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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 March 31, 1997 Commission File Number 0-8894
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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
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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
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As of May 1, 1997, 8,986,877 shares of Common Stock of the registrant were
issued and outstanding.
1
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BENJAMIN MOORE & CO. and Subsidiaries
INDEX
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<CAPTION>
PAGE NO.
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<S> <C> <C>
PartI. Financial Information
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1997 and 1996.......... 3
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996................ 4
Condensed Consolidated Statements of Cash Flows
-Three Months Ended March 31, 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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2
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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
MARCH 31,
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1997 1996
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(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
Net Sales.......................................................... $ 138,135 $ 133,506
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Costs and expenses:
Cost of products sold.............................................. 71,272 73,371
Selling, administrative and general................................ 57,439 51,864
Other expense, net................................................. 174 290
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Total costs and expenses......................................... 128,885 125,525
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Income before taxes and minority
interest........................................................... 9,250 7,981
Income tax provision................................................ 4,197 3,674
Minority interest in net loss of
subsidiaries....................................................... (89) (244)
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Net income.......................................................... $ 5,142 $ 4,551
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Weighted average number of common shares outstanding................ 9,012,766 9,445,534
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Earnings per share of common stock ................................. $ .57 $ .48
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Cash dividends declared per share of common stock .................. $ .42 $ .40
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See accompanying notes to condensed consolidated financial statements.
3
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
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ASSETS (UNAUDITED) (a)
<S> <C> <C>
Current assets:
Cash and cash equivalents................. $ 4,959 $11,365
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Accounts and notes receivable-net......... 131,812 104,902
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Inventories:
Finished goods........................... 44,924 40,988
Raw materials and supplies............... 28,613 27,964
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73,537 68,952
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Other current assets..................... 25,349 26,382
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Total current assets................... 235,657 211,601
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Property-net............................... 78,988 80,169
Other non-current assets................... 38,375 38,612
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Total assets........................... $353,020 $330,382
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LIABILITIES AND SHAREHOLDERS' EQUITY
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<S> <C> <C>
Current liabilities:
Short-term debt and current portion of
long-term obligations.................. $46,523 $29,545
Accounts payable......................... 25,259 23,910
Accrued expenses and other current
liabilities............................ 34,027 28,625
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Total current liabilities.............. 105,809 82,080
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Postretirement and postemployment benefits 5,511 5,452
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Deferred income taxes...................... 2,888 2,873
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Long-term obligations...................... 3,215 3,239
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Minority shareholders' interest in net
assets of subsidiaries................... 3,457 3,805
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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.......................... 218,604 217,244
Accumulated currency translation
adjustment................................ (3,384) (3,270)
Cost of treasury stock; 4,156,688 shares
at March 31, 1997 and 4,130,727 shares
at December 31, 1996...................... (132,048) (129,247)
Employees' stock ownership and stock
purchase plan notes....................... (14,262) (15,017)
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Shareholders' equity-net.................. 232,140 232,933
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Total liabilities and shareholders'
equity................................... $353,020 $330,382
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</TABLE>
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(a) The condensed 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.
4
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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<S> <C> <C>
1997 1996
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(UNAUDITED) (UNAUDITED)
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Cash flows from operating activities:
Net income....................................................... $ 5,142 $ 4,551
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................. 2,657 3,401
Minority interest in net loss of subsidiaries.................. (89) (244)
Other.......................................................... 113 203
Change in assets and liabilities:
Increase in accounts and notes receivable..................... (27,195) (37,732)
(Increase) decrease in inventories............................ (4,795) 5,031
Increase in other current liabilities......................... 5,458 513
Other......................................................... 2,806 (672)
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Net cash flows used in operating activities................. (15,903) (24,949)
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Cash flows from investing activities:
Payments for purchase of property, plant and equipment........... (1,458) (3,548)
Other............................................................ (493) (316)
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Net cash flows from investing activities....................... (1,951) (3,864)
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Cash flows from financing activities:
Net proceeds from short-term debt................................ 17,336 25,259
Payment of dividends............................................. (3,690) (3,662)
Purchase of treasury stock....................................... (2,802) (2,817)
Other............................................................ 576 436
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Net cash flows used in financing activities.................... 11,420 19,216
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Effect of exchange rate changes on cash............................ 28 1
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Net decrease in cash............................................... (6,406) (9,596)
Cash and cash equivalents at beginning of period................... 11,365 11,356
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Cash and cash equivalents at end of period......................... $ 4,959 $ 1,760
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Supplemental disclosures of cash flow information:
Interest paid.................................................... $ 581 $ 657
Income taxes paid................................................ $ 2,580 $ 3,001
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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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 its financial
position as of March 31, 1997 and the results of operations for the three
month periods ended March 31, 1997 and 1996, and changes in cash flows for
the three months ended March 31, 1997 and 1996. It is suggested that these
condensed consolidated 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. Certain reclassifications have been made in the 1996 financial statements
to conform to the method of presentation used in 1997.
4. The results of operations for the three month periods ended March 31,
1997 and 1996 are not necessarily indicative of operations for the entire year.
5. In February, 1997, the FASB issued Statement No. 128, "Earnings per
Share," which simplifies the standards for computing and presenting earnings per
share (EPS). Statement No. 128 replaces the standards for computing and
presenting EPS found in Accounting Principles Board Opinion No. 15, "Earnings
per Share" (APB 15). Statement No. 128 requires dual presentation of Basic
(which replaces Primary EPS under APB 15) and Diluted EPS on the face of the
income statement for all entities with complex capital structures. Statement No.
128 will be effective for financial statements for the year ended December 31,
1997. The Company does not expect that the adoption of this statement will have
a material effect on its calculation of EPS.
6
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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 first quarter of 1997 were $138,135, an increase of $4,629
or 3.5% over the comparable period of the prior year.
Trade sales coatings increased modestly in the United States, and increased
at a more accelerated rate in Canada.
Production finishes coatings, which represent less than 10% of total sales,
declined in the United States and increased in Canada.
Gross profit margin increased to 48.4% in 1997 from 45.0% in 1996 primarily
reflecting the benefit of lower raw material costs experienced during 1996 and
which continued during the first quarter of 1997.
Selling, administrative and general expenses were $5,575 or 10.7% over the
1996 level of $51,864. The increase is primarily due to higher advertising and
promotion expenses, and strategic planning initiatives.
The decrease in other expense, net reflected lower interest expense on
reduced bank borrowing in the United States and Canada.
The provision for federal and state income taxes reflected a combined rate
of approximately 45.4% and 46% for 1997 and 1996, respectively. Net income for
the first quarter of 1997 was $5,142, an increase of $591 or 13% over 1996.
Earnings per share for the first quarter of $.57 were $.09 or 18.8% above
the comparable period in 1996.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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(Dollars in thousands, except per share amounts)
FINANCIAL POSITION AND LIQUIDITY
The seasonal nature of the industry was evident in the first quarter cash
flow from operating activities. Net income of $5,142 adjusted by the addition
of non-cash components (principally depreciation and amortization), was
insufficient to support the traditional spring time build-up of accounts and
notes receivable and inventory levels. Capital expenditures also required
funds but to a lesser degree than working capital investment.
Short-term borrowing under the company's credit facility was utilized as a
source of operating funds, as well as for the payment of dividends and the
purchase of treasury stock. Such purchases of stock do not represent the
implementation of a formal acquisition program, but are transacted principally
to provide liquidity for estate taxes and other specific purposes.
The Company plans to continue to employ its credit facility in the United
States and Canada for short-term support of its working capital. The New Zealand
subsidiary will maintain borrowings for longer-term capital needs as well as for
operating capital requirements.
8
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Part II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITYHOLDERS
The only matters which were submitted to a vote of shareholders to date
during the 1997 fiscal year were the following which were acted upon at the
Annual Meeting of Shareholders which was held on April 17, 1997.
Election of Directors:--the following persons were elected as Class III
Directors of the Company to serve for a three year term:--Ward C. Belcher,
Frederick J. Costello, Robert J. Hodgson, John C. Moore, Jr., Richard Roob and
Maurice C. Workman. The following person was elected as Class II Director of the
Company to serve for a two year term constituting the balance of the term of
Joseph Sobie who retired:-- Robert H. Mundheim. The following persons continue
in office as directors: Class I Directors:--Benjamin M. Belcher, Jr., Yvan
Dupuy, Willaim J. Fritz, Gerald W. Moore and Michael C. Quaid. Class II
Directors:--Charles H. Bergmann, Jr., Frank W. Burr, Charles C. Vail, Ward B.
Wack and Sara B. Wardell.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K--There were no reports on Form 8-K filed for the
three months ended March 31, 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.
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(REGISTRANT)
DATE MAY 12, 1997 /S/ RICHARD ROOB
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RICHARD ROOB
(CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER)
DATE MAY 12, 1997 /S/ LEONARD S. GOODMAN
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LEONARD S. GOODMAN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
9
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1997 EXTRACTED FROM THE CONSENSED CONSOLIDATED STATMENT 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,959
<SECURITIES> 0
<RECEIVABLES> 148,896
<ALLOWANCES> 17,084
<INVENTORY> 73,537
<CURRENT-ASSETS> 235,657
<PP&E> 181,566
<DEPRECIATION> 102,578
<TOTAL-ASSETS> 353,020
<CURRENT-LIABILITIES> 105,809
<BONDS> 3,215
0
0
<COMMON> 131,643
<OTHER-SE> 100,497
<TOTAL-LIABILITY-AND-EQUITY> 353,020
<SALES> 138,135
<TOTAL-REVENUES> 138,135
<CGS> 71,272
<TOTAL-COSTS> 128,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,717
<INTEREST-EXPENSE> 730
<INCOME-PRETAX> 9,250
<INCOME-TAX> 4,197
<INCOME-CONTINUING> 5,142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,142
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
