 27, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517057833/d348558dex41.htm) |

| | [removed: (aa)] [added: (dd)] | [Amendment No. 7 to the Credit Agreement, dated as of May 8, 2017, 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 May 8, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517162069/d360190dex41.htm) |

| | [removed: (bb)] [added: (ee)] | [Amendment No. 8 to the Credit Agreement, dated as of May 11, 2017, 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 May 11, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517166751/d357103dex41.htm) |

| | [removed: (cc)] [added: (ff)] | [Amendment No. 9 to the Credit Agreement, dated as of February 27, 2018, 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 February 27, 2018, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312518059964/d514833dex41.htm) |

| | [removed: (dd)] [added: (gg)] | [Amendment No. 10 to the Credit Agreement, dated as of July 26, 2018, 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 July 26, 2018, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312518227030/d569324dex41.htm) |

| | [removed: (ee)] [added: (hh)] | [Amendment No. 1 to the Agreement for Letter of Credit, dated as of July 26, 2018, by and between the Company and Citibank, N.A., filed as Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000008980018000017/shw-2018930x10qxexh44.htm) |

| | [removed: (ff)] [added: (ii)] | [Assignable Loan Agreement, dated as of August 17, 2017, relating to a Floating Rate Loan by and among Sherwin-Williams Coatings S.à r.l., as Borrower, the Company, as Guarantor, and Citibank Europe plc, UK Branch, as Lender, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated August 17, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517265673/d360472dex41.htm) |

| | Page Number in Form 10-K |

| Statements of Consolidated Income | [42](#s71BB6F918C9E5C11AEC13D6ADE6BAAC5) |

| Statements of Consolidated Comprehensive Income | [43](#s02547CC647F45DD8B11CC7B93A27CCE4) |

| Consolidated Balance Sheets | [44](#s891B70B785965A37B3E13DBC42E996D8) |

| Statements of Consolidated Cash Flows | [45](#s82654CF55F1253769E38AC80D53EA9CC) |

| Statements of Consolidated Shareholders' Equity | [46](#sECD942BEECAB564EBB830FBB201B0BE4) |

| Notes to Consolidated Financial Statements | [47](#sFE22C8850DD75FA2B1C2DDE1449B5F15) |

| Beginning balance | $ | 45.9 | | | $ | 53.0 | | | $ | 40.5 | |

| Bad debt expense | 53.1 | | | | 38.2 | | | | 42.7 | | |

| Ending balance | $ | 36.5 | | | $ | 45.9 | | | $ | 53.0 | |

| (millions of dollars) | 2019 | | | | 2018 | | | | 2017 | | |

| Beginning balance | $ | 73.5 | | | $ | 44.1 | | | $ | 17.3 | |

| Additions (deductions) (1) | 7.4 | | | | 10.6 | | | | (0.5 | | ) |

| Acquired balances | 3.7 | | | | 18.8 | | | | 27.3 | | |

| Ending balance | $ | 84.6 | | | $ | 73.5 | | | $ | 44.1 | |

| 4. | (a) | [Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980020000005/shw-12312019xex4a.htm) |

| | (r) | [Thirteenth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, astrustee, dated August 26, 2019 (including Form of Note), filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated August 26, 2019, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312519228827/d793881dex41.htm) |

| | (s) | [Fourteenth Supplemental Indenture by and between the Company and Wells Fargo Bank, National Association, as trustee, dated August 26, 2019 (including Form of Note), filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated August 26, 2019, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312519228827/d793881dex42.htm) |

| | (u) | [Amendment No. 1 to Credit Agreement, dated as of October 8, 2019, 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, the issuing lenders party thereto and Citibank, N.A. as administrative agent, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated October 11, 2019, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312519266472/d816843dex41.htm) |

| 101.INS | | Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |

| 104 | | The cover page from this Annual Report on Form 10-K for the fiscal year ended December 31, 2019, formatted in Inline XBRL and contained in Exhibit 101. |

| | |

| --- | --- |

The following consolidated financial statements of the Company included in our 2018 Annual Report are incorporated by reference in Item 8.

| (i) | Report of Management on the Consolidated Financial Statements (page 38 of our 2018 Annual Report); |

| (ii) | Report of the Independent Registered Public Accounting Firm on the Consolidated Financial Statements (page 39 of our 2018 Annual Report); |

| (iii) | Statements of Consolidated Income and Comprehensive Income for the years ended December 31, 2018, 2017 and 2016 (page 40 and 41 of our 2018 Annual Report); |

| (iv) | Consolidated Balance Sheets at December 31, 2018, 2017 and 2016 (page 42 of our 2018 Annual Report); |

| (v) | Statements of Consolidated Cash Flows for the years ended December 31, 2018, 2017 and 2016 (page 43 of our 2018 Annual Report); |

| (vi) | Statements of Consolidated Shareholders’ Equity for the years ended December 31, 2018, 2017 and 2016 (page 44 of our 2018 Annual Report); and |

| (vii) | Notes to Consolidated Financial Statements for the years ended December 31, 2018, 2017 and 2016 (pages 45 through 77 of our 2018 Annual Report). |

| Beginning balance | $ | 52,997 | | | $ | 40,450 | | | $ | 49,420 | |

| Bad debt expense | 38,240 | | | | 42,716 | | | | 29,869 | | |

| Ending balance | $ | 45,883 | | | $ | 52,997 | | | $ | 40,450 | |

| Beginning balance | $ | 44,101 | | | $ | 17,292 | | | $ | 12,595 | |

| Additions (deductions) (1) | 10,660 | | | | (489 | | ) | | 4,697 | | |

| Acquired balances | 18,782 | | | | 27,298 | | | | — | | |

| Ending balance | $ | 73,543 | | | $ | 44,101 | | | $ | 17,292 | |

| | | |

| --- | --- | --- |

| | (e) | [Amended and Restated Employment Agreement between the Company and Aaron M. Erter, dated August 1, 2017 (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex10e.htm) |

| | (f) | [Amendment to the Amended and Restated Employment Agreement between the Company and Aaron M. Erter, dated February 13, 2019 (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex10f.htm) |

| | (aa) | [Form of Restricted Stock Units Award Agreement under The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex10aa.htm) |

| | (dd) | [The Sherwin-Williams Company 2007 Executive Annual Performance Bonus Plan (Amended and Restated as of April 19, 2017) filed as Exhibit 10(w) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000008980018000004/shw-12312017xex10w.htm) |

| | (ee) | [The Valspar Corporation Amended and Restated 2015 Omnibus Equity Plan filed as Exhibit 4(c) to Form S-8 Registration Statement Number 333-218406 dated June 1, 2017, and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/89800/000119312517190577/d374522dex4c.htm) |

| | (ff) | [The Sherwin-Williams Company Key Employee Separation Plan As Amended and Restated Effective March 1, 2019 (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex10ff.htm) |

| 13. | | [Our 2018 Annual Report, portions of which are incorporated herein by reference (filed herewith). With the exception of those portions of our 2018 Annual Report that are specifically incorporated by reference in this report, our 2018 Annual Report shall not be deemed “filed” as part of this report.](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex13.htm) |

| 23. | | [Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).](https://www.sec.gov/Archives/edgar/data/89800/000008980019000004/shw-12312018xex23.htm) |

| 101.INS | | XBRL Instance Document |

[removed: SIGNATURES][added: SIGNATURES]

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February [removed: 22, 2019.][added: 21, 2020.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February [removed: 22, 2019.][added: 21, 2020.]

| * JOHN G. MORIKIS | | [removed: Chairman, President] [added: Chairman] and Chief Executive Officer, Director (Principal Executive Officer) |

| By: | /S/ | MARY L. GARCEAU | | February [removed: 22, 2019] [added: 21, 2020] |

| * KERRII B. ANDERSON | | Director |

| Kerrii B. Anderson | | |

| * JEFF M. FETTIG | | Director |

| Jeff M. Fettig | | |

| * JOHN M. STROPKI | | Director |

| John M. Stropki | | |