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, 1995 Commission File Number 0-8894
------------- ----------------
Benjamin Moore & Co.
- -------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
----------------------------
None
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of August 1, 1995, 9,525,096 shares of Common Stock of the registrant were
issued and outstanding.
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(Page 1 of 13 Pages)
<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, 1995 and 1994 . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994 . . . . . . 5
Notes to Condensed Consolidated Financial Statements . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 7 - 9
Part II. Other Information . . . . . . . . . . . . . . . 10
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<PAGE>
PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Net Sales . . . . . . . . . $159,622 $156,970 $286,481 $268,968
-------- -------- -------- --------
Costs and expenses:
Cost of products sold . . 83,869 77,709 154,955 138,891
Selling, administrative and
general . . . . . . . . 53,018 54,657 101,276 98,657
Other expense (income), net 583 15 681 (189)
-------- -------- -------- --------
Total costs and expenses 137,470 132,381 256,912 237,359
-------- -------- -------- --------
Income before taxes and
minority interest . . . 22,152 24,589 29,569 31,609
Income tax provision . . . 9,070 9,980 12,214 12,866
Minority interest in income of
subsidiaries . . . . . . 120 358 60 416
-------- -------- -------- --------
Net income . . . . . . . . $12,962 $14,251 $17,295 $18,327
======== ======== ======== ========
Weighted average number of
common shares outstanding 9,555,682 9,618,062 9,577,645 9,631,647
========= ========= ========= =========
Earnings per share of common
stock . . . . . . . . . $1.36 $1.48 $1.81 $1.90
===== ===== ===== =====
Cash dividends declared per
share of common stock . . $.40 $.37 $.80 $.74
==== ==== ==== ====
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
1995 1994
-------- ------------
(Unaudited) (a)
ASSETS
Current assets:
Cash and short-term investments . . . . . . . $ 1,769 $ 16,007
--------- ---------
Accounts and notes receivable - net . . . . . 143,973 87,801
--------- ---------
Inventories
Finished goods . . . . . . . . . . . . . . . 43,964 38,514
Raw materials and supplies . . . . . . . . . 24,361 23,026
--------- ---------
68,325 61,540
--------- ---------
Other current assets . . . . . . . . . . . . 30,516 26,837
--------- ---------
Total current assets . . . . . . . . . . . 244,583 192,185
Property - net . . . . . . . . . . . . . . . . 80,847 74,269
Other non-current assets . . . . . . . . . . . 39,825 37,634
--------- ---------
Total assets . . . . . . . . . . . . . . . $ 365,255 $304,088
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations $ 49,795 $ 8,582
Accounts payable . . . . . . . . . . . . . . 30,417 22,629
Accrued taxes based on income . . . . . . . . 4,728 3,449
Accrued expenses and other current liabilities 37,879 30,820
--------- ---------
Total current liabilities . . . . . . . . 122,819 65,480
--------- ---------
Postretirement and postemployment benefits . . 2,670 3,765
--------- ---------
Deferred income taxes . . . . . . . . . . . . . 2,635 2,603
--------- ---------
Long-term obligations . . . . . . . . . . . . . 4,010 5,005
--------- ---------
Minority shareholders' interest in net
assets of subsidiaries . . . . . . . . . . . 5,477 5,697
--------- ---------
Shareholders' equity
Preferred stock, $10 par value - authorized
500,000 shares; issued - none
Common stock, $10 par value - authorized
40,000,000 shares; issued 13,164,312 shares 131,643 131,643
Additional paid-in capital . . . . . . . . . 31,395 31,295
Retained earnings . . . . . . . . . . . . . 187,936 178,296
Accumulated currency translation adjustment (2,996) (4,019)
Cost of treasury stock; 3,634,902 shares at
June 30, 1995 and 3,542,080 shares at
December 31, 1994 . . . . . . . . . . . . . (100,885) (93,772)
Employees' stock ownership and stock purchase
plan notes . . . . . . . . . . . . . . . . (19,449) (21,905)
--------- ---------
Shareholders' equity - net . . . . . . . . 227,644 221,538
--------- ---------
Total liabilities and shareholders' equity $365,255 $304,088
========= ==========
(a) The condensed balance sheet at December 31, 1994 has been taken from the
audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended
June 30,
----------------------
1995 1994
---- ----
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . $17,295 $18,327
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . 5,649 4,140
Minority interest in net income of subsidiaries 60 416
Other . . . . . . . . . . . . . . . . . . . . . (237) (41)
Change in assets and liabilities:
Increase in accounts and notes receivable (55,865) (46,873)
Increase in inventories . . . . . . . . . . (6,499) (2,144)
Other . . . . . . . . . . . . . . . . . . . 9,987 19,191
------- -------
Net cash flows used in operating activities (29,610) (6,984)
------- -------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment . . . . . . . . . . . . . . . . . . . (11,209) (10,006)
Decrease in short-term investments . . . . . . . 12,450 20,567
Payment for purchase of majority interest in
subsidiary . . . . . . . . . . . . . . . . . . . (1,695)
Other . . . . . . . . . . . . . . . . . . . . . . (2,038) (1,751)
------- -------
Net cash flows from investing activities (797) 7,115
------- -------
Cash flows from financing activities:
Proceeds from short-term debt . . . . . . . . . . 41,040 19,221
Payment of dividends . . . . . . . . . . . . . . (7,403) (6,945)
Purchase of treasury stock . . . . . . . . . . . (7,118) (9,478)
Sale of treasury stock . . . . . . . . . . . . . 37 403
Other . . . . . . . . . . . . . . . . . . . . . . 2,059 445
------- -------
Net cash flows used in financing activities 28,615 3,646
------- -------
Effect of exchange rate changes on cash . . . . . . 4 6
------- -------
Net increase (decrease) in cash . . . . . . . . . . (1,788) 3,783
Cash at beginning of period . . . . . . . . . . . . 3,435 5,011
------- -------
Cash at end of period . . . . . . . . . . . . . . . $ 1,647 $ 8,794
======= =======
Supplemental disclosures of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . $ 1,126 $ 571
Income taxes paid . . . . . . . . . . . . . . . . $10,975 $10,017
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of financial
position as of June 30, 1995 and December 31, 1994, and the results of
operations for the three and six month periods ended June 30, 1995 and 1994,
and changes in cash flows for the six months ended June 30, 1995 and 1994.
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, 1994.
2. Certain reclassifications have been made in the 1994 financial statements
to conform to the methods of presentation used in 1995.
3. The results of operations for the three and six month periods ended June
30, 1995 and 1994 are not necessarily indicative of operations for the
entire year.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
Operating Results
- -----------------
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 slowed down after a strong first quarter.
Second quarter sales of $159,622,000 showed an increase of $2,652,000 or 1.7%.
When combined with the first quarter increase of $14,861,000 net sales of
$286,481,000 for the six months ended June 30,1995 registered an increase of
$17,513,000 or 6.5%.
The strength of trade sales in the first quarter did not continue in the
second quarter. The Northeast maintained the momentum generated in the first
quarter, but the Midwest, Rocky Mountain area and part of the Far West of the
United States declined and have not yet rebounded with gains which prevailed
earlier in the year. Trade sales in Canada, although decelerating somewhat in
the second quarter, has shown consistent growth in the past few years.
Due to sharply rising raw material costs, general selling price
adjustments in both countries were effected during the second quarter.
Production finishes coatings sustained the sales increases of the first
quarter into the second quarter.
Cost of products sold rose almost 8% in the second quarter of 1995 mostly
as a result of the raw material cost increases. For the six months the
increase was 11.6% of which 8% represented cost increases and the balance of
3.6% was attributable to costs related to unit gains.
Selling, administrative and general expenses were down $1,639,000 or 3% in
the second quarter and up $2,619,000 or 2.7% for the six months. The lower
sales increases
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
in the second quarter accounted for stable variable expenses comparable to the
previous year. The absence of the 1994 non-recurring charge of $1,275,000 for
postemployment benefits resulting from the adoption of Statement of Financial
Accounting Standards No. 112 "Employers Accounting for Postemployment Benefits"
contributed to the "decline" in expenses as well as the effects of expense
reduction programs.
Other expense was up $568,000 and $870,000 in the second quarter and six
months respectively, principally due to higher interest expenses.
After providing for income taxes and minority interest, net income for the
second quarter declined $1,289,000. For the six months ended June 30, 1995,
net income was down $1,032,000 or 5.6%.
Earnings per share were $1.36 in the second quarter and $1.81 for the six
months.
With the significant raw material cost increases anticipated for the
remainder of the year compared with last year, net sales will have to resume
the momentum of the first quarter in order for net income for the year to
surpass the results of the prior year.
Financial Position and Liquidity
- --------------------------------
In following the usual seasonal pattern, net income of $17,295,000 in the
first half of 1995 was insufficient to support the increase in accounts and
notes receivable and to a lesser extent in inventories.
Bank borrowing of $41,040,000 at June 30, 1995, which was up $21,819,000
over June 30, 1994, was required to supplement the net cash flows from
operating activities.
The proceeds from the decrease in short-term investments were utilized to
pay for new asset additions. Coupled with the programmed replacement of
equipment was the completion of the Dallas and Jacksonville construction
projects and the additions to the Birmingham, Alabama and Auckland, New Zealand
plant facilities.
Cash flows used in financing activities reflected dividend disbursements
and the purchase of treasury stock. Such purchases do not indicate a formal
plan of acquisition,
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
but are transacted to provide liquidity for shareholder estate taxes and other
specific purposes.
A large portion of the bank loans was required by the parent company to
provide working capital. It is anticipated that most of the loans will be
repaid before the end of the year. The Canadian and New Zealand subsidiaries
utilize their respective lines of credit for longer term support of their
working capital requirements. No change is expected in this pattern for the
remainder of the year.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
- --------------------------
On August 11, 1995 the registrant mailed a summary report to shareholders
covering results for the six-month period ended June 30, 1995. A copy of the
summary report is attached as Exhibit A.
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, 1995.
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, 1995 /s/ M. C. Workman
------------------------- ------------------------------
Maurice C. Workman
(President)
Date August 11, 1995 /s/ W. J. Fritz
------------------------- -----------------------------
William J. Fritz, Vice President -
Finance and Treasurer
(Principal Financial Officer)
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<PAGE>
EXHIBIT A
August 11, 1995
To Our Shareholders:
Sales in the first quarter of 1995 were significantly ahead of the prior
year, slowed in the second quarter, and for the six months surpassed the same
period of 1994 by $17,513,000 or 6.5%. Although the second half of 1994
included several outstanding, even record sales months, sales in 1995 for the
second six months are budgeted to exceed the previous year.
Raw material costs began a sharp rise in January and continued to
accelerate through June. A slowing of the rate of escalation is anticipated
for the second half of the year, but year end costs will be at a level well
above last year.
Expense increases were generally maintained at approximately the inflation
rate except for variable expenses relative to higher sales volume.
In reflecting the significant increase in the cost of raw materials, net
income for the six months of 1995 declined 5.6% from 1994.
A comprehensive company-wide expense reduction program has been instituted
which should assist in ameliorating the effect of the high cost levels of raw
materials.
SIX MONTHS ENDED JUNE 30,
-------------------------
(Dollars in Thousands Except Per Share Amounts)
1995 1994
---- ----
(Unaudited) (Unaudited)
Net Sales $286,481 $268,968
Net Income $17,295 $18,327
Earnings Per Share $1.81 $1.90
A dividend in the amount of $.40 per share has been declared and will be
payable on October 2, 1995 to shareholders of record on September 7, 1995.
-11-
<PAGE>
We would also like to report two recent events:
Technical Coatings Co. acquired the formulas, customer lists, and
manufacturing technology of the S. L. Gillman Paint Co., Atlanta,
Georgia with estimated annual sales volume of $12,000,000. Their
manufacturing facility was totally destroyed by fire. Three of the
principals of the Gillman Co. are chemical engineers and have
become affiliated with Technical Coatings Co.
Donald W. Everett was elected Vice President-Sales and Marketing,
succeeding Yvan Dupuy who had earlier been elected Senior Vice
President.
BENJAMIN MOORE & CO.
Maurice C. Workman, President Richard Roob, Chairman
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
JUNE 30, 1995 EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF INCOME,
CONDENSED CONSOLIDATED BALANCE SHEET, CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS AND THE NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,647
<SECURITIES> 122
<RECEIVABLES> 157,614
<ALLOWANCES> 13,641
<INVENTORY> 68,325
<CURRENT-ASSETS> 244,583
<PP&E> 168,094
<DEPRECIATION> 87,247
<TOTAL-ASSETS> 365,255
<CURRENT-LIABILITIES> 122,819
<BONDS> 4,010
<COMMON> 131,643
0
0
<OTHER-SE> 96,001
<TOTAL-LIABILITY-AND-EQUITY> 365,255
<SALES> 286,481
<TOTAL-REVENUES> 286,481
<CGS> 154,955
<TOTAL-COSTS> 256,912
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,366
<INTEREST-EXPENSE> 1,114
<INCOME-PRETAX> 29,569
<INCOME-TAX> 12,214
<INCOME-CONTINUING> 17,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,295
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.81
</TABLE>
