SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1999
--------------
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
-----------------
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, 1999, the number of shares of Registrant's Common Stock
outstanding was 2,637,491.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
---------------------
1999 1998
---- ----
Net sales $39,201,000 $38,356,000
Cost of sales 22,104,000 22,546,000
----------- -----------
Gross profit 17,097,000 15,810,000
Selling, research and development,
administrative and general expenses 15,150,000 13,909,000
----------- -----------
Operating income 1,947,000 1,901,000
Interest expense 6,000 --
----------- -----------
Income before income taxes 1,941,000 1,901,000
Income tax provision 1,057,000 699,000
----------- -----------
Net income $ 884,000 $ 1,202,000
=========== ===========
Earnings per common share:
Basic $ .33 $ .46
=========== ===========
Diluted $ .32 $ .41
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
MOORE PRODUCTS CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1999 1998
-------- -----------
(Unaudited) (Note A)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,768,000 $ 7,549,000
Trade accounts receivable, less allowances of
$1,022,000 in 1999 and $1,213,000 in 1998 40,162,000 41,945,000
Inventories 18,032,000 15,932,000
Prepaid expenses and deferred income taxes 4,886,000 4,394,000
------------- -------------
TOTAL CURRENT ASSETS 66,848,000 69,820,000
PROPERTY, PLANT AND EQUIPMENT 63,928,000 63,182,000
Less: Accumulated depreciation (48,346,000) (47,267,000)
------------- -------------
15,582,000 15,915,000
OTHER ASSETS
Prepaid pension costs 17,239,000 16,232,000
------------- -------------
$ 99,669,000 $ 101,967,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,905,000 $ 10,772,000
Accrued compensation 2,981,000 4,022,000
Advances from customers 6,235,000 5,076,000
Accrued income taxes 1,798,000 1,242,000
Other accrued liabilities 7,934,000 8,708,000
------------- -------------
TOTAL CURRENT LIABILITIES 26,853,000 29,820,000
OTHER LIABILITIES 9,193,000 9,192,000
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 - 2,637,491 shares
in 1999 and 2,619,471 shares in 1998 2,637,000 2,619,000
Capital in excess of par value 11,761,000 11,479,000
Retained earnings 51,472,000 51,169,000
Accumulated other comprehensive income (loss) (2,423,000) (2,488,000)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 63,623,000 62,955,000
------------- -------------
$ 99,669,000 $ 101,967,000
============= =============
</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
------------------------------
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 884,000 $ 1,202,000
Noncash (income) expenses:
Depreciation 1,126,000 913,000
Deferred income taxes (164,000) (305,000)
Pension and other postretirement benefits (1,007,000) (952,000)
Changes in operating assets and liabilities:
Trade accounts receivable 1,783,000 2,325,000
Inventories (2,100,000) (1,569,000)
Accounts payable (2,867,000) 820,000
Other accrued liabilities (774,000) 321,000
Accrued compensation (1,041,000) (1,263,000)
Advances from customers 1,159,000 489,000
Accrued income taxes 556,000 576,000
Prepaid expenses (327,000) (445,000)
----------- -----------
Net cash (used in) provided by
operating activities (2,772,000) 2,112,000
INVESTING ACTIVITY:
Net purchase of property, plant and equipment (847,000) (1,162,000)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 300,000 195,000
Cash dividends paid (582,000) (1,042,000)
----------- -----------
Net cash used in financing activities (282,000) (847,000)
Effect of exchange rate changes 120,000 137,000
----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (3,781,000) 240,000
Cash and cash equivalents at beginning of year 7,549,000 3,816,000
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 3,768,000 $ 4,056,000
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MOORE PRODUCTS CO.
March 31, 1999
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 (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1999, are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.
The balance sheet at December 31, 1998, has been derived from the audited
financial statements at that date.
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, 1998.
Certain reclassifications have been made in prior periods' financial statements
in order to conform with the current-period basis of presentation.
Note B - Inventories
The components of inventory consist of the following:
March 31 December 31
1999 1998
----------- -----------
Completed instruments $ 2,481,000 $ 2,882,000
Finished parts 8,741,000 7,691,000
Work in process 6,410,000 4,945,000
Raw material 400,000 414,000
----------- -----------
$18,032,000 $15,932,000
=========== ===========
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MOORE PRODUCTS CO.
March 31, 1999
Note C - Earnings per Share
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Numerator:
Net income $ 884,000 $ 1,202,000
Preferred stock dividends (2,000) (2,000)
----------- -----------
Numerator for basic earnings per share -
income available to common stockholders 882,000 1,200,000
Effect of dilutive securities:
Preferred stock dividends 2,000 2,000
----------- -----------
Numerator for diluted earnings per share -
income available to common stockholders
after assumed conversions $ 884,000 $ 1,202,000
=========== ===========
Denominator:
Denominator for basic earnings per share -
weighted average shares 2,647,955 2,599,761
Effect of dilutive securities:
Stock options 87,475 240,399
Convertible preferred stock 70,380 70,380
----------- -----------
Dilutive potential common shares 157,855 310,779
----------- -----------
Denominator for diluted earnings per share -
adjusted weighted average shares and
assumed conversions 2,805,810 2,910,540
=========== ===========
Basic income per share $ .33 $ .46
=========== ===========
Diluted income per share $ .32 $ .41
=========== ===========
</TABLE>
6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MOORE PRODUCTS CO.
March 31, 1999
Note D - Comprehensive Income
During the first quarter of 1999 and 1998, total comprehensive income, which is
comprised of net income and net change in the accumulated foreign currency
translation adjustment account for the three-month period, amounted to $949,000
and $1,375,000, respectively.
Note E - Segment and Geographic Information
<TABLE>
<CAPTION>
United
States Europe Other Eliminations Consolidated
-------------------------------------------------------------------------
Three Months Ended 3/31/99 (Thousands of dollars)
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 30,614 $ 3,790 $ 4,797 $ --- $ 39,201
Sales and transfers between
geographic areas 3,935 242 488 (4,665) ---
----------- ----------- ---------- ----------- -----------
Total revenue $ 34,549 $ 4,032 $ 5,285 $ (4,665) $ 39,201
=========== =========== ========== =========== ===========
Operating income (loss) $ 2,722 $ (455) $ 89 $ (422) $ 1,934
Net property, plant and equipment 11,930 2,037 1,615 --- 15,582
Total assets 83,925 18,410 14,125 (16,791) 99,669
Three Months Ended 3/31/98
Sales to unaffiliated customers $ 27,968 $ 5,024 $ 5,364 $ --- $ 38,356
Sales and transfers between
geographic areas 5,508 1,017 611 (7,136) ---
----------- ----------- ---------- ----------- -----------
Total revenue $ 33,476 $ 6,041 $ 5,975 $ (7,136) $ 38,356
=========== =========== ========== =========== ===========
Operating income (loss) $ 1,545 $ 348 $ 700 $ (779) $ 1,814
Net property, plant and equipment 11,941 1,940 1,673 --- 15,554
Total assets 81,048 20,670 13,561 (19,886) 95,393
</TABLE>
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
This report contains various forward-looking statements and includes assumptions
concerning Moore Products Co.'s ("Moore") operations, future results and
prospects. These forward-looking statements are based on current expectations
and subject to risks and uncertainties. Moore does not undertake any obligation
to publicly release the results of any revisions that may be made to these
forward-looking statements to reflect any future events or circumstances.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Moore provides this cautionary statement
identifying important factors that, among others, could cause the actual results
and events to differ materially from those set forth in or implied by
forward-looking statements and related assumptions. Such factors include, but
are not limited to: product demand and market acceptance risks; the effect of
global economic conditions; the impact of competitive products and pricing;
product development, commercialization and technological difficulties; capacity
and supply constraints or difficulties; availability of capital resources;
general business conditions; changes in government laws and regulations,
including taxes; and uncertainties related to Year 2000 issues. Further
information concerning factors that potentially could materially affect Moore's
financial results is included in Moore's Form 10-K, 10-Q and other reports filed
with the Securities and Exchange Commission.
Results of Operations
Sales for the first quarter of 1999 were $39,201,000 compared to $38,356,000 for
the same period last year, a 2% increase. Higher sales of process automation
systems in the United States were somewhat offset by lower sales of such systems
outside the United States and lower sales of other product lines on a global
basis.
Order bookings for the first quarter of fiscal 1999 were $44,250,000 compared to
$45,325,000 for the same period last year, a 2% decrease. While 1999 order
bookings in the United States and Asia-Pacific were higher, our United Kingdom
subsidiary experienced a reduction in order bookings due to order bookings in
1998 of approximately $7 million for large process automation systems that were
not repeated in the current year. The consolidated backlog of unshipped orders
as of March 31, 1999 was a record $48,986,000 compared to $44,874,000 as of
March 31, 1998. Approximately 95% of this backlog is expected to be shipped in
1999.
Gross profit for the first quarter was $17,097,000, or 44% of sales, compared to
$15,810,000, or 41% of sales, for the first quarter of 1998. The gross profit
margin percentage increased compared to last year mostly due to product mix that
included higher sales of process automation systems hardware in 1999.
Selling, research and development, administrative and general expenses for the
first quarter were $15,163,000, or 39% of sales, compared to $13,996,000, or 36%
of sales in 1998.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Higher payroll and other expenses related to new product development and
marketing were the primary reasons for this increase.
Interest expense for the first quarter of 1999 was $6,000, reflecting limited
borrowing activity. There was no interest expense for the first quarter of 1998.
Moore's year-to-date effective tax rate was 54% of pretax income compared to 37%
for the first three months of 1998. This increase in the effective tax rate was
attributable to operating losses in countries for which tax loss benefits are
not currently recognized. 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 assured.
Net income for the first quarter ended March 31, 1999 was $884,000 compared to
net income of $1,202,000 for the first quarter of 1998. Diluted net income per
share was $0.33 for the first quarter of 1999 compared to $0.41 for the first
quarter of 1998.
Liquidity and Capital Resources
Cash and cash equivalents decreased during the first quarter of 1999 by
$3,781,000. This decrease was the result of negative cash flow from operating
activities, capital expenditures and a special 22-cent per share cash dividend
on the common stock. Capital expenditures were primarily for equipment in
support of sales and marketing promotion and product development.
Working capital decreased slightly at March 31, 1999, to $39,995,000 from
$40,000,000 at December 31, 1998. Accounts receivable declined $1,783,000 in the
first quarter of 1999 primarily due to a reduction in sales compared to the
fourth quarter of 1998. During the first quarter of 1999, inventory levels
increased by $2,100,000 reflecting the increase in order backlog from the year
ended 1998.
Cash and cash equivalents amounted to $3,768,000 at March 31, 1999. Moore had no
outstanding advances under credit arrangements at March 31, 1999. As of March
31, 1999, Moore had commitments to invest approximately $1.3 million in new
business ventures intended to extend certain product lines and increase global
distribution. Management believes that current cash and cash equivalents, cash
flow from operations, and its established credit facilities of approximately
$16,000,000 should be sufficient during 1999 to fund planned capital
expenditures, working capital needs, dividends, and other anticipated cash
requirements.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Year 2000 Readiness
As more fully described in Moore's annual report on Form 10-K for the year ended
December 31, 1998, Moore has undertaken a program to evaluate, test and modify
or replace certain software and hardware to try to assure no disruption in
operations beyond December 31, 1999. Moore has evaluated its internal, general
purpose and production hardware and software systems, as well as any embedded
logic devices used to control equipment or facilities, to identify any elements
requiring modification to become Year 2000 compliant. In addition, Moore has
communicated with key suppliers of goods and services and customers to determine
their state of Year 2000 readiness.
Moore's significant U.S.-based computer systems have been upgraded, modified,
tested and are believed to be compliant. The remaining information technology
system requiring modification or upgrade, which is in a non-U.S. subsidiary
location, is expected to be compliant by June 1999.
Moore has made an assessment of its current product offerings and believes that
it has identified all products that have date-sensitive software or embedded
chips. Analysis by a team of Moore's development engineers suggests that Year
2000 and other date-sensitive compliance will have minimal impact on Moore's
products. Test plans to confirm proper operation have been developed and are
completed for 95% of the potentially affected products, with the remaining
testing expected to be completed by June 30, 1999. Remediation, if required, is
also expected to be accomplished in this time period.
Amounts expended for Year 2000 projects have not been and are not expected to be
significant to Moore's results of operations or financial condition. The total
costs of Year 2000 projects, incurred to date and/or expected to be incurred,
are currently estimated to be $750,000.
Because Moore expects to be compliant for all business-critical systems, no
contingency plans have been established at this time. The company will
reevaluate its readiness and that of its customers and suppliers throughout 1999
and determine what, if any, contingency plans are required at that time.
Market and Other Risks
Moore's primary development and manufacturing activities are located in the
United States. Increasing sales of its products into international markets make
Moore vulnerable to such factors as foreign currency exchange rates or weak
economic conditions in such markets. Moore's operating results are exposed to
changes in exchange rates between the U.S. dollar and the Canadian dollar, the
U.K. pound sterling, and other currencies in Western Europe and
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Asia-Pacific. To a certain extent, foreign currency exchange rate movements
affect Moore's competitive position, as exchange rate changes may influence
business practices and/or pricing strategies of non-U.S. based competitors. In
addition, transactions between the U.S. parent company and its international
subsidiaries, which are generally denominated in U.S. dollars, are subject to
gains or losses in the consolidated financial statements. Moore does not
typically hedge these transactions but attempts to limit exposure to these
situations by timely settlement of the U.S. dollar liabilities in the subsidiary
locations. Moore maintains lines of credit in Canada and the United Kingdom to
help facilitate this approach. Foreign exchange transaction losses in the first
quarter of 1999 amounted to less than $30,000. The Economic Monetary Union (EMU)
has initiated changes to monetary policy and foreign exchange, including
adoption of the Euro as a single currency for several European countries. Based
upon Moore's current business structure in Europe, it is anticipated that these
changes will not have a material impact on Moore. Throughout 1999, Moore will
continue to evaluate the implications of this change, including, but not limited
to, financial and statutory reporting, the structure of business transactions,
business systems that might be required to support the change, and its relative
competitive position in geographic markets that participate in the EMU.
Item 3. Quantitative and Qualitative Disclosure of Market Risk.
Disclosure about market risk is contained in Item 2 above.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit
Number Description
- ------- -----------
10.1 Form of agreement with Donald E. Bogle dated April 30, 1999.
27.1 Financial Data Schedule for Quarter Ended March 31, 1999.
27.2 Restated Financial Data Schedule for Quarters Ended March
31, 1998, June 30, 1998, and September 30, 1998.
27.3 Restated Financial Data Schedule for Year Ended December 31, 1998.
(b) No reports on Form 8-K were filed during the most recently completed fiscal
quarter.
12
<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 13, 1999 By: /s/ R. E. Wisniewski
--------------------------------
As Secretary and Treasurer and as
Principal Financial and
Accounting Officer
13
EMPLOYMENT AGREEMENT
This Agreement is made effective the 31st day of October 1997, between
MOORE PRODUCTS CO. (the "Company"), and Donald E. Bogle (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company on the terms set forth herein;
NOW, THEREFORE, in consideration of the provisions contained herein and
intending to be legally bound hereby, the Company and the Executive agree as
follows:
1. Definitions. The following words and phrases shall have the meanings set
forth below for the purposes of this Agreement (unless the context clearly
indicates otherwise):
(a) "Base Salary" shall have the meaning set forth in Section 5.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean the Executive has --
(1) materially failed to perform his stated duties and not cured
such failure (if curable) within 15 days of his receipt of written notice
of the failure;
(2) materially breached any provision of this Agreement and not
cured such breach (if curable) within 15 days of his receipt of written
notice of the breach;
(3) demonstrated his personal dishonesty;
(4) engaged in willful misconduct;
(5) engaged in a breach of fiduciary duty involving personal profit;
(6) willfully violated any law, rule or regulation, or final
cease-and-desist order (other than traffic violations or similar offenses);
or
<PAGE>
(7) engaged in other serious misconduct of such a nature that his
continued employment may reasonably be expected to affect the Company
adversely.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Disability" shall mean the Executive's inability to perform his
duties hereunder by reason of any medically determinable physical or mental
impairment which is expected to result in death or which has lasted or is
expected to last for a continuous period of not fewer than 6 months, provided
the Executive is also eligible to receive disability benefit payments under the
Company's short-term and long-term disability plans.
(f) "Principal Executive Office" shall mean the Company's principal
office for executives, presently located at Sumneytown Pike, Spring House,
Pennsylvania 19477.
(g) "Termination Date" shall mean the date specified in the Termination
Notice.
(h) "Termination Notice" shall mean a dated notice which (i) indicates
the specific termination provision in this Agreement relied upon (if any), (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for the termination of the Executive's employment under such provision,
(iii) specifies a Termination Date not fewer than 30 nor more than 90 days after
such Termination Notice is given (except in the case of the Company's
termination of the Executive's employment for Cause); and (iv) is given in the
manner specified in Section 22(h).
2. Employment. The Company hereby employs the Executive as Chief
Executive Officer and President and the Executive hereby accepts such
employment and agrees to render services to the Company in such capacities
on the terms and conditions set forth in this Agreement. The Executive's
primary place of employment shall be at the Principal Executive Office.
3. Term
(a) Term and Renewal of Agreement. The initial term of employment under
this Agreement shall be three years, commencing on November 3, 1997 and, subject
to subsection (b), shall be deemed automatically, without further action, to
extend for an additional year on each subsequent November 3.
(b) Extended Term. The Term of this Agreement shall extend in the manner
set forth in subsection (a) unless either the Board does not approve the
extension and provides written notice to the Executive of such event, or the
Executive gives written notice to the Company of the Executive's election not to
extend the term. In either case, the written notice
-2-
<PAGE>
shall be given on or prior to the November 3 on which the term would otherwise
extend under subsection (a). References herein to the term of this Agreement
shall refer both to the initial term and extensions thereof.
4. Duties. The Executive shall:
(a) faithfully and diligently perform all such acts and duties, and
furnish all such services as are assigned to the Executive as of the date this
Agreement is signed, and such additional or different acts, duties, and services
as the Board may assign to the Executive in the future; and
(b) devote his full professional time, energy, and skill to the business
of the Company and to the promotion of the Company's best interests, except for
vacations and for absences made necessary because of illness.
5. Compensation. The Company shall compensate the Executive for his
services at a minimum base salary of $250,000 per year ("Base Salary"). The
Executive's Base Salary may be increased from time to time in such amounts as
may be determined by the Compensation Committee of the Board, but may not be
decreased without the Executive's express written consent (unless the decrease
is pursuant to a general compensation reduction applicable to all executive
officers of the Company). In addition to his Base Salary, the Executive shall be
entitled to receive such bonus payments and stock options as may be determined
under Sections 6 and 7, respectively.
6. Incentive Bonus. For calendar years after 1997, the Executive shall be
entitled to an incentive bonus equal to at least 25 percent of the Executive's
Base Salary if the Company meets its operating plan each year. The Board may, in
its discretion, award the Executive a larger incentive bonus, but not in excess
of 50 percent of the Executive's Base Salary. For 1997, the Executive shall be
entitled to an incentive bonus equal to $10,000 if the Company meets its 1997
business plan for operating income.
7. Stock Options. The Executive shall be granted stock options under the
Company's stock option plan in accordance with the separate stock option
agreement entered into by the Company and the Executive.
8. Welfare Benefit Plans. The Executive shall be entitled to participate in
and receive benefits under those employee welfare benefit plans (including
medical, disability and life insurance) generally covering executives of the
Company. Executive's coverage under such employee benefit plans shall commence
following the expiration of any waiting period required under the plan or, if
none, on the date of the Executive's employment.
-3-
<PAGE>
9. Retirement Benefit Plans.
(a) The Executive shall be entitled to retirement benefits in accordance
with the retirement package established by the Company for all employees. Within
the first two years of the Executive's term of employment, the Company shall
consider and decide whether to establish a supplemental executive retirement
plan to make up, to the extent determined by the Company, for the limits on
tax-qualified plan benefits that are imposed on employees earning in excess of
the Internal Revenue Code limit on compensation ($160,000 for 1998).
(b) In addition to the normal Company retirement plan, the Executive
shall receive special retirement consideration if the Company establishes an
Employee Stock Ownership Plan. Details of such consideration have not been
determined at the execution of this agreement but will be determined at the
future point in time that such Plan is established.
10. Vacation. The Executive shall be entitled to paid annual vacation in
accordance with the policies established from time to time by the Board, which
shall in no event be fewer than four weeks per annum. The Executive shall not be
entitled to extra cash payments for any vacation he does not utilize.
11. Automobile. The Company shall provide the Executive with the use of a
Company-owned automobile of a type the Board deems reasonable for the
Executive's position. The Company shall pay all costs associated with such
automobile, including registration, licensing, insurance, and costs of
operation.
12. Moving Expenses
(a) The company will reimburse the Executeve for relocation per Company
Relocation Plan Section 3.9, "Transfer of Employees to a New Location" (Issued
1/1/95).
(b) If the Executive voluntarily terminates his employment with the
Company within two (2) years of the date of his employment, the Executive shall
reimburse the Company for any closing costs, tax gross-up payment, and moving
expenses which the Company paid on the Executive's behalf or reimbursed to the
Executive under this Section.
13. Expenses. The Company shall reimburse the Executive or otherwise pay
for all reasonable expenses incurred by the Executive in furtherance of or in
connection with the business of the Company, including, but not limited to,
automobile and traveling expenses and all reasonable entertainment expenses,
subject to such reasonable documentation and other limitations as may be
established by the Board.
-4-
<PAGE>
14. Termination
(a) Termination without Salary Continuation. In the event (i) the
Executive terminates his employment hereunder, (ii) the Executive's employment
is terminated by the Board for Cause or due to his Disability, or (iii) the
Executive dies, the Executive shall have no right to compensation or other
benefits pursuant to this Agreement for any period after his last day of active
employment. In the event of Executive disability or death terms under Section 18
will apply.
(b) Termination with Salary Continuation. In the event the Executive's
employment is terminated by the Board, or as a result of a merger or
acquisition, for a reason other than Cause or Disability, then the Company
shall, subject to the provisions of Section 15 (if applicable):
(1) pay the Executive a severance amount equal to the Executive's
Base Salary for one year (determined without regard to any reduction in
violation of Section 5) as of his last day of active employment plus any
bonus(es), to the extent earned; the severance amount that is equal to the
Executive's Base Salary for one year shall be paid in equal installments
over a one-year period beginning immediately following the Termination Date
and on the Executive's normal payroll cycle (so that each installment will
equalthe Executive's pay preceding the Termination Date); the severance
amount that is equal to the Executive's bonus(es), to the extent earned,
shall be paid in a single sum(s) on the date(s) it(they) would normally be
paid; and
(2) pay the Executive for any unused vacation days at the
Executive's base pay rate; and
(3) vest in full all granted stock options which are scheduled to
become exercisable within one year of the Executive's termination; and
(4) maintain and provide to the Executive, at no cost to the
Executive, for a period of 12 months from the Executive's last day of
active employment, continued participation in all employee welfare benefit
plans (including life insurance) in which the Executive would have been
entitled to participate had his employment with the Company continued
throughout such period, provided that such participation is not prohibited
by the terms of the plan or by the Company for legal reasons. Additionally,
the executive split dollar life insurance policy which the Company
maintains on behalf of the Executive shall be transferred to the Executive.
(c) Termination Notice. Except in the event of the Executive's death, a
termination under this Agreement shall be effected by means of a Termination
Notice.
-5-
<PAGE>
15. Limitation on Severance Benefits. If the payments and benefits under
Section 14, either alone or together with other payments and benefits the
Executive has a right to receive from the Company, would constitute a "parachute
payment" under section 280G of the Code, the payments and benefits under Section
14 shall be reduced, in a manner determined by the Executive, by the minimum
amount necessary to render all of the payments and benefits deductible by the
Company pursuant to section 280G of the Code and not subject to the excise tax
imposed under section 4999 of the Code.
The amount of any reduction in the payments and benefits to be made under
Section 14 shall be based upon the opinion (the "Opinion") of independent tax
counsel selected by the Company's independent public accountants and paid by the
Company. Such counsel shall promptly prepare the Opinion, but in no event later
than 60 days from the Termination Date; and may use such actuaries as such
counsel deems necessary or advisable for the purpose.
In the event the Company and/or the Executive does not agree with the
Opinion, (i) the Company shall pay to the Executive the maximum amount of
payments and benefits under Section 14 which the Opinion indicates will be
deductible by the Company and not subject to the excise tax imposed under
section 4999 of the Code; and (ii) the Company may request, and the Executive
shall have the right to demand that the Company request, a ruling from the
Internal Revenue Service as to whether the disputed remaining payments and
benefits under Section 14 will be deductible.
Any such request for a ruling from the Internal Revenue Service shall be
promptly prepared and filed by the Company, but in no event later than 60 days
from the date of the Opinion. The request for a ruling shall be subject to the
Executive's approval prior to filing, and such approval shall not be
unreasonably withheld. The Company and the Executive agree to be bound by any
ruling received from the Internal Revenue Service and to make appropriate
payments to each other to reflect any such rulings, together with interest at
the applicable federal rate provided for in section 7872(f)(2)(B) of the Code.
16. Withholding. The Company shall have the right to withhold from all
payments made pursuant to this Agreement any federal, state, or local taxes
required by law to be withheld from such payments.
17. Assignability. The Company may assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any entity to which the
Company may transfer all or substantially all of its assets, if in any such case
said entity shall expressly in writing assume all obligations of the Company
hereunder as fully as if it had been originally made a party hereto. The Company
may not otherwise assign this Agreement or its rights and obligations hereunder.
This Agreement is personal to the Executive and his rights and duties hereunder
shall not be assigned except as expressly agreed to in writing by the Company.
-6-
<PAGE>
18. Disability or Death of Executive.
(a) In the event that the Executive is unable to perform duties under
this agreement due to a disability, the Executive shall be compensated in
accordance with terms of the Company's short-term and long-term disability
plans.
(b) Any amounts due the Executive under this Agreement (not including
any Base Salary not yet earned by the Executive) unpaid as of the date of the
Executive's death, shall be paid in a single sum as soon as practicable after
the Executive's death to the Executive's surviving spouse, or if none, to the
duly appointed personal representative of his estate.
(c) Stock option exercise will be in accordance with the Moore Products
Co. Non-qualified Stock Option Agreement entered into by the Company and the
Executive.
19. Covenant Not to Compete. During the term of this Agreement, and for a
period of one year following the termination of his employment, the Executive
shall not:
(a) engage in, work for, participate in the ownership, management,
operation, or control of, be connected with, or have any financial interest in
the following instrumentation and controls divisions -- the Fisher-Rosemount
Group, Honeywell Industrial Automation & Controls, Siebe Control Systems,
Foxboro, Elsag Bailey Process Automation, ABB Industrial Automation, Yokogawa,
Eurotherm, Siemens, Bristol Babcock, and Endress & Hauser, or a result of a
merger or combination of the competitors listed in this subsection;
(b) interfere with the relationship of the Company with any of its
employees, agents, or representatives (including, but not limited to, causing or
helping another business to hire any employee of the Company);
(c) directly or indirectly divert or attempt to divert from the Company
any business in which the Company has been actively engaged during the term
hereof, nor interfere with the relationship of the Company with any of its
customers; or
(d) in the event the Executive is terminated by the Company without
Cause; or the Executive's contract is not extended beyond the initial 3-year
term; or the Executive is terminated due to a change in control of the Company;
then the Covenant Not to Compete, Sections 19, 19 (a), 19 (b), and 19 (c), is
voided.
20. Nondisclosure Covenant. The Executive shall not (other than in the good
faith performance of his services to the Company before his termination of
employment) disclose or make known to anyone other than employees of the
Company, or use for the benefit of himself or any other person, firm, operation,
or entity unrelated to the Company, any knowledge, information, or materials,
whether tangible or intangible, belonging to the Company, about its products,
services, know-how, customers, business plans, or financial, marketing, pricing,
and compensation, or about other proprietary matters relating to the Company. On
or before the
-7-
<PAGE>
Executive's termination of employment with the Company, he shall promptly
deliver to the Company any and all tangible, confidential information in his
possession
21. Breach of Covenant. Any breach or violation of the provisions in
Section 19 or Section 20 by the Executive will result in forfeiture by the
Executive and all other persons of all rights to any further payments or
benefits under this Agreement, and in such event the Company shall have no
further obligation to pay any amounts related thereto. The Executive expressly
acknowledges that damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of Section 19 or Section 20 and that the
Company, in addition to all other remedies, shall be entitled as a matter of
right to equitable relief, including injunctions and specific performance, in
any court of competent jurisdiction. If any of the provisions of Section 19 or
Section 20 are held to be in any respect unenforceable, then they shall be
deemed to extend only over the maximum period of time, geographic area, or range
of activities as to which they may be enforceable.
22. Miscellaneous
(a) Amendment. No provision of this Agreement may be amended unless
such amendment is signed by the Executive and such officer as may be
specifically designated by the Board to sign on its behalf.
(b) Nature of Obligations. Nothing contained herein shall create or
require the Company to create a trust of any kind to fund any benefits which may
be payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Company hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Company.
(c) Prior Employment. The Executive represents and warrants that his
acceptance of employment with the Company has not breached, and the performance
of his duties hereunder will not breach, any duty owed by him to any prior
employer or other person.
(d) Headings. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In the event of a conflict between a heading
and the content of a Section, the content of the Section shall control.
(e) Gender and Number. Whenever used in this Agreement, a masculine
pronoun is deemed to include the feminine and a neuter pronoun is deemed to
include both the masculine and feminine, unless the context clearly indicates
otherwise. The singular form, whenever used herein, shall mean or include the
plural form where applicable.
(f) Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable under
any applicable law, such event shall not affect or render invalid or
unenforceable any other provision of this
-8-
<PAGE>
Agreement and shall not affect the application of any provision to other persons
or circumstances.
(g) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs, executors, and administrators.
(h) Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Company: Secretary & Treasurer
Moore Products Co.
Sumneytown Pike
Spring House, PA 19477
To the Executive: Donald E. Bogle
150 Inverness Drive
Blue Bell, PA 19422
(i) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements,
and communications, whether oral or written, pertaining to the subject matter
hereof.
(j) Governing Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the laws of the Commonwealth of Pennsylvania.
-9-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed April 30, 1999.
Attest: MOORE PRODUCTS CO.
/s/ R. E. Wisniewski By: /s/ T. C. Moore
- ------------------------ -------------------------------
R. E. Wisniewski T. C. Moore
Secretary & Treasurer Chairman of the
Compensation Committee
Witness: EXECUTIVE
/s/ D. M. Mackey /s/ D. E. Bogle
- ------------------------ -----------------------------------
D. E. Bogle
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ART. 5 FDS FOR 1ST QUARTER 10-Q
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ART. 5 FDS FOR 1998 FORM 10-K
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