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, 1996
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
---------
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)
(205) 663-8011
--------------
(Registrant's telephone number, including area code)
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 2,164,543 shares
- -------------------------------- ---------------------------------
Class Outstanding at July 10, 1996
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MOORE-HANDLEY, INC.
INDEX
Item No. Page No.
- -------- --------
PART I. FINANCIAL INFORMATION
1. Financial Statements - Unaudited
Balance Sheets -
June 30, 1996 and 1995
and December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations -
Three Months and Six Months Ended
June 30, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows -
Six Months Ended June 30, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Note to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-10
PART II. OTHER INFORMATION
4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11
6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3
MOORE-HANDLEY, INC.
BALANCE SHEETS
JUNE 30, 1996 AND 1995 AND DECEMBER 31, 1995
(UNAUDITED)
JUNE 30,
--------------------------------- DECEMBER 31,
1996 1995 1995
------------ ------------ ------------
(unaudited) (unaudited)
ASSETS:
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . $ 351,000 $ 387,000 $ 197,000
Trade receivables, net . . . . . . . . . . . . . . . . 20,031,000 21,150,000 21,267,000
Other receivables . . . . . . . . . . . . . . . . . . . 2,068,000 1,942,000 1,798,000
Merchandise inventory . . . . . . . . . . . . . . . . . 15,338,000 15,772,000 15,331,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . 344,000 284,000 215,000
Refundable income tax . . . . . . . . . . . . . . . . . 221,000 --- 319,000
Deferred income taxes . . . . . . . . . . . . . . . . . 470,000 714,000 470,000
----------- ----------- -----------
Total current assets . . . . . . . . . . . . . . . . . 38,823,000 40,249,000 39,597,000
Prepaid pension cost . . . . . . . . . . . . . . . . . . 719,000 606,000 735,000
Loan to officer . . . . . . . . . . . . . . . . . . . . . --- 25,000 19,000
Property and equipment . . . . . . . . . . . . . . . . . 18,349,000 15,797,000 16,500,000
Less accumulated depreciation . . . . . . . . . . . . . (9,671,000) (8,580,000) (9,079,000)
----------- ----------- -----------
Net property and equipment . . . . . . . . . . . . . . 8,678,000 7,217,000 7,421,000
Deferred charges, net . . . . . . . . . . . . . . . . . . 40,000 47,000 43,000
----------- ----------- -----------
$48,260,000 $48,144,000 $47,815,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans . . . . . . . . . . . . . . . . . . . . . . $ 6,000,000 $ 5,500,000 $ 7,750,000
Accounts payable . . . . . . . . . . . . . . . . . . . 16,766,000 18,214,000 15,606,000
Accrued payroll . . . . . . . . . . . . . . . . . . . . 535,000 497,000 417,000
Other accrued liabilities . . . . . . . . . . . . . . . 1,813,000 1,548,000 1,575,000
Long-term debt due in one year . . . . . . . . . . . . 1,189,000 876,000 968,000
----------- ----------- -----------
Total current liabilities . . . . . . . . . . . . . . 26,303,000 26,635,000 26,316,000
Long-term debt . . . . . . . . . . . . . . . . . . . . . 4,775,000 4,253,000 3,996,000
Deferred income taxes . . . . . . . . . . . . . . . . . . 1,059,000 988,000 1,059,000
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 . . . . . . . . . . . . . . 15,872,000 16,017,000 16,193,000
----------- ----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . 16,123,000 16,268,000 16,444,000
----------- ----------- -----------
$48,260,000 $48,144,000 $47,815,000
=========== =========== ===========
See accompanying notes.
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MOORE-HANDLEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Net sales . . . . . . . . . . . . . . . . . . $35,843,000 $36,676,000 $74,523,000 $72,442,000
Cost of merchandise sold . . . . . . . . . . . . 30,028,000 30,752,000 62,795,000 60,689,000
Warehouse and delivery
expense . . . . . . . . . . . . . . . . . . 2,595,000 2,019,000 4,798,000 4,001,000
----------- ----------- ---------- ----------
Cost of sales . . . . . . . . . . . . . . . . . . 32,623,000 32,771,000 67,593,000 64,690,000
----------- ----------- ----------- -----------
Gross profit . . . . . . . . . . . . . . . . . . 3,220,000 3,905,000 6,930,000 7,752,000
Selling and administrative
expense . . . . . . . . . . . . . . . . . . 3,732,000 3,400,000 7,071,000 6,545,000
----------- ----------- ---------- -----------
Operating income (loss) . . . . . . . . . . . . . (512,000) 505,000 (141,000) 1,207,000
Interest expense, net . . . . . . . . . . . . . . 176,000 140,000 375,000 366,000
----------- ----------- ----------- -----------
Income (loss) before provision
for income tax (benefit) . . . . . . . . . . . (688,000) 365,000 (516,000) 841,000
Income tax (benefit) . . . . . . . . . . . . . . (259,000) 138,000 (195,000) 316,000
----------- ----------- ----------- -----------
Net income (loss) . . . . . . . . . . . . . . . . $ (429,000) $ 227,000 $ (321,000) 525,000
=========== =========== ========== ===========
Net income (loss) per
common share . . . . . . . . . . . . . . . . . $ (.20) $ .10 $ (.15) $ .23
=========== =========== ========== ===========
Weighted average common
shares outstanding . . . . . . . . . . . . . . 2,165,000 2,238,000 2,165,000 2,238,000
=========== =========== ========== ===========
See accompanying notes.
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MOORE-HANDLEY, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(321,000) $525,000
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 592,000 529,000
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . 60,000 168,000
Change in assets and liabilities:
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . 906,000 (964,000)
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . (7,000) 2,941,000
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . 1,516,000 386,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 (39,000)
---------- ----------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 3,074,000 3,021,000
NET CASH PROVIDED BY
OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . 2,753,000 3,546,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,849,000) (527,000)
---------- ---------
NET CASH USED IN
INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . (1,849,000) (527,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,750,000) (3,000,000)
Principal (payments) borrowings
of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 (413,000)
---------- ----------
NET CASH USED IN
FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . (750,000) (3,413,000)
---------- ----------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154,000 (394,000)
Cash and cash equivalents
at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,000 781,000
---------- ----------
Cash and cash equivalents
at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 351,000 $ 387,000
========= =========
See accompanying notes.
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MOORE-HANDLEY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE SIX MONTHS
ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
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
regulations of the Securities and Exchange 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 conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K filed with the Commission on March 29, 1996.
The financial information presented herein reflects all adjustments
(consisting 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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Operations during the quarter were disrupted due to major changes and
improvements being made to the warehouse. It is estimated that additional
expenses and a lower than normal service level resulting from the disruption
reduced net income by about $450,000. In addition, severance pay and benefits
of $185,000, net of tax, to terminated employees was recorded in the quarter.
NET SALES
Warehouse shipments for the quarter were up about 2% compared to the
same quarter last year. However, the Company estimates that warehouse
shipments would have been about $1,500,000 higher if a normal service level had
been maintained.
In May 1995 the Company held a Dealers' Mart which generated a
substantial amount of factory direct business. In 1996 this Mart was replaced
with a special promotion later in the quarter. Factory direct sales resulting
from this promotion will, for the most part, be recorded in the third quarter.
As a result, factory direct sales for the second quarter were down about 11%
from the same quarter of 1995.
The following table sets forth the major elements of net sales:
Three Months Ended June 30,
-------------------------------------
1996 1995
--------------- -----------------
(dollars in thousands)
Net Sales:
Warehouse shipments . . . . . . . . . . . . . . . . . . . . . $25,596 71.4% $25,202 68.7%
Factory direct shipments . . . . . . . . . . . . . . . . . . 10,247 28.6 11,474 31.3
------- ----- ------- -----
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . $35,843 100.0% $36,676 100.0%
======= ===== ======= =====
Six Months Ended June 30,
-------------------------------------
1996 1995
--------------- ----------------
(dollars in thousands)
Net Sales:
Warehouse shipments . . . . . . . . . . . . . . . . . . . . . $51,582 69.2% $49,867 68.8%
Factory direct shipments . . . . . . . . . . . . . . . . . . 22,941 30.8 22,575 31.2
------- ----- ------- -----
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . $74,523 100.0% $72,442 100.0%
======= ===== ======= =====
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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,
------------------ ----------------
1996 1995 1996 1995
----- ------ ------ ------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.2 15.7 16.2
Warehouse and delivery expense . . . . . . . . . . . . . . . . . 7.2 5.5 6.4 5.5
----- ----- ----- -----
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 10.7 9.3 10.7
Selling and administrative expenses . . . . . . . . . . . . . . . 10.4 9.3 9.5 9.0
----- ----- ----- -----
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . (1.4) 1.4 (.2) 1.7
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . .5 .4 .5 .5
----- ----- ----- -----
Income (loss) before provision
for income tax (benefit) . . . . . . . . . . . . . . . . . . . (1.9)% 1.0% (.7)% 1.2%
===== ===== ==== =====
GROSS MARGIN
The gross margin percentage for the quarter ended June 30, 1996 was
unchanged compared to the same quarter last year and for the six months
decreased by .5% compared to the prior year.
The gross margin percentage of 16.2% for the quarter was up .9% from the
15.3% reported in the first quarter. An increase in warehouse shipments as a
percent of total sales accounts for .2% of the increase; the balance of the
increase was due to improved pricing.
The following table shows the gross margin trend in 1995 and the first
and second quarters of 1996:
Increase (Decrease)
vs. Same Quarter
Gross Margin in Previous Year
- ----------------------------------------------------- ---------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ----------- -------------- ---------- -------------- ----------
1995 - 1st $5,829 16.3 $ 14 (.8)
2nd 5,924 16.2 12 (1.3)
3rd 5,807 15.5 (129) (.7)
4th 5,388 16.8 (158) (.6)
1996 - 1st 5,913 15.3 $ 84 (1.0)
2nd 5,815 16.2 (109) --
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WAREHOUSE AND DELIVERY EXPENSES
As a percentage of warehouse shipments, warehouse and delivery expenses
for the quarter ended June 30, 1996 increased to 10.1% compared to 8.0% for the
same quarter last year. This increase was due to additional costs associated
with the warehouse modernization project. This project was completed, for the
most part, in the middle of the third quarter. However, the anticipated
improvement in productivity had not yet been realized at that point.
The following table shows the trend in warehouse and delivery expenses
in 1995 and the first and second quarters of 1996:
Increase (Decrease)
Warehouse and Delivery vs. Same Quarter
Expenses in Previous Year
- ---------------------------------------------------------------- ---------------------------
Percentage
Amount of Warehouse Amount Percentage
Quarter (in thousands) Sales (in thousands) Points
- ----------- -------------- ------------ -------------- ----------
1995 - 1st $1,982 8.0 $ 62 .1
2nd 2,019 8.0 28 .0
3rd 2,035 8.1 41 (.4)
4th 1,831 7.7 (182) (.2)
1996 - 1st 2,203 8.5 $ 221 .5
2nd 2,595 10.1 576 2.1
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for the quarter ended June 30, 1996
were up $332,000 compared to the same quarter last year. Most of the increase
was the accrual of severance pay and benefits for two terminated employees.
The following table shows the trend in selling and administrative
expenses in 1995 and the first and second quarters of 1996.
Increase (Decrease)
Selling and Administrative vs. Same Quarter
Expenses in Previous Year
- ---------------------------------------------------------------- ---------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ----------- -------------- ---------- -------------- ----------
1995 - 1st $3,145 8.8 $ (334) (1.9)
2nd 3,400 9.3 (309) (.8)
3rd 3,382 9.0 (226) (1.6)
4th 3,167 9.9 (113) (.6)
1996 - 1st $3,339 8.6 $ 194 (.2)
2nd 3,732 10.4 332 1.1
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LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures of $1,849,000 for warehouse modernization were made
during the six months ended June 30, 1996 which were financed under a
$2,000,000 five year term loan. Trade receivables at June 30, 1996 were down
$1,236,000 from December 1995 due to a decrease in sales made with extended
payment terms.
At June 30, 1996 the Company had unused working capital lines of credit
of $5,000,000, which it believes are adequate to finance its working capital
requirements.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this report (other than the
financial statements and other statements of historical fact) are
forward-looking statements. There can be no assurance that future developments
will be in accordance with management's expectations or that the affect of
future developments on the Company will be those anticipated by management.
Among the factors that could cause actual results to differ materially from
estimates reflected in such forward-looking statements are the following:
- competitive pressures on sales and pricing, including those from
other wholesale distributors and those from retailers in competition
with the Company's customers;
- the Company's ability to achieve projected cost savings from its
warehouse modernization program and ongoing cost reduction efforts;
- changes in cost of goods and the effect of differential terms and
conditions available to larger competitors of the Company;
- uncertainties associated with any acquisition the Company may seek
to implement; and
- changes in general economic conditions.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the Registrant was held on Thursday, April 21, 1996
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.
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11
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 2,622,833 17,760
----------- -----------
Pierce E. Marks, Jr. 2,622,833 17,760
----------- -----------
L. Ward Edwards 2,623,833 16,760
----------- -----------
Michael B. Stubbs 2,623,833 16,760
----------- -----------
Ronald J. Juvonen 2,623,833 16,760
----------- -----------
Also at the meeting, the proposal to increase the number of shares
authorized for issuance under the Corporation's 1991 Incentive Compensation
Plan was approved. The following table sets forth the distribution of votes
cast with regard to the proposal:
Number of Votes
---------------
For 2,586,948
---------------
Against 18,610
---------------
Abstain 35,035
---------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- 27 - Financial Data Schedule (for SEC use only).
(b) There were no reports on Form 8-K filed by the Company during the
six month period ended June 30, 1996.
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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: August 13, 1996 /S/ L. Ward Edwards
--------------------------
L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
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