<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
1995
FORM 10 - Q
For the Fiscal
SECOND QUARTER
Ended July 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
----- -----
2,879,118
Number of shares of Common Stock outstanding as of August 7, 1995.
Total number of pages in the numbered original is 11
This is page 1 of 11 pages.
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1
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MOORE MEDICAL CORP.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I. Financial Information
Item I. Financial Statements
Balance Sheets at the end of the second quarter of
1995 and at the end of the year 1994................ 3
Statements of Operations for the second quarters
of 1995 and 1994.................................... 4
Statements of Operations for the first two quarters
of 1995 and 1994.................................... 5
Statements of Cash Flows for the first two quarters
of 1995 and 1994.................................... 6
Notes to Financial Statements........................ 7
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition............... 8-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 10
Item 4. Submission of Matters to a Vote of Security Holders.. 10-11
Item 6. Exhibits and Reports on Form 8-K..................... 11
Signatures..................................................... 11
</TABLE>
1
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<TABLE>
<CAPTION>
MOORE MEDICAL CORP.
Balance Sheets at end of
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Amounts in thousands Second 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 $228 and $225....... 25,301 21,313
Inventories................................. 47,513 43,160
Prepaid expenses and other current assets... 5,941 4,709
Deferred taxes.............................. 775 909
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Total Current Assets................... 79,583 70,150
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NONCURRENT ASSETS
Equipment and leasehold improvements, net... 5,499 4,497
Other assets................................ 862 990
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Total Noncurrent Assets................ 6,361 5,487
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$85,944 $75,637
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................ $26,994 $24,532
Accrued expenses............................ 3,079 3,589
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Total Current Liabilities.............. 30,073 28,121
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DEFERRED TAXES............................... 407 409
REVOLVING CREDIT FINANCING................... 31,064 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.............. 21,671 21,772
Retained earnings........................... 5,872 4,955
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27,575 26,759
Less treasury shares, at cost, 367 and 388
shares................................... (3,175) (3,450)
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Total Shareholders' Equity............. 24,400 23,309
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$85,944 $75,637
======= =======
</TABLE>
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The accompanying notes are an integral part of the financial statements.
2
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MOORE MEDICAL CORP.
Statements of Operations for the
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<TABLE>
<CAPTION>
Amounts in thousands, except per share data SECOND QUARTER
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1995 1994
(Unaudited)
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<S> <C> <C>
Net sales................................... $72,271 $67,080
Cost of products sold....................... 62,034 57,329
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Gross profit................................ 10,237 9,751
Selling, general & administrative expenses.. 8,843 7,768
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Operating income............................ 1,394 1,983
Interest expense, net....................... 702 425
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Income before income taxes.................. 692 1,558
Income tax provision........................ 260 547
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Net income.................................. $ 432 $ 1,011
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Net income per share........................ $.15 $.35
======= =======
</TABLE>
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The accompanying notes are an integral part of the financial statements.
3
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MOORE MEDICAL CORP.
Statements of Operations for the
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<TABLE>
<CAPTION>
Amounts in thousands, except per share data FIRST TWO QUARTERS
--------------------
1995 1994
(Unaudited)
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<S> <C> <C>
Net sales................................... $150,049 $140,068
Cost of products sold....................... 129,446 121,043
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Gross profit................................ 20,603 19,025
Selling, general & administrative expenses.. 17,896 15,464
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Operating income............................ 2,707 3,561
Interest expense, net....................... 1,238 883
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Income before income taxes.................. 1,469 2,678
Income tax provision........................ 552 940
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Net income.................................. $ 917 $ 1,738
======== ========
Net income per share........................ $.32 $.60
======== ========
</TABLE>
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The accompanying notes are an integral part of the financial statements.
4
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MOORE MEDICAL CORP.
Statements of Cash Flows for the
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<TABLE>
<CAPTION>
Amounts in thousands FIRST TWO QUARTERS
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1995 1994
<S> <C> <C>
(Unaudited)
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CASH FLOWS FROM OPERATIONS
Net income............................. $ 917 $ 1,738
Adjustments to reconcile net income
to net cash flows provided by operating
activities
Depreciation and amortization......... 816 799
Deferred taxes........................ 132 222
Other................................. 193 199
Changes in operating assets and
liabilities
Accounts receivable.................. (3,988) (2,013)
Inventory............................ (4,353) 4,456
Other current assets................. (1,232) (1,338)
Accounts payable..................... 2,462 2,172
Other current liabilities............ (395) (602)
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Net cash flows provided by (used in)
operating activities................. (5,448) 5,633
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CASH FLOWS FROM INVESTING ACTIVITIES
Equipment & leasehold improvements (1,883) (823)
acquired..............................
Other, net............................. -- (134)
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Net cash flows used in investing (1,883) (957)
activities........................... ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Revolving credit financing increase
(decrease), net....................... 7,266 (4,636)
Other, net............................. 59 --
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Net cash flows provided by (used in)
financing activities................ 7,325 (4,636)
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Increase (decrease) in cash............. (6) 40
Cash at beginning of period............. 59 53
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CASH AT END OF PERIOD................... $ 53 $ 93
======= =======
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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 second quarter are not necessarily indicative
of the results to be expected for the full year. The fiscal quarters ended
July 1, 1995 and July 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), which was 2,902,000 shares and 2,897,000 shares in the second
quarters of 1995 and 1994, respectively, and 2,895,000 shares and 2,903,000
shares in the first two quarters of 1995 and 1994, respectively.
NOTE 3 - LITIGATION
Since 1991, the Company and certain of its present and former officers and
directors have been defendants in a shareholder class action lawsuit. (See
Note-5, Litigation, to Financial Statements included in the Company's 1994
Annual Report filed on Form 10-K.) On August 1, 1995, Judge Shira A.
Scheindlin of the United States District Court for the Southern District of
New York granted defendants' Motion for Summary Judgment and dismissed the
lawsuit.
6
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MOORE MEDICAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
OVERVIEW
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The following table sets forth items included in the Statements of Operations as
a percentage of sales for the second quarters and first two quarters of 1995 and
1994, respectively. The table also shows, for each line item, the percentage
change in the 1995 periods from the comparable 1994 periods.
<TABLE>
<CAPTION>
SECOND QUARTER FIRST TWO QUARTERS
-------------- ------------------
% of Sales % % of Sales %
-------------- ------- ------------- ------
1995 1994 Change 1995 1994 Change
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net sales.................... 100.0% 100.0% 8% 100.0% 100.0% 7%
Cost of products sold........ 85.8 85.5 8 86.3 86.4 7
----- ----- ---- ----- ----- ----
Gross profit................. 14.2 14.5 5 13.7 13.6 8
Selling, general & admin 12.2 11.6 14 11.9 11.1 16
expense..................... ----- ----- ---- ----- ----- ----
Operating income............. 2.0 2.9 (30) 1.8 2.5 (24)
Interest expense, net........ 1.0 0.6 65 0.8 0.6 40
----- ----- ---- ----- ----- ----
Income before income taxes... 1.0 2.3 (56) 1.0 1.9 (45)
Income tax provision......... 0.4 0.8 0.4 0.7
----- ----- ----- -----
Net income................... 0.6% 1.5% (57)% 0.6% 1.2% (47)%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
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SECOND QUARTER
1995 COMPARED WITH 1994
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Net sales of $72.3 million for the second quarter of 1995 increased 8% over the
same quarter of 1994. Products showing solid sales increases were
medical/surgical supplies and generic pharmaceuticals. Sales of brand-name
pharmaceuticals increased slightly from the 1994 quarter.
For the 1995 quarter, the gross margin rate of 14.2% was slightly lower than the
14.5% rate in the same quarter a year earlier. Gross profit dollars increased
5% to $10.2 million. Gross profit benefited from higher sales of
medical/surgical supplies, which have higher gross margin rates than
pharmaceuticals. The gross margin rate for pharmaceutical sales decreased
because of continued competitive pressures in the Company's wholesale markets.
7
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Selling, general and administrative expenses for the second quarter of 1995
increased more than the increase in gross profit. This was attributable to:
opening a new distribution center in 1995; higher catalog advertising expense;
and increased expenditures on information systems. The new Florida distribution
center was opened in March 1995 to better-serve customers in the Southeast and
to increase company-wide distribution capacity. Catalog advertising expense in
the second quarter of 1995 was higher than in the second quarter of 1994 due to
a continuation of a program started in the third quarter of 1994 to build a
larger customer base of health-care professionals by mailing significantly more
catalogs to expanded mailing lists. The number of professional health-care
customers has increased over 20% during the past twelve months due to this
program. The higher expenditures on information systems have largely been for
systems to support sales and marketing, including a system completed in the
second quarter to more efficiently process bid and quote requests.
Interest expense in the second quarter of 1995 increased 65% from the same
quarter a year ago. More than half of the increase resulted from higher
interest rates. Higher debt levels also contributed to the rise in interest
expense.
Net income decreased for the second quarter of 1995. An increase in gross
profit was more than offset by increases in selling, general and administrative
expenses and interest expense.
FIRST TWO QUARTERS
1995 COMPARED WITH 1994
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Net sales of $150.0 million for the first two quarters of 1995 increased 7% over
the comparable 1994 period. Products showing solid sales increases were
medical/surgical supplies and generic pharmaceuticals. Sales of brand-name
pharmaceuticals decreased from the 1994 first half.
For the 1995 first half, the gross margin rate of 13.7% was slightly higher than
the 13.6% rate in the same period a year earlier. Gross profit dollars
increased 8% to $20.6 million. Gross profit benefited from higher sales of
medical/surgical supplies, which have higher gross margin rates than
pharmaceuticals. The gross margin rate for pharmaceutical sales decreased
because of continued competitive pressures in the Company's wholesale markets.
Selling, general and administrative expenses for the first half of 1995
increased more than the increase in gross profit. This was attributable to:
opening a new distribution center in 1995; higher catalog advertising expense;
and increased expenditures on information systems. The new Florida distribution
center was opened in March 1995 to better-serve customers in the Southeast and
to increase company-wide distribution capacity. Catalog advertising expense in
the first half of 1995 was higher than in the first half of 1994 due to a
continuation of a program started in the third quarter of 1994 to build a larger
customer base of health-care professionals by mailing significantly more
catalogs to expanded mailing lists. The number of professional health-care
8
<PAGE>
customers has increased over 20% during the past twelve months due to this
program. The higher expenditures on information systems have largely been for
systems to support sales and marketing, including a system completed in the
second quarter to more efficiently process bid and quote requests.
Interest expense in the first half of 1995 increased 40% from the same period a
year ago. Substantially all of the increase resulted from higher interest
rates.
Net income decreased for the first half of 1995. An increase in gross profit
was more than offset by increases in selling, general and administrative
expenses and interest expense.
FINANCIAL CONDITION
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During the first half of 1995, the Company generated $1.9 million of cash from
earnings (net income before non-cash charges for depreciation, amortization, and
deferred taxes) and increased borrowings by $7.3 million. Cash was used to fund
equipment purchases of $1.9 million and increases in net operating assets of
$7.5 million. The new Florida distribution center accounts for most of the
equipment purchases and substantially all of the $4.4 million increase in
inventory. Accounts receivable increased $4.0 million due to higher sales at
the end of the first half of 1995 than at the end of 1994.
Management believes that funding needs for the Company's operations will
continue to be met through income from operations, working capital management
and financing under the existing line of credit.
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
On August 1, 1995, Judge Shira A. Scheindlin of the United States
District Court for the Southern District of New York granted
defendants' Motion for Summary Judgment and dismissed the class
action lawsuit that has been pending since 1991 against the Company
and certain of its present and former officers and directors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
(a) The 1995 Annual Meeting of Shareholders of the Company was held
May 17, 1995.
9
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(b) At the Annual Meeting, the following persons were elected directors,
with the following number of shares voted for and withheld:
<TABLE>
<CAPTION>
For Withheld
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<S> <C> <C>
Mark E. Karp 2,477,561 39,472
Steven Kotler 2,477,561 39,472
Robert H. Steele 2,477,561 39,472
Peter C. Sutro 2,472,760 44,273
Wilmer J. Thomas, Jr. 2,483,808 33,225
Dan K. Wassong 2,483,393 33,640
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
No report on Form 8-K was filed during the quarter.
SIGNATURES
----------
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: /s/ John A. Murray
--------------------------------
John A. Murray
Vice President - Finance and
Chief Financial Officer
August 11, 1995
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-30-1995 DEC-30-1995
<PERIOD-START> APR-02-1995 JAN-01-1995
<PERIOD-END> JUL-01-1995 APR-01-1995
<CASH> 53 53
<SECURITIES> 0 0
<RECEIVABLES> 25,529 24,934
<ALLOWANCES> 228 213
<INVENTORY> 47,513 46,823
<CURRENT-ASSETS> 6,716 7,302
<PP&E> 13,650 13,104
<DEPRECIATION> 8,151 7,784
<TOTAL-ASSETS> 85,944 85,136
<CURRENT-LIABILITIES> 30,073 35,171
<BONDS> 0 0
<COMMON> 32 32
0 0
0 0
<OTHER-SE> 24,368 23,906
<TOTAL-LIABILITY-AND-EQUITY> 85,944 85,136
<SALES> 72,271 77,778
<TOTAL-REVENUES> 72,271 77,778
<CGS> 62,034 67,412
<TOTAL-COSTS> 62,034 67,412
<OTHER-EXPENSES> 8,843 9,053
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 702 536
<INCOME-PRETAX> 692 777
<INCOME-TAX> 260 292
<INCOME-CONTINUING> 432 485
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 432 485
<EPS-PRIMARY> 0.15 0.17
<EPS-DILUTED> 0.15 0.17
</TABLE>
