Robert Wells - Senior Vice President of Corporate Communications & Public Affairs Sean Hennessy - Chief Financial Officer and Senior Vice President of Finance Christopher Connor - Chairman and Chief Executive Officer

Gregory Melich - ISI Group Inc. Stephen East - Ticonderoga Securities LLC Brian Maguire Andrew Dunn Donald Carson - Susquehanna Financial Group, LLLP Jeffrey Zekauskas - JP Morgan Chase & Co John Roberts - Buckingham Research Associations Kevin McCarthy Eric Bosshard - Cleveland Research Dmitry Silversteyn - Longbow Research LLC P.J. Juvekar - Citigroup Inc Charles Cerankosky - Northcoast Research

Good morning. Thank you for joining the Sherwin-Williams Company as we review our full quarter and full year 2010 results and expectations for 2011. With us on today's call are Chris Connor, Chairman and CEO; Sean Hennessy, Senior Vice President Finance and CFO; Al Mistysyn, Vice President, Corporate Controller; and Bob Wells, Senior Vice President, Corporate Communications. This conference call is being webcast simultaneously in listen-only mode by Vcall via the Internet at www.sherwin.com. An archived replay of this webcast will be available at sherwin.com beginning approximately two hours after this conference call ends and will be available until Tuesday, February 15, 2011, at 5 p.m. Eastern 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 statement speaks only as of the date on which such statement is made, and the company undertakes no obligation 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 release transmitted earlier this morning. After the review of our fourth quarter and full year results and 2011 expectations, we will open the session to questions. I will now turn the call over to Bob Wells.

Thanks, Claudia. In order to allow more time for questions, we've provided balance sheet items and other statistical data on our website, sherwin.com, under Investor Relations, 2010 Year-End Press Release. Summarizing overall company performance for the fourth quarter and full year 2010, consolidated sales for the fourth quarter increased 18.6% to $1.9 billion due primarily to acquisitions, higher paint sales volume and selling price increases. For the full year, sales increased 9.6% to $7.78 billion. Sales from acquisitions increased consolidated net sales 8.7% in the quarter and 3.4% for the full year. Currency translation rate changes increased consolidated net sales 0.4% in the quarter and 1.2% for the year. Consolidated gross margin in the fourth quarter decreased to 44.6% of sales from 47.4% in the fourth quarter of 2009. For the year, gross margin decreased to 44.8% of sales from 46% last year. The decrease in gross margin for the quarter and year was primarily due to higher year-over-year raw material costs. Selling, general and administrative expense in dollars increase $101.7 million in the fourth quarter compared to fourth quarter last year, but decreased as a percent of sales to 38% from 38.7% in the same quarter last year. For the full year 2010, SG&A expense increased $193.3 million but also decreased as a percent of sales to 35.1% from 35.7% in 2009. Incremental SG&A from acquisitions, higher service costs resulting from increased sales and higher freight and distribution costs account for the majority of the SG&A increase in the quarter and year. A fourth quarter asset impairment charge of $4.5 million was offset by a reduction in environmental expenses related to the disposition of closed manufacturing sites in the quarter. As a reminder, in the fourth quarter last year, asset impairment charges and a loss on the dissolution of a foreign subsidiary reduced diluted net income per common share for the quarter by approximately $0.13 per share. Interest expense for the quarter increased $12.4 million to $21.4 million, reflecting costs associated with the repurchase of $51.6 million in long-term debt. For the year, interest expense was $70.6 million, an increase of $30.6 million over 2009. The incremental interest expense related to the repurchase of long-term debt reduced diluted net income per common share by approximately $0.04 in the quarter and $0.12 for the full year. Our effective income tax rate for the fourth quarter 2010 increased to 29.7% from 19.5% in the fourth quarter of 2009. Our fourth quarter tax rate last year was reduced by the tax effect of the dissolution of a foreign subsidiary. For the year, our effective tax rate was 31.8% in 2010 compared to 30% in 2009. Consolidated net income for the quarter increased by $7.6 million, or 11.6%, to $72.9 million. For the year, net income increased $26.6 million, or 6.1%, to $462.5 million. Net income as a percent of sales decreased to 3.8% from 4.1% in the fourth quarter last year. This decrease was due primarily to lower gross margin and the dilutive effect of the acquisition. For the year, net income as a percent of sales decreased to 5.9% from 6.1% in 2009, largely for the same reasons. Diluted net income per common share for the fourth quarter 2010 increased 15.5% to $0.67 per share from $0.58 per share in the fourth quarter last year. Acquisitions reduced diluted net income per common share in the quarter by $0.05 per share. Currency translation rate changes had no material impact on fourth quarter diluted net income per common share. For the year, diluted net income per common share increased 11.4% to $4.21 from $3.78 per share in 2009. Acquisitions reduced full year diluted net income per common share by $0.10 per share, and favorable currency translation rate changes increased full year diluted net income per share by $0.05 per share. Now I'd like to review our performance by segment. Sales for our Paint Stores Group in the fourth quarter 2010 increased 8.6% to $999.3 million. For the year, net sales increased 4.1% to $4.38 billion. Sales increases in the quarter and year resulted primarily from selling price increases and gradually improving architectural paint sales volume to residential repaint contractors and DIY customers. Comparable store sales increased 8.6% in the quarter and 3.8% in the year. Regionally, in the fourth quarter, our Southwest division led all divisions followed by Midwest division, Southeast division and Eastern division. Sales by all four Paint Stores divisions increased in the fourth quarter and full year. Segment operating profit for Paint Stores Group increased 12.4% to $134.8 million from $119.9 million in the fourth quarter last year, due primarily to lower year-over-year impairment charges, higher selling prices and volume gains that more than offset higher raw material costs. For the full year, Paint Stores Group operating profit increased 3.2% to $619.6 million due primarily to higher selling prices and volume gains that more than offset higher raw material costs. Segment operating profit for the fourth quarter increased to 13.5% from 13% last year. Profit margin for the full year 2010 decreased to 14.1% from 14.3% in 2009. Turning now to our Consumer Group. Fourth quarter external net sales increased 6.2% to $255 million from $240.1 million in the fourth quarter last year. For the year, Consumer Group sales increased 5.9% to $1.3 billion from $1.23 billion in 2009. Consumer Group sales increased in the quarter and the year, reflecting moderately higher demand in some of the segment's retail, industrial and institutional customers. Segment operating profit for the fourth quarter increased $21.5 million to $26.1 million. For the year, segment operating profit increased to $204 million from $157.4 million in 2009. Segment profit improvement in the quarter and year resulted primarily from increased sales and cost savings resulting from prior year manufacturing site rationalization, which more than offset higher raw material costs. As a percent of net sales, Consumer Group's operating profit in the fourth quarter increased to 10.2% from 1.9% last year. For the year, operating margin improved to 15.7% from 12.8% in '09. For our Global Finishes Group, net sales in the fourth quarter increased 46.4% to $640.1 million. And sales for the year increased 26.5% to $2.09 billion due primarily to acquisitions, higher sales volume, favorable currency translation and selling price increases. Acquisitions increased the Group's sales in U.S. dollars by 31.8% in the fourth quarter and 14.8% in the year. Currency translation rate changes before acquisitions increased sales in U.S. dollars by 1.1% in the quarter and 4.5% in the year. Global Finishes Group's segment operating profit in the fourth quarter increased to $28.8 million from a loss of $1.1 million last year. The Group incurred trademark and asset impairment charges totaling $6.5 million in the fourth quarter 2010 compared to asset impairment charges and a loss on the dissolution of a foreign subsidiary totaling $25 million in the fourth quarter last year. Segment operating profit for the full year increased to $123.7 million from $65 million in 2009. In addition to the net change in fourth quarter impairment and dissolution costs, the increase in segment operating profit for the quarter and year resulted primarily from higher sales volume, good expense control and favorable currency rate changes that were partially offset by dilution from acquisitions and higher raw material costs. Currency translation had no significant effect on segment profit in the quarter and increased segment profit $8 million in the year. Acquisitions reduced segment profit $3.1 million in the quarter and $10.5 million in the year. As a percent of net sales, Global Finishes Group's operating profit was 4.5% in the fourth quarter and 5.9% for the year compared to 3.9% for the full year 2009. I'd now like to comment briefly on our balance sheet items. You'll find more balance sheet information on our website under sherwin-williams.com, Investor Relations, Press Releases. Our total debt on December 31, 2010, was $1.04 billion including short-term borrowings of $388.6 million. Our cash balance at the end of the quarter was $58.6 million compared to $69.3 million at the end of 2009. Total borrowings to capitalization were 39.4% at year end versus 35.4% at the end of 2009. Long-term debt to capitalization was 24.7% compared to 34.4% on December 31, 2009. For the full year 2010, we spent $125 million on capital expenditures, depreciation expense was $140 million and amortization expense was $35 million. For full year 2011, we anticipate capital expenditures for the year will be approximately $120 million to $130 million, depreciation will be about $140 million and amortization approximately $40 million. I'll conclude with three brief comments on the status of our lead pigment litigation. In the California Public Nuisance Suit, the California Supreme Court ruled it is permissible for cities and counties to retain contingent fee counsel to aid them in their suit against former manufacturers of lead pigment. In late February, the trial court will determine how the suit will proceed. There were two noteworthy developments in Wisconsin. First, a Wisconsin Court of Appeals upheld the judgment in favor of the defendants in the Thomas case, a personal injury suit tried in 2007. Second, a federal court judge in Wisconsin ruled the risk contribution theory adopted by the Wisconsin Supreme Court in the Thomas case to be unconstitutional, violating defendant's right to due process. This ruling is now on appeal to the Federal Court of Appeals for the Second Circuit. That concludes my review of our results for fourth quarter and full year 2010, so I'll turn the call over to Chris Connor, who will make some general comments and highlight our expectations for 2011. Chris?

Thank you, Bob, and good morning, everybody, and thanks you for joining us today. I think we're going to look back on 2010 as a positive transition year for our company and the domestic paints and coatings industry as we bounced off of the bottom. The U.S. recession that began in 2008 technically ended in mid-2009, but the recovery in most of our end markets didn't begin until almost a year later and its strength and sustainability remain in question. We finished 2010 with consolidated sales growth in the high-single digits, thanks in part to three acquisitions and multiple price increases taken in response to persistent raw material cost pressures. All three of our reportable segments grew sales organically in the year. Volume growth was modest but also positive across all segments, the first time in several years I've been able to say that. There was considerable disparity in the strength of demand across end markets, distribution channels and geographies. In North America, sales to our residential repaint contractors and DIY customers through our paint stores show the greatest improvement. Non-residential repaint activity also picked up moderately in the second half. The strength in our Global Finishes Group business was more broad-based with sales growth across most product lines and in most geographic markets. If 2010 did mark the end of the four-year slide in domestic coatings industry volume, we believe the recovery from here is likely to be slow and erratic. Most forecasts for new construction in the coming year call for modest increases on top of the low base established in 2010. Home maintenance and remodeling activity, which was a relative bright spot last year, should continue to improve the overall economy and consumer confidence. Industrial coatings volumes will grow in line with the somewhat more robust recovery in manufacturing and infrastructure investment. Unfortunately, the one area that we are most confident we will see significant year-over-year increases is raw material costs. Strong global demand for certain commodities, most notably titanium dioxide, as well as limited capacity will keep upward price pressure on these materials for the foreseeable future. Key petrochemical feedstocks, such as propylene, have risen sharply over the past month, which will have an adverse impact of the market price for monomers, latex and solvents. These conditions will drive the market basket of raw materials higher in 2011. Based on what we see today, average raw material cost for the paint and coatings industry is likely to be up in the low double-digit range in 2011. We cannot control the economic environment we operate in, but we can effectively manage our response to it and we have. Throughout last year, we took many difficult steps to help minimize the impact of rising commodity costs and raw material shortages on our customers and our business. These included: redistributing raw materials and finished goods between plants, distribution centers and stores; implementing priority production plans; combining certain materials on the spot market to maintain acceptable service levels. The resulting higher operating costs combined with rising raw material costs put pressure on our margins, and we responded with necessary price increases. The normal lag between rising input costs and the realization of our price increases resulted in declining gross margin each of the past three quarters. Our full year SG&A expense as a percent of sales declined 60 basis points on a consolidated basis and was lower across all three segments. Much of the incremental SG&A spending in absolute dollars was a result of acquisitions and expansion of our paint stores platform, investments that we're confident will drive future top line and bottom-line growth. For the year, we generated $707 million in net operating cash, slightly more than 9% of sales. Free cash flow, which is operating cash minus CapEx and dividends, came in at $425 million. During the year, we invested approximately $360 million to complete three acquisitions. Two of these companies strengthen our position in the global finishes market and provide a strong platform for growth in Eastern and Western Europe, as well as Asia-Pacific. The third acquisition establishes us as the market leader in architectural paint in Ecuador. Our working capital ratio increased 11.9% of sales at year end from 10.7% at the end of 2009. Backing out the working capital from the three acquisitions completed during the year, working capital at year end was essentially flat at 10.8% of sales. Last year, we also continued to invest in our control distribution platform, opening 49 stores in new markets to drive penetration and share growth. At the same time, we consolidated an additional 13 redundant store locations for a net increase of 36 stores. Our paint store count in the U.S., Canada and the Caribbean now stands at 3,390 locations compared to 3,354 one year ago. Our plan for 2011 calls for net new store openings in the range of 50 to 60 locations. In the fourth quarter, we acquired 1.53 million shares of the company's stock for treasury, bringing our full-year total of 5 million shares at an average cost of $75.14 per share and a total investment of $375 million. At year end, we had remaining authorization to acquire another 5.75 million shares. Over the past year, we also returned more than $156 million in cash to shareholders through quarterly dividends. 2010 marked our 32nd consecutive year of increased dividends per share, a string we intend to continue. This year, at our February meeting of the Board of Directors, we will recommend approval of a dividend payout rate for 2011 that'll keep our record of consecutive annual dividend increases intact. Looking ahead to 2011, the outlook for many of our end markets is stable to improving, and we believe we are well positioned to continue to grow share. Counteracting this improving demand environment is the fact that raw material cost inflation is likely to remain a challenge, and volume will be negatively impacted due to the loss of architectural paint gallons at Wal-Mart. Our outlook for the first quarter of 2011 is for consolidated net sales to increase in the mid- to high-teens compared to last year's first quarter. With sales at that level, we estimate diluted net income per common share in the first quarter will be in the range of $0.48 to $0.58 per share compared to $0.30 per share earned in the first quarter of 2010. For the full year 2011, we expect net sales will increase by a high-single digit percentage versus 2010. With annual sales at that level, we estimate diluted net income per common share for next year will be in the range of $4.65 to $5.05 per share compared to $4.21 earned in 2010. Again, thanks for joining us this morning, and now we'd be happy to take your questions.

[Operator Instructions] Our first question is coming from the line of Kevin McCarthy with Bank of America.

If I look at your sales growth and back out currency and the effect of acquisitions, looks like it was up about 9.5%. I was wondering if you could comment on how much of that would be attributable to volume versus price given the various increases you've had flowing through?

Yes, Kevin, the balance would be a little more volume than price.

Okay. And then, Chris, with regard to your outlook for 2011, what is embedded in that with regard to the U.S. architectural industry gallonage that you would foresee this year?

Yes, Kevin, we don't have a lot of economic forecasting thinking that we do here. We look at the same information that you see. We think that housing starts are likely to be up slightly, perhaps in the low 600,000 range. We think existing home turnover will probably be fairly flat, plus or minus about 5 million units. So it's all those things kind of baked in there and a more normalized kind of maintenance schedule, probably is going to look more traditional in the range of low-single digits, what we would see in a typical environment, albeit off a lower base.

Great. And then lastly if I may, on acquisitions, you mentioned a $0.05 dilution in the fourth quarter. Can you, I guess, comment on the integration there and how you would see the accretion flowing as 2011 progresses?

This is Sean Hennessy. And when you take a look at the progress we're making, we feel pretty good about the progress we're making. But as we mentioned on the last call, we believe the acquisition, in total, will be slightly dilutive in the first quarter. And for the full year, they will be slightly accretive for the year. And when we look at that, slightly means less than $0.05 a share.

Our next question is coming from the line of Jeff Zekauskas with JP Morgan. Jeffrey Zekauskas - JP Morgan Chase & Co: I think you said that in 2011, you expect your consolidated sales to grow by a high-single digit rate. And I was a little bit puzzled by that because if your prices are up roughly 4% to 5% and there's a 3% acquisition benefit, and you think the market is growing 2% to 3%, you get numbers like 10% or 11%. So is it the case that your forecast really includes no volume growth for next year? I don't know how else to make sense of your high-single digit change.

Yes, let me just take the first pass at it, Jeff, and I'll let Sean comment as well. I think the headwinds that we're seeing going into next year are going to be around the market uncertainties. We have commented that things are looking a little better. We like to believe that next year will continue to show some recovery, but the recovery that we have experienced has been extremely choppy. And so as we sit here now, to be able to indicate that all of next year is going to be a steady, smooth recovery, we're not quite sure we're prepared to make that comment. Also as we discussed with the investment community at some length during the middle part of this year, Wal-Mart's decision to eliminate our architectural paint program is going to have a significant impact on the consumer segment. We commented that it would be less than $100 million, but still that's going to be a substantial gallon numbers for us to overcome. So those two things have some headwind. Sean, do you have some other thoughts for Jeff?

No, I think Chris said it perfectly. I think, Jeff, when you continue to do your model and you try to back into some kind of a unit volume, that's when you realize the Wal-Mart effect on the volume. Jeffrey Zekauskas - JP Morgan Chase & Co: Okay. And then lastly, when you think about what you might earn for next year, are you including additional increases in acrylics and TiO2? Or does your model really just include all of the increases that we've seen so far as they come into the New Year?

Are you talking about the cost impact to us or the pricing that we might take to the market? Jeffrey Zekauskas - JP Morgan Chase & Co: In other words, you think that you'll earn somewhere between $4.65 and $5.05, and that's based on some kind of sales growth and some kind of raw materials expectation. And I was wondering whether your raw materials expectation anticipates additional TiO2 prices, the increases that we haven't seen yet or additional acrylic prices increases that we haven't seen yet. Or does it simply include what we've seen so far?

It includes what we have seen so far plus what we think will happen in the raw materials. So as you know, when you're doing a forecast, what you know so far is 100% certain. But we do have forecasts in there for different materials and so forth, and we're looking at the basket of raw materials for the paint industry to be up in the double-digit area. So when you take a look at that, that will include some type of a forecast for certain things and certain increases that we think will come throughout the calendar year 2011.

Our next question is coming from the line of Chuck Cerankosky with Northcoast Research. Charles Cerankosky - Northcoast Research: Sean, looking at the working capital, looks like it was managed very well in the quarter and the year, especially with the higher unit sales and rising raw material costs. Can you talk about what's working there and what the outlook might be for 2011?

Chuck, we were. We felt pretty good about the year. With the acquisitions, we were in the high 11s, 11.7%, up from 10.7% last year. Without the acquisitions, we were at 10.8% with those factors. That did cause us to be a source of -- use of cash this year versus last year, a source, but we think two things are going to occur over time. We think the acquisitions, we're going to be able to, again, start to approach 11% in total. Just think a couple of years ago, it took us a couple years, they're not as quick on outside domestic borders as well versus the international. But we think, eventually, we're going to get back down into that 11% range. And domestically, we're pretty happy with what we were able to do with the inventory and our receivables. And when you look at the receivables, we feel pretty good thinking about the market that we've just come through. But again, we think it will take us a couple years, but we'll get back down in that 11% range. Charles Cerankosky - Northcoast Research: I guess part of the offset with the rising raws is payables go up as well, as well as the inventory on hand?

Yes. Our payable numbers did come in very strong. Charles Cerankosky - Northcoast Research: Okay. You've got short-term debt of $388 million, an increase from last year. What are your plans for that? And where do you think that'll go in 2011?

Yes, I think we've been trying to get into this 60-40, 60% fixed, 40% floating. We were able to get closer to that. Last year, we were about 98% fixed. The two things we're trying to get to are floating, to take advantage of the short-term rates; and secondly, to get some non-domestic debt to create some natural hedges in some of these countries that we're in now for currency hedges. So we look at the gross debt, was around $1,050,000,000, net was just below $1 billion. We think that next year will be slightly higher than that $1,050,000,000. So somewhere in the $1,050,000,000 to $1.125 billion, but we also expect our EBITDA to grow. So we think that our leverage will not be much higher than we are today. Charles Cerankosky - Northcoast Research: Okay. Chris, a question for you regarding DIY sales in the fourth quarter. Are those re-emerging as a more significant, or is that re-emerging as a more significant end market given what's happened to housing starts?

Yes, as we commented, Chuck, in the body of the call, the strength, particularly in the stores business has been in res repaint, which would include both the professional and painting contractors and DIY. And we had a very strong DIY, actually, third and fourth quarter in our stores this year. Charles Cerankosky - Northcoast Research: Is that due to it getting stronger because people are choosing to do more? Or there is just less new home construction allowing it to show up a little more clearly?

I think the rebounding consumer confidence and the deferred maintenance and decorating that we've been talking about for a number of years is starting to have an impact more than the new residential home construction starts. Charles Cerankosky - Northcoast Research: Okay. And then last question back to you, Sean, you've got a lot of things going on in the other income area, with somehow dividend and royalty income becoming an expense item versus an income item a year ago. You had the interest expense up quite a bit partly because of the share repo. But it all boils down into a very big increase in the administrative cost line that you show in your segment reporting. Can you put together what the pieces are that expanded that number? And how much of it was non-cash? And what are the gains from the sale of closed manufacturing assets that appeared in the P&L?

Yes. The year-over-year change in the Admin segment appears large due to the fact that in 2009, Chuck, our administration expense was down as a result of adjustments in compensation and related expenses, including stock-based compensation. The change is less dramatic when compared to 2008 and '07. The primary contributor to the higher administration expense in -- the higher interest expense, including the repurchase of those long-term debts and the year-to-year change in compensation and benefits, including the change in stock-based compensation. You also bring up a couple other things there. We did sell three non-utilized assets, and we had a gain on that. That was cash positive. We took the proceeds in, and we were able to reduce some accruals that we had there for ongoing maintenance of those sites, as well as the gain on sale. We also had a hit in our rabbi trust for that long-term deferred compensation, which is not a cash use. It's just accrual. And over time, we would probably get that back over time because of investments that we've made. Charles Cerankosky - Northcoast Research: So getting back to those three plants, the proceeds from them, we'll see in the cash flow statement. But the gains showed up in what line item?

All Other. Charles Cerankosky - Northcoast Research: All Other? Okay, so the gain's there. So the compensation, year-over-year compensation adjustment...

Is in the SG&A in the Admin segment. Charles Cerankosky - Northcoast Research: Yes, okay. So that's a very big item then?

Yes.

Our next question is coming from the line of Don Carson with Susquehanna International Group. Donald Carson - Susquehanna Financial Group, LLLP: Chris, question on sort of channel shifts. Paint stores' volumes were up for the first time this year. You were flat for the first nine months when the market was up. So are you regaining share through the Paint Stores Group? Or do you think that you'll continue to see more competitor big boxes?

Yes, Don, we're confident that the Stores Group has in fact gained share this year across a number of segments that we monitor. Our volumes were actually up third and fourth quarter through that segment. And as we commented, while we've seen some nice performance out of the residential repaint, contractor and DIY, even in the segments that were off for us, new residential construction, commercial contractors, et cetera, we're confident the results we showed were stronger than what the market felt. So that source model continues to be a shared ramp for us. Donald Carson - Susquehanna Financial Group, LLLP: And to what extent do you think you're benefiting from a decision by other people to reduce their overall stores count?

Well clearly, we monitor that carefully, Don, the gap between our total store count versus the other folks that we compete against in the space. This has been a rough three- to four-year cycle. We've seen quite a number of independents go out of business and a number of the other super-regionals reduce their store count. We've continued to have a positive store addition number each and every year to the cycle. Donald Carson - Susquehanna Financial Group, LLLP: And a question for Sean, what do you see as a full year benefit in 2011 from your manufacturing rationalizations in the Consumer Group over the last 18 months or so?

Yes, I think that what we've said is, because you're going to see it in the gross margin, but we think it was a little, slightly higher than $20 million to $25 million.

Our next question is coming from Gregory Melich with ISI Group. Gregory Melich - ISI Group Inc.: I wanted to talk a little bit about the outlook on the cadence of your price increases. So we had 15%, a lot last year. Looks like you got a normal amount of that through so far. So as you go into this year, do you expect gross margin to -- it seems like in the first half, you expect them to be down as much as they were in the second half of 2010. Is that a fair way to think about it or am I...

We're going to try to avoid going down the model, Greg. And this is Sean. We've tried that, especially at the beginning of the year, we try to give you some outside looks at the sales of what we think in the sales and EPS. But a lot of times, as in the past, we mentioned, after the second quarter call, we've given you some type of guidance on gross margin and other things when we have a better view of selling prices that, what you're asking about, and also raws, back to what Jeff was saying, we've got a better view of what's going to hit in the current calendar year. But I think we're going to avoid giving any kind of guidance on gross profit at this time. Gregory Melich - ISI Group Inc.: So maybe then a different question, which is just looking at the pricing. In the past, it's usually taken maybe a year to, sort of, get through your normal 75%, 80%. Do you think that's still the case? Or has something changed in the last year or two in the market out there, where it's either it's able to happen faster or slower?

Yes, as you mentioned, we put three price increases in. We put the first one in April and then again in August. And both of those are really reacting just like as historical. We feel that we've got enough time looking at the market. We think that it's running correctly or just like the normal. When you take a look at December 6, it's not that we've seen anything abnormal, it's just that December is our slowest month. And we'll probably give you a little more color on that at the end of the first quarter. But it's just, since it's December 6, and December's our smallest month, I'll avoid talking about that. But we think that the market forces are still in place, that when the raw materials go up, eventually we will get it back in the selling price. Gregory Melich - ISI Group Inc.: And then a follow up on the Consumer Group, the big expansion in margin there. Would you say that the benefits that you saw, if you quantify them in dollars, is that now pretty much behind us, where you've been able to take that business up to a new level of efficiency at this run rate?

Yes. I think that we've realized 100%. It did come in tapered. We did start to see some in late '08, throughout '09 and now '10. We're at a fairly good run rate. Gregory Melich - ISI Group Inc.: Okay, great. And then lastly, on the SG&A dollars last year, up I guess a couple hundred million, I think you said a majority was acquisition, any more precision on that, like 2/3 or a dollar amount would be helpful.

We commented, Greg, that it was between the new stores and the acquisitions, but that's as much guidance as we're giving. Gregory Melich - ISI Group Inc.: Okay. But a majority, the acquisitions I think were a majority of it, was that right?

That's fair.

Our next question is coming from the line of John Roberts with Buckingham Research. John Roberts - Buckingham Research Associations: There were still a lot of small competitors in the industry that I would assume have a harder time maintaining service levels in this environment and are not as sophisticated in pricing. So why not take the Wal-Mart volume and try to accelerate your professional stores volume, add more stores this year, do something strategic?

John, that's been the goal every year for the last 145. We certainly aren't throttling back on that at all. We talked about a net new store count this year in the 50 to 60 range. There'll be some still remaining closures from our big acquisition run in the middle of the last decade, but we're getting up to a closer kind of a gross opening run that we've had historically. And rest assured, that team is aggressively out looking to grow gallons. John Roberts - Buckingham Research Associations: That just doesn't seem like they're growing enough to absorb the Wal-Mart capacity that you've got available.

They're never growing fast enough. You sound like us. John Roberts - Buckingham Research Associations: Okay. And then, secondly, could you talk about the things that are in your control to do, to sort of mitigate some of the raw materials like changing container strategies or changing suppliers or changing formulations? What are you doing internally that's within your control?

We'll comment on some of the broad themes of controls that we do have. At the outset, let me comment that the significant raw material supplier relationships that we have, for the most part, are really critical to the final manufacturing products that we make. So the ability to drastically change those relationships is not strong, nor do we want it to be. And so we're really talking about some of the items around the fringe. And you mentioned a number of them. Through formulation, we can find some way to optimize formulas, to use less of these. We can bring other raw material suppliers up to paint-grade levels and quantify and qualify their raw materials as a source. We're capable of moving some of our purchasing from various suppliers. We're able to bring some of these raw material productions in-house, as we do make some resins inside the company. So there's a variety of strategies at play here, none of which will be significant to put a real dent in the numbers that we've commented on.

Our next question is coming from the line of Rob Koort with Goldman Sachs.

This is actually Brian Maguire on for Bob. As you mentioned, raw material prices have continued to move up so far in 2011. We've seen propylene and titanium dioxide continue to go up. Is it too early to think that we might see another price increase in the spring? Or do you think that the December one kind of covers you for the first half of '11?

Yes, we've been real clear about this, Brian, in terms of giving the Street great transparency into our pricing activities, when we take them, the amount that we've taken, et cetera, when we announce it down to the specific date. Sean just commented on December 6. However, on prospective price increases, we don't comment on that, not until we've thought through the process, spoken with our customers first, et cetera. So the pricing that we've announced in the fourth quarter of last year is intended to carry us into this New Year, and we'll just have to wait and see how the raw material pricing unfolds and whether or not additional pricing is required. I think you can rest comfortably that historically, you can see the company has always had the same discipline here, that pushing back against raws first, trying to see if we can mitigate that internally through our own operations and then finally, failing those two steps, we will go to the market for pricing if we need to. At this point in time, there are no intentions or plans for further price increases.

Okay. And I was also wondering if you've seen any disruptions or loss of sales so far from the kind of adverse weather we've had kind of so far in January?

Yes, the eastern seaboard has particularly been hard hit. Our stores do in fact feel that. There's days when there -- struggle to get them open, or lack of customers through the front door. You'll rarely hear this company talk about weather. We believe that weather comes every year. You're going to have these storms that are going to go through. They may impact a given week or month or even quarter but over the greater year, it's just not a thing we're concerned about.

One just housekeeping item, what kind of tax rate are you guys assuming for 2011?

Yes, this year, we're around $31.7, and we think it's going to be slightly higher than that. But we still think it will be in the mid- to low-30s.

Our next question is coming from the line of Stephen East with Ticonderoga Securities. Stephen East - Ticonderoga Securities LLC: When you talked about, Chris, you talked about raw materials overall being up low-double digits. What percentage of your selling price is that as you look out into '11?

Last quarter, you talked about TiO2 being 20% to 30%, and so it was impacting about six percentage points, something like that. As a rule, Stephen, the basket of raw materials in a typical architectural gallon of paint accounted for about half of the selling price. So the 12% raw material cost increase would dictate a 6% selling price increase on a like gallon of paint to keep the gross margin dollars consistent on that product. Is that the question? Stephen East - Ticonderoga Securities LLC: Yes, that is the question. And if you look at your guidance, obviously you're looking at a decline in margins, at least net margin versus 2010. Two questions on that. One, is that sort of the new normal, or is that just the temporary until your pricing can catch up to your raw materials? And is it primarily occurring, that decline in margin, primarily occurring at the operating margin? Or is there a lot of below the line noise for us?

Yes, when you take a look at, first I'll mention the gross margin. We don't think it's changed. I think when two years ago, we hit -- last year, we hit 46%. In 2009, our long-term goal is that we think that we can eventually get back at and above that to a new peak. When you look at operating margins, we feel the same way. We don't think it's a new norm. When you look at 2007, 2008, we've commented eventually, we think that we've put the company in a position that we can get at and above those margins. So when you talk about the guidance for next year, I think when you first go out there at the beginning of the year, you have a lot of puts and takes, and you don't have just one scenario. You'll have three or four. And it used to be, at least a couple years ago, we actually got it to 12%, but our guidance was as wide as $1, between $3 and $4. So we're at $0.40, we have about three or four different scenarios. And what ends up happening is we start to see how the year starts out. And we start to get a better feel for what we think the raws are going to be at for the year and the selling prices, and it's a lot of other things wrapped in. And then we'll start squeezing it down and give you a little more answer and color on that. But that's really where we're at with the guidance. Stephen East - Ticonderoga Securities LLC: Okay, that's fair enough. One, could you talk about the commercial trends? And then two, Sean, I appreciate fixed versus floating and trying to capture the low-floating rates, but we're at generational lows for interest rates. At what point do you all say, for the better good of the company, a little bit longer term, we probably need to move away from that 60-40 split, fixed versus variable?

Yes, I think when you take a look at it, a couple years ago, we went out and did a five-year deal at 3.1%. We're monitoring the market right now. And we watch commercial paper and the dealers right now. We're able to get one, three, six-month commercial paper, as well as overnight. So we feel the commercial paper market is still fairly robust, at well below 0.5 point of interest. So we think that's still pretty good for the shareholders. When we start to see that tighten up, we probably would do what you said.

And then, Stephen, your question was on the commercial market trends? Stephen East - Ticonderoga Securities LLC: Yes, sir.

Our expectation here, again, same caveat about the lack of economic forecasting that we hold ourselves accountable for in looking at the same kind of industry data that you can see, we believe that non-residential construction, the spending to that will be flat to down moderately. It's been pretty low, there's not a lot more to fall there. And we do think however, that non-residential occupancy rates and turnovers are going to improve a little bit and that will help on the stronger market, which is the maintenance side of it anyway. So all in, perhaps, the commercial side of this business should have a flat to slightly up year.

Our next question is coming from Dennis McGill with Zelman & Associates.

Just firstly, Sean, without getting into specifics for the year and not looking for an absolute number here, but if we think about the price increases going through the way they typically would, and what you've seen already with raw materials and how those will flow out of inventory, can you talk to the pace of margin contraction or expansion through the year? What would be the most challenging period for the year if things play out under a normal scenario based on what's already happened?

Well, I think in a normal scenario, you would say the first quarter would be the best situation because we're anniversary-ing three price increases overall. So after April, we start to anniversary that first price increase. So the actual effect of selling prices on the volume will be the highest in the first quarter. And then as we annualize them, it'll be reduced. So when you take a look at steps, the year-over-year sales and then the year-over-year selling price increases. But really, when we take a look at how the raw materials flowed in and out, it's been anything but normal. So I think it's hard right now to say exactly which quarter is going to be the highest or where we're going to see the lowest peaks.

Just to help maybe clarify that from the raw material increase, the double digit for the year, can you give us a sense for those that exited 2010 on a year-over-year basis?

It's below that double digit. And the fourth quarter raw materials were the highest quarter increase that we had.

Meaning the year-over-year increase in the year was higher than the other?

Yes.

It was accelerating through the year, exactly right.

On the Consumer segment, just to clarify, Sean, did you say the $20 million to $25 million from restructuring was the benefit in '10 or the carry-through into '11?

2010. What we realized in 2010. And now, and I've also said it, we've realized 100% of that.

Okay. And so when we think about '11, realizing you'll have the volume challenge of Wal-Mart, you didn't mention pricing in your comments of the benefit in the fourth quarter there. So I know you don't want to speak by segment for price, but when you think about profitability in that segment looking forward, is there a scenario where you can see operating margin improve without replacing the Wal-Mart volume?

Well, I think so. I think that, that segment is also working on selling price increases. And so they're out there today working on that and they're getting some. So that's part of the effectiveness that we talk about when we say what over time we eventually get to, and why it takes a little bit longer. But when you take a look at it, that segment's out there implementing price increases.

Okay. And then just lastly, Chris, I don't know if you have to take a stab at this or if you know specifically, but on the non-res buildings, construction or commercial, what would be the split between the maintenance and your construction for your business today?

Dennis, this is Bob. New construction will be a very small piece of the commercial market, probably similar to new construction in residential versus residential repaint, maybe 20% or below.

Our next question is coming from the line of P.J. Juvekar with Citi. P.J. Juvekar - Citigroup Inc: On a bigger scale, during the downturn, you tried to get more DIY business in your stores. Was that DIY business done at a lower price point than where a contractor would come in?

No, the opposite. P.J. Juvekar - Citigroup Inc: Because you had lowered some prices to get the DIY consumer in...

Yes, I think the DIY consumer is moved by promotional activity. That's been a forever marketing strategy in our industry. We were aggressive on our promotion schedules to the DIY consumers through our stores this year, P.J. That, again, has been consistent. However, the DIY pricing starts at a considerably higher level than what a professional painter would buy similar products for. So even with discounting, that mix would have been positive as we switch to DIY.

I can tell you, in each of the four quarters, the DIY gross margin was higher than the painting contractor gross margin in the Stores Group. And that was true for every quarter last year, even with the discounting. P.J. Juvekar - Citigroup Inc: And just quickly, are you developing any paint that uses less TiO2? And was wondering if you've done new trials and what the findings were?

Sure, all of the time. We're working on both types of opportunities. And there's a lot of nice technology out there that's helping extend the use of titanium in formulations so that less can be used to achieve the same types of performance. So some of those products are winding their way to market, some are in tests. And I think there will be continuing science in that regard, not only from the paint manufacturers themselves but other raw material suppliers that see the same kind of tightness in the titanium environment. This, too, P.J., has been historic in our industry. And as we've gone through these titanium cycles in the past, other raw material technologies emerged that help mitigate the use of that. So I would expect we'll continue to see more of that going forward. P.J. Juvekar - Citigroup Inc: Now what would you say, this low TiO2 usage, would that be 5% of your paint? Would there be less or more than that?

No. Again, when I think -- there was another question about what strategies do we have, and we made the comment that these types of movements are really around the edges of the core body of products that we sell. So I'd be hesitant or reluctant, or even unprepared, to comment on that percentage. But I don't think you're far off in terms of thinking it would be very de minimis in the under 5% range.

Our next question is coming from the line of Eric Bosshard with Cleveland Research. Eric Bosshard - Cleveland Research: I was wondering if you could make a little bit of sense of your earnings guidance. The 1Q increase on a year-over-year basis is relatively material especially in light of the full year increase you're talking about. When you think about the acquisition impact, which is dilutive in the first quarter and then on the balance of the year becomes much less dilutive than it was a year ago, year-over-year incrementally impactful to earnings, I guess I'm just trying to figure out what factors are influencing what appears to more cautious 2Q to Q4 guidance relative to the 1Q guidance?

When you take a look at the first quarter, Eric, this is Sean, first of all, the Obamacare. In the first quarter last year, we really had to take a $0.10 hit in our tax rate in the first quarter. And so a couple things, the $0.30 really is $0.40, and so the increase is not as dramatic. And the first quarter, $0.10 in the first quarter, makes dramatic because it's our smallest quarter. So when you take that in consideration and some of the things that went the other way, where we were able to sell those assets, we're going to go up against that in the fourth quarter. We have some other things that were going to go up against other quarters. It just seems like this, probably, was one of the biggest movement quarters quarter-by-quarter. We had a lot of different moving parts, but when you take a look at that Obamacare, it's dramatic in the first quarter. Eric Bosshard - Cleveland Research: But even if you take out that, and you take out the, I think the roughly $0.25 of net expenses that impacted '10 that won't recur in '11, even when you pull that out the full year earnings on an operating basis are up roughly $0.40, I think at midpoint, and $0.15 of that is in 1Q. It just seems that, even looking it on that [ph] degree and pulling up what you rightly pointed out was the 1Q effect, it seems like there's more in 1Q than you're assuming in 2Q to 4Q on a disproportionate basis. Is there any factor that influences that?

Yes, couple of other things that really affected it. We also had -- in another quarter, we actually had a $9 million sale of -- we sold an asset, and then -- a small asset, but that was $9 million worth of goodness in one quarter. I'd mention again, in other quarters, where we're going up against the sales and then environmental expense. We're going to be doing a lot of remediation this year in our Chicago site, hopefully completing that this year or the first quarter of 2012. So those are the type of things that are going on and that can change quarter by quarter. But the first quarter was, again, the fact that Obamacare -- but I understand what you're saying, but there's just a lot of other things that we take a look at. And at the end of the first quarter and second quarter, then we'll probably have better idea of what's happening with selling prices and raw materials. Eric Bosshard - Cleveland Research: Okay. And then secondly, just some clarity, were the volume growth in 4Q similar to 3Q or better than 3Q?

Slightly above. Eric Bosshard - Cleveland Research: And was that broadly based? Or was there one piece of the business that contributed to that?

No, I don't know. It's pretty broadly based. All three segments, as we commented, Eric, had improving volumes. And to Sean's point, these are slightly above. These are modestly positive volume numbers in the low-single digits. So all three went the right direction.

Our next question is coming from the line of Dmitry Silversteyn with Longbow Research. Dmitry Silversteyn - Longbow Research LLC: When you look at the margins that we saw in the fourth quarter, particularly in the Consumer and the Global Group, or the decline in sequential margins was less than it was a year ago and you mentioned some one-off things that seem to have impacted the performance last year. Was it all related to that? Or is it that the businesses has changed fundamentally? And the reason why you didn't lose money in the one operation that was actually able to deliver margins that were better than 50 basis points than the other operation.

Yes, I think when you look at the consumer segment, there's sort of a combination of both. We had some one-time hits last year, we also had the sales in there. But also I go back to the full annualization of the rationalization. So I think there was some business changes that we were able to maintain and so forth, but that's really the big piece there, and the big piece of consumer was those one time. And that's why you saw it go from 1.9 to 10. 1.9 was probably understated because of the hits and so forth. And Stores Group, the 50 basis points, 13, 13.5, that was, I mean, you sit there and see that impairment last year, that was probably the majority of that 50 basis points. Dmitry Silversteyn - Longbow Research LLC: Okay. Yes, no, the Store Groups I understand, I was just -- the Consumer Group and the Global were...

Yes, on the global side, I would tell you, again, in the fourth quarter, we went from minus 0.3% to 4.5%, again last year, really, the impairment. But even with that impairment, we did see the improvement in ROS. So we think that, that's probably a good run rate. Last year, we we're talking about that 3.9% was depressed. This year, 5.9%, again, without the acquisitions. And if you add back there, we had some nice improvement in the ROS, and we think the ROS is on its way here in the Global Group. Dmitry Silversteyn - Longbow Research LLC: Sounds good. And then just a question, if you look on the balance sheet, you've seen the days sales outstanding have increased throughout the year and kind of finished up, what, is it, almost seven days higher than they did a year ago. Inventory turns have dropped a little bit and were a little bit slower than normal throughout the year. Is this just a function of raw material inflation? Or a function of acquisitions and the margins and the working capital requirements that those businesses bring with it?

Yes. And every time we do an acquisition, we see this. If you go back, when we did Duron and Purdy, our working capital went from around 11% to 13.5%. As we continue to integrate those, we actually got it back close to 11%, and we did seven acquisitions a few years ago, and that drove it back up to 12.5%, 12.7%. We actually were able to get back down to the 10.7% last year. So without the acquisitions, our DSO was up slightly, and our inventory days were actually down slightly. And as Chuck pointed out, the raw material inflation that we've seen in our raw materials, really was offset a little bit by the payables number. So the payables covered the inflation somewhat, but we feel pretty good about our working capital with our balance sheet. Dmitry Silversteyn - Longbow Research LLC: Got you. And then just final question, are you kind of net long some of the key raw materials given the experiences with some disruptions and lack of availability last year? Or is there just not even enough material available in the market for you to build a little bit of a cushion against future price increases or availability issues?

We take a look at our production plan, we got asked this a few years ago, we pre-buy. And today, we just don't have the warehouse space. But what we're doing is we've adjusted our production plan to try to -- usually in the first quarter, this is where we build our inventory, to go into the highest sales season, and we're going to do everything we can to slightly be higher than what we would've been normally and higher than we were last year.

Our next question is coming from the line of [ph] Ryan Buckus with Citigroup.

I was wondering if you could comment a little bit on the acquisition landscape and how you see yourself with your current ratings and potentially giving up the current ratings to make an acquisition of a larger scale?

First of all, Ryan, I think our ratings are fine. And Sean commented earlier about the capital markets, availability to us and we feel like we have terrific access if there were deals out there that were appropriate, strategic and added significant value for our shareholders. Having said that, the type of deals that we've historically done have been much more bolt on and additive to our existing businesses and haven't required significant capital resources to get done. So we don't really find ourselves or feel that we're constrained at all in that regard. The acquisition environment is still better than it was three, four years ago. We're looking at a number of deals. We've talked about consistently our interest in continuing to build out our controlled distribution footprint in North America, as well as adding to our industrial coatings strategy on a global basis. And there are a number of opportunities out there for us to think about it.

Our last question is coming from the line of Andrew Dunn with Keybanc Capital Markets.

Just real quickly, going back to the pricing issues, you guys are pretty close to your contractor customers. And as you deal with them, do you get any sense kind of what level of price increasing you might get a pushback from them saying we just can't push this through to our customer base anymore? And then just as a real quick follow-up on the kind of store count issue, I think you guys had talked about kind of the northwestern part of the United States, maybe even Canada moving forward. Are you guys still pretty optimistic on those areas?

Well, first of all, Andrew, on the first part of your question, the pricing that we get pushed back on from our contractors is 0.5% I mean these are not folks that are excited to get these, nor are we excited to pass them on. So they are doing their job as they should, which is to push back a little bit. As we've talked about the economics of this industry, you recall the typical paint job is 80% to 90% labor cost, 10% to 20% materials. So distasteful as these are, their ability to absorb it, modestly rate their pricing and cover their higher material cost is something that's been easy for them to do. So as Sean said earlier in the call, the price increases that we've implemented last year have all continued to go in on a fairly historic level, and we would expect that to continue going forward. In terms of our store count, you're accurate. And we've talked often about on our density mass at the western part of the United States, partly [ph] Western Canada as well as all of Canada for that matter, are areas that we can heavy up our store. You're seeing that both in our new store openings, as well as our acquisition interest.

We have no further questions at this time. I'll now turn the floor back over to Mr. Bob Wells for closing remarks.

Terrific, thanks again, Claudia. Let me wrap up the call this morning by asking you to save the date of Thursday, May 12, 2011, on your calendars. That's the day that we will host our Annual Financial Community Presentation this year at the Waldorf Astoria in midtown Manhattan. The program will consist of our customary morning presentations with questions and answers, followed by a reception and luncheon. Again, that date is Thursday, May 12, and we'll be sending out invitations and related information in the weeks ahead. As usual, we will be around today and tomorrow to take your follow-up calls. Thanks for joining us this morning, and thank you for your continued interest in Sherwin-Williams.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.