Overview: Sales for the third quarter of 2009 continue to be negatively affected by the challenging global economic environment; however, our earnings increased in the quarter due to a combination of improved raw material cost comparisons, previous customer price increases, improved efficiency in our operations resulting from previously completed restructuring actions and effective control of expenses. Sales for the quarter decreased compared to the prior year primarily due to volume declines and unfavorable foreign currency exchange rates. Sales in our Coatings segment decreased significantly reflecting continued weakness in industrial markets. Global demand in our general industrial and wood product lines has not improved, however, sales in our domestic coil and global packaging product lines improved compared to the second quarter of 2009 as customers began to restock their inventory. Sales in our Paints segment for the third quarter of 2009 were down primarily due to weakness in our Asia architectural and global automotive refinish product lines. While the overall U.S. architectural paint market declined, sales in our domestic architectural product line improved in the quarter compared to last year. Gross profit as a percent of net sales in the third quarter of 2009 increased compared to last year as a result of better raw material cost comparisons, previous price increases, favorable product mix and productivity gains from previously completed restructuring actions, partially offset by continuing restructuring charges. Operating expense dollars decreased in the third quarter of 2009 compared to last year primarily as a result of the positive impact of foreign currency exchange, benefits from previously completed restructuring actions and effective expense controls, partially offset by higher incentive-based compensation accruals.

During the third quarter of 2008, we initiated a comprehensive series of actions to lower our cost structure and further increase our operational efficiency. During the first quarter of 2009, we expanded these restructuring activities. We presently expect the total restructuring cost to be $0.35 to $0.38 per share after tax. The restructuring activities for the three and nine-month periods ended July 31, 2009, resulted in pre-tax charges of $4.7 million or $0.03 per share after tax, and $21.7 million or $0.14 per share after tax, respectively. The restructuring activities for the three and nine-month periods ended July 25, 2008, resulted in pre-tax charges of $3.8 million or $0.03 per share after tax. The restructuring charges for the full year of 2008 resulted in pre-tax charges of $23.5 million or $0.16 per share after tax.

Earnings Per Share: Net income per share available to common stockholders was $0.61 and $1.00 for the three and nine-month periods ended July 31, 2009, and $0.44 and $1.03 for the three and nine-month periods ended July 25, 2008, respectively. We accrued $3.3 million in the third quarter of 2009 and $10.0 million year-to-date for the Huarun Redeemable Stock (see Note 3 for further details). This compares to an accrual of $3.0 million for the third quarter of 2008 and $8.9 million year-to-date in 2008. The accrual reduced basic and diluted net income per common share $0.03 in the third quarter of 2009, $0.10 year-to-date in 2009, $0.03 in the third quarter of 2008 and $0.09 year-to-date in 2008.The table below presents adjusted net income per common share - diluted, which excludes the non-cash accrual relating to Huarun Redeemable Stock. The table also presents restructuring charges included in net income in the respective periods.

                                           Three Months Ended            Nine Months Ended
                                          July 31,      July 25,        July 31,      July 25,
                                            2009          2008            2009          2008
  Net income per common share -         $     0.61    $     0.44      $     1.00    $     1.03
  diluted
  Huarun redeemable stock accrual             0.03          0.03            0.10          0.09
  Adjusted net income per common        $     0.64    $     0.47      $     1.10    $     1.12
  share - diluted
        Restructuring Charges           $     0.03    $     0.03      $     0.14    $     0.03

"Adjusted net income per common share - diluted" is a non-GAAP financial measure. Management discloses this measure because we believe the measure may assist investors in comparing our results of operations in the respective periods without regard to the effect on results in the 2009 and 2008 periods of the non-cash accrual related to the Huarun Redeemable Stock. As the Huarun Redeemable Stock is redeemed, acquisition accounting is applied. We acquired the remaining Huarun Redeemable Stock in the fourth quarter of 2009; refer to Note 3 for further details.

Critical Accounting Policies: There were no material changes in our critical accounting policies during the three-month period ended July 31, 2009.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operations:



Net Sales                        Three Months Ended                   Nine Months Ended
(Dollars in millions)      July 31,     July 25,     %          July 31,     July 25,     %
                             2009         2008     Change         2009         2008     Change
Coatings                 $    415.2   $    543.3   (23.6) %   $  1,147.8   $  1,508.6   (23.9) %
Paints                        318.6        335.7    (5.1) %        788.4        826.3    (4.6) %
All Other                      60.8         78.7   (22.8) %        166.3        224.3   (25.9) %
Consolidated Net Sales   $    794.6   $    957.7   (17.0) %   $  2,102.5   $  2,559.2   (17.8) %

• Consolidated Net Sales - The sales decline for the third quarter of 2009 was 13.6% after excluding the negative effect of foreign currency of 3.4%. The sales decline year-to-date was 14.3% after excluding the negative effect of foreign currency of 3.7% and the positive effect of acquisitions of 0.2%. The decrease in core sales for the third quarter was primarily due to lower volume. The decrease in core sales for the year-to-date period was primarily due to lower volume and unfavorable product mix, partially offset by previous price increases.

• Coatings Segment Net Sales - The sales decline for the third quarter of 2009 was 18.8% after excluding the negative effect of foreign currency of 4.8%. The sales decline year-to-date was 19.1% after excluding the negative effect of foreign currency of 5.1% and the positive effect of acquisitions of 0.3%. Our coil, general industrial and wood product lines primarily drove the core sales decline for the quarter and year-to-date periods. In our general industrial and wood product lines, the global markets remain down, however, our domestic coil and global packaging product lines improved compared to the second quarter of 2009 as customers began to restock their inventory.

• Paints Segment Net Sales - The sales decline for the third quarter of 2009 was 3.7% after excluding the negative effect of foreign currency of 1.4%. The sales decline year-to-date was 3.5% after excluding the negative effect of foreign currency of 1.1%. Sales were down in third quarter and year-to-date periods primarily due to weak demand for our Asia architectural and global automotive refinish product lines, partially offset by increased sales in our domestic architectural product line.

• All Other Net Sales - The All Other category includes resins, colorants, gelcoats and our furniture protection plan business. The sales decline for the third quarter of 2009 was 20.2% after excluding the negative effect of foreign currency of 2.6%. The sales decline year-to-date was 22.8% after excluding the negative effect of foreign currency of 3.1%. The primary driver of the lower sales for the quarter and year-to-date periods was weak demand in the U.S. coatings market.

Due to the seasonal nature of portions of our business, sales for the third quarter are not necessarily indicative of sales for subsequent quarters or for the full year.

Gross Profit                  Three Months Ended             Nine Months Ended
(Dollars in millions)       July 31,       July 25,       July 31,       July 25,
                              2009           2008           2009           2008
Consolidated Gross Profit $    290.2     $    274.7     $    700.7     $    729.4
As a percent of Net Sales       36.5 %         28.7 %         33.3 %         28.5 %

• Gross Profit - The gross profit increase, as a percent of net sales, for the third quarter and year-to-date periods was driven primarily by improved raw material cost comparisons, previous price increases, favorable product mix and productivity gains from previously completed restructuring actions, partially offset by continuing restructuring charges. Gross profit for the quarter and year-to-date periods ending July 31, 2009 included restructuring charges of $4.7 million or 0.6% of net sales and $17.5 million or 0.8% of net sales, respectively. Restructuring charges of $2.8 million are included in both the third quarter and year-to-date periods of 2008, or 0.2% and 0.1% of net sales, respectively.

Operating Expenses *                  Three Months Ended                 Nine Months Ended
(Dollars in millions)               July             July              July
                                     31,              25,               31,           July 25,
                                    2009             2008              2009             2008
Consolidated Operating Expenses  $   179.8        $   188.4         $   499.0       $    511.0
As a percent of Net Sales             22.6 %           19.7 %            23.7 %           20.0 %

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

• Consolidated Operating Expenses (dollars) - Consolidated operating expenses decreased 4.5% to $179.8 million in the third quarter of 2009 compared to the prior year. Consolidated operating expenses declined 2.4% to $499.0 million year-to-date compared to the prior year. The decrease in both periods was driven primarily by favorable foreign currency, benefits from previously completed restructuring actions and effective expense controls, partially offset by higher incentive-based compensation accruals. The 2009 year-to-date period was also affected by restructuring charges of $4.2 million or 0.2% of net sales. There were no restructuring charges in operating expenses in the third quarter of 2009. Restructuring charges of $1.1 million are included in both the third quarter and year-to-date periods of 2008.

• Consolidated Operating Expenses (percent of net sales) - As a percent of consolidated net sales, operating expenses increased 290 basis points for the third quarter compared to last year. As a percent of consolidated net sales, operating expenses increased 370 basis points for the year-to-date period compared to last year. The increase in both periods is primarily due to lower sales volume and higher incentive-based compensation accruals.

 EBIT *                               Three Months Ended               Nine Months Ended
 (Dollars in millions)             July 31,          July 25,       July 31,        July 25,
                                     2009              2008           2009            2008
 Coatings                        $      61.6       $     52.1     $    116.3      $    140.8
As a percent of Net Sales               14.8 %            9.6 %         10.1 %           9.3 %

 Paints                          $      48.8       $     29.4     $    100.1      $     71.3
As a percent of Net Sales               15.3 %            8.8 %         12.7 %           8.6 %

 All Other                       $      (2.4 )     $      2.9     $    (17.8 )    $      0.5
As a percent of Net Sales               (4.0 )%           3.7 %        (10.7 )%          0.2 %

 Consolidated EBIT               $     107.9       $     84.4     $    198.6      $    212.6
As a percent of Net Sales               13.6 %            8.8 %          9.4 %           8.3 %

• Consolidated EBIT - EBIT for the third quarter of 2009 increased $23.5 million or 27.9% compared to the prior year. EBIT year-to-date decreased $13.9 million or 6.6% compared to the prior year. The third quarter and year-to-date periods of 2009 included restructuring charges of $4.7 million or 0.6% of net sales and $21.7 million or 1.0% of net sales, respectively. Restructuring charges of $3.8 million are included in both the third quarter and year-to-date periods of 2008, or 0.4% and 0.1% of net sales, respectively. Foreign currency exchange fluctuation had an immaterial effect on EBIT.

• Coatings Segment EBIT - The EBIT increase as a percentage of net sales for the third quarter and year-to-date periods was driven primarily by improved raw material cost comparisons, previous price increases and productivity gains from previously completed restructuring actions, partially offset by continuing restructuring charges. The third quarter and year-to-date periods of 2009 included restructuring charges of $1.5 million or 0.4% of net sales and $14.3 million or 1.2% of net sales, respectively. Restructuring charges of $0.9 million are included in both the third quarter and year-to-date periods of 2008, or 0.2% and 0.1% of net sales, respectively.

• Paints Segment EBIT - The EBIT increase as a percentage of net sales for third quarter and year-to-date periods was driven primarily by improved raw material cost comparisons, previous price increases and effective expense controls. The third quarter and year-to-date periods of 2009 included restructuring charges of $1.9 million or 0.6% of net sales and $2.5 million or 0.3% of net sales, respectively. Restructuring charges of $2.3 million are included in both the third quarter and year-to-date periods of 2008, or 0.7% and 0.3% of net sales, respectively.

• All Other EBIT - The All Other category includes resins, colorants, gelcoats, our furniture protection plan business and corporate expenses. The decrease for the third quarter and year-to-date periods was primarily due to the decline in net sales, higher incentive compensation accruals and restructuring charges. The third quarter and year-to-date periods of 2009 included restructuring charges of $1.2 million or 2.0% of net sales and $4.9 million or 2.9% of net sales, respectively. Restructuring charges of $0.6 million are included in both the third quarter and year-to-date periods of 2008, or 0.8% and 0.3% of net sales, respectively.

Due to the seasonal nature of portions of our business, EBIT for the third quarter is not necessarily indicative of EBIT for subsequent quarters or for the full year.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS





Interest Expense
(Dollars in millions)             Three Months Ended             Nine Months Ended
                                July 31,       July 25,       July 31,       July 25,
                                  2009           2008           2009           2008
Consolidated Interest Expense $     13.4     $     13.9     $     35.9     $     43.5

• Interest Expense - The third quarter and year-to-date decrease is primarily due to lower average debt levels partially offset by higher average interest rates on our new bond issuance.

Effective Tax Rate      Three Months Ended             Nine Months Ended
                     July 31,       July 25,       July 31,       July 25,
                       2009           2008           2009           2008
Effective Tax Rate       31.3 %         33.4 %         32.2 %         33.9 %

• Effective Tax Rate - The third quarter 2009 tax rate reflects the expected quarter-to-quarter volatility due to the accounting for uncertain tax positions and a one-time adjustment related to a prior year. We expect the effective tax rate for the full year to be 33.5% to 34%.