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
For the fiscal year ended: Commission file number:
December 31, 1996 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 3, 1997, the aggregate market value of the registrant's common stock
held by non-affiliates equalled $438,636,313.
As of March 3, 1997, 9,008,163 shares of common stock of the registrant were
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement dated March 21, 1997, for use in
connection with its 1997 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 Benjamin
Moore(R), Benjamin Moore Paints(R), Moore's(R) House Paint, Moorglo(R),
Moorgard(R) Latex House Paint, Moorwood(R), Moorwhite(R) Primer, Moorlife(R),
Impervo(R) Enamel, Moorcraft(R), Impervex(R), Regal(R) Wall Satin(R), Satin
Impervo(R), AquaGlo(R), AquaPearl(R), AquaVelvet(R), Regal Aquagrip(R), Regal
First Coat(R), Pristine(R), A Stroke of Brilliance(R) and Benwood(R). 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-Matic(R)III 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-Matic(R)III Color System has been of significant
value in promoting the sales of its trade sales coatings. Moore's(R) Video Color
Planner and Moore's(R) 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.
2
<PAGE>
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 1996, 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, New Zealand and Australia. Transfers between geographic areas are not
significant and are eliminated in consolidation. Reference is made to the
information set forth in Note 9 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, New Zealand and Australia. The
company's Canadian operations are carried on through Benjamin Moore & Co.,
Limited, which is an approximately 84% 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. The company's Australian operations are carried on
through White Knight Paints Pty. Ltd., which is a 51% owned subsidiary of
Benjamin Moore Pacific Limited. During 1996, revenues and profits from
operations attributable to those companies (which are included in the company's
consolidated financial statements) were approximately $83,360,000 and
$4,395,000, respectively. Approximately 6.4% 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, 1996, 148 chemists and technicians were employed by
the company in research and development and quality control activities. The
company expended approximately $13,787,000 $15,506,000 and $15,521,000 for such
activities in 1996, 1995 and 1994, respectively.
3
<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, New Zealand and
Australia 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 1996, 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 21.1%, 27.4%, 29.1% and 22.4%,
respectively. Production and inventory schedules are timed to coincide with the
aforementioned variations.
Employees
As of December 31, 1996, the company had approximately 2,000 employees,
of whom approximately 27% were salaried personnel, approximately 13% 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.
4
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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
extensive 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 $2,589,000
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 $172,000.
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 approximately $712,000.
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
approximately $100,000 per year.
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.
5
<PAGE>
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 $463,000.
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 1996 the company spent approximately $447,000
on remedial cleanups and related studies compared with approximately $325,000
spent for such purposes in 1995 and $541,000 for such purposes in 1994.
The company recovered approximately $1,309,000 in indemnification costs
in 1995 under an environmental impairment insurance policy. 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, uncertainties surrounding remediation
procedures, including the development of new technologies, the enactment of
additional regulations, the identification of new sites for which the company
could be a potentially responsible party ("PRP"), the apportionment of
responsibility among identified PRPs in addition to the company 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.
6
<PAGE>
ITEM 2. PROPERTIES
Set forth below is certain information with respect to the company's
principal facilities:
Approximate
Location Principal Use Square Feet Owned/Leased
- -------- ------------- ----------- ------------
Newark, NJ Plant 267,600 Owned
Melrose Park, IL Executive Offices- 145,200 Owned
Central Region;
Chicago Plant
Jacksonville, FL Plant 130,200 Owned
Pell City, AL Executive Offices - 120,800 Owned
Southern Region;
Birmingham 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
Mesquite, TX Dallas Plant 87,300 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 69,000 Owned
Montreal, PQ Plant 63,500 Owned
Commerce, CA Executive Offices- 59,000 Owned
Western Region;
Los Angeles Plant
Montvale, NJ Corporate Offices; 57,000 Owned
Executive Offices-
Eastern Region
Nutley, NJ Plant 50,000 Owned
Burlington, ON Plant 46,600 Owned
Seven Hills, NSW Plant 43,600 Leased (1)
Aldergrove, BC Vancouver Plant 39,400 Owned
Santa Clara, CA Plant 39,400 Owned
- ----------
(1) Lease expires October, 1999, not including renewal options.
7
<PAGE>
Approximate
Location Principal Use Square Feet Owned/Leased
- -------- ------------- ----------- ------------
Auckland, NZ Executive Offices- 30,700 Owned
Subsidiary; Plant
Seven Hills, NSW Executive Offices- 25,000 Leased (1)
Subsidiary; Warehouse
The company owns 9.32 acres of land in Lebanon, New Jersey, which is
used as a testing facility. The company also leases warehouse facilities in
North Kansas City, Missouri; Bloomington, Minnesota; Newark, California;
Auckland and Christchurch, New Zealand; Rocklea, QLD, Australia and in Concord,
Edmonton, Saskatoon, Winnipeg, Dartmouth and Mount Pearl, Canada. Warehouse
arrangements also exist in Portland, Oregon.
All of the 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 1996.
- ----------
(1) Lease expires June, 2001, not including renewal option.
8
<PAGE>
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
and Chief Executive Officer 64
Yvan Dupuy President and Chief Operating Officer 45
Benjamin M. Belcher, Jr Executive Vice President 62
Ward C. Belcher Vice President-Operations 50
Michael A. Bonner Vice President-Technology 47
Richard H. Delventhal Controller 60
Donald W. Everett Vice President-Sales and Marketing 49
William J. Foote Vice President-Finance 46
James E. Henderson Treasurer 45
John T. Rafferty Secretary and General Counsel 64
Charles C. Vail Vice President-Human Resources
and Administration 53
- ----------
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.
9
<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 has in the past purchased shares of its common stock
from shareholders in privately negotiated transactions. However, except with
respect to shares distributed from its Employees' Stock Ownership Plan ("ESOP"),
the company is under no obligation to purchase shares from its shareholders and
there can be no assurance that such purchases will be continued. As of March 3,
1997, the company had approximately 1,735 shareholders.
The following table sets forth the high and low price for shares in each
quarter during 1996 and 1995 as determined by an independent appraisal firm
engaged by the company to determine fair value per share for purposes of small
block transactions and transactions involving the ESOP, including purchases by
the company of shares distributed from the ESOP. The table also shows the
dividends paid in each such quarter. The company believes that, except for small
block transactions and transactions involving the ESOP or distributed ESOP
shares, the fair value of the company's shares should reflect a discount from
the appraised price after taking into account all the relevant circumstances.
Price Range Dividends Paid
1996 1995 1996 1995
- ---------------------------------------------------------------------------
High Low High Low
1st quarter $79.89 $63.86 $80.02 $74.16 $ .40 $ .40
2nd quarter 68.68 65.32 78.25 73.01 .40 .40
3rd quarter 71.44 66.48 78.80 74.09 .40 .40
4th quarter 73.19 71.36 79.45 76.08 .40 .40
4th quarter-extra .30 .20
-------------
Total $1.90 $1.80
=============
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ITEM 6. SELECTED FINANCIAL DATA
Selected Income Statement Data:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Net Sales:
<S> <C> <C> <C> <C> <C>
Trade sales coatings $573,195 $513,215 $499,713 $471,738 $448,111
Production finishes coatings 51,995 50,996 47,351 40,213 35,822
------------------------------------------------
Total $625,190 $564,211 $547,064 $511,951 $483,933
================================================
Net income $ 43,339 $ 30,456 $ 41,322 $ 36,511 $ 36,307
Earnings per share of common stock $ 4.67 $ 3.19 $ 4.29 $ 3.75 $ 3.66
Common stock cash dividends:
Declared per share $ 1.92 $ 1.80 $ 1.81 $ 1.68 $ 1.67
Paid per share $ 1.90 $ 1.80 $ 1.78 $ 1.68 $ 1.65
<CAPTION>
Selected Balance Sheet Data:
December 31,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Current assets $211,601 $207,284 $192,185 $185,198 $181,118
Current liabilities 82,080 85,487 65,479 51,996 48,537
-------------------------------------------------
Working capital $129,521 $121,797 $126,706 $133,202 $132,581
=================================================
Total assets $330,382 $330,155 $304,088 $276,040 $263,610
Long-term obligations $ 3,239 $ 3,968 $ 5,005 $ 6,477 $ 7,825
Shareholders' equity - net $232,933 $227,661 $221,538 $209,760 $199,054
Book value per share of
common stock (1) (2) $ 27.45 $ 25.99 $ 25.30 $ 23.28 $ 22.06
</TABLE>
(1) See Note 13 to Notes to Consolidated Financial Statements.
(2) Book value per share is computed based on shareholders' equity before
deduction of employees' stock ownership and stock purchase plan notes.
11
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
OPERATING RESULTS 1996 VS. 1995
Net sales of $625,190 in 1996 represented an increase of $60,979 or 10.8%
over the previous year, establishing a new record for the company.
Trade sales coatings registered increases in all geographic segments of the
company resulting in a unit sales gain of approximately 7%.
Production finishes coatings sales, which recorded a modest increase of
approximately $1,000 or 2%, continued to be sluggish in both the United States
and Canada. Production finishes coatings sales represent less than 10% of the
company's total sales.
Cost of products sold in 1996 was $320,652 and represented an increase of
$13,441 or 4.4% over 1995. The increase was attributable to greater sales
volume. Cost of products sold as a percentage of sales decreased by 3.1% from
54.4% in 1995 to 51.3% in 1996. The positive effect of lower raw material costs
together with the impact of earlier selling price adjustments were major factors
in the decrease in cost of goods sold as a percentage of net sales.
Selling, administrative and general expenses amounted to $228,274 which was
an increase of $25,721 or 12.7% over 1995. Contributing to the increase were
expenses related to product introduction and consumer rebate promotions, market
development efforts in both the western region of the United States and in
Australia, strategic planning initiatives and profit sharing and incentive
compensation. Costs associated with higher sales volume and general inflationary
factors accounted for the balance of the increase over the previous year.
Net other expenses of $2,076 rose by $429 which primarily represented
interest expense associated with increased short-term borrowings.
Income before taxes and minority interest was $74,188, an improvement of
$21,388 or 40.5% when compared with the previous year. The effective income tax
rate in 1996 was 42.7%, the same as 1995.
Net income of $43,339 in 1996 exceeded the previous year by $12,883 or 42.3%
and is a new earnings record for the company, exceeding the previous high, set
in 1994, by 4.9%. Earnings per share were $4.67 compared with $3.19 in 1995.
Dividends declared during 1996 amounted to $1.92 per share as compared with
$1.80 per share in 1995.
The company's majority owned subsidiary, Benjamin Moore Pacific Limited,
acquired a majority interest in White Knight Paints Pty. Ltd. in Australia, as
of July 1, 1996. The New Zealand subsidiary's activities in Australia have been
transferred to White Knight and it is anticipated that this acquisition will
enhance the company's position in Australasia.
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<PAGE>
OPERATING RESULTS 1995 vs. 1994
Sales in the first quarter of 1995 showed considerable growth over the
similar period in 1994, but slackened in the second quarter and remained
sluggish for the remainder of the year. For the twelve months, net sales were
$564,211, which was $17,147 or 3.1% higher than the previous year.
Trade sales coatings in the United States reflected revenue increases as a
result of selling price adjustments whereas in Canada the price adjustments were
accompanied by modest unit gains. Sales increases in the United States were
registered in both the Atlantic and Pacific coast areas, but sales in the
Midwest and Texas were below expectations. Sales in Canada were above 1994 in
most areas.
Production finishes coatings sales, which represented less than 10% of total
sales, eased in the second half of the year but benefited from the acquisition
of a small coatings manufacturer in Georgia.
Cost of products sold in 1995 was $307,211, which was $23,119 or 8.1% over
the previous year. Sharply higher raw material costs accounted for the major
portion of the increase.
Selling, administrative and general expenses of $202,553 rose $10,300 or
5.4% over 1994. In addition to general inflation effects, other factors
contributing to the increase were higher depreciation and associated expenses
relating to the facilities expansion of the past two years, a modification in
organizational structure, sales promotions, and market development activities.
Other expenses showed an increase of $1,294 primarily due to higher interest
expense from short-term borrowings.
Income before taxes and minority interest was $52,800, a decrease of $17,566
from the prior year. The effective income tax rate in 1995 was 42.7% compared
with 40.4% in 1994.
Net income of $30,456 in 1995 declined from the previous year by $10,866.
Earnings per share were $3.19 compared with $4.29 in 1994. Dividends declared
during 1995 were $1.80, which was $.01 less than the prior year.
Sales of Benjamin Moore Pacific Limited were expanded into Australia from
the sales base in New Zealand in the latter half of the year. Although the
southwest Pacific and southeast Asia are considered to be long-term growth areas
for the company, the 1995 financial results of the subsidiary did not have an
appreciable impact on the consolidated financial statements.
FINANCIAL POSITION AND LIQUIDITY
Net cash flows provided by operating activities were $52,971 in 1996, which
was $32,993 and $7,986 greater than in 1995 and 1994, respectively. The most
significant components of the improvement were the increase in net income of
$12,883 over the previous year and the decrease in inventories and prepaid
expenses totaling $6,063.
Net cash flows used in investing activities were $10,900 in 1996 as compared
with $7,331 in 1995 and $20,537 in 1994. During 1996 there were no cash flows
attributable to net sales of short-term investments whereas there were net sales
of $12,572 and $8,112 in 1995 and 1994, respectively. No major construction
projects were under way in 1996 and therefore capital expenditures returned to
more normal levels and were $2,450 and $11,323 less than the two previous years.
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<PAGE>
The net cash flows used in financing activities primarily consisted of
dividend disbursements and treasury stock acquisitions. During 1996 the company
expended $23,411 for the purchase of treasury stock, an increase of $11,328 and
$9,635 over the amounts expended in 1995 and 1994, respectively. The significant
increase in 1996 was due to the purchase of stock from shareholders in order to
provide liquidity for payment of estate taxes. The acquisition of stock by the
company does not represent a formal repurchase program, but is transacted to
provide funds for estate tax liabilities and other specific purposes. The
company has generally financed its purchases of treasury stock from working
capital as described above at Item 5, "Market Price of the Registrant's Common
Stock and Related Security Holder Matters". During the three years ended
December 31, 1996 the company purchased 434,580; 157,738 and 165,488 shares,
respectively, of its common stock. During 1996 the company reduced its
short-term debt by $3,013 as compared with increases of $22,456 and $3,316 in
the two prior years.
In 1996 the company used its short-term line of credit to supplement its
working capital needs and for the capital needs of the New Zealand and
Australian subsidiaries. The company will continue to do so in 1997.
14
<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 16 through 33. The additional financial information set forth in
Part IV and included herein should be read in conjunction with the consolidated
financial statements.
15
<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, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements 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 the company and its subsidiaries at
December 31, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
As discussed in Notes to Consolidated Financial Statements, the company changed
its method of accounting for postemployment benefits in 1994.
Deloitte & Touche LLP
Parsippany, New Jersey
March 7, 1997
16
<PAGE>
Benjamin Moore & Co. and Subsidiaries
Consolidated Statements of Income
For the Years Ended December 31, 1996, 1995 and 1994 (Dollars in thousands,
except per share amounts)
1996 1995 1994
- --------------------------------------------------------------------------------
Net Sales (Notes 1 and 4) $625,190 $564,211 $547,064
---------------------------------
Costs and Expenses: (Notes 7 and 12)
Cost of products sold 320,652 307,211 284,092
Selling, administrative and general 228,274 202,553 192,253
Other expense, net (Note 15) 2,076 1,647 353
---------------------------------
Total costs and expenses 551,002 511,411 476,698
---------------------------------
Income Before Taxes and Minority 74,188 52,800 70,366
Interest
Income Tax Provision (Note 14) 31,672 22,555 28,418
---------------------------------
Income Before Minority Interest 42,516 30,245 41,948
Minority Interest in Net (Loss) Income
of Consolidated Subsidiaries (823) (211) 626
---------------------------------
Net Income $43,339 $30,456 $41,322
=================================
Weighted Average Number of
Common Shares Outstanding 9,285,532 9,539,802 9,639,085
=================================
Earnings Per Share of Common Stock $4.67 $3.19 $4.29
=================================
Cash Dividends Declared Per Share
of Common Stock (Note 13) 1.92 $1.80 $ 1.81
=================================
See Notes to Consolidated Financial Statements.
17
<PAGE>
Benjamin Moore & Co. and Subsidiaries
Consolidated Balance Sheets
December 31, 1996 and 1995
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Assets
1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $11,365 $11,356
Accounts and notes receivable - net (Note 2) 104,902 98,148
Inventories (Note 3) 68,952 68,564
Prepaid expenses 15,672 18,712
Deferred income taxes (Note 14) 10,710 10,504
--------------------
Total Current Assets 211,601 207,284
Investments in Temporary Co-Ownerships (Note 4) 15,019 17,854
Property, Plant and Equipment - Net (Note 5) 80,169 78,361
Other Assets (Notes 2 and 7) 23,593 26,656
--------------------
Total $330,382 $330,155
====================
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term debt and current portion of long-term
obligations (Notes 6 and 11) $29,545 $30,813
Accounts payable - trade 23,910 27,398
Other liabilities and accrued expenses (Notes 7 and 8) 24,807 23,485
Dividends payable 3,818 3,791
--------------------
Total Current Liabilities 82,080 85,487
--------------------
Postretirement and Postemployment Benefits (Note 7) 5,452 5,109
--------------------
Deferred Income Taxes (Note 14) 2,873 2,876
--------------------
Long-Term Obligations (Note 11) 3,239 3,968
--------------------
Minority Interest in Net Assets of Consolidated Subsidiaries 3,805 5,054
--------------------
Commitments (Note 11)
Shareholders' Equity: (Notes 7 and 13)
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 at December 31, 1996 and 1995 131,643 131,643
Additional paid-in capital 31,580 31,564
Retained earnings 217,244 191,604
Accumulated currency translation adjustment (3,270) (2,907)
Cost of treasury stock; 4,130,727 shares and
3,696,419 shares at December 31, 1996 and 1995 (129,247) (105,837)
Employees' stock ownership and stock purchase plan notes (15,017) (18,406)
--------------------
Shareholders' Equity - Net 232,933 227,661
--------------------
Total $330,382 $330,155
====================
</TABLE>
See Notes to Consolidated Financial Statements.
18
<PAGE>
Benjamin Moore & Co. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands, except per share amounts)
<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> <C>
Balance, December 31, 1993 $ 131,643 $ 21,960 $ 154,433 $(2,450) $ (80,477) $(15,348)
Net income for the year 41,322
Cash dividends declared
on common stock -
$1.81 per share (17,459)
Sale and distribution of
treasury stock - 119,602 shares 9,323 481 (9,262)
Treasury stock purchases
and capital contribution-
165,488 shares 12 (13,776)
Interest charged on ESPP notes (17)
Dividends credited to ESPP notes 592
Note payments 2,130
Foreign currency
translation adjustment (1,568)
--------------------------------------------------------------------
Balance, December 31, 1994 131,643 31,295 178,296 (4,018) (93,772) (21,905)
Net income for the year 30,456
Cash dividends declared
on common stock -
$1.80 per share (17,148)
Sale and distribution of
treasury stock - 3,399 shares 232 18
Treasury stock purchases
and capital contribution -
157,738 shares 37 (12,083)
Interest charged on ESPP notes (9)
Dividends credited to ESPP notes 616
Note payments 2,892
Foreign currency
translation adjustment 1,111
--------------------------------------------------------------------
Balance, December 31, 1995 131,643 31,564 191,604 (2,907) (105,837) (18,406)
Net income for the year 43,339
Cash dividends declared
on common stock -
$1.92 per share (17,699)
Distribution of
treasury stock - 272 shares 16 1
Treasury stock purchases -
434,580 shares (23,411)
Interest charged on ESPP notes (5)
Dividends credited to ESPP notes 597
Note payments 2,797
Foreign currency
translation adjustment (363)
--------------------------------------------------------------------
Balance, December 31, 1996 $ 131,643 $ 31,580 $ 217,244 $(3,270) $(129,247) $(15,017)
====================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE>
Benjamin Moore & Co. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994 (Dollars in thousands,
except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $43,339 $30,456 $41,322
Adjustments To Reconcile Net Income To Net Cash Flows
Provided By Operating Activities:
Depreciation and amortization 12,008 10,568 9,151
Decrease in deferred income taxes (209) (377) (1,603)
Minority interest in net (loss) income
of consolidated subsidiaries (823) (211) 626
Loss on disposal of fixed assets 75 39 191
Interest charged on employees' stock purchase plan notes . (5) (9) (17)
Long-term portion of postretirement
and postemployment benefits 343 1,344 3,765
Other (317) 101 (437)
Changes In Assets And Liabilities:
Increase in accounts and notes receivable (4,946) (10,079) (7,098)
Decrease (increase) in inventories 2,633 (6,757) (9,832)
Decrease (increase) in prepaid expenses 3,430 (1,654) 1,836
Decrease (increase) in notes receivable due after one year 1,818 (323) (598)
Decrease (increase) in other assets 1,808 (623) (1,089)
(Decrease) increase in other current liabilities (6,183) (2,497) 8,768
-----------------------------
Net Cash Flows Provided By Operating Activities 52,971 19,978 44,985
-----------------------------
Cash Flows From Investing Activities:
Proceeds from sale of fixed assets 19 49 6
Payments for purchase of property, plant and equipment (10,661) (13,111) (21,984)
Payment for purchase of majority interest in subsidiaries (751) (1,695)
Payments for purchase of intangibles (2,104) (929)
Net proceeds from sale of short-term investments 12,572 8,112
Investments in temporary co-ownerships (1,617) (5,541) (5,668)
Proceeds from sales of temporary co-ownership interests 2,110 804 1,621
-----------------------------
Net Cash Flows Used In Investing Activities (10,900) (7,331) (20,537)
-----------------------------
Cash Flows From Financing Activities:
Payment of dividends (17,076) (16,592) (16,598)
Payment of dividends to minority shareholders (252) (220) (228)
(Repayments) proceeds of short-term debt (3,013) 22,456 3,316
Proceeds from sale of treasury stock 219 542
Payments for purchase of treasury stock (23,411) (12,083) (13,776)
Repayments of long-term obligations (1,100) (1,400) (1,425)
Payments received on employees' stock ownership and
stock purchase plan notes 2,797 2,892 2,130
-----------------------------
Net Cash Flows Used In Financing Activities (42,055) (4,728) (26,039)
-----------------------------
Effect Of Exchange Rate Changes On Cash (7) 2 15
-----------------------------
Net Increase (Decrease) In Cash 9 7,921 (1,576)
Cash At Beginning Of Year 11,356 3,435 5,011
-----------------------------
Cash At End Of Year $11,365 $11,356 $ 3,435
=============================
Supplemental Cash Flow Information:
Interest paid $ 3,674 $ 2,959 $ 1,240
Income taxes paid $29,663 $27,096 $29,495
Supplemental Schedule of Noncash Investing
and Financing Activities:
Additions to obligations under capital leases $ 224
Issuance of employees' stock purchase plan notes $ 9,262
</TABLE>
See Notes to Consolidated Financial Statements.
20
<PAGE>
Benjamin Moore & Co. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands, except per share amounts)
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.
As of July 1, 1996, Benjamin Moore Pacific Limited, a 51% controlled
subsidiary of the company, acquired 51% of the stock of White Knight Paints Pty.
Ltd. in Seven Hills, NSW, Australia for a purchase price of $753.
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. 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.
Estimates
The preparation of the company's financial statements in conformity with
generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
Actual results could differ from those estimates.
Revenue Recognition
Revenues are recorded when products are shipped.
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.
Cash and Cash Equivalents
Cash and cash equivalents consist of commercial paper of $8,000 in 1996 and
a mutual fund of short duration portfolio of $124 in 1995, 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 their
estimated useful lives are set forth below:
Estimated
Asset Depreciation and Amortization Methods Useful Life
- --------------------------------------------------------------------------------
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.
21
<PAGE>
Notes to Consolidated Financial Statements (Continued)
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.
The company's projections indicate that the operating cash flows to be
generated on an undiscounted basis should be sufficient to recover the existing
balances of its fixed assets over their remaining useful lives.
Intangible Assets
Intangible assets amounting to $9,724 and $10,228 at December 31, 1996 and
1995, respectively, are valued at cost and are being amortized over their
estimated useful lives which range from two to fifteen years. During 1996, 1995
and 1994 amortization of such intangibles amounted to $923, $1,124 and $1,059,
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. Unrecognized net assets are being
amortized over 16-2/3 years for the United States plan and 15 years for the
Canadian plan.
Advertising Expenses
The cost of advertising is expensed as incurred. Advertising expenses
amounted to $37,659, $34,475 and $30,368 in 1996, 1995 and 1994, respectively.
Research and Development Costs
Research and development and quality control expenditures amounted to
$13,787, $15,506 and $15,521 in 1996, 1995 and 1994, respectively. Quality
control expenditures aggregated $3,928, $5,636 and $5,435, 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 $1,275.
Reclassifications
Certain reclassifications have been made in the 1995 and 1994 financial
statements to conform to the method of presentation used in 1996.
22
<PAGE>
Notes to Consolidated Financial Statements (Continued)
2. Accounts and Notes Receivable
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Trade $119,268 $110,363
Other 946 774
-----------------------
Total 120,214 111,137
Less allowance for doubtful accounts 15,312 12,989
-----------------------
Net $104,902 $ 98,148
=======================
Notes receivable due after one year amounted to $11,716 and $13,534 at
December 31, 1996 and 1995, respectively, and are included in Other Assets in
the accompanying balance sheets. The carrying amount of notes receivable
approximates fair value.
3. Inventory
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Finished goods $40,988 $42,082
Raw materials 27,964 26,482
----------------------
Total $68,952 $68,564
======================
If the first-in, first-out (FIFO) method of inventory accounting, which
approximates current cost, had been used, inventory would have been $16,012 and
$16,009 higher than reported at December 31, 1996 and 1995, 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.
5. Property, Plant and Equipment
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Land $ 8,447 $ 7,814
Buildings 65,803 62,703
Machinery, equipment and leasehold improvements 106,025 96,000
--------------------
Total 180,275 166,517
Less accumulated depreciation and amortization 100,106 88,156
--------------------
Property, plant and equipment-net $ 80,169 $ 78,361
====================
23
<PAGE>
Notes to Consolidated Financial Statements (Continued)
Capital leases included in the above are as follows:
Classes of Property
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Machinery, equipment and leasehold improvements $855 $383
--------------
Total 855 383
--------------
Less accumulated amortization 329 149
--------------
Net $526 $234
===============
6. Short-Term Borrowings
Information regarding the company's arrangements with banks in the United
States, Canada, New Zealand and Australia for short-term lines of credit
follows:
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Outstanding borrowings at end of year $28,165 $29,632
Average interest rate on outstanding
borrowings at end of year 6.2% 7.6%
Unused portion of lines of credit at end of year $73,199 $30,006
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.
24
<PAGE>
Notes to Consolidated Financial Statements (Continued)
7. 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, 1996 and 1995, as determined by independent actuaries, are
presented below:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Canadian United States Canadian
Plans Plans Plans Plans
Actuarial present value of:
Vested benefit obligation $ 106,686 $ 11,930 $ 108,519 $ 10,940
==============================================
Accumulated benefit obligation $ 109,892 $ 11,930 $ 111,011 $ 10,940
==============================================
Projected benefit obligation for
service rendered to date $ 131,200 $ 13,778 $ 133,124 $ 13,210
Plan assets at fair value (plan assets
are invested primarily in insurance
contracts, equities and bonds) 142,818 17,238 127,899 16,842
----------------------------------------------
Projected benefit obligation (in excess
of) less than plan assets 11,618 3,460 (5,225) 3,632
Unrecognized net (gain) loss from past
experience different from that assumed (14,336) 66 1,089 1,312
Prior service cost not yet recognized
in net periodic pension cost 3,384 372 2,795
Unrecognized transition asset, net
of amortization (1,960) (1,885) (2,306) (2,233)
----------------------------------------------
Accrued pension (cost) credit recognized
in (other liabilities) other assets on the
balance sheet before adjustment (1,294) 2,013 (3,647) 2,711
Adjustment to reflect additional
minimum liability (1,014) (839)
----------------------------------------------
Accrued pension (cost) credit recognized
in (other liabilities) other assets on the
balance sheet after adjustment $ (2,308) $ 2,013 $ (4,486) $ 2,711
==============================================
</TABLE>
25
<PAGE>
Notes to Consolidated Financial Statements (Continued)
Net pension costs include the following components:
1996 1995 1994
- -------------------------------------------------------------------------------
Service cost-benefits earned during the period $ 4,221 $ 3,315 $ 3,949
Interest cost on projected benefit obligation 10,431 10,340 9,315
Actual return on plan assets (19,655) (26,198) (1,683)
Net amortization and deferral 6,726 15,049 (9,342)
-----------------------------
Net periodic pension cost $ 1,723 $ 2,506 $ 2,239
=============================
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit obligation
for the United States Plans were 7.5% and 4%, respectively in 1996, 7% and 4%,
respectively in 1995 and 8.5% and 5%, respectively in 1994. The expected
long-term rate of return on assets, net of expenses, was 9% in 1996, 1995 and
1994.
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit obligation
for the Canadian Plans were 8% and 3.5%, respectively for the registered plan
and 5% and 3.5%, respectively for the supplemental plan in 1996, 1995 and 1994.
The expected long-term rate of return on assets, net of expenses was 8% in 1996,
1995 and 1994.
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, 1996, the company has not established any specific
funding policy.
26
<PAGE>
Notes to Consolidated Financial Statements (Continued)
The following table sets forth the plans' status reconciled with the amount
shown in the company's statement of financial position at December 31, 1996 and
1995.
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Medical Life Medical Life
Benefits Insurance Benefits Insurance
Accumulated postretirement
benefit obligation:
Retirees $(13,081) $(1,167) $(13,849) $(1,169)
Fully eligible active plan participants (3,966) (219) (3,654) (197)
Other active plan participants (6,820) (322) (7,040) (380)
---------------------------------------------------
Accumulated postretirement benefit
obligation in excess of plan assets (23,867) (1,708) (24,543) (1,746)
Unrecognized net loss or (gain) from past
experience different from that assumed
and from changes in assumptions 164 (91) 1,499 75
Unrecognized transition obligation 16,643 1,062 17,683 1,129
---------------------------------------------------
Accrued postretirement benefit cost
recognized in other liabilities on
the balance sheet $ (7,060) $ (737) $ (5,361) $ (542)
===================================================
</TABLE>
Net periodic postretirement benefit cost included the following components:
1996 1995
- --------------------------------------------------------------------------------
Service cost-benefits attributed to service during the period $ 530 $ 393
Interest cost on accumulated postretirement benefit obligation 1,788 1,848
Net amortization and deferral 1,107 1,107
--------------
Net periodic postretirement benefit cost $3,425 $3,348
==============
For measurement purposes, the 1997 annual rate of increase in the per capita
cost of covered health care benefits was assumed to be 11.9% for participants
under age 65 and 9.9% for participants over age 65; the rates were assumed to
decrease gradually to 6% for 2009 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, 1996 by $790 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for the year then ended by $72.
27
<PAGE>
Notes to Consolidated Financial Statements (Continued)
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 7.0% in 1996 and 1995,
respectively.
During 1996, 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 $80, $81 and $65
in 1996, 1995 and 1994, 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 expense of approximately $1,275. The liability
at December 31, 1996 is approximately $1,580.
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 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 $1,272, $1,227 and $1,185 in 1996,
1995 and 1994, respectively. The fair value of the shares held by the ESOP
amounted to $34,981 and $38,444 at December 31, 1996 and 1995, respectively.
28
<PAGE>
Notes to Consolidated Financial Statements (Continued)
The company's Canadian subsidiary maintains a similar plan which covers
substantially all of the Canadian company's employees. The Canadian subsidiary
contributed approximately $183, $153 and $154 to the Canadian plan trust fund in
1996, 1995 and 1994, 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 or death. During 1993 the company
granted options to purchase 233,785 shares at an option price of $73.26 per
share, which was the fair value at the date of grant as determined by
independent appraisal. During 1996 no options were exercised and in 1995 options
to purchase 2,988 shares were exercised. At December 31, 1996 options to
purchase 130,355 shares were exercisable.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which requires adoption of the disclosure provisions for fiscal
years beginning after December 15, 1995 and adoption of the recognition and
measurement provisions for non-employee transactions entered into after December
15, 1995. The new standard defines a fair value method of accounting for stock
options and other equity instruments. Under the fair value method, compensation
cost is measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting period.
Pursuant to the new standard, companies are encouraged, but are not
required, to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," but would be required to disclose pro forma net
income in a note to the financial statements and, if presented, earnings per
share as if the company had applied the new method of accounting.
The accounting requirements of the new method are effective for all
employee awards granted after the beginning of the fiscal year of adoption and
for all non-employee transactions entered into after December 15, 1995. The
company has not yet determined if it will elect to change to the fair value
method, nor has it determined the effect the new standard will have on net
income and earnings per share in future periods should it elect to make such a
change in accounting for stock options to be granted in the future, if any.
Adoption of the new standard will have no effect on the company's cash flows.
8. Other Liabilities and Accrued Expenses
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Income taxes payable $ 959
Salaries, wages and commissions 7,094 $ 2,777
Health care, life insurance and pension costs 4,001 4,878
Customer discounts and allowances 2,802 4,559
Environmental remediation costs 2,590 2,537
Other 7,361 8,734
-------------------
Total $24,807 $23,485
===================
29
<PAGE>
Notes to Consolidated Financial Statements (Continued)
9. 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, New Zealand
and Australia. Transfers between geographic areas are not significant and are
eliminated in consolidation. Assets and operating results by geographic area are
as follows:
Net Sales:
New Zealand
United States Canada and Australia Consolidated
------------- ------ ------------- ------------
1996 $541,830 $71,821 $ 11,539 $625,190
1995 $496,539 $62,560 $ 5,112 $564,211
1994 $484,520 $58,853 $ 3,691 $547,064
Income (Loss) Before Taxes
and Minority Interest:
1996 $ 69,793 $ 7,608 $ (3,213) $ 74,188
1995 $ 49,488 $ 4,978 $ (1,666) $ 52,800
1994 $ 64,408 $ 6,247 $ (289) $ 70,366
Identifiable Assets:
1996 $271,675 $43,605 $ 15,102 $330,382
1995 $279,655 $41,015 $ 9,485 $330,155
1994 $261,662 $36,827 $ 5,599 $304,088
10. Environmental Matters
The company operates in an industry subject to extensive environmental
regulations and is subject to potential liability under various claims and legal
actions which are pending or may be asserted in the future against the company
regarding environmental remediation matters. Estimates of the future costs to be
incurred relating to such matters are necessary due to various uncertainties
surrounding remediation procedures, including the development of new
technologies, the enactment of additional regulations, the identification of new
sites for which the company could be a potentially responsible party ("PRP") and
the apportionment of responsibility among identified PRPs in addition to the
company. The company establishes reserves for environmental matters when
remediation expenditures are probable and estimable. It is reasonably possible
that the final resolution of some of these matters may require significant
expenditures by the company in excess of its existing reserves.
30
<PAGE>
Notes to Consolidated Financial Statements (Continued)
The company has accrued approximately $2,590 for estimated potential
cleanup costs based upon its monitoring of ongoing activities and its past
experience with these matters.
11. Long-Term Obligations
December 31,
------------
1996 1995
- --------------------------------------------------------------------------------
Loan payable (See Note 7) $3,900 $5,000
Note payable to minority shareholder 403
Capital leases (See Note 12) 316 149
--------------------
Total 4,619 5,149
Less payments due within one year 1,380 1,181
--------------------
Long-term obligations $3,239 $3,968
====================
Principal payments of $1,387 and $1,449 are due in 1998 and 1999,
respectively. The company has a note payable to a minority shareholder of White
Knight Paints Pty. Ltd., a majority owned subsidiary of the company. The balance
outstanding on this note at December 31, 1996 was $403. The note, which is
payable upon the retirement of the shareholder, is included in long-term debt in
the accompanying 1996 consolidated balance sheet.
At December 31, 1996 and 1995, the company was contingently liable for
guarantees of indebtedness owed by third parties in the amount of $5,234 and
$2,250, respectively, relating to financing arrangements between a bank and such
third parties, to whom the company sells merchandise. It is not practical to
estimate the fair value of the guarantee; however, the company does not
anticipate that it will incur losses as a result of this guarantee.
12. Leases
The company leases data processing equipment, buildings, transportation
equipment, autos and miscellaneous equipment under capital and operating leases
expiring at various dates.
Minimum future obligations under leases as of December 31, 1996 are as
follows:
Capital Operating
Year ending December 31, Leases Leases Total
- --------------------------------------------------------------------------------
1997 $202 $ 6,670 $ 6,872
1998 96 4,656 4,752
1999 51 3,603 3,654
2000 1,917 1,917
2001 997 997
2002-2006 441 441
------------------------
Total minimum lease payments 349 $18,284 $18,633
=================
Less amount representing interest
(at rates ranging from 8.48% to 12%) 33
----
Present value of net minimum lease payments $316
====
Rental expense on operating leases (including amounts based on equipment
usage) was approximately $8,291, $8,505 and $8,147 for the years ended December
31, 1996, 1995 and 1994, respectively.
31
<PAGE>
Notes to Consolidated Financial Statements (Continued)
13. 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 under the Plan.
Notes receivable outstanding with respect to the above referenced Plan, as
well as the Stock Option Plan and the ESOP note receivable, as of December 31,
1996 and 1995 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. Notes received by the company relative to
the Stock Option Plan bear interest at the then current rates of interest.
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.
A reconciliation of the number of common shares outstanding is as follows:
Shares of Common Stock
Issued Treasury Outstanding
- --------------------------------------------------------------------------------
Balance, December 31, 1993 13,164,312 3,496,194 9,668,118
Sale and distribution of (119,602) 119,602
treasury stock
Treasury stock purchases 165,488 (165,488)
-------------------------------------------
Balance, December 31, 1994 13,164,312 3,542,080 9,622,232
Sale and distribution of (3,399) 3,399
treasury stock
Treasury stock purchases 157,738 (157,738)
-------------------------------------------
Balance, December 31, 1995 13,164,312 3,696,419 9,467,893
Distribution of treasury stock (272) 272
Treasury stock purchases 434,580 (434,580)
------------------------------------------
Balance, December 31, 1996 13,164,312 4,130,727 9,033,585
===========================================
32
<PAGE>
Notes to Consolidated Financial Statements (Continued)
14. Income Taxes
The composition of the income tax provision is as follows:
1996 1995 1994
- -------------------------------------------------------------------------------
State and local income taxes $ 5,148 $ 4,627 $ 5,016
Foreign income taxes 3,418 2,056 2,428
Federal income taxes:
Current 23,054 15,851 22,712
Deferred 52 21 (1,738)
--------------------------------------------
Total $31,672 $22,555 $28,418
===========================================
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.
A reconciliation of the statutory federal tax rate and effective tax rate
is as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Statutory tax rate 35.0% 35.0% 35.0%
Effect of:
State and local income taxes 4.5 5.7 4.6
Foreign income taxes 2.5 1.7 .5
Other - net .7 .3 .3
---------------------------
Effective tax rate 42.7% 42.7% 40.4%
===========================
The company does not accrue Federal income taxes on its equity in the
undistributed earnings of its Canadian subsidiary, which amounted to $30,293,
$27,909 and $26,310 at December 31, 1996, 1995 and 1994, respectively, because
the company intends to reinvest such earnings indefinitely.
15. Other Expense (Income), Net
The components of other expense and (income), net are as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Other income $(1,698) $(1,502) $(1,578)
Interest expense 3,626 3,110 1,258
Loss on the disposal of fixed assets 75 39 191
Other expense 73 482
-------------------------------
Net $2,076 $1,647 $ 353
===============================
33
<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 4, 5 and 6 and "Section 16(a) Beneficial
Ownership Reporting Compliance" at pages 16 and 17 of the company's Proxy
Statement dated March 21, 1997, for use in connection with its 1997 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", "EXECUTIVE COMPENSATION" and "SEVERANCE ARRANGEMENTS"
at pages 8, 9, 10, 11 and 15 of the company's Proxy Statement dated March 21,
1997, for use in connection with its 1997 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 21, 1997, for use in connection with its 1997 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 6, 7 and 8 of the company's Proxy Statement dated March 21, 1997, for use
in connection with its 1997 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.
34
<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 11 and 12
of the company's Proxy Statement dated March 21, 1997, for use in connection
with its 1997 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
(a) (1) List of Financial Statements Included Under Item 8
of this Report
Independent Auditors' Report 16
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994 17
Consolidated Balance Sheets, December 31, 1996
and 1995 18
Consolidated Statements of Shareholders' Equity for
the Years Ended December 31, 1996,1995 and 1994 19
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994 20
Notes to Consolidated Financial Statements for the
Years Ended December 31, 1996, 1995 and 199 21 - 33
(2) Financial Statement Supplemental Schedule
II Consolidated Valuation and Qualifying Accounts
For the Years Ended December 31,
1996, 1995 and 1994 41
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, 1996 and 1995.
35
<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, 1996.
(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.
36
<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.
Reference is made to the information set forth under the
caption "Supplemental Executive Retirement Plan" and
"Severance Arrangements" at pages 10, 11 and 15 of the
company's Proxy Statement dated March 21, 1997, for use in
connection with its 1997 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
37
<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 27th day of March, 1997.
BENJAMIN MOORE & CO.
By /s/ Yvan Dupuy
----------------------------
Yvan Dupuy
President and Chief
Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Yvan Dupuy 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.
38
<PAGE>
Signature Title Date
--------- ----- ----
Chairman of the Board of
Directors and Chief
Executive Officer;
(Principal Executive
/s/Richard Roob Officer); Director March 27, 1997
----------------
Richard Roob
President and Chief
Operating Officer;
/s/ Yvan Dupuy Director March 27, 1997
---------------
Yvan Dupuy
Vice President - Finance
(Principal Financial
Officer and Principal
/s/ W.J. Foote Accounting Officer) March 27, 1997
----------------
William J. Foote
/s/ Benjamin M. Belcher, Jr. Director March 27, 1997
- ------------------------------
Benjamin M. Belcher, Jr.
/s/ W.C. Belcher Director March 27, 1997
-----------------
Ward C. Belcher
/s/ Charles H. Bergmann, Jr. Director March 27, 1997
- -----------------------------
Charles H. Bergmann, Jr.
/s/ Frank W. Burr Director March 27, 1997
-----------------
Frank W. Burr
/s/ W.J. Fritz Director March 27, 1997
---------------
William J. Fritz
/s/ R.J. Hodgson Director March 27, 1997
-----------------
Robert J. Hodgson
_________________ Director March 27, 1997
Ralph W. Lettieri
39
<PAGE>
Signature Title Date
--------- ----- ----
/s/ G.W. Moore Director March 27, 1997
-----------------
Gerald W. Moore
/s/ John C. Moore, Jr. Director March 27, 1997
- -----------------------
John C. Moore, Jr.
/s/ Michael C. Quaid Director March 27, 1997
- ---------------------
Michael C. Quaid
/s/ J. Sobie Director March 27, 1997
--------------
Joseph Sobie
/s/ Charles C. Vail Director March 27, 1997
--------------------
Charles C. Vail
/s/ Ward B. Wack Director March 27, 1997
------------------
Ward B. Wack
/s/ Sara B. Wardell Director March 27, 1997
--------------------
Sara B. Wardell
/s/ M.C. Workman Director March 27, 1997
------------------
Maurice C. Workman
40
<PAGE>
SCHEDULE II
BENJAMIN MOORE & CO. and Subsidiaries
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
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:
1996 $12,989 $10,290 $ -- $7,967 (1) $15,312
======= ======= ========= ========== =======
1995 $10,577 $ 7,385 $ -- $4,973 (1) $12,989
======= ======= ========= ========== =======
1994 $ 9,675 $ 5,092 $ -- $4,190 (1) $10,577
======= ======= ========= ========== =======
(1) Accounts Receivable Written Off - Net of Recoveries
41
<PAGE>
INDEPENDENT AUDITORS' REPORT
Benjamin Moore & Co.:
We have audited the financial statements of Benjamin Moore & Co. as of December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, and have issued our report thereon dated March 7, 1997, which report
includes an explanatory paragraph relating to the change in the method of
accounting for postemployment benefits; such financial statements and report are
included elsewhere in this Form 10-K. Our audits also included the financial
statement schedules of Benjamin Moore & Co., listed in Item 14. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
Deloitte & Touche LLP
Parsippany, New Jersey
March 7, 1997
42
<PAGE>
Subsidiaries of the company
Percentage Jurisdiction of Immediate
Name Owned Incorporation Parent
- ---- ----- ------------- ------
Benjamin Moore & Co.,
Limited 84.0 Canada company
Technical Coatings Co. 100.0 Canada Benjamin Moore & Co.,
Limited Limited
Technical Coatings Co. 100.0 Pennsylvania company
Alachua Tung Oil 100.0 Florida company
Company
Benjamin Moore & Co (NZ) 100.0 New Zealand company
Limited
Benjamin Moore Pacific 51.0 New Zealand Benjamin Moore & Co (NZ)
Limited Limited
White Knight Paints 51.0 Australia Benjamin Moore
Pty. Ltd. Pacific Limited
43
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, 1997 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to the change in the method of accounting for
postemployment benefits) appearing in this Annual Report on Form 10-K of
Benjamin Moore & Co. for the year ended December 31, 1996.
Deloitte & Touche LLP
Parsippany, New Jersey
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1996 EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME,
CONSOLIDATED BALANCE SHEET, 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 11365
<SECURITIES> 0
<RECEIVABLES> 120214
<ALLOWANCES> 15312
<INVENTORY> 68952
<CURRENT-ASSETS> 211601
<PP&E> 180275
<DEPRECIATION> 100106
<TOTAL-ASSETS> 330382
<CURRENT-LIABILITIES> 82080
<BONDS> 3239
0
0
<COMMON> 131643
<OTHER-SE> 101290
<TOTAL-LIABILITY-AND-EQUITY> 330382
<SALES> 625190
<TOTAL-REVENUES> 625190
<CGS> 320652
<TOTAL-COSTS> 551002
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10290
<INTEREST-EXPENSE> 3626
<INCOME-PRETAX> 74188
<INCOME-TAX> 31672
<INCOME-CONTINUING> 43339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43339
<EPS-PRIMARY> 4.67
<EPS-DILUTED> 4.67
</TABLE>
