SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 Commission File Number 0-8894
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Benjamin Moore & Co.
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(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
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None
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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As of May 2, 1994, 9,575,688 shares of Common Stock of the registrant were
issued and outstanding.
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BENJAMIN MOORE & CO. and Subsidiaries
INDEX
Page No.
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Part I. Financial Information
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1994 and 1993 3
Condensed Consolidated Balance Sheets -
March 31, 1994 and December 31, 1993 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
Part II. Other Information 11
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PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended
March 31,
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1994 1993
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(Unaudited) (Unaudited)
Net Sales $111,998 $107,445
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Costs and expenses:
Cost of products sold 61,182 58,955
Selling, administrative and general 44,000 42,023
Other (income) expense, net (204) (227)
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Total costs and expenses 104,978 100,751
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Income before taxes and minority
interest 7,020 6,694
Income tax provision 2,886 2,716
Minority interest in income of
subsidiary 58 22
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Net income $ 4,076 $ 3,956
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Weighted average number of common
shares outstanding 9,645,382 9,773,498
========= =========
Earnings per share of common stock $.42 $.40
==== ====
Cash dividends declared per share of
common stock $.37 $.37
==== ====
See accompanying notes to condensed consolidated financial statements.
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1994 1993
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(Unaudited) (a)
ASSETS
Current assets:
Cash and short-term investments $ 555 $ 25,695
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Accounts and notes receivable - net 108,530 80,759
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Inventories:
Finished goods 36,369 31,223
Raw materials and supplies 19,537 20,254
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55,906 51,477
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Other current assets 27,152 27,266
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Total current assets 192,143 185,197
Property - net 63,035 60,270
Other non-current assets 30,092 30,573
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Total assets $285,270 $276,040
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,180 $ 18,985
Accrued taxes based on income 3,591 2,392
Accrued expenses and other current liabilities 39,663 30,619
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Total current liabilities 65,434 51,996
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Deferred income taxes 2,624 2,676
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Long-term obligations 6,465 6,477
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Minority shareholders' interest in net
assets of subsidiary 4,837 5,131
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Shareholders' equity:
Preferred stock, $10 par value - authorized
500,000 shares; issued - none
Common stock, $10 par value - authorized
20,000,000 shares; issued 13,164,312 shares 131,643 131,643
Additional paid-in capital 22,000 21,960
Retained earnings 154,945 154,433
Accumulated currency translation adjustment (3,525) (2,450)
Cost of treasury stock; 3,540,213 shares at
March 31, 1994 and 3,496,194 shares at
December 31, 1993 (84,405) (80,477)
Employees' stock ownership and stock purchase
plan notes (14,748) (15,349)
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Shareholders' equity - net 205,910 209,760
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Total liabilities and shareholders' equity $285,270 $276,040
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(a) The condensed balance sheet at December 31, 1993 has been taken from the
audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Three Months Ended
March 31,
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1994 1993
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(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 4,076 $ 3,956
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,850 2,173
Minority interest in net income of subsidiary 58 22
Other (235) 897
Change in assets and liabilities:
Increase in accounts and notes receivable (28,569) (29,488)
Increase in inventories (4,818) (886)
Other 14,542 9,028
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Net cash flows used in operating activities (13,096) (14,298)
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Cash flows from investing activities:
Payments for purchase of property, plant and
equipment (4,828) (3,322)
Decrease in short-term investments 20,568 21,785
Other (215) (1,136)
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Net cash flows from investing activities 15,525 17,327
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Cash flows from financing activities:
Payment of dividends (3,480) (3,528)
Purchase of treasury stock (3,930) (4,414)
Other 408 448
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Net cash flows used in financing activities (7,002) (7,494)
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Effect of exchange rate changes on cash 2 6
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Net decrease in cash (4,571) (4,459)
Cash at beginning of period 5,011 8,031
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Cash at end of period $ 440 $ 3,572
======== =======
Supplemental disclosures of cash flow information:
Interest paid $ 226 $ 256
Income taxes paid $ 1,786 $ 1,832
See accompanying notes to condensed consolidated financial statements.
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BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of its
financial position as of March 31, 1994 and the results of operations for
the three month periods ended March 31, 1994 and 1993, and changes in cash
flows for the three months ended March 31, 1994 and 1993. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
2. Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for
Postemployment Benefits." SFAS No. 112 requires the Company to accrue for
the estimated cost of benefits provided by the Company to former or
inactive employees after employment but before retirement such as long-
term disability, short-term disability, and other workers compensation, if
attributable to employees' service already rendered. The cumulative
effect of this change in accounting principle resulted in a one-time
charge of $1,275,000 to earnings for the accrual, which primarily relates
to medical coverage for employees on long-term disability, for such
benefits as of January 1, 1994. The continuing incremental charge to
earnings for the first quarter was not material.
3. The results of operations for the three month periods ended March 31, 1994
and 1993 are not necessarily indicative of operations for the entire year.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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Operating Results
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It should be noted that quarterly comparisons between a current and a
previous year are most difficult in the paint industry. The timing and terms
of seasonal dating programs, the timing and extent of price increases, and the
introduction of product promotions can produce wide swings in quarterly
results.
Net Sales in the first quarter of 1994 were $111,998,000, an increase of
$4,553,000 or 4.2% over the comparable period of the previous year. The harsh
weather conditions adversely affected trade sales coatings in the Northeast
during the first two months of the year. Other areas were also affected by
factors such as the return to more normal business in Florida following the
surge of activity in reconstruction after hurricane Andrew, weather-related
conditions in the Midwest and the economic downturn in California. Despite
these early setbacks, unit sales for the quarter were slightly ahead of the
previous year. A general selling price adjustment accounted for the majority
of the percentage increase in sales volume. Unit sales were up modestly in
Canada.
Production finishes coatings, which comprises approximately 10% of total
volume, showed increased momentum both in unit sales and dollar volume in the
United States and Canada.
Cost of products sold declined .3% as a percentage of sales to 54.6%
mostly due to relatively stable raw material costs during the period and the
effect of the general selling price adjustment referred to above. The dollar
increase of $2,227,000 reflected the slightly higher unit sales and
inflationary production costs.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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Selling, administrative and general expenses rose $1,977,000 or 4.7% to
$44,000,000. In addition to inflationary increases, the adoption of Statement
of Financial Accounting Standards No. 112, "Employers Accounting for
Postemployment Benefits" resulted in a one-time charge of $1,275,000 as of
January 1, 1994 (see Note 2 to Notes to Condensed Consolidated Financial
Statements) accounted for the majority of the increase.
The reduction in other income was attributable to lower interest income on
short-term investments.
After providing for federal and state income taxes which represented an
approximate 41% combined rate for both 1994 and 1993, and minority interest,
net income was $4,076,000. The improvement over last year was $120,000 or 3%.
Earnings per share were $.42, a gain of $.02 over the same period in 1993.
If the favorable sales climate of the past few weeks continues for the
balance of the year and raw material costs maintain stability, net income for
the year should show upward movement over results of the past few years.
Financial Position and Liquidity
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Cash flows from operating activities in the first quarter, reflected the
seasonal nature of the paint and coatings business. Net income of $4,076,000,
adjusted for the non-cash item of depreciation and amortization, was
insufficient to support the dated order shipments reflected in the increase in
accounts and notes receivable as well as
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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the higher inventory levels. The increase in inventory was a result of the
stocking of the new industrial maintenance product line and the larger stocks
on hand due to the reduced shipments caused by the adverse weather conditions
in many of the population centers in the East and Mid-West. The accruals for
postretirement health benefits (SFAS 106) and postemployment benefits (SFAS
112) constituted a majority of the variance of $5,500,000 in Other between 1994
and 1993.
In net cash flows from investing activities, the decrease of $20,568,000
in short-term investments supplemented the cash flow from operating activities.
In addition, funds amounting to $4,828,000 were utilized for various
construction projects, most notably in the continuing expansion of the
Mesquite, Texas, manufacturing facility and the renovation of the offices at
the Corporate and Eastern Division building in Montvale, New Jersey.
Cash flows from financing activities principally consisted of dividend
disbursements and the purchase of treasury stock. Such purchases of stock do
not represent a formal plan of acquisition, and are transacted in most cases to
provide liquidity for estate taxes and other specific purposes.
The company anticipates limited bank borrowing to provide working capital
requirements in the United States primarily in the second quarter and a portion
of the third quarter. The Canadian and New Zealand subsidiaries utilized their
respective lines of credit during the first quarter and are expected to
continue to do so for the remainder of the year.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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The on-going capital projects in Mesquite, Texas and Montvale, New Jersey
and the anticipated April purchase of a majority interest in Southern Cross
Paints, a local New Zealand manufacturer, are not expected to require
additional borrowing.
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Part II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Securityholders
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The only matters which were submitted to a vote of shareholders to date
during the 1994 fiscal year were the following which were acted upon at the
Annual Meeting of Shareholders which was held on April 21, 1994.
Election of Directors: - the following persons were elected as Class III
Directors of the Company to serve for a three year term: - Ward C. Belcher,
Ralph W. Lettieri, Lee C. McAlister, John C. Moore, Jr., Richard Roob and
Maurice C. Workman. The following person was elected as Class II Director of
the Company to serve for a two year term: - Frank W. Burr. The following
person was elected as Class I Director of the Company to serve for a one year
term: - Gerald W. Moore. The following persons continue in office as
directors: Class II Directors - Charles H. Bergmann, Sara B. Wardell, Joseph
Sobie, Charles C. Vail and Ward B. Wack. Class I Directors: - Benjamin M.
Belcher, Jr., Yvan Dupuy, William J. Fritz and Michael C. Quaid.
Amendment of the Certificate of Incorporation: - The proposed amendment of
the Certificate of Incorporation of the Company to increase the authorized
Common Stock to 40,000,000 shares from 20,000,000 shares was approved by a vote
of 8,357,007.858 shares affirmative to 124,759.645 shares negative, with
254,155.497 shares abstaining.
Approval of Amendments of the Company Bylaws: - The proposal to approve
amendment of the Company's Bylaws in order to permit the Board to establish a
committee of the Board which excluded the Chairman and President and
ratification of all actions taken to date by the Committee for the Benjamin
Moore & Co. Stock Option Plan was approved by a vote of 8,369,198.908 shares
affirmative to 12,952.173 shares negative, with 353,771.919 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
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(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
three months ended March 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Benjamin Moore & Co.
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(Registrant)
Date May 12, 1994 M.C. Workman
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Maurice C. Workman
(President)
Date May 12, 1994 W.J. Fritz
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William J. Fritz, Vice President -
Finance and Treasurer
(Principal Financial Officer)
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