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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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1995
FORM 10-Q
For the Fiscal
FIRST QUARTER
Ended April 1, 1995
Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
MOORE MEDICAL CORP.
(Exact name of registrant as specified in its charter)
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Delaware 1-8903
(State of incorporation) (Commission File Number)
P.O. Box 1500, New Britain, CT 06050 22-1897821
(Address of principal executive offices) (I.R.S. Employer
Identification Number)
203-826-3600
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock ($.01 Par Value) American Stock Exchange
(Title of Each Class) (Name of each exchange on which registered)
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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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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2,875,368
Number of shares of Common Stock outstanding as of May 9, 1995.
Total number of pages in the numbered original is 9
This is page 1 of 9 pages.
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1
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MOORE MEDICAL CORP.
Index
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Page No.
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<S> <C> <C>
Part I. Financial Information
Item I. Financial Statements
Balance Sheets at the end of the first quarter of
1995 and at the end of the year 1994............. 3
Statements of Operations for the first quarters of
1995 and 1994.................................... 4
Statements of Cash Flows for the first quarters of
1995 and 1994.................................... 5
Notes to Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition.... 7-8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......... 9
Signatures......................................... 9
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2
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MOORE MEDICAL CORP.
Balance Sheets at end of
<TABLE>
<CAPTION>
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Amounts in thousands First Quarter 1995 Year 1994
(Unaudited)
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<S> <C> <C>
ASSETS
Current Assets
Cash $ 53 $ 59
Accounts receivable, less allowance for
doubtful accounts of $213 and $225....... 24,721 21,313
Inventories................................. 46,823 43,160
Prepaid expenses and other current assets... 6,542 4,709
Deferred income taxes....................... 760 909
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Total Current Assets................... 78,899 70,150
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Noncurrent Assets
Equipment and leasehold improvements, net... 5,320 4,497
Other assets................................ 917 990
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Total Noncurrent Assets................ 6,237 5,487
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$85,136 $75,637
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable............................ $32,673 $24,532
Accrued expenses............................ 2,498 3,589
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Total Current Liabilities.............. 35,171 28,121
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Deferred Taxes............................... 420 409
Revolving Credit Financing................... 25,607 23,798
Shareholders' Equity
Preferred stock - no shares outstanding..... -- --
Common stock - $.01 par value;
5,000 shares authorized;
3,246 shares issued...................... 32 32
Capital in excess of par value.............. 21,689 21,772
Retained earnings........................... 5,439 4,955
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27,160 26,759
Less treasury shares, at cost, 372 and 388
shares................................... (3,222) (3,450)
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Total Shareholders' Equity............. 23,938 23,309
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$85,136 $75,637
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</TABLE>
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The accompanying notes are an integral part of the financial statements.
3
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MOORE MEDICAL CORP.
<TABLE>
<CAPTION>
Statements of Operations for the
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Amounts in thousands, except per share data First Quarter
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1995 1994
(Unaudited)
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<S> <C> <C>
Net sales................................... $77,778 $72,988
Cost of products sold....................... 67,412 63,714
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Gross profit................................ 10,366 9,274
Selling, general & administrative expenses.. 9,053 7,696
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Operating income............................ 1,313 1,578
Interest expense, net....................... 536 458
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Income before income taxes.................. 777 1,120
Income tax provision........................ 292 393
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Net income.................................. $ 485 $ 727
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Net income per share........................ $ .17 $ .25
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</TABLE>
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The accompanying notes are an integral part of the financial statements.
4
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MOORE MEDICAL CORP.
<TABLE>
<CAPTION>
Statements of Cash Flows for the
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Amounts in thousands First Quarter
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1995 1994
(Unaudited)
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<S> <C> <C>
Cash Flows From Operations
Net income...................................... $ 485 $ 727
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization................ 449 454
Deferred income taxes........................ 160 26
Other........................................ 153 100
Changes in operating assets and liabilities..
Accounts receivable........................ (3,396) (2,454)
Inventory.................................. (3,690) 3,037
Other current assets....................... (1,833) (467)
Accounts payable........................... 8,141 (995)
Other current liabilities.................. (976) (171)
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Net cash flows provided by (used in)
operating activities....................... (507) 257
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Cash Flows From Investing Activities
Equipment & leasehold improvements acquired..... (1,337) (494)
Other, net...................................... -- (1)
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Net cash flows used in investing activities.. (1,337) (495)
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Cash Flows From Financing Activities
Revolving credit financing increase, net........ 1,809 248
Other, net...................................... 29 --
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Net cash flows provided by financing
activities.................................. 1,838 248
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Increase (decrease) in cash...................... (6) 10
Cash at beginning of period...................... 59 53
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Cash at end of period............................... $ 53 $ 63
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</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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MOORE MEDICAL CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of Presentation of Financial Statements
The accompanying financial statements should be read in conjunction
with the Notes to Financial Statements and Management's Discussion and
Analysis of Results of Operations and Financial Condition included in
the Company's 1994 Annual Report filed on Form 10-K and in this
Form 10-Q Report.
In the opinion of management, all adjustments necessary for a fair
presentation of the results for the interim periods have been made. The
results of operations for the first quarter are not necessarily
indicative of the results to be expected for the full year. The fiscal
quarters ended April 1, 1995 and April 2, 1994.
Note 2 - Net Income Per Share
Net income per share of common stock is based on the weighted average
number of common shares outstanding, adjusted for dilutive common stock
options. (2,888,000 shares and 2,908,000 shares in the first quarters
of 1995 and 1994, respectively.)
6
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MOORE MEDICAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
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The following table sets forth items included in the Statements of Operations as
a percentage of sales for the first quarters of 1995 and 1994. The table also
shows, for each line item, the percentage change in the 1995 period from the
comparable 1994 period.
<TABLE>
<CAPTION>
First Quarter
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% of Sales % Change
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1995 1994
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<S> <C> <C> <C>
Net sales............................... 100.0% 100.0% 7%
Cost of products sold................... 86.7 87.3 6
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Gross profit............................ 13.3 12.7 12
Selling, general & administrative 11.6 10.5 18
expenses............................... ----- -----
Operating income........................ 1.7 2.2 (17)
Interest expense, net................... .7 .6 17
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Income before income taxes.............. 1.0 1.6 (31)
Income tax provision.................... .4 .6 --
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Net income.............................. .6% 1.0% (33)%
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</TABLE>
RESULTS OF OPERATIONS
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First Quarter
1995 Compared with 1994
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Net sales of $77.8 million for the first quarter of 1995 increased 7% over the
same quarter of 1994. Sales increases of medical/surgical supplies and generic
pharmaceuticals more than offset a decrease in sales of brand-name
pharmaceuticals.
For the 1995 quarter, the gross margin rate of 13.3% was higher than the 12.7%
in the same quarter a year earlier. Gross profit dollars increased 12% to $10.4
million. These improvements resulted primarily from the planned change in sales
mix toward medical/surgical supplies and generic drugs, both of which have
higher gross margin rates than brand-name pharmaceuticals. The first quarter
1995 gross margin rate of 13.3% was lower than the 14.3% rate for the 1994 year
as a whole. Gross profits in the 1995 first quarter were negatively affected by
decreases in gross margin rates on brand-name and generic pharmaceuticals,
largely resulting from competitive pricing pressures in the Company's wholesale
markets.
7
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Selling, general and administrative expenses are generally higher as a percent
of sales for products having higher gross margin rates. Therefore, changes in
these expenses are expected to correlate more closely with changes in gross
profit than with sales. Such expenses in the first quarter of 1995 increased by
18%, which was at a rate higher than the 12% increase in gross profit. These
expenses increased at a higher rate than the rate of increase in gross profit
due to implementation of two operating strategies. In March 1995, the new
Florida distribution center was opened to better serve customers in the
Southeast and to increase company-wide distribution capacity. First quarter
1995, pre-opening start-up costs for this facility were approximately $330,000
($.07 per share after taxes). Also, the Company has continued a strategy,
started in 1994, to build a larger customer base of health-care professionals by
mailing significantly more catalogs to expanded mailing lists. As a result,
catalog advertising expense in the first quarter of 1995 was $220,000 higher
than in the first quarter of 1994. The Company estimates that the number of
health-care professional customers has increased approximately 20% during the
past twelve months due to the expanded catalog advertising. In addition to
expenses for these two initiatives, selling, general and administrative expenses
increased approximately $800,000, or 10%, from the 1994 first quarter. The
majority of this expense increase was for additional personnel to sell and
distribute a higher volume of products and for freight.
Although average debt levels in the first quarter of 1995 decreased
approximately 10% from the same quarter a year earlier, interest expense
increased 17% due to higher interest rates.
Net income decreased for the first quarter of 1995 despite increases in sales
and gross profits. The decrease in net income is most directly attributable to
the pre-opening start-up costs for the new distribution center and higher
interest expense.
FINANCIAL CONDITION
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During the first quarter of 1995, the Company borrowed $1.8 million to fund $1.3
million of equipment and $0.5 million of net cash uses for operating activities.
Accounts receivable increased $3.4 million due to increased sales; inventory
increased $3.7 million due primarily to the stocking of a new distribution
center; and net increases in prepaid/accrued expenses and other current assets
were $2.8 million. Largely offsetting these uses of cash were an increase of
$8.1 million in accounts payable, net income of $0.5 million and non-cash items
included in net income of $0.8 million. The large increase in accounts payable,
attributable mostly to inventory and equipment purchases for the new
distribution center, is expected to be paid down in the second quarter of 1995
using borrowings under the Company's revolving credit facility.
Management believes the working capital and equipment funding needs of the
Company will continue to be met through income from operations, working capital
management and financing under its line of credit.
8
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PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
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None.
(b) Reports on Form 8-K
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No report on Form 8-K was filed during the quarter.
SIGNATURES
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MOORE MEDICAL CORP.
(REGISTRANT)
By: By:
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John A. Murray Victor H. Emerson, Jr.
Vice President - Finance and Controller and Chief
Chief Financial Officer Accounting Officer
May 10, 1995 May 10, 1995
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 53
<SECURITIES> 0
<RECEIVABLES> 24,934
<ALLOWANCES> 213
<INVENTORY> 46,823
<CURRENT-ASSETS> 7,302
<PP&E> 13,104
<DEPRECIATION> 7,784
<TOTAL-ASSETS> 85,136
<CURRENT-LIABILITIES> 35,171
<BONDS> 0
<COMMON> 32
0
0
<OTHER-SE> 23,906
<TOTAL-LIABILITY-AND-EQUITY> 85,136
<SALES> 77,778
<TOTAL-REVENUES> 77,778
<CGS> 67,412
<TOTAL-COSTS> 67,412
<OTHER-EXPENSES> 9,053
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536
<INCOME-PRETAX> 777
<INCOME-TAX> 292
<INCOME-CONTINUING> 485
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
