<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 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 0-14324
-------
MOORE-HANDLEY, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0819773
- ---------------------------------------- ----------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OF ORGANIZATION) IDENTIFICATION NO.)
3140 PELHAM PARKWAY, PELHAM, ALABAMA 35124
- ---------------------------------------- ----------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (205) 663-8011
----------------------------
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
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.10 par value 2,164,543 shares
- --------------------------------------------------------------------------------
Class Outstanding at October 1, 1995
<PAGE> 2
MOORE-HANDLEY, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page No.
- -------- ---------
<S> <C>
PART I. FINANCIAL INFORMATION - UNAUDITED
1. Balance Sheets -
September 30, 1995 and 1994
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations -
Three Months and Nine Months
ended September 30, 1995 and 1994. . . . . . . . . . . . . . . . 4
Statements of Cash Flows -
Nine Months Ended September 30, 1995
and 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Note to Financial Statements . . . . . . . . . . . . . . . . . . . 6
2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
PART II. OTHER INFORMATION
6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
-2-
<PAGE> 3
MOORE-HANDLEY, INC.
BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1994 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
September 30, December 31,
----------------------------- ------------
ASSETS 1995 1994 1994
----------- ----------- ------------
Current assets: (unaudited) (unaudited)
<S> <C> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 126,000 $ 463,000 $ 781,000
Trade receivables, net . . . . . . . . . . . . . . . . . . 22,719,000 23,104,000 20,349,000
Other receivables . . . . . . . . . . . . . . . . . . . . . 2,105,000 2,066,000 1,947,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . 14,429,000 15,644,000 18,713,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 223,000 446,000 243,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . 714,000 632,000 714,000
----------- ----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . 40,316,000 42,355,000 42,747,000
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . 729,000 721,000 704,000
Loan to officer . . . . . . . . . . . . . . . . . . . . . . . . 22,000 34,000 31,000
Property and equipment: . . . . . . . . . . . . . . . . . . . . 15,970,000 15,236,000 15,270,000
Less accumulated depreciation . . . . . . . . . . . . . . . (8,802,000) (7,837,000) (8,054,000)
----------- ----------- -----------
Net property and equipment . . . . . . . . . . . . . . . 7,168,000 7,399,000 7,216,000
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . 45,000 52,000 50,000
----------- ----------- -----------
$48,280,000 $50,561,000 $50,748,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . $ 4,500,000 $ 6,400,000 $ 8,500,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . 19,389,000 19,182,000 17,902,000
Accrued payroll . . . . . . . . . . . . . . . . . . . . . . 553,000 665,000 407,000
Accrued income tax . . . . . . . . . . . . . . . . . . . . --- 34,000 124,000
Other accrued liabilities . . . . . . . . . . . . . . . . . 1,626,000 1,961,000 1,542,000
Long-term debt due in one year . . . . . . . . . . . . . . 892,000 828,000 843,000
----------- ----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . 26,960,000 29,070,000 29,318,000
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 4,024,000 4,918,000 4,699,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 988,000 968,000 988,000
Stockholders' equity:
Common stock, $.10 par value;
10,000,000 shares authorized,
2,510,040 shares issued . . . . . . . . . . . . . . . . . . 251,000 251,000 251,000
Other stockholders' equity . . . . . . . . . . . . . . . . 16,057,000 15,354,000 15,492,000
----------- ----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . 16,308,000 15,605,000 15,743,000
----------- ----------- -----------
$48,280,000 $50,561,000 $50,748,000
=========== =========== ===========
</TABLE>
See accompanying notes.
-3-
<PAGE> 4
MOORE-HANDLEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $37,579,000 $36,607,000 $110,021,000 $104,416,000
Cost of merchandise sold . . . . . . . . . . 31,772,000 30,671,000 92,461,000 86,753,000
Warehouse and delivery
expense . . . . . . . . . . . . . . . . . 2,035,000 1,994,000 6,036,000 5,905,000
----------- ----------- ------------ ------------
Cost of sales . . . . . . . . . . . . . . . . 33,807,000 32,665,000 98,497,000 92,658,000
----------- ----------- ------------ ------------
Gross profit . . . . . . . . . . . . . . . . 3,772,000 3,942,000 11,524,000 11,758,000
Selling & administrative
expense . . . . . . . . . . . . . . . . . 3,382,000 3,298,000 9,927,000 9,432,000
----------- ----------- ------------ ------------
Operating income . . . . . . . . . . . . . . 390,000 644,000 1,597,000 2,326,000
Interest expense, net . . . . . . . . . . . . 155,000 145,000 521,000 430,000
----------- ----------- ------------ ------------
Income before provision
for income tax . . . . . . . . . . . . . 235,000 499,000 1,076,000 1,896,000
Income tax . . . . . . . . . . . . . . . . . 87,000 187,000 403,000 711,000
----------- ----------- ------------ ------------
Net income . . . . . . . . . . . . . . . . . $ 148,000 $ 312,000 $ 673,000 $ 1,185,000
=========== =========== ============ ============
Net income
per share . . . . . . . . . . . . . . . . $ .07 $ .14 $ .30 $ .52
=========== =========== ============ ============
Weighted average common
shares outstanding . . . . . . . . . . . . 2,192,000 2,269,000 2,221,000 2,262,000
=========== =========== ============ ============
</TABLE>
See accompanying notes.
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<PAGE> 5
MOORE-HANDLEY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 673,000 $1,185,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 805,000 753,000
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . 168,000 270,000
Gain on sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (17,000) (90,000)
Change in assets and liabilities:
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . (2,696,000) (5,776,000)
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 4,284,000 (902,000)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . 1,717,000 6,376,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (120,000) (153,000)
---------- ----------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,141,000 478,000
---------- ----------
Net cash flows provided by
operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . 4,814,000 1,663,000
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (752,000) (729,000)
Proceeds from sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . . 17,000 93,000
---------- ----------
Net cash flows used in
investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . (735,000) (636,000)
Cash flows from financing activities:
Net borrowings (payments) under bank loans . . . . . . . . . . . . . . . . . . . (4,000,000) (1,050,000)
Principal payments under long-term debt . . . . . . . . . . . . . . . . . . . . . (626,000) (101,000)
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (108,000) ---
----------- ----------
Net cash flows (used in)
financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . (4,734,000) (1,151,000)
Net decrease in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (655,000) (124,000)
Cash and cash equivalents
at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781,000 587,000
Cash and cash equivalents
at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,000 $ 463,000
========== ==========
</TABLE>
See accompanying notes.
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<PAGE> 6
MOORE-HANDLEY, INC.
NOTE TO FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1994 IS UNAUDITED)
1. Basis of presentation.
The financial statements included herein have been prepared by
Moore-Handley, Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K filed with the Commission on March 8, 1995.
The financial information presented herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement of the results of the interim
periods. The results for interim periods are not necessarily indicative of
results to be expected for the year.
-6-
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Net sales for the quarter ended September 30, 1995 were up 3% compared
to the same quarter in the prior year and for the nine months increased by 5%.
Factory direct shipments increased 12% for the quarter and 16% for the nine
months. The Company believes the increase in factory direct shipments reflects
the change in the customer base towards larger customers.
The following table sets forth the major elements of net sales:
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------------
1995 1994
---------------- -----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Warehouse shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,008 66.5% $ 25,359 69.3%
Factory direct shipments . . . . . . . . . . . . . . . . . . . . . . . . . 12,571 33.5 11,248 30.7
-------- ----- -------- -----
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,579 100.0% $ 36,607 100.0%
======== ===== ======== =====
Nine Months Ended September 30,
---------------------------------------
1995 1994
---------------- ------------------
(dollars in thousands)
Net Sales:
Warehouse shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 74,875 68.1% $ 74,187 71.0%
Factory direct shipments . . . . . . . . . . . . . . . . . . . . . . . . . 35,146 31.9 30,229 29.0
-------- ----- -------- -----
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,021 100.0% $104,416 100.0%
======== ===== ======== =====
OPERATIONS
The following table sets forth certain financial data as a percentage of net sales for the periods indicated:
Three Months Ended Nine Months Ended
1995 1994 1995 1994
------ ------ ------ ------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
======== ===== ======== =====
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.4 16.2 16.0 16.9
Warehouse and delivery expense . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.4 5.5 5.6
-------- ----- -------- -----
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 10.8 10.5 11.3
Selling & administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 9.0 9.0 9.0 9.0
-------- ----- -------- -----
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 1.8 1.5 2.2
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 .4 .5 .4
-------- ----- -------- -----
Income before provision
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6% 1.4% 1.0% 1.8%
======== ===== ======== =====
</TABLE>
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<PAGE> 8
GROSS MARGIN
The gross margin percentage for the third quarter of 1995 was 15.4%,
down from 16.2% in the third quarter of 1994. About half the decrease in the
gross margin percentage was due to the increase in the proportion of total
shipments represented by factor direct shipments which carry a lower gross
margin percentage. The balance of the decrease was due to more competitive
pricing.
The following table sets forth gross margin dollars, gross margin
percentages and year-over-year changes for 1994 and the first three quarters of
1995.
<TABLE>
<CAPTION>
Increase (Decrease)
vs. Same Quarter
Gross Margin in Previous Year
- -------------------------------------------------------------- -------------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
1994 - 1st $5,815 17.1 $ 340 .1
2nd 5,912 17.5 60 (.2)
3rd 5,936 16.2 134 (.4)
4th 5,546 17.4 389 (.2)
1995 - 1st 5,829 16.3 14 .8
2nd 5,924 16.2 12 (1.2)
3rd 5,807 15.4 (129) (.8)
</TABLE>
WAREHOUSE & DELIVERY EXPENSES
As a percentage of warehouse shipments, warehouse and delivery expenses
increased from 7.9% in the third quarter of 1994 to 8.1% in the current year.
The following table shows the trend of warehouse and delivery expenses in 1994
and the first three quarters of 1995:
<TABLE>
<CAPTION>
Increase (Decrease)
Warehouse & Delivery vs. Same Quarter
Expenses in Previous Year
- ------------------------------------------------------------ -------------------------------------------
Percentage
Amount of Warehouse Amount Percentage
Quarter (in thousands) Shipments (in thousands) Points
- -------- -------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
1994 - 1st $1,920 7.9 $ 104 .1
2nd 1,991 8.1 66 .0
3rd 1,994 7.9 35 (.4)
4th 2,013 9.4 98 (.2)
1995 - 1st 1,982 8.0 62 .1
2nd 2,019 8.0 28 (.1)
3rd 2,035 8.1 41 .2
</TABLE>
SELLING & ADMINISTRATIVE EXPENSES
Selling and administrative expenses increased $84,000 for the quarter
ended September 30, 1995 compared to the corresponding quarter of 1994.
However, as a percent of sales these expenses were unchanged. The following
table shows the
-8-
<PAGE> 9
quarterly trend of selling and administrative expenses in 1994 and the first
three quarters of 1995.
<TABLE>
<CAPTION>
Increase (Decrease)
Selling & Administrative vs. Same Quarter
Expenses in Previous Year
-------------------------------------- ----------------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) Of Sales (in thousands) Points
- ------------ -------------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
1994 - 1st $3,030 8.9 $(268) (1.3)
2nd 3,104 9.2 (85) (.5)
3rd 3,298 9.0 38 (.4)
4th 3,928 9.2 (186) (1.4)
1995 - 1st 3,145 8.8 115 (.1)
2nd 3,145 8.8 115 (.1)
3rd 3,382 9.0 84 .0
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
From December 31, 1994 to September 30, 1995 the Company's net trade
receivables increased by $2,370,000 while inventories decreased by $4,284,000.
The increase in receivables was due to the higher level of sales in September
1995 (which include orders taken at a Dealers' Mart held in August) compared to
December 1994. Because of extended payment terms received from suppliers in
connection with the mart, the increase in receivables is offset by an increase
in trade payables. Inventories at December 31, 1994 included goods purchased to
take advantage of volume rebates available from certain suppliers. The
decrease in inventories at September 30, 1995 reflects the sale of these goods.
At September 30, 1995 the Company had unused lines of credit of
$4,500,000 which it believes are adequate to finance its working capital
requirements.
During the quarter the Board of Directors approved capital
expenditures of approximately $2,000,000 for warehouse modernization and
computer systems. Discussions are being held with the Company's bank regarding
term loan financing for these projects.
-9-
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- None.
(b) There were no reports on Form 8-K filed by the Company during
the nine month period ended September 30, 1995.
-10-
<PAGE> 11
SIGNATURE
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-Handley, Inc.
---------------------------
(Registrant)
Date: October 27, 1995 /S/ L. Ward Edwards
-------------------- ----------------------------
L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 22,719
<ALLOWANCES> 0
<INVENTORY> 14,429
<CURRENT-ASSETS> 40,316
<PP&E> 15,970
<DEPRECIATION> (8,802)
<TOTAL-ASSETS> 48,280
<CURRENT-LIABILITIES> 26,960
<BONDS> 4,024
<COMMON> 251
0
0
<OTHER-SE> 16,057
<TOTAL-LIABILITY-AND-EQUITY> 48,280
<SALES> 110,021
<TOTAL-REVENUES> 110,021
<CGS> 98,497
<TOTAL-COSTS> 98,497
<OTHER-EXPENSES> 9,927
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 521
<INCOME-PRETAX> 1,076
<INCOME-TAX> 403
<INCOME-CONTINUING> 403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 403
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
