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

B.G. Dickey - Stephens Inc. Brian Maguire Greg Melich - ISI Group Inc. Donald Carson - Susquehanna Financial Group, LLLP Jeffrey Zekauskas - JP Morgan Chase & Co Eric Bosshard - Cleveland Research Company Dennis McGill - Zelman & Associates Kevin McCarthy Unknown Analyst - Dmitry Silversteyn - Longbow Research LLC Charles Cerankosky - Northcoast Research P.J. Juvekar - Citigroup Inc

Good morning. Thank you for joining The Sherwin-Williams Company's review of first quarter 2011 results and expectations for the second quarter and full year. With us on today's call are: Chris Connor, Chairman and CEO; Sean Hennessy, Senior Vice President of Finance and CFO; Al Mistysyn, Vice President, Corporate Controller; and Bob Wells, Senior Vice President of 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 www.sherwin.com beginning approximately two hours after this conference call concludes and will be available until Wednesday, May 11, 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 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 first quarter results, we will open the session to questions. I will now turn the call over to Bob Wells.

Thanks, Jackie. As usual, in order to allow more time for questions, we provided balance sheet items and other selected information on our website at sherwin.com under Investor Relations First Quarter press release. Summarizing overall company performance for first quarter 2011 versus first quarter 2010, consolidated net sales increased 18.5% to $1.86 billion due primarily to acquisitions and selling price increases. Acquisitions increased consolidated net sales 9% and positive currency translation added 1.2%. Consolidated gross profit increased $105.4 million for the quarter to $797.4 million. Gross margin decreased 120 basis points to 43% of sales from 44.2% in the first quarter last year. Selling, general and administrative expenses for the quarter increased $78.2 million over first quarter last year to $691.1 million. As a percent of sales, SG&A decreased 37.2% this year from 39.1% last year. Interest expense decreased $895,000 compared to the first quarter last year. Consolidated profit before taxes in the quarter increased $35.2 million or 59% to $94.7 million. Our effective tax rate in the first quarter this year was 27.9% compared to 45.2% in the first quarter of 2010. And as a reminder, last year's first quarter tax rate reflected a onetime increase in income tax expense, $11.4 million related to the Health Care and Education Reconciliation Act, which raised our effective tax rate by 19.2% for the quarter. For the full year 2011, we expect our effective tax rate will be in the low 30% range compared to last year's rate of 31.8%. Consolidated net income increased $35.7 million to $68.3 million. Net income as a percent of sales was 3.7% this year compared to 2.1% in the first quarter last year. Diluted net income per common share for the quarter increased to $0.63 per share from $0.30 per share in 2010. The tax impact of health care legislation reduced last year's first quarter EPS by $0.10 per share. Looking at our results by operating segment. Sales for our Paint Stores Group in first quarter 2011 increased 9.2% to $929.3 million from $850.9 million last year. Comparable store sales, that is sales open more than 12 calendar months, increased 8.9%. The increase in sales for the segment was due primarily to higher selling prices and improving demand in residential repaint and protective and marine market. Regionally, in the first quarter, our Southwest division led all divisions followed by Southeast division, Eastern division and Midwestern division. Segment profit for the Group increased 44.2% to $68.9 million in the first quarter 2011 due primarily to selling price increases that were partially offset by higher raw material costs. Segment operating margin increased 7.4% from 5.6% in the first quarter last year. Turning to Consumer Group. Sales in the first quarter increased 1% to $294.9 million. The increase was due primarily to selling price increases and the timing of seasonal shipments to some customers that were partially offset by the loss of business at a large retail customer. Segment profit for the Consumer Group increased 9.7% in the quarter to $41.1 million. Segment profit as a percent of external sales increased to 13.9% from 12.8% in the same period last year. The improvement in operating margin was due primarily to continued tight expense control and price increases that were partially offset by raw material cost increases. Finally, for our Global Finishes Group, sales in U.S. dollars increased 49.6% to $630.2 million in the quarter due primarily to acquisitions, higher paint sales volume, selling price increases and favorable currency translation rate changes. In the quarter, acquisitions increased net sales by 33.3% and favorable currency translation rate changes added 3.6%. First quarter segment profit increased 60% to $36.8 million due to higher sales volume and good expense control. Foreign currency rate changes and acquisitions increased segment profit by $1.6 million. Segment profit as a percent of sales increased to 5.8% from 5.5% in the same period last year. Turning to the balance sheet. Our total debt on March 31, 2011 was $1.34 billion including total short-term borrowings of $678.4 million. Total debt on March 31, 2010 was $1.04 billion. Our cash balance at the end of the quarter was $53.9 million compared to $91.2 million at the end of the first quarter 2010. Total borrowings to capitalization were 45.4% at the end of the quarter versus 41% at the end of the first quarter 2010. Long-term debt-to-capitalization declined to 22.4% at the end of the first quarter this year compared to 31.4% last year due to the repurchase of $137 million in long-term debt back in 2010. In the first quarter of 2011, we spent $27 million on capital expenditures, depreciation expense was $37.3 million and amortization expense was $6.4 million. For the full year, we anticipate capital expenditures will be approximately $150 million to $160 million. Depreciation will be about $140 million, and amortization will be approximately $40 million. I'll conclude my remarks on the quarter with a brief update on the status of our lead pigment litigation. In the California public nuisance suit, no timetable has yet been set for discovery. Since our year-end 2010 call, the city of Los Angeles has withdrawn from the litigation while Ventura County has joined. On April 19, the Mississippi State Supreme Court heard oral argument on our appeal of the $7 million personal injury award in the Gaines personal injury suit. We expect a decision in the next 90 to 120 days. That concludes our review of the results for first quarter 2011, so I'll turn the call over to Chris Connor who will make some general comments and highlight our expectations for second quarter and full year. Chris?

Thank you, Bob, and good morning, everybody. Thanks for joining us today. We anticipated that 2011 would get off to a strong start, and that was reflected in our first quarter guidance. This expectation was based on the relatively easy comps we faced over the first three months and on the actions we took last year to manage our cost structure and implement necessary price increases. Our first quarter sales of $1.86 billion was the largest opening quarter in our company's history by almost $50 million. What makes this milestone a little less gratifying is that very little of incremental sales came from core volume growth. The majority from acquisitions we completed last year, the multiple price increases we took in response to rising raw material costs and moderately favorable currency translations. Core volume was only slightly positive in the quarter. There were some relative bright spots. Domestic residential repaint sales, both DIY and pro continued to outperform the other architectural segments. Protective and marine coatings demand is picking up in many markets. And our automotive finishes, product finishes and Latin American coatings businesses all delivered solid volume growth. But the continuing volume declines in domestic new construction and many nonresidential repaint segments, coupled with the loss of business at one of our retail accounts, erased most of this positive volume momentum. At this point we remain cautious in our outlook for domestic market demand over the remainder of the year. In the second quarter, we'll also begin to annualize some of the price increases and acquisition revenue, which will make comparisons more difficult going forward. First quarter was also a strong quarter in terms of our earnings improvement. Even after adding back to last year the $0.10 per share tax impact of the health care legislation, first quarter 2011 earnings per share was up more than 57%. Consolidated gross margin declined 120 basis points year-over-year due to the rapid increase in raw material cost and gross margin dilution from acquisitions. Looking ahead, the impact of higher raw material costs will likely get worse before it gets better. On our last call, we predicted that in 2011, the coatings industry would experience annualized year-over-year raw material price inflation in the low double-digit, 10% to 13%. Given the recent upward trend in propylene and the aggressive pricing actions taken by many of the major raw material suppliers, particularly the TiO2 producers, we now believe a mid-teens percent increase is more realistic. If you look at year-over-year input cost comparisons by quarter, raw materials began to rise in the second quarter last year then accelerated in the third and fourth quarters. Given the rate and timing of increases so far in 2011, the year-over-year increase in raw material cost is likely to be greater in the second quarter, with the rate of increase moderating somewhat in the back half, which means raw material costs are likely to be an even stronger earnings headwind over the balance of the year. First quarter SG&A spending was up over last year and most of this increase was reflected in our budget. The largest contributors to SG&A growth were the three acquisitions, new stores opened since the first quarter last year, the timing of advertising expenditures and increases in compensation expense in Global Group and Paint Stores Group. As a percent of sales, SG&A declined 190 basis points in the quarter compared to last year. Our working capital also increased in the quarter. Backing out working capital from acquisitions, our core working capital increased to 13% of sales from 12.4% last year. Most of the increase was the result of a concentrated effort to build inventory ahead of raw material price hikes and protect against potential material shortages. Of the $189 million increase in finished goods inventory, only $47 million of that was from acquisitions. Raw material inventories also increased $45 million, net of acquisitions. During the first quarter, we continued to invest in our controlled distribution platform. Paint Stores Group added 7 net new store locations, bringing our total store count in the U.S., Canada and the Caribbean to 3,397 locations compared to the 3,357 a year ago. Our plan calls for Paint Stores Group to add approximately 50 to 60 new store locations during the year, while the number of store closings should fall back in line with our typical low to mid-single digit pace. During the quarter, we used the company's cash to buy back 1.1 million shares of our stock and increase the quarterly dividend rate to $0.365 from $0.36 last year. At March 31, we have remaining authorization to purchase 4.65 million shares of our stock. Our balance sheet remains fiscally sound and capable of financing our planned business operations and growth for the foreseeable future. In spite of the challenges we're likely to encounter over the balance of the year, our plan calls for continued improvement in sales and earnings. We anticipate that our consolidated net sales in the second quarter will increase 8% to 13% compared to last year's second quarter. With sales at that level, we expect diluted net income per common share for the second quarter to be in the range of $1.65 to $1.75 per share compared to last year's record earnings performance of $1.64 per share. For the full year 2011, we expect consolidated net sales to increase above 2010 levels by a high single-digit percentage, and with annual sales at that level, we are reaffirming our guidance that diluted net income per common share for 2011 is expected to be in the range of $4.65 to $5.05 per share compared to $4.21 per share earned in 2010. Again, thanks to all of you for joining us this morning, and now we'd be happy to take your questions.

Thank you. [Operator Instructions] Thank you. Our first question is coming from Eric Bosshard of Cleveland Research Company. Eric Bosshard - Cleveland Research Company: Two things. First of all, on the price cost situation, can you just give us a sense -- you had commented about gross margins in 1Q and 2Q, but can you comment about your thoughts on when and how you get caught up in a balanced recovery and gross margins?

Eric, this is Sean Hennessy. Back to your point, just to remind everyone, when you look at the company as a whole, the price mix, we had slight positive volume, most of it was price. When you take a look at it, the other thing that we probably would point out to you in our gross margin is the gross margins on these acquisitions were really the majority of in the first quarter of the decline, the 44.2% down to the 43%. And our core was close to making it up in the first quarter. But as Chris pointed out, with the rapid increases in the second quarter compared to the first quarter, we think that for the full year, when you take a look at our gross profit with the acquisitions and so forth -- and we've shown you that slide in the past. When you have these rapid raw material increases, when we first get those, we do have a decline in our gross profit. Eric Bosshard - Cleveland Research Company: And so to sort of -- to finish that, knowing that this is historically how it works, that it goes down and then it goes back up, can you just talk about sort of the confidence and perhaps the kind of the recovery in the second half?

Yes, I think when you take a look at the second half of the year, we start to anniversary the acquisitions. And when you start thinking about the way this has worked in the past, we feel very confident that eventually, we will be able to recover the raws and probably with -- from my comment, I would say that we're now starting to talk about 2012 before the gross profit percent gets back into the 2009 and '10 and -- or I'm sorry, 10% and 11%. Eric Bosshard - Cleveland Research Company: And then just a follow-up if I can. On the volumes, through Q2 to 4Q last year, you saw some volume growth. You commented that there was just slight volume progress this quarter. Can you talk a little bit about what's going on in there and perhaps about what's going on excluding the impact of the Wal-Mart business?

Yes, I think that the volumes for the company, Eric, were slightly up in the quarter as we commented. Our store volumes through our comp stores was essentially flat. I think kind of what we've been seeing as we've been commenting for a while that there is some strains in the residential repaint segment, but we're still seeing year-over-year declines in demand and new construction market and some of the non-res repaint commercial specifically. And all those things are kind of giving us around this flat volume kind of sense of where we're headed. I think our guidance for the second quarter would indicate if you can kind of back out sort of the acquisition impact and the pricing impact and other modest volume expectation in the second quarter as well. And that's really the visibility that we don't quite have yet for the remainder of the year to see if that's going to rebound or not. At this point in time, we think it's going to be a -- will be a modest year for volume. Eric Bosshard - Cleveland Research Company: Great. Thanks.

Our next question is coming from Jeff Zekauskas of JP Morgan. Jeffrey Zekauskas - JP Morgan Chase & Co: You had up operating profit in your Consumer business even though your sales were flat and your raw materials were up in some double-digit rate. So how did you do that?

I think with a couple of things, Jeff. You see, the inventory increase, I think we had a really nice conversion rate in the first quarter because of the amount of gallons that we made for a lot that into the efficiencies with their process when we transferred. And secondly, the price -- what they were able to do with some of the price. You just think about the Wal-Mart, we've talked about that being in the range of $70 million to $80 million. And if you take a look at it by quarter, that pretty well speaks -- if you're straight line on that, you're pretty close. They had a 1% sales gain even going up against that Wal-Mart. So we think that has more to do with timing. But they did pretty well with getting the selling price in the volume and then their costs were pretty -- they did a nice job on it. Jeffrey Zekauskas - JP Morgan Chase & Co: And then lastly, do you guys have a strategy now in titanium dioxide in the sense that none of the small TiO2 players really have the financial strength to build new capacity and DuPont seems, at least at this juncture, a little bit slow in adding capacity. So what will you do? I mean, do you just grin and bear it? Or do you try to work with some TiO2 producers to get to it de facto vertical integration? Or what do you do?

There's a number of things we're working on, Jeff, to deal with the increasing raw material cost pressures, grin and bearing it among them, by the way. But there are a whole host of projects underway from a technical standpoint to improve the efficiency of titanium's performance in a can of paint, so we can use less of it. There are lesser quality titanium manufacturers that are stepping up. Their consistency, they can get those products into paint grade. There's a whole host of activities underway. And I think what invariably ends up happening, when we see historically the same kind of the titanium cycle when pricing and operating margins in the business get too inflated, capacity comes back on. More people will cut price and look for market share gains inside the industry. DuPont's earnings was released this morning. The numbers on their performance chemical segment were off the charts, incredible. And I think that bodes well for some additional activity in this industry, whether it's capacity coming on or some price variance. So we'll see what happens. History is our guide here. This is a cycle that will have a back end to it. And it's our intention to be in pretty good shape when we get there. Jeffrey Zekauskas - JP Morgan Chase & Co: Okay. Thanks very much.

Thank you. Our next question is coming from P.J. Juvekar of Citigroup. P.J. Juvekar - Citigroup Inc: If you look at your raw materials into three buckets, you have resins, pigments and solvents. Can you just size for us how much of -- how much are these -- each of these broken up?

We haven't broken it down that way, P.J. Generally, we just -- first, obviously, we always talk about industry raw material experience rather than our own. And we prefer to keep it as an overall basket of materials because there's a lot of movement within the basket, and we prefer not to get in at that level of detail. Suffice it to say that there's been pretty -- it's been pretty well documented how much TiO2 is up. And if we see kind of the mid to upper end of that range of inflation applied to TiO2, it gets us to the 8% to 9% inflation on the total basket. So with our mid-teen outlook, it tells you we anticipate pretty significant cost pressures across the rest of the basket, and most of that is propylene related. P.J. Juvekar - Citigroup Inc: And is the Consumer Group seeing less price increases than the Paint Stores Group? And is there kind of resistance you are seeing from the -- in the Consumer Group from customers?

No, I think, P.J., we've been consistent when we take price into the market. We're very transparent with the investment community relative to the pricing that we announce through our Stores Group. We give you, kind of, the tenth [ph] of a percentage point and the exact date we take it out. We don't share that same transparency with the Consumer Group given the ongoing discussions we have with various retail partners. But take comfort in the fact that these raw material cost pressures we're feeling are across all of our products, and our disciplines here would be intact, and we would expect our Consumer Group to be in the market with pricing in the same relative range, at the same relative timing that we announce through our stores, and that, in fact, has been the case. And they have been successful in getting pricing this year. P.J. Juvekar - Citigroup Inc: Sure. And one quick clarification question. Sean, did you say that you've pulled forward some production in the Consumer Group from 2Q into 1Q?

Yes. When you look at our inventory, we did allow our inventory to rise. Last year, we wanted to do two things. We wanted to make sure that we service our customer. Last year there was a lot of concerns about whether we're able to do that with some of the raw material shortages after the Rohm and Haas and Dow conversion. And so we brought -- we build the inventory higher and also helped us strengthen the raw materials before the big rise. P.J. Juvekar - Citigroup Inc: Okay. Thank you.

Thank you. Our next question is coming from Don Carson of Susquehanna Financial. Donald Carson - Susquehanna Financial Group, LLLP: Yes, thank you. A couple of questions on volumes and your channel shifts. As I look at the DOC information, it seems a little puzzling. They show up 7% last year, still have yet to find a coatings manufacturer with 7% volume increases. But I know you've assumed it was up a few points, your Paint Stores were flat. They seem to be flat in the first quarter. So does this reflect again DIY taking share away from the contractor? And I would have thought that with Glidden closing a lot of stores that you'd be the best positioned to benefit from that shift as well. So maybe you can comment on market share shifts and market shares.

Of course. And by the way Don, as you know this, we agree with your assessment that the Department of Commerce numbers for 2010 don't make a lot of sense. If you look at our customer mix within our Paint Stores Group, you know we're 85% contractor and roughly 15% DIY. Our DIY business has actually been growing pretty dramatically. So if we were the same mix as the market, we'd probably be gaining share across all segments. We're confident that we are not losing share. We're gaining share in the contractor market. But it's just the mix that's causing us to probably -- to grow at a rate equal to or maybe slightly behind the market as opposed to losing share in these segments. Donald Carson - Susquehanna Financial Group, LLLP: And then what about the impact of Glidden closing stores. Why wouldn't we see more of a benefit in your Paint Stores Group?

Yes, I think the -- Glidden has in fact, over the last several years, been reducing their store count in North America. I think you see in some pockets where there was a Glidden store of some volume gains that we'd see that spread over the stores that are in that same market. Again to Bob's point, these big commercial store locations that would be gathering business from that are still feeling the impact of the slower nonresidential market out there. So the repaints for institutional and commercial properties are lagging in the construction for both new res and new commercial is lagging. And we're weathering through that storm at the same time that we're able to generate our own substantial earnings improvement. Donald Carson - Susquehanna Financial Group, LLLP: Thank you.

Thank you. Our next question is coming from Trey Grooms of Stephens Inc. B.G. Dickey - Stephens Inc.: Yes, this is actually B.G. taking in for Trey today. I have a question on consumer promotion within the Stores group. It seems like -- we're hearing that -- through channel checks that you guys are going to be doing a little bit more promotion on consumer side. I know that two weeks ago you ran a 3-day sale nationwide. It was 40% off on all stains and paints, which I believe was a lot higher than what you had previously been running. We're also hearing that the frequency of these promotions might be occurring more often. So just wanted to get your thoughts on -- if that is in fact the case and then also kind of what you're seeing were the results of that?

Yes, I think Bob briefly commented that we have seen a really nice rebound in our DIY business to our stores platform. That really began sometime in the middle of 2010. And the company did adopt a little bit more of an aggressive promotional stance at that point in time in an attempt to trigger buy and we have found that the DIY consumer particularly in this downturn is a little bit more sensitive to price promotions. And so we've implemented a little bit more of aggressive program there. Stains and paints off, percentage off, has been typically the way that we've gone at that. The percentages off have been pretty consistent throughout our promotional history, so 40% is not dramatically out of line with what we've done historically. And starting a little bit earlier this year than we might have in the past, our first quarter promotion, the one you're referencing that we ran a few weekends ago is a little bit early for us, but throughout the remainder of the year, these will be fairly consistent, pretty much lined up with exactly the same kind of promotional periods we had in 2010. And I don't think this is any significant shift in change in terms of how we market or what our expectations would be. Suffice to say, that the margin performance that we have in this DIY business is terrific. And so generating more footsteps to the door, even at these percentage discounts, is really good business for the company. B.G. Dickey - Stephens Inc.: Okay. Great. Just a follow-up question related back to the TiO2. Can you guys get into just how you typically contract? Is that 90 days? I'm hearing in the industry there may be some changes there. Can you just comment on how -- that contract, I guess?

Yes, I think that this has changed over the last decade or so. It used to be you would contract your volume out at around 80% to 85%, and you'd be in the spot [ph] Market for 10% to 15%. Now I think it's a more fluid situation. You're making agreements of how much you're going to be able to get from different people at different prices and -- we don't basically have a contract per se any more. They're probably more agreements that you look at. And so I think pricing, though, I mean, they're pretty public about when they're going out with these prices. They've also salvaged -- I've heard from different people where they say that there's 60 to 90 days for the pricing protection, which we've never said, but we've heard that they've said. And we didn't disagree with it. But whether that changes or not, we don't know. But I would say it's more on a quarterly-by-quarterly basis right now. B.G. Dickey - Stephens Inc.: Okay. Thank you.

Thank you. Our next question is coming from Greg Melich of ISI. Greg Melich - ISI Group Inc.: Thank you, guys. Two questions. First, on the SG&A, you were down about 200 bps year-over-year. Could you just tell us how much of that was from acquisitions, the way you did on gross margin, which was helpful. Then I have a follow-up on pricing.

Yes, you know what, Greg, I don't have that in front of me, quite honestly. I mean, the only thing -- because we really didn't do much work to break that out. We note -- what we -- just like from Chris' comments, it is a large piece of it, but we don't have that broken out. Greg Melich - ISI Group Inc.: Okay. So it wasn't [indiscernible] like it was in gross margin, but also SG&A would have still been down even if you back out acquisition?

Yes. Greg Melich - ISI Group Inc.: Because you gain leverage on the price.

Yes. Greg Melich - ISI Group Inc.: And if I remember in the fourth quarter call, it was too early to say whether the 8% price increase late last year was sticking and or behaving normally. Now we're a few months into it. Is it sticking? Is it behaving the way it normally does?

Yes. That price increase went in well. In fact of all 3 price increases last year, it was probably the most effective. Greg Melich - ISI Group Inc.: Was the last one?

Yes, the 8%. Greg Melich - ISI Group Inc.: And does that mean then that if raws continue doing what they're doing that you could consider going earlier? Or is the fact that the volume [indiscernible] another one or is the fact that the volume remains sort of so-so in the industry that you feel like that's limiting you at all?

Well, we've always commented, Greg, that our pricing activity to our customers is always a raw material-driven event. So we've taken pricing in periods of declining volume in the industry as well as accelerating volumes. So that won't have that much of an impact on it. We will be paying really close attention to this continuing raw material cost index, and if it continues to run ahead of us, we'll probably have to take additional pricing. Greg Melich - ISI Group Inc.: Right. Thanks a lot.

Thank you. Our next question is coming from Kevin McCarthy of Bank of America-Merrill Lynch.

Sean, a couple of questions on the tax line and the fluctuations there. A quarter ago, I think you pointed to mid- to low-30s. It looks like you've come in closer to 28. I was wondering if you could comment on the variance there? And if I understood your comment this morning correctly, it sounds like you'd expect it to perhaps resurge in the balance of the year. I'd be curious as to what might be driving that as well?

Yes, the way the tax rules change -- the accounting for the tax rules about 5 to 7 years ago, discrete items which used to be, I would say smoothed over the year, no longer the case. And so as discrete items come in and -- we had a couple of discrete items come in, in the last two weeks of March that caused us to be a little lower in the first quarter than what we originally thought. It's not a great deal, but because the first quarter, the profit before taxes, the lowest number of all four, when you get a discrete item, the effective tax rate could change dramatically with the same dollar amount in the first versus the second versus the third. But you're right. When we said there look at our full year, what we think and the guidance we gave, which is the low-30s, that will tell you that our tax rate's going to be over 30, when you put the last three quarters together.

Okay. And then a second question if I may for Chris on the Consumer segment. I apologize in advance. It might be tough to answer because it's a bit general. But with regard to the prior loss at Wal-Mart, do you see today attractive opportunities to replace that volume in a counterpunching sort of fashion? Or is that perhaps sub-optimal and better to remain disciplined given the sacrifices you might need to make to do that?

Well, Kevin, I'm a specialist at answering generalist questions, so don't worry about that. Obviously, we are selling into a really consolidating retail customer base there. There are just a handful of people upscale left in that industry versus a decade ago where there were dozens and dozens of fairly robust regional home center chains and we really have a consolidated group. We have been very consistent in our comments that we have compelling products and brands and opportunities we think to add real value to one of those major players. We continue with an aggressive calling effort on them constantly. They're good customers of us today with our Minwax and Thompson and Krylon and other products that we sell into them. And if there was ever an opening, we'd be happy to fill it. What's the caveat to your point of maintaining our discipline here. So we have a growth strategy in this company in North America through our own Paint Store channel that provides us a lot of runway ahead. But we'd be happy to be a partner with one of these folks under the right circumstances. Time will tell.

Okay. Fair enough. Thank you, guys.

Thank you. Our next question is coming from Chuck Cerankosky of Northcoast Research. Charles Cerankosky - Northcoast Research: Chris, repeatedly we've been hearing more and more about the marine business in your report as one of the stronger industrial coatings areas. Can you talk about that a little bit what's driving it?

Our protective and marine business has been performing nicely over the last several quarters. I think we have talked consistently with the street relative to the fact that in down cycles, this is an area that maintenance really can't be deferred for long periods of time. A lot of the stimulus money that went into our country and other countries around the world is starting to wind its way into paint portions of those projects. And so we're seeing a nice lift in that business literally around the globe, both in the U.S. businesses as well as our Global Group segment. In our vernacular, Chuck, because the industry refers to it protective and marine, we're much heavier in the protective side of that than the marine side of it. So while we do have some businesses that have some application characteristics or parts of ocean going and groundwater vessel, our lift in this business is mainly coming from the protective side where we're coating steel and concrete in a corrosive environment. Charles Cerankosky - Northcoast Research: All right. Just clear up a couple of things. The Wal-Mart business impact in the first quarter, Sean, did you say that was more or less annualized after the rest of the year.

Yes. What I was saying is we've given you the annual number of $70 million to $80 million and that's by quarter it's relatively streamlined. Charles Cerankosky - Northcoast Research: Got you. All right. Now also, I look at my notes and I could be wrong, but I thought your original guidance for CapEx was about $20 million lower for 2011. Is that the case? Have you raised CapEx guidance?

We raised CapEx around $20 million. You are 100% accurate. We've looked at some of the things including possibly in our flight department that needed to be upgraded. And so with the way the industry -- that industry we might take advantage of where prices are to do a couple of things there. Charles Cerankosky - Northcoast Research: Any other parts of the company that are going to get the additional capital balance?

No, that's the majority of it. Charles Cerankosky - Northcoast Research: All right. You had a -- it looks like a $4.4 million gain -- I'm looking at my notes. Yes, $4.4 million gain from an asset sale. What segment was that contained in?

That's in admin. And basically that was the old paint [indiscernible] that we had in Newark in New Jersey. We had some of the entries in the fourth quarter last year. And this year was the rest of it. But that's the end of it. Charles Cerankosky - Northcoast Research: So it didn't fall through any of the three operating segments.

No, not at all. Charles Cerankosky - Northcoast Research: All right. Okay. And then the debt is up quite a bit year-over-year. All that went into working capital and inventory?

Yes. But first of all, you have to realize we did take on quite a bit of debt, non-domestic debt, when we did those acquisitions outside the country, especially the Europeans. So we have those. And secondly, just because of the ramp up in the working capital, we were -- our cash flow, our net operating cash, was actually -- that was $153 million versus last year's approximately $100 million. So the working capital demand made us have a little more debt on the books. Charles Cerankosky - Northcoast Research: All right. And then last year, in the quarter, we had added back -- or for our purposes, we added back $0.08 as nonoperating guidance mainly for that debt retirement cost or debt repurchase cost you did in the second quarter. Anything like that going on in the second quarter of this year we should be aware of or even all the rest of the year?

No, not at all. I think that that's -- we don't see anything to that magnitude. The other thing we did point out though is -- I know everyone added back $0.08, but we had a few things going the other way that would reduce that $0.08 that we have to go up against. But I fully -- I know where you got the $0.08. Charles Cerankosky - Northcoast Research: All right. Thank you very much, guys.

Thank you. Our next question is coming from Dmitry Silversteyn of Longbow Research. Dmitry Silversteyn - Longbow Research LLC: I just want to make sure that I understood what you were saying about the store pricing going off. It looked like if I kind of back out flattish to maybe up 1% volume growth, maybe a little bit of mix improvement as more DIY traffic come through, that pricing was up about 7%, 7.5%? Is that about the range that I should be thinking of for the rest of the year?

Yes, you're in the range, Dmitry. Dmitry Silversteyn - Longbow Research LLC: Okay, very good. Secondly, on the corporate expense line, you see a lot of volatility there over the last few years. Can you give us some of kind of the bigger moving pieces that we possibly can use to forecast what your corporate expense would be?

Yes, I think some of the bigger pieces that over the last couple of years we've done a few things and we've tried to do a few things. And #1 is environmental expense. And I would say that we've really made a conscious effort in the last 7, 8 years really to try to get, for a lack of a better term, no further action letters from the local and the national EPA. But some of the larger locations that we've had that we've put in our Q and if you get a chance to read the footnote regarding the environmental expenses. And so two years ago, we went down a path of a piece of property in New Jersey, Brownsburg, New Jersey that worked with EPA to try to get to the point where long term it's no longer a contingent liability. We also did it late last year with the Newark, New Jersey paint plant. We also did a lot of this work in Chicago, as well as at Emeryville. So we're hoping that in the next few years, we're going to be through the majority of those assets. So that has been in the -- caused a lot of the fluctuation. And then we've had a lot of different things in that admin line that have gone back and forth with the interest expense and some of the other things and what Chuck just mentioned. The warrants that last year in the second quarter was $0.08. And I'm sure if Chuck was still on the phone, he would tell you in the fourth quarter, there was also a piece there, so -- and then we've also taken a look at the assets. And last year, we're able to sell a couple of assets, some plants when we went through the rightsizing of the company a few years ago. There was a couple of pieces of real estate that we felt that really we didn't need anymore. So depending on where we were on the book value, we were selling different assets throughout. So the inventory of those type of assets are down. We're getting closer to the end of it. Our interest is -- I think we're done doing adjustments to our debt. So I think going forward it could be a lot less volatile than we've had in the last three to four years. Dmitry Silversteyn - Longbow Research LLC: So in terms of modeling and for quarterly purposes, can I assume that it's going to be somewhere in the low 50s?

Yes, I think that's probably that. When you take a look at the full year, I think the full year, you still have to go against those warrants that Chuck mentioned in the second and fourth quarter. But I think that it's probably not that bad of a modeling. Dmitry Silversteyn - Longbow Research LLC: You also mentioned in your prepared remarks, in the second quarter, besides the accelerating raw material negative comps that you're going to see, you're also starting to annualize acquisitions and price increases. I understand the acquisition part of it, but to the extent that you got new pricing in your stores somewhere close to, let's call it, mid-single digits, 6%, 7% something like that in December, January period of 2010, which price increase annualization were you referring to? Because that sounds like it's just getting started.

In April 1 of last year, we took approximately a 4% price increase through our Stores business. So until we get back around April 1 of this year, we have that price increase flow into the system. There was another 4% in July and then an 8% in December. So we've been essentially operating in 3 price actions, Dmitry, over these last several months. And the most -- furthest back one of those is now going to anniversary off. So we're essentially running on two price increases then. Dmitry Silversteyn - Longbow Research LLC: Okay. I understand. Thanks. That's all the question I have. Thank you.

Thank you. Our next question is coming from Dennis McGill of Zelman and Associates. Dennis McGill - Zelman & Associates: A Thanks again. The one thing kind of I was hoping you could help me with, on the gross margin impact from the acquisitions, you mentioned the sequential impact. But I think that the acquisitions would've been on the majority of the fourth quarter. So I'm just trying to understand is that a seasonal difference between the core business and the acquisitions? Or why would there still be a sequential impact with that mix?

Yes, when you take a look at -- let's go back April 1, we're also anniversarying the Sayerlack acquisition, the one acquisition. So we're going to start -- last year, the Sayerlack -- the acquisition gross margins are lower than our core. And so when you start to go up against on a comp basis we went ahead in the second quarter last year and we have in the second quarter this year. Dennis McGill - Zelman & Associates: I know. You add this sequentially. Yes.

Yes, when you take a look at it sequentially, the acquisitions don't have the biggest sales -- bell-shaped curve as well as our other business. Our core business in the first quarter is one of the lowest. It's at the end of the bell-shaped curve. Theirs is more of a straight line. So you're right. They're going to have more impact in the first quarter than they're going to have in the second, third or even the fourth. Dennis McGill - Zelman & Associates: So if anything, does that mix shift then go the other way as we move into the middle part of the year because [indiscernible]...

Yes. [indiscernible] but you just have a larger piece of the core and a higher gross margin. And so that's why it won't have as much of an effect. Dennis McGill - Zelman & Associates: Right. Okay. And then just more generally, Chris, if you want to take this. Just commenting on the residential repaint business as you move through the quarter, did you guys see any differences? And can you talk at all -- a little bit about the spring and how the spring has opened up typical to -- versus typical seasonality?

Yes, the first quarter, obviously, the very low quarter for res repaint, there's literally no exterior house painting season through that portion. So I think the kind of volume numbers that we've been counting on in our Paint Stores Group, particularly where we see that the majority of that business is relatively flat would indicate that it was not falling off the charts and certainly not rebounding dramatically. We're just getting into the season now. We have had some rough weather. We see that in the fact that our exterior paint sales are lagging behind where they would typically be at this time. So hopefully that's indicating some kind of demand, and we'll have a much better feel for that at the end of the second quarter, Dennis. Dennis McGill - Zelman & Associates: Okay. All right. Thanks, guys.

Thank you. Our next question is coming from Bob Koort of Goldman Sachs.

It's Brian Maguire on for Bob this morning. Just to come back to pricing, and I know you guys don't like to tip your hand on pricing before you make the public announcement, but just thinking philosophically about how you think about pricing and has that changed over the last year? And as you said, some of your suppliers, your TiO2 suppliers have been more public in announcing their price increases and they've also been pretty open about the frequency with which they should be coming down the line in the next year or 2, periodically every 3 months or so, has that changed your thinking about your timing of announcing price increases and maybe doing them more frequently and on the basis of some kind of formula when you do see your raw material go up? And then also as the biggest architectural paint company in the U.S., is your kind of thought around being a leader on pricing in this kind of a raw material environment changed over the last year?

Yes, I would say, Brian, that our philosophy on pricing has not changed, that again we remain a raw material-driven pricer. When we get these pressures, we've always begun with the process by pushing back to see if we can mitigate it from the supplier to us. Secondarily, what efficiencies we can bring in house to absorb it. And then third and finally, taking it to the customer base. In terms of, are we thinking about going on a more frequent timing basis, I would say 3 price increases in calendar year 2010 will be indicative of a willingness to go on a more frequent basis when the market demands us to do that. And finally, you're absolutely correct that our practice here has been to be careful about talking to our customers first and then advising the street of exactly what we've done by percentages on dates, et cetera. And at this point in time, we've not announced any additional pricing for calendar year 2011. We will be monitoring the raw material environment, and if we feel that we need to do that, we have shown in the past a discipline and the courage to get out and take the appropriate pricing when we need to. In terms of whether we're leading or following, that's never been a concern or a thought for us. Again it's really driven on where we specifically are in our raw material basket issue.

Okay. Thanks. And then one follow-up on TiO2 supply and availability. And I kind of understand the industry is running close to 100% operating rates now even in a period with demand especially in North America for architectural coatings still way below prior peaks. Can you comment on your ability to continue to get TiO2 supply if we were to have a sharp rebound in demand? It doesn't seem like it's coming in 2011, but you guys just being one of the bigger ones in the industry, I think you'd be okay. But how firm are those contracts? I know you're having discussions.

Yes, I think Sean's comment on the notion of a contract with these suppliers that really isn't perhaps the right way to think about it. However, I would tell you that we have great confidence and comfort that the titanium dioxide that we need get through this year is in good shape. No availability concerns.

And beyond this year? A little out...

That's a little further out than we have -- our relationships, our negotiations with these suppliers, I would expect that these folks will be able to keep pace with us for the foreseeable future.

Okay. Thanks for taking my question.

Thank you. Our next question is coming from Greg Bernard [ph] of UBS. Unknown Analyst -: Say, I was wondering if you would comment on the game plan to get the margins up on these -- the acquisitions that you went through 2010. Several times in the call you mentioned their contribution to revenue and then their contribution to EBITDA was quite disproportionate. So I mean, are you expecting improvement with the market? Is there some self-help programs that you're going to do? Could you walk me through that a little bit, please?

Yes, I think what we've mentioned in the past, when you look at this wood business, this wood coatings business, the product finishes, we lump Sayerlack, we lump -- when we look at this business we talk about Inchem, Becker and Sayerlack acquisitions over the last few years. And over time, we think that we've looked at the infrastructure and we've looked at the type of sales they're making through these facilities, and we think that most of it is wood, but there's some opportunities for other substrates, whether that be plastic or metal. And when we -- as we do a few more acquisitions, when you take a look at some of the other things that we've done over Europe, we think that over time, we're going to be able to put more products through these plants, and we're going to get the sales up. The gross profit percents may not grow dramatic, never get to the exact position where we are in our core, but we think they -- it will run at a lower SG&A as a percent of sales and eventually, we can get up the margins. What we've talked about is that when we do an acquisition in the United States, when you think about Duron, MAB, Columbia, even smaller ones like VHT, over time, we can do those relatively quickly. We're just start hitting the margins up 12 to 15 months. What we've said is our game plan is going to be a little bit longer because we don't have the other assets in Europe or Southeast Asia that will do it. So we think a little -- it's going to take us a little more time, probably almost double the 15 months that it takes us inside the United States, but eventually, we'll get there. Unknown Analyst -: Okay. There are no restructuring options that could accelerate that process?

Yes, there is restructuring opportunities, Greg, and we were less than a year into these acquisitions and there's all kinds of integration activities underway, and consolidations and those will continue to run for a while. And typically, when you first undertake those, there's a cost associated with them, but you would see the lift in the backside of it. So we're still very optimistic about these acquisitions. They're performing ahead of our expectations at this point in time, and they will be a contributor. Unknown Analyst -: Okay. Thank you very much, all.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr. Wells.

Thanks, Jackie. I'd like to close today by reminding you that our annual financial community presentation is scheduled for Thursday, May 12 at the Waldorf Astoria in Midtown Manhattan. If you have not signed up but would like to attend, there's still time. Send me an e-mail at rjwells@sherwin.com, and I'll reply with a link to our registration site. We'd love to see you there. Now thanks again for joining us this morning, and thank you for your continued interest in Sherwin-Williams.

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