Based on stronger than anticipated preliminary sales and earnings results, The Sherwin-Williams Company is updating its expectations previously given on October 25 for the fourth quarter and year ended December 31, 2005. Based on preliminary results, diluted net income per common share for the fourth quarter is expected to be in the range of $0.53 to $0.55 per share compared to the October guidance of $0.41 to $0.49 per share. The expected increase in fourth quarter diluted net income per common share over the earlier guidance for the quarter resulted form an additional $0.18 to $0.20 per share anticipated improvement in operating performance that was partially offset by $0.10 per share due to an asset impairment charge. For the full year 2005, diluted net income per common share is expected to be in the range of $3.26 to $3.28 per share versus the October guidance of $3.15 to $3.23 per share.
Consolidated net sales increased 14.1% in the fourth quarter versus previous expectations of a mid-single digit increase. Sales for the full year 2005 improved to $7.19 billion from $6.11 billion in 2004, an increase of 17.6% compared to previous expectations in the the mid-to-high teens. The effect of acquisitions on sales was negligible in the fourth quarter of 2005 and increased consolidated net sales $373 million, or 6.1%, in the full year 2005. On a preliminary basis, gross profit as a percent to net sales declined to approximately 42.5% in the full year 2005 from 44.2% in 2004 due primarily to raw material cost increases and asset impairment charge partially offset by price increases and better factory utilizaztion resulting from higher volume.