<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------------------- -------------
Commission file number 0-545
-------------
Moore Products Co.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1427830
-------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Spring House, PA 19477
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (215) 646-7400
------------------
Not applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No .
-- --
As of March 31, 1996, there were 2,583,892 shares of the Registrant's Common
Stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
---- ----
<S> <C> <C>
Net sales $35,155,000 $24,513,000
Cost of products sold 19,155,000 12,893,000
------------ ------------
Gross profit 16,000,000 11,620,000
Selling, research and development, administrative
and general expenses 15,037,000 12,558,000
------------ ------------
Income (loss) from operations 963,000 ( 938,000)
Other income 96,000 42,000
Interest expense ( 119,000) ( 7,000)
------------ ------------
Income (loss) before income taxes 940,000 ( 903,000)
Income tax provision (benefit) 711,000 ( 64,000)
------------ ------------
Net income (loss) $ 229,000 ($ 839,000)
============ ============
Earnings per share - primary:
Net income (loss) $.09 ($.40)
==== ====
Earnings per share - fully diluted:
Net income (loss) $.08 ($.40)
==== ====
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---- ----
(Unaudited) (Note A)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 894,000 $ 1,103,000
Trade accounts receivable 32,395,000 30,701,000
Inventories 21,325,000 20,423,000
Prepaid expenses and recoverable income taxes 3,608,000 3,117,000
----------- -----------
TOTAL CURRENT ASSETS 58,222,000 55,344,000
PROPERTY, PLANT AND EQUIPMENT 56,512,000 55,513,000
Less: Accumulated depreciation ( 39,482,000) ( 38,627,000)
----------- -----------
17,030,000 16,886,000
OTHER ASSETS 6,150,000 5,963,000
----------- -----------
$81,402,000 $78,193,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 7,174,000 $ 4,306,000
Accounts payable 10,829,000 11,032,000
Accrued compensation 2,023,000 2,306,000
Advances from customers 3,119,000 2,566,000
----------- -----------
TOTAL CURRENT LIABILITIES 23,145,000 20,210,000
OTHER LIABILITIES 5,032,000 5,000,000
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 - 2,583,892 shares
and 2,583,092 shares 2,584,000 2,583,000
Capital in excess of par value 10,854,000 10,843,000
Retained earnings 39,611,000 39,381,000
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 53,225,000 52,983,000
----------- -----------
$81,402,000 $78,193,000
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 229,000 ($ 839,000)
Noncash (income) expenses:
Depreciation 870,000 819,000
Deferred income taxes ( 25,000) ( 53,000)
Pension and other postretirement benefits ( 187,000) ( 286,000)
Changes in operating assets and liabilities:
Trade accounts receivable ( 1,694,000) 389,000
Inventories ( 902,000) ( 1,791,000)
Accounts payable ( 203,000) 1,584,000
Accrued compensation ( 283,000) ( 221,000)
Advances from customers 553,000 585,000
Prepaid expenses ( 434,000) ( 191,000)
----------- -----------
( 2,076,000) ( 4,000)
INVESTING ACTIVITY:
Purchase of property, plant and equipment ( 1,030,000) ( 833,000)
FINANCING ACTIVITIES:
Increase in notes payable to bank 2,868,000 1,904,000
Proceeds from issuance of common stock 12,000 --
----------- -----------
2,880,000 1,904,000
Effect of exchange rate changes 17,000 4,000
----------- -----------
NET INCREASE (DECREASE) IN CASH ( 209,000) 1,071,000
Cash beginning of year 1,103,000 569,000
----------- ------------
CASH END OF PERIOD $ 894,000 $1,640,000
============ ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MOORE PRODUCTS CO.
March 31, 1996
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in compliance with the Instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1996, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996.
The balance sheet at December 31, 1995, has been derived from the audited
financial statements at that date.
Primary earnings per share have been computed using the average number of shares
of Common Stock and dilutive Common Stock equivalents (stock options)
outstanding during the period and subtracting the Preferred Stock dividends,
declared or cumulative even though not declared, from net income. Unless
antidilutive, fully diluted earnings per share are computed based upon the
assumption that the Preferred Stock shares were converted into Common Stock as
of the beginning of the period and no Preferred Stock dividends were paid. The
average number of common shares used to compute primary earnings per share were
2,630,476 shares and 2,083,092 shares for the quarters ended March 31, 1996 and
1995, respectively. The average number of common shares used to compute fully
diluted earnings per share were 2,700,856 shares and 2,083,092 shares for the
quarters ended March 31, 1996 and 1995, respectively.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
Note B - Inventories
- --------------------
The components of inventory consist of the following:
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
------------ ------------
<S> <C> <C>
Completed instruments $ 3,705,000 $ 4,373,000
Finished parts 12,242,000 11,021,000
Work in process 4,730,000 4,114,000
Raw material 648,000 915,000
----------- -----------
$21,325,000 $20,423,000
=========== ===========
</TABLE>
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS
When compared with the first quarter of 1995, sales increased $10,642,000 or
43%, the result of a higher volume of products shipped. Systems sales were
especially strong for the first quarter of 1996. Cost of goods sold increased
$6,262,000 or 49%, in response to the higher sales. Gross profit margins
remained relatively stable at 46% compared to 47% last year.
Selling, research and development, administrative and general expenses for the
first quarter of 1996 increased $2,479,000 or 20% compared to the first quarter
of 1995. Higher payroll and payroll-related costs were the primary reasons for
this increase. Throughout the past year, the Company has strategically increased
staffing levels in selected areas of the organization in anticipation of higher
levels of business activity.
The nontraditional relationship of income tax to the pretax income as of
March 31, 1996, is the result of mixed operating results in various countries.
Statutory rates are applied to pretax income in the United States. Consistent
with previous reporting periods, tax benefits for losses incurred by certain
international subsidiaries in tax jurisdictions outside the United States have
not been recognized for financial reporting purposes because the realization of
such benefits is not presently considered likely.
Continued strong demand for the Company's products and services has resulted in
an improved level of business activity. For the first three months of 1996,
consolidated orders received by the Company were approximately 14% higher than
for the corresponding period in 1995. The consolidated backlog of unshipped
orders as of March 31, 1996 was $35,348,000 compared to $29,412,000 as of March
31, 1995.
In summary, quotations outstanding and sales orders received in 1996 continue to
be higher than in the previous year. The Company has increased costs with
additional personnel in support of a growth in sales. In the first quarter of
1996, shipments were sufficient to offset the higher selling, research and
development, administrative and general expenses incurred to support our
expected growth. This resulted in operating income of $963,000 for the first
quarter of 1996 compared to an operating loss of $938,000 in the first quarter
of 1995. The sales and production cycle of large-scale systems and gage products
can significantly influence shipments from one quarter to the next. Higher
shipments are not presently expected for the second quarter of 1996, and
therefore it is not yet clear if profitable results will be achieved.
The Company's working capital continues to be positive; however, higher levels
of business activity along with higher accounts receivable and inventory levels
have increased the reliance on bank financing. The Company continues to maintain
lines of credit in anticipation of short-term cash requirements during the year.
6
<PAGE>
PART II. OTHER INFORMATION
Items 1, 2, 4 and 5.
- --------------------
In accordance with the Instructions to Part II of Form 10-Q, Items 1, 2, 4 and 5
of Part II of Registrant's Quarterly Report on Form 10-Q are omitted, since none
of the Items listed thereunder are applicable.
Item 3. Defaults Upon Senior Securities.
- -----------------------------------------
The Registrant's Articles of Incorporation, as amended, essentially provide that
(i) holders of the Registrant's Preferred Shares are entitled to receive, as and
when declared by the Board, cumulative dividends at the rate of 5% ($.05 per
share), (ii) such dividends may be declared and paid quarterly, semi-annually or
annually in the discretion of the Board, and (iii) if full cumulative dividends
in cash or in Preferred Shares have not been paid or declared and set aside for
payment for the first three quarters of any fiscal year, no dividend may be
paid or distribution made on the Registrant's Common Shares (other than
dividends payable in Common Shares) until full cumulative dividends in cash or
in Preferred Shares for such year and all prior periods have been paid or
declared and set aside for payment.
Traditionally, the Registrant has paid cash dividends on both its Common and
Preferred Shares quarterly, and that practice continued through the first
quarter of 1993. However, in recognition of the difficult business climate, no
dividends on either Preferred or Common Shares have been paid or declared and
set aside for payment since March 1, 1993, and it is uncertain when the payment
of dividends will recommence. The cumulative arrearage in Preferred Share
dividends through the end of the Registrant's first quarter of 1996 (calculated
on a quarterly basis) was $26,393.
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
No reports on Form 8-K have been filed during the most recently completed fiscal
quarter.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MOORE PRODUCTS CO.
Dated: May 10, 1996 By: /s/R. E. Wisniewski
-------------------
R. E. Wisniewski,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 894000
<SECURITIES> 0
<RECEIVABLES> 32395000
<ALLOWANCES> 0
<INVENTORY> 21325000
<CURRENT-ASSETS> 58222000
<PP&E> 56512000
<DEPRECIATION> 39482000
<TOTAL-ASSETS> 81402000
<CURRENT-LIABILITIES> 23145000
<BONDS> 0
0
176000
<COMMON> 2584000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 81402000
<SALES> 35155000
<TOTAL-REVENUES> 35155000
<CGS> 19155000
<TOTAL-COSTS> 19155000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119000
<INCOME-PRETAX> 940000
<INCOME-TAX> 711000
<INCOME-CONTINUING> 229000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 229000
<EPS-PRIMARY> .09
<EPS-DILUTED> .08
