<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
1995
FORM 10 - Q
For the Fiscal
THIRD QUARTER
Ended September 30, 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)
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)
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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2,880,956
Number of shares of Common Stock outstanding as of November 8, 1995.
Total number of pages in the numbered original is 10
This is page 1 of 10 pages.
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MOORE MEDICAL CORP.
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item I. Financial Statements
Balance Sheets at the end of the third quarter of
1995 and at the end of the year 1994................ 3
Statements of Operations for the third quarters
of 1995 and 1994.................................... 4
Statements of Operations for the first three quarters
of 1995 and 1994.................................... 5
Statements of Cash Flows for the first three 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 6. Exhibits and Reports on Form 8-K.............. 10
Signatures............................................. 10
2
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<TABLE>
<CAPTION>
MOORE MEDICAL CORP.
Balance Sheets at end of the
- ----------------------------
Amounts in thousands THIRD QUARTER 1995 YEAR 1994
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 53 $ 59
Accounts receivable, less allowance for
doubtful accounts of $109 and $225....... 26,685 21,313
Inventories................................. 45,297 43,160
Prepaid expenses and other current assets... 5,264 4,709
Deferred taxes.............................. 609 909
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Total Current Assets................... 77,908 70,150
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NONCURRENT ASSETS
Equipment and leasehold improvements, net... 5,306 4,497
Other assets................................ 815 990
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Total Noncurrent Assets................ 6,121 5,487
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$84,029 $75,637
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................ $25,028 $24,532
Accrued expenses............................ 3,246 3,589
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Total Current Liabilities.............. 28,274 28,121
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DEFERRED TAXES............................... 410 409
REVOLVING CREDIT FINANCING................... 30,266 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.............. 21,675 21,772
Retained earnings........................... 6,547 4,955
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28,254 26,759
Less treasury shares, at cost, 367 and 388
shares................................... (3,175) (3,450)
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Total Shareholders' Equity............. 25,079 23,309
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$84,029 $75,637
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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MOORE MEDICAL CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Statements of Operations for the
Amounts in thousands, except per share data THIRD QUARTER
-------------
1995 1994
(Unaudited)
<S> <C> <C>
Net sales................................... $72,296 $65,306
Cost of products sold....................... 61,498 54,923
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Gross profit................................ 10,798 10,383
Selling, general & administrative expenses.. 9,030 8,274
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Operating income............................ 1,768 2,109
Interest expense, net....................... 758 509
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Income before income taxes.................. 1,010 1,600
Income tax provision........................ 335 560
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Net income.................................. $ 675 $ 1,040
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Net income per share........................ $.23 $.36
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</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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MOORE MEDICAL CORP.
Statements of Operations for the
<TABLE>
<CAPTION>
Amounts in thousands, except per share data FIRST THREE QUARTERS
--------------------
1995 1994
(Unaudited)
<S> <C> <C>
Net sales................................... $222,345 $205,374
Cost of products sold....................... 190,944 175,966
-------- --------
Gross profit................................ 31,401 29,408
Selling, general & administrative expenses.. 26,926 23,738
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Operating income............................ 4,475 5,670
Interest expense, net....................... 1,996 1,392
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Income before income taxes.................. 2,479 4,278
Income tax provision........................ 887 1,500
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Net income.................................. $ 1,592 $ 2,778
======== ========
Net income per share........................ $.55 $.96
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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<TABLE>
<CAPTION>
MOORE MEDICAL CORP.
Statements of Cash Flows for the
Amounts in thousands FIRST THREE QUARTERS
--------------------
1995 1994
<S> <C> <C>
(Unaudited)
CASH FLOWS FROM OPERATIONS
Net income............................. $ 1,592 $ 2,778
Adjustments to reconcile net income to
net cash
flows provided by operating activities
Depreciation and amortization......... 1,222 1,148
Deferred taxes........................ 301 482
Other................................. 240 67
Changes in operating assets and
liabilities
Accounts receivable.................. (5,372) (4,126)
Inventory............................ (2,137) (4,866)
Other current assets................. (555) (1,564)
Accounts payable..................... 496 7,564
Other current liabilities............ (228) (1,173)
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Net cash flows (used in) provided by
operating activities................. (4,441) 310
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CASH FLOWS FROM INVESTING ACTIVITIES
Equipment & leasehold improvements (2,096) (1,059)
acquired..............................
Other, net............................. -- (73)
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Net cash flows used in investing (2,096) (1,132)
activities........................... ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Revolving credit financing increase,
net................................... 6,468 826
Other, net............................. 63 --
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Net cash flows provided by
financing activities................ 6,531 826
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(Decrease) increase cash................ (6) 4
Cash at beginning of period............. 59 53
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CASH AT END OF PERIOD................... $ 53 $ 57
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</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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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 third quarter are not necessarily indicative
of the results to be expected for the full year. The fiscal quarters ended
September 30, 1995 and October 1, 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 2,907,000 shares and 2,918,000 shares in the third
quarters of 1995 and 1994, respectively, and 2,899,000 shares and 2,908,000
shares in the first three quarters of 1995 and 1994, respectively.
7
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MOORE MEDICAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
OVERVIEW
- --------
The following table sets forth items included in the Statements of Operations as
a percentage of sales for the third quarters and first three 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>
THIRD QUARTER FIRST THREE QUARTERS
-------------------------------------------------
% of Sales % % of Sales %
-------------------------------------------------
1995 1994 Change 1995 1994 Change
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.......................... 100.0% 100.0% 11% 100.0% 100.0% 8%
Cost of products sold.............. 85.1 84.1 12 85.9 85.7 9
----- ----- ---- ----- ----- ----
Gross profit....................... 14.9 15.9 4 14.1 14.3 7
Selling, general & admin expense. 12.5 12.7 9 12.1 11.5 13
----- ----- ---- ----- ----- ----
Operating income................... 2.4 3.2 (16) 2.0 2.8 (21)
Interest expense, net.............. 1.0 0.8 49 0.9 0.7 43
----- ----- ---- ----- ----- ----
Income before income taxes......... 1.4 2.4 (37) 1.1 2.1 (42)
Income tax provision............... 0.5 0.8 0.4 0.7
----- ----- ----- -----
Net income......................... 0.9% 1.6% (35)% 0.7% 1.4% (43)%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
- ---------------------
THIRD QUARTER
1995 COMPARED WITH 1994
- -----------------------
Net sales of $72.3 million for the third quarter of 1995 increased 11% over the
same quarter of 1994. Sales increased for medical/surgical supplies and brand-
name pharmaceuticals. Generic pharmaceutical sales in the third quarter were
level with the 1994 third quarter.
For the 1995 quarter, the gross margin rate dropped to 14.9% from 15.9% in the
same quarter a year earlier. Gross profit dollars increased 4% to $10.8
million. Gross profit benefited from higher sales of medical/surgical supplies,
which have higher gross margin rates than pharmaceuticals. More than offsetting
this benefit were decreases in gross margin rates on both brand-name and generic
pharmaceuticals. Competitive pressures on pharmaceutical prices in the
Company's wholesale markets were particularly strong in the third quarter.
8
<PAGE>
Selling, general and administrative expenses during the third quarter increased
9% from the third quarter of 1994. Most of the increase was attributable to
added costs for marketing and distribution expenses in support of the growing
sales volume of medical/surgical supplies to health-care professional customers.
The 9% rate of increase for selling, general and administrative expenses was
higher than the 4% increase in gross profit because the gross profit increase
was diminished by lower gross margins on pharmaceuticals.
Interest expense in the third quarter of 1995 increased 49% from the same
quarter a year ago. Higher debt levels accounted for approximately two-thirds
of the increase. Higher interest rates accounted for the remainder of the
increase.
Net income decreased for the third quarter of 1995. An increase in gross profit
was more than offset by increases in selling, general and administrative
expenses and interest expense.
FIRST THREE QUARTERS
1995 COMPARED WITH 1994
- -----------------------
Net sales of $222.3 million for the first three quarters of 1995 increased 8%
over the comparable 1994 period. Sales increased for medical/surgical supplies
and generic pharmaceuticals. Sales of brand-name pharmaceuticals for the first
nine months were almost level with the comparable 1994 period.
For the first nine months of 1995, the gross margin rate decreased to 14.1% from
14.3% in the same period a year earlier. Gross profit dollars increased 7% to
$31.4 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 due to continued competitive
pressures in the Company's wholesale markets.
Selling, general and administrative expenses for the first nine months of 1995
increased over 13% compared with the same period a year ago. Most of the
increase was for added costs for marketing and distribution expenses in support
of the growing sales volume of medical/surgical supplies to health-care
professional customers. The 13% rate of increase for selling, general and
administrative expenses was higher than the 7% increase in gross profit
primarily due to extra expenses in the first half of 1995 for opening a new
distribution center, higher catalog advertising expense and increased
expenditures to enhance information systems.
Interest expense in the first nine months of 1995 increased 43% over the same
period a year ago. Higher interest rates accounted for approximately two-thirds
of the increase. Higher debt levels accounted for the remainder of the
increase.
9
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Net income decreased for the first nine months of 1995. An increase in gross
profit was more than offset by increases in selling, general and administrative
expenses and interest expense.
FINANCIAL CONDITION
- -------------------
During the first nine months of 1995, the Company generated $3.4 million of cash
from earnings (net income before non-cash charges for depreciation,
amortization, and deferred taxes) and increased borrowings by $6.5 million.
Cash was used to fund equipment purchases of $2.1 million and net increases in
operating assets of $7.8 million. A new distribution center accounted for most
of the equipment purchases and substantially all of the $2.1 million increase in
inventory. Accounts receivable increased $5.4 million due primarily to higher
sales at the end of the third quarter 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 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 By: /s/ Victor H. Emerson, Jr.
------------------ -------------------------------
John A. Murray Victor H. Emerson, Jr.
Vice President - Finance and Controller and Chief Accounting
Chief Financial Officer Officer
November 13, 1995 November 13, 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> JUL-02-1995 APR-02-1995
<PERIOD-END> SEP-30-1995 JUL-01-1995
<CASH> 53 53
<SECURITIES> 0 0
<RECEIVABLES> 26,794 25,529
<ALLOWANCES> 109 228
<INVENTORY> 45,297 47,513
<CURRENT-ASSETS> 5,873 6,716
<PP&E> 13,863 13,650
<DEPRECIATION> 8,557 8,151
<TOTAL-ASSETS> 84,029 85,944
<CURRENT-LIABILITIES> 28,274 30,073
<BONDS> 0 0
<COMMON> 32 32
0 0
0 0
<OTHER-SE> 25,047 24,368
<TOTAL-LIABILITY-AND-EQUITY> 84,029 85,944
<SALES> 72,296 72,271
<TOTAL-REVENUES> 72,296 72,271
<CGS> 61,498 62,034
<TOTAL-COSTS> 61,498 62,034
<OTHER-EXPENSES> 9,030 8,843
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 758 702
<INCOME-PRETAX> 1,010 692
<INCOME-TAX> 335 260
<INCOME-CONTINUING> 675 432
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 675 432
<EPS-PRIMARY> 0.23 0.15
<EPS-DILUTED> 0.23 0.15
</TABLE>
