SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission File Number 0-8894
Benjamin Moore & Co.
(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
None
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of August 2, 1994, 9,670,473 shares of Common Stock of the registrant were
issued and outstanding.
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
INDEX
Page No.
--------
Part I. Financial Information
Condensed Consolidated Statements of Income -
Three Months and Six Months Ended
June 30, 1994 and 1993 .............................. 3
Condensed Consolidated Balance Sheets -
June 30, 1994 and December 31, 1993 ................. 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1994 and 1993 ............. 5
Notes to Condensed Consolidated Financial Statements ..... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 7 - 9
Part II. Other Information ................................ 10
<PAGE>
PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $156,970 $148,094 $268,968 $255,539
------- ------- ------- -------
Costs and expenses
Cost of products sold 77,709 76,451 138,891 135,406
Selling, administrative and general 54,657 49,344 98,657 91,367
Other (income) expense, net 15 23 (189) (204)
------- ------- ------- -------
Total costs and expenses 132,381 125,818 237,359 226,569
------- ------- ------- -------
Income before taxes and minority
interest 24,589 22,276 31,609 28,970
Income tax provision 9,980 8,961 12,866 11,677
Minority interest in income of
subsidiaries 358 253 416 275
------- ------- ------- -------
Net income $14,251 $13,062 $18,327 $17,018
======= ======= ======= =======
Weighted average number of common
shares outstanding 9,618,062 9,732,161 9,631,647 9,752,715
========= ========= ========= =========
Earnings per share of common stock $1.48 $1.34 $1.90 $1.74
==== ==== ==== ====
Cash dividends declared per share of
common stock $.37 $.37 $.74 $.74
=== === === ===
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
----------- -----------
(Unaudited) (a)
ASSETS
<S> <C> <C>
Current assets:
Cash and short-term investments $ 8,910 $ 25,695
------- -------
Accounts and notes receivable - net 127,512 80,759
------- -------
Inventories
Finished goods 35,249 31,223
Raw materials and supplies 18,639 20,254
------- -------
53,888 51,477
------- -------
Other current assets 28,251 27,266
------- -------
Total current assets 218,561 185,197
Property - net 66,931 60,270
Other non-current assets 34,577 30,573
------- -------
Total assets $320,069 $276,040
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations $ 20,728 $ 5,333
Accounts payable 29,562 18,985
Accrued taxes based on income 5,416 2,392
Accrued expenses and other current liabilities 37,931 25,286
------- -------
Total current liabilities 93,637 51,996
------- -------
Deferred income taxes 2,627 2,676
------- -------
Long-term obligations 5,408 6,477
------- -------
Minority shareholders' interest in net
assets of subsidiaries 5,771 5,131
------- -------
Shareholders' equity
Preferred stock, $10 par value - authorized
500,000 shares; issued - none
Common stock, $10 par value - authorized
20,000,000 shares; issued 13,164,312 shares 131,643 131,643
Additional paid-in capital 31,187 21,960
Retained earnings 165,613 154,433
Accumulated currency translation adjustment (3,381) (2,450)
Cost of treasury stock; 3,488,528 shares at
June 30, 1994 and 3,496,194 shares at
December 31, 1993 (89,483) (80,477)
Employees' stock ownership and stock purchase
plan notes (22,953) (15,349)
------- -------
Shareholders' equity - net 212,626 209,760
------- -------
Total liabilities and shareholders' equity $320,069 $276,040
======= =======
</TABLE>
(a) The condensed balance sheet at December 31,1993 has been taken from the
audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $18,327 $17,018
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,140 3,953
Minority interest in net income of subsidiaries 416 275
Other (41) 527
Change in assets and liabilities:
(Increase) in accounts and notes receivable (46,873) (49,406)
(Increase) decrease in inventories (2,144) 2,111
Other 38,412 19,980
------- -------
Net cash flows used in operating activities 12,237 (5,542)
------- -------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment (10,006) (7,043)
Decrease in short-term investments 20,567 26,775
Payment for purchase of majority interest in subsidiary (1,695)
Other (1,751) (1,437)
------- -------
Net cash flows from investing activities 7,115 18,295
------- -------
Cash flows from financing activities:
Payment of dividends (6,945) (7,035)
Purchase of treasury stock (9,478) (6,805)
Sale of treasury stock 403
Other 445 1,260
------- -------
Net cash flows used in financing activities (15,575) (12,580)
------- -------
Effect of exchange rate changes on cash 6 3
------- -------
Net increase (decrease) in cash 3,783 176
Cash at beginning of period 5,011 8,031
------- -------
Cash at end of period $ 8,794 $ 8,207
======= =======
Supplemental disclosures of cash flow information:
Interest paid $ 571 $ 560
Income taxes paid $10,017 $ 8,887
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of
financial position as of June 30, 1994 and December 31, 1993, and the
results of operations for the three and six month periods ended June 30,
1994 and 1993, and changes in cash flows for the six months ended June 30,
1994 and 1993. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for
Postemployment Benefits." SFAS No. 112 requires the Company to accrue for
the estimated cost of benefits provided by the Company to former or
inactive employees after employment but before retirement such as long-term
disability, short-term disability, and other workers compensation, if
attributable to employees' service already rendered. The cumulative effect
of this change in accounting principle resulted in a one-time charge of
$1,275,000 to earnings for the accrual, which primarily relates to medical
coverage for employees on long-term disability, for such benefits as of
January 1, 1994. The continuing incremental charge to earnings for the
first six months was not material.
3. The results of operations for the three and six month periods ended June
30, 1994 and 1993 are not necessarily indicative of operations for the
entire year.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
Operating Results
It should be noted that quarterly comparisons between a current and a
previous year are most difficult in the paint industry. The timing and terms of
seasonal dating programs, the timing and extent of price increases, and the
introduction of product promotions can produce wide swings in quarterly results.
Net Sales in the second quarter of 1994 surpassed the comparable
period of the prior year by $8,876,000 or 6%. For the six months ended June 30,
1994 net sales amounted to $268,968,000, which represented an increase of
$13,429,000 or 5.3% over the first six months of 1993. Better weather
conditions during the second quarter contributed to improved sales especially in
the Northeast. The return to more normal business conditions in Florida
resulted in reduced sales in that area when compared with the sales produced by
the surge of reconstruction activity during 1993 following hurricane Andrew.
Other pockets of sales weakness were representative of more local conditions.
Total trade coatings volume registered a modest unit sales increase in the first
six months in the United States and slightly higher gains in Canada. A general
selling price increase in the U.S. in the fourth quarter of 1993 had a
beneficial effect on revenues in the first half of 1994.
Production finishes coatings, which contributes approximately 10% of
sales revenues, sustained the sales increases of the first quarter through the
second quarter.
Cost of products sold as a percentage of sales declined 2.1% in the
second quarter and 1.4% for the six months period when compared with the
respective periods during 1993. In addition to the effect of the general
selling price increase, raw material cost levels were relatively stable.
However, there are indications of a general upward movement in costs for the
second half of the year. The dollar increase in cost of products sold of
$1,258,000 for the
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
second quarter and $3,485,000 for the six months, respectively, generally
reflected the higher unit sales and inflationary production costs.
Selling, administrative and general expenses were up $5,313,000 in the
second quarter and $7,290,000 in the six months. The adoption of Statement of
Financial Accounting Standards No. 112 - "Employers Accounting for
Postemployment Benefits" resulted in a one-time charge of $1,275,000 as of
January 1, 1994 (See Note 2 to Notes To Condensed Consolidated Financial
Statements). Increased national advertising expenditures in the second quarter
represented approximately $1,000,000 of the increase and general inflationary
factors accounted for the balance of the remaining increase.
Due principally to lower dividend and interest income on short term
investments, other income showed a reduction for the second quarter and six
months.
After providing for income taxes and minority interest, net income for
the second quarter was $14,251,000, an increase of $1,189,000 or 9.1% over the
second quarter of 1993. Net income for the six months ended June 30, 1994 was
$18,327,000, representing an improvement of $1,309,000 over the same period in
1993.
Earnings per share were $1.48 in the second quarter and $1.90 in the
six months, which were increases over the same periods in 1993 of $.14 and $.16,
respectively.
In April the Company acquired a majority equity interest in Southern
Cross Paints in Auckland, New Zealand. The operations of Benjamin Moore & Co.
(NZ) Limited, a wholly-owned subsidiary, have been combined with Southern Cross
which has been renamed Benjamin Moore Pacific Limited. The financial results of
the new entity were not a significant factor in the Consolidated Financial
Statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
If the sales pattern of the first six months extends into the second
half of the year and raw material costs do not escalate beyond anticipated
levels, net income for 1994 should continue to be ahead of 1993 for the nine
months and for the year.
Financial Position and Liquidity
Similar to 1993 and previous years, net income in the first half of
1994 was insufficient to support the dated order shipments which were reflected
in the increase of accounts and notes receivable. Temporary bank loans of
$19,221,000 were required to supplement the net cash flows provided by operating
activities for the six months ended June 30, 1994.
The principal source of cash flows from investing activities was a
decrease in short-term investments. The funds provided were utilized to pay for
various construction projects. The major expansion of the Mesquite, Texas,
manufacturing facility continued in the second quarter as well as the renovation
of the offices at the Corporate and Eastern Division building in Montvale, New
Jersey.
Cash flows used in financing activities principally consisted of
dividend disbursements and the purchase of treasury stock. Such purchases of
stock do not represent a formal plan of acquisition, and are transacted in most
cases to provide liquidity for estate taxes and other specific purposes.
The short-term bank loans were required by the parent company to
provide working capital in the second quarter. It is expected that the loans
will be repaid in the third quarter. The Canadian and New Zealand subsidiaries
utilized their respective lines of credit during the first quarter and are
expected to continue to do so for the remainder of the year.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended June 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Benjamin Moore & Co.
---------------------------------
(Registrant)
Date August 11, 1994 M.C. Workman
------------------------- ---------------------------------
Maurice C. Workman
(President)
Date August 11, 1994 W.J. Fritz
------------------------- ---------------------------------
William J. Fritz, Vice President -
Finance and Treasurer
(Principal Financial Officer)
