SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number 0-8894
Benjamin Moore & Co.
(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
None
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
As of August 1, 1996, 9,308,885 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 Six Months Ended
June 30, 1996 and 1995.................................. 3
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995..................... 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 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 - 10
Part II. Other Information...................................... . 11
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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 Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales ............................................................ $ 170,349 $ 159,622 $ 303,855 $ 286,481
----------- ----------- ----------- -----------
Costs and expenses:
Cost of products sold ........................................... 84,667 83,869 158,038 154,955
Selling, administrative and general ............................. 58,133 53,018 109,997 101,276
Other expense (income), net ..................................... 562 583 852 681
----------- ----------- ----------- -----------
Total costs and expenses .................................. 143,362 137,470 268,887 256,912
----------- ----------- ----------- -----------
Income before taxes and minority
interest .......................................................... 26,987 22,152 34,968 29,569
Income tax provision ................................................. 11,371 9,070 15,045 12,214
Minority interest in income of
subsidiaries ...................................................... (30) 120 (274) 60
----------- ----------- ----------- -----------
Net income ........................................................... $ 15,646 $ 12,962 $ 20,197 $ 17,295
=========== =========== =========== ===========
Weighted average number of common
shares outstanding ................................................ 9,398,089 9,555,682 9,421,812 9,577,645
=========== =========== =========== ===========
Earnings per share of common stock ................................... $ 1.66 $ 1.36 $ 2.14 $ 1.81
=========== =========== =========== ===========
Cash dividends declared per share of
common stock ...................................................... $ .40 $ .40 $ .80 $ .80
=========== =========== =========== ===========
</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)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ---------
(Unaudited) (a)
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments ................................................. $ 6,170 $ 11,356
--------- ---------
Accounts and notes receivable - net ............................................. 156,238 98,148
--------- ---------
Inventories
Finished goods ................................................................. 45,157 42,082
Raw materials and supplies ..................................................... 22,461 26,482
--------- ---------
67,618 68,564
--------- ---------
Other current assets ............................................................ 30,527 29,216
--------- ---------
Total current assets ...................................................... 260,553 207,284
Property - net ....................................................................... 80,419 78,361
Other non-current assets ............................................................. 42,209 44,510
--------- ---------
Total assets .............................................................. $ 383,181 $ 330,155
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations ........................................................ $ 54,787 $ 30,813
Accounts payable ................................................................ 29,453 27,398
Accrued taxes based on income ................................................... 6,400
Accrued expenses and other current liabilities .................................. 41,385 27,276
--------- ---------
Total current liabilities ................................................. 132,025 85,487
--------- ---------
Postretirement and postemployment benefits ........................................... 5,400 5,109
--------- ---------
Deferred income taxes ................................................................ 2,854 2,876
--------- ---------
Long-term obligations ................................................................ 3,928 3,968
--------- ---------
Minority shareholders' interest in net
assets of subsidiaries ............................................................ 4,630 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 .............................................................. 204,289 191,604
Accumulated currency translation adjustment .................................... (2,883) (2,907)
Cost of treasury stock; 3,823,485 shares at
June 30, 1996 and 3,696,419 shares at
December 31, 1995 ........................................................... (113,016) (105,837)
Employees' stock ownership and stock purchase
plan notes .................................................................. (17,269) (18,406)
--------- ---------
Shareholders' equity - net ................................................ 234,344 227,661
--------- ---------
Total liabilities and shareholders' equity ................................ $ 383,181 $ 330,155
========= =========
</TABLE>
(a) The condensed balance sheet at December 31, 1995 has been taken from the
audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1996 1995
-------- --------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................ $ 20,197 $ 17,295
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................... 6,176 5,649
Minority interest in net income of subsidiaries ....... (274) 60
Other ................................................. 259 (237)
Change in assets and liabilities:
Increase in accounts and notes receivable ....... (57,420) (55,865)
Decrease (increase) in inventories .............. 2,565 (6,499)
Other ........................................... 20,288 9,987
-------- --------
Net cash flows used in operating activities (8,209) (29,610)
-------- --------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment ................................................ (6,256) (11,209)
Decrease in short-term investments ........................ (5) 12,450
Other ..................................................... (604) (2,038)
-------- --------
Net cash flows from investing activities .. (6,865) (797)
-------- --------
Cash flows from financing activities:
Proceeds from short-term debt ............................. 23,559 41,040
Payment of dividends ...................................... (7,310) (7,403)
Purchase of treasury stock ................................ (7,161) (7,118)
Sale of treasury stock .................................... 37
Other ..................................................... 793 2,059
-------- --------
Net cash flows used in financing activities 9,881 28,615
-------- --------
Effect of exchange rate changes on cash ........................ 2 4
-------- --------
Net increase (decrease) in cash ................................ (5,191) (1,788)
Cash at beginning of period .................................... 11,232 3,435
-------- --------
Cash at end of period .......................................... $ 6,041 $ 1,647
======== ========
Supplemental disclosures of cash flow information:
Interest paid ............................................. $ 1,553 $ 1,126
Income taxes paid ......................................... $ 8,704 $ 10,975
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of
financial position as of June 30, 1996 and December 31, 1995, and the
results of operations for the three and six month periods ended June 30,
1996 and 1995, and changes in cash flows for the six months ended June 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 six month periods ended June
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
- --------------------------------------------------------------------------------
Operating Results
The sales momentum of the first quarter of 1996 continued into the second
quarter with net sales of $170,349,000 exceeding those of the comparable period
in 1995 by $10,727,000 or 6.7%. For the six months ended June 30, 1996 net sales
were $303,855,000, up $17,374,000 or 6.1% over the prior year.
Trade sales coatings showed moderate unit gains of approximately 4% in the
United States. The most notable increases were in the Middle Atlantic,
Southeast, and Pacific regions with slower sales prevailing in New England,
portions of the Midwest and in the Northwest. Unit sales in Canada were slightly
lower than the prior year.
Production finishes coatings sales, which account for less than 10% of
total sales, continued to reflect modest growth in the United States during the
second quarter, but were sluggish in Canada.
Decelerating raw material costs, particularly in the second quarter,
effected minimal percentage increases of .9% and 2% in cost of goods sold in the
second quarter and six months respectively. Earlier selling price adjustments,
and to a lesser extent a varying product sales mix, resulted in a decline in
cost of goods sold as a percentage of sales. In the second quarter, the
percentage of cost of sales to sales was down 2.8 percentage points to 49.7%.
For the six months the decrease was 2.1 points to 52.0%.
Selling, administrative and general expenses reflected increases of 9.6%
and 8.6% for the second quarter and six months. The majority of the increases
resulted from market development initiatives in the Pacific region of the United
States and in Hawaii, media advertising and product promotions, and internal
reorganization costs. Higher sales volume and general inflationary factors
accounted for the balance of the variance from the previous year.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Although other expense in the second quarter in 1996 was similar to 1995,
interest on bank borrowings was the major contributor to the increase of
$171,000 for the six months period.
After provisions for federal and state income taxes and minority interest
in subsidiaries, net income for the second quarter was $15,646,000, up
$2,684,000 or 20.7% over 1995. A new record high amount of net income of
$20,197,000 was attained for the six months in 1996 surpassing the same period
in 1995 by $2,902,000 or 16.8%.
Earnings per share in 1996 were $1.66 for the second quarter and $2.14 for
the six months, up $.30 and $.33 respectively over the prior year.
The sales growth of trade sales coatings in the first half of the year is
anticipated to extend into the third and fourth quarters, but recent indications
of weakness in production finishes coatings may have a modest negative effect on
sales revenues. However, net income for the year is expected to show significant
improvement over 1995.
Financial Position and Liquidity
In reflecting the traditional seasonal pattern, net income for the six
months of both years was insufficient to support the increase in accounts and
notes receivable, as evidenced in cash flows from operating activities. However,
accruals for income taxes coupled with lower payments for the prior year's tax
liability contributed to an increase in other liabilities of over $10,000,000 in
1996 when compared to 1995, thereby improving cash flow.
No major capital projects were in progress in 1996. In 1995 disbursements
for the completion of construction of the Dallas and Jacksonville facilities and
additions to plants in Birmingham, Alabama and Auckland, New Zealand were
recorded.
The increase in net income and the reduction in capital expenditure
requirements lessened the need for cash flow from financing activities. Proceeds
from a decrease of over $12,000,000 in short-term investments and increase in
short-term debt of over $41,000,000 in
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
1995 accounted for cash inflow of over $53,000,000 whereas in 1996 proceeds from
the same sources amounted to less than $24,000,000.
Funds utilized for the payment of dividends and for the purchase of
treasury stock represented similar amounts in both years. The acquisition of
stock does not represent a formal program, but is transacted primarily to
provide liquidity for estate taxes and other specific purposes.
The Company expects to utilize its credit facility in the United States to
support its working capital requirements. The Canadian and New Zealand
subsidiaries will maintain borrowings for capital needs in addition to
supplementing operating funds.
-9-
<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 10-Q:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
three months ended June 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 August 12, 1996 /s/ Yvan Dupuy
---------------------------------
Yvan Dupuy, President
(Chief Operating Officer)
Date August 12, 1996 /s/ W.J. Fritz
---------------------------------
William J. Fritz, Vice President -
Finance and Treasurer
(Principal Financial Officer)
-10-
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
JUNE 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,041
<SECURITIES> 129
<RECEIVABLES> 171,114
<ALLOWANCES> 14,876
<INVENTORY> 67,618
<CURRENT-ASSETS> 260,553
<PP&E> 174,268
<DEPRECIATION> 93,849
<TOTAL-ASSETS> 383,181
<CURRENT-LIABILITIES> 132,025
<BONDS> 3,928
0
0
<COMMON> 131,643
<OTHER-SE> 102,701
<TOTAL-LIABILITY-AND-EQUITY> 383,181
<SALES> 303,855
<TOTAL-REVENUES> 303,855
<CGS> 158,038
<TOTAL-COSTS> 268,887
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,304
<INTEREST-EXPENSE> 1,752
<INCOME-PRETAX> 34,968
<INCOME-TAX> 15,045
<INCOME-CONTINUING> 20,197
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,197
<EPS-PRIMARY> 2.14
<EPS-DILUTED> 2.14
</TABLE>
