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## THE SHERWIN-WILLIAMS COMPANY HAD ANOTHER SUCCESSFUL YEAR IN 2004, ACHIEVING DOUBLE-DIGIT GROWTH IN REVENUE AND VOLUME AND SURPASSING $6 BILLION IN SALES FOR THE FIRST TIME IN COMPANY HISTORY. 

Consolidated net income rose to $393.3 million, rep- resenting an increase of 18.4 percent over the previous year. Diluted net income per common share increased more than 20 percent to a record $2.72 per share. 

We generated nearly $545 million in net operating cash, which enabled us to complete three strategically important acquisitions, pay record dividends of $0.68 per share, invest $106.8 million in capital expenditures and repurchase over six-and-a-half million shares of our stock. Total annual return to our shareholders in 2004, assuming dividend reinvestment, was 30.4 percent. 

Last year marked our 26th consecutive year of dividend increases. On February 2, 2005 we declared a 20 percent increase in our quarterly dividend from $0.17 per common share to $0.205 per common share, 

payable on March 14, 2005 to shareholders of record on February 28, 2005. This represents the first step toward our 27th consecutive year of increased dividends. 

These results are particularly gratifying in light of the stiff headwind we faced from rapidly rising raw material costs. In 2004, annualized year-over-year raw material costs for the industry increased more dramatically than any time in the last decade. This environment has put pressure on our consolidated gross margin, and we anticipate this pressure will continue in the foreseeable future. We will be diligent in our efforts to offset raw material cost increases through manufacturing efficiencies, higher fixed cost absorption, alternative technologies, tight expense control and measured price increases. 

