shw final_transcript_3_24_08

FINAL TRANSCRIPT

SHW - The Sherwin-Williams Company Updates 2008 Sales and
Earnings Expectations
Event Date/Time: Mar. 24. 2008 / 11:00AM ET

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Mar. 24. 2008 / 11:00AM, SHW - The Sherwin-Williams Company Updates 2008 Sales and Earnings Expectations

CORPORATE PARTICIPANTS
Chris Connor
Sherwin-Williams - Chairman, CEO
Sean Hennessy
Sherwin-Williams - SVP, CFO
John Ault
Sherwin-Williams - VP, Corporate Controller
Bob Wells
Sherwin-Williams - VP, Corporate Communications

CONFERENCE CALL PARTICIPANTS
Silke Kueck-Valdes
JPMorgan Chase - Analyst
Chuck Cerankosky
FTN Midwest Research - Analyst
Dennis McGill
Zelman & Assoc. - Analyst
Saul Ludwig
KeyBanc Capital Markets - Analyst
Bob Koort
Goldman Sachs - Analyst
Robert Felice
Gabelli & Co. - Analyst
P.J. Juvekar
Citigroup - Analyst
Gregg Goodnight
UBS - Analyst
Robert Reitzes
Bear Stearns - Analyst
Rajul Aggarwal
Marathon Asset Management - Analyst
Eric Bosshard
Cleveland Research Company - Analyst
John Roberts
Buckingham Research Group - Analyst
Mahil Klavel
Silicon Capital - Analyst
Alexander Mitchell
Scopus Asset Management - Analyst

PRESENTATION
Operator

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Good morning. Thank you for joining us this morning for Sherwin-Williams Company's updated Sales and Earnings expectations
for the first quarter and full year 2008.

This conference call is being webcast simultaneous in listen-only mode by V-call via the Internet at www.Sherwin.com. An
archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference
call concludes, and will be available until Friday, April 11th, 2008, at 5 p.m. Eastern Standard time.

This conference call will include certain forward-looking statements as defined under U.S. Federal Securities laws, with respect
to sales, earnings, and other matters. Any forward-looking statements speaks only as of the date on which such statement is
made. And the Company undertakes no obligate to update or revise any forward-looking statement, whether as a result of new
information, future events, or otherwise. A full declaration regarding forward-looking statements is provided in the Company's
earnings earnings release transmitted earlier this morning.

After the review of the Company's updated sales and earnings expectations, we will open the session for questions. I will now
turn the call over to Chris Connor, Sherwin-Williams' Chairman and CEO. Thank you, Mr. Connor, you may begin.

Chris Connor - Sherwin-Williams - Chairman, CEO
Thanks, Anthony. Good morning everyone. Joining me this morning on the call are Sean Hennessy, our CFO, John Ault, our Vice
President, Corporate Comptroller, and Bob Wells, our Vice President of Corporate Communications.

Today we are updating our sales and EPS expectations for the first quarter and full year 2008 that we previously announced on
January 29th of this year. For the first quarter we now expect consolidated net sales to increase in the low single-digit percentage
range over the first quarter of 2007. Our previous expectation had been for a low to mid single-digit percentage increase.

We expect diluted net income per common share for the quarter to be in the range of $0.56 to $0.61 per share, compared to
the $0.72 to $0.80 per share guidance we provided in January. As a reminder, the Company reported $0.83 per share in the first
quarter of 2007. The lower anticipated earnings per share is due primarily to the negative impact on first quarter operations of
lower domestic sales, and the timing and severity of raw material cost increases.

For the full year 2008, we are reaffirming our prior consolidated net sales expectation of low-to-mid single digit percentage
increase over 2007. We anticipate diluted net income per common share for 2008 will be in the range of $4.70 to $4.85 per
share. The earnings per share guidance we provided in January for 2008 was in the range of $5.00 to $5.15 per share. The
Company reported diluted net income per common share of $4.70 for the full year 2007.

Our lower expectation of diluted net income per common share for the full year 2008 relates primarily to the first quarter
shortfall, and the expected continuation of the sluggish U.S. economy and housing market, that will be partly offset by improved
international operations.

We are disappointed that today's news ends a consistent track record of meeting or exceeding quarterly earnings guidance
through some very difficult market conditions over the past several years. The length and severity of the housing market decline
has caused a business and segment mix change that is contributing to this earnings shortfall.

For example, our comp store performance for our paint store segment will likely finish down mid-single digits for the first
quarter, while our global segment is expected to report sales percentage gains in the mid-to-high teens. This mix change
towards our lower operating margin business, coupled with increasing raw material input costs, will likely result in a reduction
in our margin performance.


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Appropriately the Company is well into the execution of a number of contingency programs to adjust to the current market
environment. We are well underway in implementing selective expense and headcount reductions in our plants, distribution
centers, and paint stores.

These actions are in keeping with our discipline of prudent SG&A management, and will begin to have an impact in the coming
quarters. While we intend to continue our aggressive new store opening program, we will accelerate our plans to close redundant
store locations from recent acquisitions. This combined activity of openings and closings should give us an additional 40 to 50
net additional stores by the end of 2008, down from our previous guidance of approximately 100 net new stores.

We are confident that our cash generation remains on-track, and should once again be in the rate of 10% to sales, as it has been
for the past several years. We intend to use our cash consistent with our past practices to continue to create shareholder value.

Looking forward, domestic market conditions remain very challenging with no apparent end in sight. While we can't control
or predict when the cycle will change course, we will continue to focus our efforts on strengthening the Company, in preparation
for the eventual rebound, and importantly, remain committed to generating an improved earnings per share performance year
in 2008.

With these brief introductory comments behind us, we now welcome your questions.

QUESTIONS AND ANSWERS
Operator
Thank you. (OPERATOR INSTRUCTIONS)

Our first question comes from the line of Jeff Zekauskas, JP Morgan Chase.

Silke Kueck-Valdes - JPMorgan Chase - Analyst
Good morning, this is Silke Kueck-Valdes for Jeff.

Good morning, Silke.

Good morning. Can you talk about the source of the demand shortfall, what is weather related, and what is absolutely lower
demand that you're experiencing?

Silke, I would tell you that we are not crediting any of this shortfall to weather. And while we have come through the first quarter
which is typically our most aggressive weather quarter, it has been consistent weather patterns as we have seen in past years.
So our guidance here is 100% related to the softness in the market.


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As we gave a brief comment on the call, our stores are really feeling the brunt of this, and particularly in the area of those sales
that we have to the new housing market, our DIY segment is down as well, and for the first time in quite some period of time,
our residential [residing] is flat to slightly down. That is the market where paint for contractors to homes that have been recently
sold or purchased is also indicated, and we are seeing a slowdown in the existing home turnover, and we are feeling that through
that store segment as well, too. So those are the three areas that we are feeling the pressure right now.

If I can ask a question on raw materials, which raw materials are opposite, is it solvent based, is it acrylic, is it TI02? Can you just
comment about it?

Certainly the oil derivative and natural gas derivative raws are the ones that are having the biggest impact on us now. We have
seen oil go from $75 a barrel in the second half of last year, up towards $90 a barrel in the fourth quarter, and last week up at a
$111 spike. So those derivative products have certainly been impacted. Those pricing increases have come quicker than we
anticipated.

So that is mostly solvent based then?

There are a lot of derivative that come off of that, fuel costs for our Company, et cetera. And on the natural gas where a lot of
the ethylene and propylene costs are driven, which impact our packaging, and other chemicals monomers, et cetera, that is
also spiking as well, too. So pretty much across the board with all of the solvent based backdrop raws, we are seeing an increase.

Thanks so much. I will get back into queue.

Operator
Our next question comes from the line of Chuck Cerankosky, FTN Midwest. Please proceed with your question.

Chuck Cerankosky - FTN Midwest Research - Analyst
Good morning everyone. We are looking at some of the other aspects of the business, can you talk about what you are seeing
in industrial maintenance, OEM coatings demand, and also maybe talk specifically about the consumer segment, and how that
is faring in the current environment, please?

Sure Chuck, I would be happy to. I think starting with the commercial and industrial segments, our commercial business remains
positive through our stores. I think in the fourth quarter and year end call, we gave guidance that we had seen those commercial


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markets performing probably in the mid-to-high single digits in 2007, and '06, our expectations were that in '08, they would be
positive, but more in the low-to-mid single digit range. And that is proving to be the case.

So while we are still seeing some growth there, it is just certainly is slower than it had been in the past. And that would be true
for our industrial maintenance and protective coatings businesses as well. Still positive, but not as robust as they had been. Our
consumer segment, I think our guidance for the year is going to be that that segment is going to come in flat year-over-year,
and it is trending right at that line as we speak.

Just to go back to commercial how would you compare new commercial coatings demand with commercial architectural
repaint?

New commercial coatings demand is going to be positive, we think, for the year, in that low-to-mid single-digit range. Residential
repaint for the segment?

I meant commercial repaint.

Commercial repaint versus new construction. I don't have that, Chuck. My guess is those will both be very comparable in that
low-to-mid single digits, probably.

All right. Thank you.

Operator
Our next question comes from the line of Dennis McGill with Zelman and Associates. Please proceed with your question.

Dennis McGill - Zelman & Assoc. - Analyst
Good morning, guys, thanks for the quick call. Just quickly on the guidance for the year, I realize this is difficult, but can you put
some parameters around how much of the reduction in guidance would be materials related, how much of it is top line, and
how much of it is the mix that you have talked about?

Sean Hennessy - Sherwin-Williams - SVP, CFO
I would tell you that if it is pretty tough, but I would tell you that the sales and the sales mix is probably 40 to 45% of that, and
then the remainder of the 50 to 55% is probably the raws, the margin and the SG&A.


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Okay. And second question, just having to do with price, if you could talk a little bit about within the comp store, how much of
that mid-single digits climb, what the split roughly would be volume and price, and maybe as you look out this year with material
costs going up, and demand going down, putting you on a tough position on increasing prices, anything that changes, relative
to what you guys have guided to, to start the year?

Fair question. As we we announced in the January call, we have announced price increases across all segments, in the range of
3.5 to 6.5%, and those price increases are going in and being implemented, pretty much on a historical pattern that we have
seen in the past years.

To that end, with our comp stores down in the mid-single digits, volume would be down slightly more than that, though some
price impact helping offset that, and all of the price impact has not been felt yet, as it will take us the remainder of six to nine
months to implement, and get this one in.

Going forward we would not be prepared to comment on any future pricing action the Company might take. We will continue
to monitor the raw material market and our results, and reserve the right to do that at a later time.

Just for the guidance for the year on the revenue line basically holding that flat, but I would suppose moving more towards the
lower end of the prior range, can you just walk through why that stays in the low-to-mid single-digit range, given the shortfall
you have seen, and then maybe your expectations for the year in some of the other sessions?

You bet, Dennis. As we normally do, we can kind of break down our expectations by segment for you. For the year we expect
our store segment, with sales flat to up slightly for the year. Consumer segment should report near flat sales, and global up in
the high-single digits.

And all those would include any currency or acquisition benefits, right.

Yes.

All right. Thanks again, guys.


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Operator
Our next question coming from the line of Saul Ludwig with KeyBanc.

Saul Ludwig - KeyBanc Capital Markets - Analyst
Good morning. On the administrative line, anything noteworthy that is there? What should we be thinking about first quarter
to first quarter year to year on administrative?

I think really there is nothing noteworthy. I think we got through a lot of those quarter by quarter changes last year. I would say
that we are going to be flat to up slightly for the quarter and for the year, Saul.

Okay. On the raw materials, when you gave your guidance on the 29th of January, by that time you would have locked in
certainly your contractual pricing for the first quarter, and you kind of knew what that was when you gave that guidance. Why
is there such a surprise on the raw material front, as regards to the first quarter, given the negotiations that you would have
had, long before you gave your guidance?

Yes, I think that is a fair question, Saul. When we gave guidance in the January call, that was really the work we had been doing
in the fourth quarter 2007, to get to our best guess at that point in time. I would remind you to your point about our contractual
agreements, while that is accurate for some of our raw material suppliers, not all of them are on a contractual basis. Some of
these raws that we purchase, we have to take sooner rather than later, per our contract agreement.

We are also buying a lot of these things just the cost of operating our business. Fuel costs happens to us pretty instantly, and
with a fleet of trucks delivering products to our stores, with responsibility for hauling these things around, we have taken that
impact directly. So some of them have come sooner than we expected. Some of the contracts had clauses in them that allowed
them to be reset if certain input costs for them had changed, and all of those things came to pass in the first quarter.

Given that the raw material acceleration is coming faster than you thought, why can't you be more aggressive with regard to
implementing your own prices, which is sort of totally within your control, why would you let the normal pattern if you will
continue, versus changing in-line with the changes that have occurred in raw materials?

We do have the ability to take those actions. We had announced pricing already for the first quarter, that we are implementing
as we speak. As I mentioned in the earlier call, I will continue to monitor our implementation of that, and make a determination
if additional pricing actions are necessary later in the year.


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You are also mentioned that you are going to do some consolidation of stores, and instead of having 100, you are going to have
40 or 50. As you close some of these redundant stores, does that result in any expenses that you are factoring into both the first
quarter or the year, that wasn't there before?

And, secondly, you had this dilution as a result of the Bruder acquisition in the third and fourth quarters of last year. What impact
is the Bruder acquisition having here in the first quarter, and is in-line with what you thought it would be, or is that also a part
of the revision in your estimates?

Let me take the question regarding the stores, and I will ask she wasn't to comment on the M.A. Bruder acquisition specifically.
Our intention to accelerate the closing of redundant store locations has not impacted the first quarter earnings performance.
And the costs that we will incur in closing them will be modest at best. We will perhaps pay some dead rent in some locations,
but for the most part these are locations that are coming up on lease. We have opportunities to consolidate them into nearby
stores. This will go both ways.

For example, We will close some Sherwin stores and move the business into the neighboring acquired store location, and vice
versa, depending on the power of the individual real estate. So none of the planned closings of those stores are included in this
first quarter. For that, I will turn it over to Sean to comment on the MAB acquisitions specifically.

When you take a look at the MAB acquisition in total, Saul, the back room synergies have come, and we have done very well.
Again, Chris just mentioned that we are looking at some of the store closings on the store side, and what that is going to do.
But MAB, just because of the cycle that we are in with the sales, does not hit every pro forma that we have had set. But in total
the back room synergies has been good.

The first quarter we will be dilutive in the MAB transaction because of their, they are in the north, and so basically they are going
to be dilutive in the first quarter, just like they were in the fourth. But we start to see in the second and third quarter. And again
as you point out in third quarter, we went against some good size expenses for MAB in those quarters, and we see that actually
in the third quarter we should have some kind of flow through compared to last year.

So this dilution that you are going to see in the first quarter, there is not a change in that as it impacted your change in guidance?

No, no.

And the bad debts that you took on with Bruder, are they now all cleaned out, so we are not going to see any unusual amount
of bad debts?


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Yes, and that is what the footnote was last year in the third quarter when we did those write-offs.

Great. Thank you very much.

Thanks, Saul.

Operator
Next question, Bob Koort, Goldman Sachs.

Bob Koort - Goldman Sachs - Analyst
Thank you, good morning. Could you guys talk a little bit, have you seen much regional disparity, or is it pretty much now, there
was for a while there it was, the coasts were suffering the most, is it pretty well across the country, or is there still greater pain
around the coasts?

In the new home construction market, we are still feeling primarily in the Sun coast market, a more aggressive decline, Florida,
the Carolinas, the southwestern part of the United States. But that has been joined now by, to your point, a much more consistent
softness in existing home turnover and other markets across the entire United States.

And, Chris, would you ever consider putting in some sort of indexed escalator into your price deck, so that you can go to your
customer base and say, it is not us, it is the raws, or does that then take away the opportunity if raw materials ever do fall, to
sort of get your pay back as your prices are a bit stickier?

We have not historically used that as a pricing mechanism, and I don't think there is any plan to switch to it.

And then last question, obviously the economy is weak that is causing credit issues for consumers, to what extent have you
seen any increased price elasticity, in other words, are consumers not buying as much paint because they have got other
problems, or is there at some point a price threshold where they will stop buying paint specifically?


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That is an interesting question. I don't have the answer to that. Through past cycles we have seen consumers willing to continue
to by quality products. We have not seen a significant mix change down to lower quality products in our group. So I would think
that that isn't at play here. I think it is just an overall softness and slow down in demand.

Perfect. Thank you.

Thanks, Bob.

Operator
Our next question comes from the line of Robert Felice with Gabelli and Company.

Robert Felice - Gabelli & Co. - Analyst
Most of my questions have been answered, just a couple more. If I look, you lowered your guidance by $0.30 for the year, and
the shortfall during the quarter is $0.16 to $0.24, which would suggest that as the year progresses you expect some of these
issues to taper off or be less of a headwind?

I guess I am wondering what your assumptions are for the rest of the year in terms of your price cost gap, how much you expect
raw material costs to rise, and then domestic demand, whether or not you expect that to improve a bit on a sequential basis as
the year progresses, or at least as we near the back half of the year?

You are correct, I mean when you take a look at the numerous questions I will try to grab as many as I can if I remember here.
When you asked about that price gap as Chris mentioned in the beginning, in the mid-December timeframe, in the first quarter
we have been implementing a 3.5 to 6.5% selling price increase across. If the past is any indication we will get 80 to 85% of that
throughout the year. We are less than that right now, but as time goes on, it usually takes us six to nine months to really get
most of that. So that is going to continue to help us.

When you take a look at the SG&A actions that we have taken, in the short term there won't be as much goodness from the
forecast, but by the third and fourth quarter, we see that also helping us. And so those are the types of transactions or actions
that we have taken that we think will help us, and will alleviate the negative debts that we have in the first quarter, to actually
be able to give you guidance in that $4.70 to $4.85 range.

And by the third and fourth quarter do you expect demand to pick up on a sequential basis?


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No, I think our forecasts here are based on the current market environment that we are seeing. I think in the comments we said
we don't see it ending any time soon. Our guidance is based on the actions we are taking to get the Company position to
generate the earnings guidance we have just given.

If I remember correctly on your fourth quarter call, you had expected raw material cost inflation for the year to be between 3
and 6%. Did you revise that at all?

Yes, we are revising that today. We now think given the current levels of raw inputs, that we expect to industry will take a 4 to
8%.

In terms of the first quarter, can you just comment as to how much costs were up year-over-year and how much pricing you
got?

It would be in that 3 to 6% range, towards the high-end. We have told that you we announced pricing in the 3.5 to 6.5% range,
and we are moving towards, as Sean said, about an 80% expected full pricing implementation, but that will take us probably
the better part, in to the third quarter to get it. We are right on-track with where we ought to be moving towards those goals.

So about 6% cost inflation in the first quarter, and pricing of maybe 2% or so out of that 3.5 to 6.5, is that fair?

You are not directionally far off.

Okay. Which would suggest to me, if your raw material costs are 50% of your COGS, then you are off on pricing by maybe 1%
to 1.5%?

That is not far off, either.


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Thanks for taking my call.

Thanks Rob.

Operator
Next question, P.J. Juvekar with Citigroup.

P.J. Juvekar - Citigroup - Analyst
Good morning.

Good morning.

Can you talk about pricing in the consumer segment division? You talked about your own stores, but what is going on in
consumer division?

Sure.

And is there, what is your intelligence about price increases at big boxes this year?

Consumer segment is included in our comments that across all segments we have instituted 3.5 to 6.5 price increases. Those
conversations have been presented and are taking place. And we expect all customers to eventually get in line. As we have
commented in the past, our larger retailing partners are more difficult pricing discussions for us to have, but I think given the
current market conditions and the support and the need for this, those activities are moving along at the appropriate pace.

So would you say, Chris, that discussions with the big boxes, pricing is probably less than 3.5 to 6.5 that you talked about?


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We wouldn't comment specifically on any one customer, or reaction or negotiations. I am only comfortable telling you that we
have taken pricing in the range of 3.5 to 6.5% to all customers, including the big boxes, and those conversations are ongoing.

Okay. Then secondly as your outlook changes, is there a change in the way you use your free cash flow this year?

No. I think that we are still out there looking at acquisitions. I think we announced Inchem. We also announced that we completed
a deal with Becker Powder earlier this year. And we are still going to be using it to increase shareholder value.

How actively are you looking at global acquisitions to globalize the business, which is today predominantly U.S. based?

Last year with the seven acquisitions we announced, four of them are outside of the United States, as Sean just mentioned the
two we have announced this year, one of them is located in Singapore. As we go forward, we will continue to look for those
opportunities outside of North America.

Thank you.

Thanks, P.J.

Operator
Our next question comes from the line of Gregg Goodnight with UBS. Please proceed with your question.

Gregg Goodnight - UBS - Analyst
Yes, a question for you. In terms of the same store paint segment revenue growth, you said down mid-single digits.

Correct.


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Including the uptick from M&A, what would you think the total revenue growth per paint store, is it going to breakeven, or be
slightly negative?

It is going to be very breakeven to slightly negative, right in that area.

Maybe down a couple percent even? Is that the first time that has ever happened?

No, it happened back in 2001 one quarter, there was quarter in 2001, and prior to that it has been a while, I can't.

I am talking for the entire year, has it ever happened for the entire year?

We are a 142-year old company, Gregg. I can't pull that year off the top of my head.

Okay. Very good. Commercial construction, would you comment on the direction you are seeing with respect to new commercial
construction?

We rely on McGraw Hills Dodge reports to comment on that, and I think in the fourth quarter when we were discussing this
with the investment community, we were relying on documents from them that talked about positive year-over-year new
construction. We have watched those reports wane, in terms of their confidence and robustness, and I think the guidance that
we are giving now, or expecting, is that is going to be up flat to low single digits, as compared to past practices where it was in
the mid-to-high single digits.

One clarification on your first question, our outlook for stores for the year is to be flat to up slightly, not down slightly, I thought
you meant the first quarter, Gregg.

Okay, and that is including perhaps the 50 store shutdown from your acquisitions?


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Yes, that would be consolidated revenue based on all the guidance and actions that we are taking this year.

Okay. Great. Thanks again.

Thanks, Gregg.

Operator
Our next question comes from the line of Robert Reitzes, Bear Stearns.

Robert Reitzes - Bear Stearns - Analyst
Just some quick questions, do you think you guys lost any market share in the first quarter, or is this generic for the whole
industry?

It is difficult to make that determination until we see some industry data. Anecdotally just talking with our folks we don't think
this is a market share decline, as much as it just entire sector softness.

The second question is you guys, it was asked a couple ways differently, on the industrial non-residential, was that also weak,
or weaker than you thought, in line with what you thought? I am just curious in your outlook if you have any visibility there?

I think we gave guidance that those numbers would be weaker than they have been historically, and the results were in-line
with our expectations.

Thanks.

Operator
Our next question comes from the line of Rajul Aggarwal, Marathon Asset Management.


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Rajul Aggarwal - Marathon Asset Management - Analyst
Hi, thanks for taking my questions. Two questions, one is in terms of the raw material cost inflation we are seeing, it is a first for
a lot of things. Just wanted to get your perspective, if you see another 10 to 20% move in oil uptick and gas uptick, where do
you see the biggest risk in the business, as far as volumes, margins.

Well, it is difficult to predict if that would happen. If it did happen, I think what you would see the risk to us would be in the raw
material input costs and impacting in our margins. Just since we have given guidance that the industry would take a 3 to 6%
price increase year over year, now we are adjusting that cost increase to be 4 to 8%. You can see the corresponding margin
impact that has had on our Company and probably some of our peers as well. So if it continues to go higher, we will feel that
in the margins and the pricing impact.

From what you are saying you don't see much being impacted from the demand side from these ever increasing raw material
costs?

We think the demand side is mostly driven by the housing environment. That is more of a financing issue. Where interest rates
are high, and there is significant inventory in the market, as opposed to any kind of pricing that is driving that.

Okay. The second question and maybe restating an older question, when you gave your last guidance you certain view of the
world as to how the first quarter will pan out and how the full year will pan out, and given where you are right now, you reduced
the first quarter guidance significantly, and I just, it seems like the if full year is primarily the first year, and first quarter impact
and driving the change for the rest of the quarters, I was wondering as to why you haven't changed your outlook for the rest
of the year, more so versus what you thought it would be when you gave the initial guidance?

When we see that $0.30 we think that is pretty dramatic, what we think is going to be down. On the sales side when we were,
we sit there and take a look at what we think by the different markets and so forth, and we have looked at, looking to the outside
we think that sales will not be the biggest impact. It will probably be the other factors. But we brought our sales down a little
bit for the year. But it is really the $0.30 that, taking it from $4.70 to $4.85, from the $5.00 to $5.15.

I understand what you are saying. Maybe I didn't say it right, where I was coming from was after the $0.30, $0.20 seems to be
coming from the first quarter itself?


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We definitely see that most of the pain we were going to take this year was in the first quarter, and I think as we reviewed with
the investment community on this call this morning, the action steps that management has taken, and our confidence that
those steps are going to have an impact on the results for the remainder of the year, gives us the confidence to give the guidance
we just have.

Thank you.

Thank you.

Operator
Our next question comes from the line of Eric Bosshard with Cleveland Research Company.

Eric Bosshard - Cleveland Research Company - Analyst
Good morning. Chris, the comment you just made with the steps you are taking to mitigate what is going on is why Q2 to 4Q
gets better, I would assume that the price increase is much more important than the SG&A, but can you characterize the relative
importance of those two factors, in terms of improving the results as we work through the year?

Eric, I would say that I wouldn't agree with you. I think the SG&A reductions are as important this year as pricing. In past years
we have gone through this cycle, and we have put a lot more emphasis on price, and why that is as important as it has been
historically. This year we are putting much more emphasis on getting these SG&A reductions to get them in-line with what our
revenues are going to be. So there is a lot of effort and energy right now in the Company getting those costs out, and aligned
appropriately with the expectations we have for the rest of the year.

The big piece, are there any big pieces or buckets within the SG&A reduction that you can highlight?

No, I don't think so. There shouldn't be. If the Company is appropriately managed, we shouldn't have huge opportunities to lop
off bodies, and that is the case here. This is happening store by store, factory by factory, distribution center by distribution
throughout our corporate headquarters here, flattening out our organization, just appropriately reducing headcount wherever
we can.


FINAL TRANSCRIPT

In terms of the opens, I understand where the net goes, but in terms of the gross opens, what has changed in that area in terms
of how many stores you are going to open?

Not a lot. As we have commented in the past, this process of negotiating and selecting outstanding retail locations, is an activity
that happens well in front of the store actually opening. So as we enter into this year, we have probably 60 to 70 of those 100
net new locations kind of in the bag already. We will slow that down a little bit, and probably maybe net new get another 10
or 20, on top of the 60 we entered the year with.

But as we speak we are working on store locations that we intend to open in 2009. So the pace is continuing a little bit slower
on the total openings, and the net to your point, down to that 40 to 50 range.

And lastly, Sean, can you give us any sense on the gross margin for the year? I guess and quickly going through my numbers
maybe it looks like the full year gross margin ends up down a 0.5 point, or a bit more than that with the first quarter down 1.5
points, can you give us any guidance on the gross margin?

I would tell you that we really wanted to avoid going through the full model, and talking about margin, and the SG&A, and so
forth. But I wouldn't have a big argument with the numbers that you just quoted.

And then as you think about '09 which is a ways away, is this, historically we have seen some type of multi-year step downs in
gross margin, is it something that is more likely focused as '08 and then you could stop the gross margin decline and start to
recapture this in '09, is there anything from a big picture standpoint that you could comment on that?

I could tell you it's really going to come down to the raws and we will probably have a better idea of what we think raws will be
in 2009 in another two quarters or so. But right now our thoughts would be that it would be able to maintain our margins in
'09.

Thank you.

Operator
Our next question comes from the line of John Roberts from Buckingham Research. Please proceed with your question.


FINAL TRANSCRIPT

John Roberts - Buckingham Research Group - Analyst
Good morning, guys.

Good morning, John.

Would you characterize this as bad as the period right after 9/11? That was the last really weak period I think you referred to in
an earlier response.

It is interesting. It is very different from that period, too. That was much more of a corporate driven decline where corporate
profits were down. We saw very little spending on infrastructure.

Our industrial maintenance businesses were down significantly. This one is much broader because it is a housing market which
impacts literally every little town in America. So from a steepness, yes, but from a flavor, very different.

Secondly the big box retailers sometimes can move their inventories around a lot. It doesn't sound like an inventory reduction
at your consumer segment is an issue here.

That is correct.

Lastly, are you facing down pricing in any markets?

As we have commented in the past particularly through our stores organization, when we are bidding on larger jobs, and in a
period of low demand, sometimes pricing will be lower year-over-year we have always experienced that. We are experiencing
some of that as we speak. But for the most part as we have commented, these price increases are going in, and we do expect
that on average we will have higher selling prices this year.

Thank you.


FINAL TRANSCRIPT

Thanks, John.

Operator
Our next question comes from the line of [Mahil Klavel with Silicon Capital].

Mahil Klavel - Silicon Capital - Analyst
Hi, good morning, I was wondering if you could give us a sense of the volume declines in Q1, and your expectations for the full
year on a like for like basis for the U.S.?

On the volume we probably will comment at the end of the first quarter, and probably give you some guidance then. We are
not prepared to today.

I think we talked about just anecdotally we said on the call for example our comp stores were down mid-single digits, and
volume was a little more backwards than that. With the company in the low-to-mid single digits for the quarter. Some pricing,
volume is going to be flat to backwards slightly, and as Sean said, we will give you that much more close in on the April 22nd
call when we close the quarter.

And in terms of the 4 to 8% increase in raw material prices, could you give a rough as to what is coming from oil pricing and
from packaging [costs are up about 80%].

We don't really have that information available for this call, I'm sorry.

Thank you.

Thank you.

Operator
Our next question come from the line of Alex Mitchell with Scopus Asset Management, please proceed with your question.


FINAL TRANSCRIPT

Alexander Mitchell - Scopus Asset Management - Analyst
Good morning.

Good morning.

Are you budgeting in the a higher marketing and promotional spend in this environment spend going forward?

I don't have that number in front of me either. My guess is no.

So it would be comparable to including the seasonal pick up and comparable to--?

It will be flat plus or minus a few points from last year's level.

Okay. And just finally, are you, will the tax rate be consistent with your previous guidance?

Yes, I think we said that we would be in the low 30s, that 33% range for the year, and we think that the first quarter will be
comparable to that.

Okay. Thank you very much.

Operator
Thank you. Our next question comes from the line of Chuck Cerankosky with FTN Midwest.


FINAL TRANSCRIPT

I want to follow up on the cash flow implications of some of the things you have been talking about with regard to looking at
the full year. Any cash coming in from asset sales as you back off on some of these redundant stores? What is the CapEx budget
for this year, and what are the implications for your working capital needs?

I would tell you that, I will take them in reverse order. When you take a look at the CapEx, I think our CapEx is going to be probably
a little lower than the 165 that we told you earlier in the year. As far as set sales when you take a look at it, I mean there's, last
year I think we had an asset sale of a piece of property in [Beltsville] and we are looking at a couple of little things, but we really
don't have any assets of significance for sale site now, Chuck.

And then on the working capital we are spending a lot of time working on collecting those receivables, and really inventory.
So we think that we still will have even with the sales implications it is tough to have working capital improvement, but we still
have a goal, we still have an idea that we can get working capital improvement this year.

Is the challenge with the reduced sales because the cost of the raws are going up?

Well, that is challenge, but just as a percent of sales as we have increased we have done a few acquisitions, and with the sales
increase, just when you are averaging over the year it's just tough to have more assets from acquisitions, and have lower working
capital as a percent of sales, because if your sales are in low single digits, call it 1 to 3%, and just trying to get your working
capital below that it is sort of tough.

The other impact, too, Chuck is if you think about it the working capital percentages we enjoy domestically through our stores
business, compared to the working capital in our global segment is stronger, so as our global business gross faster and the mix
changes that has a negative impact on the working capital as well. So to Sean's point, even with all those factors at play here,
we are still pushing towards a flat perhaps slightly improved working capital year.

All right. Thanks.

Thanks, Chuck.

Operator
Ladies and gentlemen, (OPERATOR INSTRUCTIONS) We have a follow-up question from the line of Saul Ludwig, KeyBanc. Please
proceed with your question.


FINAL TRANSCRIPT

Chris, with the guidance that you have given for the full year looking at sort of from a macro picture, we are starting off the year
pretty week, very, very soft, net comparable store sales that is a function of the housing, less housing turnover, all the points
that you made, what assumptions have you made about the macro environment in regard to the full year guidance that you
have given? Because it sounds like you are counting on some things getting much better than they are now. I wonder if you
might just elaborate.

Sure, well, I think we are giving guidance, Saul, for the entire year that we expect the Company to be up in the low-to-mid single
digits, which is where we are at in the first quarter. So we are not indicating that we are going to see a significant improvement
in the marketing conditions. They are going to drive this on the revenue side, this is not going to be a revenue led rebound in
the next couple of quarters for our Company.

We are seeing strength in our global segments as we have talked about. And I think our expectations are that as these pricing
actions take effect as the other contingency plans that we have discussed on this call take effect, then we will be able to see
the Company's financial earnings performance come back in-line.

So in kind of a broader sense you took $0.30 off the full year, you took $0.20 off the first quarter. So that means you took $0.10
off maybe the second quarter, and yet you are not thinking there is going to be much change in the back end of the year from
an earnings standpoint, compared to what you previously expected initially.

That is correct.

Great. Thank you. One final thing, how much have you spent on acquisitions so far this year?

I would tell you, yes, the only one that we have completed is the Becker transaction. The Inchem has not been completed. We
believe that is going to be completed in the May timeframe. So the Becker was less than $50 million.

How much.

Less than 50 million.


FINAL TRANSCRIPT

How much is the next one order of magnitude?

A little higher than 50 million.

Less than 100 million.

Okay. Thanks for those precise numbers.

You are welcome, Saul. (laughter) We have lots more of them over here for you, too.

Thank you. (laughter)

Operator
Follow up from Jeff Zekauskas from JPMorgan.

Good morning, Silke again. Can you comment on the magnitude of the easier cost reductions that you could get if I remember
it right, you spent maybe 200 or 300 million advertising every year, and there are a bunch of flex workers that you hire out of
college over the summers, are those all things that could come down very, very quickly?

Yes, I think it was Eric Bosshard's question regarding whether there any big buckets where we could see cuts in SG&A, like
advertising to take that to zero for example, and the answer is that there are no areas like that, Silke, where we are taking
extremely drastic reactions. We are taking some of our service headcounts down, and are our stores organization as demand
softens we are able to do that into your point about summertime help in the stores that won't be hired this year, and it's really
across the board in a variety of different areas. We continue to invest in our R&D, to continue to bring out innovative new
products, we are not cutting there.

We are continuing to invest in the training programs, to ensure that the people that we do have in our stores are prepared to
service our demanding customer base. We will continue to invest in those areas that we think are appropriate to keep the


FINAL TRANSCRIPT

Company going. Having said that all that there's always areas where companies can continue to trim fat and build muscle, and
those are the actions we are taking.

What is the very rough ratio in terms of full-time employees at the stores versus summer help?

I don't have that information with me.

Thanks very much.

Operator
There are no further questions at this time. I would now like to turn the floor back over to Mr. Bob Wells for closing comments.

Bob Wells - Sherwin-Williams - VP, Corporate Communications
Thank you. We appreciate you all taking time to participate in our call this morning. As a reminder, we will be reporting our first
quarter results on April 22nd at 11 a.m. And we look forward to providing more detail on the quarter and our full year expectations
at that time.

In the meantime, thanks for joining us this morning, and thank you again for your interest in Sherwin-Williams.

Operator
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation

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