<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Three Months Ended September 30, 1996 Commission File No. 0-4123
MOYCO TECHNOLOGIES, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-1697233
- ----------------------------- ---------------------------------
(State or other Jurisdiction) (IRS Employer Identification No.)
200 Commerce Drive, Montgomeryville, PA 18936
- --------------------------------------------------------------------------------
*(Address of Principal Executive Offices) (Zip Code)
200 Commerce Drive, Montgomeryville, PA 18936
- --------------------------------------------------------------------------------
*(As of June 1995 Principal Executive Offices)
Registrant's telephone number, including area code: (215) 855-4300
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
On September 30, 1996, there were 4,140,340 shares of the Registrant's common
stock outstanding.
Page 1
<PAGE>
Item 1. Financial Information
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
1996 June 30,
ASSETS (Substantially Pledged) (Note 3) (Unaudited) 1996
------------ ------------
Current Assets
Cash and Cash Equivalents $ 1,516,948 $ 1,402,088
Accounts receivable, net of doubtful account
allowances of $132,755 at September 30, 1996
and $78,990 at June 30, 1996 1,828,658 1,600,764
Note Receivable-Trade -- 11,519
Other Receivable -- 8,215
Inventories, estimated (Note 1 and 2) 4,035,066 3,283,779
Deferred Taxes 68,856 68,856
Prepaid Taxes 120,944 117,644
Prepaid expenses 69,231 24,218
------------ ------------
Total Current Assets 7,639,703 6,517,083
------------ ------------
Property, Plant and Equipment
Land 602,433 452,433
Buildings and improvements 4,558,228 4,386,877
Automotive equipment 48,511 48,511
Machinery and equipment 5,340,203 4,822,188
Furniture and fixtures 637,509 534,068
------------ ------------
11,186,884 10,244,077
Less: Accumulated Depreciation (4,519,164) (4,350,226)
------------ ------------
Net Property, Plant and Equipment 6,667,720 5,893,851
------------ ------------
Other Assets 1,082,145 133,080
------------ ------------
TOTAL ASSETS $ 15,389,568 $ 12,544,014
============ ============
See accompanying notes.
Page 2
<PAGE>
September 30,
1996 June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited) 1996
----------- -----------
Current Liabilities
Current maturities of long-term debt (Note 3) $ 934,234 $ 895,408
Accounts payable 583,271 381,372
Accrued expenses:
Payroll 145,314 205,092
Interest 33,750 33,750
Other 469,389 284,086
Corporate Taxes 68,405 --
----------- -----------
Total Current Liabilities 2,234,363 1,799,708
Long-term debt, net of current maturities 6,382,471 5,616,112
Accrued Liabilities - Long Term 450,000 --
Deferred income taxes 381,964 152,704
----------- -----------
Total Liabilities 9,448,798 7,568,524
----------- -----------
Shareholders' Equity
Preferred stock, $.005 par value -- --
Authorized 2,500,000 shares,
None issued
Common stock, $.005 par value 24,159 23,083
Authorized 15,000,000 shares
Issued 4,732,215 shares
Additional paid-in capital 3,933,433 3,118,239
Retained Earnings 2,104,131 1,955,121
Less: Treasury stock 591,875 shares at September 30,
1996 and at June 30, 1996, at cost ( 120,953) ( 120,953)
----------- -----------
Total Shareholders' Equity 5,940,770 4,975,490
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $15,389,568 $12,544,014
=========== ===========
Page 3
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
SEPTEMBER 30
------------------------
1996 1995
---------- ----------
Net Sales $3,245,693 $2,710,084
Cost of Sales 1,970,953 1,662,983
---------- ----------
Gross Profit 1,274,740 1,047,101
Operating Expenses 898,115 834,889
---------- ----------
Income from Operations 376,625 212,212
---------- ----------
Other Income (Expenses)
Interest Expense ( 175,926) ( 163,249)
Other Income 24,412 69,273
Loss on Sale of Fixed Assets ( 7,696) -
---------- ----------
Total Other Income (Expense) ( 159,210) ( 93,976)
---------- ----------
Income Before Provision for Income Taxes 217,415 118,236
---------- ----------
Provision for Income Taxes 68,405 49,758
---------- ----------
Net Income 149,010 68,478
Retained Earnings, beginning of period 1,955,121 1,209,982
---------- ----------
Retained Earnings, end of period $2,104,131 $1,278,460
========== ==========
Earnings per Share $ 0.04 $ 0.02
========== ==========
Weighted Average Number of Common Shares 4,118,738 4,009,415
========== ==========
See accompanying notes.
Page 4
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net cash provided by operating activities $ 21,071 $ 128,779
Cash flows from investing activities
(Expenditures) Retirements for property, plant and
equipment ( 46,111) ( 300,459)
Expenditures for equipment deposits - ( 277,938)
---------- ----------
Net Cash (used in) investing activities ( 46,111) ( 578,397)
---------- ----------
Cash flows from financing activities
Reduction of long-term debt obligations ( 611,524) ( 114,734)
Proceeds from exercise of options 1,424 -
New borrowings of long-term debt 750,000 700,000
---------- ----------
Net cash Provided by financing activities 139,900 585,266
---------- ----------
Net Increase (Decrease) in cash 114,860 135,648
Cash and cash equivalents, beginning of period 1,402,088 1,097,323
---------- ----------
Cash and cash equivalents, end of period $1,516,948 $1,232,971
========== ==========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
-------------------------------------------------------------------
Equipment sold for retirement of debt $ 18,339 $ -
========== =======
Merger accounted for under the purchase method:
Step-up in basis of assets to fair value $ 492,579 $ -
Goodwill 874,966 -
Deferred taxes ( 230,260) -
Liabilities assumed or created 48,654 -
---------- -------
Excess of Purchase Price over Net Assets Acquired $1,185,939 $ -
========== =======
See accompanying notes.
Page 5
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies
Nature of Business
The Company manufacturers professional Dental waxes, supplies,
instruments, mirrors, endodontic materials and equipment,
medicaments, precision abrasives, commercial abrasives, CMP
materials, and is a repacker of other disposable products for
commercial and industrial use and sells to both domestic and
international customers.
Principles of Accounting
The balance sheet as of September 30, 1996 and the related
statements of operations and retained earnings, and cash flows
for the three months ended September 30, 1996 and 1995 are
unaudited in the opinion of management, all adjustments
necessary for a fair presentation of such financial statements
have been included. Such adjustments consisted only of normal
recurring items. Interim results are not necessarily
indicative of results for the full year.
Principles of Consolidation
The consolidated financial statements include the accounts of
Moyco Technologies, Inc. and its wholly owned subsidiaries.
All intercompany accounts and transactions have been
eliminated in consolidation.
The assets and liabilities of Thompson Dental Manufacturing
Co., Inc. have been consolidated with the Company as of August
8, 1996 (purchase date).
Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Actual results may differ from those
estimates.
Valuation of Inventories
Inventories are stated at the lower of cost or market. Costs
of raw materials and cartons are determined by the first-in,
first-out method. Labor and overhead included in
work-in-process and finished goods are determined at average
cost. Ending inventories at interims are estimated by the
gross profit method.
Page 6
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies (Continued)
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is
computed by the straight-line method over the assets expected
useful lives as follows:
Buildings and Improvements 10-25 Years
Machinery, Equipment, Furniture
and Fixtures 5-10 Years
Automotive Equipment 3 Years
Patents and Trademarks
The costs of patents and trademarks are capitalized and
amortized to operations over their estimated useful lives or
statutory lives, whichever is shorter. Amortization is
computed by the straight-line method.
Mortgage Costs
Mortgage costs are being amortized over the terms of the
related mortgages.
Income Taxes
The Company currently accounts for income taxes in accordance
with the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
Reclassifications
Certain accounts in the prior-year financial statements have
been reclassified for comparative purposes to conform with the
presentation in the current-year consolidated financial
statements.
Research and Development
Research and development costs are charged to expense as
incurred.
Earnings Per Common Share
Earnings per common share have been computed by dividing
earnings for each period by the weighted average number of
common shares outstanding during each period.
Advertising Costs
Advertising costs are charged to expense as incurred.
Fair Value of Financial Instruments
The following notes summarize the major methods and
assumptions used in estimating the fair values of financial
instruments.
Page 7
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
The carrying amount approximates fair value due to the
relatively short period to maturity of these instruments.
Long-Term Debt
The fair value of the Company's long-term debt is estimated
based on the quoted market prices for the same or similar
issues or on the current prices for the same or similar issues
or on the current rates offered to the Company for debt of the
same remaining maturities.
The following table presents the carrying amounts and
estimated fair values of the Company's financial instruments:
September 30, 1996 June 30, 1996
-------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------------------------------------------------------------
Cash and Cash
Equivalents $1,516,948 $1,516,948 $1,402,088 $1,402,088
Accounts
Receivable 1,828,658 1,828,658 1,600,764 1,600,764
Accounts Payable
and Accrued
Expenses 1,750,129 1,750,129 904,300 904,300
Long-Term Debts
including current
portion 7,316,705 6,897,291 6,511,520 6,080,263
-------------------------------------------------------------
Note 2: Inventories
The components of inventories are as follows:
September 30, June 30,
1996 1996
------------ ----------
Raw materials $ 830,809 $ 761,072
Work-in-process 1,132,793 873,884
Finished goods 1,849,567 1,450,411
Cartons 221,897 198,412
---------- ----------
$4,035,066 $3,283,779
========== ==========
Page 8
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
Note 3: Long-Term Debt
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------ -------
<S> <C> <C>
Mortgages Payable
Banks
Mortgage payable in monthly installments of $6,569, including
interest at .85% of prime (not to exceed 15% or be below
8.5%), which matures in August 2001.
Rate at June 30, 1996 was 8.5%. $ 294,973 $ 306,827
Mortgage payable in monthly installments of $5,053 including
interest at 8.75% for five years and at prime plus 1% for the
remaining term through maturity December 1, 2009. 475,235 479,696
Mortgage payable in monthly installments of $14,950 including
interest at 9.25% for five years and at prime plus 1% for the
remaining term through maturity May 1, 2010. 1,392,105 1,403,848
Mortgages Payable
Municipal Authorities
Mortgage payable in 180 monthly installments of $1,952,
including interest at 2% which matures April 1, 2010. 273,861 278,314
Mortgage payable in 180 monthly installments of $6,371,
including interest at 2% which matures July 1, 2010. 918,355 932,735
Other
Auto loan payable in forty-eight monthly
installments of $838 plus interest at 7.75%. 16,250 18,764
Commercial term note payable in monthly installments of
$30,000 plus interest at prime rate plus 1/2% beginning August
1, 1995 which matures August 1, 2000. 1,380,000 1,470,000
Note payable in monthly installments of $2,333 plus interest
at 8.65% beginning November 1, 1995 which matures
November 1, 2000. 114,337 121,336
Note payable in quarterly interest-only payments through 1996.
Thereafter, twenty equal quarterly payments including
principal and interest at prime. (interest rate not to exceed
10% or be below 8%). Rate at June 30, 1996 was 8.25%.
Subordinated to prime lender. 1,500,000 1,500,000
</TABLE>
Page 9
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
Note 3: Long-Term Debt (Continued)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------- -------
<S> <C> <C>
Note payable to bank, due August 2002, interest at 8.25%,
interest only payable monthly through August 1997. Monthly
payments of $15,297, including interest, are due thereafter
through August 2002. $ 750,000 $ -
Mortgage payable due March 2015, interest at greater of prime
plus 5.5% or 14% (14% at September 30, 1996), payable $817
monthly, including interest; secured by land and building. 67,353 -
Trust indenture note to an employee, due January 1999,
interest at 10%, payable $611 monthly, including interest;
secured by land and building 20,740 -
Treasury stock contract payable to estate of former
shareholder, due July 1998, interest at 9%, payable $500
quarterly, including interest. 3,036 -
Treasury stock contract payable, due March 2000, interest at
9%, payable $750 annually, original payment was not accepted
by former shareholder and payments are not currently made. 6,500 -
Capital lease obligation, due October 2001, interest at 10%,
payable $2,209 monthly, including interest, through October
2001; secured by equipment. 103,960 -
---------- -------
7,316,705 6,511,520
Less: Current Maturities ( 934,234) ( 895,408)
---------- ----------
$6,382,471 $5,616,112
========== ==========
</TABLE>
As of September 30, 1996 long-term debt matures as follows:
1997 $ 934,234
1998 1,058,661
1999 1,077,794
2000 1,049,143
2001 744,680
Thereafter 2,452,193
----------
$7,316,705
==========
Substantially all of the Company's assets are pledged as
collateral for long-term debt.
Page 10
<PAGE>
MOYCO TECHNOLOGIES, NC.
A. SUMMARIZED FINANCIAL INFORMATION
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996
Results of Operations
Comparison of recent quarter (9/30/96) and immediate preceding Quarter
(6/30/96):
-----------------------------------------------------------------------
Net Sales increased by $102,307 and is mainly attributable to the
Thompson merger and increased sales in the Moyco Union Broach dental
division. The increase in sales activity is significant because the
first quarter is historically our slowest as we close for year end
physical inventory count as well as vacation.
The increase of $236,515 in gross profit is correlated to the increase
in volume. The procedure for computing inventories by department is the
gross profit method using the previous fiscal years actual gross profit
percentage, unless management is aware of a significant adjustment
required in the quarter, continues as the standard procedure in
computing interim quarterly accounting.
Inventories increased primarily as a result of the merger with Thompson
Dental Manufacturing Co. Inc. In addition, the abrasive division had to
maintain a high level of inventory to accommodate contract customers
just in time delivery schedules.
Operating expenses decreased as year end bonus and awards and other
adjustments were recorded in the comparative period and not incurred in
the current quarter. Furthermore, expenses incurred due to the
consolidation of dental operations at the York facility have been fully
absorbed in prior quarters.
The increase in net profit is related to the increase in sales.
Working capital is sufficient for current operating needs however,
should the current state of the economy continue, both nationally and
internationally, the need for additional sales levels will put further
stress on working capital needs. Inflationary pressures have
significantly less bearing on current profitability than the continued
need for additional sales.
Page 11
<PAGE>
MOYCO TECHNOLOGIES, INC.
A. SUMMARIZED FINANCIAL INFORMATION
(Continued)
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996
Comparison of recent Quarter (9/30/96) and Equivalent Quarter
(9/30/95):
-----------------------------------------------------------------------
Net sales increased by $535,609 primarily in our dental division as a
result of increased demand of the Moyco Union Broach product line and
the sales generated by the Thompson Dental Manufacturing Co. Inc.
subsidiary.
The increase of $227,639 in gross profit is correlated to the increase
in volume. The procedure for computing inventories by department by the
gross profit method, using the previous fiscal years actual gross
profit percentage, unless management is aware of a significant
adjustment required in the quarter, continues as the standard procedure
in computing interim quarterly accounting.
Operating expenses increased slightly by $63,226 as a result of the
Thompson Dental merger.
The increase in profit is directly related to the increase in sales and
consolidation of the Moyco Union Broach dental division in York, PA.
Working capital increased by repositioning current debt to long term
debt, increased inventories and accounts receivables.
Working capital is sufficient for current operating needs, however
should the state of the economy continue the need for additional sales
levels, further stress will be placed on the working capital.
Inflationary pressures have significantly less bearing on current
profitability than the continued need for additional sales.
Page 12
<PAGE>
MOYCO TECHNOLOGIES, INC.
A. SUMMARIZED FINANCIAL INFORMATION
(Continued)
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996
Liquidity and Capital Resources
-------------------------------
It is anticipated that pressures on earnings will continue. The current
economic conditions, and the continuing need to increase sales to
offset costs are a reality. The addition of capital improvement
projects of plant facilities and equipment, along with the financial
commitments will require sales growth and earnings to repay the
additional debt service. Moyco currently has enjoyed twenty-four
straight quarters of profitability. Also, changes in the high tech
products sold by our abrasive division are subject to swings which
directly effect net sales and profits.
Moyco Technologies, Inc. as of June 30, 1994 is in compliance with the
enactment of the Clean Air Act, effective August 1992.
Litigation
----------
The Company has retained legal counsel to represent it in a government
investigation in which the government has asserted it has evidence of
violations of law and/or regulations that may have been committed by
certain officers and/or employees of the Company. Legal counsel has not
yet completed its investigation of these matters and, therefore, cannot
evaluate the likelihood of an unfavorable outcome to the Company. The
investigation centers around certain government contracts for the
manufacture and prior deliveries of foot powder. Legal and expert fees
incurred during the quarter were $21,145. The Company expects
additional legal and expert fees during the next quarter.
There were no other material legal issues during the quarter.
Page 13
<PAGE>
MOYCO TECHNOLOGIES, INC.
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits - Unaudited Condensed Pro Forma Financial
Statements
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
MOYCO TECHNOLOGIES, INC.
(Registrant)
Date November 14, 1996 By /s/ Marvin E. Sternberg
--------------------------- ------------------------------------
Marvin E. Sternberg
President and Chief Executive
Officer
Chairman of the Board
Date November 14, 1996 By /s/ Jerome Lipkin
--------------------------- ------------------------------------
Jerome Lipkin
Vice President and Director
Executive Officer
Date November 14, 1996 By /s/ William G. Woodhead
--------------------------- ------------------------------------
William G. Woodhead
Secretary/Treasurer and Director
Page 14
<PAGE>
Exhibit A
C O N T E N T S
Page
Unaudited Condensed Pro Forma Financial Information . . . . . . . . . . 1
Unaudited Condensed Pro Forma Consolidation Balance Sheet . . . . . . . 2-3
Unaudited Condensed Pro Forma Consolidation Statement of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Unaudited Condensed Pro Forma Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 5-6
<PAGE>
MOYCO TECHNOLOGIES, INC.
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Condensed Pro Forma Consolidated Balance Sheet of Moyco
Technologies, Inc. ("Moyco"), as of June 30, 1996 and the Unaudited Condensed
Pro Forma Consolidated Statement of Operations of Moyco for the year then ended
are set forth below.
The Unaudited Condensed Pro Forma Consolidated Balance Sheet has been
prepared assuming that the Merger had been consummated on June 30, 1996. The
Unaudited Condensed Pro Forma Consolidated Statement of Operations has been
prepared assuming that the Merger had occurred on July 1, 1995.
The Unaudited Condensed Pro Forma Financial Statements are presented
for informational purposes only and do not purport to present what the
Consolidated Balance Sheet would have been had the Merger, in fact, occurred on
June 30, 1996 or what the Consolidated Results of Operations for the year then
ended would have been had the Merger, in fact, occurred on July 1, 1995 or to
project the results of operations for any future period.
The Unaudited Condensed Pro Forma Financial Statements should be read
in conjunction with the Financial Statements and related notes thereto and the
information set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in Moyco's Form 10-K filed on
September 25, 1996.
<PAGE>
MOYCO TECHNOLOGIES, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 1996
---------------------------------------------------------
Historical
Historical Thompson Pro Forma Pro Forma
Moyco (Unaudited) Adjustments Results
---------------------------------------------------------
<S> <C> <C> <C>
Current Assets
Cash and Cash Equivalents $ 1,402,088 $ 10,466 $ 1,412,554
Accounts Receivable 1,600,764 272,886 1,873,650
Note Receivable - Trade 11,519 - 11,519
Other Receivable 8,215 - 8,215
Inventories 3,283,779 542,957 3,826,736
Deferred Taxes 68,856 - 68,856
Prepaid Taxes 117,644 - 117,644
Prepaid Expenses 24,218 19,502 43,720
---------------------------------------------------------
Total Current Assets 6,517,083 845,811 7,362,894
Property, Plant and Equipment
Land 452,433 15,000 135,000 (c) 602,433
Buildings and Improvements 4,386,877 226,403 ( 56,403) (d) 4,556,877
Automotive Equipment 48,511 35,811 ( 9,776) (e) 74,546
Machinery and Equipment 4,822,188 614,529 ( 84,635) (e) 5,352,082
Furniture and Fixtures 534,068 39,107 573,175
---------------------------------------------------------
10,244,077 930,850 ( 15,814) 11,159,113
Less: Accumulated Depreciation 4,350,226 461,032 ( 461,032) 4,350,226
---------------------------------------------------------
Net Property, Plant and
Equipment 5,893,851 469,818 445,218 (b) 6,808,887
Other Assets 133,080 24,486 60,514 (b)(f) 218,080
Goodwill - - 922,404 (b) 922,404
---------------------------------------------------------
Total Assets $12,544,014 $1,340,115 $1,428,136 $15,312,265
=========================================================
</TABLE>
See accompanying notes to unaudited condensed pro forma consolidated financial
statements.
- 2 -
<PAGE>
MOYCO TECHNOLOGIES, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 1996
------------------------------------------------------------
Historical
Historical Thompson Pro Forma Pro Forma
Moyco (Unaudited) Adjustments Results
------------------------------------------------------------
<S> <C> <C> <C> <C>
Current Liabilities
Current maturities of
Long-Term Debt $ 895,408 $ 437,795 ($ 437,795)(g) $ 895,408
Accounts Payable 381,372 316,367 ( 6,611)(g) 691,128
Accrued Expenses 522,928 216,409 29,345 (a)(b)(g) 768,682
------------------------------------------------------------
Total Current Liabilities 1,799,708 970,571 ( 415,061) 2,355,218
Long-Term Debt, Net of
Current Maturities 5,616,112 255,920 463,715 (g) 6,335,747
Accrued Liabilities - - 450,000 (a)(h) 450,000
Net Deferred Income Taxes 152,704 - 229,260 (b)(i) 381,964
------------------------------------------------------------
Total Liabilities 7,568,524 1,226,491 727,914 9,522,929
Shareholders' Equity
Common Stock 23,083 87,500 ( 86,925)(a)(j)(k) 23,658
Additional Paid-In Capital 3,118,239 422,372 390,899 (a)(j)(k) 3,931,510
Retained Earnings 1,955,121 ( 382,498) 382,498 (j) 1,955,121
Less: Treasury Stock 120,953 13,750 ( 13,750)(j) 120,953
------------------------------------------------------------
Total Shareholders' Equity 4,975,490 113,624 700,222 5,789,336
Total Liabilities and
Shareholders' Equity $12,544,014 $1,340,115 $1,428,136 $15,312,265
============================================================
</TABLE>
See accompanying notes to unaudited condensed pro forma consolidated financial
statements.
- 3 -
<PAGE>
MOYCO TECHNOLOGIES, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
June 30, 1996
----------------------------------------------------------
Historical
Historical Thompson Pro Forma Pro Forma
Moyco (Unaudited) Adjustments Results
----------------------------------------------------------
<S> <C> <C> <C>
Net Sales $11,914,303 $2,684,706 $14,599,009
Cost of Sales 7,299,860 1,788,057 9,087,917
----------------------------------------------------------
Gross Profit 4,614,443 896,649 5,511,092
Operating Expenses 3,617,865 852,982 $132,181 (e) 4,603,028
----------------------------------------------------------
Income from Operations 996,578 43,667 ( 132,181) 908,064
Other Income (Expense):
Interest Expense ( 559,240) ( 76,995) ( 636,235)
Other Income 138,635 5,899 144,534
----------------------------------------------------------
Net Other ( 420,605) ( 71,096) ( 491,701)
----------------------------------------------------------
Income before provision for
income taxes and extraordinary
item 575,973 ( 27,429) ( 132,181) 416,363
Provision for Income Taxes 35,123 - 35,123
----------------------------------------------------------
Income before effect of
extraordinary item 540,850 ( 27,429) ( 132,181) 381,240
Extraordinary Item 204,289 - 204,289
----------------------------------------------------------
Net Income $ 745,139 ($ 27,429) ($132,181) $ 585,529
==========================================================
Net Income Per Share $.14
Weighted Average Number
of Shares Outstanding 4,160,408
</TABLE>
See accompanying notes to unaudited condensed pro forma consolidated financial
statements.
- 4 -
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments:
The Unaudited Condensed Pro Forma Financial Statements have been
prepared to give effect to the Merger in a business combination to be
accounted for as a purchase for accounting purposes. All voting and nonvoting
common shares of Thompson Dental Mfg. Co. were exchanged for 115,000 shares of
Moyco Technologies, Inc. as of the close of business on August 8, 1996. The
assets and liabilities of Thompson Dental Mfg. Co. ("Thompson") were then
contributed to Thompson Dental Manufacturing Co., Inc. a wholly-owned
subsidiary of Moyco, in exchange for 1,000 shares of Thompson Dental
Manufacturing Co., Inc. stock.
A description of the pro forma adjustments is as follows:
(a) To record the issuance of 1,000 common shares to Moyco by
Thompson Dental Manufacturing Co., Inc., a wholly owned
subsidiary of Moyco, in exchange for the assets and
liabilities of Thompson Dental Mfg. Co., ("Thompson"). The
purchase price of Thompson was $862,500 (the closing price of
$7.50 per Moyco share on August 8, 1996 multiplied by the
115,000 Moyco shares given). Also included in the purchase
price is an accrual for commissions in the amount of $450,000
and direct costs of acquisition of $48,654.
(b) To record the allocation of the excess of the purchase price
over the net assets acquired as follows:
Aggregate Purchase Price $1,361,154
Book Value of Net Assets Acquired 113,624
----------
Excess of Purchase Price over
Net Assets Acquired $1,247,530
==========
Moyco has made a preliminary allocation of the excess purchase
price over the book value of Thompson's assets and liabilities
based upon information received to date on the fair values of
assets and liabilities acquired.
Management has allocated the excess of the purchase price over
net assets acquired as follows:
Property, Plant and Equipment $ 445,218
Other Assets 60,514
Accrued Expenses 48,654
Deferred Taxes ( 229,260)
Goodwill 922,404
----------
Total $1,247,530
==========
(c) To reflect land at appraised market value at June 30, 1996.
(d) To reflect building at appraised market value at June 30,
1996.
(e) To reflect fixed assets at estimated market value at June 30,
1996.
(f) To reflect intangibles at estimated market value at June 30,
1996.
- 5 -
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments: (Continued)
(g) To reflect the borrowing of new debt to pay off outstanding
debt at June 30, 1996.
(h) To record the liability for commissions payable at June 30,
1996.
(i) To increase deferred income taxes payable at June 30, 1996
based upon the impact of pro forma adjustments of assets and
liabilities acquired.
(j) To eliminate the historical book value of Thompson.
(k) To record the issuing of common stock and additional paid-in
capital for the 1,000 shares issued in exchange for Moyco
issuing 115,000 shares to Thompson shareholders at $7.50 per
share and contributing the assets and liabilities of Thompson
to Moyco's wholly-owned subsidiary.
(l) To reflect the additional amortization and depreciation
expense resulting from the allocation of the purchase price to
goodwill, intangibles, and property, plant and equipment.
Moyco amortizes goodwill and intangibles over a period of 15
years and depreciates buildings over 25 years, furniture,
fixtures and equipment over 7-10 years, computers over 5 years
and autos over 3 years.
- 6 -
<TABLE> <S> <C>
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<CIK> 0000200533
<NAME> MOYCO TECHNOLOGIES INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,516,948
<SECURITIES> 0
<RECEIVABLES> 1,961,413
<ALLOWANCES> (132,755)
<INVENTORY> 4,035,066
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<DEPRECIATION> 4,519,164
<TOTAL-ASSETS> 15,389,568
<CURRENT-LIABILITIES> 2,234,363
<BONDS> 7,316,705
0
0
<COMMON> 24,159
<OTHER-SE> 5,916,611
<TOTAL-LIABILITY-AND-EQUITY> 15,389,568
<SALES> 3,245,693
<TOTAL-REVENUES> 3,245,693
<CGS> 1,970,953
<TOTAL-COSTS> 1,970,953
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 175,926
<INCOME-PRETAX> 217,415
<INCOME-TAX> 68,405
<INCOME-CONTINUING> 149,010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 149,010
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
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