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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 MARCH 31, 1997
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.
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(Exact name of registrant as specified in its charter)
DELAWARE 63-0819773
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
HIGHWAY 31 SOUTH, PELHAM, ALABAMA 35124
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(Address of principal executive offices) (Zip Code)
(205) 663-8011
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(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 Securi ties 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 2,154,543 shares
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Class Outstanding at April 15, 1997
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MOORE-HANDLEY, INC.
INDEX
Item No. Page No.
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PART I. FINANCIAL INFORMATION - UNAUDITED
1. Balance Sheets -
March 31, 1997 and 1996
and December 31, 1996...................................... 3
Statements of Operations -
Three Months Ended March 31, 1997 and 1996................. 4
Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996................. 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
6. Exhibits and Reports on Form 8-K............................... 10
Signature.............................................................. 11
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MOORE-HANDLEY, INC.
BALANCE SHEETS
MARCH 31, 1997 AND 1996 AND DECEMBER 31, 1996
(UNAUDITED)
MARCH 31, DECEMBER 31,
------------------------------------ ------------
1997 1996 1996
------------ ------------ ------------
ASSETS:
Current assets: (unaudited) (unaudited)
Cash and cash equivalents ........................ $ 590,000 $ 1,035,000 $ 596,000
Trade receivables, net ........................... 24,507,000 23,364,000 21,995,000
Other receivables ................................ 1,814,000 1,546,000 1,969,000
Merchandise inventory ............................ 14,087,000 16,206,000 17,693,000
Prepaid expenses ................................. 462,000 528,000 243,000
Refundable income tax ............................ 734,000 319,000 870,000
Deferred income taxes ............................ 510,000 470,000 510,000
------------ ------------ ------------
Total current assets ........................ 42,704,000 43,468,000 43,876,000
Prepaid pension cost ................................ 811,000 727,000 789,000
Loan to officer ..................................... -- 16,000 --
Property and equipment .............................. 19,386,000 18,007,000 19,019,000
Less accumulated depreciation .................... (10,563,000) (9,365,000) (10,248,000)
------------ ------------ ------------
Net property and equipment .................. 8,823,000 8,642,000 8,771,000
Deferred charges, net ............................... 34,000 41,000 36,000
------------ ------------ ------------
$ 52,372,000 $ 52,894,000 $ 53,472,000
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans ....................................... $ 8,000,000 $ 5,810,000 $ 10,450,000
Accounts payable ................................. 20,265,000 22,945,000 18,134,000
Accrued payroll .................................. 431,000 508,000 453,000
Other accrued liabilities ........................ 1,568,000 1,298,000 1,690,000
Long-term debt due in one year ................... 1,151,000 938,000 1,133,000
------------ ------------ ------------
Total current liabilities ................... 31,415,000 31,499,000 31,860,000
Long-term debt ...................................... 4,837,000 3,784,000 5,111,000
Deferred income taxes ............................... 1,129,000 1,059,000 1,129,000
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 ....................... 14,740,000 16,301,000 15,121,000
------------ ------------ ------------
Total stockholders' equity .................. 14,991,000 16,552,000 15,372,000
------------ ------------ ------------
$ 52,372,000 $ 52,894,000 $ 53,472,000
============ ============ ============
See accompanying notes.
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MOORE-HANDLEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
1997 1996
------------ -----------
Net sales ................................ $ 37,842,000 $38,680,000
Cost of merchandise sold ................. 32,331,000 32,767,000
Warehouse and delivery
expense ............................... 2,294,000 2,203,000
------------ -----------
Cost of sales ............................ 34,625,000 34,970,000
------------ -----------
Gross profit ............................. 3,217,000 3,710,000
Selling and administrative
expense ............................... 3,498,000 3,339,000
------------ -----------
Operating income (loss) .................. (281,000) 371,000
Interest expense, net .................... 280,000 199,000
------------ -----------
Income (loss) before provision
for income tax (benefit) .............. (561,000) 172,000
Income tax (benefit) ..................... (180,000) 64,000
------------ -----------
Net income (loss) ........................ $ (381,000) $ 108,000
============ ===========
Net income (loss) per
common share .......................... $ (.18) $ .05
============ ===========
Weighted average common
shares outstanding .................... 2,154,000 2,165,000
============ ===========
See accompanying notes.
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MOORE-HANDLEY, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................... $ (381,000) $ 108,000
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization .............. 315,000 288,000
Provision for doubtful accounts ............ 145,000 90,000
Change in assets and liabilities:
Trade and other receivables ........... (2,502,000) (1,935,000)
Merchandise inventory ................. 3,606,000 (875,000)
Accounts payable and accrued expenses . 1,987,000 7,099,000
Other assets .......................... (103,000) (248,000)
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Total adjustments ..................... 3,448,000 4,419,000
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NET CASH PROVIDED BY
OPERATING ACTIVITIES ............... 3,067,000 4,527,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................ (367,000) (1,507,000)
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES ....................... (367,000) (1,507,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of bank loans .......................... (2,450,000) (1,940,000)
Principal payments of long-term debt ................ (256,000) (242,000)
----------- -----------
NET CASH USED IN
FINANCING ACTIVITIES ....................... (2,706,000) (2,182,000)
----------- -----------
Net increase (decrease) in cash
and cash equivalents ................................. (6,000) 838,000
Cash and cash equivalents
at beginning of period .............................. 596,000 197,000
----------- -----------
Cash and cash equivalents
at end of period .................................... $ 590,000 $ 1,035,000
=========== ===========
See accompanying notes.
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MOORE-HANDLEY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1996 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 27, 1997.
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.
The Financial Accounting Standards Board has issued Statement No. 128,
Earnings per Share. This must be adopted by the Company on December 31, 1997 at
which time it must restate all prior periods. The impact, if any, of Statement
128 on the calculation of earings per share for the first quarter of 1997 and
1996 is not expected to be material.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
MANAGEMENT CHANGES
At the end of the first quarter of 1997, E. H. White, the Company's
President and Chief Executive Officer, resigned. The Board elected Chairman
William Riley to the additional post of Chief Executive Officer and Michael J.
Gaines, Vice President of Merchandising, to be President and Chief Operating
Officer.
NET SALES
Net sales for the quarter ended March 31, 1997 were down 2% compared to
the same quarter in the prior year. Factory direct shipments increased 7% for
the quarter which the Company believes reflects the change in customer base
towards larger customers.
The following table sets forth the major elements of net sales:
Three Months Ended March 31,
----------------------------------
1997 1996
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(dollars in thousands)
Net Sales:
Warehouse shipments .................. $24,322 64.3% $25,986 67.2%
Factory direct shipments ............. 13,520 35.7 12,694 32.8
------- ----- ------- -----
Net Sales .......................... $37,842 100.0% $38,680 100.0%
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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
March 31,
--------------------
1997 1996
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Net sales ......................................... 100.0% 100.0%
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Gross margin ...................................... 14.6 15.3
Warehouse and delivery expense .................... 6.1 5.7
----- -----
Gross profit ...................................... 8.5 9.6
Selling and administrative expenses ............... 9.3 8.6
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Operating income (loss) ........................... (.8) 1.0
Interest expense, net ............................. .7 .5
----- -----
Income (loss) before provision
for income tax (benefit) ....................... (1.5)% .5%
===== =====
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GROSS MARGIN
The gross margin percentage for the first quarter of 1997 was 14.6%,
down from 15.3% in the first quarter of 1996. About half of the decrease was due
to the increase in factory direct shipments as a percent of total sales and the
balance of the decrease is due to more competitive pricing and liquida tion of
high-cost inventory buildup during the warehouse construction project.
The following table sets forth the gross margin dollars, gross margin
percentages and year-over-year changes for 1996 and the first quarter of 1997:
Increase (Decrease)
vs. Same Quarter
Gross Margin in Previous Year
- --------------------------------------------- -------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ---------- -------------- ---------- -------------- ----------
1996 - 1st $5,913 15.3 $ 84 (1.0)
2nd 5,815 16.2 (109) --
3rd 5,955 15.2 148 (.3)
4th 5,681 17.8 293 1.0
1997 - 1st 5,511 14.6 $(402) (.7)
WAREHOUSE AND DELIVERY EXPENSES
As a percentage of warehouse shipments, warehouse and delivery expenses
increased to 9.4% in the first quarter of 1997 from 8.5% in the same quarter
last year. All of the increase took place in warehouse expenses. This increase
was due, in large part, to additional costs associated with a warehouse
modernization project.
The following table shows the trend in warehouse and delivery expenses
in 1996 and the first quarter of 1997:
Increase (Decrease)
Warehouse and Delivery vs. Same Quarter
Expenses in Previous Year
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Percentage
Amount of Warehouse Amount Percentage
Quarter (in thousands) Sales (in thousands) Points
- ---------- -------------- ------------ -------------- ----------
1996 - 1st $2,203 8.5 $221 .5
2nd 2,595 10.1 576 2.1
3rd 2,703 10.3 668 2.2
4th 2,407 10.5 576 2.8
1997 - 1st 2,294 9.4 $ 91 .9
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SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses increased $159,000 for the quarter
ended March 31, 1997 compared to the same quarter of 1996 due to the accrual of
severance pay (including benefits) resulting from the change in management.
The following table shows the quarterly trend in selling and administr-
ative expenses in 1997 and the first quarter of 1997.
Increase (Decrease)
Selling and Administrative vs. Same Quarter
Expenses in Previous Year
- --------------------------------------------- ------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ---------- -------------- ---------- -------------- ----------
1996 - 1st $3,339 8.6 $194 (.2)
2nd 3,732 10.4 332 1.1
3rd 3,593 9.1 211 .1
4th 3,476 10.9 309 1.0
1997 - 1st $3,498 9.3 $159 .7
LIQUIDITY AND CAPITAL RESOURCES
From December 31, 1996 to March 31, 1997 the Company's net trade recei-
vables increased by $2,512,000 or 11.4%. The increase in receivables was due
largely to higher level of sales in March 1997 (which includes orders taken at a
Dealers' Mart held in February) compared to December 1996. Inventories decreased
by $3,606,000 or 20.4% in the same period. The decrease was due in large part to
the elimination of slow-moving inventory items. Because of extended terms
received from suppliers in connection with the mart, trade payables increased
$2,131,000 from December 1996.
At March 31, 1997 the Company had unused lines of credit of $4,000,000,
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 est-
imates reflected in such forward-looking statements are the following:
- competitive pressures on sales and pricing, including those from
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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.
While the Company periodically reassesses material trends and uncertai-
nties affecting the Company's results of operations and financial condition in
connection with its preparation of management's discussion and analysis of
results of operations and financial condition contained in its quarterly and
annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in light of future events.
PART II. OTHER INFORMATION
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 Three
month period ended March 31, 1997.
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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: April 24, 1997 /S/ L. Ward Edwards
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L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
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