<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 June 30, 1999 Commission File Number 0-8894
------------- -------------------------
BENJAMIN MOORE & CO.
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(Exact Name of registrant as specified in its charter)
New Jersey 13-5256230
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
-----------------------------
None
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Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
As of August 11, 1999, 26,683,317 shares of Common Stock of the registrant were
issued and outstanding.
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(Page 1 of 14 Pages)
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BENJAMIN MOORE & CO. and Subsidiaries
INDEX
Page No.
--------
Part I. Financial Information
Condensed Consolidated Statements of Income and
Comprehensive Income -
Three Months and Six Months Ended
June 30, 1999 and 1998.................................... 3
Condensed Consolidated Balance Sheets -
June 30, 1999 and December 31, 1998....................... 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 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 Six Months Ended
June 30, June 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales ................................... $ 206,076 $ 199,269 $ 376,601 $ 351,672
--------- --------- --------- ---------
Costs and expenses:
Cost of products sold ................... 109,176 110,939 209,160 203,517
Selling, general and administrative ..... 51,425 48,546 102,677 94,876
Other income, net ....................... (2,126) (1,054) (3,715) (1,589)
--------- --------- --------- ---------
Total costs and expenses ............ 158,475 158,431 308,122 296,804
--------- --------- --------- ---------
Income before taxes and minority
interest ................................. 47,601 40,838 68,479 54,868
Income tax provision ........................ 19,422 16,760 28,354 22,745
Minority interest in net income of
subsidiaries ............................. 454 426 632 415
--------- --------- --------- ---------
Net income .................................. $ 27,725 $ 23,652 $ 39,493 $ 31,708
--------- --------- --------- ---------
Other comprehensive income, net of tax:
Foreign currency translation adjustment
(Net of tax of $(21) and $(1,228) for the
six months ended June 1999 and 1998,
respectively, and $(244) and $(1,096)
for the three months ended June 30, 1999
and 1998, respectively) ................. (349) (1,688) (30) (1,731)
--------- --------- --------- ---------
Comprehensive income ........................ $ 27,376 $ 21,964 $ 39,463 $ 29,977
========= ========= ========= =========
Cash dividends declared per share of
common stock ............................. $ .17 $ .15 $ .33 $ .30
========= ========= ========= =========
Basic and diluted earnings per share (Note 3) $ 1.04 $ .89 $ 1.48 $ 1.19
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- ---------
(Unaudited) (a)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 65,416 $ 97,249
Accounts and notes receivable - net .................. 130,556 83,100
Inventories:
Finished goods, net ................................. 52,068 39,066
Raw materials and supplies .......................... 20,921 29,965
--------- ---------
Net .............................................. 72,989 69,031
Prepaid expenses and other current assets ............ 24,352 23,892
--------- ---------
Total current assets ............................. 293,313 273,272
Property, plant and equipment - net ...................... 95,139 86,651
Other non-current assets ................................. 61,256 32,062
--------- ---------
Total assets ..................................... $ 449,708 $ 391,985
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt 4,791 7,397
Accounts payable ..................................... 42,304 27,980
Other liabilities and accrued expenses ............... 44,146 32,489
--------- ---------
Total current liabilities ........................ 91,241 67,866
--------- ---------
Pension and other long-term benefits ..................... 27,797 27,566
--------- ---------
Long-term obligations .................................... 19,075 20,581
--------- ---------
Minority shareholders' interest in net
assets of subsidiaries ................................ 7,301 8,447
--------- ---------
Shareholders' equity:
Preferred stock, $10 par value - authorized
500,000 shares; issued - none
Common stock, $3.33 par value - authorized
120,000,000 shares; issued 39,492,936 shares ...... 131,643 131,643
Additional paid-in capital .......................... 46,520 41,206
Retained earnings ................................... 299,661 268,949
Accumulated other comprehensive income - foreign
currency translation adjustment ................... (5,944) (5,914)
Cost of treasury stock; 12,795,126 shares at
June 30, 1999 and 12,922,290 shares at
December 31, 1998 ................................. (154,110) (152,380)
Employees' stock ownership and stock purchase
plan notes ........................................ (13,476) (15,979)
--------- ---------
Shareholders' equity - net ....................... 304,294 267,525
--------- ---------
Total liabilities and shareholders' equity ....... $ 449,708 $ 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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BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1999 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................ $ 39,493 $ 31,708
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................................. 6,057 4,521
Minority interest in net income of subsidiaries ................ 632 415
Other .......................................................... 618 (816)
Change in assets and liabilities, net of effects of acquisition:
(Increase) in accounts and notes receivable ................ (45,127) (44,339)
Decrease in inventories .................................... 1,724 2,698
Increase in other current liabilities ...................... 18,970 28,595
Other ...................................................... (2,207) 1,963
----------- -----------
Net cash provided by operating
activities .......................................... 20,160 24,745
----------- -----------
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment and acquisitions ....................................... (45,158) (3,892)
Proceeds from sale of White Knight assets ......................... 3,654 --
Other ............................................................. 1,231 124
----------- -----------
Net cash used in investing activities ................. (40,273) (3,768)
----------- -----------
Cash flows from financing activities:
Net (repayments) proceeds from short-term debt .................... (1,079) 750
Payment of dividends .................................................. (8,675) (7,769)
Purchase of treasury stock ............................................ (1,995) (8,979)
Other ............................................................. 1,373 2,956
----------- -----------
Net cash used in financing activities ................. (10,376) (13,042)
----------- -----------
Effect of exchange rate changes on cash ............................... (1,344) (147)
----------- -----------
Net (decrease) increase in cash ...................................... (31,833) 7,788
Cash and cash equivalents at beginning of period ...................... 97,249 43,899
----------- -----------
Cash and cash equivalents at end of period ............................ $ 65,416 $ 51,687
=========== ===========
Supplemental disclosures of cash flow information:
Interest paid ..................................................... $ 176 $ 683
Income taxes paid ................................................. $ 25,114 $ 13,885
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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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 June 30, 1999 and the results of operations for
the three and six month periods ended June 30, 1999 and 1998, and changes
in cash flows for the three and six months ended June 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 six - month periods ended
June 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Weighted average common shares
outstanding 26,704,293 26,570,262 26,672,855 26,571,696
DILUTED EARNINGS PER COMMON SHARE:
Plus stock options assumed to be
exercised 44,621 48,714 39,194 44,046
----------------------------------------------------
Denominator for diluted earnings per
common share 26,748,914 26,618,976 26,712,049 26,615,742
====================================================
</TABLE>
Due to the stock split (see below) which occurred after June 30, 1999 but
prior to the Form 10-Q filing, retroactive effect was given to the capital
structure reported for 1999 and 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 will be 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 shall be
increased from 40,000,000 shares to 120,000,000 shares and the par value of
the Common Stock shall 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 June 30, 1999,
relating primarily to dismantling and facility costs, is $2,262. During the
first half of 1999 and 1998, cash payments charged against the reserve were
$499 and $6,753, respectively.
5. The Company manufactures and sells coatings for use by the general public
and industrial and commercial users in the U.S., Canada, and 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 six
months ended June 30 are as follows:
<TABLE>
<CAPTION>
ALL RECONCILING CONSOLIDATED
1999 UNITED STATES CANADA OTHERS ITEMS TOTALS
------------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Net Sales $330,675 $43,867 $ 5,494 $ (3,435) $376,601
Net Sales to External
Customers $330,675 $40,432 $ 5,494 $376,601
Net Income (Loss) $ 38,604 $ 4,489 $ (265) $ (3,335) $ 39,493
1998
Net Sales $304,617 $43,067 $ 7,142 $ (3,154) $351,672
Net Sales to External
Customers $304,617 $39,913 $ 7,142 $351,672
Net Income (Loss) $ 29,606 $ 4,385 $ (744) $ (1,539) $ 31,708
</TABLE>
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<PAGE>
Operating results by reportable segment and geographic area for the three
months ended June 30 are as follows:
<TABLE>
<CAPTION>
ALL RECONCILING CONSOLIDATED
1999 UNITED STATES CANADA OTHERS ITEMS TOTALS
------------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Net Sales $181,102 $25,484 $ 1,428 $ (1,938) $206,076
Net Sales to External
Customers $181,102 $23,546 $ 1,428 $206,076
Net Income (Loss) $ 26,647 $ 3,183 $ 206 $ (2,311) $ 27,725
1998
Net Sales $173,311 $24,648 $ 3,299 $ (1,989) $199,269
Net Sales to External
Customers $173,311 $22,659 $ 3,299 $199,269
Net Income (Loss) $ 21,569 $ 3,364 $ (465) $ (816) $ 23,652
</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>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
------------------------- ---------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Trade Sales Coatings $319,494 $299,125 $174,788 $171,287
Production Finishes Coatings 28,290 28,115 15,064 14,428
Retail 28,817 24,432 16,224 13,554
---------------------- ----------------------
Total $376,601 $351,672 $206,076 $199,269
====================== ======================
</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 a New York paint and
home decorating retailer.
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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 six months and quarter
ended June 30, 1999.
Net sales for the six months ended June 30, 1999 increased 7.1% over last year's
first six months to $376,601 due primarily to increased volume as well as a
price increase across all North American do-it-yourself ("DIY") product lines.
Net sales in the 1999 second quarter of $206,076 increased 3.4% or $6,807 over
1998 sales of $199,269. Excluding the operations of White Knight in 1998, in the
second quarter 1999, net sales would have increased 4.6% over comparable net
sales for the quarter ended June 30, 1998.
Net sales in the United States ("U.S.") of $330,675 increased by 8.6% for the
first six months of 1999 compared to the comparable period in the prior year.
The increase in sales was primarily due to increased volume, price increases
across DIY product lines effective March 1, 1999, as well as mild weather
conditions and a strong U.S. economy. Net U.S. sales of $181,102 for the
quarter ended June 30, 1999 increased 4.5% over the second quarter 1998. Net
sales in Canada for the first six months of 1999 and the second quarter
increased by 1.3% and 3.9%, respectively, as compared to 1998. In local
currency, the year-to-date and second quarter 1999 Canadian net sales
increased by 4.1% and 4.3%, respectively, as compared to the year-to-date and
second quarter 1998, respectively.
Gross margin increased from 42.1% in the first half of 1998 to 44.5% for the six
months ended June 30, 1999. Gross margin increased from 44.3% in the second
quarter of 1998 to 47.0% for the quarter ended June 30, 1999. The improved gross
margins in the first half of 1999 and for the second quarter ended June 30, 1999
primarily resulted from sales gains in higher-margin product lines, lower raw
material costs and a price increase across all DIY product lines.
Selling, general and administrative expenses ("SG&A") as a percent of sales
increased to 27.3% and 25.0% for the six months and quarter ended June 30, 1999,
respectively, as compared to 27.0% and 24.4% for the same periods in 1998. SG&A
of $102,677 and $51,425 for the six months and quarter ended June 30, 1999,
respectively, increased by $7,801 and $2,879, respectively, as compared 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 $2,126 and $1,072 for the six months and
quarter ended June 30, 1999, respectively, which resulted from increased
interest income on a higher average cash position during 1999 as compared to
1998 as well as a gain on the sale of surplus land in Canada of $471 in the
second quarter.
Income before taxes and minority interest was $68,479 for the first six months
of 1999 and $47,601 for the second quarter 1999, an increase of $13,611 and
$6,763, respectively, compared to the comparable previous year periods. The
increase is
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<PAGE>
primarily attributable to the Company's strong sales and volume growth as well
as improved gross margins.
As a result of the foregoing, the Company generated net income for the six
months and quarter ended June 30, 1999 of $39,493 and $27,725, respectively, as
compared to $31,708 and $23,652 for the same periods in 1998. Basic and diluted
net income per share for the six months ended June 30, 1999 were $1.48, an
increase of $.29 compared to 1998. Basic and diluted net income per share for
the quarter ended June 30, 1999 were $1.04, an increase of $.15 compared to
1998.
FINANCIAL POSITION AND LIQUIDITY
Net cash flows provided by operating activities were $20,160 for the six months
ended June 30, 1999, which was $4,585 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
$499 in the first six months of 1999.
Net cash flows used in investing activities were $40,273 in the first half of
1999, an increase of $36,505 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 first six months ended June 30, 1999 versus last year driven by
continuing initiatives to improve manufacturing productivity. Also, the
Company purchased in a New York paint and home decorating retailer,
which was effective June 30, 1999.
Net cash flows used in financing activities of $10,376 represented a decrease of
$2,666 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 short-term debt repayments of $1,079 in the first half of 1999
as compared to receiving proceeds from borrowings of $750 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.
There were no facility or line of credit borrowings by the U.S. and Canadian
manufacturing operations at June 30, 1999.
Working capital increased to $202,072 at June 30, 1999 and the current ratio
increased to 3.2:1 from 3.1:1 for the comparable period last year. Cash and cash
equivalents were $65,416 at June 30, 1999, as compared to $51,687 at June 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
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<PAGE>
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.
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:
- - 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 was successfully
completed by mid year 1999. Application and system changes are continually
being monitored to ensure Y2K compliance.
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<PAGE>
- - 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 in the process of being implemented. Business
critical systems and applications have been made Y2K compliant and are
substantially complete. Some desktop hardware and software applications for
essential applications which are not business critical will be
substantially compliant before the end of the third quarter of 1999.
Contingency plans have been developed and tested for appropriateness based
on business priorities and impacts. Changes to embedded systems and
applications are continually being monitiored to ensure Y2K compliance.
- - Third Parties - The Company has also completed an inventory of its key
business stakeholders, which includes customers, suppliers, vendors and
third party agents and has assessed their impact on its business. The
Company has issued and is continuing to issue requests for Y2K compliance
status from its key business stakeholders. The majority of requests for
stakeholder status have been received. Where possible, the Company is
continuing to work closely with each of its key business stakeholders to
determine if their Y2K issues might impact the Company's business.
Contingency plans were developed based on the responses received from each
business stakeholder.
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 June 30, 1999,
approximately $500 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.
Although the Company anticipates minimal business disruption will occur as a
result of Y2K issues, there is no guarantee that possible "worst case" Y2K
issues of third party vendors and suppliers would not impact the Company. The
Company has completed a formal contingency plan for non-compliance and continues
to develop such plans based on the information obtained from third parties with
whom it has material relationships, as well as the completion of the evaluation
of its IT and non-IT systems.
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.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following is an index of the exhibits included in this 10-Q:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K -
Reported on Form 8-K filed April 23, 1999 - 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 shall be decreased from
$10.00 per share to $3.33 1/3 per share. The date of distribution was
August 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 August 13, 1999 /s/ Yvan Dupuy
---------------------- -----------------------------------------
Yvan Dupuy
President and Chief Operating Officer
Date August 13, 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 SIX MONTHS ENDED
JUNE 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
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 16,623
<SECURITIES> 48,793
<RECEIVABLES> 145,044
<ALLOWANCES> (14,488)
<INVENTORY> 72,989
<CURRENT-ASSETS> 293,313
<PP&E> 200,910
<DEPRECIATION> (105,771)
<TOTAL-ASSETS> 449,708
<CURRENT-LIABILITIES> 91,241
<BONDS> 4,525
0
0
<COMMON> 131,643
<OTHER-SE> 172,651
<TOTAL-LIABILITY-AND-EQUITY> 449,708
<SALES> 376,601
<TOTAL-REVENUES> 376,601
<CGS> 209,160
<TOTAL-COSTS> 311,837
<OTHER-EXPENSES> (3,715)
<LOSS-PROVISION> 2,945
<INTEREST-EXPENSE> (2,645)
<INCOME-PRETAX> 68,479
<INCOME-TAX> 28,354
<INCOME-CONTINUING> 39,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,493
<EPS-BASIC> 1.48
<EPS-DILUTED> 1.48
</TABLE>
