1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 0-14324
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Moore-Handley, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0819773
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
Highway 31 South, Pelham, Alabama 35124
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (205) 663-8011
------------------------------
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
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.10 par value 2,209,543 shares
- -------------------------------- ---------------------------------
Class Outstanding at July 18, 1995
2
Moore-Handley, Inc.
INDEX
Page No.
PART I. FINANCIAL INFORMATION - UNAUDITED
Item 1. Balance Sheets - June 30, 1995
and 1994 and December 31, 1994. 3
Statements of Operations -
Three Months and Six Months Ended
June 30, 1995 and 1994. 4
Statements of Cash Flows -
Six Months Ended June 30, 1995
and 1994. 5
Notes to Financial Statements. 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 7-9
Item 4. Submission of Matters to a Vote of
Security Holders 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 10
Signatures 11
2
3
Moore-Handley, Inc.
Balance Sheets
June 30, 1995 and 1994 and December 31, 1994
ASSETS
June 30, December 31,
1995 1994 1994
------ ------ ------
Current assets: (unaudited) (unaudited)
Cash and cash equivalents $ 387,000 $ 451,000 $ 781,000
Trade receivables, net 21,150,000 19,081,000 20,349,000
Other receivables 1,942,000 1,818,000 1,947,000
Merchandise inventory 15,772,000 14,831,000 18,713,000
Prepaid expenses 284,000 768,000 243,000
Deferred income taxes 714,000 632,000 714,000
----------- ----------- -----------
Total current assets 40,249,000 37,581,000 42,747,000
Prepaid pension cost 606,000 662,000 704,000
Loan to officer 25,000 37,000 31,000
Property and equipment: 15,797,000 15,173,000 15,270,000
Less accumulated depreciation (8,580,000) (7,651,000) (8,054,000)
----------- ----------- -----------
Net property and equipment 7,217,000 7,522,000 7,216,000
Deferred charges, net 47,000 54,000 50,000
----------- ----------- -----------
$48,144,000 $45,856,000 $50,748,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $ 5,500,000 $ 3,500,000 $ 8,500,000
Accounts payable 18,214,000 17,480,000 17,902,000
Accrued payroll 497,000 622,000 407,000
Accrued income tax 22,000 132,000 124,000
Other accrued liabilities 1,526,000 1,907,000 1,542,000
Long-term debt due in one year 876,000 800,000 843,000
----------- ----------- -----------
Total current liabilities 26,635,000 24,441,000 29,318,000
Long-term debt 4,253,000 5,154,000 4,699,000
Deferred income taxes 988,000 968,000 988,000
Stockholders' equity:
Common stock, $.10 par value;
10,000,000 shares authorized,
2,510,040 shares issued 251,000 251,000 251,000
Other stockholders' equity 16,017,000 15,042,000 15,492,000
----------- ----------- -----------
Total stockholders' equity 16,268,000 15,293,000 15,743,000
----------- ----------- -----------
$48,144,000 $45,856,000 $50,748,000
=========== =========== ===========
See accompanying notes.
3
4
Moore-Handley, Inc.
Statements of Operations
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
Net sales $36,676,000 $33,825,000 $72,442,000 $67,809,000
Cost of merchandise sold 30,752,000 27,913,000 60,689,000 56,082,000
Warehouse and delivery
expense 2,019,000 1,991,000 4,001,000 3,911,000
----------- ----------- ----------- -----------
Cost of sales 32,771,000 29,904,000 64,690,000 59,993,000
----------- ----------- ----------- -----------
Gross profit 3,905,000 3,921,000 7,752,000 7,816,000
Selling & administrative
expense 3,400,000 3,104,000 6,545,000 6,134,000
----------- ----------- ----------- -----------
Operating income 505,000 817,000 1,207,000 1,682,000
Interest expense, net 140,000 127,000 366,000 285,000
----------- ----------- ----------- -----------
Income before provision
for income tax 365,000 690,000 841,000 1,397,000
Income tax 138,000 259,000 316,000 524,000
----------- ----------- ----------- -----------
Net income $ 227,000 $ 431,000 $ 525,000 $ 873,000
=========== =========== =========== ===========
Net income per
common share $ 0.10 $ 0.19 $ 0.23 $ 0.39
=========== =========== =========== ===========
Weighted average common
shares outstanding 2,238,000 2,280,000 2,238,000 2,259,000
=========== =========== =========== ===========
See accompanying notes.
4
5
Moore-Handley, Inc.
Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994
(unaudited)
1995 1994
-------- --------
Cash flows from operating activities:
Net income $ 525,000 $ 873,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 529,000 508,000
Provision for doubtful accounts 168,000 180,000
Gain on sale of equipment ---- (90,000)
Change in assets and liabilities:
Trade and other receivables (964,000) (1,415,000)
Merchandise inventory 2,941,000 (89,000)
Other assets (39,000) (453,000)
Accounts payable and accrued expenses 386,000 4,709,000
----------- -----------
Total adjustments 3,021,000 3,350,000
----------- -----------
Net cash flows provided by
operating activities 3,546,000 4,223,000
Cash flows from investing activities:
Capital expenditures (527,000) (609,000)
Proceeds from sale of equipment ---- 93,000
----------- -----------
Net cash flows used in
investing activities (527,000) (516,000)
Cash flows from financing activities:
Net payments under bank loans (3,000,000) (3,950,000)
Principal borrowings (payments) under
long-term debt (413,000) 107,000
----------- -----------
Net cash flows used in
financing activities (3,413,000) (3,843,000)
----------- -----------
Net decrease in cash and
cash equivalents (394,000) (136,000)
Cash and cash equivalents
at beginning of period 781,000 587,000
----------- -----------
Cash and cash equivalents
at end of period $ 387,000 $ 451,000
=========== ===========
See accompanying notes.
5
6
MOORE-HANDLEY, INC.
Notes to Financial Statements
(Information pertaining to the six months
ended June 30, 1995 and 1994 is unaudited)
Note 1. Basis of presentation.
The financial statements included herein have been prepared by Moore-
Handley, Inc. (the "Company"), without audit, pursuant to the rules and regula
tions of the Securities and Exchange Commission (the "Commission"). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in conjunc
tion with the financial statements and the notes thereto included in the Com
pany's Annual Report on Form 10-K filed with the Commission on March 8, 1995.
The financial information presented herein reflects all adjustments (con
sisting only of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement of the results of the interim
periods. The results for interim periods are not necessarily indicative of
results to be expected for the year.
6
7
Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
Net Sales
Net sales for the quarter ended June 30, 1995 increased by approximately
8% compared to the same quarter in the prior year and for the six months
increased by 7%. Factory direct shipments increased 24% for the quarter and
19% for the six months. The Company believes this reflects the change in the
customer base towards larger customers.
The following table sets forth the major elements of net sales:
Three Months Ended June 30,
--------------------------------------
1995 1994
--------------- ---------------
(dollars in thousands)
Net Sales:
Warehouse shipments.............. $25,202 68.7% $24,553 72.6%
Factory direct shipments......... 11,474 31.3 9,272 27.4
------- ----- ------- -----
Net Sales................... $36,676 100.0% $33,825 100.0%
======= ===== ======= =====
Six Months Ended June 30,
--------------------------------------
1995 1994
--------------- ---------------
(dollars in thousands)
Net Sales:
Warehouse shipments.............. $49,867 68.8% $48,828 72.0%
Factory direct shipments......... 22,575 31.2 18,981 28.0
------- ----- ------- -----
Net Sales................... $72,442 100.0% $67,809 100.0%
======= ===== ======= =====
In the second quarter of 1994 the Company began a program of hiring
sales service assistants to work with certain of the more senior territory
managers. Because of this, comparisons of sales per territory manager are no
longer meaningful. During the second quarter of 1995 the Comapny had an
average of 82 field sales personnel as compared to 75 in 1994.
Operations
The following table sets forth certain financial data as a percentage of
net sales for the periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
----------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
Net sales...............................100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Gross margin............................ 16.2 17.5 16.2 17.3
Warehouse and delivery expense.......... 5.5 5.9 5.5 5.8
----- ----- ----- -----
Gross profit............................ 10.7 11.6 10.7 11.5
Selling & administrative expenses....... 9.3 9.2 9.0 9.0
----- ----- ----- -----
Operating income........................ 1.4 2.4 1.7 2.5
Interest expense, net................... .4 .4 .5 .4
----- ----- ----- -----
Income before provision
for income taxes...................... 1.0% 2.0% 1.2% 2.1%
===== ===== ===== =====
7
8
Gross Margin
The gross margin percentage for the second quarter of 1995 was 16.2%, down
from 17.5% in the second quarter of 1994. About half the decrease in the gross
margin percentage was due to the increase in the proportion of total shipments
represented by factory direct shipments which carry a lower gross margin
percent age. The balance of the decrease was due to more competitive pricing.
The following table sets forth the trend of gross margin dollars, gross
margin percentages and year-over-year changes for 1994 and the first and second
quarters of 1995:
Increase (Decrease)
vs. Same Quarter
Gross Margin in Previous Year
------------------------------ ---------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
----------- -------------- ---------- -------------- ----------
1994 - 1st $5,815 17.1 $340 .1
2nd 5,912 17.5 60 (.2)
3rd 5,936 16.2 134 (.4)
4th 5,546 17.4 389 (.2)
1995 - 1st 5,829 16.3 14 (.8)
2nd 5,924 16.2 12 (1.2)
Warehouse & Delivery Expenses
Warehouse and delivery expenses increased from $1,991,000 in the second
quarter of 1994 to $2,019,000 in the current year. However, they decreased
slightly as a percent of warehouse shipments. The following table shows the
trend of warehouse and delivery expenses in 1994 and the first and second
quarters of 1995:
Increase (Decrease)
Warehouse & Delivery vs. Same Quarter
Expenses in Previous Year
------------------------------- --------------------------
Percentage
Amount of Warehouse Amount Percentage
Quarter (in thousands) Shipments (in thousands) Points
--------- -------------- ------------ -------------- ----------
1994 - 1st $1,920 7.9 $104 .1
2nd 1,991 8.1 66 .0
3rd 1,994 7.9 35 (.4)
4th 2,013 8.4 98 (.2)
1995 - 1st 1,982 8.0 62 .1
2nd 2,019 8.0 28 (.1)
Selling & Administrative Expense
Selling and administrative expenses for the quarter ended June 30, 1995
increased by $296,000 or 9.5% compared to the corresponding quarter of 1994.
As a percentage of sales these expenses increased slightly from 9.2% in the
second quarter of 1994 to 9.3% in the second quarter of 1995. This increase
was due in part to upgrading the company's computer system and in part to the
increase in sales personnel.
The following table shows the quarterly trend of selling and
administrative expenses in 1994 and the first and second quarters of 1995:
8
9
Increase (Decrease)
Selling & Administrative vs. Same Quarter
Expenses in Previous Year
---------------------------- --------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
--------- -------------- ---------- -------------- ----------
1994 - 1st $3,030 8.9 $(268) (1.3)
2nd 3,104 9.2 (85) (.5)
3rd 3,298 9.0 38 (.4)
4th 2,928 9.2 (186) (1.4)
1995 - 1st 3,145 8.8 115 (.1)
2nd 3,400 9.3 296 .1
Liquidity and Capital Resources
The company's trade receivables increased by $801,000 from December 31,
1994 to June 30, 1995 as a result of the higher level of sales.
At June 30, 1995 the Company had unused lines of credit of $5,500,000,
which it believes are adequate to finance its working capital requirements.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the Registrant was held on Thursday, April 27, 1995
at 10:00 a.m. At the meeting, each of Messrs. William Riley, Pierce E. Marks,
Jr., L. Ward Edwards, Michael B. Stubbs and Ronald J. Juvonen was re-elected as
a director of the Registrant.
The following table sets forth the distribution of votes cast with regard
to each of the nominees:
Votes Cast Votes
Nominee for Nominee Withheld
- ------- ----------- --------
William Riley 2,193,067 500
----------- --------
Pierce E. Marks, Jr. 2,193,067 500
----------- --------
L. Ward Edwards 2,193,067 500
----------- --------
Michael B. Stubbs 2,193,067 500
----------- --------
Ronald J. Juvonen 2,193,067 500
----------- --------
9
10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits --
10.1 Employment Agreement, dated as of June 5, 1995, between the
Company and Emery H. White.
10.2 Letter Agreement, dated June 5, 1995, between the Company
the Company and Emery H. White.
27 Financial Data Schedule (for SEC purposes only)
(b) There were no reports on Form 8-K filed by the Company during the
six month period ended June 30, 1995.
10
11
SIGNATURE
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.
Moore-Handley, Inc.
---------------------------
(Registrant)
Date: July 21, 1995 /s/ L. Ward Edwards
-------------------- -------------------------------
L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
11
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MOORE-HANDLEY, INC.
INDEX OF EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3(a) Restated Certificate of Incorporation of Company, filed as Exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1987 and incorporated herein by reference.
(a)-1 Amendment to Restated Certificate of Incorporation dated May 7, 1987, filed as Exhibit 3(a)-1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by
reference.
(b) By-laws of the Company, filed as Exhibit 3(d) to the Company's Registration Statement on Form S-1 (Reg.
No. 33-3032) and incorporated herein by reference.
(b)-1 Article VII of By-laws of the Company, as amended May 7, 1987, filed as Exhibit 3(b)-1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by reference.
4(a) Lease Agreement, dated as of December 1, 1981, as amended, between the Company and the Industrial
Development Board of the Town of Pelham (the "Board"), filed as Exhibit 10(a) to the Company's
Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(b) Guarantee Agreement, dated as of December 1, 1981, between the Company and the First Alabama Bank of
Birmingham, as Trustee ("Trustee"), filed as Exhibit 10(b) to the Company's Registration Statement on Form
S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(c) Mortgage and Trust Indenture, dated as of December 1, 1981, between the Trustee and the Board, filed as
Exhibit 10(c) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated
herein by reference.
(d) Lease Agreement, dated as of December 1, 1982, between the Company and the Board, filed as Exhibit 10(d)
to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by
reference.
(e) Guarantee Agreement, dated as of December 1, 1982, between the Company and the Trustee, filed as Exhibit
10(e) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by
reference.
(f) Mortgage and Trust Indenture, dated as of December 1, 1982, between the Trustee and the Board, filed as
Exhibit 10(f) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated
herein by reference.
(g) Guarantee Agreement, dated as of December 30, 1986, between the Company and the First Alabama Bank of
Birmingham, as Trustee ("Trustee"), filed as Exhibit 10(dd) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987 and incorporated herein by reference.
(h) Mortgage and Trust Indenture, dated as of December 30, 1986, between the Trustee and the Board, filed as
Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the year ended December 31, 1987 and
incorporated herein by reference.
(i) Master Lease Agreement, dated as of September 30, 1993, between the Company and The CIT Financing, related
to the lease of 10 Navistar Tractors for the term of 36 months and incorporated herein by reference.
*10(n)-3 Amended and Restated Moore-Handley, Inc. Salaried Pension Plan, dated February 10, 1992 but effective
January 1, 1989, filed as Exhibit 10(n)-3 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference.
*(n)-4 Amendment No. 6 to The Moore-Handley Incorporated Salaried Pension Plan, dated February 10, 1992, filed as
Exhibit 10(n)-4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference.
(n)-5 Amendment No. 2 to The Moore-Handley Incorporated Salaried Pension Plan, dated December 29, 1994, filed as
Exhibit 10(n)-5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
(o)-3 Amended and Restated Moore-Handley, Inc. Hourly Employees' Retirement Plan dated February 10, 1992 but
effective January 1, 1989, filed as Exhibit 10(o)-3 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 and incorporated herein by reference.
(o)-4 Amendment No. 2 to the Moore-Handley, Inc. Hourly Employees' Retirement Plan, dated December 29, 1994,
filed as Exhibit 10(0)-4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
*(p)-1 Amended and restated The Moore-Handley Salaried Employees' Savings Plan and Trust dated February 4, 1994
but effective January 1, 1989, filed as Exhibit 10(p)-1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
12
13
EXHIBIT NO. DESCRIPTION
- ----------- -----------
(q)-3 Collective Bargaining Agreement between the Company and United Wholesale and Warehouse Employees' Union,
effective December 23, 1992 through December 23, 1995, filed as Exhibit 10(q)-3 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference.
*(r) The Moore-Handley Return-on-Investment Bonus Program, dated February 23, 1983, filed as Exhibit 10(r) to
the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
*(aa) Form of Stock Subscription Agreement, dated as of January 29, 1986, between the Company and certain
managers of the Company, filed as Exhibit 10(aa) to the Company's Registration Statement on Form S-1 (Reg.
No. 33-3032) and incorporated herein by reference.
(bb) Form of Amendatory Agreements, dated as of March 3, 1986 between the Company, the Trustee and the Board,
relating to the Lease Agreements listed as items 10(c) and 10(d), respectively, filed as Exhibit 10(bb) to
the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(cc) Lease Agreement, dated as of December 30, 1986, between the Company and the Industrial Development Board
of the Town of Pelham (the "Board"), filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987 and incorporated herein by reference.
*(dd) Agreement dated August 15, 1989 between the Company and John L. Sawyer related to the purchase of common
stock, filed as Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by refer ence.
*(ee) Agreement dated August 15, 1989 between the Company and J. Franklin West related to the purchase of common
stock, filed as Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by reference.
*(ff) 1991 Incentive Compensation Plan, filed as Exhibit A to the Company's Proxy Statement dated April 30, 1991
and incorporated herein by reference.
*(gg) The Moore-Handley, Inc. Employees' 401(k) Profit Sharing Prototype Non-Standardized Adoption Agreement
effective July 1, 1993 and incorporated herein by reference.
*10.1 Employment Agreement, dated June 5, 1995, between the Company and Emery H. White.
*10.2 Letter Agreement, dated June 5, 1995, between the Company and Emery H. White.
27 Financial Data Schedule (for SEC purposes only)
_________________
* Management contract or management compensation plan or arrangement.
13