<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-545
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Moore Products Co.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1427830
- ------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Spring House, PA 19477
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (215) 646-7400
---------------------------
Not applicable
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(Former name, former address and former fiscal year, if
changed since last report.)
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 such
filing requirements for the past 90 days. Yes X. No.
---- ----
As of September 30, 1995, there were 2,083,092 shares of the Registrant's Common
Stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
-------------------------------------- ------------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $83,874,000 $72,262,000 $29,910,000 $24,992,000
Cost of products sold 43,414,000 38,779,000 15,561,000 13,332,000
------------ ----------- ----------- -----------
Gross profit 40,460,000 33,483,000 14,349,000 11,660,000
Selling, research and
development,
administrative and
general expenses 41,393,000 34,715,000 14,957,000 12,362,000
------------ ----------- ----------- -----------
Loss from operations (933,000) (1,232,000) (608,000) (702,000)
Other income 188,000 111,000 40,000 51,000
------------- ------------ ----------- ------------
Loss before
income taxes (745,000) (1,121,000) (568,000) (651,000)
Income tax
provision (benefit) 221,000 117,000 (120,000) (68,000)
------------- ------------ ----------- ------------
Net loss ($966,000) ($1,238,000) ($448,000) ($583,000)
============= ============ =========== ============
Loss per common share-assuming no dilution:
Net loss ($.47) ($.59) ($.22) ($.28)
==== ==== ==== ====
Cash dividends per share:
Preferred $.0000 $.0000 $.0000 $.0000
Common $.00 $.00 $.00 $.00
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
------------- -------------
(Unaudited) (Note A)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 513,000 $ 569,000
Trade accounts receivable 25,881,000 19,469,000
Inventories 20,823,000 16,126,000
Prepaid expenses and recoverable income taxes 3,482,000 2,605,000
------------ ------------
TOTAL CURRENT ASSETS 50,699,000 38,769,000
PROPERTY, PLANT AND EQUIPMENT 56,055,000 52,896,000
Less: Accumulated depreciation ( 38,840,000) (36,311,000)
------------ ------------
17,215,000 16,585,000
OTHER ASSETS 5,654,000 4,796,000
------------ ------------
$ 73,568,000 $ 60,150,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 6,500,000 $ 0
Accounts payable 10,998,000 5,644,000
Accrued compensation 1,917,000 1,759,000
Advances from customers 4,336,000 2,126,000
------------ ------------
TOTAL CURRENT LIABILITIES 23,751,000 9,529,000
OTHER LIABILITIES 5,958,000 5,958,000
STOCKHOLDERS' EQUITY
Preferred Stock, 5% cumulative, voting and convertible,
par value $1 per share:
Authorized - 325,000 shares
Issued and outstanding - 175,950 shares 176,000 176,000
Common Stock, par value $1 per share:
Authorized - 3,750,000 shares
Issued and outstanding - 2,083,092 2,083,000 2,083,000
Capital in excess of par value 3,343,000 3,343,000
Retained earnings 38,257,000 39,061,000
------------ ------------
43,859,000 44,663,000
------------ ------------
$ 73,568,000 $ 60,150,000
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($ 966,000) ($1,238,000)
Noncash (income) expenses:
Depreciation 2,470,000 2,295,000
Deferred income taxes ( 78,000) 0
Pension and other postretirement benefits ( 858,000) ( 210,000)
Changes in operating assets and liabilities:
Trade accounts receivable ( 6,412,000) ( 3,278,000)
Inventories ( 4,697,000) ( 2,471,000)
Accounts payable 5,354,000 1,698,000
Accrued compensation 158,000 380,000
Advances from customers 2,210,000 1,636,000
Prepaid expenses and income taxes ( 799,000) 648,000
---------- ----------
( 3,618,000) ( 540,000)
INVESTING ACTIVITY:
Purchase of property, plant and equipment ( 3,006,000) ( 2,045,000)
FINANCING ACTIVITIES:
Dividends paid 0 0
Increase in notes payable to bank 6,500,000 1,500,000
---------- ----------
6,500,000 1,500,000
Effect of exchange rate changes 68,000 120,000
---------- ----------
NET DECREASE IN CASH ( 56,000) ( 965,000)
Cash beginning of year 569,000 1,964,000
---------- ----------
CASH END OF PERIOD $ 513,000 $ 999,000
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MOORE PRODUCTS CO.
September 30, 1995
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in compliance with the Instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1995, are not necessarily
indicative of the results that may be expected for the year ended December 31,
1995.
The balance sheet at December 31, 1994, has been derived from the audited
financial statements at that date.
Primary earnings per share have been computed using the average number of shares
of Common Stock outstanding during the period (2,083,092 shares for the three
and nine month periods ended September 30, 1995 and 1994) and subtracting the
Preferred Stock dividends, declared or cumulative even though not declared, from
net income. No effect has been given to options outstanding under the Company's
stock option plan as no material dilutive effect would result from exercise of
these items. Fully diluted earnings per share are computed based upon the
assumption that the Preferred Stock shares were converted into Common Stock as
of the beginning of the period (2,153,472 shares for the three and nine month
periods ended September 30, 1995 and 1994) and no Preferred Stock dividends were
paid. Fully diluted per share data is not disclosed when convertible preferred
stock is antidilutive.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
Note B - Inventories
<TABLE>
<CAPTION>
The components of inventory consist of the following: September 30, December 31,
1995 1994
--------------- -----------
<S> <C> <C>
Completed instruments $ 3,315,000 $ 3,290,000
Finished parts 10,926,000 9,252,000
Work in process 5,624,000 2,984,000
Raw material 958,000 600,000
----------- -----------
$20,823,000 $16,126,000
=========== ===========
</TABLE>
Note C - CREDIT AGREEMENTS
Effective September 29, 1995, the Company revised its bank revolving line of
credit facility to include $9 million and (pound)2 million. Under terms of the
new credit agreements, the lender holds collateral in the form of a security
interest in trade accounts receivable and inventory. The loan agreements require
maintenance of certain restrictive financial covenants including limitation on
the amount of dividends paid per year. Cash advances are made at rates ranging
from 9.25% to 10.1% depending upon the currency utilized. Approximately $1.3
million of the credit line supports outstanding letters of credit.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS
When compared with the same periods in 1994, sales for the nine months ended
September 30, 1995, increased 16% and for the three months ended September 30,
1995, increased 20%, the result of a higher physical volume of products shipped.
Systems sales were especially higher in the nine and three month periods ended
September 30, 1995. Increased gross profits for the same periods are attributed
to the higher sales volume, reduced manufacturing costs, and a more favorable
product mix.
Selling, research and development, administrative and general expenses,
increased approximately 19% and 21%, respectively, in the nine and three month
periods ended September 30, 1995, compared to the same periods last year. Higher
payroll costs and sales-related expenses were primary reasons for these
increases.
The nontraditional relationship of income taxes to the pretax income (loss) is
due to mixed operating results in various countries. Statutory rates have been
applied to pretax income in the United States; while tax benefits for losses
incurred by certain subsidiaries in tax jurisdictions outside the United States
have been fully reserved for financial reporting purposes because the
realization of such benefits is not presently assured.
Continued improvement in general economic conditions and customer interest in
the Company's Systems products have led to an increasing level of business
activity. For the first ten months of 1995, orders received by the parent
company were 20% higher and shipments were 13% higher than for the corresponding
period in 1994. The backlog of unshipped orders held by the parent company as of
October 31, 1995, was $30,389,000 compared to $19,965,000 as of October 31,
1994.
In summary, quotations outstanding and sales orders received continue ahead of
last year. The Company has increased costs with added personnel and resources in
support of a growth in sales. The sales and production cycles of large-scale
Systems and Gage products can significantly influence shipments from one
reporting period to the next. In the first nine months of 1995, shipments were
not sufficient to offset the higher base cost incurred to support our expected
growth. This resulted in a net loss of $966,000 for the first nine months of
1995. In the third quarter of 1995, higher shipments were not sufficient to
offset the higher support costs, resulting in a net loss of $448,000.
Profitability in the fourth quarter of 1995 is dependent upon shipment levels
above that of the third quarter.
In June 1995, the Company acquired the business and certain assets of
Vernon Gauging Systems Ltd. The Moore-Vernon Division of Moore
Products Co. (U.K.) Ltd. has been located in Hitchen, Hertfordshire, United
Kingdom. This acquisition has increased the markets and product offerings
of the Company's dimensional measurement business. Moore-Vernon is not
expected to have a significant impact on consolidated operations.
The Company's working capital continues to be positive. The combination of
higher levels of business activity and resulting increases in accounts
receivable and inventory, in addition to the acquisition of Moore-Vernon assets,
has increased the Company's dependence on bank lines of credit with notes
payable of $6,500,000 as of September 30, 1995. It is anticipated that
short-term cash requirements during the balance of the year will continue to be
funded from operations and established credit lines. In contemplation of
continued growth in business activity, the Company is investigating a variety of
longer-term financing alternatives to fund required investment in capital
equipment, on-going product development and new channels of distribution.
6
<PAGE>
PART II. OTHER INFORMATION
Items 1, 4 and 5.
In accordance with the Instructions to Part II of Form 10-Q, Items 1, 4 and 5 of
Part II of Registrant's Quarterly Report on Form 10-Q are omitted, since none of
the Items listed thereunder are applicable.
Item 2. Changes in Securities
Certain loan agreements dated September 29, 1995, restrict the Registrant's
ability to pay dividends on account of its capital stock. Once the Registrant
has achieved positive net income for each of four (4) consecutive quarters,
dividends may be paid in an amount not to exceed 50% of net income for the most
recent quarter. No dividends may be paid if an event of default under the
agreement has occurred.
Item 3. Defaults Upon Senior Securities.
The Registrant's Articles of Incorporation, as amended, essentially provide that
(i) holders of the Registrant's Preferred Shares are entitled to receive, as and
when declared by the Board, cumulative dividends at the rate of 5% ($.05 per
share), (ii) such dividends may be declared and paid quarterly, semi-annually or
annually in the discretion of the Board, and (iii) if full cumulative dividends
in cash or in Preferred Shares have not been paid or declared and set aside for
payment for the first three quarters of any fiscal year, no dividend may be
paid or distribution made on the Registrant's Common Shares (other than
dividends payable in Common Shares) until full cumulative dividends in cash or
in Preferred Shares for such year and all prior periods have been paid or
declared and set aside for payment.
Traditionally, the Registrant has paid cash dividends on both its Common and
Preferred Shares quarterly, and that practice continued through the first
quarter of 1993. However, in recognition of the difficult business climate, no
dividends on either Preferred or Common Shares have been paid or declared and
set aside for payment since March 1, 1993, and it is uncertain when the payment
of dividends will recommence. The cumulative arrearage in Preferred Share
dividends through the end of the Registrant's third quarter of 1995 (calculated
on a quarterly basis) was $21,994.
Item 6. Exhibits and Reports on Form 8-K.
No reports on Form 8-K have been filed during the most recently completed fiscal
quarter.
7
<PAGE>
SIGNATURES
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 PRODUCTS CO.
Dated: November 14, 1995 By: /S/ R. E. Wisniewski
-------------------
R. E. Wisniewski,
Secretary and Treasurer
(Principal Financial and Accounting
Officer)
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 513,000
<SECURITIES> 0
<RECEIVABLES> 25,881,000
<ALLOWANCES> 0
<INVENTORY> 20,823,000
<CURRENT-ASSETS> 50,699,000
<PP&E> 56,055,000
<DEPRECIATION> 38,840,000
<TOTAL-ASSETS> 73,568,000
<CURRENT-LIABILITIES> 23,751,000
<BONDS> 0
<COMMON> 2,083,000
0
176,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 73,568,000
<SALES> 83,874,000
<TOTAL-REVENUES> 83,874,000
<CGS> 43,414,000
<TOTAL-COSTS> 43,414,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232,000
<INCOME-PRETAX> (745,000)
<INCOME-TAX> 221,000
<INCOME-CONTINUING> (966,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (966,000)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
