<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 June 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
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(State or other jurisdiction of incorporation (I.R.S. Employer
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
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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 June 30, 1995, there were 2,083,092 shares of the Registrant's Common
Stock outstanding.
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PART I. FINANCIAL INFORMATION
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
------------------------------- -----------------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $53,964,000 $47,270,000 $29,451,000 $24,425,000
Cost of products sold 27,853,000 25,447,000 14,960,000 13,297,000
------------ ----------- ----------- -----------
Gross profit 26,111,000 21,823,000 14,491,000 11,128,000
Selling, research and
development,
administrative and
general expenses 26,436,000 22,353,000 13,871,000 11,329,000
------------ ----------- ----------- -----------
Income (loss)
from operations ( 325,000) ( 530,000) 620,000 ( 201,000)
Other income 148,000 60,000 106,000 40,000
------------- ------------ ----------- ------------
Income (loss) before
income taxes ( 177,000) ( 470,000) 726,000 ( 161,000)
Income tax provision 341,000 185,000 405,000 47,000
------------ ------------ ----------- ------------
Net income (loss) ( $ 518,000) ( $ 655,000) $ 321,000 ( $ 208,000)
============ ============ =========== ===========
Loss per common share -
assuming no dilution:
Net income (loss) ($.25) ($.31) $.15 ($.10)
==== ==== ==== ====
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>
ASSETS June 30 December 31
1995 1994
CURRENT ASSETS (Unaudited) (Note A)
----------- -----------
<S> <C> <C>
Cash $ 763,000 $ 569,000
Trade accounts receivable 23,538,000 19,469,000
Inventories 19,153,000 16,126,000
Prepaid expenses and recoverable income taxes 2,994,000 2,605,000
------------ ------------
TOTAL CURRENT ASSETS 46,448,000 38,769,000
PROPERTY, PLANT AND EQUIPMENT 54,981,000 52,896,000
Less: Accumulated depreciation ( 37,973,000) ( 36,311,000)
------------ -----------
17,008,000 16,585,000
OTHER ASSETS 5,368,000 4,796,000
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$68,824,000 $60,150,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 5,000,000 $ 0
Accounts payable 8,485,000 5,644,000
Accrued compensation 1,812,000 1,759,000
Advances from customers 3,310,000 2,126,000
------------ ------------
TOTAL CURRENT LIABILITIES 18,607,000 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 38,657,000 39,061,000
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44,259,000 44,663,000
----------- -----------
$68,824,000 $60,150,000
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------------
OPERATING ACTIVITIES: 1995 1994
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<S> <C> <C>
Net loss ($ 518,000) ($ 655,000)
Noncash (income) expenses:
Depreciation 1,650,000 1,529,000
Deferred income taxes ( 44,000) 0
Pension and other postretirement benefits ( 572,000) ( 140,000)
Changes in operating assets and liabilities:
Trade accounts receivable ( 4,069,000) ( 1,958,000)
Inventories ( 3,027,000) ( 1,771,000)
Accounts payable 2,841,000 2,416,000
Accrued compensation 53,000 ( 130,000)
Advances from customers 1,184,000 871,000
Prepaid expenses and income taxes ( 345,000) 812,000
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( 2,847,000) 974,000
INVESTING ACTIVITY:
Purchase of property, plant and equipment ( 1,998,000) ( 1,389,000)
FINANCING ACTIVITIES:
Dividends paid 0 0
Increase in notes payable to bank 5,000,000 0
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5,000,000 0
Effect of exchange rate changes 39,000 27,000
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NET INCREASE (DECREASE) IN CASH 194,000 ( 388,000)
Cash beginning of year 569,000 1,964,000
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CASH END OF PERIOD $ 763,000 $1,576,000
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MOORE PRODUCTS CO.
June 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 six month periods ended June 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 six month periods ended June 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 six month
periods ended June 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
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
----------- -----------
<S> <C> <C>
Completed instruments $ 3,307,000 $ 3,290,000
Finished parts 10,496,000 9,252,000
Work in process 4,506,000 2,984,000
Raw material 844,000 600,000
----------- -----------
$19,153,000 $16,126,000
</TABLE>
Note C - CREDIT AGREEMENTS
During the quarter ended June 30, 1995, the Company increased its bank line of
credit from $6,000,000 to $7,500,000. Pursuant to the terms of a revised credit
facility, the Company granted the lender collateral in the form of a security
interest in trade accounts receivable.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS
When compared with the same periods in 1994, sales for the six months ended June
30, 1995, increased 14% and for the three months ended June 30, 1995, increased
21%, the result of a higher physical volume of products shipped. Systems sales
were higher in the six and three month periods ended June 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 18% and 22%, respectively, in the six and three month periods
ended June 30, 1995, compared to the same periods last year. Higher payroll
costs and sales-related expenses were primary reasons for the 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 seven months of 1995, orders received by the parent
company were 19% higher and shipments were 9% higher than for the corresponding
period in 1994. The backlog of unshipped orders held by the parent company as of
July 31, 1995, was $27,114,000 compared to $17,291,000 as of July 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 half 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 $518,000 for the first six months of
1995. In the second quarter of 1995, however, higher shipments offset the higher
support costs, resulting in a net profit of $321,000. Profitability in the third
quarter of 1995 is dependent upon shipment levels above that of the second
quarter.
During the quarter ended June 30, 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. While this acquisition will increase the markets and product offerings
of our dimensional measurement business, it 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 $5,000,000 as of June 30, 1995. It is anticipated that short-term
cash requirements during the balance of the year will continue to be funded from
operations and established credit lines.
6
<PAGE>
PART II. OTHER INFORMATION
Items 1, 2 and 5.
In accordance with the Instructions to Part II of Form 10-Q, Items 1, 2 and 5 of
Part II of Registrant's Quarterly Report on Form 10-Q are omitted, since none of
the Items listed thereunder are applicable.
Item 3. Defaults Upon Senior Securities.
The Registrant's Articles of Incorporation, as amended, essentially provide that
(i) holders of the Registrant's Preferred Shares are entitled to receive, as and
when declared by the Board, cumulative dividends at the rate of 5% ($.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 second quarter of 1995 (calculated
on a quarterly basis) was $19,794.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 4, 1995, the Registrant held its Annual Meeting of Shareholders at which
time one director was elected to serve for a term expiring in 1998. The
tabulation of votes with respect to the nominee was as follows: F. Lawton
Hindle, For - 2,671,559, Withheld - 19,678. Two directors were elected to serve
for terms expiring in 1999. The tabulation of votes with respect to each nominee
was as follows: Edward J. Curry, For - 2,671,719, Withheld - 19,518; and Raymond
M. Reed, For - 2,670,944, Withheld - 20,293.
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: August 14, 1995 By: /s/ R. E. Wisniewski
-------------------
R. E. Wisniewski,
Secretary and Treasurer
(Principal Financial and Accounting
Officer)
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 763000
<SECURITIES> 0
<RECEIVABLES> 23538000
<ALLOWANCES> 0
<INVENTORY> 19153000
<CURRENT-ASSETS> 46448000
<PP&E> 54981000
<DEPRECIATION> 37973000
<TOTAL-ASSETS> 68824000
<CURRENT-LIABILITIES> 18607000
<BONDS> 0
<COMMON> 2083000
0
176000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 68824000
<SALES> 53964000
<TOTAL-REVENUES> 53964000
<CGS> 27853000
<TOTAL-COSTS> 27853000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87000
<INCOME-PRETAX> (177000)
<INCOME-TAX> 341000
<INCOME-CONTINUING> (518000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (518000)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
