SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 [Fee required]
For the fiscal year ended December 31, 1995.
Commission file no. 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 of incorporation) (I.R.S. Employer Identification No.)
Spring House, Pennsylvania 19477-0900
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 646-7400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 Par Value
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(Title of class)
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 periods 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 .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [X].
The aggregate market value of voting stock held by nonaffiliates of the
Registrant (as explained on page 8) as of March 14, 1996, was approximately
$25,500,000.
Common stock outstanding at March 14, 1996, was 2,583,092 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended December 31, 1995,
are incorporated by reference into Parts II and IV of this report.
Portions of the proxy statement for the annual shareholders meeting to be held
May 2, 1996, are incorporated by reference into Part III of this report.
<PAGE>
PART I
Item 1. Business.
Moore Products Co. ("Registrant") was originally organized in January 1940,
as a partnership and incorporated in the Commonwealth of Pennsylvania in
December 1953.
Registrant is in the business of developing, manufacturing, selling, and
supporting technical products used in measurement and control of manufacturing
processes. These include a broad range of technologically advanced systems,
industrial controls and instrumentation, dimensional measuring gages, and high-
precision metrology calibration systems. It also licenses others to manufacture
its products. Many of Registrant's products are of standard design and are sold
from stock; some products are custom engineered and manufactured to order.
Industrial instruments measure and control temperature, pressure, flow of
liquid or gas, liquid level, and other variables found in process industries,
such as chemical, pulp and paper, and power and utility. Metrology products,
dimensional gages, and statistical process control systems are used in
quality-related applications in high-precision calibration laboratories and in
the manufacture of precision and discrete parts such as is found in the
automotive industry. In June 1995, the Registrant acquired the assets and
business of Vernon Gauging Systems Ltd. in the United Kingdom. This acquisition
expands the Registrant's international markets and product offerings in the
dimensional gaging business.
Registrant's products are designed to use compressed air and/or electricity
as a source of power. Registrant uses digital electronic, analog electronic,
pneumatic and software technologies in the design of its products and does not
specialize in one particular technology.
The business of the Registrant is primarily capital equipment. As such,
it is subject to the cyclical nature of commitments to new or replacement
manufacturing facilities and equipment by the industries that it serves. The
business of the Registrant is not generally seasonal, but has followed a pattern
of higher sales activity in the second half of each calendar year when customer
spending for capital goods tends to accelerate in response to capital budgeting
activities.
During the past five years, the Registrant has introduced a series of new
product offerings intended to provide complete, advanced technological solutions
to industries seeking efficient control of their manufacturing processes. These
products range from remote field transmission and control devices to
sophisticated microcomputer-based control systems - both hardware and software
products. In many instances these
<PAGE>
products are linked through a standard industry communication protocol and are
custom engineered or configured to meet unique requirements of specific
customers. The innovative, technical advances represented by some of these
products have been formally recognized through industry awards. Increased sales
volume in the past year is attributed to customer acceptance of these newer
products.
Higher levels of business activity and capital investment have increased
working capital requirements during 1995. In order to finance these needs the
Registrant increased its bank lines of credit to $12 million. In addition, the
Registrant completed an equity financing transaction by selling 500,000 shares
of previously unissued common stock to the Moore Products Co. Pension Plan for
$8 million.
Markets:
The principal markets for Registrant's products are the process industries
(including chemical, pulp and paper, power and utility, pharmaceuticals, oil and
gas, metals, synthetic fiber, and food and beverage), precision discrete parts
manufacturing industries (including machine tool, aeronautical and automotive),
and calibration laboratories. Certain of the Registrant's systems products are
sold in significant dollar amounts as part of major customer projects. As such,
changes in quarterly and annual sales are influenced by the shipment of these
orders.
Sales and Distribution:
Registrant's United States sales are made primarily through factory-trained
employees of its own organization, located in its sales offices in 42 cities.
International sales and customer support are handled through a combination of 11
subsidiaries and approximately 60 sales representatives appointed by Registrant
or its subsidiaries strategically located throughout the world. Sales in Canada
and Europe are made through Registrant's wholly-owned Canadian, English, Dutch,
Italian and French subsidiaries, Moore Products Co. (Canada) Inc., Moore
Products Co. (U.K.) Limited, Moore Products Co. B.V., Moore Products Co.
(Italia) S.r.l., and Moore Products Co. (France) SARL. Sales in the Asia/Pacific
region are also supported through wholly-owned subsidiaries in Australia, Japan,
and Singapore by Moore Products Co. (Australia) Pty. Ltd., Moore Products Co.
(Japan) K.K., and Moore Products Co (S) Pte Ltd. Sales in Mexico, India and
Brazil, which are not significant, are made through jointly-owned subsidiaries,
Moore Products de Mexico S.A. de C.V., Moore Controls Pvt. Limited and T & M
Controles Ltda., respectively.
<PAGE>
Raw Materials:
In its manufacturing operation, Registrant uses aluminum, brass, stainless
steel, various synthetic materials, as well as forgings and many types of
castings and electronic components. Registrant is experiencing no significant
shortages in raw materials at this time which would be expected to have a
serious effect on the delivery aspect of Registrant's business, although
occasional disruption in the availability of certain electronic components can
impact the scheduled manufacture and shipment of some products. In most
instances, Registrant has more than one source of supply for its material
requirements.
Patents, Trademarks, and Licenses:
Registrant applies for patents on inventions and developments which it
considers clearly patentable and desirable with respect to its products. As of
December 31, 1995, Registrant owned several unexpired United States patents and
unexpired international patents, none of which are considered individually to be
material to its business.
Considered to be of greater importance to its business is Registrant's
"know-how" in manufacturing products, including those covered by patents which
have expired. Registrant has from time to time granted "know-how" licenses to
others, and has been licensed by others, to manufacture certain products, but
none of these licenses are believed to be material to the Registrant.
Several of the Registrant's products are sold under trademarks, some of
which are registered. Examples of these include "QUADLOG(TM)", "VIEWPAC(TM)",
"FIELDPAC(TM)", "APACS(R)", "XTC(R)", "LABMASTER(R)", and "LASERULER(R)". In
addition the Registrant conducts business under the registered trademarks of
"MOORE(R)" in logo form, "PRATT & WHITNEY(R)" and "P&W(R)" in logo form, which
provide unique identity within its industry.
Backlog:
As of December 31, 1995, Registrant had a total consolidated backlog of
orders, believed by it to be firm, amounting to $36,997,000. Registrant expects
that substantially all such orders will be filled within the current fiscal
year. As of December 31, 1994, Registrant had a total consolidated backlog of
orders amounting to $24,784,000.
<PAGE>
Competition:
Registrant is a medium-sized company in the process, measurement and
control, and the dimensional gaging industry. It is one of a limited number of
companies in the United States with the capability to bid as manufacturer for
complete process instrumentation projects, such as the instrumentation of a
chemical plant, an oil refinery, or a paper mill. Competition in Registrant's
industry has intensified as markets, customers and competitors have become
increasingly international in their focus. Registrant has attempted to maintain
its position in the industry by the quality and performance of its existing
products and technical innovation of new product developments. Price,
availability, service and support also are important factors.
Registrant's principal competitors in the industry, some of whom are
considerably larger than the Registrant, are The Foxboro Company, a SIEBE
Company; ABB Process Automation, Inc., and ABB Kent-Taylor Inc., two divisions
of ABB Asea Brown Boveri, Inc.; Elsag Bailey Process Automation N.V.and its
subsidiary, Bailey-Fischer & Porter; the Industrial Automation and Control
Division of Honeywell, Inc.; Fisher-Rosemount, a unit of Emerson Electric Co.;
Marposs Gauges Corp.; Illitron Division of ITW; and Air Gage Company.
Research Activities:
Approximately $8,129,000 was spent during 1995, $8,146,000 during 1994, and
$9,467,000 during 1993 on company-sponsored research activities relating to the
development of new products or the improvement of existing products. The amount
spent on customer-sponsored research activity was not significant in any of the
years covered. No costs associated with the development of software products are
capitalized.
Environment:
Compliance with federal, state, and local provisions regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment is not expected to have a material effect on the
capital expenditures, earnings, or competitive position of Registrant and its
subsidiaries. Registrant's involvement in environmental actions, to date, has
been limited to situations where a former licensed waste hauler allegedly
disposed of de minimis quantities of waste materials from Registrant's United
States plant to several land fill sites in an unacceptable manner. Net costs to
Registrant with respect to these actions to date have been immaterial.
Registrant presently does not anticipate that its net uninsured
<PAGE>
costs with respect to these actions will be material and further believes that
potential monetary sanctions, if any, from any such governmental actions will
not exceed $100,000.
Number of Employees:
Registrant and its subsidiaries had approximately 1,300 employees as of
December 31, 1995.
Foreign and Domestic Operations and Export Sales:
Reference is made to Note G on page 13 of Registrant's Consolidated
Financial Statements contained in Exhibit 13 of this report.
Item 2. Properties.
Registrant's principal manufacturing facility and corporate office are
contained in a modern steel and masonry building of approximately 374,000 square
feet located on 154 acres in Spring House, Montgomery County, Pennsylvania. The
building and land at this facility are owned outright by Registrant. The
Registrant leases approximately 42,000 square feet of light manufacturing and
warehouse space in Montgomeryville, Montgomery County, Pennsylvania. The
Registrant's Pratt & Whitney Division owns and occupies an 18,000 square foot
office and manufacturing facility in Plainville, Connecticut.
Registrant's Canadian subsidiary, Moore Products Co. (Canada) Inc., is
located in a modern plant and office building of approximately 35,000 square
feet. The building is located on 89 acres of land in Brampton, Ontario, Canada.
Both the building and the land are owned outright by Registrant's subsidiary.
Registrant's English subsidiary, Moore Products Co. (U.K.) Limited, is
located in a modern plant and office building of approximately 36,000 square
feet. The building is located on 5 acres of land in Yeovil, Somerset, England.
Both the building and land are owned outright by Registrant's subsidiary.
Moore-Vernon, a division of Moore Products Co. (U.K.) Limited, leases an office
and manufacturing facility of approximately 23,000 square feet in Hitchin,
Hertfordshire, England.
The remaining international subsidiaries occupy leased premises.
Registrant's leases for branch sales offices and international subsidiaries in
the aggregate are not material.
<PAGE>
The equipment at Registrant's plants, principally machine tools, assembly
tools, and automatic testing equipment, some of which was built by Registrant
itself, is modern and in good condition. Equipment is generally owned outright
by Registrant. Registrant believes its facilities are adequate and suitable for
its purposes.
Item 3. Legal Proceedings.
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Registrant or any of
its subsidiaries is a party or of which any of their property is the subject.
See "Environment" in Part I, Item 1 of this report.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
Additional Information:
The following information is furnished in this report pursuant to
Instruction 3 to Item 401(b) of Regulation S-K:
Executive Officers of the Registrant:
Set forth below is certain information with respect to the executive
officers of Registrant as of March 14, 1996.
<TABLE>
<CAPTION>
Positions and
Name of Officer Age Offices Held with Registrant
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<S> <C> <C>
William B. Moore 53 President and Chief Executive Officer
Edward J. Curry 49 Executive Vice President and Chief Operating
Officer
James McDonald 46 Vice President, Sales
Robert E. Wisniewski 42 Secretary and Treasurer
</TABLE>
Executive officers of Registrant are appointed annually by the Board of
Directors, to serve at the discretion of the Board until their successors are
appointed. All of the executive officers of Registrant have served in executive
or related administrative capacities with Registrant for over five years. Mr.
Curry was appointed Chief Operating Officer in September 1995.
<PAGE>
For the purposes of calculating the aggregate market value of the shares of
the voting stock of the Registrant held by nonaffiliates, as shown on the cover
page of this report, the value of the Registrant's outstanding preferred stock
(which has voting rights and is convertible into common stock but is not
publicly traded), which is held entirely by affiliates, has not been included,
and it has been assumed that all the other outstanding voting shares (common
stock) were held by nonaffiliates except for the shares held or beneficially
owned by directors and executive officers of the Registrant, the Moore Products
Co. Pension Plan and by Frances O. Moore, widow of the late Coleman B. Moore,
founder of the Registrant. However, this should not be deemed to constitute an
admission that all directors and executives officers of the Registrant, the
Moore Products Co. Pension Plan and/or Frances O. Moore are, in fact, affiliates
of the Registrant, or that there are not other persons who may be deemed to be
affiliates of the Registrant. Further information concerning shareholdings of
executive officers, directors and principal shareholders of Registrant is
included in the Registrant's definitive proxy statement filed or to be filed
with the Securities and Exchange Commission.
<PAGE>
PART II
As indicated in the following table, the information required to be
presented in Part II of this report is hereby incorporated by reference to
Registrant's Annual Report to Shareholders for the year ended December 31, 1995,
which is attached as Exhibit 13 to this report.
<TABLE>
<CAPTION>
Material in Annual Report to
Shareholders for the year ended
December 31, 1995, which is
incorporated herein by reference
Form 10-K --------------------------------
Item No. and Item Caption Caption Page
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<S> <C> <C> <C>
5 Market for Registrant's "Shareholder Information" 15
Common Equity and
Related Stockholder
Matters.
6 Selected Financial Data. "Selected Financial Data" 15
7 Management's Discussion "Report to Shareholders" 1
and Analysis of Financial "Management's Discussion
Condition and Results of and Analysis" 2
Operations.
8 Financial Statements and "Consolidated Balance Sheets" 4-5
Supplementary Data. "Consolidated Statements of
Operations" 6
"Consolidated Statements of
Cash Flows" 7
"Notes to Consolidated
Financial Statements" 8-14
"Report of Independent Auditors" 3
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
<PAGE>
PART III
As indicated in the following table, the information required to be
presented in Part III of this report is hereby incorporated by reference to the
Registrant's definitive Proxy Statement for its 1996 Annual Meeting of
Shareholders, to be filed with the Securities and Exchange Commission within 120
days of the end of the fiscal year covered by this report:
<TABLE>
<CAPTION>
Material in Proxy Statement for 1996
Annual Meeting which is incorporated
herein by reference
Form 10-K -------------------------------------
Item No. and Item Caption Caption
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<S> <C> <C>
10 Directors and Executive "1. ELECTION OF DIRECTORS"
Officers of Registrant.
11 Executive Compensation. "ADDITIONAL INFORMATION - Summary
Compensation Table"
12 Security Ownership of Certain "Beneficial Ownership of Principal
Beneficial Owners and Stockholders and Management"
Management.
13 Certain Relationships and "Compensation of Directors"
Related Transactions. "Certain Relationships and Related
Transactions"
</TABLE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) The following consolidated financial statements of Registrant and
its subsidiaries, included in Registrant's Annual Report to Shareholders for the
year ended December 31, 1995, which is attached as Exhibit 13 to this report,
are incorporated herein by reference:
Consolidated Balance Sheets - December 31, 1995
and December 31, 1994
Consolidated Statements of Operations -
Years ended December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows -
Years ended December 31, 1995, 1994, and 1993
Notes to Consolidated Financial Statements - December 31, 1995
Report of Independent Auditors
<PAGE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
(a)(3) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
3a Articles of Incorporation. (Incorporated by
reference to Exhibit 3a to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1993.)
3b By-Laws, as amended through May 2, 1991.
(Incorporated by reference to Exhibit 3b to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1991.)
4 Instruments defining the rights of security holders.
(Reference is made to (i) Articles 5 and 10 of Registrant's
Articles of Incorporation (Exhibit 3a to this report) and (ii)
Articles III, IV, VIII, X and XIII of Registrant's By-Laws
(Exhibit 3b to this report).)
10 Registration Rights Agreement entered into as of
December 18, 1995, between Moore Products Co. and
Mellon Bank N.A., as trustee for the Moore Products Co.
Pension Plan.
11 Statement Re: Per Share Earnings.
13 Annual Report to Shareholders for the year ended
December 31, 1995.
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed by Registrant during the last quarter
of 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 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, thereunto duly authorized.
MOORE PRODUCTS CO.
\s\ W. B. Moore
-----------------------------------
Date: March 25, 1996 W. B. Moore, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
\s\ W. B. Moore
-----------------------------------
Date: March 25, 1996 W. B. Moore, President,
Chief Executive Officer and Director
\s\ E. J. Curry
-----------------------------------
Date: March 25, 1996 E. J. Curry, Executive Vice President,
Chief Operating Officer and Director
\s\ R. E. Wisniewski
-----------------------------------
Date: March 25, 1996 R. E. Wisniewski
Secretary and Treasurer
(Principal Financial & Accounting Officer)
\s\ R. B. Adams
-----------------------------------
Date: March 25, 1996 R. B. Adams, Director
-----------------------------------
Date: F. L. Hindle, Director
\s\ J. O. Moore
-----------------------------------
Date: March 25, 1996 J. O. Moore, Director
-----------------------------------
Date: T. C. Moore, Director
-----------------------------------
Date: R. H. Owens, Director
-----------------------------------
Date: R. M. Reed, Director
\s\ E. G. Rorke
-----------------------------------
Date: March 25, 1996 E. G. Rorke, Director
</TABLE>
REGISTRATION RIGHTS AGREEMENT
Dated as of:
December 18, 1995
By and Between
Moore Products Co.
and
Mellon Bank, N.A., as trustee for the Moore
Products Co. Pension Plan
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Common Stock
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of December 18, 1995, by and between Moore Products Co., a
Pennsylvania corporation (the "Company"), and Mellon Bank, N.A., as trustee for
the Moore Products Co. Pension Plan (the "Shareholder").
This Agreement is made in connection with, is a condition precedent to,
and forms part of the consideration for, a Subscription Agreement, dated as of
December 18, 1995, by and between the Company and the Shareholder (the
"Subscription Agreement"). In order to induce the Shareholder to enter into the
Subscription Agreement, the Company has agreed to provide registration rights
with respect to the Shares.
The parties hereto, intending to be legally bound, hereby agree as
follows:
1. Securities Subject to this Agreement.
(a) Definitions.
(i) The term "Shares" means the Common Stock issued by the
Company pursuant to the Subscription Agreement.
(ii) The terms "Registrable Securities" and "Restricted
Securities" mean each of the following: (1) the Shares, and (2) any other
securities issued in exchange for or as dividends on, or by way of a split of,
the Shares.
(b) Restricted Securities. For the purposes of this Agreement,
Restricted Securities will cease to be Restricted Securities when (i) a
registration statement filed pursuant to the Securities Act of 1933, as amended
(the "Act"), covering such Restricted Securities has been declared effective and
such securities have been disposed of pursuant to such effective registration
statement, (ii) they are distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Act, (iii) they are eligible to be
sold pursuant to Rule 144(k) under the Act without limitation as to the amount
of securities to be sold or as to the manner of sale, or (iv) they have been
otherwise transferred and the Company has delivered new certificates or other
evidences of ownership for them not subject to any legal or other restriction on
transfer and not bearing the following or any similar legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933 or under any applicable state
securities law, and may not be transferred except upon delivery to the
Corporation of an opinion of counsel satisfactory in form and substance
to it that such transfer will not violate the Securities Act of 1933,
as amended, or any applicable state securities law.
(c) Registrable Securities. As to any particular Registrable
Securities, such Securities will cease to be Registrable Securities when they
cease to be Restricted Securities.
<PAGE>
2. Demand Registrations.
(a) Request for Registration. At any time after the date hereof
the Shareholder may make a written request for registration under the Act of all
or part of its Registrable Securities (the "Demand Registration"). No other
party, including the Company, shall be permitted to offer securities under any
such Demand Registration unless all shares of Registrable Securities requested
to be included by the Shareholder shall be so included. If the number of shares
of Registrable Securities to be offered hereunder is restricted, the number of
shares to be included in the offering shall be determined pursuant to the
provisions of subsection 2(d) hereof.
(b) Limitations on Demand. Notwithstanding the foregoing, the
Company shall not be obligated to file a registration statement relating to the
Demand Registration under Section 2(a) hereof if counsel to the Company renders
an opinion addressed to the Company and the Shareholder to the effect that
registration is not required for the proposed transfer of Registrable
Securities. In addition, the Company may delay in filing a registration
statement relating to the Demand Registration for not more than 90 days if (i)
the Company has filed, or is about to file, a registration statement relating to
the offering of any of the Company's securities (the "Company's Securities"),
and the managing underwriter of such offering is of the opinion that the filing
of a registration statement with respect to the Demand Registration would
adversely affect the offering by the Company of the Company's Securities, or
(ii) the Company's ability to pursue a pending significant business opportunity
(representing in excess of 10% of the Company's consolidated revenues or total
assets) might be materially adversely affected by the filing of a registration
statement with respect to the Demand Registration, whether due to the
requirement that the Company disclose material non-public information about the
Company in connection with such registration or for other reasons.
(c) Effective Registration and Expenses. A registration will not
count as a Demand Registration under Section 2(a) hereof until it has become
effective; provided, however, that if the Shareholder shall cause or request the
Company to withdraw any such registration statement, the Shareholder may
thereafter request the Company to reinstate such registration statement, if
permitted under the Act, or to file another Demand Registration, in accordance
with the procedures set forth herein, only upon agreeing in writing to reimburse
the Company for all Registration Expenses (excluding internal expenses) over and
above those Registration Expenses which the Company would have incurred had such
Demand Registration not been withdrawn. The Company shall cause the registration
statement relating to any Demand Registration to remain effective until the
earlier of three (3) years from the date hereof or such earlier date upon which
all of the Registrable Securities cease to be Restricted Securities. Except as
provided above, the Company will pay all Registration Expenses (as defined in
Section 6 hereof) in connection therewith, whether or not it becomes effective.
The Company shall not be required to undergo or pay for any special audit, the
cost of which would exceed $20,000, to effect any registration statement under
this Section 2, and if such a special audit would be required in order to file
or effect a registration statement hereunder, the Company shall be entitled to
delay the filing or effectiveness of such registration statement until a
reasonable period of time following the completion of such audit in the ordinary
course of the Company's activities; provided, however, that the Company shall
not
<PAGE>
be entitled to delay the filing or effectiveness of such registration statement
if the Shareholder agrees to pay for the cost of any such special audit.
(d) Priority on Demand Registrations.
If the Shareholder so elects, the offering of Registrable
Securities pursuant to the Demand Registration shall be in the form of an
underwritten offering, provided, however, that such offering shall be for a
minimum of 200,000 shares of Registrable Securities, unless such number shall be
reduced by the managing underwriter or underwriters in accordance with this
paragraph. If the managing underwriter or underwriters of such offering advise
the Company and the Shareholder in writing that in its or their opinion the
number of Registrable Securities requested to be included in such offering would
materially and adversely affect the success of such offering or the price of the
Registrable Securities to be offered, the number of Registrable Securities to be
registered shall be reduced by the managing underwriter or underwriters. If all
of the Registrable Securities requested to be included by the Shareholder in the
Demand Registration have been included, the Company shall be entitled to include
that number of shares of its unissued Common Stock or other securities as are
consented to by the managing underwriter or underwriters, and security holders
of the Company other than the Shareholder exercising "piggy-back" registration
rights may include that number of securities as are consented to by the managing
underwriter or underwriters, provided that, in the opinion of the managing
underwriter or underwriters, the inclusion by the Company of such shares of
Common Stock or other securities and the inclusion of such other securities by
the security holders exercising "piggy-back" registration rights would not
materially and adversely affect the success of the offering of the Registrable
Securities or the price of the Registrable Securities to be offered.
(e) Selection of Underwriters. If the Demand Registration is in
the form of an underwritten offering, the Company shall select and obtain the
investment banker or investment bankers and manager or managers that will
administer the offering; provided that such investment bankers and managers must
be approved by the Shareholder, which approval shall not be unreasonably
withheld.
3. Piggy-Back Registration
If the Company proposes to file a registration statement under the Act
with respect to an offering by the Company for its own account of its Common
Stock (other than a registration statement on Form S-4, S-8 or S-14 (or any form
substituting therefor) or filed in connection with an exchange offer or an
offering of securities solely to the Company's existing stockholders or
employees) at any time, on or after the date hereof, the Company shall in each
case give written notice of such proposed filing to the Shareholder at least
twenty days before the anticipated filing date, and such notice shall offer the
Shareholder the opportunity to register such number of Registrable Securities as
the Shareholder may request in writing within ten days after receipt of such
notice. The Company shall use reasonable efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Shareholder to include such securities in such offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering deliver a written opinion to the Shareholder to the effect that
the total amount
<PAGE>
of securities which the Shareholder, the Company and any other persons or
entities intend to include in such offering would materially and adversely
affect the success of such offering, then the amount of securities to be offered
for the account of the Shareholder shall be reduced to the extent necessary to
reduce the total amount of securities to be included in such offering to the
amount recommended by such managing underwriter; provided that if securities are
being offered for the account of other persons or entities as well as the
Company, such reduction shall not represent a greater fraction of the number of
securities requested to be registered by the Shareholder than the fraction of
similar reductions imposed on such other persons or entities over the amount of
securities requested to be registered by such holders. In connection with a
piggy-back registration, the Company will bear all Registration Expenses.
4. Holdback Agreements
(a) Restrictions on Public Sale by Holder of Registrable
Securities. To the extent not inconsistent with applicable law, the Shareholder
agrees not to effect any public sale or distribution of the issue being
registered or a similar security of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, including a sale
pursuant to Rule 144 under the Act, during the 14 days prior to, and during the
90-day period beginning on, the effective date of the registration statement
referred to in Section 2 or Section 3 hereof (except as part of the
registration) or the commencement of a public distribution of securities
pursuant to such registration statement.
(b) Restrictions on Public Sale by the Company and Others. The
Company agrees not to effect, pursuant to a firm commitment underwriting, on its
own behalf or for the benefit of any other security holder, any public sale or
distribution of any securities similar to those being registered, or any
securities convertible into or exchangeable or exercisable for such securities
(other than any such sale or distribution of such securities in connection with
any merger or consolidation by the Company or any subsidiary thereof or the
acquisition by the Company or a subsidiary thereof of the capital stock or
substantially all of the assets of any other person), during the 14 days prior
to, and during the 90-day period beginning on the effective date of the
registration statement referred to in Section 2 or 3 hereof or the commencement
of a public distribution of the Registrable Securities pursuant to any such
registration statement.
5. Registration Procedures
(a) Whenever the Shareholder has requested that any Registrable
Securities be registered pursuant to Section 2 or 3 hereof, the Company will use
its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
promptly as reasonably practicable, and in connection with any such request, the
Company shall commence, no later than 60 days from the date of such Shareholder
request, the necessary steps to effect such registration and sale, and the
Company will, as expeditiously as possible:
(i) furnish to the Shareholder, and if requested, to the
Shareholder's investment adviser, prior to filing a registration statement,
copies of such registration
<PAGE>
statement as proposed to be filed, and thereafter such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
the Shareholder may reasonably request in order to facilitate the disposition of
such Registrable Securities owned by the Shareholder;
(ii) use its best efforts to register or qualify such
Registrable Securities under the state securities or blue sky laws of such
jurisdictions, not to exceed ten in number, as the Shareholder reasonably
requests, or, in the event of a firm commitment underwritten offering, such
larger number of jurisdictions as the managing underwriter or underwriters shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Shareholder to consummate the
disposition in such jurisdictions of such Registrable Securities owned by the
Shareholder; provided that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (ii), (B) subject itself to taxation
in any such jurisdiction, or (C) consent to general service of process in any
such jurisdiction;
(iii) use reasonable efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the
Shareholder to consummate the disposition of such Registrable Securities;
(iv) notify the Shareholder at any time when a prospectus
relating thereto is required to be delivered under the Act, of the happening of
any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, and the Company will prepare a supplement or amendment to such
prospectus as soon as reasonably practicable thereafter (except that the Company
may avoid supplementing or amending such prospectus for up to 30 days when such
non-disclosure is in the interests of the Company) so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(v) enter into and perform customary agreements (including,
without limitation, an underwriting agreement containing customary
representations, underwriters compensation and indemnity and other customary
terms and conditions) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable Securities;
(vi) make available for inspection by the Shareholder, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by the
Shareholder or any such underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents and
properties and other pertinent information of the
<PAGE>
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all pertinent information reasonably
requested by any such Inspector in connection with such registration statement.
Records which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (A) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the registration statement, (B) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (C) the information in such Records has been
made generally available to the public. The seller of Registrable Securities
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(vii) in the event such sale is pursuant to an underwritten
offering, use reasonable efforts to obtain a "cold comfort" letter from the
Company's independent certified public accountants in customary form and
covering such matters of the type customarily covered by "cold comfort" letters
as the Shareholder or the managing underwriter reasonably requests;
(viii) use reasonable efforts to obtain an opinion or
opinions from counsel for the Company in customary form addressed to the
managing underwriter or underwriters, if any, and, in the event of an
underwritten public offering, the Shareholder if it requests such an opinion or
opinions;
(ix) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve months, beginning within three months after the end
of the fiscal quarter in which the registration statement becomes effective,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Act; and
(x) use reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed, provided that the applicable
listing requirements are satisfied.
(b) The Company may require the Shareholder to furnish to the
Company such information regarding the distribution of the Registrable
Securities as the Company may from time to time reasonably request.
(c) The Shareholder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
5(a)(iv) hereof, the Shareholder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until the Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(a)(iv) hereof, and,
if so directed by the Company, the Shareholder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in the
Shareholder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In
<PAGE>
the event the Company shall give any such notice, the Company shall extend the
period during which such registration statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from and
excluding the date of the giving of such notice pursuant to Section 5(a)(iv)
hereof to and including the date when the Shareholder shall have received the
copies of the supplemented or amended prospectus contemplated by Section
5(a)(iv) hereof.
6. Registration Expenses
Except as set forth in Section 2(c) hereof, all expenses incident
to the Company's performance of or compliance with this Agreement, including
without limitation all registration and filing fees (including all counsel fees
and expenses incident thereto), fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), rating
agency fees, printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which such securities are required to
be listed, and fees and disbursements of counsel for the Company and its
independent certified public accountants (including the expenses of any special
audit conducted at the Company's option or "cold comfort" letters required by or
incident to such performance), securities acts liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and expenses of
any special experts retained by the Company in connection with such
registration, and fees and expenses of other persons retained by the Company,
but not including any underwriting discounts or commissions attributable to the
sale of Registrable Securities or any out-of-pocket expenses of the Shareholder
(all such expenses being herein called "Registration Expenses"), will be borne
by the Company; provided, however, that, in connection with the registration or
qualification of the Registrable Securities under state securities laws, nothing
herein shall be deemed to require the Company to make any payments to third
parties in order to obtain "lock-up," escrow or other extraordinary agreements.
The Shareholder shall pay the fees and expenses of its own counsel, underwriting
discounts, and commissions attributable to the sale of the Registrable
Securities, and his other out-of-pocket expenses.
7. Indemnification; Contribution
(a) Indemnification by the Company. The Company shall agree to
indemnify, to the fullest extent permitted by law, the Shareholder, its
officers, directors and agents and each person who controls the Shareholder
(within the meaning of the Act), and any investment adviser thereof or agent
therefor, against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused by any untrue or alleged untrue
statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein (in the case of a prospectus, in the light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by or contained in any information with respect to the Shareholder
furnished to the Company by the Shareholder for use therein or by the
Shareholder's failure to deliver a copy of the registration statement or
prospectus or
<PAGE>
any amendments or supplements thereto in accordance with the requirements of the
Act after the Company has furnished the Shareholder with a copy of the same. The
Company will also indemnify any underwriters of the Registrable Securities,
their officers and directors and each person who controls such underwriters
(within the meaning of the Act) to the same extent as provided above with
respect to the indemnification of the Shareholder.
(b) Indemnification by the Shareholder. In connection with any
registration statement in which the Shareholder is participating, the
Shareholder will furnish to the Company in writing such information and
affidavits with respect to the Shareholder as the Company reasonably requests
for use in connection with any such registration statement or prospectus and
shall indemnify, to the fullest extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within the
meaning of the Act) against any losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees) resulting from any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto, or necessary to make
the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent that such untrue statement or omission is caused by or
contained in (i) any information or affidavit with respect to the Shareholder or
the shares or its investment therein furnished by the Shareholder, or (ii) by
the Shareholder's failure to deliver a copy of the prospectus or any amendments
or supplements thereto in accordance with the requirements of the Act after the
Company has furnished the Shareholder with a copy of the same.
(c) Conduct of Indemnification Proceedings. Any person entitled
to indemnification hereunder shall give written notice within 30 days to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such person may claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to such indemnified party. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim, unless in the reasonable judgment of counsel for such indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels. The indemnifying party will not be subject
to any liability for any settlement made without its consent.
(d) Contribution. If the indemnification provided for in this
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to
<PAGE>
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7(c) hereof, any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 7(a) and (b) hereof without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7(d).
8. Participation in Underwritten Registrations
The Shareholder may not participate in any underwritten
registration hereunder unless the Shareholder (a) agrees to sell its securities
on the basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
9. Reporting Requirements
The Company covenants that it will timely file the reports
required to be filed by it under the Act and the Securities Exchange Act of
1934; and it will use reasonable efforts to take such further action as the
Shareholder may reasonably request to the extent required to enable the
Shareholder to sell Registrable Securities without registration under the Act
within the limitation of the exemptions provided by Rule 144 and Rule 144A under
the Act, as such Rules may be amended or any similar rules or regulations
hereafter adopted. Upon the request of the Shareholder, the Company will deliver
to the Shareholder a written statement as to whether the Company has complied
with such requirements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Shareholder in this Agreement.
<PAGE>
(b) Remedies. Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Shareholder.
(d) Notices. Any notice or other communications required or
permitted hereunder shall be deemed validly given, made or served, when
delivered personally or by telecopier (except for legal process), or upon
receipt by the party entitled to receive the notice when sent by registered or
certified mail, postage prepaid, or by a recognized overnight delivery service,
addressed as follows or to such other address or addresses or telecopier number
as may hereafter be furnished in writing by notice similarly given by one party
to the other parties hereto:
To the Company: Moore Products Co.
Spring House, Pa. 19477-0900
Telecopier Number: (215) 653-0348
Attention: President
To the Shareholder: Mellon Bank, N.A., as trustee for the Moore
Products Co. Pension Plan
1735 Market Street
Philadelphia, PA 19101-7899
Telecopier Number: (215) 553-3409
Attention: William McCabe,
Vice President
Notice given by telecopier shall be deemed delivered on the day the sender
receives telecopier confirmation that such notice was received at the telecopier
number of the addressee. Notice given by mail as set out above shall be deemed
received three days after the date the same is postmarked.
(e) Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each of the parties hereto and shall inure to the
benefit of their respective successors and permitted assigns. This Agreement
shall not be assignable by the Shareholder, by operation of law or otherwise,
unless such assignee shall enter into a binding agreement with the Company
whereby the assignee shall (i) make representations, warranties and covenants to
the Company substantially similar to the representations, warranties and
covenants made by the Shareholder to the Company in the Subscription Agreement
and otherwise acceptable to the Company, and (ii) agree to make only one request
for Demand Registration hereunder.
(f) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania applicable to contracts made and to be performed wholly therein
without regard to principles of conflict of laws.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Shareholder shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. With respect to the Company and the
Shareholder, this Agreement, together with the Subscription Agreement, is
intended by such parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
such parties in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement and the
Subscription Agreement supersede all prior agreements and understandings between
the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
MOORE PRODUCTS CO.
By:\S\W. B. Moore
-------------------
Title: President
MELLON BANK, N.A., AS TRUSTEE
FOR THE MOORE PRODUCTS CO.
PENSION PLAN
By:\S\William McCabe
-------------------
Title: Vice President
<PAGE>
Exhibit 11
STATEMENT RE: PER SHARE EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before cumulative
effect of change in accounting $ 259,000 ($1,089,000) ($4,589,000)
Cumulative effect of
change in accounting - - 233,000
----------- ---------- ----------
Net income (loss) 259,000 ( 1,089,000) ( 4,356,000)
Less: Preferred stock dividend ( 9,000) ( 9,000) ( 9,000)
----------- ---------- ----------
$ 250,000 ($1,098,000) ($4,365,000)
=========== ========== ==========
PRIMARY EARNINGS PER SHARE
Average shares outstanding 2,100,900 2,083,092 2,083,092
Net effect of dilutive stock options-
based on the treasury stock method
using average market price 13,957 -- --
--------- --------- ---------
Total 2,114,857 2,083,092 2,083,092
========= ========= =========
Income (loss) before cumulative
effect of change in accounting $0.12 ($0.53) ($2.20)
Cumulative effect of
change in accounting -- -- 0.11
----- ----- -----
Net income (loss) $0.12 ($0.53) ($2.09)
===== ===== =====
FULLY DILUTED EARNINGS PER SHARE (a)
Average shares outstanding 2,100,900 2,083,092 2,083,092
Net effect of dilutive stock options-
based on the treasury stock method
using the year-end market price, if
higher than average market price 27,452 -- --
Increase in common stock based on
the assumption that the preferred
shares were converted as of the
beginning of the year 70,380 70,380 70,380
--------- --------- ---------
Total 2,198,732 2,153,472 2,153,472
========= ========= =========
Income (loss) before cumulative
effect of change in accounting $0.12 ($0.51) ($2.13)
Cumulative effect of
change in accounting -- -- 0.11
----- ----- -----
Net income (loss) $0.12 ($0.51) ($2.02)
===== ===== =====
</TABLE>
(a) This calculation is presented in accordance with Regulation S-K although
the resultant effect of the assumed conversion of preferred stock shares
is antidilutive. Therefore, amounts computed under Regulation S-K differ
from that which is required for financial reporting under Accounting
Principles Board Opinion No. 15.
MOORE PRODUCTS CO.
1995
Annual Report
<PAGE>
Moore Products Co. is a global leader in providing manufacturers with innovative
solutions to process measurement and control challenges. The Company's process
control instruments and systems help increase plant safety and product
throughput, reduce time to market, and improve product quality in industries
such as chemical, pharmaceutical, paper, and power. The Company's metrology
systems and dimensional measuring systems facilitate inspection and quality
control in calibration laboratories and manufacturing processes for
mass-produced precision parts in industries such as automotive and aeronautical.
Founded in 1940 in Philadelphia, Pennsylvania, Moore Products Co. has grown into
an international operation with over 1300 employees worldwide. Pictured on the
front cover of this report is the Company's headquarters located in Spring
House, Pennsylvania.
<PAGE>
Report to Shareholders
CONSOLIDATED RESULTS
Moore Products Co. reached record sales of $121,037,000 in 1995,
a 20% increase over 1994. Earnings for the year were $259,000, or $.12 per
share. It is reassuring to see the efforts of the last three years pay off in a
return to profitability. While interim results fluctuated significantly in 1995
due to the timing of project shipments, the fourth quarter was especially
strong, with record sales of $37,163,000 representing 31% of total annual sales.
All operating units contributed to the higher sales and improved operating
results for the year and the quarter. In 1996, we expect continued quarterly
fluctuations as our business becomes increasingly project-driven.
U.S.A. OPERATIONS
Products introduced over the last five years continue to fuel our growth.
Comparing 1995 to 1994, bookings increased by 20% and shipments increased by
16%. The APACS(R) process control system, field transmitters, and automatic
gaging systems for dimensional measurement experienced significant growth in
1995.
We continued to focus our development and marketing activities by product
lines. While there is significant synergy and activity across our product lines,
organization by product line rather than by function has improved our operations
and our priority-setting techniques. In 1995, this concept was expanded to our
manufacturing operations. Many new focused work cells have been created, and
significant investment has been made in high-speed equipment to improve product
quality and yield, and reduce overall product costs.
Our growth and ongoing need for new equipment will require financing in
excess of earnings. In December 1995, the Company pension fund invested
$8,000,000 in the common stock of the Company to help fund this capital need.
INTERNATIONAL OPERATIONS
Canada continued to show impressive gains in both bookings and shipments
in 1995. Compared to 1994, bookings were up almost 30%, while shipments were up
over 35%.
In 1995, our U.K. subsidiary continued to experience solid sales growth.
Bookings for 1995 increased over 50% compared to 1994, while shipments increased
by 18%.
Over the last two years, we have reduced our direct operating costs on the
European continent while establishing new agent/distributor agreements
throughout the area. Consolidation in our industry has presented opportunities
to improve our European presence with the addition of several well-established,
industry-knowledgeable distributors.
In June 1995, we purchased Vernon Gauging Systems Ltd. in the U.K.
Operating under the name Moore-Vernon, this organization contributes products,
market presence and international expertise to the Company that complement our
existing dimensional measurement business. Moore-Vernon not only serves our
traditional automotive market, but also serves the aeronautical market. In
addition, Moore-Vernon satisfies a strategic need for a stronger international
presence consistent with the increased globalization of our major customers.
Our Asia-Pacific business continues to increase, with the People's
Republic of China as a focal point. We are establishing service centers in China
to better serve our installed base and to help generate new business. Sales to
the People's Republic of China are achieved by direct contact with end users
through our agents and through engineering firms involved in projects for China.
The People's Republic of China is supported through our Hong Kong and Singapore
offices. The Singapore office is also expanding our ties to other countries in
the Asia-Pacific area, and we will be enhancing our engineering services
capability in Singapore to better serve this region.
We expect Brazil to be a growth area for process measurement and control.
Therefore, in May 1995, we started operations in Brazil with a joint venture.
The Brazilian joint venture will manufacture transmitters for the South American
market, as well as providing sales and service for the Company's full product
line.
PRODUCTS
The Company's current success justifies the level of research and
development expense incurred over the last few years. Expenditures for R&D in
1995 continued at the same dollar level as the previous year. This R&D
expenditure resulted in several new products and product enhancements which were
introduced at our industry's major trade show in New Orleans in the autumn of
1995.
Heading the list of product introductions was our QUADLOG(TM) safety
system. This product has as its foundation our very successful APACS process
control system. QUADLOG is designed to meet the standards of TUV, the globally
recognized safety system evaluation organization.
Our transmitter line was expanded with a unique transmitter designed
specifically for the paper industry. A new software package was introduced for
our VIEWPAC(TM) recorder that allows the storage and manipulation of data
received from this digital device.
Moore Products Co. has always had a leading market position in valve
positioners. This market position should be maintained with the latest additions
to the valve positioner line for both pneumatic and electrically operated
positioners, which will be in production in 1996. This new valve positioner line
also forms the base product for an all-digital valve positioner.
OUTLOOK
The core of our business is to provide customers with complete measurement
and control solutions. These solutions are based on our state-of-the-art
products combined with comprehensive customer support. It is this commitment
that has fueled our growth and made us profitable in 1995.
As we examine our long-range plan, we recognize the need for a larger
installed base and significant growth. To help reach our goals, the Company is
fortunate to have very talented and dedicated employees and a sound financial
base. We are committed to making the necessary investment in people, operations
and new markets to ensure our long-term success.
W.B. MOORE
W.B. Moore, President
and Chief Executive Officer
March 1996
<PAGE>
Management's Discussion and Analysis
RESULTS OF OPERATIONS
Comparing 1995 to 1994, the Company experienced a $1,348,000 improvement
in earnings. This was due primarily to higher sales and increased gross margin.
Net sales increased 20% as a result of the higher volume of products shipped.
The APACS system contributed to much of the increase in shipments. Gage and
XTC(R) transmitter products also experienced significant increases in sales
activity. Economic conditions in the Company's traditional process control
markets continued to be strong in 1995. The Company is also benefiting from a
broader range of customers and worldwide market opportunities.
The 24% increase in gross profit from 1994 was a result of the higher
sales volume and the continuing improvement in capacity utilization by
manufacturing facilities.
Selling, research, administrative and general expenses increased 20% from
1994. This was attributable mostly to higher sales and marketing costs related
to the increased sales volume. The significant growth in business activity over
the past two years has also caused the Company to increase customer and product
support costs across a broad range of activities. Payrolls and payroll-related
expenses comprise the largest share of these costs, reflecting the increased
employment levels required to support these activities. Research and development
costs of $8.1 million were comparable to 1994 in absolute dollars but lower as a
percentage of sales due to the increase in sales revenue.
In 1995, income taxes were higher than U.S. federal statutory rates. This
was due mostly to certain nondeductible expenses for federal tax purposes that
create permanent differences between pretax income as determined for financial
reporting and federal tax regulations. Accumulated tax benefits for losses
incurred by certain subsidiaries in tax jurisdictions outside the United States
have been recognized but fully reserved for financial reporting purposes because
the realization of such benefits is not presently considered likely.
Comparing 1994 to 1993, the Company experienced a $3,267,000 reduction in
net loss. This was due primarily to increased shipments, improved manufacturing
efficiencies, and control of selling, research, administrative and general
expenses. Net sales increased 14% as a result of the higher volume of products
shipped. The Company's systems products and custom gaging products were the
major contributors to this higher level of sales activity. Improved economic
conditions in the Company's traditional process control markets were the most
significant influences in this upward trend. The Company also realized sales
opportunities from new industrial customers and geographic areas as market
acceptance of the APACS System product continued to spread.
The 23% increase in gross profit from 1993 was a result of the higher
sales volume and a corresponding improvement in capacity utilization by
manufacturing facilities.
Selling, research, administrative and general expenses increased 6% from
1993, following several years of reductions in these costs. Higher marketing and
sales support costs, related to the increased sales volume, were the major
contributors to this increase. Research and development costs, while lower in
1994, continued at relatively high levels of over 8% of sales. In 1994,
engineering resources were shifted to marketing and customer support activities
and enhancements to the major product introductions of recent years.
The nontraditional relationship of income taxes to the pretax losses for
1994 is due to mixed operating results in various countries. Statutory tax rates
have been applied to pretax income in the United States; however, tax benefits
for losses incurred by certain subsidiaries in tax jurisdictions outside the
United States have been recognized, but fully reserved for financial reporting
purposes because the realization of such benefits is not presently considered
likely.
FINANCIAL CONDITION, LIQUIDITY
AND CAPITAL RESOURCES
In support of the higher sales activity, working capital requirements have
increased. The growth of trade accounts receivable and inventories has been
especially significant. During 1995, these requirements were funded primarily
from short-term bank lines of credit and the sale of 500,000 shares of
restricted common stock to the Moore Products Co. Pension Plan. This transaction
provided $8 million in new equity financing. Also, during 1995, the bank
revolving line of credit was expanded to $12 million. It is anticipated that
short-term cash requirements for the next year will be met from operations and
established credit facilities. In contemplation of expected growth in business
activity, the Company is investigating a variety of longer-term financing
alternatives to fund required investment in capital equipment, ongoing product
development and new channels of distribution.
<PAGE>
Report of Independent Auditors
THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MOORE PRODUCTS CO.
We have audited the accompanying consolidated balance sheets of Moore
Products Co. as of December 31, 1995 and 1994, and the related consolidated
statements of operations and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Moore
Products Co. at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note D to the financial statements, in 1993, the
Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 2, 1996
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31
1995 1994
---- -----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.......................................................................... $ 1,103,000 $ 569,000
Trade accounts receivable..................................................... 30,701,000 19,469,000
Inventories:
Completed instruments....................................................... 4,373,000 3,290,000
Finished parts.............................................................. 11,021,000 9,252,000
Work in process............................................................. 4,114,000 2,984,000
Raw materials............................................................... 915,000 600,000
----------- -----------
20,423,000 16,126,000
Prepaid expenses and recoverable income taxes................................. 3,117,000 2,605,000
----------- -----------
TOTAL CURRENT ASSETS.................................................. 55,344,000 38,769,000
PROPERTY, PLANT AND EQUIPMENT
Land.......................................................................... 939,000 935,000
Buildings..................................................................... 13,783,000 13,715,000
Machinery and equipment....................................................... 40,791,000 38,246,000
Less: Accumulated depreciation................................................ ( 38,627,000) ( 36,311,000)
----------- -----------
16,886,000 16,585,000
OTHER ASSETS
Prepaid pension costs......................................................... 5,963,000 4,796,000
----------- -----------
$78,193,000 $60,150,000
=========== ===========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31
1995 1994
---- ----
CURRENT LIABILITIES
Notes payable to bank......................................................... $ 4,306,000 $ --
Accounts payable.............................................................. 11,032,000 5,644,000
Accrued compensation.......................................................... 2,306,000 1,759,000
Advances from customers....................................................... 2,566,000 2,126,000
----------- -----------
TOTAL CURRENT LIABILITIES............................................. 20,210,000 9,529,000
OTHER LIABILITIES
Postretirement medical benefits and deferred taxes............................ 5,000,000 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 - 2,583,092 shares and 2,083,092 shares............ 2,583,000 2,083,000
Capital in excess of par value................................................ 10,843,000 3,343,000
Retained earnings............................................................. 40,922,000 40,663,000
Foreign currency translation adjustments...................................... ( 1,541,000) ( 1,602,000)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY............................................ 52,983,000 44,663,000
----------- -----------
$78,193,000 $60,150,000
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
NET SALES.................................................... $121,037,000 $100,680,000 $88,059,000
Cost of products sold........................................ 63,282,000 54,002,000 49,962,000
------------ ------------ -----------
GROSS PROFIT........................................... 57,755,000 46,678,000 38,097,000
Selling, research, administrative and general expenses....... 56,950,000 47,326,000 44,732,000
------------ ------------ -----------
INCOME (LOSS) FROM OPERATIONS.......................... 805,000 ( 648,000) ( 6,635,000)
Other income................................................. 242,000 206,000 177,000
Interest expense............................................. ( 438,000) ( 37,000) ( 20,000)
Net gain from early retirement settlements................... -- -- 580,000
------------ ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING........................................... 609,000 ( 479,000) ( 5,898,000)
Income tax provision (benefit)............................... 350,000 610,000 ( 1,309,000)
------------ ------------ -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING................................. 259,000 ( 1,089,000) ( 4,589,000)
Cumulative effect of change in accounting.................... -- -- 233,000
------------ ------------ -----------
NET INCOME (LOSS)...................................... $ 259,000 ($ 1,089,000) ($4,356,000)
============ ============ ===========
Earnings per share - primary:
Income (loss) before cumulative effect of
change in accounting................................. $ .12 ($ .53) ($2.20)
Cumulative effect of change in accounting.............. -- -- .11
------------ ------------ -----------
Net income (loss)...................................... $ .12 ($ .53) ($2.09)
============ ============ ===========
Earnings per share - fully diluted:
Net income (loss)...................................... $ .12 ($ .53) ($2.09)
============ ============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............................................ $ 259,000 ($ 1,089,000) ($ 4,356,000)
Noncash (income) expenses:
Depreciation............................................... 3,347,000 3,219,000 3,353,000
Deferred income taxes...................................... 90,000 51,000 ( 150,000)
Pension and other postretirement benefits.................. ( 1,221,000) ( 97,000) ( 364,000)
Cumulative effect of change in accounting.................. -- -- ( 233,000)
Net gain from early retirement settlements................. -- -- ( 580,000)
Changes in operating assets and liabilities:
Trade accounts receivable.................................. ( 11,232,000) ( 3,518,000) 1,072,000
Inventories................................................ ( 4,297,000) ( 863,000) 1,396,000
Accounts payable........................................... 5,388,000 1,263,000 770,000
Accrued compensation....................................... 547,000 789,000 392,000
Advances from customers.................................... 440,000 677,000 ( 125,000)
Prepaid expenses and income taxes.......................... ( 1,506,000) 1,214,000 ( 474,000)
------------ ------------ ------------
( 8,185,000) 1,646,000 701,000
INVESTING ACTIVITY:
Net purchase of property, plant and equipment.............. ( 3,602,000) ( 3,105,000) ( 1,884,000)
FINANCING ACTIVITIES:
Increase in notes payable to bank.......................... 4,306,000 -- --
Proceeds from issuance of common stock..................... 8,000,000 -- --
Dividends paid............................................. -- -- ( 128,000)
------------ ------------ ------------
12,306,000 -- ( 128,000)
Effect of exchange rate changes.............................. 15,000 64,000 ( 166,000)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH.............................. 534,000 ( 1,395,000) ( 1,477,000)
Cash at beginning of year.................................... 569,000 1,964,000 3,441,000
------------ ------------ ------------
CASH AT END OF YEAR.......................................... $ 1,103,000 $ 569,000 $ 1,964,000
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Notes to Consolidated Financial Statements
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and all subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Investments in affiliated
companies which are not majority owned or controlled are accounted for using the
equity method.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Sales: The Company recognizes revenue from sales of products as shipped and from
services as performed.
Inventories: Inventories are stated at the lower of cost or market. Cost of
domestic inventories (approximately 70% of consolidated inventories) was
determined by the last-in, first-out (LIFO) method. Current cost exceeded the
LIFO value of inventories by approximately $9,800,000 and $9,600,000 at December
31, 1995 and 1994, respectively. Cost of international inventories was
determined by the first-in, first-out (FIFO) method.
Property, Plant and Equipment: Property, plant and equipment are stated at cost.
Depreciation is provided over the estimated useful lives of the assets using
primarily the straight-line method.
Currency Translation: Balance sheets of the Company's international operations
are translated to U.S. dollars at the current exchange rate and income
statements are translated at the average exchange rate for the year; resulting
translation adjustments are made directly to a separate component of
stockholders' equity. Certain other transaction adjustments are reported in
operations.
Research and Development: Research and development costs, which approximated
$8,129,000 in 1995, $8,146,000 in 1994, and $9,467,000 in 1993, are expensed as
incurred.
Income Taxes: Income taxes are accounted for under the liability method
prescribed by Statement of Financial Accounting Standards ("SFAS") No. 109.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. United States income taxes
have not been provided on unremitted earnings of international subsidiaries
because the Company plans to continue to finance international expansion and
operating requirements by reinvestment of such unremitted earnings. No material
amount of income taxes would result from remittance of such earnings.
Earnings per Share: Primary earnings per share have been computed using the
average number of shares of Common Stock and dilutive Common Stock equivalents
(stock options) outstanding during the year and subtracting the Preferred Stock
dividends, declared or current period arrearage declared, from net income.
Unless antidilutive, fully diluted earnings per share have been computed based
on the assumption that the Preferred Stock shares were converted as of the
beginning of the year and no Preferred Stock dividends were paid. The average
number of common shares used to compute primary earnings per share were: 1995 -
2,114,857; 1994 - 2,083,092; 1993 - 2,083,092. The average number of common
shares used to compute fully diluted earnings per share were: 1995 - 2,198,732;
1994 - 2,083,092; 1993 - 2,083,092.
Changes in Presentation of Comparative Financial Statements: Certain
reclassifications have been made in prior years' financial statements in order
to conform with the current year basis of presentation.
<PAGE>
NOTE B - CREDIT FACILITIES
In September 1995, the Company entered into a new revolving line of credit
agreement totaling approximately $12 million as of December 31, 1995. Under
terms of the new agreement, the lender has a security interest in trade accounts
receivable and inventory. The loan agreement requires maintenance of certain
restrictive financial covenants including limitation on the amount of dividends
paid per year. Cash advances are made at rates tied to the bank's prime interest
or LIBOR rates, which ranged from 9% to 10% as of December 31, 1995. In addition
to outstanding loan balances as of December 31, 1995, the credit line supports
approximately $1.3 million of outstanding letters of credit.
The Company's Canadian and United Kingdom subsidiaries have approximately $1
million in separate credit facilities that generally support periodic bonding
and guarantee requirements arising out of routine trade activities.
NOTE C - STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Foreign
Capital in Currency
Preferred Common Excess of Retained Translation
Stock Stock Par Value Earnings Adjustments
--------- ------ ---------- -------- -----------
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993.................. $ 176 $ 2,083 $ 3,343 $46,236 ($ 1,405)
Net loss.................................... -- -- -- ( 4,356) --
Cash dividends paid:
Preferred stock ($.0125 a share).......... -- -- -- ( 2) --
Common stock ($.06 a share)............... -- -- -- ( 126) --
Foreign currency translation adjustment..... -- -- -- -- ( 279)
------- ------- ------- ------- ---------
BALANCE AT DECEMBER 31, 1993................ 176 2,083 3,343 41,752 ( 1,684)
Net loss.................................... -- -- -- ( 1,089) --
Foreign currency translation adjustment..... -- -- -- -- 82
------- ------- ------- ------- ---------
BALANCE AT DECEMBER 31, 1994................ 176 2,083 3,343 40,663 ( 1,602)
Net income.................................. -- -- -- 259 --
Foreign currency translation adjustment..... -- -- -- -- 61
Issuance of restricted stock................ -- 500 7,500 -- --
------- ------- ------- ------- ---------
BALANCE AT DECEMBER 31, 1995................ $ 176 $ 2,583 $10,843 $40,922 ($ 1,541)
======= ======= ======= ======= =========
</TABLE>
In December 1995, the Company sold 500,000 shares of restricted common stock to
the Moore Products Co. Pension Plan for $8 million. Coincident with this private
placement of shares, the Company and the Pension Plan have entered into a
registration rights agreement under which the Pension Plan trustee may request
the Company to register the securities.
The 5% cumulative Preferred Stock is entitled to 5 votes for each share issued.
In addition, the preferred shares may, at the election of the holder, be
converted into common shares at a rate of 2.5 preferred shares for each common
share. Subsequent to March 1, 1993, no dividends on either preferred or common
shares have been declared. The Company's current loan agreement limits dividend
payments to 50% of net income after having achieved positive net income for four
quarters. Cumulative Preferred Stock dividends in arrears through December 31,
1995, were $24,000.
<PAGE>
The Company has a stock option plan, effective February 7, 1994, under which
options to purchase 300,000 shares of Common Stock may be granted to key
employees. The Plan provides that the option price shall not be less than the
fair market value of the shares on the date of grant and that no portion of the
option may be exercised beyond ten years from that date. A total of 266,900
options, which were outstanding at December 31, 1995, become exercisable
cumulatively over the first four or five years from the grant date.
Approximately 32,300 of granted options were exercisable on December 31, 1995.
Option prices range from $14.75 to $17.325 per share. Through the year ended
1995, no options have been exercised.
The Company accounts for its stock compensation arrangements utilizing the
intrinsic value method under Accounting Principals Board Opinion No. 25,
"Accounting for Stock Issued to Employees." It is expected that this method will
continue to be used in future years.
NOTE D - INCOME TAXES
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Income (loss) before income taxes and effect of change
in accounting consisted of the following:
United States............................................... $ 250 $ 1,099 ($ 4,010)
Other countries............................................. 359 ( 1,578) ( 1,888)
------- ------- --------
Total..................................................... $ 609 ($ 479) ($ 5,898)
======= ======= ========
Income tax provision (benefit) consisted of the following:
Current:
Federal................................................... $ 154 $ 426 ($ 1,204)
State..................................................... -- 129 --
Other countries........................................... 106 4 45
------- ------- --------
260 559 ( 1,159)
Deferred.................................................... 90 51 ( 150)
------- ------- --------
TOTAL .......................................................... $ 350 $ 610 ($ 1,309)
======= ======= ========
</TABLE>
The differences between the provision for income taxes and income tax (benefit)
using the federal statutory rate were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Tax expense (benefit) at the federal statutory rate (34%)........... $ 207 ($ 163) ($ 2,005)
Losses in other countries for which no tax benefit is recognized.... 275 548 696
Net tax benefits and credits related to other countries............. ( 291) -- --
State income tax, net of federal tax benefit........................ ( 63) 4 54
Permanent differences............................................... 117 117 ( 54)
Other............................................................... 105 104 --
------- ------- --------
Provision (benefit) for income taxes.......................... $ 350 $ 610 ($ 1,309)
======= ======= ========
</TABLE>
<PAGE>
The components of deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Deferred tax liabilities:
Tax over book depreciation.................................. $ 1,704 $ 1,875 $ 1,867
Prepaid pension costs....................................... 2,554 2,182 2,120
------- ------- -------
Total deferred tax liabilities............................ 4,258 4,057 3,987
Deferred tax assets:
Net operating loss carryforwards - federal and state........ 35 -- 478
Net operating loss carryforwards - other countries.......... 3,171 3,382 2,663
Postretirement medical benefits............................. 1,045 1,097 1,122
Inventories................................................. 807 644 765
Vacation obligations........................................ 424 351 257
Alternative minimum tax credits............................. 480 472 207
Accruals and reserves....................................... 531 429 131
------- ------- -------
Total deferred tax assets................................. 6,493 6,375 5,623
Valuation allowance for deferred tax assets................. 3,171 3,382 2,663
------- ------- -------
Net deferred tax assets................................... 3,322 2,993 2,960
------- ------- -------
Net deferred tax liabilities.............................. $ 936 $ 1,064 $ 1,027
======= ======= =======
</TABLE>
The Company's international subsidiaries have net operating loss carryforwards
that aggregate to approximately $9.3 million for income tax purposes, including
approximately $6.6 million with unlimited expiration. The balance expires in
varying amounts beginning in years 1996 through 2003. For financial reporting
purposes, a valuation allowance has been recognized to offset the deferred tax
assets related to these carryforwards. Utilization of these net operating losses
is contingent upon various international operations generating sufficient
taxable income, which cannot be ascertained at this time.
In 1993, the Company changed its method of accounting for income taxes from the
deferred method to the liability method required by SFAS No. 109, "Accounting
for Income Taxes." The cumulative effect of adopting Statement 109 as of the
beginning of the first quarter of 1993 was to increase net income by $233,000 or
11 cents per share.
<PAGE>
NOTE E - EMPLOYEE RETIREMENT PLANS
The Company has pension plans that cover substantially all United States,
Canadian and United Kingdom employees. These plans provide benefits based upon
years of service and compensation prior to retirement. Pension costs are funded
as actuarially determined and to the extent cash contributions are deductible
for tax purposes.
The following is a summary of net periodic pension income:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Service cost - benefits earned during the period................ $ 2,017 $ 2,484 $ 2,109
Interest cost on projected benefit obligation................. 3,770 3,644 3,436
Actual return on plan assets.................................. ( 23,167) ( 328) ( 7,980)
Net amortization and deferral................................. 16,306 ( 5,845) 2,061
-------- ------- -------
Net periodic pension income................................. ( $ 1,074) ($ 45) ($ 374)
======== ======= =======
</TABLE>
In addition to the net periodic pension income noted above, the Company
recognized a pretax noncash gain of $580,000 during the first quarter of 1993,
for the combined net effect of settlements, curtailments and special termination
benefits in connection with a special early retirement offer to certain eligible
employees in the United States.
The funded status of pension plans as of December 1 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Plan assets at fair value (primarily stocks
and U.S. Government obligations)............................ $96,212 $75,120
Less projected benefits:
Vested...................................................... 45,396 37,241
Accumulated, not vested..................................... 199 140
Effects of future pay increases............................. 12,378 9,339
------- -------
Plan assets over projected benefits........................... 38,239 28,400
Adjustments:
Unrecognized net asset...................................... ( 5,899) ( 6,578)
Unrecognized net gains...................................... ( 26,377) ( 17,026)
------- -------
Net pension asset recognized in the consolidated
balance sheets.............................................. $ 5,963 $ 4,796
======= =======
</TABLE>
Significant assumptions used in accounting for the pension plans are:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate................................ 7.25% 8.25% 7.25%
Long-term rate of return on plan assets....................... 8.00% 8.00% 8.00%
Rate of increase in future compensation levels................ Graded from Graded from Graded from
7.44% to 2.80% 7.44% to 2.80% 7.44% to 2.80%
at ages 21 to 60 at ages 21 to 60 at ages 21 to 60
</TABLE>
Effective November 1, 1994, the Company also sponsors a defined contribution
401(k) plan covering substantially all United States employees under which
employees may defer a portion of their salary. The Company matches 50% of
deferred amounts up to a maximum of 4% of a participant's compensation. Amounts
charged to expense for this plan were approximately $611,000 in 1995 and
$100,000 in 1994.
<PAGE>
NOTE F - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides medical insurance benefits to early retirees in the United
States until they reach age 65.
Net periodic benefit costs include the following components:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Service cost of benefits earned................................. $ 68 $ 88 $ 118
Interest cost on the accumulated postretirement benefit
obligation ("APBO")......................................... 141 155 198
Net amortization and deferral................................... ( 42) ( 21) --
-------- -------- -------
Total net periodic benefit cost............................. $ 167 $ 222 $ 316
======== ======== =======
</TABLE>
Summary of the unfunded APBO as of December 31 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Early retirees.................................................. $ 530 $ 585
Fully eligible active employees................................. 341 300
Other active participants....................................... 1,132 819
-------- -------
Total APBO.................................................. 2,003 1,704
Unrecognized net gain........................................... 740 1,095
-------- -------
Accrued postretirement medical benefits recognized
in accompanying consolidated balance sheets................. $ 2,743 $ 2,799
======== =======
</TABLE>
The discount rate used in determining the APBO was 7.25% at December 31, 1995
and 8.25% at December 31, 1994. The assumed health care cost trend used in
measuring the APBO was 10% in 1994 and 9% in 1995, declining 1% per year to 7%
by the year 1997 and thereafter. If the health care cost trend rate assumptions
were increased by 1%, the net periodic postretirement benefit cost for 1995
would increase by approximately $30,000 and the APBO as of December 31, 1995,
would increase by approximately $220,000.
NOTE G - SEGMENT AND GEOGRAPHIC INFORMATION
The Company, operating in one industry segment, is in the business of
developing, manufacturing, and selling process control instruments and systems.
In addition to the United States, the Company conducts separate operations in
Canada, Europe and the Pacific Rim. A summary of operations outside of the
United States is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Thousands of dollars)
<S> <C> <C> <C>
Sales to unaffiliated customers .................................... $ 27,045 $ 19,222 $ 15,707
Operating income (loss) ............................................ 276 ( 1,708) ( 2,158)
Identifiable assets - including $1,115 in 1995, $866
in 1994, and $830 in 1993 of profits on inventories
purchased from the parent ...................................... 24,849 16,844 14,861
Total liabilities - including $11,320 in 1995, $8,179 in 1994, and
$5,295 in 1993 of intercompany obligations to the parent ....... 18,629 10,901 7,418
</TABLE>
Operating income (loss) is total revenue less operating expenses, excluding
interest and corporate expenses. Sales by the parent company to subsidiaries
were $11,956,000 in 1995, $9,873,000 in 1994, and $7,374,000 in 1993. Profit
margins on intercompany sales approximate normal profit margins to unaffiliated
customers.
<PAGE>
NOTE H - QUARTERLY DATA (UNAUDITED)
(Thousands of dollars, except per share data)
<TABLE>
<CAPTION>
1995
Quarter Ended
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales................................... $ 24,513 $ 29,451 $ 29,910 $37,163
Gross profit................................ 11,620 14,491 14,349 17,295
Net income (loss)........................... ( 839) 321 ( 448) 1,225
Earnings (loss) per share:
Primary................................... (.40) .15 (.22) .56
Fully diluted............................. (.40) .15 (.22) .54
Stock price range:
High...................................... 16 18 1/2 18 3/4 18 3/4
Low....................................... 13 15 1/4 16 1/2 17 3/4
1994
Quarter Ended
March 31 June 30 September 30 December 30
-------- ------- ------------ -----------
Net sales................................... $ 22,845 $ 24,425 $ 24,992 $28,418
Gross profit................................ 10,695 11,128 11,660 13,195
Net income (loss)........................... ( 447) ( 208) ( 583) 149
Earnings (loss) per share................... (.22) (.10) (.28) .07
Stock price range:
High...................................... 17 15 1/2 16 17
Low....................................... 15 13 14 15 1/4
</TABLE>
<PAGE>
Selected Financial Data
<TABLE>
<CAPTION>
As Reported for Year Ended December 31
1995 1994 1993* 1992* 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales............................ $121,037,000 $100,680,000 $ 88,059,000 $ 96,409,000 $ 97,085,000
Income (loss) before
cumulative effect of
change in accounting............... 259,000 ( 1,089,000) ( 4,589,000) ( 1,031,000) 503,000
Net income (loss).................... 259,000 ( 1,089,000) ( 4,356,000) ( 2,603,000) 503,000
Total assets......................... 78,193,000 60,150,000 57,459,000 61,229,000 64,485,000
Earnings (loss) per share:
Primary............................ $ .12 ($ .53) ($2.09) ($1.25) $ .24
Fully diluted...................... .12 ( .53) ( 2.09) ( 1.25) .23
Cash dividends per
common share....................... -- -- .06 .34 .66
</TABLE>
* For the years ended December 31, 1993 and 1992, loss before cumulative effect
of change in accounting and net loss include special gains from early
retirement settlements of $580,000 and $2,511,000, respectively. During 1993,
the Company adopted provisions of SFAS No. 109, "Accounting for Income
Taxes," which resulted in a cumulative noncash gain of $233,000. During 1992,
the Company adopted provisions of SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This accounting change resulted
in a cumulative pretax charge of $2,587,000 or $1,572,000 ($.76 per share),
net of income taxes.
Shareholder Information
The Company's Common Stock is traded on the Nasdaq National Market tier of
The Nasdaq Stock Market(SM) under the symbol "MORP." Common Stockholders of
record on December 31, 1995, totaled approximately 1,000 based upon information
obtained from the Company's transfer agent.
Copies of the Annual Report on Form 10-K and quarterly financial reports
are available to shareholders without charge. Shareholders can receive
shareholder information directly from the Company by being placed on our mailing
list. If you would like to request specific information or have your name added
to our mailing list, please write to the Secretary and Treasurer, Moore Products
Co., Spring House, PA 19477-0900.
If your stock certificate is lost, stolen or destroyed, or if you change
your address, please call our stock transfer agent, Chemical Mellon Shareholder
Services, L.L.C. in the United States at 1-800-526-0801.
<PAGE>
Directors
Robert B. Adams*
Vice President, Engineering
(Retired)
Edward J. Curry*
Executive Vice President and
Chief Operating Officer
F. Lawton Hindle
President (Retired)
Moore Products Co. (Canada) Inc.
James O. Moore*
General Manager
Measurement & Control Division
Thomas C. Moore
Regional Manager (Retired)
William B. Moore*
President and
Chief Executive Officer
Ralph H. Owens
Senior Vice President
(Retired)
Raymond M. Reed
President
R. Reed & Associates, Inc.
Edwin G. Rorke*
Chairman of the Board
*Member of Executive Committee
Officers
Edward J. Curry
Executive Vice President and
Chief Operating Officer
James McDonald
Vice President, Sales
William B. Moore
President and
Chief Executive Officer
Robert E. Wisniewski
Secretary and Treasurer
Principal Locations
Corporate Headquarters
Moore Products Co.
Sumneytown Pike
Spring House, PA 19477-0900
Phone: (215) 646-7400
Fax: (215) 283-6358
Pratt & Whitney Division
Plainville, CT
Wholly-Owned
Subsidiaries
AUSTRALIA
Moore Products Co.
(Australia) Pty. Ltd.
Waterloo, NSW
CANADA
Moore Products Co. (Canada) Inc.
Brampton, Ontario
FRANCE
Moore Products Co. (France) SARL
Lyon
ITALY
Moore Products Co. (Italia) S.r.l.
Milano
JAPAN
Moore Products Co. (Japan) K.K.
Tokyo
THE NETHERLANDS
Moore Products Co. B.V.
Ridderkerk
SINGAPORE
Moore Products Co (S) Pte Ltd
Singapore
UNITED KINGDOM
Moore Products Co. (U.K.) Limited
Yeovil, Somerset
Moore-Vernon
Hitchin, Hertfordshire
Jointly-Owned Subsidiaries
BRAZIL
T & M Controles Ltda.
Rio de Janeiro
INDIA
Moore Controls Pvt. Limited
Poona
MEXICO
Moore Products de Mexico S.A. de C.V.
Mexico, D.F.
Regional Engineering Offices
BAHRAIN
Moore Products Co.
c/o BMMI Engineering Services
Manama
HONG KONG
Moore Products Co.
c/o Sun Engineering Services Ltd.
Kowloon
Exhibit 21
SUBSIDIARIES OF REGISTRANT*
State or Other
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
------------------ ------------
Moore Products Co. (Canada) Inc. Canada
Moore Products Co. (U.K.) Limited England
Moore Products Co. B.V. Netherlands
Moore Products Co. (Italia) S.r.l. Italy
Moore Products Co. (France) SARL France
Moore Products Co. (Australia) Pty. Ltd. Australia
Moore Products Co (S) Pte Ltd Singapore
Moore Products Co. (Japan) K.K. Japan
*The names of certain subsidiaries are omitted pursuant to Item 601(b)(21)(ii)
of Regulation S-K.
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Moore Products Co. of our report dated February 2, 1996, included in the 1995
Annual Report to Shareholders of Moore Products Co.
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-82948) pertaining to the Incentive Stock Option and Non-Qualified
Stock Option Plan of Moore Products Co. of our report dated February 2, 1996,
with respect to the consolidated financial statements of Moore Products Co.
incorporated by reference in the Annual Report (Form 10-K) for the year ended
December 31, 1995.
\S\Ernst & Young LLP
Philadelphia, Pennsylvania
March 26, 1996
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1103000
<SECURITIES> 0
<RECEIVABLES> 30701000
<ALLOWANCES> 0
<INVENTORY> 20423000
<CURRENT-ASSETS> 55344000
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0
176000
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