SHERWIN WILLIAMS CO, 10-Q filed on 10/30/2013
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Document and Entity Information [Abstract]
 
Entity Registrant Name
SHERWIN WILLIAMS CO 
Entity Central Index Key
0000089800 
Document Type
10-Q 
Document Period End Date
Sep. 30, 2013 
Amendment Flag
false 
Document Fiscal Year Focus
2013 
Document Fiscal Period Focus
Q3 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Large Accelerated Filer 
Entity Common Stock, Shares Outstanding
101,333,029 
Statements of Consolidated Income (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Income Statement [Abstract]
 
 
 
 
Net sales
$ 2,847,417 
$ 2,603,226 
$ 7,728,474 
$ 7,312,592 
Cost of goods sold
1,551,459 
1,452,944 
4,236,086 
4,101,874 
Gross profit
1,295,958 
1,150,282 
3,492,388 
3,210,718 
Percent to net sales
45.50% 
44.20% 
45.20% 
43.90% 
Selling, general and administrative expenses
889,690 
799,786 
2,505,493 
2,367,672 
Percent to net sales
31.20% 
30.70% 
32.40% 
32.40% 
Other general expense - net
834 
1,123 
5,266 
9,246 
Interest expense
15,394 
10,358 
45,774 
30,925 
Interest and net investment income
(916)
(793)
(2,363)
(1,960)
Other expense (income) - net
3,494 
(3,190)
1,488 
(8,281)
Income before income taxes
387,462 
342,998 
936,730 
813,116 
Income taxes
124,496 
108,045 
300,292 
250,134 
Net income
262,966 
234,953 
636,438 
562,982 
Net income per common share:
 
 
 
 
Basic (in dollars per share)
$ 2.60 
$ 2.29 
$ 6.24 
$ 5.49 
Diluted (in dollars per share)
$ 2.55 
$ 2.24 
$ 6.11 
$ 5.37 
Average shares outstanding - basic (in shares)
100,460,185 
101,525,658 
101,362,328 
101,680,883 
Average shares and equivalents outstanding - diluted (in shares)
102,622,514 
104,019,320 
103,551,542 
103,968,124 
Comprehensive income
$ 286,887 
$ 226,891 
$ 617,758 
$ 573,510 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Current assets:
 
 
 
Cash and cash equivalents
$ 1,035,713 
$ 862,590 
$ 55,181 
Accounts receivable, less allowance
1,348,607 
1,032,508 
1,263,079 
Inventories:
 
 
 
Finished goods
818,557 
732,359 
787,570 
Work in process and raw materials
199,061 
187,965 
176,125 
Total inventory
1,017,618 
920,324 
963,695 
Deferred income taxes
128,306 
126,730 
149,090 
Other current assets
240,471 
207,086 
178,350 
Total current assets
3,770,715 
3,149,238 
2,609,395 
Goodwill
1,175,621 
1,156,005 
1,122,924 
Intangible assets
307,043 
347,553 
316,926 
Deferred pension assets
252,229 
249,911 
235,011 
Other assets
405,052 
366,134 
397,408 
Property, plant and equipment:
 
 
 
Land
101,731 
102,336 
103,028 
Buildings
698,675 
677,944 
670,470 
Machinery and equipment
1,872,562 
1,750,729 
1,726,551 
Construction in progress
44,301 
56,582 
50,902 
Total gross property, plant and equipment
2,717,269 
2,587,591 
2,550,951 
Less allowances for depreciation
1,706,341 
1,621,695 
1,607,350 
Total net property, plant and equipment
1,010,928 
965,896 
943,601 
Total Assets
6,921,588 
6,234,737 
5,625,265 
Current liabilities:
 
 
 
Short-term borrowings
295,276 
69,035 
330,148 
Accounts payable
1,121,001 
922,999 
1,034,921 
Compensation and taxes withheld
305,525 
314,892 
300,152 
Accrued taxes
187,662 
52,104 
157,558 
Current portion of long-term debt
2,386 
3,689 
3,936 
Other accruals
494,423 
513,717 
465,309 
Total current liabilities
2,406,273 
1,876,436 
2,292,024 
Long-term debt
1,631,988 
1,632,165 
635,348 
Postretirement benefits other than pensions
320,219 
320,223 
299,438 
Other long-term liabilities
693,457 
614,109 
619,045 
Shareholders' equity:
 
 
 
Common stock - $1.00 par value: 101,333,029, 103,270,067 and 103,107,051 shares outstanding at September 30, 2013, December 31, 2012 and September 30, 2012, respectively
112,604 
111,623 
110,658 
Preferred stock - convertible, no par value: 54,946, 101,086 and 115,321 shares outstanding at September 30, 2013, December 31, 2012 and September 30, 2012, respectively
54,946 
101,086 
115,321 
Unearned ESOP compensation
(54,946)
(101,086)
(115,321)
Other capital
1,798,797 
1,673,788 
1,552,202 
Retained earnings
1,708,553 
1,226,467 
1,198,573 
Treasury stock, at cost
(1,361,234)
(849,685)
(724,673)
Cumulative other comprehensive loss
(389,069)
(370,389)
(357,350)
Total shareholders' equity
1,869,651 
1,791,804 
1,779,410 
Total Liabilities and Shareholders' Equity
$ 6,921,588 
$ 6,234,737 
$ 5,625,265 
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Statement of Financial Position [Abstract]
 
 
 
Common stock, par value (usd per share)
$ 1 
$ 1 
$ 1 
Common stock, shares outstanding (shares)
101,333,029 
103,270,067 
103,107,051 
Preferred stock, par value (usd per share)
   
   
   
Preferred stock, shares outstanding (shares)
54,946 
101,086 
115,321 
Condensed Statements of Consolidated Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
OPERATING ACTIVITIES
 
 
Net income
$ 636,438 
$ 562,982 
Adjustments to reconcile net income to net operating cash:
 
 
Depreciation
117,693 
113,336 
Amortization of intangible assets
21,473 
20,099 
Stock-based compensation expense
35,948 
33,044 
Provisions for qualified exit costs
848 
6,648 
Provisions for environmental-related matters
2,353 
9,621 
Defined benefit pension plans net cost
14,963 
14,782 
Net increase in postretirement liability
2,700 
2,700 
Other
4,302 
(2,975)
Change in working capital accounts - net
(52,193)
(145,124)
Costs incurred for environmental-related matters
(9,736)
(24,614)
Costs incurred for qualified exit costs
(6,451)
(2,374)
Other
9,573 
(18,860)
Net operating cash
777,911 
569,265 
INVESTING ACTIVITIES
 
 
Capital expenditures
(108,500)
(102,989)
Acquisitions of businesses, net of cash acquired
(92,780)
(46,893)
Proceeds from sale of assets
3,298 
11,065 
Increase in other investments
(55,872)
(36,222)
Net investing cash
(253,854)
(175,039)
FINANCING ACTIVITIES
 
 
Net increase (decrease) in short-term borrowings
228,241 
(15,230)
Proceeds from long-term debt
   
2,108 
Payments of long-term debt
(1,140)
(12,943)
Payments of cash dividends
(154,352)
(120,594)
Proceeds from stock options exercised
48,973 
162,416 
Income tax effect of stock-based compensation exercises and vesting
41,219 
62,046 
Treasury stock purchased
(492,022)
(433,053)
Other
(18,443)
(14,376)
Net financing cash
(347,524)
(369,626)
Effect of exchange rate changes on cash
(3,410)
(2,115)
Net increase in cash and cash equivalents
173,123 
22,485 
Cash and cash equivalents at beginning of year
862,590 
32,696 
Cash and cash equivalents at end of period
1,035,713 
55,181 
Income taxes paid
161,416 
164,157 
Interest paid
$ 39,639 
$ 29,850 
Basis of Presentation
BASIS OF PRESENTATION
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
There have been no significant changes in critical accounting policies since December 31, 2012. Accounting estimates were revised as necessary during the first nine months of 2013 based on new information and changes in facts and circumstances.
The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.
The consolidated results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013.
Impact of Recently Issued Accounting Pronouncements
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-2, which amends the Comprehensive Income Topic of the Accounting Standards Codification (ASC). The updated standard requires the presentation of information about reclassifications out of accumulated other comprehensive income. ASU No. 2013-2 is effective for fiscal years and interim periods within those years beginning after December 15, 2012. The Company has adopted the standard on a prospective basis as required. The updated standard affects the Company's disclosures but has no impact on its results of operations, financial condition or liquidity.
Dividends
DIVIDENDS
DIVIDENDS
Dividends paid on common stock during each of the first three quarters of 2013 and 2012 were $.50 per common share and $.39 per common share, respectively.
Changes in Cumulative Other Comprehensive Loss
CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS
CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in Cumulative other comprehensive loss for the nine months ended September 30, 2013:

(Thousands of dollars)
 
 
 
 
 
 
 
 
Foreign Currency Translation Adjustments
 
Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans
 
Unrealized Net Gains (Losses) on Available-for-Sale Securities
 
Total Cumulative Other Comprehensive Loss
Beginning balance
$
(204,195
)
 
$
(166,595
)
 
$
401

 
$
(370,389
)
Other comprehensive loss before reclassifications(1)
(27,935
)
 
(855
)
 
(276
)
 
(29,066
)
Amounts reclassified from other comprehensive loss (2)


 
10,389

 
(3
)
 
10,386

Net other comprehensive (loss) income
(27,935
)
 
9,534

 
(279
)
 
(18,680
)
Ending balance
$
(232,130
)
 
$
(157,061
)
 
$
122

 
$
(389,069
)
(1) Net of taxes of $534 for net actuarial gains and prior service costs recognized for employee benefit plans and $173 for unrealized net gains on available-for-sale securities.
(2) Net of taxes of $(6,005) for net actuarial gains and prior service costs recognized for employee benefit plans and $2 for unrealized net gains on available-for-sale securities.
Product Warranties
PRODUCT WARRANTIES
PRODUCT WARRANTIES
Changes in the Company’s accrual for product warranty claims during the first nine months of 2013 and 2012, including customer satisfaction settlements, were as follows:
 
(Thousands of dollars)
 
 
 
 
2013
 
2012
Balance at January 1
$
22,710

 
$
22,071

Charges to expense
18,916

 
18,646

Settlements
(18,936
)
 
(19,101
)
Balance at September 30
$
22,690

 
$
21,616


For further details on the Company’s accrual for product warranty claims, see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Exit or Disposal Activities
EXIT OR DISPOSAL ACTIVITIES
EXIT OR DISPOSAL ACTIVITIES
Liabilities associated with exit or disposal activities are recognized as incurred in accordance with the Exit or Disposal Cost Obligations Topic of the ASC. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with the Property, Plant and Equipment Topic of the ASC, and if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value.
In the nine months ended September 30, 2013, four stores in the Paint Stores Group, four branches in the Global Finishes Group and seven stores in the Latin America Coatings Group were closed due to lower demand or redundancy.
The following table summarizes the activity and remaining liabilities associated with qualified exit costs at September 30, 2013:
 
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
Exit Plan
 
Balance at December 31, 2012
 
Provisions in Cost of goods sold or SG&A
 
 Actual expenditures charged to accrual
 
Adjustments to prior provisions in Other general expense - net
 
Balance at September 30, 2013
Paint Stores Group stores shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
 
 
$
27

 
$
(27
)
 
 
 


Consumer Group facilities shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
 
 
164

 

 
 
 
$
164

Global Finishes Group stores shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
 
 
294

 
(25
)
 
 
 
269

Paint Stores Group stores shutdown in 2012:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
$
313

 
 
 
(54
)
 
$
(1
)
 
258

Global Finishes Group facilities shutdown in 2012:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
2,236

 
268

 
(1,883
)
 
 
 
621

Other qualified exit costs
 
3,430

 


 
(3,530
)
 
100

 


Global Finishes Group branches shutdown in 2011:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
290

 
 
 
(128
)
 
 
 
162

Other qualified exit costs for facilities shutdown prior to 2011
 
2,288

 
 
 
(804
)
 
(4
)
 
1,480

Totals
 
$
8,557

 
$
753

 
$
(6,451
)
 
$
95

 
$
2,954


For further details on the Company’s exit or disposal activities, see Note 5 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Health Care, Pension and Other Benefits
HEALTH CARE, PENSION AND OTHER BENEFITS
HEALTH CARE, PENSION AND OTHER BENEFITS
Shown below are the components of the Company’s net periodic benefit cost for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:
 
(Thousands of dollars)
Domestic Defined
Benefit Pension Plans
 
Foreign Defined
Benefit Pension Plans
 
Postretirement
Benefits Other than
Pensions
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Three Months Ended September 30:
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
5,396

 
$
4,732

 
$
1,160

 
$
892

 
$
765

 
$
736

Interest cost
4,267

 
4,330

 
1,902

 
1,725

 
3,046

 
3,380

Expected return on assets
(10,342
)
 
(11,210
)
 
(1,783
)
 
(1,677
)
 
 
 
 
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
456

 
398

 
 
 
 
 
(82
)
 
(164
)
Actuarial loss
3,489

 
5,486

 
443

 
251

 
983

 
429

Net periodic benefit cost
$
3,266

 
$
3,736

 
$
1,722

 
$
1,191

 
$
4,712

 
$
4,381

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30:
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
16,189

 
$
14,196

 
$
3,480

 
$
2,677

 
$
2,296

 
$
2,208

Interest cost
12,801

 
12,992

 
5,707

 
5,174

 
9,137

 
10,140

Expected return on assets
(31,026
)
 
(33,631
)
 
(5,347
)
 
(5,031
)
 
 
 
 
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
1,367

 
1,194

 
 
 
 
 
(246
)
 
(492
)
Actuarial loss
10,465

 
16,457

 
1,327

 
754

 
2,950

 
1,286

Net periodic benefit cost
$
9,796

 
$
11,208

 
$
5,167

 
$
3,574

 
$
14,137

 
$
13,142


For further details on the Company’s health care, pension and other benefits, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Other Long-term Liabilities
OTHER LONG-TERM LIABILITIES
OTHER LONG-TERM LIABILITIES
The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are determined based on currently available facts regarding each site. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided. At September 30, 2013, the unaccrued maximum of the estimated range of possible outcomes is $81.9 million higher than the minimum.
The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.
Included in Other long-term liabilities at September 30, 2013 and 2012 were accruals for extended environmental-related activities of $94.8 million and $80.8 million, respectively. Estimated costs of current investigation and remediation activities of $17.1 million and $42.8 million are included in Other accruals at September 30, 2013 and 2012, respectively.
Two of the Company’s currently and formerly owned manufacturing sites account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at September 30, 2013. At September 30, 2013, $58.2 million, or 52.0 percent of the total accrual, related directly to these two sites. In the aggregate unaccrued maximum of $81.9 million at September 30, 2013, $56.9 million, or 69.4 percent, related to the two manufacturing sites. While environmental investigations and remedial actions are in different stages at these sites, additional investigations, remedial actions and monitoring will likely be required at each site.
Management cannot presently estimate the ultimate potential loss contingencies related to these sites or other less significant sites until such time as a substantial portion of the investigation at the sites is completed and remedial action plans are developed. In the event any future loss contingency significantly exceeds the current amount accrued, the recording of the ultimate liability may result in a material impact on net income for the annual or interim period during which the additional costs are accrued. Management does not believe that any potential liability ultimately attributed to the Company for its environmental-related matters will have a material adverse effect on the Company’s financial condition, liquidity, or cash flow due to the extended period of time during which environmental investigation and remediation takes place. An estimate of the potential impact on the Company’s operations cannot be made due to the aforementioned uncertainties.
Management expects these contingent environmental-related liabilities to be resolved over an extended period of time. Management is unable to provide a more specific time frame due to the indefinite amount of time to conduct investigation activities at any site, the indefinite amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indefinite amount of time necessary to conduct remediation activities.
For further details on the Company’s Other long-term liabilities, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Litigation
LITIGATION
LITIGATION
In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with the Contingencies Topic of the ASC, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred.
Lead pigment and lead-based paint litigation. The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company is also a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint. The Company believes that the litigation brought to date is without merit or subject to meritorious defenses and is vigorously defending such litigation. The Company has not settled any lead pigment or lead-based paint litigation. The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief.
Notwithstanding the Company’s views on the merits, litigation is inherently subject to many uncertainties, and the Company ultimately may not prevail. Adverse court rulings or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings. In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful.
Due to the uncertainties involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceedings, or the effect that any legislation and/or administrative regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations. The Company has not accrued any amounts for such litigation. With respect to such litigation, including the public nuisance litigation, the Company does not believe that it is probable that a loss has occurred, and it is not possible to estimate the range of potential losses as there is no prior history of a loss of this nature and there is no substantive information upon which an estimate could be based. In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated. In the event any significant liability is determined to be attributable to the Company relating to such litigation, the recording of the liability may result in a material impact on net income for the annual or interim period during which such liability is accrued. Additionally, due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made due to the aforementioned uncertainties.
Public nuisance claim litigation. The Company and other companies are or were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island, the City of St. Louis, Missouri, various cities and counties in the State of New Jersey, various cities in the State of Ohio and the State of Ohio, the City of Chicago, Illinois, the City of Milwaukee, Wisconsin and the County of Santa Clara, California and other public entities in the State of California. Except for the Santa Clara County, California proceeding, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.
The proceedings initiated by the State of Rhode Island included two jury trials. At the conclusion of the second trial, the jury returned a verdict finding that (i) the cumulative presence of lead pigment in paints and coatings on buildings in the State of Rhode Island constitutes a public nuisance, (ii) the Company, along with two other defendants, caused or substantially contributed to the creation of the public nuisance, and (iii) the Company and two other defendants should be ordered to abate the public nuisance. The Company and two other defendants appealed and, on July 1, 2008, the Rhode Island Supreme Court, among other determinations, reversed the judgment of abatement with respect to the Company and two other defendants. The Rhode Island Supreme Court’s decision reversed the public nuisance liability judgment against the Company on the basis that the complaint failed to state a public nuisance claim as a matter of law.
The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara. In the original complaint, the plaintiffs asserted various claims including fraud and concealment, strict product liability/failure to warn, strict product liability/design defect, negligence, negligent breach of a special duty, public nuisance, private nuisance, and violations of California’s Business and Professions Code. A number of the asserted claims were resolved in favor of the defendants through pre-trial proceedings. The named plaintiffs in the Fourth Amended Complaint, filed on March 16, 2011, are the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura, and the Cities of Oakland, San Diego and San Francisco. The Fourth Amended Complaint asserts a sole claim for public nuisance, alleging that the presence of lead products for use in paint and coatings in, on and around buildings in the plaintiffs’ jurisdictions constitutes a public nuisance. The plaintiffs seek the abatement of the alleged public nuisance that exists within the plaintiffs’ jurisdictions. A trial commenced on July 15, 2013 and ended on August 22, 2013. Closing arguments were heard on September 23, 2013. The trial court is expected to issue its decision by December 31, 2013.
Litigation seeking damages from alleged personal injury. The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries. These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint, claims for damages allegedly incurred by the children’s parents or guardians, and claims for damages allegedly incurred by professional painting contractors. These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs. These proceedings include purported claims by individuals, groups of individuals and class actions.
The plaintiff in Thomas v. Lead Industries Association, et al., initiated an action in state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999. The claims against the Company and the other defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability. Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory which is similar to market share liability) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff. The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result. The plaintiff appealed and, on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the Company and other defendants.
Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation. Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts. However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v. American Cyanamid, et al., on November 15, 2010, the District Court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive. The District Court's decision in Gibson v. American Cyanamid, et al., has been appealed by the plaintiff.
Insurance coverage litigation. The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to primarily determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company. The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, is currently stayed and inactive. The liability insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, has been dismissed. An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities. The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual. Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition. As previously stated, however, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

Department of Labor (DOL) leveraged ESOP settlement. As previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, on February 20, 2013, the Company reached a settlement with the DOL of the DOL's investigation of transactions related to the Company's ESOP that were implemented on August 1, 2006 and August 27, 2003. The DOL had notified the Company, among others, of potential enforcement claims asserting breaches of fiduciary obligations and sought compensatory and equitable remedies. The Company resolved all ESOP related claims with the DOL by agreeing, in part, to make a one-time payment of $80.0 million to the ESOP, resulting in a $49.2 million after tax charge to earnings in the fourth quarter of 2012. The Company made this required $80.0 million payment to the ESOP during the first quarter of 2013.

Government tax assessment settlements related to Brazilian operations. Charges of $16.9 million and $28.7 million were recorded to cost of goods sold in the quarter and nine months, respectively, and $2.9 million to SG&A in the quarter and nine months. The charges in the quarter and nine months were primarily related to import duty taxes paid to the Brazilian government related to the handling of import duties on products brought into the country for the years 2006 through 2012. The Company elected to pay the taxes through an existing voluntary amnesty program offered by the government to resolve these issues rather than contest them in court. The after-tax charges were $13.5 million and $21.9 million, respectively, for the quarter and nine months. The Company’s import duty process in Brazil was changed to reach a final resolution of this matter with the Brazilian government.
Other
OTHER
OTHER
Other general expense - net
Included in Other general expense - net were the following:
(Thousands of dollars)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Provisions for environmental matters - net
$
584

 
$
528

 
$
2,353

 
$
9,621

Loss (gain) on disposition of assets
495

 
654

 
2,818

 
(281
)
Adjustments to prior provisions for qualified exit costs
(245
)
 
(59
)
 
95

 
(94
)
Total
$
834

 
$
1,123

 
$
5,266

 
$
9,246


Provisions for environmental matters - net represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with the Offsetting Subtopic of the Balance Sheet Topic of the ASC. See Note 8 for further details on the Company’s environmental-related activities.
The loss (gain) on disposition of assets represents net realized losses (gains) associated with the disposal of fixed assets previously used in the conduct of the primary business of the Company.
The adjustments to prior provisions for qualified exit costs represent site specific increases or decreases to accrued qualified exit costs as adjustments for costs of employee terminations are required or as information becomes available upon which more accurate amounts can be reasonably estimated. See Note 6 for further details on the Company’s exit or disposal activities.
Other expense (income) - net
Included in Other expense (income) - net were the following:
 
(Thousands of dollars)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Dividend and royalty income
$
(1,128
)
 
$
(1,433
)
 
$
(4,765
)
 
$
(3,534
)
Net expense from financing activities
2,508

 
2,347

 
7,251

 
6,368

Foreign currency transaction related losses (gains)
2,594

 
(2,604
)
 
8,538

 
(6,308
)
Other income
(3,981
)
 
(3,629
)
 
(18,400
)
 
(12,109
)
Other expense
3,501

 
2,129

 
8,864

 
7,302

Total
$
3,494

 
$
(3,190
)
 
$
1,488

 
$
(8,281
)

The net expense from financing activities includes the net expense relating to the change in the Company’s financing fees.
Foreign currency transaction related losses (gains) represent net realized losses (gains) on U.S. dollar-denominated liabilities of foreign subsidiaries and net realized and unrealized losses (gains) from foreign currency option and forward contracts. The Company had foreign currency option and forward contracts outstanding at September 30, 2012. All of the outstanding contracts had maturity dates of less than twelve months and were undesignated hedges with changes in fair value being recognized in earnings in accordance with the Derivatives and Hedging Topic of the ASC. These derivative instrument values were included in either Other current assets or Other accruals and were insignificant at September 30, 2012. There were no foreign currency option and forward contracts outstanding at September 30, 2013.
Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no items within the other income or other expense caption that were individually significant.
Income Taxes
INCOME TAXES
INCOME TAXES
The effective tax rate was 32.1 percent for the third quarter and first nine months of 2013, compared to 31.5 percent and 30.8 percent for the third quarter and first nine months of 2012, respectively. The increase in the effective tax rate for the third quarter and first nine months of 2013 compared to 2012 was primarily due to the impact of additional state income tax expense as well as a reduction in tax benefits related to federal income tax credits.
At December 31, 2012, the Company had $28.1 million in unrecognized tax benefits, the recognition of which would have an effect of $25.0 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2012, was $7.0 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised of items related to federal audits of partnership investments, assessed state income tax audits, state settlement negotiations currently in progress and expiring statutes in federal and foreign jurisdictions.
The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2012, the Company had accrued $6.2 million for the potential payment of income tax interest and penalties.
There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2012 during the first nine months of 2013.
On January 2, 2013, the American Taxpayer Relief Act (ATRA) was enacted which retroactively reinstated and extended the Federal Research and Development Tax Credit from January 1, 2012 to December 31, 2013. As a result, the Company recognized a $2.0 million discrete tax benefit during the first quarter of 2013. The other provisions of the Act will have a negligible impact on the Company's effective tax rate in 2013.
During the third quarter of 2013, the Company completed the acquisition of the U.S./Canada business of Consorcio Comex, S.A. de C.V. The Company has engaged an independent valuation firm to value the assets of the acquired business. Once this process is completed, the Company will determine if any tax attributes are required to be recorded.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The IRS completed an examination of the Company's U.S. income tax returns for the 2008 and 2009 tax years in the third quarter of 2013. The audit adjustments had a negligible impact on the Company's 2013 effective tax rate. The Company has fully resolved all IRS issues relating to the matters challenging the ESOP related federal income tax deductions claimed by the Company. During the third quarter of 2013, the Company made a final interest payment of $2.0 million related to the 2008 ESOP adjustment which had been disclosed in prior years. The Company expects that the IRS will commence an examination of the 2010 and 2011 tax years during the fourth quarter of 2013.
As of September 30, 2013, the Company is subject to non-U.S. income tax examinations for the tax years of 2006 through 2012. In addition, the Company is subject to state and local income tax examinations for the tax years 2002 through 2012.
Net Income Per Common Share
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE
(Thousands of dollars except per share data)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Basic
 
 
 
 
 
 
 
Average common shares outstanding
100,460,185

 
101,525,658

 
101,362,328

 
101,680,883

 
 
 
 
 
 
 
 
Net income
$
262,966

 
$
234,953

 
$
636,438

 
$
562,982

Less net income allocated to unvested restricted shares
(1,700
)
 
(1,965
)
 
(3,978
)
 
(4,654
)
Net income allocated to common shares
$
261,266

 
$
232,988

 
$
632,460

 
$
558,328

Basic net income per common share
$
2.60

 
$
2.29

 
$
6.24

 
$
5.49

 
 
 
 
 
 
 
 
Diluted
 
 
 
 
 
 
 
Average common shares outstanding
100,460,185

 
101,525,658

 
101,362,328

 
101,680,883

Stock options and other contingently issuable shares (1)
2,162,329

 
2,493,662

 
2,189,214

 
2,287,241

Average common shares outstanding assuming dilution
102,622,514

 
104,019,320

 
103,551,542

 
103,968,124

 
 
 
 
 
 
 
 
Net income
$
262,966

 
$
234,953

 
$
636,438

 
$
562,982

Less net income allocated to unvested restricted shares
 
 
 
 
 
 
 
assuming dilution
(1,667
)
 
(1,922
)
 
(3,902
)
 
(4,555
)
Net income allocated to common shares assuming
 
 
 
 
 
 
 
dilution
$
261,299

 
$
233,031

 
$
632,536

 
$
558,427

Diluted net income per common share
$
2.55

 
$
2.24

 
$
6.11

 
$
5.37

 
(1) 
Stock options and other contingently issuable shares excluded 16,609 shares for the three and nine months ended September 30, 2013. There were no options excluded due to their anti-dilutive effect for the three months ended September 30, 2012. Stock options and other contingently issuable shares excluded 10,924 shares for the nine months ended September 30, 2012.
The Company has two classes of participating securities: common shares and restricted shares, representing 99% and 1% of outstanding shares, respectively. The restricted shares are shares of unvested restricted stock granted under the Company’s restricted stock award program. Unvested restricted shares granted prior to April 21, 2010 received non-forfeitable dividends. Accordingly, the shares are considered a participating security and the two-class method of calculating basic and diluted earnings per share is required. Effective April 21, 2010, the restricted stock award program was revised and dividends on performance-based restricted shares granted after this date are deferred and payment is contingent upon the awards vesting. Only the time-based restricted shares, which continue to receive non-forfeitable dividends, are considered a participating security. Basic and diluted earnings per share are calculated using the two-class method in accordance with the Earnings Per Share Topic of the ASC.
Reportable Segment Information
REPORTABLE SEGMENT INFORMATION
REPORTABLE SEGMENT INFORMATION
The Company reports segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC. The Company has determined that it has four reportable operating segments: Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group (individually, a "Reportable Segment" and collectively, the “Reportable Segments”).
(Thousands of dollars)
Three Months Ended September 30, 2013
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
1,763,404

 
$
366,845

 
$
507,284

 
$
208,645

 
$
1,239

 
$
2,847,417

Intersegment transfers
 
 
689,319

 
2,437

 
9,170

 
(700,926
)
 
 
Total net sales and intersegment transfers
$
1,763,404

 
$
1,056,164

 
$
509,721

 
$
217,815

 
$
(699,687
)
 
$
2,847,417

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
359,352

 
$
73,065

(1) 
$
44,536

 
$
(983
)
 
 
 
$
475,970

Interest expense
 
 
 
 
 
 
 
 
$
(15,394
)
 
(15,394
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(73,114
)
 
(73,114
)
Income before income taxes
$
359,352

 
$
73,065

 
$
44,536

 
$
(983
)
 
$
(88,508
)
 
$
387,462

 
Three Months Ended September 30, 2012
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
1,553,461

 
$
348,001

 
$
491,816

 
$
208,726

 
$
1,222

 
$
2,603,226

Intersegment transfers
 
 
644,400

 
853

 
13,686

 
(658,939
)
 
 
Total net sales and intersegment transfers
$
1,553,461

 
$
992,401

 
$
492,669

 
$
222,412

 
$
(657,717
)
 
$
2,603,226

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
300,563

 
$
57,054

(1) 
$
36,415

 
$
21,931

 
 
 
$
415,963

Interest expense
 
 
 
 
 
 
 
 
$
(10,358
)
 
(10,358
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(62,607
)
 
(62,607
)
Income before income taxes
$
300,563

 
$
57,054

 
$
36,415

 
$
21,931

 
$
(72,965
)
 
$
342,998

(1) Segment profit includes $8,340 and $6,908 of mark-up on intersegment transfers realized as a result of external sales by the Paint Stores Group during the third quarter of 2013 and 2012, respectively.
 
Nine Months Ended September 30, 2013
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings 
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
4,537,849

 
$
1,069,085

 
$
1,507,626

 
$
610,271

 
$
3,643

 
$
7,728,474

Intersegment transfers
 
 
1,855,226

 
7,469

 
29,081

 
(1,891,776
)
 
 
Total net sales and intersegment transfers
$
4,537,849

 
$
2,924,311

 
$
1,515,095

 
$
639,352

 
$
(1,888,133
)
 
$
7,728,474

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
822,037

 
$
206,079

(2) 
$
132,929

 
$
20,712

 
 
 
$
1,181,757

Interest expense
 
 
 
 
 
 
 
 
$
(45,774
)
 
(45,774
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(199,253
)
 
(199,253
)
Income before income taxes
$
822,037

 
$
206,079

 
$
132,929

 
$
20,712

 
$
(245,027
)
 
$
936,730


 
Nine Months Ended September 30, 2012
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings 
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
4,164,648

 
$
1,066,123

 
$
1,473,584

 
$
604,600

 
$
3,637

 
$
7,312,592

Intersegment transfers
 
 
1,803,175

 
5,118

 
36,310

 
(1,844,603
)
 
 
Total net sales and intersegment transfers
$
4,164,648

 
$
2,869,298

 
$
1,478,702

 
$
640,910

 
$
(1,840,966
)
 
$
7,312,592

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
680,257

 
$
193,117

(2) 
$
113,084

 
$
51,099

 
 
 
$
1,037,557

Interest expense
 
 
 
 
 
 
 
 
$
(30,925
)
 
(30,925
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(193,516
)
 
(193,516
)
Income before income taxes
$
680,257

 
$
193,117

 
$
113,084

 
$
51,099

 
$
(224,441
)
 
$
813,116

(2) Segment profit includes $22,618 and $21,552 of mark-up on intersegment transfers realized as a result of external sales by the Paint Stores Group during the first nine months of 2013 and 2012, respectively.
In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs. International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses which were not directly associated with the Reportable Segments. The Administrative segment did not include any significant foreign operations. Also included in the Administrative segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.
Net external sales and segment profit of all consolidated foreign subsidiaries were $523.7 million and $18.2 million, respectively, for the third quarter of 2013, and $497.6 million and $37.7 million, respectively, for the third quarter of 2012. Net external sales and segment profit of these subsidiaries were $1.572 billion and $50.2 million, respectively, for the first nine months of 2013, and $1.491 billion and $105.0 million, respectively, for the first nine months of 2012. Long-lived assets of these subsidiaries totaled $679.9 million and $648.8 million at September 30, 2013 and September 30, 2012, respectively. Domestic operations accounted for the remaining net external sales, segment profits and long-lived assets. No single geographic area outside the United States was significant relative to consolidated net external sales, income before taxes, or consolidated long-lived assets.
Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all periods presented.
Acquisitions
ACQUISITIONS
ACQUISITIONS
On November 9, 2012, the Company entered into a definitive Stock Purchase Agreement to purchase all of the issued and outstanding shares of Consorcio Comex, S.A. de C.V. (Comex) for an aggregate purchase price of approximately $2.34 billion, including assumed debt. However, on July 17, 2013, the Federal Competition Commission of Mexico (Commission) informed the Company that the acquisition of Comex was not authorized. The Company appealed the Commission's decision. On September 16, 2013, the Stock Purchase Agreement was amended and restated to extend the date by which the agreement can be terminated by either party to March 31, 2014. Additionally, the Stock Purchase Agreement was amended to reflect a revised purchase price of approximately $2.25 billion. On October 29, 2013, the Commission informed the Company that the Company's appeal relating to its pending acquisition of Comex's Mexico business was denied and the acquisition is not authorized. The Company is currently reviewing the Commission's decision and is considering all options, including whether to refile with the Commission. Comex is a leader in the paint and coatings market in Mexico with headquarters in Mexico City. Also on September 16, 2013, the Company entered into a new definitive Stock Purchase Agreement and completed the acquisition of Comex's U.S./Canada business. The Company has engaged an independent valuation firm to value the assets of the acquired business. Once this process is completed, the Company will record any necessary adjustments. The U.S./Canada business of Comex focuses on the manufacture and sale of paint and paint related products through retail service centers under various proprietary brands. The acquisition of the U.S./Canada business of Comex strengthens the ability of the Paint Stores Group and Consumer Group to serve customers in key geographic markets.
Effective December 18, 2012, the Company acquired Jiangsu Pulanna Coating Co., Ltd. (Pulanna). Headquartered in Changzhou, China, Pulanna is a leading automotive refinishes coatings manufacturer in China. The acquisition strengthens the Global Finishes Group's established presence in China and its ability to serve automotive customers around the world.
Effective June 1, 2012, the Company acquired Geocel Holdings Corporation. Geocel manufactures innovative caulks, sealants, and adhesives specially designed for tough construction and repair applications in commercial, residential, industrial and transport non-automotive markets. Geocel has operations in both the United States and United Kingdom. The acquisition strengthens the Consumer Group’s sealant and adhesive market position.
The completed acquisitions above have been accounted for as purchases and their results of operations have been included in the consolidated financial statements since the date of acquisition. The Pulanna and Geocel acquisitions resulted in the recognition of goodwill and intangible assets.
The following unaudited pro-forma summary presents consolidated financial information as if the U.S./Canada business of Comex, Pulanna and Geocel had been acquired as of the beginning of each period presented. The pro-forma consolidated financial information does not necessarily reflect the actual results that would have occurred had the acquisitions taken place on January 1, 2012 or of future results of operations of these acquisitions under ownership and operation of the Company. 
(Thousands of dollars except per share data)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Net sales
$
2,959,162

 
$
2,753,280

 
$
8,083,123

 
$
7,874,576

Net income
257,149

 
229,297

 
609,651

 
524,639

Net income per common share:
 
 
 
 
 
 
 
Basic
$
2.53

 
$
2.24

 
$
5.96

 
$
5.12

Diluted
$
2.47

 
$
2.19

 
$
5.83

 
$
5.01

Fair Value Measurements
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. It does not expand the use of fair value measurements. The Company did not have any fair value measurements for its non-financial assets and liabilities during the third quarter. The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
Quoted Prices
 
 
 
 
 
 
 
in Active
 
 
 
Significant
 
Fair Value at
 
Markets for
 
Significant Other
 
Unobservable
 
September 30,
 
Identical Assets
 
Observable Inputs
 
Inputs
 
2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Deferred compensation plan asset (1)
$
20,456

 
$
3,294

 
$
17,162

 

Liabilities:
 
 
 
 
 
 
 
Deferred compensation plan liability (2)
$
25,800

 
$
25,800

 

 

 
(1) 
The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $20,420.

(2) 
The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.
Debt
DEBT
DEBT
The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.
(Thousands of dollars)
September 30, 2013
 
September 30, 2012
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Publicly traded debt
$
1,630,269

 
$
1,631,266

 
$
632,460

 
$
693,681

Non-traded debt
4,105

 
3,903

 
6,824

 
6,607


On March 18, 2013, Sherwin-Williams Canada, Inc., a wholly owned subsidiary of the Company, increased the aggregate amount of its existing credit facility to CAD 150.0 million. The credit facility is being used for general corporate purposes, including refinancing indebtedness and for acquisitions.
Non-Traded Investments
NON-TRADED INVESTMENTS
NON-TRADED INVESTMENTS
The Company has invested in the U.S. affordable housing and historic renovation real estate markets. These non-traded investments have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the ASC, the investments are not consolidated. The Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized over the period that the tax credits are recognized. The carrying amount of the investments, included in Other assets, was $262.4 million and $257.6 million at September 30, 2013 and 2012, respectively. The liability for estimated future capital contributions to the investments was $223.0 million and $224.0 million at September 30, 2013 and 2012, respectively.
Basis of Presentation (Policies)
Inventory Policy
The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.
Impact of Recently Issued Accounting Pronouncements (Policies)
New Accounting Pronouncements, Policy
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-2, which amends the Comprehensive Income Topic of the Accounting Standards Codification (ASC). The updated standard requires the presentation of information about reclassifications out of accumulated other comprehensive income. ASU No. 2013-2 is effective for fiscal years and interim periods within those years beginning after December 15, 2012. The Company has adopted the standard on a prospective basis as required. The updated standard affects the Company's disclosures but has no impact on its results of operations, financial condition or liquidity.
Changes in Cumulative Other Comprehensive Loss (Tables)
Changes in Cumulative Other Comprehensive Loss
The following table summarizes the changes in Cumulative other comprehensive loss for the nine months ended September 30, 2013:

(Thousands of dollars)
 
 
 
 
 
 
 
 
Foreign Currency Translation Adjustments
 
Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans
 
Unrealized Net Gains (Losses) on Available-for-Sale Securities
 
Total Cumulative Other Comprehensive Loss
Beginning balance
$
(204,195
)
 
$
(166,595
)
 
$
401

 
$
(370,389
)
Other comprehensive loss before reclassifications(1)
(27,935
)
 
(855
)
 
(276
)
 
(29,066
)
Amounts reclassified from other comprehensive loss (2)


 
10,389

 
(3
)
 
10,386

Net other comprehensive (loss) income
(27,935
)
 
9,534

 
(279
)
 
(18,680
)
Ending balance
$
(232,130
)
 
$
(157,061
)
 
$
122

 
$
(389,069
)
(1) Net of taxes of $534 for net actuarial gains and prior service costs recognized for employee benefit plans and $173 for unrealized net gains on available-for-sale securities.
(2) Net of taxes of $(6,005) for net actuarial gains and prior service costs recognized for employee benefit plans and $2 for unrealized net gains on available-for-sale securities.
Product Warranties (Tables)
Company's accrual for product warranty claims
Changes in the Company’s accrual for product warranty claims during the first nine months of 2013 and 2012, including customer satisfaction settlements, were as follows:
 
(Thousands of dollars)
 
 
 
 
2013
 
2012
Balance at January 1
$
22,710

 
$
22,071

Charges to expense
18,916

 
18,646

Settlements
(18,936
)
 
(19,101
)
Balance at September 30
$
22,690

 
$
21,616

Exit or Disposal Activities (Tables)
Summary of activity and remaining liabilities associated with qualified exit costs
The following table summarizes the activity and remaining liabilities associated with qualified exit costs at September 30, 2013:
 
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
Exit Plan
 
Balance at December 31, 2012
 
Provisions in Cost of goods sold or SG&A
 
 Actual expenditures charged to accrual
 
Adjustments to prior provisions in Other general expense - net
 
Balance at September 30, 2013
Paint Stores Group stores shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
 
 
$
27

 
$
(27
)
 
 
 


Consumer Group facilities shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
 
 
164

 

 
 
 
$
164

Global Finishes Group stores shutdown in 2013:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
 
 
294

 
(25
)
 
 
 
269

Paint Stores Group stores shutdown in 2012:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
$
313

 
 
 
(54
)
 
$
(1
)
 
258

Global Finishes Group facilities shutdown in 2012:
 
 
 
 
 
 
 
 
 
 
Severance and related costs
 
2,236

 
268

 
(1,883
)
 
 
 
621

Other qualified exit costs
 
3,430

 


 
(3,530
)
 
100

 


Global Finishes Group branches shutdown in 2011:
 
 
 
 
 
 
 
 
 
 
Other qualified exit costs
 
290

 
 
 
(128
)
 
 
 
162

Other qualified exit costs for facilities shutdown prior to 2011
 
2,288

 
 
 
(804
)
 
(4
)
 
1,480

Totals
 
$
8,557

 
$
753

 
$
(6,451
)
 
$
95

 
$
2,954

Health Care, Pension and Other Benefits (Tables)
Components of net periodic benefit costs for pension and other employee benefit plans
Shown below are the components of the Company’s net periodic benefit cost for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:
 
(Thousands of dollars)
Domestic Defined
Benefit Pension Plans
 
Foreign Defined
Benefit Pension Plans
 
Postretirement
Benefits Other than
Pensions
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Three Months Ended September 30:
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
5,396

 
$
4,732

 
$
1,160

 
$
892

 
$
765

 
$
736

Interest cost
4,267

 
4,330

 
1,902

 
1,725

 
3,046

 
3,380

Expected return on assets
(10,342
)
 
(11,210
)
 
(1,783
)
 
(1,677
)
 
 
 
 
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
456

 
398

 
 
 
 
 
(82
)
 
(164
)
Actuarial loss
3,489

 
5,486

 
443

 
251

 
983

 
429

Net periodic benefit cost
$
3,266

 
$
3,736

 
$
1,722

 
$
1,191

 
$
4,712

 
$
4,381

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30:
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
16,189

 
$
14,196

 
$
3,480

 
$
2,677

 
$
2,296

 
$
2,208

Interest cost
12,801

 
12,992

 
5,707

 
5,174

 
9,137

 
10,140

Expected return on assets
(31,026
)
 
(33,631
)
 
(5,347
)
 
(5,031
)
 
 
 
 
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
1,367

 
1,194

 
 
 
 
 
(246
)
 
(492
)
Actuarial loss
10,465

 
16,457

 
1,327

 
754

 
2,950

 
1,286

Net periodic benefit cost
$
9,796

 
$
11,208

 
$
5,167

 
$
3,574

 
$
14,137

 
$
13,142

Other (Tables)
Other general expense - net 
Included in Other general expense - net were the following:
(Thousands of dollars)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Provisions for environmental matters - net
$
584

 
$
528

 
$
2,353

 
$
9,621

Loss (gain) on disposition of assets
495

 
654

 
2,818

 
(281
)
Adjustments to prior provisions for qualified exit costs
(245
)
 
(59
)
 
95

 
(94
)
Total
$
834

 
$
1,123

 
$
5,266

 
$
9,246

Other expense (income) - net 
Included in Other expense (income) - net were the following:
 
(Thousands of dollars)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Dividend and royalty income
$
(1,128
)
 
$
(1,433
)
 
$
(4,765
)
 
$
(3,534
)
Net expense from financing activities
2,508

 
2,347

 
7,251

 
6,368

Foreign currency transaction related losses (gains)
2,594

 
(2,604
)
 
8,538

 
(6,308
)
Other income
(3,981
)
 
(3,629
)
 
(18,400
)
 
(12,109
)
Other expense
3,501

 
2,129

 
8,864

 
7,302

Total
$
3,494

 
$
(3,190
)
 
$
1,488

 
$
(8,281
)
Net Income Per Common Share (Tables)
Computation of net income per common share
(Thousands of dollars except per share data)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Basic
 
 
 
 
 
 
 
Average common shares outstanding
100,460,185

 
101,525,658

 
101,362,328

 
101,680,883

 
 
 
 
 
 
 
 
Net income
$
262,966

 
$
234,953

 
$
636,438

 
$
562,982

Less net income allocated to unvested restricted shares
(1,700
)
 
(1,965
)
 
(3,978
)
 
(4,654
)
Net income allocated to common shares
$
261,266

 
$
232,988

 
$
632,460

 
$
558,328

Basic net income per common share
$
2.60

 
$
2.29

 
$
6.24

 
$
5.49

 
 
 
 
 
 
 
 
Diluted
 
 
 
 
 
 
 
Average common shares outstanding
100,460,185

 
101,525,658

 
101,362,328

 
101,680,883

Stock options and other contingently issuable shares (1)
2,162,329

 
2,493,662

 
2,189,214

 
2,287,241

Average common shares outstanding assuming dilution
102,622,514

 
104,019,320

 
103,551,542

 
103,968,124

 
 
 
 
 
 
 
 
Net income
$
262,966

 
$
234,953

 
$
636,438

 
$
562,982

Less net income allocated to unvested restricted shares
 
 
 
 
 
 
 
assuming dilution
(1,667
)
 
(1,922
)
 
(3,902
)
 
(4,555
)
Net income allocated to common shares assuming
 
 
 
 
 
 
 
dilution
$
261,299

 
$
233,031

 
$
632,536

 
$
558,427

Diluted net income per common share
$
2.55

 
$
2.24

 
$
6.11

 
$
5.37

 
(1) 
Stock options and other contingently issuable shares excluded 16,609 shares for the three and nine months ended September 30, 2013. There were no options excluded due to their anti-dilutive effect for the three months ended September 30, 2012. Stock options and other contingently issuable shares excluded 10,924 shares for the nine months ended September 30, 2012.
Reportable Segment Information (Tables)
Reportable segment information
(Thousands of dollars)
Three Months Ended September 30, 2013
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
1,763,404

 
$
366,845

 
$
507,284

 
$
208,645

 
$
1,239

 
$
2,847,417

Intersegment transfers
 
 
689,319

 
2,437

 
9,170

 
(700,926
)
 
 
Total net sales and intersegment transfers
$
1,763,404

 
$
1,056,164

 
$
509,721

 
$
217,815

 
$
(699,687
)
 
$
2,847,417

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
359,352

 
$
73,065

(1) 
$
44,536

 
$
(983
)
 
 
 
$
475,970

Interest expense
 
 
 
 
 
 
 
 
$
(15,394
)
 
(15,394
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(73,114
)
 
(73,114
)
Income before income taxes
$
359,352

 
$
73,065

 
$
44,536

 
$
(983
)
 
$
(88,508
)
 
$
387,462

 
Three Months Ended September 30, 2012
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
1,553,461

 
$
348,001

 
$
491,816

 
$
208,726

 
$
1,222

 
$
2,603,226

Intersegment transfers
 
 
644,400

 
853

 
13,686

 
(658,939
)
 
 
Total net sales and intersegment transfers
$
1,553,461

 
$
992,401

 
$
492,669

 
$
222,412

 
$
(657,717
)
 
$
2,603,226

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
300,563

 
$
57,054

(1) 
$
36,415

 
$
21,931

 
 
 
$
415,963

Interest expense
 
 
 
 
 
 
 
 
$
(10,358
)
 
(10,358
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(62,607
)
 
(62,607
)
Income before income taxes
$
300,563

 
$
57,054

 
$
36,415

 
$
21,931

 
$
(72,965
)
 
$
342,998

(1) Segment profit includes $8,340 and $6,908 of mark-up on intersegment transfers realized as a result of external sales by the Paint Stores Group during the third quarter of 2013 and 2012, respectively.
 
Nine Months Ended September 30, 2013
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings 
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
4,537,849

 
$
1,069,085

 
$
1,507,626

 
$
610,271

 
$
3,643

 
$
7,728,474

Intersegment transfers
 
 
1,855,226

 
7,469

 
29,081

 
(1,891,776
)
 
 
Total net sales and intersegment transfers
$
4,537,849

 
$
2,924,311

 
$
1,515,095

 
$
639,352

 
$
(1,888,133
)
 
$
7,728,474

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
822,037

 
$
206,079

(2) 
$
132,929

 
$
20,712

 
 
 
$
1,181,757

Interest expense
 
 
 
 
 
 
 
 
$
(45,774
)
 
(45,774
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(199,253
)
 
(199,253
)
Income before income taxes
$
822,037

 
$
206,079

 
$
132,929

 
$
20,712

 
$
(245,027
)
 
$
936,730


 
Nine Months Ended September 30, 2012
 
Paint Stores
Group
 
Consumer
Group
 
Global
Finishes
Group
 
Latin America
Coatings 
Group
 
Administrative
 
Consolidated
Totals
Net external sales
$
4,164,648

 
$
1,066,123

 
$
1,473,584

 
$
604,600

 
$
3,637

 
$
7,312,592

Intersegment transfers
 
 
1,803,175

 
5,118

 
36,310

 
(1,844,603
)
 
 
Total net sales and intersegment transfers
$
4,164,648

 
$
2,869,298

 
$
1,478,702

 
$
640,910

 
$
(1,840,966
)
 
$
7,312,592

 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
$
680,257

 
$
193,117

(2) 
$
113,084

 
$
51,099

 
 
 
$
1,037,557

Interest expense
 
 
 
 
 
 
 
 
$
(30,925
)
 
(30,925
)
Administrative expenses and other
 
 
 
 
 
 
 
 
(193,516
)
 
(193,516
)
Income before income taxes
$
680,257

 
$
193,117

 
$
113,084

 
$
51,099

 
$
(224,441
)
 
$
813,116

(2) Segment profit includes $22,618 and $21,552 of mark-up on intersegment transfers realized as a result of external sales by the Paint Stores Group during the first nine months of 2013 and 2012, respectively.
Acquisitions (Tables)
Summary of pro-forma consolidated financial information
The following unaudited pro-forma summary presents consolidated financial information as if the U.S./Canada business of Comex, Pulanna and Geocel had been acquired as of the beginning of each period presented. The pro-forma consolidated financial information does not necessarily reflect the actual results that would have occurred had the acquisitions taken place on January 1, 2012 or of future results of operations of these acquisitions under ownership and operation of the Company. 
(Thousands of dollars except per share data)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Net sales
$
2,959,162

 
$
2,753,280

 
$
8,083,123

 
$
7,874,576

Net income
257,149

 
229,297

 
609,651

 
524,639

Net income per common share:
 
 
 
 
 
 
 
Basic
$
2.53

 
$
2.24

 
$
5.96

 
$
5.12

Diluted
$
2.47

 
$
2.19

 
$
5.83

 
$
5.01

Fair Value Measurements (Tables)
Financial assets and liabilities measured at fair value on a recurring basis
The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
Quoted Prices
 
 
 
 
 
 
 
in Active
 
 
 
Significant
 
Fair Value at
 
Markets for
 
Significant Other
 
Unobservable
 
September 30,
 
Identical Assets
 
Observable Inputs
 
Inputs
 
2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Deferred compensation plan asset (1)
$
20,456

 
$
3,294

 
$
17,162

 

Liabilities:
 
 
 
 
 
 
 
Deferred compensation plan liability (2)
$
25,800

 
$
25,800

 

 

 
(1) 
The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $20,420.

(2) 
The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices.
Debt (Tables)
Carrying amount and fair value of debt
The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.
(Thousands of dollars)
September 30, 2013
 
September 30, 2012
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Publicly traded debt
$
1,630,269

 
$
1,631,266

 
$
632,460

 
$
693,681

Non-traded debt
4,105

 
3,903

 
6,824

 
6,607

Dividends (Details)
3 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dividends [Abstract]
 
 
 
 
 
 
Dividends paid per common share (in dollars per share)
$ 0.500 
$ 0.5 
$ 0.5 
$ 0.390 
$ 0.39 
$ 0.39 
Changes in Cumulative Other Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
 
 
Beginning balance
$ (370,389)
$ (357,350)
Other comprehensive loss before reclassifications
(29,066)1
 
Amounts reclassified from other comprehensive loss
10,386 2
 
Net other comprehensive (loss) income
(18,680)
 
Ending balance
(389,069)
(357,350)
Tax effect for net actuarial gains and prior service costs recognized for employee benefit plans before reclassification
534 
 
Tax effect for unrealized net gains on available-for-sale securities before reclassifications
173 
 
Tax effect for net actuarial gains and prior service costs recognized for employee benefit plans for amounts reclassified from other comprehensive (loss) income
(6,005)
 
Tax effect for unrealized net gains on available-for-sale securities for amounts reclassified from other comprehensive (loss) income
2 
 
Foreign Currency Translation Adjustments
 
 
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
 
 
Beginning balance
(204,195)
 
Other comprehensive loss before reclassifications
(27,935)
 
Amounts reclassified from other comprehensive loss
   
 
Net other comprehensive (loss) income
(27,935)
 
Ending balance
(232,130)
 
Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans
 
 
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
 
 
Beginning balance
(166,595)
 
Other comprehensive loss before reclassifications
(855)1
 
Amounts reclassified from other comprehensive loss
10,389 2
 
Net other comprehensive (loss) income
9,534 
 
Ending balance
(157,061)
 
Unrealized Net Gains (Losses) on Available-for-Sale Securities
 
 
Changes in Net Other Comprehensive (Loss) Income [Roll Forward]
 
 
Beginning balance
401 
 
Other comprehensive loss before reclassifications
(276)1
 
Amounts reclassified from other comprehensive loss
(3)2
 
Net other comprehensive (loss) income
(279)
 
Ending balance
$ 122 
 
Product Warranties (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Company's accrual for product warranty claims
 
 
Balance at January 1
$ 22,710 
$ 22,071 
Charges to expense
18,916 
18,646 
Settlements
(18,936)
(19,101)
Balance at September 30
$ 22,690 
$ 21,616 
Exit or Disposal Activities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
$ 8,557 
 
Provisions in Cost of goods Sold or SG&A
 
 
753 
 
Actual expenditures charged to accrual
 
 
(6,451)
(2,374)
Adjustments to prior provisions in Other general expense - net
(245)
(59)
95 
(94)
Ending Balance at September 30, 2013
2,954 
 
2,954 
 
Facilities Shutdown Prior to 2011 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
2,288 
 
Actual expenditures charged to accrual
 
 
(804)
 
Adjustments to prior provisions in Other general expense - net
 
 
(4)
 
Ending Balance at September 30, 2013
1,480 
 
1,480 
 
Paint Stores Group [Member]
 
 
 
 
Exit or Disposal Activities (Textual) [Abstract]
 
 
 
 
Branches closed
 
 
4 
 
Global Finishes Group [Member]
 
 
 
 
Exit or Disposal Activities (Textual) [Abstract]
 
 
 
 
Branches closed
 
 
4 
 
Latin America Coatings Group [Member]
 
 
 
 
Exit or Disposal Activities (Textual) [Abstract]
 
 
 
 
Branches closed
 
 
7 
 
Other qualified exit costs [Member] |
Paint Stores Group [Member] |
Stores Shut Down in 2013 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Provisions in Cost of goods Sold or SG&A
 
 
27 
 
Actual expenditures charged to accrual
 
 
(27)
 
Ending Balance at September 30, 2013
   
 
   
 
Other qualified exit costs [Member] |
Paint Stores Group [Member] |
Stores Shut Down in 2012 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
313 
 
Actual expenditures charged to accrual
 
 
(54)
 
Adjustments to prior provisions in Other general expense - net
 
 
(1)
 
Ending Balance at September 30, 2013
258 
 
258 
 
Other qualified exit costs [Member] |
Global Finishes Group [Member] |
Facility Shutdown in 2012 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
3,430 
 
Provisions in Cost of goods Sold or SG&A
 
 
   
 
Actual expenditures charged to accrual
 
 
(3,530)
 
Adjustments to prior provisions in Other general expense - net
 
 
100 
 
Ending Balance at September 30, 2013
   
 
   
 
Other qualified exit costs [Member] |
Global Finishes Group [Member] |
Branches Shutdown in 2011 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
290 
 
Actual expenditures charged to accrual
 
 
(128)
 
Ending Balance at September 30, 2013
162 
 
162 
 
Severance and related costs [Member] |
Global Finishes Group [Member] |
Stores Shut Down in 2013 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Provisions in Cost of goods Sold or SG&A
 
 
294 
 
Actual expenditures charged to accrual
 
 
(25)
 
Ending Balance at September 30, 2013
269 
 
269 
 
Severance and related costs [Member] |
Global Finishes Group [Member] |
Facility Shutdown in 2012 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Beginning Balance, at December 31, 2012
 
 
2,236 
 
Provisions in Cost of goods Sold or SG&A
 
 
268 
 
Actual expenditures charged to accrual
 
 
(1,883)
 
Ending Balance at September 30, 2013
621 
 
621 
 
Severance and related costs [Member] |
Consumer Group [Member] |
Facilities Shut Down in 2013 [Member]
 
 
 
 
Summary of activity and remaining liabilities associated with qualified exit costs
 
 
 
 
Provisions in Cost of goods Sold or SG&A
 
 
164 
 
Ending Balance at September 30, 2013
$ 164 
 
$ 164 
 
Health Care, Pension and Other Benefits (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Domestic Defined Benefit Pension Plans [Member]
 
 
 
 
Net periodic benefit cost:
 
 
 
 
Service cost
$ 5,396 
$ 4,732 
$ 16,189 
$ 14,196 
Interest cost
4,267 
4,330 
12,801 
12,992 
Expected return on assets
(10,342)
(11,210)
(31,026)
(33,631)
Amortization of:
 
 
 
 
Prior service cost (credit)
456 
398 
1,367 
1,194 
Actuarial loss
3,489 
5,486 
10,465 
16,457 
Net periodic benefit cost
3,266 
3,736 
9,796 
11,208 
Foreign Defined Benefit Pension Plans [Member]
 
 
 
 
Net periodic benefit cost:
 
 
 
 
Service cost
1,160 
892 
3,480 
2,677 
Interest cost
1,902 
1,725 
5,707 
5,174 
Expected return on assets
(1,783)
(1,677)
(5,347)
(5,031)
Amortization of:
 
 
 
 
Actuarial loss
443 
251 
1,327 
754 
Net periodic benefit cost
1,722 
1,191 
5,167 
3,574 
Postretirement Benefits Other than Pensions [Member]
 
 
 
 
Net periodic benefit cost:
 
 
 
 
Service cost
765 
736 
2,296 
2,208 
Interest cost
3,046 
3,380 
9,137 
10,140 
Amortization of:
 
 
 
 
Prior service cost (credit)
(82)
(164)
(246)
(492)
Actuarial loss
983 
429 
2,950 
1,286 
Net periodic benefit cost
$ 4,712 
$ 4,381 
$ 14,137 
$ 13,142 
Other Long-Term Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
ManufacturingSite
Sep. 30, 2012
Other Long-Term Liabilities (Textual) [Abstract]
 
 
Amount by which unaccrued maximum of estimated range exceeds minimum
$ 81.9 
 
Accruals for extended environmental-related activities
94.8 
80.8 
Estimated costs of current investigation and remediation activities included in Other accruals
17.1 
42.8 
Number of manufacturing sites accounting for the majority of the accrual for environmental-related activities
2 
 
Accruals for environmental-related activities of two sites
58.2 
 
Percentage of accrual for environmental-related activities related to two sites
52.00% 
 
Amount of unaccrued maximum related to two sites
$ 56.9 
 
Percentage of aggregate unaccrued maximum related to two sites
69.40% 
 
Litigation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2013
Jul. 1, 2008
Trial by Jury, State of Rhode Island [Member]
jury_trial
defendant
Sep. 30, 2013
Selling, General and Administrative Expenses [Member]
Sep. 30, 2013
Selling, General and Administrative Expenses [Member]
Sep. 30, 2013
Cost of Sales [Member]
Sep. 30, 2013
Cost of Sales [Member]
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
Number of jury trials
 
 
 
 
2 
 
 
 
 
Number of additional defendants
 
 
 
 
2 
 
 
 
 
Employee Stock Ownership Plan (ESOP), settlement payment
 
$ 80.0 
 
 
 
 
 
 
 
Employee Stock Ownership Plan (ESOP), effect on net income due to settlement
 
 
49.2 
 
 
 
 
 
 
Import tax examination, liability adjustment from settlement with taxing authority
 
 
 
 
 
2.9 
2.9 
16.9 
28.7 
Import tax examination, liability adjustment from settlement with taxing authority, after tax
$ 13.5 
 
 
$ 21.9 
 
 
 
 
 
Other (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Contract
OptionPlan
Sep. 30, 2012
Sep. 30, 2013
Contract
OptionPlan
Sep. 30, 2012
Other general expense (income) - net
 
 
 
 
Provisions for environmental matters - net
$ 584 
$ 528 
$ 2,353 
$ 9,621 
Loss (gain) on disposition of assets
495 
654 
2,818 
(281)
Adjustments to prior provisions for qualified exit costs
(245)
(59)
95 
(94)
Total
834 
1,123 
5,266 
9,246 
Other expense (income) - net
 
 
 
 
Dividend and royalty income
(1,128)
(1,433)
(4,765)
(3,534)
Net expense from financing activities
2,508 
2,347 
7,251 
6,368 
Foreign currency transaction related losses (gains)
2,594 
(2,604)
8,538 
(6,308)
Other income
(3,981)
(3,629)
(18,400)
(12,109)
Other expense
3,501 
2,129 
8,864 
7,302 
Total
$ 3,494 
$ (3,190)
$ 1,488 
$ (8,281)
Number of foreign currency option outstanding
0 
 
0 
 
Number of foreign forward contracts outstanding
0 
 
0 
 
Income Taxes (Details Textual) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Mar. 31, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
 
 
 
Effective tax rate
32.10% 
 
31.50% 
32.10% 
30.80% 
 
Unrecognized tax benefits
 
 
 
 
 
$ 28,100,000 
Unrecognized tax benefits adjusted
 
 
 
 
 
25,000,000 
Amount of unrecognized tax benefits where significant change is reasonably possible
0 
 
 
0 
 
7,000,000 
Accrued income tax interest and penalties
 
 
 
 
 
6,200,000 
Discrete tax benefit recognized due to the enactment of the American Taxpayer Relief Act
 
2,000,000 
 
 
 
 
Interest related to 2008 tax year due to ESOP settlement
 
 
 
$ 2,000,000 
 
 
Net Income Per Common Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
ParticipatingSecurities
Sep. 30, 2012
Basic
 
 
 
 
Average common shares outstanding (in shares)
100,460,185 
101,525,658 
101,362,328 
101,680,883 
Net income
$ 262,966 
$ 234,953 
$ 636,438 
$ 562,982 
Less net income allocated to unvested restricted shares
(1,700)
(1,965)
(3,978)
(4,654)
Net income allocated to common shares
261,266 
232,988 
632,460 
558,328 
Basic net income per common share (in dollars per share)
$ 2.60 
$ 2.29 
$ 6.24 
$ 5.49 
Diluted
 
 
 
 
Average common shares outstanding (in shares)
100,460,185 
101,525,658 
101,362,328 
101,680,883 
Stock options and other contingently issuable shares (in shares)
2,162,329 1
2,493,662 1
2,189,214 1
2,287,241 1
Average common shares outstanding assuming dilution (in shares)
102,622,514 
104,019,320 
103,551,542 
103,968,124 
Net income
262,966 
234,953 
636,438 
562,982 
Less net income allocated to unvested restricted shares assuming dilution
(1,667)
(1,922)
(3,902)
(4,555)
Net income allocated to common shares assuming dilution
$ 261,299 
$ 233,031 
$ 632,536 
$ 558,427 
Diluted net income per common share (in dollars per share)
$ 2.55 
$ 2.24 
$ 6.11 
$ 5.37 
Average common shares outstanding, anti-dilutive (in shares)
16,609 
0 
16,609 
10,924 
Classes of participating securities
 
 
2 
 
Percent common shares representing outstanding shares
99.00% 
 
99.00% 
 
Percent restricted shares representing outstanding shares
1.00% 
 
1.00% 
 
Reportable Segment Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
$ 2,847,417 
$ 2,603,226 
$ 7,728,474 
$ 7,312,592 
Segment profit
475,970 
415,963 
1,181,757 
1,037,557 
Interest expense
(15,394)
(10,358)
(45,774)
(30,925)
Administrative expenses and other
(73,114)
(62,607)
(199,253)
(193,516)
Income before income taxes
387,462 
342,998 
936,730 
813,116 
Paint Stores Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
1,763,404 
1,553,461 
4,537,849 
4,164,648 
Segment profit
359,352 
300,563 
822,037 
680,257 
Income before income taxes
359,352 
300,563 
822,037 
680,257 
Consumer Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
1,056,164 
992,401 
2,924,311 
2,869,298 
Segment profit
73,065 1
57,054 1
206,079 2
193,117 2
Income before income taxes
73,065 
57,054 
206,079 
193,117 
Reportable Segment Information (Textual) [Abstract]
 
 
 
 
Mark-up on intersegment transfers realized as result of external sales included in segment profit
8,340 
6,908 
22,618 
21,552 
Global Finishes Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
509,721 
492,669 
1,515,095 
1,478,702 
Segment profit
44,536 
36,415 
132,929 
113,084 
Income before income taxes
44,536 
36,415 
132,929 
113,084 
Latin America Coatings Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
217,815 
222,412 
639,352 
640,910 
Segment profit
(983)
21,931 
20,712 
51,099 
Income before income taxes
(983)
21,931 
20,712 
51,099 
Administrative [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
(699,687)
(657,717)
(1,888,133)
(1,840,966)
Interest expense
(15,394)
(10,358)
(45,774)
(30,925)
Administrative expenses and other
(73,114)
(62,607)
(199,253)
(193,516)
Income before income taxes
(88,508)
(72,965)
(245,027)
(224,441)
Operating Segments [Member] |
Paint Stores Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
1,763,404 
1,553,461 
4,537,849 
4,164,648 
Operating Segments [Member] |
Consumer Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
366,845 
348,001 
1,069,085 
1,066,123 
Operating Segments [Member] |
Global Finishes Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
507,284 
491,816 
1,507,626 
1,473,584 
Operating Segments [Member] |
Latin America Coatings Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
208,645 
208,726 
610,271 
604,600 
Corporate, Non-Segment [Member] |
Administrative [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
1,239 
1,222 
3,643 
3,637 
Intersegment Eliminations [Member] |
Administrative [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
(700,926)
(658,939)
(1,891,776)
(1,844,603)
Intersegment Transfers [Member] |
Consumer Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
689,319 
644,400 
1,855,226 
1,803,175 
Intersegment Transfers [Member] |
Global Finishes Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
2,437 
853 
7,469 
5,118 
Intersegment Transfers [Member] |
Latin America Coatings Group [Member]
 
 
 
 
Reportable segment information
 
 
 
 
Net external sales and intersegment transfers
$ 9,170 
$ 13,686 
$ 29,081 
$ 36,310 
Reportable Segment Information (Details Textual) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
segment
Sep. 30, 2012
Segment Reporting Information [Line Items]
 
 
 
 
Number of Operating Segments
 
 
4 
 
Reportable Segment Information (Textual) [Abstract]
 
 
 
 
Net external sales
$ 2,847,417,000 
$ 2,603,226,000 
$ 7,728,474,000 
$ 7,312,592,000 
Segment profit
475,970,000 
415,963,000 
1,181,757,000 
1,037,557,000 
Reportable Segment Information (Additional Textual) [Abstract]
 
 
 
 
Export sales and sales to any individual customer
 
 
less than 10 percent of consolidated sales to unaffiliated customers 
 
Foreign Subsidiaries [Member]
 
 
 
 
Reportable Segment Information (Textual) [Abstract]
 
 
 
 
Net external sales
523,700,000 
497,600,000 
1,572,000,000 
1,491,000,000 
Segment profit
18,200,000 
37,700,000 
50,200,000 
105,000,000 
Long-Lived Assets
$ 679,900,000 
$ 648,800,000 
$ 679,900,000 
$ 648,800,000 
Acquisitions (Details) (USD $)
0 Months Ended 3 Months Ended 9 Months Ended
Sep. 16, 2013
Nov. 9, 2012
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Acquisitions (Textual) [Abstract]
 
 
 
 
 
 
Aggregate purchase price, including assumed debt
$ 2,250,000,000 
$ 2,340,000,000 
 
 
 
 
Summary of pro-forma consolidated financial information
 
 
 
 
 
 
Net sales
 
 
2,959,162,000 
2,753,280,000 
8,083,123,000 
7,874,576,000 
Net income
 
 
$ 257,149,000 
$ 229,297,000 
$ 609,651,000 
$ 524,639,000 
Net income per common share:
 
 
 
 
 
 
Basic (in dollars per share)
 
 
$ 2.53 
$ 2.24 
$ 5.96 
$ 5.12 
Diluted (in dollars per share)
 
 
$ 2.47 
$ 2.19 
$ 5.83 
$ 5.01 
Fair Value Measurements (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Fair Value Measurements (Textual) [Abstract]
 
Cost basis of the investment funds
$ 20,420 
Estimate of Fair Value Measurement [Member]
 
Assets:
 
Deferred compensation plan asset
20,456 1
Liabilities:
 
Deferred compensation plan liability
25,800 2
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Assets:
 
Deferred compensation plan asset
3,294 1
Liabilities:
 
Deferred compensation plan liability
25,800 2
Significant Other Observable Inputs (Level 2) [Member]
 
Assets:
 
Deferred compensation plan asset
17,162 1
Liabilities:
 
Deferred compensation plan liability
   2
Significant Unobservable Inputs (Level 3) [Member]
 
Assets:
 
Deferred compensation plan asset
   1
Liabilities:
 
Deferred compensation plan liability
   2
Debt (Details)
Mar. 18, 2013
Sherwin-Williams Canada, Inc. [Member]
CAD ($)
Sep. 30, 2013
Publicly traded debt [Member]
USD ($)
Sep. 30, 2012
Publicly traded debt [Member]
USD ($)
Sep. 30, 2013
Non-traded debt [Member]
USD ($)
Sep. 30, 2012
Non-traded debt [Member]
USD ($)
Financial Instruments
 
 
 
 
 
Carrying Amount
 
$ 1,630,269,000 
$ 632,460,000 
$ 4,105,000 
$ 6,824,000 
Fair Value
 
1,631,266,000 
693,681,000 
3,903,000 
6,607,000 
Financial Instruments (Textual) [Abstract]
 
 
 
 
 
New credit agreements
$ 150,000,000 
 
 
 
 
Non-Traded Investments (Details Textual) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Sep. 30, 2012
Non Traded Investments (Textual) [Abstract]
 
 
Carrying amount of the investments, included in other assets
$ 262.4 
$ 257.6 
Liability for estimated future capital contributions to the investments
$ 223.0 
$ 224.0