ITEM 1. BUSINESS - - -----------------
The Company is engaged in the formulation, manufacture and sale of a broad line of coatings, consisting of water-thinnable and solvent-thinnable general purpose coatings (paints, stains and clear finishes) for use by the general public, painting contractors and industrial and commercial users, primarily for the decoration and preservation of the interiors and exteriors of residential, commercial, institutional and industrial buildings and allied structures (collectively referred to as "trade sales coatings"), and production finishes coatings which are usually produced to conform to the specific requirements of manufacturers who utilize such coatings in the manufacturing process (collectively referred to as "production finishes coatings"). The production finishes coatings are primarily used in the manufacture of various types of flexible packages, beverage and food containers, tanks, roof decking, coils, furniture and shelving, window blinds and flatwood products. The production finishes coatings, like the trade sales coatings, serve both decorative and preservative functions.
The Company believes that it is one of the leading manufacturers of coatings in the United States and Canada. It has never been engaged in any other type of business.
Marketing and Distribution - - --------------------------
It has always been the Company's policy to actively support the continued growth and prosperity of independently owned distributors and retail outlets, through which the trade sales coatings are sold. In furtherance of that policy, the Company provides financing to such enterprises under circumstances where it is deemed to be in the best interests of the Company to do so (see, e.g., Note 4 to the Notes to Consolidated Financial Statements, Part II, Item 8 hereof). The trade sales coatings are sold under such tradmarks as Moore's -House Paint, Moorglo-, Moorgard- Latex House Paint, Moorwood-, Moorwhite- Primer, Impervo- Enamel, Moorcraft-, Impervex-, Regal- Wall Satin-, Satin Impervo-, AquaGlo-, AquaPearl-, AquaVelvet-, Regal Aquagrip-, Enhance-, Moorlife-, A Stroke of Brilliance -, Pro-Saver-, Benwood-, Utilac- and Ironclad-. Although a large variety of ready-mixed colors is available in all of these products, a substantially wider selection can be obtained through the Company's Moor-O-Matic- III Color System, which provides in-store machine capability to tint formulated bases with colorants which are manufactured by the Company. The Company believes its Moor-O-Matic- III Color System has been of significant value in promoting the sales of its trade sales coatings. Moore's- Video Color Planner and Moore's- Computer Color Matching System provide the ability to plan color schemes and to quickly match almost any color by computer. Production finishes coatings are customarily sold by the Company directly to the ultimate user.
Sales - - -----
The Company considers itself to be engaged in a single line of business; i.e. the formulation, manufacture and sale of coatings. Reference is made to the information set forth under the caption, "SELECTED FINANCIAL DATA", Part II, Item 6 hereof, with respect to net sales of each of the two classes of products which comprise the aforementioned line of business. During 1993, no one customer accounted for as much as 1% of the Company's net sales.
Geographic Segment Information - - ------------------------------
The Company manufactures and sells coatings in the United States, Canada and New Zealand. Transfers between geographic areas are not significant and are eliminated in consolidation. Reference is made to the information set forth in Note 8 to the Notes to Consolidated Financial Statements, Part II, Item 8 hereof, with respect to assets and operating results by geographic area.
Foreign Operations - - ------------------
The Company operates in Canada and New Zealand. The Company's Canadian operations are carried on through Benjamin Moore & Co., Limited, which is an approximately 82% owned subsidiary of the Company, and Technical Coatings Co. Limited, which is a wholly-owned subsidiary of the Canadian company. The Company's New Zealand operations are carried on through Benjamin Moore & Co (NZ) Limited, which is a wholly-owned subsidiary of the Company. During 1993, revenues and profits from operations attributable to those companies (which are included in the Company's consolidated financial statements) were approximately $57,736,000 and $4,188,000, respectively. Approximately 8% of the outstanding shares of the Canadian subsidiary are owned by persons who are associated with the Company, including employees of such subsidiary.
Research and Development; Quality Control - - -----------------------------------------
The Company considers its research and development and quality control activities to be among the most advanced in the industry, and of significant importance in enabling it to achieve and maintain its position as one of the leading companies in the coatings industry.
The Company maintains several laboratory facilities for the development of new products and processes, the improvement of existing products and the special formulation of products to meet the specific requirements of its customers. The Central Laboratories, which is the principal such facility, is located in Flanders, New Jersey. Quality control activities are carried out in laboratories located at each manufacturing facility.
The Company also maintains outdoor testing facilities at Lebanon, New Jersey, where its products, as well as those of its competitors, are evaluated for performance under varying weather conditions. Independent commercial facilities are also utilized for this purpose.
As of December 31, 1993, 189 chemists and technicians were employed by the Company in research and development and quality control activities. In 1993, the Company expended approximately $13,988,000 for such activities.
Competition - - -----------
The coatings industry is highly competitive and has historically been subject to intense price competition. It is estimated that there are approximately 900 coatings manufacturers in the United States, many of which are small companies which provide intense competition within regional and local markets, especially with respect to lower priced coatings and custom made specialty items which are required on a short-time delivery basis. Other manufacturers are large diversified corporations, the assets of which are substantially greater than those of the Company, which compete on a nationwide basis. The competition which the Company encounters in Canada and New Zealand is similar in nature to that which it encounters in the United States. The Company estimates that it is one of the largest manufacturers of trade sales coatings in the United States and Canada. With respect to sales of production finishes coatings, the Company's overall position in the industry is relatively small.
Seasonal Aspects - - ----------------
Historically, sales of trade sales coatings have been seasonal in nature, with the heaviest concentration of such sales occurring in the second and third quarters of the year. Sales of production finishes coatings have been relatively stable throughout the year. During 1993, the percentages of the Company's sales of trade sales coatings which were made in the first, second, third and fourth quarters of the year were 20.8%, 29.2%, 29.2% and 20.8%, respectively. Production and inventory schedules are timed to coincide with the aforementioned variations.
Employees - - ---------
As of December 31, 1993, the Company had approximately 1,962 employees, of whom approximately 26% were salaried personnel, approximately 14% were sales representatives, and approximately 60% were hourly employees. The Company considers its relations with its employees to be excellent.
Raw Materials and Supplies - - --------------------------
The Company purchases its raw material and supplies from a wide variety of sources, and does not consider its business to be dependent upon any one source of supply. However, the price and supply of some petrochemical intermediate products, which are important ingredients in the manufacture of coatings, are subject to world political and economic conditions. Certain raw materials are converted into synthetic resins which, when combined with pigments, are used in the production of both the trade sales coatings and the production finishes coatings.
Patent and Trademarks - - ---------------------
The Company does not rely on patents in its business. The Company does, however, rely upon formulas developed by it, and upon its technical expertise and experience in meeting the requirements of its customers. The Company owns a
- 4 -
large number of registered trademarks and trade names, several of which are referred to elsewhere herein, which it considers to be of significance in identifying the Company and its products.
Backlog - - -------
As is typical in the industry, backlog of orders is not significant in the business of the Company.
Environmental Affairs and Governmental Regulation - - -------------------------------------------------
The operations of the Company, like those of other companies engaged in similar businesses, involve the use and disposal of substances regulated under environmental protection laws. The Company believes that its operations are in compliance with applicable federal, state and local laws and regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment. Such laws and regulations have not had any material adverse effect upon the Company's capital expenditures, earnings or competitive position.
The Company places importance on environmental responsibility. Its capital expenditures at new and existing facilities constructed or modified in the normal course of business incorporate designs to minimize waste.
To date the Company has entered into full or partial settlement agreements with governmental authorities or private parties with respect to twelve sites under federal and state laws. Total settlement costs have been approximately $2 million.
The Company is involved in thirty unsettled sites. In all cases the Company believes its share of liability for environmental clean up costs are less than 1% of such costs for each site. A total of approximately $2,312,000 has been accrued as a reserve against such future costs. These cost estimates are carefully reviewed and revised where necessary each quarter during the year. Possible insurance recoveries are not considered in estimating liabilities.
Also, the Company is involved in remedial activities at three of its owned facilities as follows:
1. A water monitoring program continues at the Company's plant in Cuyahoga Heights, Ohio. No remediation activities are being conducted now. Total costs to date are $160,000.
2. Soil and shallow ground water contamination has been detected at the Company's facility at Milford, MA. The affected soils have been excavated and an interim ground water pumping extraction and treatment system has been installed. Further studies are being undertaken to assess the full extent of the water contamination. However, preliminary results indicate that the problem is moderate and is being remediated with traditional technologies. Expenditures to date have been less than $300,000.
3. The Company has expended nearly $5 million over the last nine years to assess and remediate contamination of soil and water at the Company's facility at Santa Clara, California, operated by its subsidiary, Technical Coatings Co. The Company has installed an underground trench along two sides of its property. This trench is capable of capturing the contamination and preventing its migration off the plant site. A biological treatment system treats the pumped water to acceptable cleanup levels. The treated water is used in the paint manufacturing process as cooling water before being discharged to the municipal sewer system or reinjected to the ground for recirculation.
There are ongoing engineering studies to identify and develop additonal remediation techniques to address soil contamination and to clean up contaminated water more rapidly. Current operating and maintenance costs are $100,000 per year.
Adjoining landowners filed suits against the Company claiming damages due to the migration, or potential migration, of the contamination located at the Company's facility at Santa Clara.
In each case the plaintiff or his predecessor in title has conducted activities on its own property which resulted in contamination there. One of these suits was settled during 1993 for $75,000 and an undertaking by the Company to continue the remediation activities at the site. The anticipated liability of the Company in the other suit is not material.
Accrued costs against future cleanup expenses for these three facilities are approximately $700,000.
Federal and state laws require that potentially responsible parties fund remedial actions regardless of fault, legality of original disposal or ownership of a disposal site. In 1993 the Company spent approximately $571,000 on remedial cleanups and related studies compared with approximately $1,113,000 spent for such purposes in 1992.
It is difficult to estimate the ultimate level of future environmental expenditures due to a number of uncertainties, including uncertainties about the current status of the law and regulations, remedial technologies and insurance recoveries of Company costs, as well as information relating to individual sites. Subject to the foregoing, Company management believes its estimates of its liability is reliable and anticipates that capital expenditures and the cost of remedial actions to comply with the current laws governing environmental protection will not have a material adverse effect upon its capital expenditures, earnings or financial position.
ITEM 2.
ITEM 2. PROPERTIES - - -------------------
Set forth below is certain information with respect to the Company's principal facilities:
Approximate Location Principal Use Square Feet Owned/Leased - - -------- ------------- ----------- ------------
Newark, NJ Plant 267,570 Owned
Melrose Park, IL Executive Offices- 145,200 Owned Central Division; Plant
Toronto, ON Executive Offices- 118,792 Owned Subsidiary; Plant
Milford, MA Plant 110,500 Owned
Cuyahoga Heights, OH Plant 106,000 Owned
Colonial Heights, VA Plant 92,800 Owned
Jacksonville, FL Plant 82,400 Owned
Flanders, NJ Central Laboratories, 78,000 Owned Information Resource Center, Executive Offices - Subsidiary
St. Louis, MO Plant 76,750 Owned
Denver, CO Plant 73,450 Owned
Johnstown, NY Plant 66,400 Owned
Houston, TX Plant 64,900 Owned
Montreal, PQ Plant 63,500 Owned
Pell City, AL Plant 62,500 Leased (1)
Commerce, CA Executive Offices- 59,000 Owned Western Division; Plant
Montvale, NJ Corporate Offices; 57,000 Owned Executive Offices- Eastern Division
Nutley, NJ Plant 50,000 Owned
Burlington, ON Plant 45,351 Owned
Santa Clara, CA Plant; Warehouse 38,507 Owned __________________________________ (1) Lease expires August 1995 at which time the facility may be purchased by the Company for $1,000. The Company has a continuing option to purchase the facility at an earlier date.
Approximate Location Principal Use Square Feet Owned/Leased - - -------- ------------- ----------- ------------
Aldergrove, BC Plant 36,900 Owned
Mesquite, TX Plant 29,346 Owned
The Company owns 9.32 acres of land in Lebanon, New Jersey, which is used as a testing facility, and maintains a New York City sales office and an administrative office in Montvale, New Jersey in rented premises. The Company also leases warehouse facilities in North Kansas City, Missouri; Golden Valley, Minnesota; Auckland and Christchurch, New Zealand and in Concord, Edmonton, Saskatoon, Calgary, Winnipeg, Dartmouth and Mount Pearl, Canada. Warehouse arrangements also exist in Portland, Oregon.
All of the other facilities which are stated above as being owned by the Company are owned in fee, free and clear of any mortgages or other material encumbrances. The Company believes that its properties and equipment are well maintained and in good condition, and that the rentals paid by it for its leased properties are at competitive rates. The Company also believes that its facilities are adequate for its existing needs.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS - - --------------------------
The Company is involved in a number of legal actions in which substantial monetary damages are sought. Management believes that the outcome of all such legal actions, individually and in the aggregate, will not have a material effect on the Company's consolidated financial position or results of operations. Also, see "Environmental Affairs and Governmental Regulation" above.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - - ------------------------------------------------------------
There was no submission of matters to a vote of security holders during the fourth quarter of 1993.
PART II
ITEM 5.
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED - - ------------------------------------------------------------------ SECURITY HOLDER MATTERS -----------------------
There is no established public trading market for shares of the Company's common stock. The Company and its Employees' Stock Ownership Benefit Plan, although under no obligation to do so, have in the past purchased shares of the Company's common stock from shareholders in privately negotiated transactions. Usually such purchases are made at the then current fair value of the shares as determined by an independent appraisal firm engaged by the Company. There can be no assurance that such purchases will be continued. As of March 1, 1994, the Company had approximately 1,450 shareholders.
The following table sets forth the high and low price for such shares in each quarter during 1993 and 1992 and the dividends paid in each such quarter.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA - - --------------------------------
Selected Income Statement Data:
Selected Balance Sheet Data:
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - - -------------------------------------------------------------------- AND RESULTS OF OPERATIONS - - -------------------------
OPERATING RESULTS 1993 VS. 1992
Net Sales in 1993 showed strength throughout the year and produced total sales revenues of $511,951,000, which exceeded the previous year by $28,019,000 or 5.8%. Unit gains were generated both in the United States and Canada. Upward selling price movements which were limited had little effect on the year's total sales.
Except for small geographical pockets indicative of specific local conditions, the sales momentum extended to areas which had been affected by adverse economic conditions in the last few years. Most noteworthy were the recoveries in New England and other sections of the Northeast and the business upsurge in southern Florida attributable to the rebuilding following the aftermath of Hurricane Andrew.
Production finishes also reflected unit growth although this market segment represents less than 10% of total sales.
Cost of products sold in 1993 was $267,494,000 which was 5.2% above the prior year. Slightly lower raw material cost levels and production efficiencies were beneficial in keeping the percentage increase .6% lower than the sales increase percentage.
However, selling, administrative and general expenses of $184,255,000 rose $14,164,000 or 8.3%. The largest single increase was for postretirement health benefits. An additional amount of approximately $2,529,000 was charged to earnings consisting of the annual service cost and the amortization of the transition liability as required by SFAS No. 106.
In addition to general inflationary increases and other factors attributable to higher sales volume, two other significant factors contributing to the increase in expenses were the second year of a renewed emphasis on media advertising amounting to approximately $1,000,000 and start-up costs of $1,491,000 associated with the introduction of a broad new line of industrial maintenance products. Sales of the new product line were limited to a market test in 1993. A broadening of distribution is planned in 1994.
Dealer business closures and slow collection continued to be prevalent and, despite tighter credit controls, resulted in high bad debt writeoffs similar to the previous year. In recent months business growth by the Company's Dealers suggest an optimistic outlook for 1994.
Other income in 1993 declined $171,000 from 1992 mostly due to reduced interest income on lower short-term investments. Income before taxes and minority interest was $60,951,000, up $552,000 or .9% over 1992. The effective income tax rate in 1993 was 39.2% compared with 38.9% in 1992. Higher profits and the 1993 tax rate increase accounted for the increased provision for income taxes of $379,000 or 1.6%.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - - --------------------------------------------------------------- RESULTS OF OPERATIONS - - ---------------------
Net income of $36,511,000 represented an improvement of $204,000 or .6% over 1992. Earnings per share in 1993 were $3.75, up $.09 over the prior year. Dividends declared per share edged upward by $.01 to $1.68 in 1993.
The Company's New Zealand subsidiary which consists of a warehouse operation continued to concentrate on sales development in it first full year. Since its initial market test in 1991, there has been little effect on total sales and income.
If the economic recoveries in the Northeast and New England continue into 1994 and inflationary pressures are maintained under control, optimism should prevail for growth in both sales and income.
OPERATING RESULTS 1992 VS. 1991
Net Sales of $483,933,000 in 1992 surpassed the prior year by $20,961,000 or 4.5%. Without a general selling price adjustment in trade sales coatings, the increase was generated by unit gains both in the United States and Canada.
The sales gains in the United States began late in the first half of the year, leveled off for a short period and resumed momentum especially in the fourth quarter. Most areas of the country showed upward movement with noticeable improvement in the southern region, the Midwest, the Northwest, and portions of the Northeast. New England indicated an end of its slide by recovering some of the volume lost in prior years. Slow areas continued to be in the Greater New York market and in California where the economies remained sluggish. Sales in Canada reflected gains throughout the year.
Production finishes sales in the U.S. experienced good growth in 1992 largely due to the acquisition of a general industrial coatings line late in 1991. The acquired product line supplemented existing volume in production finishes coatings and has had no significant change in product mix. Sales of production finishes coatings in Canada were slow.
Cost of products sold was $254,362,000 in 1992 which was $7,747,000 or 3.1% above 1991. As a percent of sales, cost of products sold was 52.6% in 1992 compared with 53.3% in 1991. The unit sales gains were accompanied by a decrease of approximately 3% in raw material cost levels to account for the decline in the percentage.
Selling, administrative and general expenses of $170,091,000 rose $12,246,000 or 7.8% over the prior year. In addition to an inflationary effect of nearly 3.5% in operating expenses, bad debt writeoffs represented a significant increase of $1,162,000 or 17.0% over 1991. Business failures and slow collections were prevalent during the two year period. Close monitoring of accounts Receivable along with the writeoffs resulted in an improvement in the quality of the outstanding Receivables. Another major reason for the increase in expenses was the commencement of a renewed national advertising thrust directed toward
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - - --------------------------------------------------------------- RESULTS OF OPERATIONS - - ---------------------
the consumer especially in large metropolitan areas. The relocation of private label production from Gibbsboro, New Jersey to Newark, New Jersey in the latter part of 1992 also accounted for a one-time charge of approximately $500,000.
Other income in 1992 declined $759,000 from the previous year. Reduced interest rates earned on short-term securities combined with lesser amounts available for temporary investments occasioned the decrease.
Net income before taxes and minority interest was $60,399,000, up $208,000 over 1991.
The Company's effective income tax rate was 38.9% in 1992 as compared with 39.4% in 1991. The provision for income taxes decreased by $189,000 or .8%.
Net income of $36,307,000 in 1992 was $370,000 or 1% above 1991. Earnings per share were $3.66 in 1992, and improvement of $.12 over 1991. Dividends declared per share were $1.67 compared with $1.62 in the prior year.
The Company's warehouse operation in New Zealand which opened in 1991 showed some indication of growth but had little effect on either net sales or net income.
FINANCIAL POSITION AND LIQUIDITY
During 1993 the financial strenth of the Company continued to be evidenced in the ability of the cash flows from operations to meet operating and capital requirements.
Net cash flows provided by operating activities amounted to $32,282,000 in 1993 compared with $39,972,000 in 1992 and $33,772,000 in 1991.
The decrease in operating cash flows of 1993 vs. 1992 was attributable to the additional support required for accounts and notes receivable and for the higher inventories of merchandising material which is reflected in prepaid expenses.
Net cash flows used in investing activities showed a significant increase in 1993 over the prior year.
The completion of the property renovation for a corporate technical and administrative center in Flanders, New Jersey accounted for the increase of over $2,017,000 in capital expenditures of 1993 compared with 1992. The continued reduction in short-term investments was a reflection of the use of internal funds for the Flanders building project as well as, in part, the accounts receivable support.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - - --------------------------------------------------------------- RESULTS OF OPERATIONS - - ---------------------
The cash flows used in financing activities declined over $4,800,000 principally due to lower requirements for the acquisition of treasury stock. Generally, the Company finances its stock repurchases from its working capital in accordance with the conditions described at Part II, Item 5 above. It is expected that any future purchases will be similarly financed.
During the three years ended December 31, 1993 the Company purchased 141,048; 218,110 and 178,683 shares, respectively, of its common stock. In addition, a capital contribution of 42,000 shares was received by the Company in 1991 through a bequest of a deceased senior executive.
Sales of treasury stock are made to employees under an Employees' Stock Purchase Plan. During 1992 and 1991, the Company sold 300 and 229,100 shares, respectively, to employees. In addition, the Company distributed 876; 1,432 and 2,004 shares to non-executive sales employees in 1993, 1992 and 1991, respectively.
During 1993 borrowing by the Company was largely limited to short-term line of credit uses by the Canadian subsidiary. The subsidiary in New Zealand also utilized local bank loans for a majority of its capital requirements.
In 1994 the Company will continue with a major expansion of its production and warehouse facility at Mesquite, Texas. The project which is expected to amount to $8,500,000, is anticipated to consist of several phases with completion in 1995. The closing of the Houston plant and the transfer of production to the Mesquite facility is planned upon completion of the building project at Mesquite. A warehouse addition at an estimated cost of $800,000 is also in progress at the Pell City, Alabama plant.
The renovation of the interior offices at the general administrative offices location in Montvale, New Jersey, at a cost of approximately $1,000,000, is expected to be completed by mid 1994. In addition, the relocation of the Company's Jacksonville, Florida plant, which is located adjacent to the Gator Bowl, will commence within the next year due to the awarding of an NFL football franchise to the city. The property occupied by the plant is included in the local development project. Negotiations are being conducted with the appropriate authorities for property appraisals and a determination of relocation costs.
It is likely that a limited amount of short-term bank borrowing may be necessary to supplement funds from operating cash flows to finance the several construction projects.
OTHER MATTERS
The Company places importance on its environmental responsibilites. Compliance with current laws concerning environmental protection has not resulted in significant capital expenditures and has
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - - --------------------------------------------------------------- RESULTS OF OPERATIONS - - ---------------------
not had a material adverse effect on the Company's earnings or its financial postion. The Company does not anticipate that future costs associated with current laws governing environmental protection will have a material effect upon its capital expenditures, earnings or competitive postion.
For information regarding Financial Accounting Standards that have been issued but not yet adopted by the Company refer to Note 6 of the Notes to Consolidated Financial Statements.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - - ----------------------------------------------------
The consolidated financial statements of the registrant and its subsidiaries, together with notes thereto and the auditors' report, are set forth on pages 17 through 34. The additional financial information set forth in Part IV and included herein should be read in conjunction with the consolidated financial statements.
DELOITTE & TOUCHE - - ---------- ---------------------------------------------- Two Hilton Court Telephone: (201) 631-7000 P.O. Box 319 Facsimilie: (201) 631-7459 Parsippany, New Jersey 07054-0319
INDEPENDENT AUDITORS' REPORT
Benjamin Moore & Co.:
We have audited the accompanying consolidated financial statements of Benjamin Moore & Co. and its subsidiaries, listed in the index at Item 14. Our audits also included the financial statement schedules listed in the Index at Item 14. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Benjamin Moore & Co. and subsidiaries at December 31, 1993 and 1992 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As discussed in Notes to Consolidated Financial Statements listed in the Index at Item 14, the Company changed both its method of accounting for income taxes to conform with Statement of Financial Accounting Standards ("SFAS") No. 109 and its method of accounting for postretirement benefits other than pensions to conform with SFAS No. 106.
/s/ Deloitte & Touche Deloitte & Touche
March 1, 1994
- - --------------- DELOITTE TOUCHE TOHMATSU INTERNATIONAL - - ---------------
BENJAMIN MOORE & CO. and Subsidiaries
See Notes to Consolidated Financial Statements.
BENJAMIN MOORE & CO. and Subsidiaries
See Notes to Consolidated Financial Statements.
BENJAMIN MOORE & CO. and Subsidiaries
See Notes to Consolidated Financial Statements.
BENJAMIN MOORE & CO. and Subsidiaries
See Notes to Consolidated Financial Statements.
BENJAMIN MOORE & CO. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1993, 1992 and 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation --------------------- The financial statements include all majority-owned subsidiaries except for Temporary Co-Ownerships as explained in Note 4 below. All balances and transactions between subsidiaries are eliminated in consolidation.
Foreign Currency Translation ---------------------------- All balance sheet accounts of foreign subsidiaries are translated to United States dollars at current exchange rates. The income statements are translated using the average exchange rates for the period. Adjustments for currency exchange rate fluctuations are excluded from net income and reflected as a separate component of shareholders' equity.
Short-Term Investments ---------------------- Short-term investments consist of United States treasury bills of $14,422,837 in 1993 and $20,850,732 in 1992, stated at cost, which approximates market value, and a mutual fund of short duration portfolio of $6,260,577 in 1993 and $6,024,634 in 1992, carried at the lower of cost or market value. The carrying amount of these investments approximates fair value.
Inventory --------- Inventories are valued at lower of cost, determined by the use of the last-in, first-out (LIFO) method, or market.
Property, Plant and Equipment ----------------------------- The major classes of property along with the depreciation and amortization methods and estimated useful lives used are set forth below:
Major expenditures for renewals and improvements are capitalized; maintenance and repairs are expensed. The cost of property retired or sold is eliminated from the asset account and, after deducting the related accumulated depreciation, any profit or loss is included in income.
Intangible Assets ----------------- Intangible assets acquired during 1993 and 1991, amounting to $1,083,561 and $4,080,000, respectively, are valued at cost and are being amortized over their estimated useful lives. During 1993 and 1992 amortization of such intangibles amounted to $942,685 and $642,632, respectively.
Provision for Income Taxes -------------------------- The Company and its subsidiaries file separate tax returns. The Company provides deferred income taxes on temporary differences between amounts of assets
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and liabilities for financial reporting purposes and such amounts as measured by enacted tax laws. Tax credits are included as a reduction of income tax expense in the year the credits arise.
Pension Expense --------------- It is the Company's policy to fund all qualified pension costs based on calculations made by independent actuaries. Pension expense is determined in accordance with Statement of Financial Accounting Standards No. 87, Employers' Accounting for Pensions. Unrecognized net assets are being amortized over 16-2/3 years for the United States plan and 15 years for the Canadian plan.
Research and Development Costs ------------------------------ Research and development and quality control expenditures are charged to income in the year incurred and amounted to $13,987,537, $12,417,319 and $11,300,763 in 1993, 1992 and 1991, respectively. Quality control expenditures aggregated $5,001,518, $4,716,561 and $4,054,769, respectively, and are included herein because a substantial portion of such expenditures is related to development projects.
Accounting Change ----------------- Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The net unrecorded liability at the date of adoption is being amortized over 20 years (See Note 6). As of the same date, the Company adopted SFAS No. 109, "Accounting for Income Taxes." Prior year financial statements have not been restated. The adoption of SFAS No. 109 resulted in an additional income tax expense of approximately $700,000 in 1993 (See Note 13).
Reclassifications ----------------- Certain reclassifications have been made in the 1991 financial statements to conform to the method of presentation used in 1993.
2. ACCOUNTS AND NOTES RECEIVABLE
December 31, ----------------------- 1993 1992
Trade .................................. $88,940,829 $81,337,135 Other .................................. 1,493,077 1,049,161 ----------- ----------- Total ............................. 90,433,906 82,386,296 Less allowance for doubtful accounts ... 9,674,679 7,836,301 ----------- ----------- Net ............................... $80,759,227 $74,549,995 ----------- ----------- ----------- -----------
Notes receivable due after one year amounted to $12,614,376 and $11,904,207 at December 31, 1993 and 1992, respectively, and are included in Other Assets in the accompanying balance sheet. The carrying amount of notes receivable approximates fair value.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVENTORY
December 31, ----------------------- 1993 1992
Finished goods ......................... $31,223,724 $27,979,303 Raw materials .......................... 20,253,750 21,204,848 ----------- -----------
Total ............................. $51,477,474 $49,184,151 ----------- ----------- ----------- -----------
If the first-in, first-out (FIFO) method of inventory accounting, which approximates current cost, had been used, inventory would have been $15,601,000, $13,142,000 and $15,235,000 higher than reported at December 31, 1993, 1992 and 1991, respectively.
Work-in-process is not significant, due to the brief production cycle, and is included with raw materials.
4. INVESTMENTS IN TEMPORARY CO-OWNERSHIPS
Investments in Temporary Co-Ownerships are carried at cost. These investments, in the capital stock of retail paint stores, are non- interest bearing financing arrangements. All increases in equity from earnings accrue solely to the benefit of the independent co-owners. The Company sells its products to Temporary Co-Ownerships at the same prices and terms used in transactions with all other customers. A reasonable estimate of fair value of the investments in Temporary Co- Ownerships could not be made without incurring excessive costs.
5. PROPERTY, PLANT AND EQUIPMENT
December 31, ----------------------- 1993 1992
Land................................... $ 6,985,753 $ 6,135,827 Buildings.............................. 53,769,421 46,909,858 Machinery, equipment and leasehold improvements......................... 75,353,810 71,572,295 ----------- ----------- Total............................. 136,108,984 124,617,980 Less accumulated depreciation and amortization......................... 75,839,326 69,693,745 ----------- ----------- Property, plant and equipment-net. $60,269,658 $54,924,235 ----------- ----------- ----------- -----------
Capital leases included in the above are as follows:
Classes of Property December 31, ----------------------- 1993 1992
Land................................... $ 96,000 $ 96,000
Buildings.............................. 1,616,902 1,616,902
Machinery, equipment and leasehold improvements............... 3,511,123 3,406,402 ---------- ---------- Total.............................. 5,224,025 5,119,304
Less accumulated depreciation and amortization..................... 3,811,492 3,456,342 ---------- ---------- Net............................... $1,412,533 $1,662,962 ---------- ---------- ---------- ----------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. EMPLOYEE BENEFIT PLANS
Pension Plans -------------
The Company and its subsidiaries have retirement income plans covering substantially all employees. The benefits are based upon years of service and the employee's highest average compensation during any thirty-six consecutive full calendar months of employment.
The funded status and amounts recognized in the Company's balance sheet at December 31, 1993 and 1992, as determined by independent actuaries, are presented below:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net pension costs include the following components:
The discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7 percent and 4 percent, respectively in 1993 and 8 1/2 percent and 6 1/2 percent, respectively in 1992 and 1991. The expected long-term rate of return on assets, net of expenses, was 8.5 percent in 1993 and 9 percent in 1992 and 1991.
Postretirement Medical and Life Insurance Plans -----------------------------------------------
The Company and its subsidiaries have two defined benefit postretirement plans that cover substantially all of the United States employees of the Company and its subsidiaries. One plan provides medical benefits, and the other provides life insurance benefits. The postretirement health care plan is contributory for employees retiring on or after January 1, 1993, with retiree contributions adjusted annually; the life insurance plan is noncontributory. The accounting for the health care plan anticipates future cost-sharing changes to the written plan that are consistent with the Company's expressed intent to increase retiree contributions each year by the same percent increase experienced by the Net Incurred Charges through 1998, after which all future cost increases will be passed onto the retirees.
As of December 31, 1993, the Company has not established any specific funding policy.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the plans' funded status reconciled with the amount shown in the Company's statement of financial position at December 31, 1993.
Net periodic postretirement benefit cost for 1993 included the following components:
Service cost-benefits attributed to service during the period ............. $ 368,000
Interest cost on accumulated postretirement benefit obligation ........ 1,822,000
Net amortization and deferral .............. 1,107,000 ----------
Net periodic postretirement benefit cost ... $3,297,000
For measurement purposes, the 1994 annual rate of increase in the per capita cost of covered health care benefits was assumed to be 14% for costs under age 65 and 11.1% for costs over age 65; the rates were assumed to decrease gradually to 6% for 2020 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rates by 1 percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1993 by $957,000 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $61,000.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average discount rate used in determing the accumulated postretirement benefit obligation was 7 percent.
During 1993, the Company's Canadian subsidiary continued to provide certain health care and life insurance benefits for retired employees as were previously provided to substantially all employees of the Company. Substantially all of the employees of the Company's Canadian subsidiary became eligible for those benefits upon retirement at the normal retirement age. The benefits are provided through insurance companies whose premiums are based upon the benefits paid during the year.
The Company recognized the cost of providing those benefits by expensing the annual insurance premiums, which amounted to approximately $54,000, $822,000 and $703,000 in 1993, 1992 and 1991, respectively.
Postemployment Benefits -----------------------
In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"). This new statement requires an accrual of benefits provided to former or inactive employees after employment but before retirement. The cost of these benefits is currently expensed on a pay-as-you-go basis by the Company. The Company is required to adopt this statement in 1994. It is estimated that adoption of SFAS No. 112 will result in the accrual of a liability of approximately $1,300,000 as of January 1, 1994.
Employees' Stock Ownership Benefit Plan ---------------------------------------
The Company also maintains a qualified Employees' Stock Ownership Benefit Plan (ESOP), covering substantially all of its United States employees. The Board of Directors of the Company is authorized to make contributions from time to time to the plan trust fund.
In 1989, the Company and its ESOP entered into a leveraged transaction whereby the Company borrowed $10,000,000 from a bank and loaned such funds to the ESOP. The ESOP used the loan proceeds to purchase, as restated to reflect the 1990 stock dividend, 239,792.236 shares of the Company's common stock; 87,590 shares from estates and 152,202.236 shares from the Company's treasury stock account. The bank loan bears interest at 7.85% and is payable in ten graduated annual installments through June 30, 1999. Based upon the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the carrying value of the bank loan approximates its current fair value. The common stock purchased by the ESOP is held by the ESOP trustees as collateral for the loan from the Company to the ESOP in a restricted account. Each year the Company will make contributions to the plan, which the plan's trustees will use to repay the loan from the Company in an amount sufficient for the Company to make interest and principal payments on the loan. The collateralized shares of common stock will be released from restriction and allocated to participating employees annually, as of December 31, based upon the percentage of debt service paid during the year then ended to the projected total amount of debt service to be paid under the loan agreement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contributions to the ESOP amounted to $1,160,599, $1,140,564 and $1,096,272 in 1993, 1992 and 1991, respectively.
The Company's Canadian subsidiary maintains a similar plan which covers substantially all of the Company's Canadian employees. The Canadian subsidiary contributed approximately $144,000, $141,000 and $135,000 to the Canadian plan trust fund in 1993, 1992 and 1991, respectively.
Stock Option Plan -----------------
During 1993 the Company adopted a Stock Option Plan. The Plan provides for the granting of non-statutory stock options to officers and other employees of the Company. Options for the purchase of 400,000 shares of common stock, par value $10 per share, may be granted. The options become fully vested over a period of up to four years. During 1993 the Company granted options to purchase 233,785 shares at an option price of $73.26 per share, which is the fair value at the date of grant as determined by independent appraisal. At December 31, 1993 none of the options were exercisable.
7. OTHER LIABILITIES AND ACCRUED EXPENSES
December 31, ----------------------- 1993 1992
Income taxes payable ...................... $ 2,392,051 $ 2,382,132 Salaries, wages and commissions ........... 3,962,768 4,011,129 Customer discounts and allowances ......... 2,757,399 2,625,168 Environmental remediation costs ........... 2,311,094 2,177,619 Other ..................................... 12,672,232 10,362,003 ------------ ------------ Total ............................... $ 24,095,544 $ 21,558,051 ------------ ------------ ------------ ------------
8. GEOGRAPHIC SEGMENT INFORMATION
The Company manufactures and sells coatings for use by the general public and industrial and commercial users in the United States, Canada and New Zealand. Transfers between geographic areas are not significant and are eliminated in consolidation. Assets and operating results by geographic area are as follows:
NET SALES:
United States Foreign Consolidated ------------- ----------- ------------
1993 .......... $454,215,349 $57,736,116 $511,951,465
1992 .......... $426,409,378 $57,523,335 $483,932,713
1991 .......... $404,834,192 $58,137,893 $462,972,085
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INCOME BEFORE TAXES AND MINORITY INTEREST:
United States Foreign Consolidated ------------- ----------- ------------
1993 .......... $56,762,454 $4,188,481 $60,950,935
1992 .......... $56,342,273 $4,056,698 $60,398,971
1991 .......... $55,162,304 $5,028,192 $60,190,496
IDENTIFIABLE ASSETS:
1993 .......... $237,810,998 $38,229,141 $276,040,139
1992 .......... $228,204,051 $35,405,527 $263,609,578
1991 .......... $220,322,784 $35,251,911 $255,574,695
9. SHORT-TERM BORROWINGS
Information regarding the Company's arrangements with banks in the United States, Canada and New Zealand for short-term lines of credit follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
There are no significant compensating cash balances or commitment fees that relate to the above arrangements. Due to the short maturity of these borrowings, the carrying amount approximates fair value.
10. LONG-TERM OBLIGATIONS
December 31, ----------------------- 1993 1992
Loan payable (See Note 6)...................... $ 6,925,000 $ 7,775,000
Capital leases (See Note 11)................... 1,024,191 1,400,000
Total........................................ 7,949,191 9,175,000
Less payments due within one year.............. 1,471,981 1,350,000
Long-term obligations........................ $ 6,477,210 $ 7,825,000
Principal payments of $1,471,981, $1,450,806, $1,126,405, $1,200,000 and $1,300,000 are due in 1994, 1995, 1996, 1997 and 1998, respectively.
11. LEASES
During 1985, the Industrial Development Board of the City of Pell City, Alabama, issued $5,000,000 ten year, First Mortgage Industrial Revenue Bonds, guaranteed by the Company, to an Alabama Bank under a mortgage and trust indenture of which the Bank is the trustee. The bonds bear interest at a floating rate equal to 79% of the Bank's lending rate. The proceeds of the bonds were used by the Industrial Development Board to finance the construction of a plant facility in Pell City, Alabama, which is being leased to the Company for a ten- year period ending September 1, 1995. At the end of the lease term, or earlier in the event of prepayment of this obligation, the plant facility which has been recorded as a capital lease, may be purchased by the Company for $1,000.
The Company also leases data processing equipment, buildings, transportation equipment, autos and miscellaneous equipment under operating leases expiring at various dates.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Minimum future obligations under leases as of December 31, 1993 are as follows:
Rental expense on operating leases (including amounts based on equipment usage) was approximately $8,255,642, $6,912,552 and $6,479,948 for the years ended December 31, 1993, 1992 and 1991, respectively.
12. SHAREHOLDERS' EQUITY
In 1978 the Board of Directors, with shareholder approval, adopted an Employees' Stock Purchase Plan (ESPP). Under the Plan, as restated to reflect stock dividends, up to an aggregate of 800,000 shares of Common Stock held in the treasury may be offered and sold from time to time to employees of the Company and its subsidiaries at the fair value price per share as determined by an independent appraisal firm, at the date of offering. Since 1979, 509,965 shares have been sold to employees. During 1992, the Company sold 300 shares to employees.
Notes receivable outstanding with respect to the above referenced Plan, as well as the ESOP note receivable, as of December 31, 1993 and 1992 are reflected in the Balance Sheets as reductions in shareholders' equity. The notes received by the Company relative to the 1991 ESPP offering are non-interest bearing.
Treasury stock is reflected at acquisition value, determined by the use of the first-in, first-out (FIFO) method. Sales and distributions of treasury shares are recorded at fair value price per share. Any excess of such fair value proceeds over the FIFO cost is reflected as additional paid-in capital.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 1993 and 1991, the Company received capital contributions of $20,515 and 42,000 shares, respectively, through the bequest of a deceased senior executive.
A reconciliation of the number of common shares outstanding is as follows:
13. INCOME TAXES
The composition of the income tax provision is as follows:
1993 1992 1991
State and local income taxes .... $ 4,595,010 $ 4,749,421 $ 4,412,758 Foreign income taxes ........... 1,946,324 1,732,755 2,112,240 Federal income taxes: Current ....................... 18,310,612 17,751,496 17,984,412 Deferred ...................... (954,885) (715,644) (802,519)
Total ...................... $23,897,061 $23,518,028 $23,706,891
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred income taxes represent the tax effects of recognizing certain expenses in different periods for tax and financial reporting, none of which are individually significant in any year.
A reconciliation of the statutory federal tax rate and effective tax rate is as follows:
1993 1992 1991
Statutory tax rate................. 35.0% 34.0% 34.0%
Effect of: State and local income taxes.. 4.9 5.2 4.8
Other - net................... (.7) (.3) .6 ---- ---- ---- Effective tax rate................. 39.2% 38.9% 39.4% ---- ---- ---- ---- ---- ----
The Company does not accrue Federal income taxes on its equity in the undistributed earnings of its Canadian subsidiary, which amounted to $23,902,094, $22,358,291 and $21,429,758 at December 31, 1993, 1992 and 1991, respectively, because the Company intends to reinvest such earnings indefinitely.
14. OTHER (INCOME) EXPENSE, NET
The components of other (income) and expense, net are as follows:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - - ---------------------------------------------------------------------- AND FINANCIAL DISCLOSURE - - ------------------------
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - - ------------------------------------------------------------
Reference is made to the information set forth under the captions (i) "ELECTION OF DIRECTORS" at pages 3, 4 and 5 and "Compliance with Section 16(a) of the Securities Exchange Act" at page 21 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of Shareholders, which information is hereby incorporated by reference, and (ii) "EXECUTIVE OFFICERS" at page 36 of this Annual Report on Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION - - --------------------------------
Reference is made to the information set forth under the caption "DIRECTOR COMPENSATION" and "EXECUTIVE COMPENSATION" at pages 8, 9 and 10 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of Shareholders, which information is hereby incorporated by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND - - ---------------------------------------------------------------------- MANAGEMENT - - ----------
(a) Security Ownership of Certain Beneficial Owners
Reference is made to the information set forth under the caption "PRINCIPAL SHAREHOLDERS" at pages 2 and 3 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of Shareholders, which information is hereby incorporated by reference.
(b) Security Ownership of Management
Reference is made to the information set forth under the caption "ELECTION OF DIRECTORS - Ownership of Securities by Nominees and Directors" at pages 5, 6 and 7 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of Shareholders, which information is hereby incorporated by reference.
(c) Changes in Control
To the knowledge of the Company, there are no arrangements the operation of which may at a subsequent date result in a change in control of the Company.
EXECUTIVE OFFICERS ------------------
The executive officers of the Company are elected each year by the directors of the Company, and are as follows:
Name Office Age - - ---- ------ ---
Richard Roob....................Chairman of the Board of Directors........... 61
Maurice C. Workman.........................President.................................... 65
Benjamin M. Belcher, Jr.........Executive Vice President..................... 59
Ward C. Belcher.................Vice President-Operations.................... 47
Richard H. Delventhal...........Controller................................... 57
Yvan Dupuy......................Vice President-Sales and Marketing........... 42
William J. Fritz................Vice President-Finance and Treasurer......... 63
John J. Oberle..................Vice President-Manufacturing and Technology.. 64
John T. Rafferty................Secretary and General Counsel................ 61
Charles C. Vail.................Vice President-Human Resources............... 50
_____________________________________
All of the executive officers of the Company have during a period in excess of the past five years, been actively engaged in the business and affairs of the Company in various senior management capacities.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - - --------------------------------------------------------
Reference is made to the information set forth under the caption "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" at pages 10 and 11 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of Shareholders, which information is hereby incorporated by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS - - ------------------------------------------------------------- ON FORM 8-K -----------
(a)(1) List of Financial Statements Included Under Item 8 -------------------------------------------------- of this Report. ---------------
Independent Auditors' Report................................... 17
Consolidated Statements of Income for the Years Ended December 31, 1993, 1992 and 1991............................ 18
Consolidated Balance Sheets, December 31, 1993 and 1992.................................................... 19
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1993, 1992 and 1991............................................... 20
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991...................... 21
Notes to Consolidated Financial Statements for the Years Ended December 31, 1993, 1992 and 1991...................... 22-34
(2) Financial Statement Supplemental Schedule. ------------------------------------------
I.... Short-Term Investments, December 31, 1993.............. 43
II... Amounts Receivable From Related Parties, and Underwriters, Promoters and Employees Other Than Related Parties For the Year Ended December 31, 1993...................................... 44-46
VIII. Consolidated Valuation and Qualifying Accounts For the Years Ended December 31, 1993, 1992 and 1991.................................... 47
X.... Supplementary Consolidated Income Statement Information for the Years Ended December 31, 1993, 1992 and 1991.......................... 48
All other schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission are omitted because of the absence of conditions under which they are required or because the information required thereby is shown in the financial statements or notes thereto.
The individual financial statements of the Company have been omitted because the Company is primarily an operating company and all subsidiaries are included in the consolidated financial statements being filed. In addition, in the aggregate, such subsidiaries do not have minority equity interests and/or indebtedness to any person other than the Company or its consolidated subsidiaries in amounts which together exceed 5 percent of the total assets of the Company at December 31, 1993 and 1992.
(b) Reports on Form 8-K ------------------- No reports on Form 8-K have been filed by the Company during the last quarter of the fiscal year ended December 31, 1993.
(c) List of Exhibits ---------------- (3) Restated Certificate of Incorporation and Bylaws of the Company.
(i) Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3(a) of the Company's Registration Statement under the Securities Act of 1933, as amended, on Form S-1 - Registration No. 2-62626).
Reference is made to the information set forth under the caption "Amendment of the Restated Certificate of Incorporation" at pages 10 and 11 of the Company's Proxy Statement dated March 22, 1985, for use in connection with its 1985 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
Reference is made to the information set forth under the caption "Limitation of Liability of Directors and Officers to the Maximum Extent Permitted by New Jersey Law" at pages 10, 11, 12 and 13 of the Company's Proxy Statement dated March 28, 1988, for use in connection with its 1988 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
Reference is made to the information set forth under the caption "Amendment of the Restated Certificate of Incorporation" at pages 11 and 12 of the Company's Proxy Statement dated March 21, 1989, for use in connection with its 1989 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
Reference is made to the information set forth under the caption "Amendment of the Certificate of Incorporation" at pages 15, 16 and 17 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
(ii) Bylaws of the Company (incorporated herein by reference to Exhibit 3(b) of the Company's Registration Statement under the Securities Act of 1933, as amended, on Form S-1 - Registration No. 2-62626).
Reference is made to the information set forth under the caption "Indemnification of Directors, Officers and Employees" at pages 13 and 14 of the Company's Proxy Statement dated March 28, 1988, for use in connection with its 1988 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
Reference is made to the information set forth under the caption "Approval of Amendments of the Company Bylaws" at pages 17 through 21 of the Company's Proxy Statement dated March 28, 1994, for use in connection with its 1994 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
(10) Material Contracts
(iii) (A) Employees' Stock Purchase Plan of the Company (incorporated herein by reference to Exhibit 4(a) of the Company's Registration Statement under the Securities Act of 1933, as amended, on Form S-8 - Registration No. 33-2694).
Reference is made to the information set forth under the caption "Amendment of Employees' Stock Purchase Plan" at pages 11 and 12 of the Company's Proxy Statement dated March 25, 1991, for use in connection with its 1991 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
Reference is made to the information set forth under the caption "Approval of the Stock Option Plan" at pages 13, 14 and 15 of the Company's Proxy Statement dated March 22, 1993, for use in connection with its 1993 Annual Meeting of the Shareholders, which information is hereby incorporated by reference.
(22) Subsidiaries of the Company..................Page 49
(24) Consent of Experts and Counsel...............Page 50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in Montvale, New Jersey, on the 30th day of March, 1994.
BENJAMIN MOORE & CO.
By /s/ Maurice C. Workman -------------------------- Maurice C. Workman President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Maurice C. Workman and Richard Roob, and each of them, his true and lawful attorneys-in- fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
_________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ----
Chairman of the Board of Directors (Principal /s/ Richard Roob Executive Officer); --------------------- Richard Roob Director March 30, 1994
President (Principal /s/ Maurice C. Workman Executive Officer); ----------------------- Maurice C. Workman Director March 30, 1994
Vice President - Finance and Treasurer (Principal Financial Officer and Principal /s/ W.J. Fritz Accounting Officer); ----------------------- William J. Fritz Director March 30, 1994
/s/ Benjamin M. Belcher, Jr. Director March 30, 1994 ---------------------------- Benjamin M. Belcher, Jr.
/s/ W.C. Belcher Director March 30, 1994 ----------------------- Ward C. Belcher
/s/ Charles H. Bergmann Director March 30, 1994 -------------------------- Charles H. Bergmann
/s/ Yvan Dupuy Director March 30, 1994 ------------------------- Yvan Dupuy
/s/ Ralph W. Lettieri Director March 30, 1994 ------------------------- Ralph W. Lettieri
/s/ Lee C. McAlister Director March 30, 1994 ------------------------- Lee C. McAlister
/s/ John C. Moore Director March 30, 1994 ------------------------- John C. Moore
/s/ Michael C. Quaid Director March 30, 1994 ------------------------- Michael C. Quaid
/s/ J. Sobie Director March 30, 1994 ------------------------- Joseph Sobie
Signature Title Date --------- ----- ----
/s/ Charles C. Vail Director March 30, 1994 ------------------------- Charles C. Vail
/s/ Ward B. Wack Director March 30, 1994 ------------------------- Ward B. Wack
/s/ Sara B. Wardell Director March 30, 1994 ------------------------- Sara B. Wardell
SCHEDULE I
BENJAMIN MOORE & CO. and Subsidiaries SHORT-TERM INVESTMENTS December 31, 1993
Col. A Col. B Col. C
Number of Shares or Name of Issuer and Units - Principal Amount Cost of Title of Each Issue of Bonds and Notes Each Issue - - --------------------------------------------------------------------------------
United States treasury bills ..... $ 14,422,837 $14,422,837
Infinity Mutual Funds ............ 1,251,019.018 shares 6,260,577 ----------- $20,683,414 ----------- -----------
Information required by Columns D & E is omitted since short-term investments are valued at cost, and such cost approximates market value.
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E Balance at end of period ------------------------
Balance at beginning Amounts Name of debtor of period Additions collected Current Not Current - - -------------------------------------------------------------------------------- Benjamin M. Belcher, Jr.: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 13,288 5,276 5,276 2,736 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 12,336 2,540 2,540 7,256 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
Ward C. Belcher: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 14,454 5,276 5,276 3,902 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 41,120 8,468 8,468 24,184 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084 5% Stock Purchase Plan Note dated 5/2/88, due in 9 annual installments 15,451 3,615 3,104 8,732
Yvan Dupuy: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 5,316 2,110 2,110 1,096
5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 16,448 16,448 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E Balance at end of period ------------------------
Balance at beginning Amounts Name of debtor of period Additions collected Current Not Current - - -------------------------------------------------------------------------------- Yvan Dupuy: Continued Non-Interest Bearing Stock Purchase Plan Note dated 2/3/92, due in 10 annual installments 44,546 5,211 2,299 37,036
Richard H. Delventhal: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 5,316 2,110 2,110 1,096 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 12,336 2,540 2,540 7,256 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
Joel J. Mayor: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 5,782 2,110 2,110 1,562 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 21,454 4,234 4,234 12,986 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
John T. Rafferty: 5% Stock Purchase Plan Note dated 8/8/89, due in 9 annual installments 38,141 6,509 6,509 25,123 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
Schedule II
BENJAMIN MOORE & CO. and Subsidiaries AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 1993
COL. A COL. B COL. C COL. D COL. E Balance at end of period ------------------------
Balance at beginning Amounts Name of debtor of period Additions collected Current Not Current - - -------------------------------------------------------------------------------- Richard Roob: 5% Stock Purchase Plan Note dated 2/28/86, due in 9 annual installments 13,288 5,276 5,276 2,736 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 41,120 8,468 8,468 24,184 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084 5% Stock Purchase Plan Note dated 5/2/88, due in 9 installments 15,451 3,615 3,104 8,732
Charles C. Vail: 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 12,336 12,336 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
Maurice C. Workman: 5% Stock Purchase Plan Note dated 2/28/86, due in 7 annual installments 4,244 4,244 5% Stock Purchase Plan Note dated 7/22/88, due in 9 annual installments 12,336 4,540 2,540 7,256 Non-Interest Bearing Stock Purchase Plan Note dated 1/1/91, due in 10 annual installments 99,950 7,933 7,933 84,084
SCHEDULE VIII
SCHEDULE X
BENJAMIN MOORE & CO. and Subsidiaries SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
- - -------------------------------------------------------------------------------- COLUMN A COLUMN B - - -------------------------------------------------------------------------------- Item Charges to Costs and Expenses ---- ----------------------------- 1993 1992 1991 ---- ---- ----
Advertising costs......................$30,508,550 $27,716,894 $26,456,383