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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
1996
FORM 10 - Q
For the Fiscal
FIRST QUARTER
Ended March 30, 1996
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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2,901,261
Number of shares of Common Stock outstanding as of May 1, 1996.
Total number of pages in the numbered original is 9
This is page 1 of 9 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 first quarter of
1996 and at the end of the year 1995.............. 3
Statements of Operations for the first quarters
of 1996 and 1995.................................. 4
Statements of Cash Flows for the first quarters
of 1996 and 1995.................................. 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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<CAPTION>
MOORE MEDICAL CORP.
Balance Sheets at end of
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Amounts in thousands First Quarter 1996 Year 1995
(Unaudited)
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<S> <C> <C>
ASSETS
Current Assets
Cash $ 77 $ 39
Accounts receivable, less allowances
of $879 and $734.......................................... 25,966 22,890
Inventories................................................. 42,408 40,897
Prepaid expenses and other current assets................... 6,709 4,759
Deferred income taxes....................................... 594 619
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Total Current Assets.................................. 75,754 69,204
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Noncurrent Assets
Equipment and leasehold improvements, net.................. 4,708 4,937
Other assets............................................... 1,221 1,222
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Total Noncurrent Assets.............................. 5,929 6,159
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$81,683 $75,363
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable........................................... $27,255 $24,699
Accrued expenses........................................... 2,804 2,689
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Total Current Liabilities............................ 30,059 27,388
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Deferred Income Taxes.......................................... 428 447
Revolving Credit Financing..................................... 24,638 21,672
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............................. 21,691 21,680
Retained earnings.......................................... 7,907 7,274
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29,630 28,986
Less treasury shares, at cost, 345 and 352
shares................................................... (3,072) (3,130)
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Total Shareholders' Equity........................... 26,558 25,856
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$81,683 $75,363
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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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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1996 1995
(Unaudited)
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<S> <C> <C>
Net sales................................... $75,833 $77,778
Cost of products sold....................... 65,236 67,412
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Gross profit................................ 10,597 10,366
Selling, general & administrative expenses.. 9,158 9,053
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Operating income............................ 1,439 1,313
Interest expense, net....................... 466 536
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Income before income taxes.................. 973 777
Income tax provision........................ 340 292
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Net income.................................. $ 633 $ 485
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Net income per share........................ $ .22 $ .17
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The accompanying notes are an integral part of the financial statements.
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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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1996 1995
(Unaudited)
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<S> <C> <C>
Cash Flows From Operating Activities
Net income.................................. $ 633 $ 485
Adjustments to reconcile net income to
net cash flows provided by operating activities
Depreciation and amortization.............. 448 449
Deferred income taxes...................... 6 160
Other...................................... -- 356
Changes in operating assets and
liabilities
Accounts receivable........................ (3,076) (3,396)
Inventories................................ (1,511) (3,690)
Other current assets....................... (1,950) (1,833)
Accounts payable........................... 2,556 8,141
Other current liabilities.................. 163 (1,179)
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Net cash flows used in operating
activities............................... (2,731) (507)
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Cash Flows From Investing Activities
Equipment & leasehold improvements acquired. (218) (1,337)
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Net cash flows used in investing
activities............................. (218) (1,337)
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Cash Flows From Financing Activities
Revolving credit financing increase, net.... 2,966 1,809
Other, net.................................. 21 29
Net cash flows provided by financing --------- --------
activities............................. 2,987 1,838
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Increase (decrease) in cash..................... 38 (6)
Cash at beginning of period..................... 39 59
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Cash at end of period........................... $ 77 $ 53
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</TABLE>
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The accompanying notes are an integral part of the financial statements.
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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 1995 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 March 30, 1996 and April 1, 1995.
Certain prior year amounts have been reclassified to conform with the
current year presentation.
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. (2,909,000 shares and 2,888,000 shares in the first quarters
of 1996 and 1995, respectively.)
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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 1996 and 1995. The table also
shows, for each line item, the percentage change in the 1996 period from the
comparable 1995 period.
<TABLE>
<CAPTION>
First Quarter
--------------------------------
% of Sales % Change
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1996 1995
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<S> <C> <C> <C>
Net sales............................... 100.0% 100.0% (3)%
Cost of products sold................... 86.0 86.7 (3)
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Gross profit............................ 14.0 13.3 2
Selling, general & administrative
expenses............................... 12.1 11.6 1
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Operating income........................ 1.9 1.7 10
Interest expense, net................... .6 .7 (13)
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Income before income taxes.............. 1.3 1.0 25
Income tax provision.................... .5 .4 --
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Net income.............................. .8% .6% 31%
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RESULTS OF OPERATIONS
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First Quarter
1996 Compared with 1995
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Net sales of $75.8 million for the first quarter of 1996 decreased 3% from the
same quarter of 1995. Sales of pharmaceuticals, comprising brand-name and
generic products, decreased due to competitive pressures in the Company's
wholesale markets, particularly in the independent pharmacy market. Sales of
medical/surgical supplies increased during the 1996 quarter from the comparable
1995 quarter. Growth in sales to the Company's health-care practitioner
customers accounted for most of the sales increase in medical/surgical supplies.
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For the 1996 quarter, the gross margin rate of 14.0% was higher than the 13.3%
in the same quarter a year earlier. Gross profit dollars increased 2% to $10.6
million. These improvements resulted primarily from the change in sales mix
toward medical/surgical supplies, which have higher gross margin rates than
pharmaceuticals.
Selling, general and administrative expenses in the first quarter of 1996
increased slightly from the same quarter of 1995. In the first quarter of 1995,
the Company incurred $330,000 ($.07 per share after taxes) for pre-opening
start-up costs in connection with a new distribution center. After eliminating
these costs from the 1995 quarter for comparability, the 1996 selling, general
and administrative expenses increased approximately 5%. Most of this increase
was for costs in support of the growing sales of medical/surgical supplies to
health-care practitioners.
Interest expense decreased 13% in the 1996 quarter, primarily due to lower
interest rates on a new revolving line of credit financing agreement which the
Company entered into in January 1996.
Net income increased 31% for the first quarter of 1996. The increase in net
income was most directly attributable to the one-time expenses in the 1995
quarter associated with starting up a new distribution center.
FINANCIAL CONDITION
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During the first quarter of 1996, the Company borrowed $2.9 million to fund $2.7
million of net cash uses for operations and $0.2 million of equipment purchases.
Accounts receivable increased $3.1 million due to higher sales in the first
quarter than for the fourth quarter of 1995; inventory increased $1.5 million;
and net increases in prepaid/accrued expenses and other current assets were $1.8
million. Somewhat offsetting these uses of cash were an increase of $2.6
million in accounts payable, net income of $0.6 million and non-cash items
included in net income of $0.5 million.
In January, 1996, the Company entered into a new revolving line of credit
financing agreement with a bank. This $45 million secured line of credit
extends through December 31, 1998. The facility provides for funding limited by
a formula using accounts receivable balances and inventory levels as the primary
variables. Interest on loans is charged at the prime rate or, at the option of
the Company, at the Eurodollar rate plus a rate in a range of 1% to 2% depending
on the financial leverage of the Company. In addition the Company pays a 1/4%
commitment fee on the unused line of credit. Substantially all assets of the
Company have been pledged as collateral and the agreement contains covenants and
restrictions relating to asset protection, financial condition, dividends,
investments, acquisitions and certain other matters. Under the
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prior financing facility that was in effect for 1995, interest on loans was
charged at the prime rate plus a 1/4% premium or, at the option of the Company,
at LIBOR plus 2 1/2%.
Management believes that the funding needs of the Company will continue to be
met through income from operations, working capital management and financing
under it's line of credit.
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
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The Registrant filed on Form 8-K a new Revolving Credit Agreement
between Bank of Boston Connecticut and the Company and a Security
Agreement between Bank of Boston Connecticut and the Company
which where dated January 9, 1996.
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: /s/ John A. Murray By: /s/ Victor H. Emerson, Jr.
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John A. Murray Victor H. Emerson, Jr.
Vice President - Finance and Controller and Chief
Chief Financial Officer Accounting Officer
May 3, 1996 May 3, 1996
<TABLE> <S> <C>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-28-1996 DEC-30-1995
<PERIOD-START> DEC-31-1995 JAN-01-1995
<PERIOD-END> MAR-30-1996 DEC-30-1995
<CASH> 77 39
<SECURITIES> 0 0
<RECEIVABLES> 26,845 23,624
<ALLOWANCES> 879 734
<INVENTORY> 42,408 40,897
<CURRENT-ASSETS> 7,303 5,378
<PP&E> 14,108 13,942
<DEPRECIATION> 9,400 9,005
<TOTAL-ASSETS> 81,683 75,363
<CURRENT-LIABILITIES> 30,059 27,388
<BONDS> 0 0
0 0
0 0
<COMMON> 32 32
<OTHER-SE> 26,526 25,824
<TOTAL-LIABILITY-AND-EQUITY> 81,683 75,363
<SALES> 75,833 289,062
<TOTAL-REVENUES> 75,833 289,062
<CGS> 65,236 247,556
<TOTAL-COSTS> 65,236 247,556
<OTHER-EXPENSES> 9,158 35,410
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 466 2,609
<INCOME-PRETAX> 973 3,487
<INCOME-TAX> 340 1,168
<INCOME-CONTINUING> 633 2,319
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 633 2,319
<EPS-PRIMARY> 0.22 0.80
<EPS-DILUTED> 0.22 0.80
</TABLE>
