SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 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 November 1, 1996, 9,095,619 shares of Common Stock of the registrant were
issued and outstanding.
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(Page 1 of 12 Pages)
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
INDEX
Page No.
--------
Part I. Financial Information
Condensed Consolidated Statements of Income -
Three Months and Nine Months Ended
September 30, 1996 and 1995......................... 3
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995............ 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995....... 5
Notes to Condensed Consolidated Financial Statements... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 7 - 9
Part II. Other Information................................. 10
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<PAGE>
PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales ..................... $ 180,656 $ 159,491 $ 484,511 $ 445,972
----------- ---------- ----------- ----------
Costs and expenses:
Cost of products sold ...... 90,863 86,411 248,901 241,366
Selling, administrative
and general .............. 57,445 51,144 167,442 152,420
Other expense, net ......... 588 654 1,440 1,335
----------- ---------- ----------- ----------
Total costs and expenses 148,896 138,209 417,783 395,121
----------- ---------- ----------- ----------
Income before taxes and
minority interest ........... 31,760 21,282 66,728 50,851
Income tax provision .......... 13,449 8,840 28,494 21,054
Minority interest in net (loss)
income of subsidiaries ...... (25) 7 (299) 67
----------- ---------- ----------- ----------
Net income .................... $ 18,336 $ 12,435 $ 38,533 $ 29,730
=========== ========== =========== ==========
Weighted average number of
common shares outstanding ... 9,220,127 9,517,970 9,354,093 9,557,535
=========== ========== =========== ==========
Earnings per share of common
stock ....................... $ 1.99 $ 1.31 $ 4.12 $ 3.11
=========== ========== =========== ==========
Cash dividends declared per
share of common stock ....... $ .40 $ .40 $ 1.20 $ 1.20
=========== ========== =========== ==========
</TABLE>
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)
September December
30, 1996 31, 1995
----------- ----------
(Unaudited) (a)
ASSETS
Current assets:
Cash and short-term investments ..................... $ 4,623 $ 11,356
--------- ---------
Accounts and notes receivable - net ................. 148,276 98,148
--------- ---------
Inventories:
Finished goods ..................................... 43,250 42,082
Raw materials and supplies ......................... 21,107 26,482
--------- ---------
64,357 68,564
Other current assets ................................ 29,861 29,216
--------- ---------
Total current assets ............................... 247,117 207,284
Property - net ......................................... 79,516 78,361
Other non-current assets ............................... 42,265 44,510
--------- ---------
Total assets ................................... $ 368,898 $ 330,155
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations .............................. $ 41,696 $ 30,813
Accounts payable .................................... 27,165 27,398
Accrued taxes based on income ....................... 7,406
Accrued expenses and other current liabilities ...... 38,789 27,276
--------- ---------
Total current liabilities .......................... 115,056 85,487
--------- ---------
Postretirement and postemployment benefits ............. 5,400 5,109
--------- ---------
Deferred income taxes .................................. 3,075 2,876
--------- ---------
Long-term obligations .................................. 2,707 3,968
--------- ---------
Minority shareholders' interest in net
assets of subsidiary ................................ 4,568 5,054
--------- ---------
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 .......................... 31,580 31,564
Retained earnings ................................... 218,984 191,604
Accumulated currency translation adjustment ......... (3,000) (2,907)
Cost of treasury stock; 4,063,630 shares at
September 30, 1996, and 3,696,419 shares at
December 31, 1995 .................................. (125,462) (105,837)
Employees' stock ownership and stock purchase
plan notes ......................................... (15,653) (18,406)
--------- ---------
Shareholders' equity - net ......................... 238,092 227,661
--------- ---------
Total Liabilities and shareholders' equity ......... $ 368,898 $ 330,155
========= =========
(a) The condensed balance sheet at December 31, 1995 has been taken from the
audited financial statements of 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)
Nine Months Ended
September 30,
-----------------------
1996 1995
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income ........................................... $ 38,533 $ 29,730
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ...................... 9,254 8,550
Minority interest in net (loss) income of
subsidiaries ..................................... (299) 67
Other .............................................. 256 (325)
Change in assets and liabilities:
Increase in accounts and notes receivable ....... (49,411) (51,385)
Decrease (increase) in inventories .............. 5,896 (3,946)
Other ........................................... 15,939 1,359
-------- --------
Net cash flows provided by operating
activities ................................. 20,168 (15,950)
-------- --------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment ............................................ (8,160) (11,004)
(Increase) decrease in short-term investments ........ (6) 12,449
Other ................................................ (614) (3,561)
-------- --------
Net cash flows from investing
activities ................................. (8,780) (2,116)
-------- --------
Cash flows from financing activities:
Proceeds from short-term debt ........................ 10,261 35,788
Payment of dividends ................................. (10,922) (11,087)
Purchase of treasury stock ........................... (19,721) (8,984)
Sale of treasury stock ............................... 47
Other ................................................ 2,239 307
-------- --------
Net cash flows used in financing
activities .................................. (18,143) 16,071
-------- --------
Effect of exchange rate changes on cash ................ 16 23
-------- --------
Net increase (decrease) in cash ........................ (6,739) (1,972)
Cash at beginning of period ............................ 11,232 3,435
-------- --------
Cash at end of period .................................. $ 4,493 $ 1,463
======== ========
Supplemental disclosures of cash flow information:
Interest paid ........................................ $ 2,595 $ 2,047
Income taxes paid .................................... $ 20,139 $ 21,245
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of financial
position as of September 30, 1996 and December 31, 1995, and the results of
operations for the three and nine month periods ended September 30, 1996 and
1995, and changes in cash flows for the nine months ended September 30, 1996
and 1995. 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,
1995.
2. Certain information included in this report is forward looking and involves
risks and uncertainties, including general economic and competitive
conditions that could significantly impact expected results.
3. The results of operations for the three and nine month periods ended
September 30, 1996 and 1995 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
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Operating Results
Net Sales of $180,656,000 in the third quarter of 1996 exceeded those of
the comparable period in 1995 by $21,165,000 or 13.3%. For the nine months ended
September 30, 1996, net sales amounted to $484,511,000, which surpassed the
prior year by $38,539,000 or 8.6%.
Trade sales coatings were up throughout most areas of the United States
and Canada for the third quarter and for the nine months ended September 30,
1996. The sales strength that prevailed during the nine months of 1996 was
reflected in unit gains of over 6%. Sales in New Zealand and Australia to date
have not been significant.
Production finishes coatings, however, continued to be sluggish in both
the United States and Canada.
Lowering raw material costs, especially in the second and third quarters,
accompanied by the effect of earlier selling price adjustments, were the major
factors in the decrease of costs of goods sold. As a percentage of sales, cost
of goods sold declined by 3.9 percentage points in the third quarter to 50.3% as
compared with 54.2% in 1995. For the nine months the decrease was 2.7 points to
51.4% as compared with 54.1% in 1995.
Selling, administrative and general expenses were up 12.3% and 9.9%
respectively for the third quarter and nine months. Product introduction and
consumer rebate promotions, market development alternatives in the western
region of the United States, market entry costs in Australia, and strategic
planning initiatives comprised a significant portion of the increases. Higher
sales volume and general inflationary factors represented the balance of the
variances from the previous year.
Interest on bank borrowings was the principal component of net other
expense which was up $105,000 for the nine months.
After provisions for federal and state income taxes and minority interest
in net (loss) income of subsidiaries, net income for the third quarter was
$18,336,000, which was $5,901,000 or 47.5% over the same period in 1995. A new
record high amount of net income of $38,533,000 was attained for the nine
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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months in 1996 surpassing the previous year by $8,803,000 or 29.6% and the 1994
record by $1,660,000 or 4.5%.
Earnings per share were $1.99 for the third quarter and $4.12 for the nine
months, up $.68 and $1.01 respectively over 1995.
In September the Company's majority owned subsidiary, Benjamin Moore
Pacific Ltd., acquired a majority equity interest in White Knight Paints Pty.
Limited in Sydney, Australia. It is anticipated that the acquisition will
bolster the Company's efforts to broaden its sales base in Australasia.
Although the sales growth of trade sales coatings is expected to ease
somewhat in the fourth quarter, net income for the year is projected to sustain
the increase for the nine months and be significantly above the financial
results of 1995.
Financial Position and Liquidity
Net income for the nine months of 1996 adjusted for the non-cash items of
depreciation and amortization, coupled with increased payables and current
liabilities, provided a positive cash flow from operating activities. In
contrast, net income and other sources of cash flow from operating activities
produced a negative result in 1995.
The principal utilization of cash from operating activities in both years
was to support Accounts and Notes Receivable at their traditionally highest
level of the year, which is the summer months.
There were no major construction projects in progress in 1996. In 1995,
final disbursements were made for the completion of the Jacksonville and Dallas
facilities and additions to plants in the Birmingham, Alabama area and Auckland,
New Zealand.
Short-term bank borrowings provided $10,261,000 in 1996 to supplement
working capital which was considerably below the $35,780,000 provided in 1995.
In addition to dividend payments, which represent a continuing utilization
of cash flow from financing activities, the acquisition of treasury stock was up
$10,737,000 over the previous year. The significant increase in 1996 was due
principally to the purchase of a considerable amount of stock in order to
provide cash for the payment of estate taxes of a deceased major shareholder.
The acquisition of stock
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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does not represent a formal re-purchase program, but is transacted to realize
liquidity for estate taxes and other specific purposes.
The Company expects to continue to employ its credit facility in the
United States to support its working capital requirements. The Canadian, New
Zealand and Australian subsidiaries will support a portion of their capital
needs and supplement operating funds with bank borrowings.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following is an index of the exhibits included in this Form 10-Q:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
nine months ended September 30, 1996.
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 November 8, 1996 /s/ Yvan Dupuy
------------------ -----------------------------------
Y. Dupuy
(President)
Date November 8, 1996 /s/ W.J. Fritz
------------------ -----------------------------------
William J. Fritz, Vice President -
Finance and Treasurer
(Principal Financial Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,493
<SECURITIES> 130
<RECEIVABLES> 165,589
<ALLOWANCES> 17,313
<INVENTORY> 64,357
<CURRENT-ASSETS> 247,117
<PP&E> 176,241
<DEPRECIATION> 96,725
<TOTAL-ASSETS> 368,898
<CURRENT-LIABILITIES> 115,055
<BONDS> 2,707
0
0
<COMMON> 131,643
<OTHER-SE> 106,449
<TOTAL-LIABILITY-AND-EQUITY> 368,898
<SALES> 484,511
<TOTAL-REVENUES> 484,511
<CGS> 248,901
<TOTAL-COSTS> 417,783
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,534
<INTEREST-EXPENSE> 2,748
<INCOME-PRETAX> 66,728
<INCOME-TAX> 28,494
<INCOME-CONTINUING> 38,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,533
<EPS-PRIMARY> 4.12
<EPS-DILUTED> 4.12
</TABLE>
