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, 1994 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)
Registrant's 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, 1995, the aggregate market value of the registrant's common stock
held by non-affiliates equalled $482,442,763.
As of March 1, 1995, 9,594,901 shares of common stock of the registrant were
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement dated March 23, 1995, for use in
connection with its 1995 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 trademarks 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-MaticIII 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-MaticIII 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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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 1994, no
one customer accounted for as much as 2% 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 83% 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, and Benjamin Moore
Pacific Limited, which is a 51% owned subsidiary of the New Zealand company.
During 1994, revenues and profits from operations attributable to those
companies (which are included in the Company's consolidated financial
statements) were approximately $62,544,000 and $5,958,000, respectively.
Approximately 7% 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, 1994, 198 chemists and technicians were employed by
the Company in research and development and quality control activities. In
1994, the Company expended approximately $15,521,000 for such activities.
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<PAGE>
Competition
The coatings industry is highly competitive and has historically been
subject to intense price competition. It is estimated that there are
approximately 800 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 1994, 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 20.3%, 28.9%, 29.3% and 21.5%,
respectively. Production and inventory schedules are timed to coincide with the
aforementioned variations.
Employees
As of December 31, 1994, the Company had approximately 2,000
employees, of whom approximately 28% were salaried personnel, approximately 12%
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.
Patents 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 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.
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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
fourteen sites under federal and state laws. Total settlement costs have been
approximately $2 million.
The Company is involved in twenty-nine unsettled sites. In all cases
the Company believes its share of liability for environmental clean up costs is
less than 1% of such costs for each site. A total of approximately $2,459,000
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 $500,000.
3. The Company has expended approximately $5 million over the last
ten 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
additional remediation techniques to address soil contamination and to clean up
contaminated water more rapidly. Current operating and maintenance costs are
$100,000 per year.
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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 1994 for approximately $67,000. The other suit
was settled during 1993 for $75,000 and an undertaking by the Company to
continue the remediation activities at the site.
Accrued costs against future cleanup expenses for these three
facilities are approximately $600,000.
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 1994 the Company spent approximately $541,000
on remedial cleanups and related studies compared with approximately $571,000
spent for such purposes in 1993.
In 1994 the Company recovered approximately $950,000 in
indemnification and defense costs under its general liability policies from one
of its primary insurance companies for environmental liabilities. The Company
continues to negotiate further settlements.
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 consolidated
financial statements.
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<PAGE>
ITEM 2. PROPERTIES
Set forth below is certain information with respect to the Company's
principal facilities:
<TABLE><CAPTION>
Approximate
Location Principal Use Square Feet Owned/Leased
<S> <C> <C> <C>
Newark, NJ Plant 267,600 Owned
Melrose Park, IL Executive Offices- 145,200 Owned
Central Division;
Chicago Plant
Toronto, ON Executive Offices- 118,800 Owned
Subsidiary; Plant
Milford, MA Boston Plant 110,500 Owned
Cuyahoga Heights, OH Cleveland Plant 106,000 Owned
Colonial Heights, VA Richmond Plant 92,800 Owned
Jacksonville, FL Plant 82,400 Owned
Pell City, AL Birmingham Plant 80,500 Leased (1)
Mesquite, TX Dallas Plant 80,000 Owned
Flanders, NJ Central Laboratories, 78,000 Owned
Information Resource
Center, Executive
Offices - Subsidiary
St. Louis, MO Plant 76,800 Owned
Denver, CO Plant 73,500 Owned
Johnstown, NY Plant 66,400 Owned
Montreal, PQ Plant 63,500 Owned
Commerce, CA Executive Offices- 59,000 Owned
Western Division;
Los Angeles Plant
Montvale, NJ Corporate Offices; 57,000 Owned
Executive Offices-
Eastern Division
Nutley, NJ Plant 50,000 Owned
Burlington, ON Plant 45,400 Owned
Santa Clara, CA Plant 38,500 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.
</TABLE>
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<PAGE>
Approximate
Location Principal Use Square Feet Owned/Leased
Aldergrove, BC Vancouver Plant 36,900 Owned
Auckland, NZ Executive Offices- 30,700 Owned
Subsidiary; Plant
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 in rented
premises. The Company also leases warehouse facilities in North Kansas City,
Missouri; Bloomington, Minnesota; Newark, California; Auckland and Christchurch,
New Zealand and in Concord, Edmonton, Saskatoon, Winnipeg, Dartmouth and Mount
Pearl, Canada. Warehouse arrangements also exist in Portland, Oregon.
The Company is in the process of decommissioning its plant and
warehouse facility in Houston, Texas, the operations of which have been
transferred to the Dallas, Texas facility.
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 statements. 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 1994.
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EXECUTIVE OFFICERS OF THE REGISTRANT
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 62
Maurice C. Workman President 66
Benjamin M. Belcher, Jr Executive Vice President 60
Ward C. Belcher Vice President-Operations 48
Richard H. Delventhal Controller 58
Yvan Dupuy Senior Vice President-Sales and
Marketing 43
William J. Fritz Vice President-Finance and Treasurer 64
John J. Oberle Vice President-Manufacturing and
Technology 65
John T. Rafferty Secretary and General Counsel 62
Charles C. Vail Vice President-Human Resources 51
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.
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<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 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, 1995, the
Company had approximately 1,775 shareholders.
The following table sets forth the high and low price for such shares
in each quarter during 1994 and 1993 and the dividends paid in each such
quarter.
<TABLE><CAPTION>
Price Range Dividends Paid
1994 1993 1994 1993
High Low High Low
<S> <C> <C> <C> <C> <C> <C>
1st quarter $93.63 $84.56 $76.66 $70.57 $ .37 $ .37
2nd quarter 90.12 77.67 76.66 71.61 .37 .37
3rd quarter 79.34 74.19 78.18 71.50 .37 37
4th quarter 82.20 74.25 87.88 77.60 .37 .37
4th quarter-extra .30 .20
Total $1.78 $1.68
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA
Selected Income Statement Data:
<TABLE><CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
NET SALES:
TRADE SALES COATINGS $499,713 $471,738 $448,111 $433,380 $429,972
PRODUCTION FINISHES COATINGS 47,351 40,213 35,822 29,592 29,395
Total $547,064 $511,951 $483,933 $462,972 $459,367
NET INCOME $ 41,322 $ 36,511 $ 36,307 $ 35,937 $ 36,971
EARNINGS PER SHARE OF
COMMON STOCK $4.29 $3.75 $3.66 $3.54 $3.66
COMMON STOCK CASH DIVIDENDS:
DECLARED PER SHARE $1.81 $1.68 $1.67 $1.62 $1.53
PAID PER SHARE $1.78 $1.68 $1.65 $1.60 $1.50
Selected Balance Sheet Data:
December 31,
1994 1993 1992 1991 1990
(Dollars in thousands, except per share amounts)
CURRENT ASSETS $192,185 $185,198 $181,118 $180,467 $184,085
CURRENT LIABILITIES 69,244 51,996 48,537 44,000 41,810
WORKING CAPITAL $122,941 $133,202 $132,581 $136,467 $142,275
TOTAL ASSETS $304,088 $276,040 $263,610 $255,575 $243,496
LONG-TERM OBLIGATIONS $ 5,005 $ 6,477 $ 7,825 $ 10,036 $ 11,885
SHAREHOLDERS' EQUITY - NET $221,538 $209,760 $199,054 $193,565 $182,028
BOOK VALUE PER SHARE OF
COMMON STOCK (1) $25.30 $23.28 $22.06 $21.22 $19.24
</TABLE>
(1) Book value per share is computed based on shareholders' equity before
deduction of employees' stock ownership and stock purchase plan notes.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS 1994 VS. 1993
Net Sales of $547,064,000 in 1994 represented an increase of
$35,113,000 or 6.9% over the previous year. Record sales were attained in each
quarter of the year with the largest increase occurring in the fourth quarter.
Modest unit gains in trade sales coatings were registered in both the
United States and Canada. The effect in 1994 of a late 1993 general selling
price adjustment supplemented the unit growth in producing the higher sales
revenues.
The sales strength in trade coatings was generally distributed in both
countries with the exception of a few localized areas. Most notable was the
decreased reconstruction activity in 1994 and the resultant lower sales in
southern Florida in 1994 as compared with the 1993 period which included the
rebuilding activity following the damage from Hurricane Andrew.
In addition, considerable unit growth was generated in production
finishes in both the United States and Canada. However, this market segment
represented less than 10% of total sales.
Cost of products sold in 1994 was $284,092,000 which was 6.2% over the
previous year. Raw material costs were slightly lower in the first half of the
year, but reflected an upward trend in the last six months of the year which has
extended into 1995. Production expense was held to the generally low inflation
rate except for those expenses related to the additional sales volume.
Selling, administrative and general expenses amounted to $192,253,000
which was an increase of $7,998,000 or 4.3% over 1993. 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. Start-
up and promotional allowances associated with the nation-wide introduction of a
new line of industrial maintenance products accounted for an expense increase of
$1,395,000. The balance of the increase was attributable to general
inflationary factors.
An improved collection pattern and a recovering economy in previously
distressed areas contributed to a decrease of approximately $2,600,000 or 37.7%
in bad debt writeoffs and signaled indications of a return to more "normal"
business conditions.
Other expense (income) showed a net expense increase of $1,101,000 due
principally to decommissioning costs pertaining to the closing of the plant and
warehouse facility in Houston, Texas and the relocation of the operation to the
expanded facility in Dallas, Texas as well as lower dividend and interest income
on short-term investments.
Income before taxes and minority interest was $70,366,000, up
$9,415,000 or 15.4% over 1993. The effective income tax rate in 1994 was 40.4%
compared with 39.2% in 1993.
Net income of $41,322,000 in 1994 surpassed the previous year by
$4,811,000 or 13.2%. Earnings per share were $4.29 reflecting an increase of
$.54 or 14.4% over 1993. Dividends declared during 1994 were up by $.13 or 7.7%
to $1.81 per share.
In April 1994, the Company acquired a majority interest in Southern
Cross Paints Limited in Auckland, New Zealand. The operation of Benjamin Moore
& Co (NZ) Limited, a wholly-owned
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
subsidiary, was combined with Southern Cross and renamed Benjamin Moore Pacific
Limited. Benjamin Moore & Co (NZ) Limited survived as a holding company for the
Company's investment in the new entity. The financial results of Benjamin Moore
Pacific Limited did not have a significant effect on the consolidated financial
statements.
If the rise in raw material costs abates and the economy reflects
modest growth with controlled inflationary pressures, the financial performance
in 1995 should be comparable to or even exceed the record results of 1994.
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 volume.
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 represented 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 FAS No. 106.
In addition to general inflationary increases and other factors
attributable to higher sales volume, two significant factors that contributed to
the increase in expenses was 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.
Dealer business closures and slow collections were prevalent in 1993
and, despite tighter credit controls, resulted in high bad debt writeoffs
similar to the previous year.
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, Benjamin Moore & Co (NZ)
Limited, operating as a warehouse facility, continued to concentrate on sales
development in its first full year.
FINANCIAL POSITION AND LIQUIDITY
The Company's financial position in 1994 maintained its traditional
strength.
Net cash flows provided by operating activities were $48,288,000 in
1994 compared with $32,282,000 in 1993 and $39,972,000 in 1992. Net income in
1994 was approximately $5,000,000 higher than both of the previous two years and
coupled with the increase in other current liabilities accounted for the
majority of the improvement in cash flows from operating activities. The
increase in other current liabilities in 1994 was primarily attributable to
accrued salaries, wages and commissions and health care and pension costs which
accounted for $7,503,000 of the increase.
Net cash flows in 1994 used in investing activities were significantly
above those of 1993 and 1992. Capital expenditures amounting to $21,984,000
which were supported by internal financing consisted of additions to the Dallas,
Texas and Birmingham, Alabama plant and warehouse facilities, the renovation of
the Montvale and Flanders, New Jersey administration buildings and the
commencement of construction on a relocated Jacksonville, Florida plant.
The Company's Jacksonville facility was sold to the City of
Jacksonville as part of a municipal sports complex project to accommodate a
National Football League franchise. Proceeds from the sale, which will be
received upon the transfer of the manufacturing operation, should provide the
funds required for the completion of the plant. The building projects and other
capital items in 1994 represented an increased cash utilization of $8,767,000
over 1993 and $10,784,000 over 1992.
The continued reduction in short-term investments was a reflection of
the use of internal funds for the above capital expenditures and for the higher
level of funding of temporary co-ownership investments.
The net cash flows used in financing activities were up $2,858,000 in
1994 vs. 1993 due primarily to higher requirements for the acquisition of
treasury stock. Generally, the Company finances its stock purchases from its
working capital in accordance with the conditions described above at Item 5,
"Market Price of the Registrant's Common Stock and Related Security Holder
Matters." It is anticipated that any future purchases will be similarly
financed.
During 1994, 1993 and 1992 the Company purchased 165,488; 141,048 and
218,110 shares, respectively, of its common stock.
Sales of treasury stock are made to employees under an Employees'
Stock Purchase Plan and a Stock Option Plan. During 1994 and 1992, the Company
sold 119,140 and 300 shares, respectively, to employees. In addition, the
Company distributed 462; 876 and 1,432 shares to non-executive sales employees
in 1994, 1993 and 1992, respectively.
-14-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
During 1994 borrowing by the Company was largely limited to short-term
line of credit uses. The New Zealand subsidiaries also utilized bank loans for
a substantial portion of their capital requirements.
Except for the completion of the relocated Jacksonville plant which
will be mostly financed by funds received from the consummation of the sale of
the current property to the city, the only remaining construction activity is
the final phase of the Dallas plant expansion. This will amount to less than
$1,000,000.
No new major capital projects are scheduled for 1995.
OTHER MATTERS
The Company places importance on its environmental responsibilities.
Compliance with current laws concerning environmental protection has not
resulted in significant capital expenditures and has not had a material adverse
effect on the Company's consolidated financial statements. The Company does not
anticipate that future costs associated with current laws governing
environmental protection will have a material effect upon its consolidated
financial statements or competitive position.
-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>
INDEPENDENT AUDITORS' REPORT
BENJAMIN MOORE & CO.:
We have audited the accompanying consolidated balance sheets of Benjamin Moore &
Co. and its subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item 14. These
financial statements and financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedule 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, 1994 and 1993 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents 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 its method of accounting for postemployment
benefits, in 1994, and its methods of accounting for income taxes and
postretirement benefits other than pensions, in 1993.
Deloitte & Touche LLP
Parsippany, New Jersey
March 7, 1995
-17-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993 and 1992
<TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
NET SALES (Note 4) $547,063,568 $511,951,465 $483,932,713
COSTS AND EXPENSES: (Notes 6 and 11)
Cost of products sold 284,091,534 267,494,172 254,361,885
Selling, administrative and general 192,253,190 184,254,963 170,091,083
Other expense (income), net (Note 14) 352,682 (748,605) (919,226)
TOTAL COSTS AND EXPENSES 476,697,406 451,000,530 423,533,742
INCOME BEFORE TAXES AND MINORITY
INTEREST 70,366,162 60,950,935 60,398,971
INCOME TAX PROVISION (Note 13) 28,417,716 23,897,061 23,518,028
INCOME BEFORE MINORITY INTEREST 41,948,446 37,053,874 36,880,943
MINORITY INTEREST IN NET INCOME
OF CONSOLIDATED SUBSIDIARIES 626,017 542,959 573,606
NET INCOME $41,322,429 $ 36,510,915 $ 36,307,337
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,639,085 9,723,937 9,916,669
EARNINGS PER SHARE OF
COMMON STOCK $4.29 $3.75 $3.66
CASH DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK (Note 12) $1.81 $1.68 $1.67
</TABLE>
See Notes to Consolidated Financial Statements.
-18-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
ASSETS
<TABLE>
1994 1993
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,435,068 $ 5,011,498
Short-term investments 12,571,739 20,683,414
Accounts and notes receivable - net (Note 2) 87,800,509 80,759,227
Inventories (Note 3) 61,540,423 51,477,474
Prepaid expenses 16,970,836 18,959,037
Deferred income taxes (Note 13) 9,866,508 8,307,138
TOTAL CURRENT ASSETS 192,185,083 185,197,788
INVESTMENTS IN TEMPORARY CO-OWNERSHIPS (Note 4) 13,023,203 9,173,763
PROPERTY, PLANT AND EQUIPMENT - NET (Note 5) 74,268,521 60,269,658
OTHER ASSETS (Notes 2 and 6) 24,611,004 21,398,930
TOTAL $304,087,811 $276,040,139
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term
obligations (Notes 9 and 10) $ 8,581,936 $ 5,333,001
Accounts payable - trade 22,629,208 18,984,997
Other liabilities and accrued expenses (Note 7) 34,181,821 24,095,544
Dividends payable 3,851,307 3,582,417
TOTAL CURRENT LIABILITIES 69,244,272 51,995,959
DEFERRED INCOME TAXES (Note 13) 2,602,881 2,675,968
LONG-TERM OBLIGATIONS (Note 10) 5,005,458 6,477,210
MINORITY INTEREST IN NET ASSETS
OF CONSOLIDATED SUBSIDIARIES 5,696,823 5,130,728
COMMITMENTS (Note 11)
SHAREHOLDERS' EQUITY: (Notes 6 and 12)
Preferred stock, $10 par value-
authorized, 500,000 shares; issued - none
Common stock, $10 par value- authorized,
40,000,000 shares in 1994 and
20,000,000 shares in 1993; issued 13,164,312
at December 31, 1994 and 1993 131,643,120 131,643,120
Additional paid-in capital 31,295,259 21,960,011
Retained earnings 178,295,916 154,432,773
Accumulated currency translation adjustment (4,018,659) (2,449,956)
Cost of treasury stock; 3,542,080 shares and
3,496,194 shares at December 31, 1994 and 1993 (93,772,244) (80,477,178)
Employees' stock ownership and stock purchase
plan notes (21,905,015) (15,348,496)
SHAREHOLDERS' EQUITY - NET 221,538,377 209,760,274
TOTAL $304,087,811 $276,040,139
</TABLE>
See Notes to Consolidated Financial Statements.
-19-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
<TABLE><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>
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)
Net income for the year 41,322,429
Cash dividends declared
on common stock -
$1.81 per share (17,459,286)
Sale and distribution of
treasury stock - 119,602
shares 9,322,793 481,078 (9,262,182)
Treasury stock purchases
and capital contribution-
165,488 shares 12,455 (13,776,144)
Interest charged on ESPP
notes (17,107)
Dividends credited
to ESPP notes 592,296
Note payments 2,130,474
Foreign currency
translation adjustment (1,568,703)
Balance, December 31, 1994 $131,643,120 $31,295,259 $178,295,916 $(4,018,659) $(93,772,244) $(21,905,015)
See Notes to Consolidated Financial Statements.
</TABLE>
-20-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993 and 1992
<TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $41,322,429 $36,510,915 $36,307,337
Adjustments To Reconcile Net Income To Net Cash Flows
Provided By Operating Activities:
Depreciation and amortization 9,151,342 8,551,136 7,928,547
Decrease in deferred income taxes (1,603,034) (525,923) (571,718)
Minority interest in net income
of consolidated subsidiaries 626,017 542,956 573,606
Loss (gain) on disposal of fixed assets 190,999 (84) 72,429
Interest charged on employees' stock purchase
plan notes (17,107) (30,459) (51,232)
Other (437,219) (25,675) 329,128
Changes In Assets And Liabilities:
Increase in accounts and notes receivable (7,098,379) (6,513,849) (2,520,064)
Increase in inventories (9,832,223) (2,529,226) (1,526,191)
Decrease (increase) in prepaid expenses 1,835,770 (4,709,608) (758,755)
Increase in notes receivable due after one year (597,743) (712,384) (4,464,970)
Increase in other assets (1,089,093) (1,950,905) (765,341)
Increase in other current liabilities 15,848,733 3,674,866 5,419,224
Net Cash Flows Provided By Operating Activities 48,300,492 32,281,760 39,972,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets 6,379 15,150 87,130
Payments for purchase of property, plant and equipment (21,983,746) (13,217,058) (11,200,173)
Payment for purchase of majority interest in subsidiary (1,695,000)
Payments for purchase of intangibles (928,628) (235,440)
Decrease in short-term investments 8,111,675 6,191,952 8,485,497
Investments in temporary co-ownerships (5,667,983) (2,718,308) (1,868,578)
Proceeds from sales of temporary co-ownership interests 1,620,586 1,137,003 1,256,852
Net Cash Flows Used In Investing Activities (20,536,717) (8,826,701) (3,239,272)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (16,598,100) (15,899,266) (15,925,947)
Payment of dividends to minority shareholders (228,249) (225,277) (236,263)
Proceeds from sale of treasury stock 541,689 1,434
Payments for purchase of treasury stock (13,776,144) (10,553,912) (14,053,928)
Repayments of long-term obligations (1,425,000) (1,350,000) (2,596,913)
Payments received on employees' stock ownership and
stock purchase plan notes 2,130,474 1,543,204 1,447,199
Net Cash Flows Used In Financing Activities (29,355,330) (26,485,251) (31,364,418)
Effect of exchange rate changes on cash 15,125 10,679 4,823
Net (Decrease) Increase in Cash (1,576,430) (3,019,513) 5,373,133
Cash at Beginning of Year 5,011,498 8,031,011 2,657,878
Cash at End of Year $ 3,435,068 $ 5,011,498 $ 8,031,011
Supplemental Cash Flow Information:
Interest paid $ 1,239,867 $ 1,117,166 $ 1,096,584
Income taxes paid $29,494,846 $25,124,273 $26,686,136
Supplemental Schedule Of Noncash Investing And
Financing Activities:
Additions to obligations under capital leases $ 124,191
Issuance of employees' stock purchase plan notes $ 9,262,182 $ 12,165
Capital contribution $ 12,455 $ 20,515
</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, 1994, 1993 and 1992
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.
In April 1994, the Company acquired 51% of the stock of Southern Cross
Paints Limited in Auckland, New Zealand for a purchase price of $2,359,000. The
Company's subsidiary, Benjamin Moore & Co (NZ) Limited, is a holding company of
this majority interest. In connection with the acquisition, Southern Cross
Paints Limited changed its name to Benjamin Moore Pacific Limited.
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
$12,452,752 in 1994 and $14,422,837 in 1993, stated at cost, which approximates
market value, and a mutual fund of short duration portfolio of $118,987 in 1994
and $6,260,577 in 1993, 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
Property, plant and equipment is recorded at cost. 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 Sum of the years digits, declining balance, straight-line 25-45 yrs.
Machinery and equipment Sum of the years digits, declining balance, straight-line 8-11 yrs.
Furniture and fixtures Sum of the years digits, declining balance, straight-line 6-10 yrs.
Automobiles and trucks Sum of the years digits, declining balance, straight-line 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 amounting to $6,281,696 and $5,163,561 at December
31, 1994 and 1993,
-22-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
respectively, are valued at cost and are being amortized over their estimated
useful lives which range from two to fifteen years. During 1994, 1993 and
1992 amortization of such intangibles amounted to $1,016,678, $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 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 $15,521,368, $13,987,537 and
$12,417,319 in 1994, 1993 and 1992, respectively. Quality control expenditures
aggregated $5,435,277, $5,001,518 and $4,716,561, respectively, and are included
herein because a substantial portion of such expenditures is related to
development projects.
Accounting Change
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for Postemployment
Benefits" and as a result recorded a one-time expense of approximately
$1,300,000.
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).
2. ACCOUNTS AND NOTES RECEIVABLE
December 31,
1994 1993
Trade $97,572,410 $88,940,829
Other 804,929 1,493,077
Total 98,377,339 90,433,906
Less allowance for doubtful accounts 10,576,830 9,674,679
Net $87,800,509 $80,759,227
Notes receivable due after one year amounted to $13,209,875 and
$12,614,376 at December 31, 1994 and 1993, respectively, and are included in
Other Assets in the accompanying balance sheets. The carrying amount of notes
receivable approximates fair value.
-23-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVENTORY December 31,
1994 1993
Finished goods $38,514,099 $31,223,724
Raw materials 23,026,324 20,253,750
Total $61,540,423 $51,477,474
If the first-in, first-out (FIFO) method of inventory accounting,
which approximates current cost, had been used, inventory would have been
$12,714,000 and $15,601,000 higher than reported at December 31, 1994 and 1993,
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.
<TABLE><CAPTION>
5. PROPERTY, PLANT AND EQUIPMENT December 31,
1994 1993
<S> <C> <C>
Land $ 7,064,991 $ 6,985,753
Buildings 66,527,626 53,769,421
Machinery, equipment and leasehold
improvements 82,787,937 75,353,810
Total 156,380,554 136,108,984
Less accumulated depreciation and
amortization 82,112,033 75,839,326
Property, plant and equipment-net $ 74,268,521 $ 60,269,658
Capital leases included in the above are as follows:
Classes of Property December 31,
1994 1993
<S> <C> <C>
Land $ 96,000 $ 96,000
Buildings 1,616,902 1,616,902
Machinery, equipment and
leasehold improvements 3,390,430 3,511,123
Total 5,103,332 5,224,025
Less accumulated depreciation
and amortization 4,026,885 3,811,492
Net $1,076,447 $1,412,533
</TABLE>
-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
sheets at December 31, 1994 and 1993, as determined by independent actuaries,
are presented below:
<TABLE><CAPTION>
December 31, 1994 December 31, 1993
United States Canadian United States Canadian
Plans Plan Plans Plan
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 87,247,000 $ 9,916,000 $ 97,082,000 $10,059,000
Accumulated benefit obligation $ 89,541,000 $ 9,916,000 $ 99,572,000 $10,059,000
Projected benefit obligation for
service rendered to date $110,569,000 $11,878,000 $119,931,000 $11,860,000
Plan assets at fair value (plan assets
are invested primarily in insurance
contracts, equities and bonds) 108,589,000 14,603,000 112,128,000 16,495,000
Projected benefit obligation (in excess
of) less than plan assets (1,980,000) 2,725,000 (7,803,000) 4,635,000
Unrecognized net (gain) loss from past
experience different from that
assumed (324,000) 2,609,000 5,907,000 1,024,000
Prior service cost not yet recognized
in net periodic pension cost 3,033,000 3,271,000
Unrecognized transition asset, net
of amortization (2,652,000) (2,649,000) (2,997,000) (3,077,000)
Accrued pension (cost) credit recognized
in (other liabilities) other assets on the
balance sheet $ (1,923,000) $ 2,685,000 $ (1,622,000) $2,582,000
</TABLE>
-25-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net pension costs include the following components:
<TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned during the
period $3,949,000 $ 3,708,000 $3,458,000
Interest cost on projected benefit
obligation 9,315,000 9,713,000 9,015,000
Actual return on plan assets (1,683,000) (10,549,000) (8,014,000)
Net amortization and deferral (9,342,000) (257,000) (2,926,000)
Net periodic pension cost $2,239,000 $ 2,615,000 $1,533,000
</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 8.5 percent and 5 percent, respectively in 1994, 7 percent and 4
percent, respectively in 1993 and 8.5 percent and 6.5 percent, respectively in
1992. The expected long-term rate of return on assets, net of expenses, was 9
percent in 1994, 8.5 percent in 1993 and 9 percent in 1992.
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 on to the retirees.
As of December 31, 1994, 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, 1994 and 1993.
<TABLE><CAPTION>
December 31, 1994 December 31, 1993
----------------- -----------------
Medical Life Insurance Medical Life Insurance
Plan Plan Plan Plan
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(11,280,000) $ (937,000) $(14,343,000) $(1,078,000)
Fully eligible active plan participants (3,166,000) (168,000) (3,635,000) (172,000)
Other active plan participants (5,510,000) (284,000) (6,744,000) (383,000)
Accumulated postretirement benefit
obligation in excess of plan assets (19,956,000) (1,389,000) (24,722,000) (1,633,000)
Unrecognized net (gain) or loss from past
experience different from that assumed
and from changes in assumptions (2,431,000) (165,000) 3,211,000 194,000
Unrecognized transition obligation 18,723,000 1,195,000 19,763,000 1,262,000
Accrued postretirement benefit cost
recognized in the other liabilities on
the balance sheet $ (3,664,000) $ (359,000) $ (1,748,000) $ (177,000)
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE><CAPTION>
1994 1993
<S> <C> <C>
Service cost-benefits attributed
to service during the period $ 470,000 $ 368,000
Interest cost on accumulated
postretirement benefit obligation 1,619,000 1,822,000
Net amortization and deferral 1,107,000 1,107,000
Net periodic postretirement benefit cost $3,196,000 $3,297,000
</TABLE>
For measurement purposes, the 1995 annual rate of increase in the per
capita cost of covered health care benefits was assumed to be 13.5% for costs
under age 65 and 10.8% 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, 1994 by $771,000 and the aggregate of the service
and interest cost components of net periodic postretirement benefit cost for the
year then ended by $76,000.
-27-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8.5 percent and 7 percent in 1994 and
1993, respectively.
During 1994, 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
$64,880, $54,000 and $822,000 in 1994, 1993 and 1992, 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. Effective January 1, 1994, the Company adopted SFAS No.
112 and as a result recorded an accrued liability of approximately $1,300,000
which also approximates the reserve liability at December 31, 1994.
Employees' Stock Ownership Plan
The Company also maintains a qualified Employees' Stock Ownership 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.
Contributions to the ESOP amounted to $1,185,312, $1,160,599 and
$1,140,564 in 1994, 1993 and 1992, respectively.
-28-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company's Canadian subsidiary maintains a similar plan which
covers substantially all of the Company's Canadian employees. The Canadian
subsidiary contributed approximately $154,000, $144,000 and $141,000 to the
Canadian plan trust fund in 1994, 1993 and 1992, 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 or upon retirement. 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. During 1994 options to purchase 1,440 shares were exercised by
employees by reason of their retirement during 1994, which made their respective
options exercisable during a six month period following their respective
retirement dates. At December 31, 1994 none of the options were exercisable.
7. OTHER LIABILITIES AND ACCRUED EXPENSES
<TABLE><CAPTION>
December 31,
1994 1993
<S> <C> <C>
Income taxes payable $ 3,449,393 $ 2,392,051
Salaries, wages and commissions 7,964,744 3,962,768
Health care, life insurance and pension costs 7,340,094 3,839,208
Customer discounts and allowances 3,457,132 2,757,399
Environmental remediation costs 2,481,889 2,311,094
Other 9,488,569 8,833,024
Total $34,181,821 $24,095,544
</TABLE>
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:
<TABLE><CAPTION>
NET SALES:
<S> <C> <C> <C>
United States Foreign Consolidated
1994 $484,520,019 $62,543,549 $547,063,568
1993 $454,215,349 $57,736,116 $511,951,465
1992 $426,409,378 $57,523,335 $483,932,713
</TABLE>
-29-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INCOME BEFORE TAXES
AND MINORITY INTEREST:
<TABLE><CAPTION>
United States Foreign Consolidated
<S> <C> <C> <C>
1994 $64,407,680 $5,958,482 $70,366,162
1993 $56,762,454 $4,188,481 $60,950,935
1992 $56,342,273 $4,056,698 $60,398,971
IDENTIFIABLE ASSETS:
1994 $261,661,657 $42,426,154 $304,087,811
1993 $237,810,998 $38,229,141 $276,040,139
1992 $228,204,051 $35,405,527 $263,609,578
9. SHORT-TERM BORROWINGS
</TABLE>
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,
1994 1993 1992
<S> <C> <C> <C>
Outstanding borrowings at end of year $ 7,177,000 $ 3,861,000 $ 3,157,000
Average interest rate on outstanding
borrowings at end of year 9.0% 5.8% 7.0%
Maximum month-end outstanding
borrowings during the year ended $21,391,000 $ 9,856,000 $ 7,045,000
Approximate month-end average
outstanding borrowings during
the year ended $ 9,514,000 $ 6,159,000 $ 3,547,000
Weighted average interest rate
on approximate month-end
average borrowings outstanding
during the year ended 6.1% 6.2% 7.6%
Unused portion of lines of credit
at end of year $30,632,000 $22,138,000 $23,445,000
</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,
1994 1993
Loan payable (See Note 6) $6,000,000 $6,925,000
Capital leases (See Note 11) 410,793 1,024,191
Total 6,410,793 7,949,191
Less payments due within one year 1,405,335 1,471,981
Long-term obligations $5,005,458 $6,477,210
Principal payments of $1,405,335, $1,105,458, $1,200,000, $1,300,000
and $1,400,000 are due in 1995, 1996, 1997, 1998 and 1999, 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 78% 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, 1994 are as
follows:
<TABLE><CAPTION>
Capital Operating
Year ending December 31, Leases Leases Total
<S> <C> <C> <C>
1995 $423,896 $ 5,279,801 $ 5,703,697
1996 5,458 4,057,660 4,063,118
1997 2,476,831 2,476,831
1998 1,575,005 1,575,005
1999 702,451 702,451
2000-2004 1,180,420 1,180,420
Total minimum lease payments 429,354 $15,272,168 $15,701,522
</TABLE>
Less amount representing interest (at
rates ranging from 6.63% to
7.02%) 18,561
Present value of net minimum
lease payments $410,793
Rental expense on operating leases (including amounts based on
equipment usage) was approximately $8,147,158, $8,255,642 and $6,912,552 for the
years ended December 31, 1994, 1993 and 1992, 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 1,600,000 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, 627,665
shares have been sold to employees. During 1994, the Company sold 117,700
shares to employees.
Notes receivable outstanding with respect to the above referenced
Plan, as well as the ESOP note receivable, as of December 31, 1994 and 1993 are
reflected in the balance sheets as reductions in shareholders' equity. The
notes received by the Company relative to the 1991 and 1994 ESPP offerings 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)
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, 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
Sale and distribution of
treasury stock (119,602) 119,602
Treasury stock purchases 165,488 (165,488)
Balance, December 31, 1994 13,164,312 3,542,080 9,622,232
</TABLE>
13. INCOME TAXES
The composition of the income tax provision is as follows:
<TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
State and local income taxes $ 5,015,664 $ 4,595,010 $ 4,749,421
Foreign income taxes 2,427,921 1,946,324 1,732,755
Federal income taxes:
Current 22,712,600 18,310,612 17,751,496
Deferred (1,738,469) (954,885) (715,644)
Total $28,417,716 $23,897,061 $23,518,028
</TABLE>
Deferred income taxes represent the tax effects of differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, none of which are individually significant in any
year. The components of the deferred tax asset relate primarily to accruals and
accounts receivable allowances, and the deferred tax liability relates primarily
to depreciation.
-33-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of the statutory federal tax rate and effective tax
rate is as follows:
1994 1993 1992
Statutory tax rate 35.0% 35.0% 34.0%
Effect of:
State and local income taxes 4.6 4.9 5.2
Other - net .8 (.7) (.3)
Effective tax rate 40.4% 39.2% 38.9%
The Company does not accrue Federal income taxes on its equity in the
undistributed earnings of its Canadian subsidiary, which amounted to
$26,309,657, $23,902,094 and $22,358,291 at December 31, 1994, 1993 and 1992,
respectively, because the Company intends to reinvest such earnings
indefinitely.
14. OTHER EXPENSE (INCOME), NET
The components of other expense and (income), net are as follows:
<TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Other income $(1,578,002) $(1,879,938) $(2,149,551)
Interest expense 1,257,886 1,131,417 1,157,896
Loss (gain) on the disposal of
fixed assets 190,999 (84) 72,429
Other expense 481,799
Net $ 352,682 $ (748,605) $ (919,226)
</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 15 of the Company's Proxy Statement
dated March 23, 1995, for use in connection with its 1995 Annual Meeting of
Shareholders, which information is hereby incorporated by reference, and (ii)
"EXECUTIVE OFFICERS OF THE REGISTRANT" at page 9 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 7, 8 and 9 of the
Company's Proxy Statement dated March 23, 1995, for use in connection with its
1995 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 23, 1995, for use in connection with its 1995 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 23, 1995, for use
in connection with its 1995 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>
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 9 and 10
of the Company's Proxy Statement dated March 23, 1995, for use in connection
with its 1995 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
<TABLE>
<S> <C>
(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, 1994, 1993 and 1992 18
Consolidated Balance Sheets, December 31, 1994
and 1993 19
Consolidated Statements of Shareholders' Equity for
the Years Ended December 31, 1994,
1993 and 1992 20
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1994, 1993 and 1992 21
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1994, 1993 and 1992 22-34
(2) Financial Statement Supplemental Schedule.
II Consolidated Valuation and Qualifying Accounts
For the Years Ended December 31,
1994, 1993 and 1992 42
</TABLE>
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.
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, 1994 and 1993.
-36-
<PAGE>
(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, 1994.
(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 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 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 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 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).
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 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 Shareholders, which
information is hereby incorporated by
reference.
-37-
<PAGE>
(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 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
Shareholders, which information is hereby
incorporated by reference.
(21) Subsidiaries of the Company Page 43
(23) Consent of Experts and Counsel Page 44
(27) Financial Data Schedule Page 45
-38-
<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, 1995.
BENJAMIN MOORE & CO.
By /s/ M.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.
-39-
<PAGE>
<TABLE><CAPTION>
Signature Title Date
<S> <C> <C>
Chairman of the Board of
Directors (Principal
/s/ Richard Roob Executive Officer);
Richard Roob Director March 30, 1995
President (Principal
/s/ M.C. Workman Executive Officer);
Maurice C. Workman Director March 30, 1995
Vice President -
Finance and Treasurer
(Principal Financial
Officer and Principal
/s/ W.J. Fritz Accounting Officer);
William J. Fritz Director March 30, 1995
/s/ B.M. Belcher, Jr. Director March 30, 1995
Benjamin M. Belcher, Jr.
/s/ W.C. Belcher Director March 30, 1995
Ward C. Belcher
/s/ Charles H. Bergmann Director March 30, 1995
Charles H. Bergmann
Director March 30, 1995
Frank W. Burr
/s/ Yvan Dupuy Director March 30, 1995
Yvan Dupuy
Director March 30, 1995
Robert J. Hodgson
Director March 30, 1995
Ralph W. Lettieri
Director March 30, 1995
Gerald W. Moore
-40-
<PAGE>
Signature Title Date
/s/ John C. Moore, Jr. Director March 30, 1995
John C. Moore, Jr.
/s/ Michael C. Quaid Director March 30, 1995
Michael C. Quaid
Director March 30, 1995
Joseph Sobie
/s/ Charles C. Vail Director March 30, 1995
Charles C. Vail
Director March 30, 1995
Ward B. Wack
Director March 30, 1995
Sara B. Wardell
</TABLE>
-41-
<PAGE>
SCHEDULE II
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE><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
Allowance For Doubtful
Accounts:
<S> <C> <C> <C> <C> <C>
1994 $9,674,679 $5,092,275 $ - $4,190,124 (1) $10,576,830
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
</TABLE>
(1) Accounts Receivable Written Off - Net of Recoveries
-42-
<PAGE>
Subsidiaries of the Company
<TABLE><CAPTION>
Percentage Jurisdiction of Immediate
Name Owned Incorporation Parent
<S> <C> <C> <C>
Benjamin Moore & Co., Limited 82.7 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
Benjamin Moore Pacific Limited 51.0 New Zealand Benjamin Moore & Co (NZ) Limited
</TABLE>
-43-
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Benjamin Moore & Co.:
We consent to the incorporation by reference in Post-Effective Amendment No. 2
to Registration Statement No. 33-2694 and in Registration Statement Nos. 33-
39750 and 33-69480 of Benjamin Moore & Co. on Form S-8 of our report dated March
7, 1995 (which expresses an unqualified opinion and includes an explanatory
paragraph relating to changes in the methods of accounting for postemployment
benefits, income taxes and postretirement benefits other than pensions)
appearing in this Annual Report on Form 10-K of Benjamin Moore & Co. for the
year ended December 31, 1994.
Deloitte & Touche LLP
Parsippany, New Jersey
March 30, 1995
44
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,435
<SECURITIES> 12,572
<RECEIVABLES> 98,377
<ALLOWANCES> 10,576
<INVENTORY> 61,540
<CURRENT-ASSETS> 192,185
<PP&E> 156,381
<DEPRECIATION> 82,112
<TOTAL-ASSETS> 304,088
<CURRENT-LIABILITIES> 69,244
<BONDS> 5,005
0
0
<COMMON> 131,643
<OTHER-SE> 89,898
<TOTAL-LIABILITY-AND-EQUITY> 304,088
<SALES> 547,064
<TOTAL-REVENUES> 547,064
<CGS> 284,092
<TOTAL-COSTS> 476,697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,092
<INTEREST-EXPENSE> 1,258
<INCOME-PRETAX> 70,366
<INCOME-TAX> 28,418
<INCOME-CONTINUING> 41,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,322
<EPS-PRIMARY> 4.29
<EPS-DILUTED> 4.29
</TABLE>
