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 September 30, 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
As of November 1, 1994, 9,630,242 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 and Nine Months Ended
September 30, 1994 and 1993....................... 3
Condensed Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993.......... 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1994 and 1993..... 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 7-9
Part II. Other Information.............................. 10
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<PAGE>
PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE><CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales ..................................... $158,865 $148,049 $427,833 $403,588
Costs and expenses:
Cost of products sold ..................... 79,893 73,240 218,784 208,646
Selling, administrative and general........ 47,044 46,787 145,701 138,154
Other (income) expense, net ............... 111 (205) (78) (409)
Total costs and expenses .............. 127,048 119,822 364,407 346.391
Income before taxes and minority
interest ...................................... 31,817 28,227 63,426 57,197
Income tax provision .......................... 12,998 11,207 25,864 22,884
Minority interest in income of
subsidiary'. ................................. 273 290 689 565
Net income ................................... $18.546 $16,730 $36,873 $33,748
Weighted average number of common
shares outstanding ........................... 9,662,344 9,707,578 9,641,992 9,737,504
Earnings per share of common stock ........... $1.92 $1.72 $3.82 $3.47
Cash dividends declared per share
of common stock .............................. $.37 $.37 $1.11 $1.11
</TABLE>
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See accompanying notes to condensed consolidated financial statements.
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE><CAPTION>
September 30, December 31,
1994 1993
(Unaudited) (a)
ASSETS
<S> <C> <C>
Current assets:
Cash and short-term investments ........................................................... $ 5,469 $ 25,695
Accounts and notes receivable - net ....................................................... 127,075 80,759
Inventories
Finished goods ........................................................................ 36,000 31,223
Raw materials and supplies ............................................................ 19,525 20,254
55,525 51,477
Other current assets .................................................................. 25,822 27,266
Total current assets .................................................................. 213,891 185,197
Property - net ............................................................................ 69,700 60,270
Other non-current assets .................................................................. 37,533 30.573
Total assets ................................................................. $321,124 $276.040
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations .................................................................. $ 4,418 $ 5,333
Accounts payable ....................................................................... 25,551 18,985
Accrued taxes based on income .......................................................... 6,601 2,392
Accrued expenses and other current liabilities ......................................... 45,112 25,286
Total current liabilities .............................................................. 81,682 51,996
Deferred income taxes ...................................................................... 2,664 2,676
Long-term obligations ...................................................................... 5,007 6,477
Minority, shareholders' interest in net
assets of subsidiary........................................................................ 6,066 5,131
Shareholders' equity.
Preferred stock. $10 par value - authorized
500,000 shares; issued - none
Common stock, $ I0 par value - authorized
40,000,000 shares; issued 13,164,312 shares ............................................. 131,643 131,643
Additional paid-in capital .............................................................. 31,262 21,960
Retained earnings ....................................................................... 180,587 154,433
Accumulated currency translation adjustment ............................................. (2,863) (2,450)
Cost of treasury stock; 3,525.869 shares at
September 30, 1994, and 3,496,194 shares at
December 31, 1993 ....................................................................... (92,460) (80,477)
Employees' stock ownership and stock purchase
plan notes .............................................................................. (22,464) (15,349)
Shareholders' equity - net .......................................................... 225,705 209,760
Total Liabilities and shareholders' equity .......................................... $321,124 $276.040
</TABLE>
(a) The condensed balance sheet at December 31, 1993 has been taken from the
audited financial statements of 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)
<TABLE><CAPTION>
Nine Months Ended
September 30,
1994 1993
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................... $ 36,873 $ 33,748
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................. 6,734 5,753
Minority interest in net income of subsidiary ............. 688 448
Other ..................................................... (408) 682
Change in assets and liabilities:
Increase in accounts and notes receivable ........... (45,975) (45,630)
Increase in inventories ............................. (3,511) (1,576)
Other ............................................... 25,896 23,191
Net cash flows provided by operating activities.. 20,297 16,616
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment .................................................. (14,712) (10,620)
Decrease in short-term investments ......................... 20,566 12,763
Payment for purchase of majority interest in subsidiary .... (1,695)
Other ...................................................... (3,446) (1,707)
Net cash flows from investing activities ....... 713 436
Cash flows from financing activities:
Payment of dividends ....................................... (10,388) (10,529)
Purchase of treasury stock ................................. (12,460) (8,733)
Sale of treasury stock ..................................... 463
Other ...................................................... 1,703 1,336
Net cash flows used in financing activities .... (20,682) (17,926)
Effect of exchange rate changes on cash ....................... 12 2
Net increase (decrease) in cash ............................... 340 (872)
Cash at beginning of period ................................... 5,011 8,031
Cash at end of period ......................................... 5,351 $ 7,159
Supplemental disclosures of cash flow information:
Interest paid ................................................ $ 948 $ 833
Income taxes paid ............................................ $ 21,734 $ 9,990
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
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 financial position as of
September 30, 1994 and December 31, 1993, and the results of
operations for the three and nine month periods ended September
30, 1994 and 1993, and changes in cash flows for the nine months
ended September 30, 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 nine
months was not material.
3. The results of operations for the three and nine month
periods ended September 30, 1994 and 1993 are not necessarily
indicative of operations for the entire year.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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 third quarter of 1994 showed considerable
unit gains in both trade sales coatings and production finishes.
The unit growth, supplemented by the effect of a general selling
price adjustment in trade sales in late 1993, resulted in sales
revenues of $158,865,000, up $10,816,000 or 7.3% over the same
period last year. For the nine months ended September 30, 1994
net sales were $427,833,000, which represented an increase of
$24,245,000 or 6.0% above the prior year. Reduced sales in
Florida due to the non-recurrence of the reconstruction activity
prevailing during 1993 following hurricane Andrew was offset by a
resumption of growth in the Northeast and Mid-Atlantic regions.
Parts of the Southwest and southern California remained as
pockets of sales weakness.
Production finishes coatings continued to display the sales
strength of the first six months of the year in both the United
States and Canada.
Cost of products sold as a percentage of sales reflected the
rising raw material costs of the past few months and edged upward
as a percentage of sales in the third quarter from 49.5% in 1993
to 50.3% in 1994. For the nine months the percentage was 51.1%,
down .6% from 1993. The dollar increase for the quarter was
$6,653,000 or 9.1% and for the nine months the increase was
$10,138,000 or 4.9%.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Selling, administrative and general expenses amounted to
$47,044,000 for the third quarter and $145,701,000 for the nine
months, up $257,000 or .5% and $7,547,000 or 5.5%, respectively.
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). General inflationary factors accounted for the
balance of the remaining year-to-date increase.
Other income showed a reduction for the third quarter and
nine months principally due to lower dividend and interest income
on short-term investments.
After providing for income taxes and minority interest, net
income for the third quarter was $18,546,000 which was an
increase of $1,816,000 or 10.9% over the same period in 1993.
For the nine months net income was $36,873,000, up $3,125,000 or
9.3% over the previous year.
Earnings per share were $1.92 for the third quarter, which
was $.20 or 11.6% above 1993. The nine months' earnings per
share were $3.82, an improvement of $.35 or 10.1% over last year.
In April, the Company acquired a majority interest in
Southern Cross Paints in Auckland, New Zealand. The operations
of Benjamin Moore & Co (NZ) Limited, a wholly-owned subsidiary,
was combined with Southern Cross and renamed Benjamin Moore
Pacific Limited. The financial results of the new entity did not
have a significant effect on the Consolidated financial
statements.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Sales are expected to follow the historical seasonal pattern
of reduced activity in the fourth quarter. Net income for the
same period will have to overcome the recent rising raw material
costs to be comparable to the prior year.
Financial Position and Liquidity
Cash flow from operating activities for the nine months
ended September 30, 1994 amounted to $20,297,000 which was an
increase of $3,681,000 over the comparable period of 1993.
Higher net income supplemented by non-cash accruals exceeded the
amount of working capital required to support the seasonally high
level of accounts and notes receivable and inventories.
The utilization of funds resulting from a decrease in
short-term investments was applied toward several building
projects. Construction continued on a major addition to the
Company's plant and warehouse facility in Mesquite, Texas with an
estimated completion date in early 1995. The renovation of the
Corporate and Eastern Division offices in Montvale was completed
while a warehouse addition to the Pell City, Alabama plant was
also concluded in the third quarter.
The Company's Jacksonville facility has been sold to the
City of Jacksonville as part of a municipal sports complex
project to accommodate a National Football League franchise.
Proceeds from the sale will be received upon construction of a
new plant in 1995. Interim bank financing is anticipated during
the building phase.
Cash flows used in financing activities consisted of
disbursements for dividends and the purchase of treasury stock.
Such stock purchases do not represent a formal plan of
acquisition, but are transacted primarily to provide funds for
estate taxes and other similar purposes.
Although any borrowing by the parent company for the
remainder of the year will be of a short-term nature, the
Canadian and New Zealand subsidiaries will continue to supplement
their working capital by borrowing against their respective lines
of credit.
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<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
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On August 15, 1994 the registrant mailed a summary report to
shareholders covering results for the six-month period ended June
30, 1994. A copy of the summary report is attached as Exhibit A.
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 nine months ended September 30, 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 November 11, 1994 M.C. Workman
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Maurice C. Workman
(President)
Date November 11, 1994 W.J. Fritz
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William J. Fritz, Vice President-
Finance and Treasurer
(Principal Financial Officer)
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<PAGE>
EXHIBIT A
August 15, 1994
To Our Shareholders:
We are pleased to enclose a summary report covering results for
the six-month period ended June 30, 1994.
Sales for the first six months exceeded those of 1993 by over
$13,000,000 or 5.3%. We expect this increase will be sustained
for the balance of the year.
Operating expenses for the six months were generally reflective
of the low inflation rate except for an extraordinary accounting
charge of $1,275,000 relating to postemployment benefits required
by the adoption of Financial Accounting Standard No. 112. In
addition, the majority of the advertising media costs for the
year were accounted for during the first half of the year.
SIX MONTHS ENDED JUNE 30,
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(Dollars in Thousands Except Per Share Amounts)
1994 1993
(Unaudited) (Unaudited)
Net Sales $268,968 $255,539
Net Income $18,327 $17,018
Earnings Per Share $1.90 $1.74
A dividend in the amount of $0.37 per share has been declared and
will be payable on October 3, 1994 to shareholders of record on
September 8, 1994.
BENJAMIN MOORE & CO.
Maurice C. Workman, President Richard Roob, Chairman
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