<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000 Commission File Number 0-8894
------------- ---------------
BENJAMIN MOORE & CO.
--------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
NEW JERSEY 13-5256230
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 CHESTNUT RIDGE ROAD, MONTVALE, NEW JERSEY 07645
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-9600
-------------------
NONE
--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
As of August 1, 2000, 26,523,567 shares of Common Stock of the registrant were
issued and outstanding.
-1-
(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 Six Months Ended
June 30, 2000 and 1999.............................. 3
Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999................. 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2000 and 1999............. 5
Notes to Condensed Consolidated Financial Statements... 6 - 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 10 - 12
Part II. Other Information................................ 13
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(As Adjusted) (As Adjusted)
<S> <C> <C> <C> <C>
Net Sales .................................... $ 231,775 $ 206,076 $ 414,677 $ 376,601
--------- --------- --------- ---------
Costs and expenses:
Cost of products sold ..................... 124,266 109,261 230,033 208,605
Selling, general and administrative ....... 60,875 51,401 116,738 102,653
Restructuring ............................. -- -- 38,598 --
Other income, net ......................... (1,295) (2,102) (2,531) (3,691)
--------- --------- --------- ---------
Total costs and expenses .............. 183,846 158,560 382,838 307,567
--------- --------- --------- ---------
Income before taxes and minority
interest ................................... 47,929 47,516 31,839 69,034
Income tax provision ......................... 19,280 19,422 12,810 28,354
Minority interest in net income/(loss) of
subsidiaries ............................... 205 440 (210) 716
--------- --------- --------- ---------
Net income ................................... $ 28,444 $ 27,654 $ 19,239 $ 39,964
--------- --------- --------- ---------
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustment
(Net of tax of $(1,245) and $(799) for the
six months ended June 30, 2000 and 1999,
respectively, and $(841) and $(255)
for the three months ended June 30, 2000
and 1999, respectively) ................... (1,304) (370) (1,904) (1,147)
Unrealized (loss)/gain on securities
(net of tax of $21 for the six months
ended June 30, 2000 and $(51) for the
three months ended June 30, 2000) ......... (76) -- 32 --
--------- --------- --------- ---------
Other comprehensive (loss) ................... (1,380) (370) (1,872) (1,147)
--------- --------- --------- ---------
Comprehensive income ......................... $ 27,064 $ 27,284 $ 17,367 $ 38,817
========= ========= ========= =========
Cash dividends declared per share of
common stock ............................... $ .21 $ .17 $ .40 $ .33
========= ========= ========= =========
Basic net income per share (Note 3) .......... $ 1.07 $ 1.04 $ .72 $ 1.51
========= ========= ========= =========
Diluted net income per share ................. $ 1.07 $ 1.03 $ .72 $ 1.50
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(As Adjusted)
--------- -------------
(a)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................. $ 5,129 $ 70,553
--------- ---------
Trading securities .................................... 35,930 29,871
--------- ---------
Accounts and notes receivable - net ................... 145,530 91,817
--------- ---------
Inventories:
Finished goods, net .................................. 68,692 56,040
Raw materials and supplies ........................... 25,164 25,376
--------- ---------
Net ............................................... 93,856 81,416
Prepaid expenses and other current assets ............. 23,749 25,870
--------- ---------
Total current assets .............................. 304,194 299,527
Property, plant and equipment - net ...................... 118,382 104,988
Other non-current assets ................................. 78,245 72,895
--------- ---------
Total assets ...................................... $ 500,821 $ 477,410
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt . $ 7,672 $ 634
Accounts payable ...................................... 38,314 35,642
Other liabilities and accrued expenses ................ 54,254 51,136
--------- ---------
Total current liabilities ......................... 100,240 87,412
--------- ---------
Pension and other long-term benefits ..................... 35,252 30,180
--------- ---------
Long-term obligations .................................... 22,261 20,945
--------- ---------
Minority shareholders' interest in net
assets of subsidiaries ................................. 10,067 10,441
--------- ---------
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 ........................... 47,491 46,967
Retained earnings .................................... 331,073 322,484
Accumulated other comprehensive income ............... (7,463) (5,591)
Cost of treasury stock; 12,946,388 shares at
June 30, 2000 and 12,807,593 shares at
December 31, 1999 .................................. (159,565) (155,021)
Employees' stock ownership and stock purchase
plan notes ......................................... (10,178) (12,050)
--------- ---------
Shareholders' equity - net ........................ 333,001 328,432
--------- ---------
Total liabilities and shareholders' equity ........ $ 500,821 $ 477,410
========= =========
</TABLE>
(a) The condensed consolidated balance sheet at December 31, 1999 has been
derived from the audited financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
2000 1999
(As Adjusted)
-------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 19,239 $ 39,964
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Restructuring charge ............................... 36,716 --
Depreciation and amortization ...................... 7,413 6,057
Minority interest in net (loss)/income of
subsidiaries ..................................... (210) 716
Deferred taxes ..................................... (8,503) --
Other .............................................. (183) 687
Change in assets and liabilities, net of assets
sold and acquired:
Increase in accounts and notes receivable ....... (54,237) (45,127)
(Increase) decrease in inventories .............. (13,732) 1,188
(Decrease) increase in other current liabilities (5,980) 20,740
Other ........................................... (3,496) (3,944)
-------- --------
Net cash (used in) provided by
operating activities ...................... (22,973) 20,281
-------- --------
Cash flows from investing activities:
Purchase of securities ................................ (10,000) --
Sale of securities .................................... 5,000 --
Payments for purchase of property, plant and
equipment and acquisitions ........................... (28,366) (45,158)
Proceeds from sale of subsidiary ...................... 981 3,654
Other ................................................. (444) 1,231
-------- --------
Net cash used in investing activities ....... (32,829) (40,273)
-------- --------
Cash flows from financing activities:
Net proceeds (repayments) from short-term debt ........ 7,000 (2,479)
Payment of dividends .................................. (12,987) (8,675)
Purchase of treasury stock ............................ (4,576) (1,995)
Other ................................................. 1,945 2,651
-------- --------
Net cash used in financing activities ....... (8,618) (10,498)
-------- --------
Effect of exchange rate changes on cash .................. (1,004) (1,343)
-------- --------
Net decrease in cash ..................................... (65,424) (31,833)
Cash and cash equivalents at beginning of period ......... 70,553 97,249
-------- --------
Cash and cash equivalents at end of period ............... $ 5,129 $ 65,416
======== ========
Supplemental disclosures of cash flow information:
Interest paid ......................................... $ 233 $ 176
Income taxes paid ..................................... $ 31,910 $ 25,114
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE>
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Per 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, 2000 and the results of operations for the three and
six month periods ended June 30, 2000 and 1999, and changes in cash flows for
the three and six months ended June 30, 2000 and 1999. 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, 1999.
The results of operations for the three - and six - month periods ended June
30, 2000 and 1999 are not necessarily indicative of operations for the entire
year.
2. Certain reclassifications have been made in the 1999 financial statements to
conform to the method of presentation used in 2000.
3. In June 1998, 1999, and 2000, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities (an amendment
of FASB Statement No. 133)," respectively. SFAS No. 137 defers the effective
date for SFAS No. 133 until the first quarter for the fiscal year beginning
after June 15, 2000. SFAS No. 133 establishes accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. SFAS No. 138 addresses a limited
number of implementation issues for SFAS No. 133 and becomes effective at the
same time. The Company has not yet completed its determination of how these
statements will affect its reporting.
In December 1999, the staff of the Securities and Exchange Commission ("SEC")
issued SEC Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." In March and June 2000, the SEC issued SAB 101A and
101B, amendments to SAB 101, which defer the effective date of application of
SAB 101. SAB 101 summarizes certain of the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The effective date of adoption is no later than the fourth
quarter of the fiscal years beginning after December 15, 1999. The Company
has not yet completed its determination of how this SAB will affect its
reporting.
-6-
<PAGE>
4. 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,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Weighted average common shares
outstanding 26,567,618 26,704,293 26,602,317 26,672,855
DILUTED EARNINGS PER COMMON SHARE:
Plus stock options assumed to be
exercised 66,913 44,621 59,080 39,194
-------------------------------------------------------
Denominator for diluted earnings
per common share 26,634,531 26,748,914 26,661,397 26,712,049
=======================================================
</TABLE>
5. During the first quarter of 2000, the Board of Directors approved a
restructuring of U.S. and Canadian manufacturing operations and offered a
voluntary early retirement program. This plan was designed to lower
manufacturing costs and maximize efficient means of distribution. These
actions resulted in a first quarter pre-tax charge of $38,598, primarily
consisting of enhanced benefits associated with the voluntary early
retirement program of $12,365, severance and benefits of $14,585, asset
write-offs and plant closure costs of $9,348 and other charges of $2,300. As
a result of this restructuring, the Company will have reduced its North
American manufacturing facilities from sixteen to eight and reconfigured its
distribution centers.
The voluntary early retirement program and employee separation packages
resulting from the cessation of manufacturing and/or distribution at certain
facilities and other organization changes affected over 300 employees. Plant
closure costs consist of the write-down of property, plant and equipment, and
maintenance costs. The Company expects all separations to be substantially
completed by the end of 2000. The restructuring charge reduced net income for
the quarter ended March 31, 2000 by $22,236 or $.84 per share.
The remaining restructuring liability as of June 30, 2000 is $36,716. During
the first half of 2000, cash payments charged against the reserve were
$1,882. Of the approximately 300 expected employee terminations, 171 have
occurred in the first six months of 2000, with the remainder expected in the
second half of the year.
6. During the first quarter of 2000, the Company changed its method of
determining the cost of its inventories at its two Canadian subsidiaries from
the last-in, first-out ("LIFO") to the first-in, first-out ("FIFO") method.
The Company believes the FIFO method provides a better matching of inventory
costs with sales in the Canadian market. All previously reported results have
been restated to reflect the retroactive application of this accounting
change as required by generally accepted accounting principles. The
accounting change increased net income by $287 for the quarter ended June 30,
2000 and $489 for the first six months of 2000. Net earnings previously
reported for the second quarter and the six months ended June 30, 1999 were
increased by $71 and $471, respectively.
7. The Company manufactures and sells coatings for use by the general public and
industrial and commercial users in the U.S. and Canada. As discussed in Notes
8 and 9, during the first quarter of 1999, and in April 2000 the Company sold
certain
-7-
<PAGE>
assets of its Australian and New Zealand subsidiaries. Transfers between
segments and geographic areas are eliminated in consolidation. The Company
has three reportable segments - (1) U.S. Coatings Manufacturing, (2) U.S.
Retail and (3) Canadian Coatings Manufacturing. Business groups within
these three segments are Trade Sales Coatings, Production Finishes Coatings,
and Retail.
Segment data includes intersegment net sales. The Company evaluates the
performance of its U.S. Coatings Manufacturing segment based upon net sales
to external customers and U.S. Retail and net income (loss). The Company
evaluates the performance of its U.S. Retail and Canadian Coatings
Manufacturing 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 ending June 30 are as follows:
<TABLE>
<CAPTION>
US CANADIAN
COATINGS US COATINGS ALL RECONCILING CONSOLIDATED
2000 MANUFACTURING RETAIL MANUFACTURING OTHERS ITEMS TOTALS
------------- ------ ------------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $322,011 $ 70,576 $ 44,647 $ -- $(22,557) $414,677
Net Sales to External
Customers and US
Retail $321,097 $ 70,576 $ 43,206 $ -- $(20,202) $414,677
Net Sales to External
Customers $300,895 $ 70,576 $ 43,206 $ -- $ -- $414,677
Net Income (Loss) $ 22,337 $ (124) $ (1,246) $ -- $ (1,728) $ 19,239
US CANADIAN
COATINGS US COATINGS ALL RECONCILING CONSOLIDATED
1999 MANUFACTURING RETAIL MANUFACTURING OTHERS ITEMS TOTALS
------------- ------ ------------- ------ ----- ------
Net Sales $311,761 $ 28,818 $ 43,868 $ 5,494 $(13,340) $376,601
Net Sales to External
Customers and US
Retail $310,874 $ 28,818 $ 40,433 $ 5,494 $ (9,018) $376,601
Net Sales to External
Customers $301,856 $ 28,818 $ 40,433 $ 5,494 -- $376,601
Net Income (Loss) $ 38,049 $ 561 $ 4,738 $ (265) $ (3,119) $ 39,964
</TABLE>
-8-
<PAGE>
Operating results by reportable segment and geographic area for the three
months ended June 30 are as follows:
<TABLE>
<CAPTION>
US CANADIAN
COATINGS US COATINGS ALL RECONCILING CONSOLIDATED
2000 MANUFACTURING RETAIL MANUFACTURING OTHERS ITEMS TOTALS
------------- ------ ------------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $181,479 $ 38,736 $ 23,972 $ -- $(12,412) $231,775
Net Sales to External
Customers and US
Retail $180,948 $ 38,736 $ 23,351 $ -- $(11,260) $231,775
Net Sales to External
Customers $169,688 $ 38,736 $ 23,351 $ -- $ -- $231,775
Net Income (Loss) $ 27,504 $ 317 $ 1,578 $ -- $ (955) $ 28,444
1999
Net Sales $170,984 $ 16,228 $ 25,536 $ 1,423 $ (8,095) $206,076
Net Sales to External
Customers and US
Retail $170,478 $ 16,228 $ 23,598 $ 1,423 $ (5,651) $206,076
Net Sales to External
Customers $164,827 $ 16,228 $ 23,598 $ 1,423 -- $206,076
Net Income (Loss) $ 26,285 $ 1,043 $ 2,942 $ 192 $ (2,808) $ 27,654
</TABLE>
Reconciling items primarily consist of the elimination of sales and cost of
sales between segments.
The decrease in Net Sales to External Customers for the six months ended June 30
(above) and Trade Sales Coatings (below) over the prior year is due to
acquisitions of former external customers.
The following table represents net sales to external customers by business
group:
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30 JUNE 30
---------------- -------------------
2000 1999 2000 1999
Trade Sales Coatings $315,547 $319,493 $178,791 $174,784
Production Finishes Coatings 28,554 28,290 14,248 15,064
Retail 70,576 28,818 38,736 16,228
------------------- ---------------------
Total $414,677 $376,601 $231,775 $206,076
=================== =====================
8. 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.
9. The Company completed the sale of its New Zealand operating subsidiary on
April 6, 2000.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
OPERATING RESULTS 2000 VS. 1999
Consolidated Net Sales for the quarter and six months ended June 30, 2000
increased 12.5 percent and 10.1 percent, respectively, over the comparable 1999
period, to $231,775 and $414,677, respectively. The increase in the second
quarter was due to increased U.S. Coatings Manufacturing and U.S. Retail Segment
Net Sales. The increase in the six months Net Sales is primarily due to the
impact of acquisitions within the U.S. Retail Segment. Excluding the impact of
acquisitions and divestitures, Net Sales for the second quarter and six months
ended June 30, 2000 increased 5.2 percent and 3.6 percent, respectively, over
the comparable 1999 period.
U.S. Coatings Manufacturing Segment Net Sales to External Customers and the U.S.
Retail Segment increased 6.1 percent and 3.3 percent to $180,948 and $321,097 in
the second quarter and first six months of 2000, respectively. By business group
within this segment, Trade Sales Coatings increased 7.2 percent and 3.8 percent
for the quarter and six months, respectively, partially offset by the impact of
unit volume declines in the Production Finishes Coatings business group. The
increase in Trade Sales Coatings for the quarter and six month period was
primarily driven by unit volume growth offset by product mix shifting towards
contractor lines.
Net Sales in the U.S. Retail Segment increased 138.7 percent and 144.9 percent
to $38,736 and $70,576 in the three and six-month periods ended June 30, 2000
due primarily to the effect of acquisitions. As of June 30, 2000, the Company
operated 89 owned-retail stores as compared to 45 at June 30, 1999. Comparable
store sales increased 1.1 percent and 4.3 percent in the second quarter and
year-to-date over the prior year. This increase was due primarily to higher
paint sales combined with sales gains in each of the remaining major product
lines (wallcoverings, window treatments and associated products).
Net Sales to External Customers in the Canadian Coatings Manufacturing Segment
decreased 1 percent for the quarter and increased 6.9 percent for the six-month
period as compared to 1999. By business group within this segment, Trade Sales
Coatings decreased 1.5 percent for the quarter and increased 5.1 percent for the
six-month period as compared to last year. The slight decline in Trade Sales
Coatings for the quarter was due to a shift in product mix as unit growth was
5.7 percent as compared to the prior year. However, the increase in year-to-date
Trade Sales Coatings Net Sales is due to unit volume growth of 7.7 percent.
Production Finishes Coatings increased 3.1 percent and 22.8 percent for the
three and six-month periods ended June 30, 2000, respectively, as compared to
1999 which is attributable to unit volume growth partially offset by product
mix. Excluding the effect of exchange rate fluctuations, 2000 Canadian Coatings
Manufacturing second quarter Net Sales to External Customers increased by 1.5
percent and 6.6 percent for the six-month period as compared to 1999.
There were no Net Sales within the All Others Segment in 2000 as a result of the
New Zealand subsidiary being sold in 2000 and the Australian subsidiary being
sold in April of 1999. All Others Segment Net Sales for the six months of 1999
were $5,494.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Consolidated Gross Margin decreased in the second quarter from 47.0 percent in
1999 to 46.4 percent in 2000 primarily due to increased temporary warehousing
and costs related to the restructuring that was announced in the first quarter
of 2000 as well as increased U.S. Retail sales which carry a lower gross margin
than the Manufacturing Segments. Such costs related to the restructuring were
planned and expected to occur in the second quarter and are expected to be
offset in the second half of 2000. Consolidated Gross Margin for the six-month
period ended June 30, 2000 was essentially flat as compared to last year.
Consolidated Selling, General and Administrative expenses ("SG&A") increased in
the three months and six months ended June 30, 2000 as compared to last year by
$9,474 and $14,085. SG&A as a percentage of sales was 26.3 percent in the second
quarter 2000 as compared to 24.9 percent in the second quarter 1999 and 28.2
percent in the first six months of 2000 as compared to 27.3 percent in the same
period in 1999. The increase in SG&A and the percentage to sales is due
partially to the Company acquiring retail operations over the preceding twelve
months, which typically have a higher SG&A ratio as compared to the
Manufacturing Segment. The increased SG&A also resulted from additional sales
and marketing spending attributed to the Color PreviewTM System introduced in
the U.S. as well as costs related to the restructuring that was announced in the
first quarter of 2000.
During the first quarter of 2000, the Board of Directors approved a
restructuring of U.S. and Canadian operations and offered an early retirement
program. This plan is designed to lower manufacturing costs and maximize
efficient means of distribution in both the U.S. and Canadian Coatings
Manufacturing Segments. This plan resulted in the Company recording a pre-tax
2000 first quarter charge of $38,598 including employee separation costs of
$26,950 and asset impairments and other charges of $11,648.
The decrease in "Other income, net" is primarily due to decreased interest
income on a lower average cash position in 2000 as compared to 1999.
Income before taxes and minority interest was $47,929 for the second quarter of
2000 and $31,839 for the first six months of 2000. Excluding the impact of the
2000 restructuring charge, income before taxes and minority interest would have
been $70,406 for the six months ended June 30, 2000, an increase of $1,369, or 2
percent as compared to last year. The effective income tax rate for the quarter
and six months ended June 30, 2000 was 40.2 percent as compared to 40.9 percent
and 41.1 percent, respectively in 1999. As a result of the foregoing, the
Company generated net income of $28,444 and $19,239 for the three and six months
ended June 30, 2000 and, excluding the restructuring charge, net income would
have been $42,078 for the six months ended June 30, 2000.
Basic and diluted net income per share for the second quarter ended June 30,
2000 increased 2.9 percent and 3.9 percent respectively as compared to last
year. Basic and diluted net income per share for the six-month period ended June
30, 2000 decreased
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
approximately 52 percent as compared to last year; however, excluding the
restructuring charge, basic and diluted net income per share would have been
$1.58, an increase of $.07 and $.08, respectively, as compared to 1999, or 4.6
percent and 5.3 percent respectively.
FINANCIAL POSITION AND LIQUIDITY
Net cash flows used in operating activities were $22,973 for the six months
ended June 30, 2000 as compared to the net cash flows provided by operating
activities of $20,281 in 1999. The increase in inventory is primarily due to the
build-up of inventory prior to the plant closings which were announced in the
first quarter 2000 restructuring. The Company also made larger tax payments and
bonus payments as compared to 1999.
Net cash flows used in investing activities were $32,829 in the first six months
of 2000, a decrease of $7,444 compared to 1999. Capital spending increased for
2000, driven by continuing initiatives to improve manufacturing productivity as
well as restructuring while acquisitions decreased. In addition, the Company
invested $5,000 in trading securities. 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 and, in the second quarter of 2000, sold its New
Zealand subsidiary resulting in proceeds of $981.
Net cash flows used in financing activities of $8,618 in the first half of 2000
are compared to $10,498 in 1999. Cash flows relating to financing activities
were principally used for payment of dividends and the purchase of treasury
stock. The Company borrowed $20,000 on its line of credit in the first six
months of 2000 but repaid $13,000, for net borrowings of $7,000 as compared to
repayments of borrowings of $2,479 last year. There were no facility or line of
credit borrowings by the Canadian Coatings segment at June 30, 2000.
Working capital decreased to $203,954 at June 30, 2000 and the current ratio
decreased to 3.0:1 from 3.2:1 for the comparable period last year. Cash and cash
equivalents were $5,129 at June 30, 2000, as compared to $65,416 at June 30,
1999. 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.
-12-
<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 28, 2000 - At its meeting on April 27,
2000 the Board of Directors of Benjamin Moore & Co. elected its President and
Chief Operating Officer, Yvan Dupuy, to the position of Chief Executive Officer.
Mr. Dupuy will serve as President and Chief Executive Officer and continue as a
Director. Richard Roob, who will continue to serve as Chairman of the Board of
Directors, previously held the position of Chief Executive Officer. The position
of Chief Operating Officer will remain vacant.
The Board of Directors also declared a regular quarterly dividend of $0.21
per share payable July 3, 2000 to shareholders of record on June 1, 2000. This
represents an increase of $0.02 per share in the regular quarterly dividend.
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 10, 2000 /s/ Yvan Dupuy
----------------------- ------------------------------------------
Yvan Dupuy
President and Chief Executive Officer
Date August 10, 2000 /s/ Donald E. Devine II
----------------------- ------------------------------------------
Donald E. Devine II
Chief Financial Officer and
Vice President - Finance
-13-
