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, 1997 Commission File Number 0-8894
Benjamin Moore & Co.
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(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
None
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of August 1, 1997, 8,961,517 shares of Common Stock of the registrant were
issued and outstanding.
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(Page 1 of 11 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, 1997 and 1996....................................... 3
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996.......................... 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996...................... 5
Notes to Condensed Consolidated Financial Statements............. 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 7 - 8
Part II. Other Information.............................................. 9
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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,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales.......................................... $ 185,879 $ 170,349 $ 324,014 $ 303,855
---------- ---------- ---------- ----------
Costs and expenses:
Cost of products sold.......................... 87,632 84,667 158,904 158,038
Selling, general and administrative ........... 64,847 58,133 122,286 109,997
Other expense, net............................. 130 562 304 852
---------- ---------- ---------- ----------
Total costs and expenses................... 152,609 143,362 281,494 268,887
---------- ---------- ---------- ----------
Income before taxes and minority
interest........................................ 33,270 26,987 42,520 34,968
Income tax provision............................... 13,820 11,371 18,017 15,045
Minority interest in income (loss) of
subsidiaries.................................... 206 (30) 117 (274)
---------- ---------- ---------- ----------
Net income......................................... $ 19,244 $ 15,646 $ 24,386 $ 20,197
========== ========== ========== ==========
Weighted average number of common
shares outstanding.............................. 8,979,337 9,398,089 8,995,959 9,421,812
========== ========== ========== ==========
Earnings per share of common stock................. $2.14 $1.66 $2.71 $2.14
===== ===== ===== =====
Cash dividends declared per share of
common stock.................................... $.42 $.40 $.84 $.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)
June 30, December 31,
1997 1996
----------- ------------
(Unaudited) (a)
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 8,251 $ 11,365
--------- ---------
Accounts and notes receivable - net .............. 141,604 104,902
--------- ---------
Inventories
Finished goods .................................. 49,401 40,988
Raw materials and supplies ...................... 22,726 27,964
--------- ---------
72,127 68,952
--------- ---------
Other current assets ............................. 27,881 26,382
--------- ---------
Total current assets ......................... 249,863 211,601
Property - net ....................................... 77,884 80,169
Other non-current assets ............................. 58,834 38,612
--------- ---------
Total assets ................................. $ 386,581 $ 330,382
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term obligations .......................... $ 47,113 $ 29,545
Accounts payable ................................. 31,345 23,910
Accrued expenses and other current liabilities ... 47,538 28,625
--------- ---------
Total current liabilities .................... 125,996 82,080
--------- ---------
Postretirement and postemployment benefits ........... 5,513 5,452
--------- ---------
Deferred income taxes ................................ 3,141 2,873
--------- ---------
Long-term obligations ................................ 2,025 3,239
--------- ---------
Minority shareholders' interest in net
assets of subsidiaries ............................ 3,713 3,805
--------- ---------
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 ...................... 31,587 31,580
Retained earnings ............................... 233,939 217,244
Accumulated currency translation adjustment ..... (3,433) (3,270)
Cost of treasury stock; 4,208,399 shares at
June 30, 1997 and 4,130,727 shares at
December 31, 1996 ............................. (134,921) (129,247)
Employees' stock ownership and stock purchase
plan notes .................................... (12,622) (15,017)
--------- ---------
Shareholders' equity - net ................... 246,193 232,933
--------- ---------
Total liabilities and shareholders' equity ... $ 386,581 $ 330,382
========= =========
(a) The consolidated balance sheet at December 31, 1996 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,
----------------
1997 1996
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................ $ 24,386 $ 20,197
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .......................... 5,656 6,176
Minority interest in net income (loss) of subsidiaries . 117 (274)
Other .................................................. (93) 259
Change in assets and liabilities:
Increase in accounts and notes receivable .......... (36,951) (57,420)
(Increase) decrease in inventories ................. (3,445) 2,565
Other .............................................. 18,656 20,288
-------- --------
Net cash flows provided by (used) in
operating activities .......................... 8,326 (8,209)
-------- --------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment and acquisitions ............................... (16,707) (6,256)
Other ..................................................... (714) (609)
-------- --------
Net cash flows used in investing activities ..... (17,421) (6,865)
-------- --------
Cash flows from financing activities:
Proceeds from short-term debt ............................. 18,184 23,559
Payment of dividends ...................................... (7,346) (7,310)
Purchase of treasury stock ................................ (5,675) (7,161)
Other ..................................................... 839 793
-------- --------
Net cash flows provided by financing activities.. 6,002 9,881
-------- --------
Effect of exchange rate changes on cash ....................... (21) 2
-------- --------
Net decrease in cash and cash equivalents ..................... (3,114) (5,191)
Cash and cash equivalents at beginning of period .............. 11,365 11,232
-------- --------
Cash and cash equivalents at end of period .................... $ 8,251 $ 6,041
======== ========
Supplemental disclosures of cash flow information:
Interest paid ............................................. $ 1,220 $ 1,553
Income taxes paid ......................................... $ 12,109 $ 8,704
</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, 1997 and December 31, 1996, and the
results of operations for the three and six month periods ended June 30,
1997 and 1996, and changes in cash flows for the six months ended June 30,
1997 and 1996. 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, 1996.
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, 1997 and 1996 are not necessarily indicative of operations for the
entire year.
4. In July of 1997 the Company announced a restructuring plan which will
result in curtailment of manufacturing at certain plant locations and an
early retirement program within the U.S. business. Management is in the
process of finalizing the costs of these programs, which will be recorded
in the third quarter. Management anticipates that there will be no
significant asset impairment effects related to these plant decisions.
In addition, effective July 1, 1997 the Company made an investment in a
Midwestern paint dealer and home decorating retailer. The effect of this
investment is not material to the financial condition of the Company.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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(Dollars in thousands, except per share amounts)
Operating Results
Net Sales in the 1997 second quarter of $185,879, reflected strong growth
and increased 9.1% or $15,530 over 1996 sales of $170,349. For the six months
ended June 30, 1997 Net Sales were $324,014 an increase of 6.6% or $20,159 over
the $303,855 of sales in the similar period in 1996.
Trade sales coatings in the United States registered an increase of 9.7%
in the second quarter compared to 1996, and trade sales in Canada increased by
6.3% in the second quarter. Production finishes coating sales, which amount to
less than 10% of total sales, declined slightly in the second quarter compared
to 1996.
Gross profit margin in the second quarter increased to 52.9% from 50.3% in
the comparable period in 1996, an increase of 2.6 percentage points, primarily
reflecting lower raw material costs. For the 1997 six months period, gross
profit margin increased to 51.0% from 48.0% with the increase of 3.0 percentage
points also primarily reflecting lower raw material costs.
Selling, general and administrative expenses increased by 11.5% and 11.2%
respectively in the second quarter and six months. The increases primarily
reflected costs associated with higher sales volume, and increased advertising
and promotion expenses, principally related to the national introduction of the
Crayola line.
The decrease in other expense, net reflected lower interest expense on
reduced bank borrowings in the United States and Canada.
Net income of $19,244 in the second quarter increased 23% or $3,598 above
the similar period in 1996. For the first half of 1997 net income was $24,386,
an increase of 20.7% or $4,189.
Earnings per share in 1997 were $2.14 for the second quarter and $2.71 for
the six months, an increase of $.48 and $.57 respectively over the prior year.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Financial Position and Liquidity
Similar to 1996 and previous years, net income in the first half of 1997
was exceeded by the increase in accounts receivable, primarily reflecting
extended dating programs for dealer shipments. The Company strengthened its
credit policies in the second quarter which favorably impacted net cash flows
from accounts receivable. During the first six months of 1997 capital
expenditures declined, and at the end of the second quarter of 1997, the Company
made a prepaid investment in a Midwestern paint dealer and home decorating
retailer, which transaction was effective July 1, 1997.
Short-term borrowing under the Company's credit facility was utilized
primarily for the payment of dividends and for the purchase of treasury stock.
The acquisition of stock does not represent a formal repurchase 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,
Canada and New Zealand to support working capital requirements.
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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 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, 1997.
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 13, 1997 /s/ Yvan Dupuy
------------------ -------------------------------
Yvan Dupuy, President
(Chief Operating Officer)
Date August 13, 1997 /s/ Leonard S. Goodman
------------------ -------------------------------
Leonard S. Goodman
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE SIX MONTHS
ENDED JUNE 30, 1997 EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF
INCOME, CONDENSED CONSOLIDATED BALANCE SHEET, CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS AND THE
NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,251
<SECURITIES> 0
<RECEIVABLES> 163,584
<ALLOWANCES> 21,980
<INVENTORY> 72,127
<CURRENT-ASSETS> 249,863
<PP&E> 183,310
<DEPRECIATION> 105,426
<TOTAL-ASSETS> 386,581
<CURRENT-LIABILITIES> 125,996
<BONDS> 2,025
0
0
<COMMON> 131,643
<OTHER-SE> 114,550
<TOTAL-LIABILITY-AND-EQUITY> 386,581
<SALES> 324,014
<TOTAL-REVENUES> 324,014
<CGS> 158,904
<TOTAL-COSTS> 281,494
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,532
<INTEREST-EXPENSE> 1,546
<INCOME-PRETAX> 42,520
<INCOME-TAX> 18,017
<INCOME-CONTINUING> 24,386
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,386
<EPS-PRIMARY> 2.71
<EPS-DILUTED> 2.71
</TABLE>
