SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(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
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________________
Commission file number 0-545
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Moore Products Co.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1427830
- ------------------------------- -------------------
(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>
Amendment No. 1 to Form 10-Q
----------------------------
This amendment is being filed to correct minor errors in the financial
statements contained in Part I, Items 1 and 2, as originally filed. Part I,
Items 1 and 2, as amended, is set forth in its entirety below.
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) $ 2,750 $ (466) $ 85 $ (422) $ 1,947
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) $ 1,605 $ 366 $ 709 $ (779) $ 1,901
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 $15,150,000, or 39% of sales, compared to $13,909,000, 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 $0.32 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 25, 1999 By: /s/ R. E. Wisniewski
--------------------------------
As Secretary and Treasurer and as
Principal Financial and
Accounting Officer
13
