UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended: Commission file number:
December 31, 1993 0-8894
BENJAMIN MOORE & CO.
(Exact name of registrant as specified in its charter)
New Jersey 13-5256230
(State of incorporation) (I.R.S. Employer Identification No.)
51 Chestnut Ridge Road
Montvale, New Jersey 07645
(Address of principal executive offices)
Registrants telephone number including area code: (201) 573-9600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $10 per share
_______________________________________
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
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 March 1, 1994, the aggregate market value of the registrant's
common stock held by non-affiliates equalled $599,327,969.
As of March 1, 1994, 9,640,468 shares of common stock of the
registrant were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement dated March 28, 1994, for
use in connection with its 1994 Annual Meeting of Shareholders are
incorporated by reference in Part III of this Annual Report on Form
10-K to the extent set forth in Items 10, 11, 12 and 13 hereof.
<PAGE>
PART I
INTRODUCTION
- - ------------
Benjamin Moore & Co. (the "Company") was incorporated under the
laws of the State of New Jersey in 1891, as the successor to a
business established in 1883. As used herein, the term "Company"
means Benjamin Moore & Co. and its subsidiaries, unless the context
indicates otherwise. The Company's principal executive offices are
located at 51 Chestnut Ridge Road, Montvale, New Jersey 07645; and its
telephone number at that location is (201) 573-9600.
ITEM 1. BUSINESS
- - -----------------
The Company is engaged in the formulation, manufacture and sale
of a broad line of coatings, consisting of water-thinnable and
solvent-thinnable general purpose coatings (paints, stains and clear
finishes) for use by the general public, painting contractors and
industrial and commercial users, primarily for the decoration and
preservation of the interiors and exteriors of residential,
commercial, institutional and industrial buildings and allied
structures (collectively referred to as "trade sales coatings"), and
production finishes coatings which are usually produced to conform to
the specific requirements of manufacturers who utilize such coatings
in the manufacturing process (collectively referred to as "production
finishes coatings"). The production finishes coatings are primarily
used in the manufacture of various types of flexible packages,
beverage and food containers, tanks, roof decking, coils, furniture
and shelving, window blinds and flatwood products. The production
finishes coatings, like the trade sales coatings, serve both
decorative and preservative functions.
The Company believes that it is one of the leading manufacturers
of coatings in the United States and Canada. It has never been
engaged in any other type of business.
Marketing and Distribution
- - --------------------------
It has always been the Company's policy to actively support the
continued growth and prosperity of independently owned distributors
and retail outlets, through which the trade sales coatings are sold.
In furtherance of that policy, the Company provides financing to such
enterprises under circumstances where it is deemed to be in the best
interests of the Company to do so (see, e.g., Note 4 to the Notes to
Consolidated Financial Statements, Part II, Item 8 hereof). The trade
sales coatings are sold under such tradmarks as Moore's -House Paint,
Moorglo-, Moorgard- Latex House Paint, Moorwood-, Moorwhite- Primer,
Impervo- Enamel, Moorcraft-, Impervex-, Regal- Wall Satin-, Satin
Impervo-, AquaGlo-, AquaPearl-, AquaVelvet-, Regal Aquagrip-,
Enhance-, Moorlife-, A Stroke of Brilliance -, Pro-Saver-, Benwood-,
Utilac- and Ironclad-. Although a large variety of ready-mixed colors
is available in all of these products, a substantially wider selection
can be obtained through the Company's Moor-O-Matic-
III Color System, which provides in-store machine capability to tint
formulated bases with colorants which are manufactured by the Company.
The Company believes its Moor-O-Matic- III Color System has been of
significant value in promoting the sales of its trade sales coatings.
Moore's- Video Color Planner and Moore's- Computer Color Matching
System provide the ability to plan color schemes and to quickly match
almost any color by computer. Production finishes coatings are
customarily sold by the Company directly to the ultimate user.
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<PAGE>
Sales
- - -----
The Company considers itself to be engaged in a single line of
business; i.e. the formulation, manufacture and sale of coatings.
Reference is made to the information set forth under the caption,
"SELECTED FINANCIAL DATA", Part II, Item 6 hereof, with respect to net
sales of each of the two classes of products which comprise the
aforementioned line of business. During 1993, no one customer
accounted for as much as 1% of the Company's net sales.
Geographic Segment Information
- - ------------------------------
The Company manufactures and sells coatings in the United States,
Canada and New Zealand. Transfers between geographic areas are not
significant and are eliminated in consolidation. Reference is made to
the information set forth in Note 8 to the Notes to Consolidated
Financial Statements, Part II, Item 8 hereof, with respect to assets
and operating results by geographic area.
Foreign Operations
- - ------------------
The Company operates in Canada and New Zealand. The Company's
Canadian operations are carried on through Benjamin Moore & Co.,
Limited, which is an approximately 82% owned subsidiary of the
Company, and Technical Coatings Co. Limited, which is a wholly-owned
subsidiary of the Canadian company. The Company's New Zealand
operations are carried on through Benjamin Moore & Co (NZ) Limited,
which is a wholly-owned subsidiary of the Company. During 1993,
revenues and profits from operations attributable to those companies
(which are included in the Company's consolidated financial
statements) were approximately $57,736,000 and $4,188,000,
respectively. Approximately 8% of the outstanding shares of the
Canadian subsidiary are owned by persons who are associated with the
Company, including employees of such subsidiary.
Research and Development; Quality Control
- - -----------------------------------------
The Company considers its research and development and quality
control activities to be among the most advanced in the industry, and
of significant importance in enabling it to achieve and maintain its
position as one of the leading companies in the coatings industry.
The Company maintains several laboratory facilities for the
development of new products and processes, the improvement of existing
products and the special formulation of products to meet the specific
requirements of its customers. The Central Laboratories, which is the
principal such facility, is located in Flanders, New Jersey. Quality
control activities are carried out in laboratories located at each
manufacturing facility.
The Company also maintains outdoor testing facilities at Lebanon,
New Jersey, where its products, as well as those of its competitors,
are evaluated for performance under varying weather conditions.
Independent commercial facilities are also utilized for this purpose.
As of December 31, 1993, 189 chemists and technicians were
employed by the Company in research and development and quality
control activities. In 1993, the Company expended approximately
$13,988,000 for such activities.
-3-
<PAGE>
Competition
- - -----------
The coatings industry is highly competitive and has historically
been subject to intense price competition. It is estimated that there
are approximately 900 coatings manufacturers in the United States,
many of which are small companies which provide intense competition
within regional and local markets, especially with respect to lower
priced coatings and custom made specialty items which are required on
a short-time delivery basis. Other manufacturers are large
diversified corporations, the assets of which are substantially
greater than those of the Company, which compete on a nationwide
basis. The competition which the Company encounters in Canada and New
Zealand is similar in nature to that which it encounters in the United
States. The Company estimates that it is one of the largest
manufacturers of trade sales coatings in the United States and Canada.
With respect to sales of production finishes coatings, the Company's
overall position in the industry is relatively small.
Seasonal Aspects
- - ----------------
Historically, sales of trade sales coatings have been seasonal in
nature, with the heaviest concentration of such sales occurring in the
second and third quarters of the year. Sales of production finishes
coatings have been relatively stable throughout the year. During
1993, the percentages of the Company's sales of trade sales coatings
which were made in the first, second, third and fourth quarters of the
year were 20.8%, 29.2%, 29.2% and 20.8%, respectively. Production
and inventory schedules are timed to coincide with the aforementioned
variations.
Employees
- - ---------
As of December 31, 1993, the Company had approximately 1,962
employees, of whom approximately 26% were salaried personnel,
approximately 14% were sales representatives, and approximately 60%
were hourly employees. The Company considers its relations with its
employees to be excellent.
Raw Materials and Supplies
- - --------------------------
The Company purchases its raw material and supplies from a wide
variety of sources, and does not consider its business to be dependent
upon any one source of supply. However, the price and supply of some
petrochemical intermediate products, which are important ingredients
in the manufacture of coatings, are subject to world political and
economic conditions. Certain raw materials are converted into
synthetic resins which, when combined with pigments, are used in the
production of both the trade sales coatings and the production
finishes coatings.
Patent and Trademarks
- - ---------------------
The Company does not rely on patents in its business. The
Company does, however, rely upon formulas developed by it, and upon
its technical expertise and experience in meeting the requirements of
its customers. The Company owns a
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<PAGE>
large number of registered trademarks and trade names, several of
which are referred to elsewhere herein, which it considers to be of
significance in identifying the Company and its products.
Backlog
- - -------
As is typical in the industry, backlog of orders is not
significant in the business of the Company.
Environmental Affairs and Governmental Regulation
- - -------------------------------------------------
The operations of the Company, like those of other companies
engaged in similar businesses, involve the use and disposal of
substances regulated under environmental protection laws. The Company
believes that its operations are in compliance with applicable
federal, state and local laws and regulations relating to the
discharge of materials into the environment, or otherwise relating to
the protection of the environment. Such laws and regulations have not
had any material adverse effect upon the Company's capital
expenditures, earnings or competitive position.
The Company places importance on environmental responsibility.
Its capital expenditures at new and existing facilities constructed or
modified in the normal course of business incorporate designs to
minimize waste.
To date the Company has entered into full or partial settlement
agreements with governmental authorities or private parties with
respect to twelve sites under federal and state laws. Total
settlement costs have been approximately $2 million.
The Company is involved in thirty unsettled sites. In all cases
the Company believes its share of liability for environmental clean up
costs are less than 1% of such costs for each site. A total of
approximately $2,312,000 has been accrued as a reserve against such
future costs. These cost estimates are carefully reviewed and revised
where necessary each quarter during the year. Possible insurance
recoveries are not considered in estimating liabilities.
Also, the Company is involved in remedial activities at three of
its owned facilities as follows:
1. A water monitoring program continues at the Company's plant
in Cuyahoga Heights, Ohio. No remediation activities are being
conducted now. Total costs to date are $160,000.
2. Soil and shallow ground water contamination has been detected
at the Company's facility at Milford, MA. The affected soils have
been excavated and an interim ground water pumping extraction and
treatment system has been installed. Further studies are being
undertaken to assess the full extent of the water contamination.
However, preliminary results indicate that the problem is moderate and
is being remediated with traditional technologies. Expenditures to
date have been less than $300,000.
-5-
<PAGE>
3. The Company has expended nearly $5 million over the last
nine years to assess and remediate contamination of soil and water at
the Company's facility at Santa Clara, California, operated by its
subsidiary, Technical Coatings Co. The Company has installed an
underground trench along two sides of its property. This trench is
capable of capturing the contamination and preventing its migration
off the plant site. A biological treatment system treats the pumped
water to acceptable cleanup levels. The treated water is used in the
paint manufacturing process as cooling water before being discharged
to the municipal sewer system or reinjected to the ground for
recirculation.
There are ongoing engineering studies to identify and develop
additonal remediation techniques to address soil contamination and to
clean up contaminated water more rapidly. Current operating and
maintenance costs are $100,000 per year.
Adjoining landowners filed suits against the Company claiming
damages due to the migration, or potential migration, of the
contamination located at the Company's facility at Santa Clara.
In each case the plaintiff or his predecessor in title has
conducted activities on its own property which resulted in
contamination there. One of these suits was settled during 1993 for
$75,000 and an undertaking by the Company to continue the remediation
activities at the site. The anticipated liability of the Company in
the other suit is not material.
Accrued costs against future cleanup expenses for these three
facilities are approximately $700,000.
Federal and state laws require that potentially responsible
parties fund remedial actions regardless of fault, legality of
original disposal or ownership of a disposal site. In 1993 the
Company spent approximately $571,000 on remedial cleanups and related
studies compared with approximately $1,113,000 spent for such purposes
in 1992.
It is difficult to estimate the ultimate level of future
environmental expenditures due to a number of uncertainties, including
uncertainties about the current status of the law and regulations,
remedial technologies and insurance recoveries of Company costs, as
well as information relating to individual sites. Subject to the
foregoing, Company management believes its estimates of its liability
is reliable and anticipates that capital expenditures and the cost of
remedial actions to comply with the current laws governing
environmental protection will not have a material adverse effect upon
its capital expenditures, earnings or financial position.
-6-
<PAGE>
ITEM 2. PROPERTIES
- - -------------------
Set forth below is certain information with respect to the
Company's principal facilities:
Approximate
Location Principal Use Square Feet Owned/Leased
- - -------- ------------- ----------- ------------
Newark, NJ Plant 267,570 Owned
Melrose Park, IL Executive Offices- 145,200 Owned
Central Division;
Plant
Toronto, ON Executive Offices- 118,792 Owned
Subsidiary; Plant
Milford, MA Plant 110,500 Owned
Cuyahoga Heights, OH Plant 106,000 Owned
Colonial Heights, VA Plant 92,800 Owned
Jacksonville, FL Plant 82,400 Owned
Flanders, NJ Central Laboratories, 78,000 Owned
Information Resource
Center, Executive
Offices - Subsidiary
St. Louis, MO Plant 76,750 Owned
Denver, CO Plant 73,450 Owned
Johnstown, NY Plant 66,400 Owned
Houston, TX Plant 64,900 Owned
Montreal, PQ Plant 63,500 Owned
Pell City, AL Plant 62,500 Leased (1)
Commerce, CA Executive Offices- 59,000 Owned
Western Division;
Plant
Montvale, NJ Corporate Offices; 57,000 Owned
Executive Offices-
Eastern Division
Nutley, NJ Plant 50,000 Owned
Burlington, ON Plant 45,351 Owned
Santa Clara, CA Plant; Warehouse 38,507 Owned
__________________________________
(1) Lease expires August 1995 at which time the facility may be
purchased by the Company for $1,000. The Company has a continuing option
to purchase the facility at an earlier date.
-7-
<PAGE>
Approximate
Location Principal Use Square Feet Owned/Leased
- - -------- ------------- ----------- ------------
Aldergrove, BC Plant 36,900 Owned
Mesquite, TX Plant 29,346 Owned
The Company owns 9.32 acres of land in Lebanon, New Jersey, which
is used as a testing facility, and maintains a New York City sales
office and an administrative office in Montvale, New Jersey in rented
premises. The Company also leases warehouse facilities in North
Kansas City, Missouri; Golden Valley, Minnesota; Auckland and
Christchurch, New Zealand and in Concord, Edmonton, Saskatoon,
Calgary, Winnipeg, Dartmouth and Mount Pearl, Canada. Warehouse
arrangements also exist in Portland, Oregon.
All of the other facilities which are stated above as being owned
by the Company are owned in fee, free and clear of any mortgages or
other material encumbrances. The Company believes that its properties
and equipment are well maintained and in good condition, and that the
rentals paid by it for its leased properties are at competitive rates.
The Company also believes that its facilities are adequate for its
existing needs.
ITEM 3. LEGAL PROCEEDINGS
- - --------------------------
The Company is involved in a number of legal actions in which
substantial monetary damages are sought. Management believes that the
outcome of all such legal actions, individually and in the aggregate,
will not have a material effect on the Company's consolidated
financial position or results of operations. Also, see "Environmental
Affairs and Governmental Regulation" above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------------------------------------------------------------
There was no submission of matters to a vote of security holders
during the fourth quarter of 1993.
-8-
<PAGE>
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED
- - ------------------------------------------------------------------
SECURITY HOLDER MATTERS
-----------------------
There is no established public trading market for shares of the
Company's common stock. The Company and its Employees' Stock
Ownership Benefit Plan, although under no obligation to do so, have in
the past purchased shares of the Company's common stock from
shareholders in privately negotiated transactions. Usually such
purchases are made at the then current fair value of the shares as
determined by an independent appraisal firm engaged by the Company.
There can be no assurance that such purchases will be continued. As
of March 1, 1994, the Company had approximately 1,450 shareholders.
The following table sets forth the high and low price for such
shares in each quarter during 1993 and 1992 and the dividends paid in
each such quarter.
<TABLE> <CAPTION>
Price Range Dividends Paid
------------------------------------------ --------------
1993 1992 1993 1992
------------------------------------------ --------------
High Low High Low
------------------------------------------
<S> <C> <C>
1st quarter............... $76.66 $70.57 $66.19 $59.03 $ .37 $ .35
2nd quarter............... 76.66 71.61 68.98 63.67 .37 .35
3rd quarter............... 78.18 71.50 66.01 63.67 .37 .35
4th quarter............... 87.88 77.60 71.53 63.61 .37 .35
4th quarter-extra.......................................................... .20 .25
----- -----
Total.................................................................. $1.68 $1.65
----- -----
----- -----
</TABLE>
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- - --------------------------------
Selected Income Statement Data:
<TABLE> <CAPTION>
Year Ended December 31,
----------------------------------------------------
1993 1992 1991 1990 1989
----------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
NET SALES:
TRADE SALES COATINGS.......... $471,738 $448,111 $433,380 $429,972 $407,505
PRODUCTION FINISHES COATINGS.. 40,213 35,822 29,592 29,395 31,189
-------- -------- -------- -------- --------
Total...................... $511,951 $483,933 $462,972 $459,367 $438,694
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
NET INCOME...................... $ 36,511 $ 36,307 $ 35,937 $ 36,971 $ 36,772
EARNINGS PER SHARE OF
COMMON STOCK.................. $3.75 $3.66 $3.54 $3.66 $3.60
COMMON STOCK CASH DIVIDENDS:
DECLARED PER SHARE............ $1.68 $1.67 $1.62 $1.53 $1.40
PAID PER SHARE................ $1.68 $1.65 $1.60 $1.50 $1.375
</TABLE>
Selected Balance Sheet Data:
<TABLE> <CAPTION>
Year Ended December 31,
----------------------------------------------------
1993 1992 1991 1990 1989
----------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS.................. $185,198 $181,118 $180,467 $184,085 $181,954
CURRENT LIABILITIES............. 51,996 48,537 44,000 41,810 39,541
-------- -------- -------- -------- --------
WORKING CAPITAL................. $133,202 $132,581 $136,467 $142,275 $142,413
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL ASSETS.................... $276,040 $263,610 $255,575 $243,496 $230,068
LONG-TERM OBLIGATIONS........... $ 6,477 $ 7,825 $ 10,036 $ 11,885 $ 13,672
SHAREHOLDERS' EQUITY - NET...... $209,760 $199,054 $193,565 $182,028 $169,621
BOOK VALUE PER SHARE OF
COMMON STOCK (1).............. $23.28 $22.06 $21.22 $19.24 $17.72
<FN>
(1) Book value per share is computed based on shareholders' equity
before deduction of employees' stock ownership and stock purchase plan notes.
</TABLE>
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- - --------------------------------------------------------------------
AND RESULTS OF OPERATIONS
- - -------------------------
OPERATING RESULTS 1993 VS. 1992
Net Sales in 1993 showed strength throughout the year and
produced total sales revenues of $511,951,000, which exceeded the
previous year by $28,019,000 or 5.8%. Unit gains were generated both
in the United States and Canada. Upward selling price movements which
were limited had little effect on the year's total sales.
Except for small geographical pockets indicative of specific
local conditions, the sales momentum extended to areas which had been
affected by adverse economic conditions in the last few years. Most
noteworthy were the recoveries in New England and other sections of
the Northeast and the business upsurge in southern Florida
attributable to the rebuilding following the aftermath of Hurricane
Andrew.
Production finishes also reflected unit growth although this
market segment represents less than 10% of total sales.
Cost of products sold in 1993 was $267,494,000 which was 5.2%
above the prior year. Slightly lower raw material cost levels and
production efficiencies were beneficial in keeping the percentage
increase .6% lower than the sales increase percentage.
However, selling, administrative and general expenses of
$184,255,000 rose $14,164,000 or 8.3%. The largest single increase
was for postretirement health benefits. An additional amount of
approximately $2,529,000 was charged to earnings consisting of the
annual service cost and the amortization of the transition liability
as required by SFAS No. 106.
In addition to general inflationary increases and other factors
attributable to higher sales volume, two other significant factors
contributing to the increase in expenses were the second year of a
renewed emphasis on media advertising amounting to approximately
$1,000,000 and start-up costs of $1,491,000 associated with the
introduction of a broad new line of industrial maintenance products.
Sales of the new product line were limited to a market test in 1993.
A broadening of distribution is planned in 1994.
Dealer business closures and slow collection continued to be
prevalent and, despite tighter credit controls, resulted in high bad
debt writeoffs similar to the previous year. In recent months
business growth by the Company's Dealers suggest an optimistic outlook
for 1994.
Other income in 1993 declined $171,000 from 1992 mostly due to
reduced interest income on lower short-term investments. Income
before taxes and minority interest was $60,951,000, up $552,000 or .9%
over 1992. The effective income tax rate in 1993 was 39.2% compared
with 38.9% in 1992. Higher profits and the 1993 tax rate increase
accounted for the increased provision for income taxes of $379,000 or
1.6%.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ---------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
Net income of $36,511,000 represented an improvement of $204,000
or .6% over 1992. Earnings per share in 1993 were $3.75, up $.09 over
the prior year. Dividends declared per share edged upward by $.01 to
$1.68 in 1993.
The Company's New Zealand subsidiary which consists of a
warehouse operation continued to concentrate on sales development in
it first full year. Since its initial market test in 1991, there has
been little effect on total sales and income.
If the economic recoveries in the Northeast and New England
continue into 1994 and inflationary pressures are maintained under
control, optimism should prevail for growth in both sales and income.
OPERATING RESULTS 1992 VS. 1991
Net Sales of $483,933,000 in 1992 surpassed the prior year by
$20,961,000 or 4.5%. Without a general selling price adjustment in
trade sales coatings, the increase was generated by unit gains both in
the United States and Canada.
The sales gains in the United States began late in the first half
of the year, leveled off for a short period and resumed momentum
especially in the fourth quarter. Most areas of the country showed
upward movement with noticeable improvement in the southern region,
the Midwest, the Northwest, and portions of the Northeast. New
England indicated an end of its slide by recovering some of the volume
lost in prior years. Slow areas continued to be in the Greater New
York market and in California where the economies remained sluggish.
Sales in Canada reflected gains throughout the year.
Production finishes sales in the U.S. experienced good growth in
1992 largely due to the acquisition of a general industrial coatings
line late in 1991. The acquired product line supplemented existing
volume in production finishes coatings and has had no significant
change in product mix. Sales of production finishes coatings in
Canada were slow.
Cost of products sold was $254,362,000 in 1992 which was
$7,747,000 or 3.1% above 1991. As a percent of sales, cost of
products sold was 52.6% in 1992 compared with 53.3% in 1991. The unit
sales gains were accompanied by a decrease of approximately 3% in raw
material cost levels to account for the decline in the percentage.
Selling, administrative and general expenses of $170,091,000 rose
$12,246,000 or 7.8% over the prior year. In addition to an
inflationary effect of nearly 3.5% in operating expenses, bad debt
writeoffs represented a significant increase of $1,162,000 or 17.0%
over 1991. Business failures and slow collections were prevalent
during the two year period. Close monitoring of accounts Receivable
along with the writeoffs resulted in an improvement in the quality of
the outstanding Receivables. Another major reason for the increase in
expenses was the commencement of a renewed national advertising thrust
directed toward
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ---------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
the consumer especially in large metropolitan areas. The relocation of
private label production from Gibbsboro, New Jersey to Newark, New
Jersey in the latter part of 1992 also accounted for a one-time charge
of approximately $500,000.
Other income in 1992 declined $759,000 from the previous year.
Reduced interest rates earned on short-term securities combined with
lesser amounts available for temporary investments occasioned the
decrease.
Net income before taxes and minority interest was $60,399,000, up
$208,000 over 1991.
The Company's effective income tax rate was 38.9% in 1992 as
compared with 39.4% in 1991. The provision for income taxes decreased
by $189,000 or .8%.
Net income of $36,307,000 in 1992 was $370,000 or 1% above 1991.
Earnings per share were $3.66 in 1992, and improvement of $.12 over
1991. Dividends declared per share were $1.67 compared with $1.62 in
the prior year.
The Company's warehouse operation in New Zealand which opened in
1991 showed some indication of growth but had little effect on either
net sales or net income.
FINANCIAL POSITION AND LIQUIDITY
During 1993 the financial strenth of the Company continued to be
evidenced in the ability of the cash flows from operations to meet
operating and capital requirements.
Net cash flows provided by operating activities amounted to
$32,282,000 in 1993 compared with $39,972,000 in 1992 and $33,772,000
in 1991.
The decrease in operating cash flows of 1993 vs. 1992 was
attributable to the additional support required for accounts and notes
receivable and for the higher inventories of merchandising material
which is reflected in prepaid expenses.
Net cash flows used in investing activities showed a significant
increase in 1993 over the prior year.
The completion of the property renovation for a corporate
technical and administrative center in Flanders, New Jersey accounted
for the increase of over $2,017,000 in capital expenditures of 1993
compared with 1992. The continued reduction in short-term investments
was a reflection of the use of internal funds for the Flanders
building project as well as, in part, the accounts receivable support.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ---------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
The cash flows used in financing activities declined over
$4,800,000 principally due to lower requirements for the acquisition
of treasury stock. Generally, the Company finances its stock
repurchases from its working capital in accordance with the conditions
described at Part II, Item 5 above. It is expected that any future
purchases will be similarly financed.
During the three years ended December 31, 1993 the Company
purchased 141,048; 218,110 and 178,683 shares, respectively, of its
common stock. In addition, a capital contribution of 42,000 shares
was received by the Company in 1991 through a bequest of a deceased
senior executive.
Sales of treasury stock are made to employees under an Employees'
Stock Purchase Plan. During 1992 and 1991, the Company sold 300 and
229,100 shares, respectively, to employees. In addition, the Company
distributed 876; 1,432 and 2,004 shares to non-executive sales
employees in 1993, 1992 and 1991, respectively.
During 1993 borrowing by the Company was largely limited to
short-term line of credit uses by the Canadian subsidiary. The
subsidiary in New Zealand also utilized local bank loans for a
majority of its capital requirements.
In 1994 the Company will continue with a major expansion of its
production and warehouse facility at Mesquite, Texas. The project
which is expected to amount to $8,500,000, is anticipated to consist
of several phases with completion in 1995. The closing of the Houston
plant and the transfer of production to the Mesquite facility is
planned upon completion of the building project at Mesquite. A
warehouse addition at an estimated cost of $800,000 is also in
progress at the Pell City, Alabama plant.
The renovation of the interior offices at the general
administrative offices location in Montvale, New Jersey, at a cost of
approximately $1,000,000, is expected to be completed by mid 1994. In
addition, the relocation of the Company's Jacksonville, Florida plant,
which is located adjacent to the Gator Bowl, will commence within the
next year due to the awarding of an NFL football franchise to the
city. The property occupied by the plant is included in the local
development project. Negotiations are being conducted with the
appropriate authorities for property appraisals and a determination of
relocation costs.
It is likely that a limited amount of short-term bank borrowing
may be necessary to supplement funds from operating cash flows to
finance the several construction projects.
OTHER MATTERS
The Company places importance on its environmental
responsibilites. Compliance with current laws concerning
environmental protection has not resulted in significant capital
expenditures and has
-14-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ---------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
not had a material adverse effect on the
Company's earnings or its financial postion. The Company does not
anticipate that future costs associated with current laws governing
environmental protection will have a material effect upon its capital
expenditures, earnings or competitive postion.
For information regarding Financial Accounting Standards that
have been issued but not yet adopted by the Company refer to Note 6 of
the Notes to Consolidated Financial Statements.
-15-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- - ----------------------------------------------------
The consolidated financial statements of the registrant and its
subsidiaries, together with notes thereto and the auditors' report,
are set forth on pages 17 through 34. The additional financial
information set forth in Part IV and included herein should be read in
conjunction with the consolidated financial statements.
-16-
<PAGE>
DELOITTE &
TOUCHE
- - ---------- ----------------------------------------------
Two Hilton Court Telephone: (201) 631-7000
P.O. Box 319 Facsimilie: (201) 631-7459
Parsippany, New Jersey 07054-0319
INDEPENDENT AUDITORS' REPORT
Benjamin Moore & Co.:
We have audited the accompanying consolidated financial statements of
Benjamin Moore & Co. and its subsidiaries, listed in the index at Item
14. Our audits also included the financial statement schedules listed
in the Index at Item 14. These financial statements and financial
statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Benjamin Moore &
Co. and subsidiaries at December 31, 1993 and 1992 and the results of
their operations and their cash flows for each of the three years in
the period ended December 31, 1993 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
As discussed in Notes to Consolidated Financial Statements listed in
the Index at Item 14, the Company changed both its method of
accounting for income taxes to conform with Statement of Financial
Accounting Standards ("SFAS") No. 109 and its method of accounting for
postretirement benefits other than pensions to conform with SFAS No.
106.
/s/ Deloitte & Touche
Deloitte & Touche
March 1, 1994
- - ---------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- - ---------------
-17-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
NET SALES (Note 4)........................ $511,951,465 $483,932,713 $462,972,085
------------ ------------ ------------
COSTS AND EXPENSES: (Notes 6 and 11)
Cost of products sold................... 267,494,172 254,361,885 246,614,875
Selling, administrative and general..... 184,254,963 170,091,083 157,844,997
Other income, net (Note 14)............. (748,605) (919,226) (1,678,283)
------------ ------------ ------------
TOTAL COSTS AND EXPENSES..... 451,000,530 423,533,742 402,781,589
------------ ------------ ------------
INCOME BEFORE TAXES AND MINORITY
INTEREST................................ 60,950,935 60,398,971 60,190,496
INCOME TAX PROVISION (Note 13)............ 23,897,061 23,518,028 23,706,891
------------ ------------ ------------
INCOME BEFORE MINORITY INTEREST........... 37,053,874 36,880,943 36,483,605
MINORITY INTEREST IN NET INCOME
OF CONSOLIDATED SUBSIDIARY.............. 542,959 573,606 546,180
------------ ------------ ------------
NET INCOME................................ $ 36,510,915 $ 36,307,337 $ 35,937,425
------------ ------------ ------------
------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING...................... 9,723,937 9,916,669 10,139,417
------------ ------------ ------------
------------ ------------ ------------
EARNINGS PER SHARE OF
COMMON STOCK............................ $3.75 $3.66 $3.54
------------ ------------ ------------
------------ ------------ ------------
CASH DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK......................... $1.68 $1.67 $1.62
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
-18-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
<TABLE>
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
<CAPTION>
ASSETS
1993 1992
<S> <C> <C>
CURRENT ASSETS:
Cash .............................................. $ 5,011,498 $ 8,031,011
Short-term investments ............................ 20,683,414 26,875,366
Accounts and notes receivable - net (Note 2)....... 80,759,227 74,549,995
Inventories (Note 3) .............................. 51,477,474 49,184,151
Prepaid expenses .................................. 18,959,037 14,357,743
Deferred income taxes (Note 13) ................... 8,307,138 8,120,109
------------ ------------
TOTAL CURRENT ASSETS ....................... 185,197,788 181,118,375
INVESTMENTS IN TEMPORARY CO-OWNERSHIPS (Note 4) ..... 9,173,763 7,741,666
PROPERTY, PLANT AND EQUIPMENT - NET (Note 5)......... 60,269,658 54,924,235
OTHER ASSETS (Notes 2 and 6) ........................ 21,398,930 19,825,302
------------ ------------
TOTAL .................................... $276,040,139 $263,609,578
------------ ------------
------------ ------------
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt and current portion of long-term
obligations (Note 10) ........................... $ 5,333,001 $ 4,506,732
Accounts payable - trade .......................... 18,984,997 18,838,008
Other liabilities and accrued expenses (Note 7).... 24,095,544 21,558,051
Dividends payable ................................. 3,582,417 3,634,011
------------ ------------
TOTAL CURRENT LIABILITIES .................. 51,995,959 48,536,802
DEFERRED INCOME TAXES (Note 13) ..................... 2,675,968 3,033,967
------------ ------------
LONG-TERM OBLIGATIONS (Note 10) ..................... 6,477,210 7,825,000
------------ ------------
MINORITY INTEREST IN NET ASSETS
OF CONSOLIDATED SUBSIDIARY ........................ 5,130,728 5,160,152
------------ ------------
COMMITMENTS (Note 11)
SHAREHOLDERS' EQUITY: (Notes 6 & 12)
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
at December 31, 1993 and 1992.................... 131,643,120 131,643,120
Additional paid-in capital ........................ 21,960,011 21,880,795
Retained earnings ................................. 154,432,773 134,239,948
Accumulated currency translation adjustment ....... (2,449,956) (1,450,945)
Cost of treasury stock; 3,496,194 shares and
3,356,022 shares at December 31, 1993 and 1992 .. (80,477,178) (69,927,602)
Employees' stock ownership and stock purchase
plan notes ...................................... (15,348,496) (17,331,659)
------------ ------------
SHAREHOLDERS' EQUITY - NET ................. 209,760,274 199,053,657
------------ ------------
TOTAL .................................... $276,040,139 $263,609,578
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
-19-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
Accumulated Employees' Stock
Additional Currency Ownership and
Common Paid-in Retained Translation Treasury Stock Purchase
Stock Capital Earnings Adjustment Stock Plan Notes
------------ ------------ ------------- ------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990... $131,643,120 $ 9,852,382 $ 94,901,879 $ 678,492 $(44,446,812) $(10,601,438)
Net income for the year... 35,937,425
Cash dividends declared
on common stock -
$1.62 per share.......... (16,378,429)
Sale and distribution of
treasury stock - 231,104
shares................... 9,632,181 867,852 (10,025,183)
Treasury stock purchases
and capital contribution-
220,683 shares........... 2,299,500 (12,302,143)
Interest charged on ESPP
notes.................... (81,285)
Dividends credited
to ESPP notes............ 404,625
Note payments.............. 1,104,808
Foreign currency
translation adjustment... 77,874
------------ ----------- ------------ ----------- ------------ ------------
Balance, December 31, 1991... 131,643,120 21,784,063 114,460,875 756,366 (55,881,103) (19,198,473)
Net income for the year.... 36,307,337
Cash dividends declared
on common stock -
$1.67 per share............ (16,528,264)
Sale and distribution of
treasury stock -
1,732 shares............... 96,732 7,429 (12,165)
Treasury stock purchases -
218,110 shares............. (14,053,928)
Interest charged on ESPP
notes...................... (51,232)
Dividends credited
to ESPP notes.............. 483,012
Note payments................ 1,447,199
Foreign currency
translation adjustment..... (2,207,311)
------------ ----------- ------------ ----------- ------------ ------------
Balance, December 31, 1992... 131,643,120 21,880,795 134,239,948 (1,450,945) (69,927,602) (17,331,659)
Net income for the year.... 36,510,915
Cash dividends declared
on common stock -
$1.68 per share.......... (16,318,090)
Distribution of treasury
stock - 876 shares....... 58,701 4,336
Treasury stock purchases
and capital contribution-
141,048 shares........... 20,515 (10,553,912)
Interest charged on ESPP
notes.................... (30,459)
Dividends credited
to ESPP notes............ 470,418
Note payments.............. 1,543,204
Foreign currency
translation adjustment... (999,011)
------------ ----------- ------------ ----------- ------------ ------------
Balance, December 31, 1993... $131,643,120 $21,960,011 $154,432,773 $(2,449,956) $(80,477,178) $(15,348,496)
------------ ----------- ------------ ----------- ------------ ------------
------------ ----------- ------------ ----------- ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
-20-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................. $36,510,915 $36,307,337 $35,937,425
Adjustments To Reconcile Net Income To Net Cash Flows
Provided By Operating Activities:
Depreciation and amortization ........................... 8,551,136 7,928,547 6,479,536
Decrease in deferred income taxes ....................... (525,923) (571,718) (914,499)
Minority interest in net income
of consolidated subsidiary ............................ 542,956 573,606 546,180
(Gain) loss on disposal of fixed assets ................. (84) 72,429 34,070
Interest charged on employee stock purchase
plan notes ............................................ (30,459) (51,232) (81,285)
Other ................................................... (25,675) 329,128 (83,635)
Changes In Assets And Liabilities:
Increase in accounts and notes receivable ............... (6,513,849) (2,520,064) (7,470,424)
Increase in inventories ................................. (2,529,226) (1,526,191) (1,662,015)
(Increase) decrease in prepaid expenses ................. (4,709,608) (758,755) 1,293,753
Increase in notes receivable due after one year ......... (712,384) (4,464,970) (1,358,098)
Increase in other assets ................................ (1,950,905) (765,341) (905,225)
Increase in other current liabilities ...................
3,674,866 5,419,224 1,956,712
----------- ----------- -----------
Net Cash Flows Provided By Operating Activities ....... 32,281,760 39,972,000 33,772,495
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets .......................... 15,150 87,130 90,700
Payments for purchase of property, plant and equipment ...... (13,217,058) (11,200,173) (15,431,108)
Payments for purchase of intangibles ........................ (235,440) (4,080,000)
Decrease in short-term investments .......................... 6,191,952 8,485,497 12,142,114
Investments in temporary co-ownerships ...................... (2,718,308) (1,868,578) (1,036,346)
Proceeds from sales of temporary co-ownership interests ..... 1,137,003 1,256,852 535,702
----------- ----------- -----------
Net Cash Flows Used In Investing Activities ........... (8,826,701) (3,239,272) (7,778,938)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends ........................................ (15,899,266) (15,925,947) (15,765,677)
Payment of dividends to minority shareholders ............... (225,277) (236,263) (220,387)
Proceeds from sale of treasury stock ........................ 1,434 359,920
Payments for purchase of treasury stock ..................... (10,553,912) (14,053,928) (10,002,643)
Repayments of long-term obligations ......................... (1,350,000) (2,596,913) (1,820,903)
Payments received on employees' stock ownership and
stock purchase plan notes ................................. 1,543,204 1,447,199 1,104,808
----------- ----------- -----------
Net Cash Flows Used In Financing Activities ........... (26,485,251) (31,364,418) (26,344,882)
----------- ----------- -----------
Effect of exchange rate changes on cash ........................ 10,679 4,823 10,735
----------- ----------- -----------
Net (Decrease) Increase in Cash ................................ (3,019,513) 5,373,133 (340,590)
Cash at Beginning of Year ...................................... 8,031,011 2,657,878 2,998,468
Cash at End of Year ............................................ $ 5,011,498 $ 8,031,011 $ 2,657,878
----------- ----------- -----------
----------- ----------- -----------
Supplemental Cash Flow Information:
Interest paid ............................................... $ 1,117,166 $ 1,096,584 $ 1,361,957
Income taxes paid ........................................... $25,124,273 $26,686,136 $23,475,801
Supplemental Schedule Of Noncash Investing And Financing
Activities:
Additions to obligations under capital leases ............... $ 124,191
Issuance of employee stock purchase plan notes .............. $ 12,165 $10,025,183
Capital contribution ........................................ $ 20,515 $ 2,299,500
</TABLE>
See Notes to Consolidated Financial Statements.
-21-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1993, 1992 and 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The financial statements include all majority-owned subsidiaries
except for Temporary Co-Ownerships as explained in Note 4 below. All
balances and transactions between subsidiaries are eliminated in
consolidation.
Foreign Currency Translation
----------------------------
All balance sheet accounts of foreign subsidiaries are translated
to United States dollars at current exchange rates. The income
statements are translated using the average exchange rates for the
period. Adjustments for currency exchange rate fluctuations are
excluded from net income and reflected as a separate component of
shareholders' equity.
Short-Term Investments
----------------------
Short-term investments consist of United States treasury bills of
$14,422,837 in 1993 and $20,850,732 in 1992, stated at cost, which
approximates market value, and a mutual fund of short duration
portfolio of $6,260,577 in 1993 and $6,024,634 in 1992, carried at the
lower of cost or market value. The carrying amount of these
investments approximates fair value.
Inventory
---------
Inventories are valued at lower of cost, determined by the use of
the last-in, first-out (LIFO) method, or market.
Property, Plant and Equipment
-----------------------------
The major classes of property along with the depreciation and
amortization methods and estimated useful lives used are set forth
below:
<TABLE>
<CAPTION>
Estimated
Asset Depreciation and Amortization Methods Useful Life
----- -------------------------------------- -----------
<S> <C> <C>
Buildings.................. Straight-line, sum of the years digits,
declining balance 25-45 yrs.
Machinery and equipment.. Sum of the years digits, declining balance 8-11 yrs.
Furniture and fixtures..... Sum of the years digits, declining balance 6-10 yrs.
Automobiles and trucks..... Sum of the years digits, declining balance 3-6 yrs.
Leasehold improvements..... Straight-line 3-20 yrs.
</TABLE>
Major expenditures for renewals and improvements are capitalized;
maintenance and repairs are expensed. The cost of property retired or
sold is eliminated from the asset account and, after deducting the
related accumulated depreciation, any profit or loss is included in
income.
Intangible Assets
-----------------
Intangible assets acquired during 1993 and 1991, amounting to
$1,083,561 and $4,080,000, respectively, are valued at cost and are
being amortized over their estimated useful lives. During 1993 and
1992 amortization of such intangibles amounted to $942,685 and
$642,632, respectively.
Provision for Income Taxes
--------------------------
The Company and its subsidiaries file separate tax returns. The
Company provides deferred income taxes on temporary differences
between amounts of assets
-22-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and liabilities for financial reporting purposes and such amounts as
measured by enacted tax laws. Tax credits are included as a reduction
of income tax expense in the year the credits arise.
Pension Expense
---------------
It is the Company's policy to fund all qualified pension costs
based on calculations made by independent actuaries. Pension expense
is determined in accordance with Statement of Financial Accounting
Standards No. 87, Employers' Accounting for Pensions. Unrecognized
net assets are being amortized over 16-2/3 years for the United States
plan and 15 years for the Canadian plan.
Research and Development Costs
------------------------------
Research and development and quality control expenditures are
charged to income in the year incurred and amounted to $13,987,537,
$12,417,319 and $11,300,763 in 1993, 1992 and 1991, respectively.
Quality control expenditures aggregated $5,001,518, $4,716,561 and
$4,054,769, respectively, and are included herein because a
substantial portion of such expenditures is related to development
projects.
Accounting Change
-----------------
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The net
unrecorded liability at the date of adoption is being amortized over
20 years (See Note 6). As of the same date, the Company adopted SFAS
No. 109, "Accounting for Income Taxes." Prior year financial
statements have not been restated. The adoption of SFAS No. 109
resulted in an additional income tax expense of approximately $700,000
in 1993 (See Note 13).
Reclassifications
-----------------
Certain reclassifications have been made in the 1991 financial
statements to conform to the method of presentation used in 1993.
2. ACCOUNTS AND NOTES RECEIVABLE
December 31,
-----------------------
1993 1992
Trade .................................. $88,940,829 $81,337,135
Other .................................. 1,493,077 1,049,161
----------- -----------
Total ............................. 90,433,906 82,386,296
Less allowance for doubtful accounts ... 9,674,679 7,836,301
----------- -----------
Net ............................... $80,759,227 $74,549,995
----------- -----------
----------- -----------
Notes receivable due after one year amounted to $12,614,376 and
$11,904,207 at December 31, 1993 and 1992, respectively, and are
included in Other Assets in the accompanying balance sheet. The
carrying amount of notes receivable approximates fair value.
-23-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVENTORY
December 31,
-----------------------
1993 1992
Finished goods ......................... $31,223,724 $27,979,303
Raw materials .......................... 20,253,750 21,204,848
----------- -----------
Total ............................. $51,477,474 $49,184,151
----------- -----------
----------- -----------
If the first-in, first-out (FIFO) method of inventory accounting,
which approximates current cost, had been used, inventory would have
been $15,601,000, $13,142,000 and $15,235,000 higher than reported at
December 31, 1993, 1992 and 1991, respectively.
Work-in-process is not significant, due to the brief production
cycle, and is included with raw materials.
4. INVESTMENTS IN TEMPORARY CO-OWNERSHIPS
Investments in Temporary Co-Ownerships are carried at cost. These
investments, in the capital stock of retail paint stores, are non-
interest bearing financing arrangements. All increases in equity from
earnings accrue solely to the benefit of the independent co-owners.
The Company sells its products to Temporary Co-Ownerships at the same
prices and terms used in transactions with all other customers. A
reasonable estimate of fair value of the investments in Temporary Co-
Ownerships could not be made without incurring excessive costs.
5. PROPERTY, PLANT AND EQUIPMENT
December 31,
-----------------------
1993 1992
Land................................... $ 6,985,753 $ 6,135,827
Buildings.............................. 53,769,421 46,909,858
Machinery, equipment and leasehold
improvements......................... 75,353,810 71,572,295
----------- -----------
Total............................. 136,108,984 124,617,980
Less accumulated depreciation and
amortization......................... 75,839,326 69,693,745
----------- -----------
Property, plant and equipment-net. $60,269,658 $54,924,235
----------- -----------
----------- -----------
Capital leases included in the above are as follows:
Classes of Property
December 31,
-----------------------
1993 1992
Land................................... $ 96,000 $ 96,000
Buildings.............................. 1,616,902 1,616,902
Machinery, equipment and
leasehold improvements............... 3,511,123 3,406,402
---------- ----------
Total.............................. 5,224,025 5,119,304
Less accumulated depreciation
and amortization..................... 3,811,492 3,456,342
---------- ----------
Net............................... $1,412,533 $1,662,962
---------- ----------
---------- ----------
-24-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. EMPLOYEE BENEFIT PLANS
Pension Plans
-------------
The Company and its subsidiaries have retirement income
plans covering
substantially all employees. The benefits are based upon years of
service and the employee's highest average compensation during any
thirty-six consecutive full calendar months of employment.
The funded status and amounts recognized in the Company's balance
sheet at December 31, 1993 and 1992, as determined by independent
actuaries, are presented below:
<TABLE> <CAPTION>
December 31, 1993 December 31, 1992
----------------- -----------------
United States Canadian United States Canadian
Plan Plan Plan Plan
-------------------------- ---------------------------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation ............... $ 97,082,000 $10,059,000 $73,817,000 $ 7,487,000
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Accumulated benefit obligation .......... $ 99,572,000 $10,059,000 $75,474,000 $ 7,711,000
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Projected benefit obligation for
service rendered to date ................ $119,931,000 $11,860,000 $101,711,000 $10,440,000
Plan assets at fair value (plan assets
are invested primarily in various
contracts with insurance companies) ..... 112,128,000 16,495,000 104,704,000 14,929,000
------------ ----------- ----------- -----------
Projected benefit obligation (in excess
of) less than plan assets ............... (7,803,000) 4,635,000 2,993,000 4,489,000
Unrecognized net loss (gain) from past
experience different from that assumed .. 5,907,000 1,024,000 (1,272,000) 1,040,000
Prior service cost not yet recognized
in net periodic pension cost ............ 3,271,000 (428,000)
Unrecognized transition asset, net
of amortization ......................... (2,997,000) (3,077,000) (3,343,000) (3,023,000)
------------ ----------- ----------- -----------
Accrued pension (cost) credit recognized in
(other liabilities) other assets on the
balance sheet............................ $ (1,622,000) $ 2,582,000 $ (2,050,000) $ 2,506,000
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
</TABLE>
-25-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net pension costs include the following components:
<TABLE> <CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Service cost-benefits earned during the
period ................................ $ 3,708,000 $ 3,458,000 $ 3,264,000
Interest cost on projected benefit
obligation ............................ 9,713,000 9,015,000 8,472,000
Actual return on plan assets ............ (10,549,000) (8,014,000) (18,456,000)
Net amortization and deferral ........... (257,000) (2,926,000) 8,779,000
------------ ------------ ------------
Net periodic pension cost ........... $ 2,615,000 $ 1,533,000 $ 2,059,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 7 percent and 4 percent, respectively in 1993 and 8 1/2
percent and 6 1/2 percent, respectively in 1992 and 1991. The expected
long-term rate of return on assets, net of expenses, was 8.5 percent in
1993 and 9 percent in 1992 and 1991.
Postretirement Medical and Life Insurance Plans
-----------------------------------------------
The Company and its subsidiaries have two defined benefit
postretirement plans that cover substantially all of the United States
employees of the Company and its subsidiaries. One plan provides medical
benefits, and the other provides life insurance benefits. The
postretirement health care plan is contributory for employees retiring on
or after January 1, 1993, with retiree contributions adjusted annually;
the life insurance plan is noncontributory. The accounting for the
health care plan anticipates future cost-sharing changes to the written
plan that are consistent with the Company's expressed intent to increase
retiree contributions each year by the same percent increase experienced
by the Net Incurred Charges through 1998, after which all future cost
increases will be passed onto the retirees.
As of December 31, 1993, the Company has not established any
specific funding policy.
-26-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the plans' funded status reconciled
with the amount shown in the Company's statement of financial position at
December 31, 1993.
<TABLE> <CAPTION>
Medical Life Insurance
Plan Plan
-------------- --------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ..................................... $(14,343,000) $(1,078,000)
Fully eligible active plan participants ...... (3,635,000) (172,000)
Other active plan participants ............... (6,744,000) (383,000)
------------ -----------
Accumulated postretirement benefit
obligation in excess of plan assets ...... (24,722,000) (1,633,000)
Unrecognized net (gain) or loss from past
experience different from that assumed
and from changes in assumptions ............... 3,211,000 194,000
Unrecognized transition obligation ............. 19,763,000 1,262,000
------------ -----------
Accrued postretirememt benefit cost
recognized in the other liabilities on
the balance sheet.......................... $ (1,748,000) $ (177,000)
------------ -----------
------------ -----------
</TABLE>
Net periodic postretirement benefit cost for 1993 included the
following components:
Service cost-benefits attributed
to service during the period ............. $ 368,000
Interest cost on accumulated
postretirement benefit obligation ........ 1,822,000
Net amortization and deferral .............. 1,107,000
----------
Net periodic postretirement benefit cost ... $3,297,000
For measurement purposes, the 1994 annual rate of increase in the
per capita cost of covered health care benefits was assumed to be 14% for
costs under age 65 and 11.1% for costs over age 65; the rates were
assumed to decrease gradually to 6% for 2020 and remain at that level
thereafter. The health care cost trend rate assumption has a significant
effect on the amounts reported. To illustrate, increasing the assumed
health care cost trend rates by 1 percentage point in each year would
increase the accumulated postretirement benefit obligation as of December
31, 1993 by $957,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year then
ended by $61,000.
-27-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average discount rate used in determing the accumulated
postretirement benefit obligation was 7 percent.
During 1993, the Company's Canadian subsidiary continued to provide
certain health care and life insurance benefits for retired employees as
were previously provided to substantially all employees of the Company.
Substantially all of the employees of the Company's Canadian subsidiary
became eligible for those benefits upon retirement at the normal
retirement age. The benefits are provided through insurance companies
whose premiums are based upon the benefits paid during the year.
The Company recognized the cost of providing those benefits by
expensing the annual insurance premiums, which amounted to approximately
$54,000, $822,000 and $703,000 in 1993, 1992 and 1991, respectively.
Postemployment Benefits
-----------------------
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" ("SFAS No. 112"). This new
statement requires an accrual of benefits provided to former or inactive
employees after employment but before retirement. The cost of these
benefits is currently expensed on a pay-as-you-go basis by the Company.
The Company is required to adopt this statement in 1994. It is estimated
that adoption of SFAS No. 112 will result in the accrual of a liability
of approximately $1,300,000 as of January 1, 1994.
Employees' Stock Ownership Benefit Plan
---------------------------------------
The Company also maintains a qualified Employees' Stock Ownership
Benefit Plan (ESOP), covering substantially all of its United States
employees. The Board of Directors of the Company is authorized to make
contributions from time to time to the plan trust fund.
In 1989, the Company and its ESOP entered into a leveraged
transaction whereby the Company borrowed $10,000,000 from a bank and
loaned such funds to the ESOP. The ESOP used the loan proceeds to
purchase, as restated to reflect the 1990 stock dividend, 239,792.236
shares of the Company's common stock; 87,590 shares from estates and
152,202.236 shares from the Company's treasury stock account. The bank
loan bears interest at 7.85% and is payable in ten graduated annual
installments through June 30, 1999. Based upon the borrowing rates
currently available to the Company for bank loans with similar terms and
average maturities, the carrying value of the bank loan approximates its
current fair value. The common stock purchased by the ESOP is held by
the ESOP trustees as collateral for the loan from the Company to the
ESOP in a restricted account. Each year the Company will make
contributions to the plan, which the plan's trustees will use to repay
the loan from the Company in an amount sufficient for the Company to make
interest and principal payments on the loan. The collateralized shares
of common stock will be released from restriction and allocated to
participating employees annually, as of December 31, based upon the
percentage of debt service paid during the year then ended to the
projected total amount of debt service to be paid under the loan
agreement.
-28-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contributions to the ESOP amounted to $1,160,599, $1,140,564 and
$1,096,272 in 1993, 1992 and 1991, respectively.
The Company's Canadian subsidiary maintains a similar plan which
covers substantially all of the Company's Canadian employees. The
Canadian subsidiary contributed approximately $144,000, $141,000 and
$135,000 to the Canadian plan trust fund in 1993, 1992 and 1991,
respectively.
Stock Option Plan
-----------------
During 1993 the Company adopted a Stock Option Plan. The Plan
provides for the granting of non-statutory stock options to officers and
other employees of the Company. Options for the purchase of 400,000
shares of common stock, par value $10 per share, may be granted. The
options become fully vested over a period of up to four years. During
1993 the Company granted options to purchase 233,785 shares at an option
price of $73.26 per share, which is the fair value at the date of grant
as determined by independent appraisal. At December 31, 1993 none of the
options were exercisable.
7. OTHER LIABILITIES AND ACCRUED EXPENSES
December 31,
-----------------------
1993 1992
Income taxes payable ...................... $ 2,392,051 $ 2,382,132
Salaries, wages and commissions ........... 3,962,768 4,011,129
Customer discounts and allowances ......... 2,757,399 2,625,168
Environmental remediation costs ........... 2,311,094 2,177,619
Other ..................................... 12,672,232 10,362,003
------------ ------------
Total ............................... $ 24,095,544 $ 21,558,051
------------ ------------
------------ ------------
8. GEOGRAPHIC SEGMENT INFORMATION
The Company manufactures and sells coatings for use by the general
public and industrial and commercial users in the United States, Canada
and New Zealand. Transfers between geographic areas are not significant
and are eliminated in consolidation. Assets and operating results by
geographic area are as follows:
NET SALES:
United States Foreign Consolidated
------------- ----------- ------------
1993 .......... $454,215,349 $57,736,116 $511,951,465
1992 .......... $426,409,378 $57,523,335 $483,932,713
1991 .......... $404,834,192 $58,137,893 $462,972,085
-29-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INCOME BEFORE TAXES
AND MINORITY INTEREST:
United States Foreign Consolidated
------------- ----------- ------------
1993 .......... $56,762,454 $4,188,481 $60,950,935
1992 .......... $56,342,273 $4,056,698 $60,398,971
1991 .......... $55,162,304 $5,028,192 $60,190,496
IDENTIFIABLE ASSETS:
1993 .......... $237,810,998 $38,229,141 $276,040,139
1992 .......... $228,204,051 $35,405,527 $263,609,578
1991 .......... $220,322,784 $35,251,911 $255,574,695
9. SHORT-TERM BORROWINGS
Information regarding the Company's arrangements with banks in
the United States, Canada and New Zealand for short-term lines of
credit follows:
<TABLE> <CAPTION>
December 31,
-------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
Outstanding borrowings at end of year..... $ 3,861,000 $ 3,157,000 $ 926,000
Average interest rate on outstanding
borrowings at end of year............... 5.8% 7.0% 8.0%
Maximum month-end outstanding
borrowings during the year ended........ $ 9,856,000 $ 7,045,000 $ 4,987,000
Approximate month-end average
outstanding borrowings during
the year ended.......................... $ 6,159,000 $ 3,547,000 $ 2,363,000
Weighted average interest rate
on approximate month-end
average borrowings outstanding
during the year ended................... 6.2% 7.6% 10.5%
Unused portion of lines of credit
at end of year.......................... $22,138,000 $23,445,000 $24,900,000
</TABLE>
-30-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
There are no significant compensating cash balances or commitment
fees that relate to the above arrangements. Due to the short maturity
of these borrowings, the carrying amount approximates fair value.
10. LONG-TERM OBLIGATIONS
December 31,
-----------------------
1993 1992
Loan payable (See Note 6)...................... $ 6,925,000 $ 7,775,000
Capital leases (See Note 11)................... 1,024,191 1,400,000
Total........................................ 7,949,191 9,175,000
Less payments due within one year.............. 1,471,981 1,350,000
Long-term obligations........................ $ 6,477,210 $ 7,825,000
Principal payments of $1,471,981, $1,450,806, $1,126,405,
$1,200,000 and $1,300,000 are due in 1994, 1995, 1996, 1997 and 1998,
respectively.
11. LEASES
During 1985, the Industrial Development Board of the City of Pell
City, Alabama, issued $5,000,000 ten year, First Mortgage Industrial
Revenue Bonds, guaranteed by the Company, to an Alabama Bank under a
mortgage and trust indenture of which the Bank is the trustee. The
bonds bear interest at a floating rate equal to 79% of the Bank's
lending rate. The proceeds of the bonds were used by the Industrial
Development Board to finance the construction of a plant facility in
Pell City, Alabama, which is being leased to the Company for a ten-
year period ending September 1, 1995. At the end of the lease term,
or earlier in the event of prepayment of this obligation, the plant
facility which has been recorded as a capital lease, may be purchased
by the Company for $1,000.
The Company also leases data processing equipment, buildings,
transportation equipment, autos and miscellaneous equipment under
operating leases expiring at various dates.
-31-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Minimum future obligations under leases as of December 31, 1993 are
as follows:
<TABLE> <CAPTION>
Capital Operating
Year ending December 31, Leases Leases Total
----------- ------------- ---------
<S> <C> <C> <C>
1994................................... $ 592,652 $ 5,277,861 $ 5,870,513
1995................................... 468,688 3,636,535 4,105,223
1996................................... 27,497 2,412,567 2,440,064
1997................................... 1,397,512 1,397,512
1998................................... 549,676 549,676
1999-2003.............................. 510,030 510,030
---------- ----------- -----------
Total minimum lease payments...... 1,088,837 $13,784,181 $14,873,018
---------- ----------- -----------
----------- -----------
Less amount representing interest (at
rates ranging from 4.74% to
7.757%)........................... 64,646
---------
Present value of net minimum
lease payments.................. $1,024,191
----------
----------
</TABLE>
Rental expense on operating leases (including amounts based on
equipment usage) was approximately $8,255,642, $6,912,552 and
$6,479,948 for the years ended December 31, 1993, 1992 and 1991,
respectively.
12. SHAREHOLDERS' EQUITY
In 1978 the Board of Directors, with shareholder approval,
adopted an Employees' Stock Purchase Plan (ESPP). Under the Plan, as
restated to reflect stock dividends, up to an aggregate of 800,000
shares of Common Stock held in the
treasury may be offered and sold from time to time to employees of the
Company and its subsidiaries at the fair value price per share as
determined by an independent appraisal firm, at the date of offering.
Since 1979, 509,965 shares
have been sold to employees. During 1992, the Company sold 300 shares
to employees.
Notes receivable outstanding with respect to the above referenced
Plan, as well as the ESOP note receivable, as of December 31, 1993
and 1992 are reflected
in the Balance Sheets as reductions in shareholders' equity. The
notes received
by the Company relative to the 1991 ESPP offering are non-interest
bearing.
Treasury stock is reflected at acquisition value, determined by
the use of the first-in, first-out (FIFO) method. Sales and
distributions of treasury shares are recorded at fair value price per
share. Any excess of such fair value proceeds over the FIFO cost is
reflected as additional paid-in capital.
-32-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 1993 and 1991, the Company received capital contributions
of $20,515 and 42,000 shares, respectively, through the bequest of a
deceased senior executive.
A reconciliation of the number of common shares outstanding is as
follows:
<TABLE> <CAPTION>
Shares of Common Stock
-------------------------------
Issued Treasury Outstanding
------ -------- -----------
<S> <C> <C> <C>
Balance, December 31, 1990....... 13,164,312 3,150,065 10,014,247
Sale and distribution of
treasury stock................. (231,104) 231,104
Treasury stock purchases
and capital contributions...... 220,683 (220,683)
---------- --------- ----------
Balance, December 31, 1991....... 13,164,312 3,139,644 10,024,668
Sale and distribution of
treasury stock................. (1,732) 1,732
Treasury stock purchases......... 218,110 (218,110)
---------- --------- ----------
Balance, December 31, 1992....... 13,164,312 3,356,022 9,808,290
Distribution of treasury
stock.......................... (876) 876
Treasury stock purchases......... 141,048 (141,048)
---------- --------- ----------
Balance, December 31, 1993....... 13,164,312 3,496,194 9,668,118
---------- --------- ----------
---------- --------- ----------
</TABLE>
13. INCOME TAXES
The composition of the income tax provision is as follows:
1993 1992 1991
State and local income taxes .... $ 4,595,010 $ 4,749,421 $ 4,412,758
Foreign income taxes ........... 1,946,324 1,732,755 2,112,240
Federal income taxes:
Current ....................... 18,310,612 17,751,496 17,984,412
Deferred ...................... (954,885) (715,644) (802,519)
Total ...................... $23,897,061 $23,518,028 $23,706,891
-33-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred income taxes represent the tax effects of recognizing
certain expenses in different periods for tax and financial reporting,
none of which are individually significant in any year.
A reconciliation of the statutory federal tax rate and effective tax
rate is as follows:
1993 1992 1991
Statutory tax rate................. 35.0% 34.0% 34.0%
Effect of:
State and local income taxes.. 4.9 5.2 4.8
Other - net................... (.7) (.3) .6
---- ---- ----
Effective tax rate................. 39.2% 38.9% 39.4%
---- ---- ----
---- ---- ----
The Company does not accrue Federal income taxes on its equity in
the undistributed earnings of its Canadian subsidiary, which amounted
to $23,902,094, $22,358,291 and $21,429,758 at December 31, 1993, 1992
and 1991, respectively, because the Company intends to reinvest such
earnings indefinitely.
14. OTHER (INCOME) EXPENSE, NET
The components of other (income) and expense, net are as follows:
<TABLE> <CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Other income ..................... $(1,879,938) $(2,149,551) $(3,106,312)
Interest expense ................. 1,131,417 1,157,896 1,393,959
(Gain) loss on the sale of
fixed assets .................. (84) 72,429 34,070
----------- ----------- -----------
Net ......................... $ (748,605) $ (919,226) $(1,678,283)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
-34-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- - ----------------------------------------------------------------------
AND FINANCIAL DISCLOSURE
- - ------------------------
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- - ------------------------------------------------------------
Reference is made to the information set forth under the captions
(i) "ELECTION OF DIRECTORS" at pages 3, 4 and 5 and "Compliance with
Section 16(a) of the Securities Exchange Act" at page 21 of the
Company's Proxy Statement dated March 28, 1994, for use in connection
with its 1994 Annual Meeting of Shareholders, which information is
hereby incorporated by reference, and (ii) "EXECUTIVE OFFICERS" at
page 36 of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
- - --------------------------------
Reference is made to the information set forth under the caption
"DIRECTOR COMPENSATION" and "EXECUTIVE COMPENSATION" at pages 8, 9 and
10 of the Company's Proxy Statement dated March 28, 1994, for use in
connection with its 1994 Annual Meeting of Shareholders, which
information is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- - ----------------------------------------------------------------------
MANAGEMENT
- - ----------
(a) Security Ownership of Certain Beneficial Owners
Reference is made to the information set forth under the caption
"PRINCIPAL SHAREHOLDERS" at pages 2 and 3 of the Company's Proxy
Statement dated March 28, 1994, for use in connection with its 1994
Annual Meeting of Shareholders, which information is hereby
incorporated by reference.
(b) Security Ownership of Management
Reference is made to the information set forth under the caption
"ELECTION OF DIRECTORS - Ownership of Securities by Nominees and
Directors" at pages 5, 6 and 7 of the Company's Proxy Statement dated
March 28, 1994, for use in connection with its 1994 Annual Meeting of
Shareholders, which information is hereby incorporated by reference.
(c) Changes in Control
To the knowledge of the Company, there are no arrangements the
operation of which may at a subsequent date result in a change in
control of the Company.
-35-
<PAGE>
EXECUTIVE OFFICERS
------------------
The executive officers of the Company are elected each year by
the directors of the Company, and are as follows:
Name Office Age
- - ---- ------ ---
Richard Roob....................Chairman of the Board of Directors........... 61
Maurice C.
Workman.........................President.................................... 65
Benjamin M. Belcher, Jr.........Executive Vice President..................... 59
Ward C. Belcher.................Vice President-Operations.................... 47
Richard H. Delventhal...........Controller................................... 57
Yvan Dupuy......................Vice President-Sales and Marketing........... 42
William J. Fritz................Vice President-Finance and Treasurer......... 63
John J. Oberle..................Vice President-Manufacturing and Technology.. 64
John T. Rafferty................Secretary and General Counsel................ 61
Charles C. Vail.................Vice President-Human Resources............... 50
_____________________________________
All of the executive officers of the Company have during a period
in excess of the past five years, been actively engaged in the
business and affairs of the Company in various senior management
capacities.
-36-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - --------------------------------------------------------
Reference is made to the information set forth under the caption
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" at pages
10 and 11 of the Company's Proxy Statement dated March 28, 1994, for
use in connection with its 1994 Annual Meeting of Shareholders, which
information is hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
- - -------------------------------------------------------------
ON FORM 8-K
-----------
(a)(1) List of Financial Statements Included Under Item 8
--------------------------------------------------
of this Report.
---------------
Independent Auditors' Report................................... 17
Consolidated Statements of Income for the Years Ended
December 31, 1993, 1992 and 1991............................ 18
Consolidated Balance Sheets, December 31, 1993
and 1992.................................................... 19
Consolidated Statements of Shareholders' Equity for
the Years Ended December 31, 1993,
1992 and 1991............................................... 20
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991...................... 21
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1993, 1992 and 1991...................... 22-34
(2) Financial Statement Supplemental Schedule.
------------------------------------------
I.... Short-Term Investments, December 31, 1993.............. 43
II... Amounts Receivable From Related Parties, and
Underwriters, Promoters and Employees Other
Than Related Parties For the Year Ended
December 31, 1993...................................... 44-46
VIII. Consolidated Valuation and Qualifying Accounts
For the Years Ended December 31,
1993, 1992 and 1991.................................... 47
X.... Supplementary Consolidated Income Statement
Information for the Years Ended
December 31, 1993, 1992 and 1991.......................... 48
All other schedules for which provision is made in the
applicable regulations of the Securities and Exchange Commission are
omitted because of the absence of conditions under which they are
required or because the information required thereby is shown in the
financial statements or notes thereto.
-37-
<PAGE>
The individual financial statements of the Company have been
omitted because the Company is primarily an operating company and all
subsidiaries are included in the consolidated financial statements
being filed. In addition, in the aggregate, such subsidiaries do not
have minority equity interests and/or indebtedness to any person other
than the Company or its consolidated subsidiaries in amounts which
together exceed 5 percent of the total assets of the Company at
December 31, 1993 and 1992.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed by the Company during
the last quarter of the fiscal year ended December 31, 1993.
(c) List of Exhibits
----------------
(3) Restated Certificate of Incorporation and Bylaws of the
Company.
(i) Restated Certificate of Incorporation of the
Company (incorporated herein by reference to
Exhibit 3(a) of the Company's Registration
Statement under the Securities Act of 1933, as
amended, on Form S-1 - Registration No. 2-62626).
Reference is made to the information set forth
under the caption "Amendment of the Restated
Certificate of Incorporation" at pages 10 and 11
of the Company's Proxy Statement dated March 22,
1985, for use in connection with its 1985 Annual
Meeting of the Shareholders, which information is
hereby incorporated by reference.
Reference is made to the information set forth
under the caption "Limitation of Liability of
Directors and Officers to the Maximum Extent
Permitted by New Jersey Law" at pages 10, 11, 12
and 13 of the Company's Proxy Statement dated
March 28, 1988, for use in connection with its
1988 Annual Meeting of the Shareholders, which
information is hereby incorporated by reference.
Reference is made to the information set
forth under the caption "Amendment of the Restated
Certificate of Incorporation" at pages 11 and 12
of the Company's Proxy Statement dated March 21,
1989, for use in connection with its 1989
Annual Meeting of the Shareholders, which
information is hereby incorporated by reference.
Reference is made to the information set forth
under the caption "Amendment of the Certificate of
Incorporation" at pages 15, 16 and 17 of the
Company's Proxy Statement dated March 28, 1994,
for use in connection with its 1994 Annual Meeting
of the Shareholders, which information is hereby
incorporated by reference.
(ii) Bylaws of the Company (incorporated herein by
reference to Exhibit 3(b) of the Company's
Registration Statement under the Securities Act of
1933, as amended, on Form S-1 - Registration
No. 2-62626).
-38-
<PAGE>
Reference is made to the information set forth under the
caption "Indemnification of Directors, Officers and
Employees" at pages 13 and 14 of the Company's Proxy
Statement dated March 28, 1988, for use in connection
with its 1988 Annual Meeting of the Shareholders, which
information is hereby incorporated by reference.
Reference is made to the information set forth
under the caption "Approval of Amendments of the Company
Bylaws" at pages 17 through 21 of the Company's Proxy
Statement dated March 28, 1994, for use in connection
with its 1994 Annual Meeting of the Shareholders, which
information is hereby incorporated by reference.
(10) Material Contracts
(iii) (A) Employees' Stock Purchase Plan of the Company
(incorporated herein by reference to Exhibit 4(a)
of the Company's Registration Statement under
the Securities Act of 1933, as amended, on Form
S-8 - Registration No. 33-2694).
Reference is made to the information set forth
under the caption "Amendment of Employees'
Stock Purchase Plan" at pages 11 and 12 of the
Company's Proxy Statement dated March 25, 1991,
for use in connection with its 1991 Annual
Meeting of the Shareholders, which information is
hereby incorporated by reference.
Reference is made to the information set forth
under the caption "Approval of the Stock Option
Plan" at pages 13, 14 and 15 of the Company's
Proxy Statement dated March 22, 1993, for use
in connection with its 1993 Annual Meeting of
the Shareholders, which information is hereby
incorporated by reference.
(22) Subsidiaries of the Company..................Page 49
(24) Consent of Experts and Counsel...............Page 50
-39-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Annual Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in Montvale, New Jersey, on
the 30th day of March, 1994.
BENJAMIN MOORE & CO.
By /s/ Maurice C. Workman
--------------------------
Maurice C. Workman
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Maurice C. Workman
and Richard Roob, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments to this Annual Report on Form 10-K and
to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
_________________
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
-40-
<PAGE>
Signature Title Date
--------- ----- ----
Chairman of the Board of
Directors (Principal
/s/ Richard Roob Executive Officer);
---------------------
Richard Roob Director March 30, 1994
President (Principal
/s/ Maurice C. Workman Executive Officer);
-----------------------
Maurice C. Workman Director March 30, 1994
Vice President -
Finance and Treasurer
(Principal Financial
Officer and Principal
/s/ W.J. Fritz Accounting Officer);
-----------------------
William J. Fritz Director March 30, 1994
/s/ Benjamin M. Belcher, Jr. Director March 30, 1994
----------------------------
Benjamin M. Belcher, Jr.
/s/ W.C. Belcher Director March 30, 1994
-----------------------
Ward C. Belcher
/s/ Charles H. Bergmann Director March 30, 1994
--------------------------
Charles H. Bergmann
/s/ Yvan Dupuy Director March 30, 1994
-------------------------
Yvan Dupuy
/s/ Ralph W. Lettieri Director March 30, 1994
-------------------------
Ralph W. Lettieri
/s/ Lee C. McAlister Director March 30, 1994
-------------------------
Lee C. McAlister
/s/ John C. Moore Director March 30, 1994
-------------------------
John C. Moore
/s/ Michael C. Quaid Director March 30, 1994
-------------------------
Michael C. Quaid
/s/ J. Sobie Director March 30, 1994
-------------------------
Joseph Sobie
-41-
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Charles C. Vail Director March 30, 1994
-------------------------
Charles C. Vail
/s/ Ward B. Wack Director March 30, 1994
-------------------------
Ward B. Wack
/s/ Sara B. Wardell Director March 30, 1994
-------------------------
Sara B. Wardell
-42-
<PAGE>
SCHEDULE I
BENJAMIN MOORE & CO. and Subsidiaries
SHORT-TERM INVESTMENTS
December 31, 1993
Col. A Col. B Col. C
Number of Shares or
Name of Issuer and Units - Principal Amount Cost of
Title of Each Issue of Bonds and Notes Each Issue
- - --------------------------------------------------------------------------------
United States treasury bills ..... $ 14,422,837 $14,422,837
Infinity Mutual Funds ............ 1,251,019.018 shares 6,260,577
-----------
$20,683,414
-----------
-----------
Information required by Columns D & E is omitted since short-term
investments are valued at cost, and such cost approximates market
value.
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<PAGE>
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries
AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E
Balance at end of period
------------------------
Balance at
beginning Amounts
Name of debtor of period Additions collected Current Not Current
- - --------------------------------------------------------------------------------
Benjamin M. Belcher, Jr.:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 13,288 5,276 5,276 2,736
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 12,336 2,540 2,540 7,256
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
Ward C. Belcher:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 14,454 5,276 5,276 3,902
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 41,120 8,468 8,468 24,184
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
5% Stock Purchase Plan
Note dated 5/2/88, due in
9 annual installments 15,451 3,615 3,104 8,732
Yvan Dupuy:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 5,316 2,110 2,110 1,096
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 16,448 16,448
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
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<PAGE>
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries
AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E
Balance at end of period
------------------------
Balance at
beginning Amounts
Name of debtor of period Additions collected Current Not Current
- - --------------------------------------------------------------------------------
Yvan Dupuy: Continued
Non-Interest Bearing Stock
Purchase Plan Note dated
2/3/92, due in 10 annual
installments 44,546 5,211 2,299 37,036
Richard H. Delventhal:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 5,316 2,110 2,110 1,096
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 12,336 2,540 2,540 7,256
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
Joel J. Mayor:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 5,782 2,110 2,110 1,562
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 21,454 4,234 4,234 12,986
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
John T. Rafferty:
5% Stock Purchase Plan
Note dated 8/8/89, due in
9 annual installments 38,141 6,509 6,509 25,123
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
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<PAGE>
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries
AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E
Balance at end of period
------------------------
Balance at
beginning Amounts
Name of debtor of period Additions collected Current Not Current
- - --------------------------------------------------------------------------------
Richard Roob:
5% Stock Purchase Plan
Note dated 2/28/86, due in
9 annual installments 13,288 5,276 5,276 2,736
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 41,120 8,468 8,468 24,184
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
5% Stock Purchase Plan
Note dated 5/2/88, due in
9 installments 15,451 3,615 3,104 8,732
Charles C. Vail:
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 12,336 12,336
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
Maurice C. Workman:
5% Stock Purchase Plan
Note dated 2/28/86, due in
7 annual installments 4,244 4,244
5% Stock Purchase Plan
Note dated 7/22/88, due in
9 annual installments 12,336 4,540 2,540 7,256
Non-Interest Bearing Stock
Purchase Plan Note dated
1/1/91, due in 10 annual
installments 99,950 7,933 7,933 84,084
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<PAGE>
SCHEDULE VIII
<TABLE>
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
- - ---------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- - ---------------------------------------------------------------------------------------
Additions
Balance At Charged To Charged
Beginning Costs And To Other Balance At
Description Of Year Expenses Accounts Deductions End of Year
----------- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Allowance For Doubtful
Accounts:
1993 ........... $7,836,301 $9,101,965 $ - $7,263,587 (1) $9,674,679
---------- ---------- ------ ---------- ----------
---------- ---------- ------ ---------- ----------
1992 ........... $5,997,023 $9,110,407 $ - $7,271,129 (1) $7,836,301
---------- ---------- ------ ---------- ----------
---------- ---------- ------ ---------- ----------
1991 ........... $3,705,302 $8,627,480 $ - $6,335,759 (1) $5,997,023
---------- ---------- ------ ---------- ----------
---------- ---------- ------ ---------- ----------
<FN>
(1) Accounts Receivable Written Off - Net of Recoveries
</TABLE>
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<PAGE>
SCHEDULE X
BENJAMIN MOORE & CO. and Subsidiaries
SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
- - --------------------------------------------------------------------------------
COLUMN A COLUMN B
- - --------------------------------------------------------------------------------
Item Charges to Costs and Expenses
---- -----------------------------
1993 1992 1991
---- ---- ----
Advertising costs......................$30,508,550 $27,716,894 $26,456,383
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Subsidiaries of the Company
- - ---------------------------
Percentage Jurisdiction of Immediate
Name Owned Incorporation Parent
- - ---- ---------- --------------- ---------
Benjamin Moore & Co., Limited 81.6 Canada Company
Technical Coatings Co. Limited 100.0 Canada Benjamin
Moore & Co.,
Limited
Technical Coatings Co. 100.0 Pennsylvania Company
Alachua Tung Oil Company 100.0 Florida Company
Benjamin Moore & Co (NZ) Limited 100.0 New Zealand Company
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DELOITTE &
TOUCHE
- - ---------- ----------------------------------------------
Two Hilton Court Telephone: (201) 631-7000
P.O. Box 319 Facsimilie: (201) 631-7459
Parsippany, New Jersey 07054-0319
INDEPENDENT AUDITORS' CONSENT
Benjamin Moore & Co.:
We consent to the incorporation by reference in Registration
Statement No. 33-39750 of Benjamin Moore & Co. on Form S-8,
Post-Effective Amendment No. 2 to Registration Statement
No. 33-2694 of Benjamin Moore & Co. on Form S-8, and Registration
Statement No. 33-69480 of Benjamin Moore & Co. on Form S-8 of
our report dated March 1, 1994, appearing in the Annual Report on
Form 10-K of Benjamin Moore & Co. for the year ended December 31,
1993.
/s/ Deloitte & Touche
Deloitte & Touche
March 30, 1994
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