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, 1997
--------------------------
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 April 30, 1997, there were 2,585,972 shares of the Registrant's Common
Stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
- ------------------------------
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
-------------------------------
1997 1996
---- ----
Net sales $ 37,818,000 $35,155,000
Cost of products sold 21,772,000 20,005,000
------------ -----------
Gross profit 16,046,000 15,150,000
Selling, research and development,
administrative and general expenses 14,491,000 14,160,000
------------ -----------
Income from operations 1,555,000 990,000
Other expense - net 113,000 50,000
------------ ------------
Income before income taxes 1,442,000 940,000
Income tax provision 387,000 711,000
------------ -----------
Net income $ 1,055,000 $ 229,000
============ ===========
Earnings per common share:
Primary $.39 $.09
==== ====
Fully diluted $.38 $.08
==== ====
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
ASSETS ------------ ------------
CURRENT ASSETS (Unaudited) (Note A)
<S> <C> <C>
Cash and cash equivalents $ 3,197,000 $ 4,066,000
Trade accounts receivable 32,864,000 30,541,000
Inventories 20,620,000 21,479,000
Prepaid expenses and deferred taxes 3,715,000 3,608,000
------------ ------------
TOTAL CURRENT ASSETS 60,396,000 59,694,000
PROPERTY, PLANT AND EQUIPMENT 58,205,000 58,183,000
Less: Accumulated depreciation ( 42,336,000) ( 41,639,000)
----------- -----------
15,869,000 16,544,000
OTHER ASSETS 10,083,000 9,809,000
----------- -----------
$86,348,000 $86,047,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 885,000 $ 4,230,000
Accounts payable 14,326,000 12,370,000
Accrued compensation 3,233,000 2,638,000
Advances from customers 5,275,000 5,129,000
------------ ------------
TOTAL CURRENT LIABILITIES 23,719,000 24,367,000
OTHER LIABILITIES 7,126,000 7,126,000
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 - 7,500,000 shares
Issued and outstanding - 2,585,972
shares and 2,585,972 shares 2,586,000 2,586,000
Capital in excess of par value 10,885,000 10,885,000
Retained earnings 41,856,000 40,907,000
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 55,503,000 54,554,000
----------- -----------
$86,348,000 $86,047,000
=========== ===========
</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
---------------------------------
OPERATING ACTIVITIES: 1997 1996
---- ----
<S> <C> <C>
Net income $1,055,000 $ 229,000
Noncash (income) expenses:
Depreciation 864,000 870,000
Deferred income taxes ( 117,000) ( 25,000)
Pension and other postretirement
benefits ( 274,000) ( 187,000)
Changes in operating assets and liabilities:
Trade accounts receivable ( 2,323,000) ( 1,694,000)
Inventories 859,000 ( 902,000)
Accounts payable 1,956,000 ( 203,000)
Accrued compensation 595,000 ( 283,000)
Advances from customers 146,000 553,000
Prepaid expenses 10,000 ( 434,000)
---------- -----------
2,771,000 ( 2,076,000)
INVESTING ACTIVITY:
Net purchase of property, plant and equipment ( 300,000) ( 1,030,000)
FINANCING ACTIVITIES:
(Decrease) increase in notes payable to bank ( 3,345,000) 2,868,000
Proceeds from exercise of stock options -- 12,000
----------- -----------
( 3,345,000) 2,880,000
Effect of exchange rate changes 5,000 17,000
---------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS ( 869,000) ( 209,000)
Cash and cash equivalents at beginning of year 4,066,000 1,103,000
---------- -----------
CASH AND CASH EQUIVALENTS
END OF PERIOD $3,197,000 $ 894,000
========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MOORE PRODUCTS CO.
March 31, 1997
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, 1997, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997.
The balance sheet at December 31, 1996, 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
2,701,990 shares and 2,630,476 shares for the three month periods ended March
31, 1997 and 1996, respectively. The average number of common shares used to
compute fully diluted earnings per share were 2,772,355 shares and 2,700,856
shares for the three month periods ended March 31, 1997 and 1996, respectively.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact is expected to result in an increase
in primary earnings per share of $.02 per share for the first quarter ended
March 31, 1997 and no change for the first quarter ended March 31, 1996. The
impact of Statement 128 on the calculation of fully diluted earnings per share
for these quarters is not expected to be material.
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, 1996.
Certain reclassifications have been made in prior period's financial statements
in order to conform with the current-period basis of presentation.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MOORE PRODUCTS CO.
March 31, 1997
Note B - Inventories
- --------------------
The components of inventory consist of the following:
March 31 December 31
1997 1996
----------- -----------
Completed instruments $ 4,092,000 $ 4,554,000
Finished parts 10,788,000 11,091,000
Work in process 4,860,000 4,957,000
Raw material 880,000 877,000
----------- -----------
$20,620,000 $21,479,000
=========== ===========
Note C - Other Expense
- ----------------------
The components of other expense consist of the following:
Three Months Ended
March 31
------------------------
1997 1996
---- ----
Other income ($ 46,000) ($ 45,000)
Loss on disposal of fixed assets 75,000 --
Interest expense 84,000 95,000
-------- --------
Total other expense - net $113,000 $ 50,000
======== ========
6
<PAGE>
Item 2. Management's Discussion and Analysis of the Results of Operations.
- ---------------------------------------------------------------------------
When compared with the first quarter of 1996, sales increased $2,663,000 or 8%,
due to a higher volume of product shipments. Systems sales were especially
strong for the first quarter of 1997. Cost of goods sold increased in response
to the higher sales. As a result of product mix and higher manufacturing costs,
gross profit margin percentages declined slightly compared to last year.
Selling, research and development, administrative and general expenses for the
first quarter of 1997 increased moderately by $331,000 or 2% compared to the
first quarter of 1996. Higher payroll and payroll-related costs were the primary
reasons for this increase. The Company has increased staffing levels in sales
and product support areas of the organization experiencing higher levels of
business activity.
The nontraditional relationship and fluctuation of income tax to pretax income
as of March 31, 1997, 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 fully recognized for financial reporting purposes because
the realization of such benefits is not presently considered likely.
Demand for the Company's products and services has continued to outpace 1996.
For the first three months of 1997, consolidated orders received by the Company
were approximately 17% higher than for the corresponding period in 1996. The
consolidated backlog of unshipped orders as of March 31, 1997 was $46,634,000
compared to $35,348,000 as of March 31, 1996.
Improved operating results and working capital management have reduced the
Company's dependence on external financing. Cash generated from operations was
$2,771,000 for the first quarter of 1997 compared to $2,076,000 of cash used in
operations for the corresponding quarter last year. Investment in new plant and
equipment has been held to $300,000 compared to $1,030,000 in the first quarter
of 1996. It is expected that cash requirements for the year will continue to be
met from operations and approximately $16,000,000 of established credit
facilities.
7
<PAGE>
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.
- -----------------------------------------
The Company's Articles of Incorporation, as amended, essentially provide that
(i) holders of the Company's Preferred Shares are entitled to receive, as and
when declared by the Board, cumulative dividends at the rate of 5% ($.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 Company'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 Company 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 Company's first quarter of 1997 (calculated on
a quarterly basis) was $35,190.
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) Exhibits:
Exhibit
Number Description
- ------- -----------------------------------------------
27 Financial Data Schedule.
(Schedule submitted in electronic format only.)
-------------
(b) No reports on Form 8-K have been filed during the most recently completed
fiscal quarter.
8
<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 12, 1997 By: /s/ R. E. Wisniewski
---------------------------------------------
Secretary and Treasurer
(Principal Financial and Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3197000
<SECURITIES> 0
<RECEIVABLES> 32864000
<ALLOWANCES> 0
<INVENTORY> 20620000
<CURRENT-ASSETS> 60396000
<PP&E> 58205000
<DEPRECIATION> 42336000
<TOTAL-ASSETS> 86348000
<CURRENT-LIABILITIES> 23719000
<BONDS> 0
0
176000
<COMMON> 2586000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 86348000
<SALES> 37818000
<TOTAL-REVENUES> 37818000
<CGS> 21772000
<TOTAL-COSTS> 21772000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84000
<INCOME-PRETAX> 1442000
<INCOME-TAX> 387000
<INCOME-CONTINUING> 1055000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1055000
<EPS-PRIMARY> .39
<EPS-DILUTED> .38
</TABLE>
