<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1999 Commission File Number 0-8894
-----------------
BENJAMIN MOORE & CO.
- --------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
-----------------------------
None
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Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
As of November 4, 1999, 26,682,243 shares of Common Stock of the registrant were
issued and outstanding.
(Page 1 of 14 Pages)
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
INDEX
PAGE NO.
Part I. Financial Information
Condensed Consolidated Statements of Income and
Comprehensive Income -
Three Months and Nine Months Ended
September 30, 1999 and 1998................................ 3
Condensed Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998................... 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998.............. 5
Notes to Condensed Consolidated Financial Statements........... 6 - 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9 - 12
Part II. Other Information........................................... 13
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PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales ....................................... $ 218,335 $ 200,399 $ 594,937 $ 552,071
--------- --------- --------- ---------
Costs and expenses:
Cost of products sold ....................... 112,447 109,801 321,607 313,317
Selling, general and administrative ......... 55,806 46,372 158,460 141,263
Other income, net ........................... (2,134) (312) (5,825) (1,918)
--------- --------- --------- ---------
Total costs and expenses ................ 166,119 155,861 474,242 452,662
--------- --------- --------- ---------
Income before taxes and minority
interest ..................................... 52,216 44,538 120,695 99,409
Income tax provision ............................ 21,262 19,265 49,616 42,010
Minority interest in net income of
subsidiaries ................................. 453 (322) 1,085 92
--------- --------- --------- ---------
Net income ...................................... $ 30,501 $ 25,595 $ 69,994 $ 57,307
--------- --------- --------- ---------
Other comprehensive income, net of tax: Foreign
currency translation adjustment (Net of tax
of $(263) and $(1,055) for the three months
ended September 30, 1999 and 1998,
respectively, and $(288) and $(2,298) for the
nine months ended September 30, 1999 and
1998, respectively) ......................... (382) (1,404) (412) (3,135)
--------- --------- --------- ---------
Comprehensive income ............................ $ 30,119 $ 24,191 $ 69,582 $ 54,172
========= ========= ========= =========
Cash dividends declared per share of
common stock ................................. $ .17 $ .15 $ .51 $ .45
========= ========= ========= =========
Basic earnings per share (Note 3) ............... $ 1.14 $ .96 $ 2.62 $ 2.16
========= ========= ========= =========
Diluted earnings per share (Note 3) ............. $ 1.14 $ .96 $ 2.62 $ 2.15
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
(Unaudited) (a)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 85,291 $ 97,249
Accounts and notes receivable - net .................. 127,559 83,100
Inventories:
Finished goods, net ................................. 50,335 39,066
Raw materials and supplies .......................... 23,460 29,965
------------ ------------
Net .............................................. 73,795 69,031
Prepaid expenses and other current assets ............ 30,444 23,892
------------ ------------
Total current assets ............................. 317,089 273,272
Property, plant and equipment - net ...................... 99,847 86,651
Other non-current assets ................................. 64,513 32,062
------------ ------------
Total assets ..................................... $ 481,449 $ 391,985
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt 262 7,397
Accounts payable ..................................... 35,234 27,980
Other liabilities and accrued expenses ............... 63,598 32,489
------------ ------------
Total current liabilities ........................ 99,094 67,866
------------ ------------
Pension and other long-term benefits ..................... 27,146 27,566
------------ ------------
Long-term obligations .................................... 17,219 20,581
------------ ------------
Minority shareholders' interest in net
assets of subsidiaries ................................ 8,094 8,447
------------ ------------
Shareholders' equity:
Preferred stock, $10 par value - authorized
500,000 shares; issued - none
Common stock, $3.33 1/3 par value - authorized
120,000,000 shares; issued 39,492,936 shares ...... 131,643 131,643
Additional paid-in capital .......................... 46,525 41,206
Retained earnings ................................... 325,627 268,949
Accumulated other comprehensive income - foreign
currency translation adjustment ................... (6,326) (5,914)
Cost of treasury stock; 12,817,293 shares at
September 30, 1999 and 12,922,290 shares at
December 31, 1998 ................................. (154,778) (152,380)
Employees' stock ownership and stock purchase
plan notes ........................................ (12,795) (15,979)
------------ ------------
Shareholders' equity - net ....................... 329,896 267,525
------------ ------------
Total liabilities and shareholders' equity ....... $ 481,449 $ 391,985
============ ============
</TABLE>
(a) The condensed consolidated balance sheet at December 31, 1998 has been
derived from the audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1999 1998
-------- --------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................ $ 69,994 $ 57,307
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................................. 9,244 6,239
Write-off of goodwill, intangibles, and other assets ........... 291 2,473
Minority interest in net income of subsidiaries ................ 1,085 92
Other .......................................................... 119 (1,619)
Change in assets and liabilities, net of effects of acquisition:
(Increase) in accounts receivable .......................... (41,375) (43,497)
Decrease in inventories .................................... 850 6,946
Increase in other current liabilities ...................... 29,402 26,727
Other ...................................................... (13,122) 3,028
-------- --------
Net cash provided by operating activities ............. 56,488 57,696
-------- --------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment and acquisitions ....................................... (51,978) (5,220)
Proceeds from sale of White Knight assets ......................... 3,654 --
Other ............................................................. 1,699 229
-------- --------
Net cash used in investing activities ................. (46,625) (4,991)
-------- --------
Cash flows from financing activities:
Net (repayments) proceeds from debt ............................... (7,606) 853
Payment of dividends .............................................. (13,013) (12,007)
Purchase of treasury stock ........................................ (2,663) (10,436)
Other ............................................................. 3,291 2,847
-------- --------
Net cash used in financing activities ................. (19,991) (18,743)
-------- --------
Effect of exchange rate changes on cash ............................... (1,830) (360)
-------- --------
Net (decrease) increase in cash ...................................... (11,958) 33,602
Cash and cash equivalents at beginning of period ...................... 97,249 43,899
-------- --------
Cash and cash equivalents at end of period ............................ $ 85,291 $ 77,501
======== ========
Supplemental disclosures of cash flow information:
Interest paid ..................................................... $ 316 $ 964
Income taxes paid ................................................. $ 34,689 $ 33,777
Acquisitions under capital leases (non-cash) ...................... $ 908 $ --
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share Amounts)
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 September 30, 1999 and the results of operations
for the three and nine month periods ended September 30, 1999 and 1998, and
changes in cash flows for the nine months ended September 30, 1999
and 1998. 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, 1998.
The results of operations for the three - and nine - month periods ended
September 30, 1999 and 1998 are not necessarily indicative of operations
for the entire year.
2. Certain reclassifications have been made in the 1998 financial statements
to conform to the method of presentation used in 1999.
3. The components of the denominator for basic earnings per common share and
diluted earnings per common share are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Weighted average common shares
outstanding 26,686,727 26,610,716 26,677,547 26,584,894
DILUTED EARNINGS PER COMMON SHARE:
Plus stock options assumed to be
exercised 58,179 40,615 45,482 44,116
----------------------------------------------------
Denominator for diluted earnings per
common share 26,744,906 26,651,331 26,723,029 26,629,010
====================================================
</TABLE>
Due to the stock split (see below) in August 1999, retroactive effect was
given to the capital structure reported for 1998.
The Board of Directors of Benjamin Moore & Co. on April 15, 1999 declared a
stock split pursuant to which each outstanding share of Common Stock, par
value $10.00 per share, of the Company held by a shareholder of the Company
on the record date of July 1, 1999 and each such share held in the treasury
of the Company on the record date of July 1, 1999 was divided into three
(3) shares of Common Stock. In connection with the stock split, and as
permitted under New Jersey law, the Board of Directors of the Company also
determined that the authorized Common Stock of the Company be increased
from 40,000,000 shares to 120,000,000 shares and the par value of the
Common Stock be decreased from $10.00 per share to $3.33 1/3 per share. The
date of distribution was August 2, 1999.
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<PAGE>
4. During the third quarter of 1997, the Board of Directors approved and
implemented a strategic restructuring program designed to improve operating
efficiency and industry competitiveness. This plan resulted in the Company
recording a pre-tax charge of $33,388 including employee separation costs
of $29,683 and asset impairments and other charges of $3,705 during the
third quarter of 1997. The Company streamlined its operations by reducing
its workforce, consolidating certain manufacturing facilities and disposing
of excess equipment.
Over 90% of all separations were completed by December 31, 1997 with the
remainder completed during 1998. Exclusive of pension and postretirement
enhancements, the remaining restructuring liability as of September 30,
1999, relating primarily to dismantling and facility costs, is $866. During
the nine months ended September 30, 1999 and 1998, cash payments charged
against the reserve were $896 and $9,033, respectively. Also in the third
quarter, the Company benefited from a $1,000 pre-tax accrual reversal which
was part of the $33,388 restructuring charge recorded in 1997.
5. The Company manufactures and sells coatings for use by the general public
and industrial and commercial users in the U.S., Canada, New Zealand
and Australia. As discussed in Note 6, during the first quarter of 1999 the
Company sold certain assets of its Australian subsidiary. Transfers between
geographic areas are eliminated in consolidation. The Company has two
reportable segments - (1) U.S. and (2) Canada. Business groups within these
two segments are trade sales coatings, production finishes coatings, and
retail. Also included in the Company's consolidated financial statements,
but not considered a reportable segment, are the international businesses
in New Zealand and Australia.
Segment data includes intersegment net sales. The Company evaluates the
performance of its segments based upon net sales to external customers and
net income (loss).
The Company does not have any customers to which sales exceed 10% of total
sales.
Operating results by reportable segment and geographic area for the nine
months ended September 30 are as follows:
<TABLE>
<CAPTION>
ALL RECONCILING CONSOLIDATED
1999 UNITED STATES CANADA OTHERS ITEMS TOTALS
------------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Net Sales $526,988 $66,553 $ 6,712 $(5,316) $594,937
Net Sales to External Customers $526,988 $61,237 $ 6,712 $594,937
Net Income (Loss) $ 67,570 $ 7,774 $ (380) $(4,970) $ 69,994
1998
Net Sales $481,074 $65,230 $ 10,825 $(5,058) $552,071
Net Sales to External Customers $481,074 $60,172 $ 10,825 $552,071
Net Income (Loss) $ 56,527 $ 6,238 $ (1,998) $(3,460) $ 57,307
</TABLE>
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<PAGE>
Operating results by reportable segment and geographic area for the three
months ended September 30 are as follows:
<TABLE>
<CAPTION>
ALL RECONCILING CONSOLIDATED
1999 UNITED STATES CANADA OTHERS ITEMS TOTALS
------------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Net Sales $196,313 $22,686 $ 1,217 $(1,881) $218,335
Net Sales to External Customers $196,313 $20,805 $ 1,217 -- $218,335
Net Income (Loss) $ 28,966 $ 3,285 $ (115) $(1,635) $ 30,501
1998
Net Sales $176,457 $22,163 $ 3,683 $(1,904) $200,399
Net Sales to External Customers $176,457 $20,259 $ 3,683 -- $200,399
Net Income (Loss) $ 26,921 $ 1,853 $(1,254) $(1,925) $ 25,595
</TABLE>
Reconciling items primarily consist of the elimination of sales and cost of
sales between segments.
The following table represents net sales to external customers by business
group:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Trade Sales Coatings $489,965 $470,465 $170,470 $171,340
Production Finishes Coatings 43,705 42,751 15,415 14,636
Retail 61,267 38,855 32,450 14,423
-------------------------- -------------------------
Total $594,937 $552,071 $218,335 $200,399
========================== =========================
</TABLE>
6. During the first quarter of 1999, the Company sold certain assets
consisting of inventory and property of the White Knight Paints Pty Limited
subsidiary in Australia.
7. Effective June 30, 1999, the Company purchased Janovic/Plaza, Inc.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
OPERATING RESULTS
The Company achieved record sales and net income for the nine months and quarter
ended September 30, 1999.
Net sales for the nine months ended September 30, 1999 increased 7.8% over
last year's first nine months to $594,937. Excluding the effect of the
acquisition of Janovic/Plaza, Inc. ("Janovic") in June 1999, net sales
increased by 5.9% for the nine-month period as compared to the nine months
ended September 30, 1998. Further excluding the operations of White Knight
Paints Pty Ltd, which was sold in the first quarter of 1999, net sales would
have increased 6.8% over comparable net sales for the nine-months ended
September 30, 1998. The increase in sales is primarily attributable to
increased volume and a price increase across all do-it-yourself ("DIY")
product lines earlier in the year.
Net sales in the 1999 third quarter of $218,335 increased 9.0% or $17,936 over
1998 sales of $200,399. Excluding the net effect of acquisitions and
divestitures in 1999 and 1998, net sales increased by 5.1% compared to the
quarter ended September 30, 1998.
Net sales in the United States ("U.S.") of $526,988 increased by 9.5% for the
first nine months of 1999 compared to the prior year. Excluding the effect of
the acquisition of Janovic in June 1999, net sales in the U.S increased by 6.9%
for the nine months ended September 30, 1999 as compared to 1998. Overall sales
volumes have increased by 6.1% over the same period last year. The Company has
also benefited from a price increase across all DIY product lines in the first
quarter of 1999, however some of this benefit has been offset by a shift in
product mix towards contractor lines. Net U.S. sales of $196,313 for the quarter
ended September 30, 1999 increased 11.3% over the third quarter 1998. Excluding
the effect of acquiring Janovic in June 1999, net sales increased by
4.5% for the quarter as compared to the quarter ended September 30, 1998.
Net sales in Canada for the first nine months of 1999 and the third quarter
increased by 1.8% and 2.7%, respectively, as compared to 1998. In local
currency, the year-to-date and third quarter 1999 Canadian net sales increased
by 2.7% and 1.2% as compared to the year-to-date and third quarter 1998,
respectively. The increase in sales was primarily due to the above mentioned
price increase during 1999.
Gross margin increased from 43.3% in the first nine months of 1998 to 45.9% for
the nine months ended September 30, 1999. Third quarter gross margins were also
favorable compared to the same period in the prior year. The improved gross
margins in the nine months and quarter ended September 30, 1999 primarily
resulted from a price increase across all DIY product lines and cost savings
from certain manufacturing and purchasing initiatives.
Selling, general and administrative expenses ("SG&A") as a percent of sales
increased to 26.6% and 25.6% for the nine months and quarter ended September 30,
1999, respectively, as compared to 25.6% and 23.1% for the same periods in 1998.
SG&A of $158,460 and $55,806 for the nine months and quarter ended September 30,
1999, respectively, increased by $17,197 and $9,434, respectively, as compared
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<PAGE>
to the comparable prior year periods. This increase in SG&A spending is
primarily due to higher advertising and promotion expenses.
"Other income, net" increased $3,907 and $1,822 for the nine months and quarter
ended September 30, 1999, respectively, which resulted from increased interest
income on a higher average cash position during 1999 as compared to 1998. Also
in the third quarter, the Company benefited from a $1,000 pre-tax accrual
reversal which was part of the $33,388 restructuring charge recorded in 1997.
Income before taxes and minority interest was $120,695 for the first nine months
of 1999 and $52,216 for the third quarter 1999, an increase of $21,286 and
$7,678, respectively, compared to the comparable previous year periods. The
increase is primarily attributable to the Company's strong sales and volume
growth and improved gross margins.
As a result of the foregoing, the Company generated net income for the nine
months and quarter ended September 30, 1999 of $69,994 and $30,501,
respectively, as compared to $57,307 and $25,595 for the same periods in 1998.
Basic net income per share for the nine months ended September 30, 1999 was
$2.62, an increase of $.46 compared to 1998. Diluted net income per share for
the nine months ended September 30, 1999 was $2.62, an increase of $.47 compared
to 1998. Basic and diluted net income per share for the quarter ended September
30, 1999 were $1.14, an increase of $.18 compared to 1998.
FINANCIAL POSITION AND LIQUIDITY
Net cash flows provided by operating activities were $56,488 for the nine months
ended September 30, 1999, which was $1,208 lower than the comparable period in
1998. Cash flow from operations continues to be the primary source of financing
the Company's growth. During the first quarter of 1998, the Company paid
approximately $6,753 in severance and related employee benefits resulting from
the third quarter 1997 restructuring program as compared to payments of only
$896 in the first nine months of 1999. The Company also funded $6,000 to
the Supplemental Executive Retirement Plan in the third quarter 1999.
Net cash flows used in investing activities were $46,625 in the nine months
of 1999, an increase of $41,634 compared to 1998. During the first quarter of
1999 the Company sold certain assets of its White Knight Paints Pty Limited
subsidiary resulting in proceeds of $3,654. Capital spending increased for
the nine months ended September 30, 1999 versus last year driven by
continuing initiatives to improve manufacturing productivity. Also, the
Company purchased Janovic, which was effective June 30, 1999.
Net cash flows used in financing activities of $19,991 represented an increase
of $1,248 over the comparable quarter. Cash flows relating to financing
activities were principally used for repayment of short-term debt, dividends and
the purchase of treasury stock. The Company expects the purchase of treasury
stock to continue to decline due to the ability to trade the Company's shares on
the over-the-counter bulletin board ("OTCBB").
The Company made debt repayments of $7,606 in the nine months of 1999 as
compared to receiving proceeds from borrowings of $853 last year. The majority
of these repayments relate to the Company repaying a portion of the outstanding
debt of the White Knight subsidiary after receiving proceeds from the sale of
certain assets of the business during the first quarter of 1999. In addition,
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<PAGE>
the Company repaid the bank borrowings of J.C. Licht, a wholly-owned retail
subsidiary. There were no facility or line of credit borrowings by the U.S.
and Canadian manufacturing operations at September 30, 1999.
Working capital increased to $217,995 at September 30, 1999 and the current
ratio decreased to 3.2:1 from 3.3:1 for the comparable period last year. Cash
and cash equivalents were $85,291 at September 30, 1999, as compared to $77,501
at September 30, 1998, reflecting the Company's continued commitment to
strengthening its balance sheet and cash position. The Company maintains
excellent relations with its banks and other financial institutions that may
serve as available resources for future growth opportunities, if the need
arises.
YEAR 2000
The Year 2000 ("Y2K") issue is the result of computer programs which were
written using two digits rather than four digits to define the applicable year.
The Company is very much aware of the issues that Y2K will bring to its computer
systems and other equipment with embedded micro controllers. The Company is
actively addressing its information technology ("IT") infrastructure, including
hardware, software and facilities, with the goal of achieving substantial Y2K
compliance in all significant areas of its operations, including, to the extent
practicable, its relationships with vendors, suppliers and customers. During
1998, the Company established a Company-wide Y2K Program Team made up of Company
leaders and outside experts to establish a disciplined project management
approach, issue inventory and assessment guidelines and coordinate worldwide Y2K
compliance efforts. The Company's Y2K Program Team has oversight responsibility
for monitoring the compliance efforts.
The program team developed a multi-phase approach to assessing and resolving Y2K
issues. These phases are:
1. A review of the Company's end-to-end business processes. This phase helped
to create a thorough inventory of all date and non-date dependent systems,
internal and external stakeholders, vendors, customers and suppliers.
Materials, services and informational inputs and outputs were identified
and prioritized based on impacts to the business if any should fail as a
result of a Y2K problem.
2. Assessment of all inventoried systems, applications and stakeholders to
identify and locate Y2K issues. The Company has established a data
repository for Y2K documentation. The database includes the information
gathered in Phase 1. External stakeholders, vendors, suppliers and other
entities were polled to determine if they are Y2K compliant. Databases were
researched for the current status of available fixes for items identified
with Y2K issues. Listings of compliant and non-compliant items were
generated. Planned and available fixes are being documented for
non-compliant items and have formed the basis for Phase 3-Test Planning.
3. Test planning and remediation of systems presenting Y2K issues. This step
included the development of a detailed test plan based on the business
priority assessment of the items identified in Phases 1 and 2. Units and
applications were then tested. Based on the test results, a remediation
plan was developed to renovate, retire, re-host, replace, redevelop or
outsource as appropriate.
4. Contingency plans have been developed at this time based on the remediation
plan.
5. Testing/validating of systems to measure the effectiveness of the
remediation.
-11-
<PAGE>
6. Continued monitoring of the remedied systems for ongoing compliance.
The Company recognizes the importance of resolving these issues at an early date
so as not to adversely impact its own operations or its relationships with its
customers and other third parties. The Company has active implementation teams
focusing on this program and has made it a high priority to substantially
complete its Y2K compliance efforts in a timely manner. Currently the results of
the assessment and remediation efforts being conducted under the Y2K program are
as follows:
o IT AS400 Systems and Applications - The Company's IT systems and applications
have been made substantially Y2K compliant. Final testing of the major
applications, on a duplicate test platform, were successfully completed by mid
year 1999. Application and system changes are continually being monitored to
ensure Y2K compliance.
o Embedded Systems - Embedded systems, which include building services,
operations, network services, personal computers and non-IT applications have
been inventoried. A preliminary assessment of inventoried embedded systems was
completed in December 1998. Testing and remediation plans have been developed
and are substantially complete. Business critical systems and applications have
been made Y2K compliant and are substantially complete. Contingency plans have
been developed and tested for appropriateness based on business priorities and
impacts. Changes to embedded systems and applications are continually being
monitored to ensure Y2K compliance.
The total estimated pre-tax cost for resolving Y2K issues is approximately
$2,000, with approximately $1,000 of expenditures planned for 1999, while $1,000
of costs were incurred and expensed in 1998. As of September 30, 1999,
approximately $700 of those planned 1999 expenditures have been incurred. The
Company will incur costs that include internal resources, external consulting,
software and certain equipment upgrades. The majority of these costs relate to
software modifications. System replacement costs have been, or will be,
capitalized and expensed over their estimated useful lives. The cost of new
hardware and software for recent replacements is not included in the Y2K costs,
as the Company had already planned to replace these systems and did not
accelerate the replacement due to Y2K issues.
The foregoing discussion regarding the Y2K project's timing, effectiveness,
implementation and cost contains forward-looking statements, which are based on
management's best estimates derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved, and actual results could differ materially
from those contemplated estimates. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes and similar uncertainties and the remediation success of
the Company's customers and suppliers.
-12-
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Board of Directors of Benjamin Moore & Co. on November 4, 1999 declared
a fourth quarter extra dividend of seventeen cents ($0.17) per share payable
December 1, 1999 to shareholders of record November 5, 1999 and a regular
quarterly dividend of nineteen cents ($0.19) per share payable January 3, 2000
to shareholders of record December 2, 1999.
Mr. Ward C. Belcher, Vice President - Operations, has announced his
decision to retire as of January 1, 2000. He will continue to serve as a
Director. Mr. Denis S. Abrams, a Vice President, will be Vice President -
Operations, effective January 1, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following is an index of the exhibits included in this 10-Q:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
Reported on Form 8-K filed August 3, 1999 - The Board of Directors of
Benjamin Moore & Co. on August 3, 1999 declared a regular quarterly
dividend of seventeen cents ($0.17) per share payable October 1, 1999
to shareholders of record September 2, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BENJAMIN MOORE & CO.
--------------------------------------
(Registrant)
Date November 11, 1999 /s/ Yvan Dupuy
--------------------------------------
Yvan Dupuy
President and Chief Operating Officer
Date November 11, 1999 /s/ Donald E. Devine II
--------------------------------------
Donald E. Devine II
Vice President - Finance and
Chief Financial Officer
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF INCOME
AND COMPREHENSIVE INCOME, CONDENSED CONSOLIDATED BALANCE SHEET, CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS AND THE NOTES THERETO AND IS QUALIFIED IN
TIS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 21,930
<SECURITIES> 63,361
<RECEIVABLES> 141,149
<ALLOWANCES> (13,590)
<INVENTORY> 73,795
<CURRENT-ASSETS> 317,089
<PP&E> 208,702
<DEPRECIATION> (108,855)
<TOTAL-ASSETS> 481,449
<CURRENT-LIABILITIES> 99,094
<BONDS> 1,144,483
0
0
<COMMON> 131,643
<OTHER-SE> 198,253
<TOTAL-LIABILITY-AND-EQUITY> 481,449
<SALES> 594,937
<TOTAL-REVENUES> 594,937
<CGS> 321,607
<TOTAL-COSTS> 480,067
<OTHER-EXPENSES> (5,825)
<LOSS-PROVISION> 3,046
<INTEREST-EXPENSE> (3,755)
<INCOME-PRETAX> 120,695
<INCOME-TAX> 49,616
<INCOME-CONTINUING> 69,994
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,994
<EPS-BASIC> 2.62
<EPS-DILUTED> 2.62
</TABLE>
