<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 June 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.)
Highway 31 South, 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 2,209,543 shares
- -------------------------------- ---------------------------------
Class Outstanding at July 18, 1995
<PAGE> 2
Moore-Handley, Inc.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
PART I. FINANCIAL INFORMATION - UNAUDITED
Item 1. Balance Sheets - June 30, 1995
and 1994 and December 31, 1994. 3
Statements of Operations -
Three Months and Six Months Ended
June 30, 1995 and 1994. 4
Statements of Cash Flows -
Six Months Ended June 30, 1995
and 1994. 5
Notes to Financial Statements. 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 7-9
Item 4. Submission of Matters to a Vote of
Security Holders 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 10
Signatures 11
</TABLE>
2
<PAGE> 3
Moore-Handley, Inc.
Balance Sheets
June 30, 1995 and 1994 and December 31, 1994
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1995 1994 1994
------ ------ ------
<S> <C> <C> <C>
Current assets: (unaudited) (unaudited)
Cash and cash equivalents $ 387,000 $ 451,000 $ 781,000
Trade receivables, net 21,150,000 19,081,000 20,349,000
Other receivables 1,942,000 1,818,000 1,947,000
Merchandise inventory 15,772,000 14,831,000 18,713,000
Prepaid expenses 284,000 768,000 243,000
Deferred income taxes 714,000 632,000 714,000
----------- ----------- -----------
Total current assets 40,249,000 37,581,000 42,747,000
Prepaid pension cost 606,000 662,000 704,000
Loan to officer 25,000 37,000 31,000
Property and equipment: 15,797,000 15,173,000 15,270,000
Less accumulated depreciation (8,580,000) (7,651,000) (8,054,000)
----------- ----------- -----------
Net property and equipment 7,217,000 7,522,000 7,216,000
Deferred charges, net 47,000 54,000 50,000
----------- ----------- -----------
$48,144,000 $45,856,000 $50,748,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $ 5,500,000 $ 3,500,000 $ 8,500,000
Accounts payable 18,214,000 17,480,000 17,902,000
Accrued payroll 497,000 622,000 407,000
Accrued income tax 22,000 132,000 124,000
Other accrued liabilities 1,526,000 1,907,000 1,542,000
Long-term debt due in one year 876,000 800,000 843,000
----------- ----------- -----------
Total current liabilities 26,635,000 24,441,000 29,318,000
Long-term debt 4,253,000 5,154,000 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 16,017,000 15,042,000 15,492,000
----------- ----------- -----------
Total stockholders' equity 16,268,000 15,293,000 15,743,000
----------- ----------- -----------
$48,144,000 $45,856,000 $50,748,000
=========== =========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
Moore-Handley, Inc.
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $36,676,000 $33,825,000 $72,442,000 $67,809,000
Cost of merchandise sold 30,752,000 27,913,000 60,689,000 56,082,000
Warehouse and delivery
expense 2,019,000 1,991,000 4,001,000 3,911,000
----------- ----------- ----------- -----------
Cost of sales 32,771,000 29,904,000 64,690,000 59,993,000
----------- ----------- ----------- -----------
Gross profit 3,905,000 3,921,000 7,752,000 7,816,000
Selling & administrative
expense 3,400,000 3,104,000 6,545,000 6,134,000
----------- ----------- ----------- -----------
Operating income 505,000 817,000 1,207,000 1,682,000
Interest expense, net 140,000 127,000 366,000 285,000
----------- ----------- ----------- -----------
Income before provision
for income tax 365,000 690,000 841,000 1,397,000
Income tax 138,000 259,000 316,000 524,000
----------- ----------- ----------- -----------
Net income $ 227,000 $ 431,000 $ 525,000 $ 873,000
=========== =========== =========== ===========
Net income per
common share $ 0.10 $ 0.19 $ 0.23 $ 0.39
=========== =========== =========== ===========
Weighted average common
shares outstanding 2,238,000 2,280,000 2,238,000 2,259,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
Moore-Handley, Inc.
Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 525,000 $ 873,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 529,000 508,000
Provision for doubtful accounts 168,000 180,000
Gain on sale of equipment ---- (90,000)
Change in assets and liabilities:
Trade and other receivables (964,000) (1,415,000)
Merchandise inventory 2,941,000 (89,000)
Other assets (39,000) (453,000)
Accounts payable and accrued expenses 386,000 4,709,000
----------- -----------
Total adjustments 3,021,000 3,350,000
----------- -----------
Net cash flows provided by
operating activities 3,546,000 4,223,000
Cash flows from investing activities:
Capital expenditures (527,000) (609,000)
Proceeds from sale of equipment ---- 93,000
----------- -----------
Net cash flows used in
investing activities (527,000) (516,000)
Cash flows from financing activities:
Net payments under bank loans (3,000,000) (3,950,000)
Principal borrowings (payments) under
long-term debt (413,000) 107,000
----------- -----------
Net cash flows used in
financing activities (3,413,000) (3,843,000)
----------- -----------
Net decrease in cash and
cash equivalents (394,000) (136,000)
Cash and cash equivalents
at beginning of period 781,000 587,000
----------- -----------
Cash and cash equivalents
at end of period $ 387,000 $ 451,000
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
MOORE-HANDLEY, INC.
Notes to Financial Statements
(Information pertaining to the six months
ended June 30, 1995 and 1994 is unaudited)
Note 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 regula
tions of the Securities and Exchange Commission (the "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 conjunc
tion with the financial statements and the notes thereto included in the Com
pany's Annual Report on Form 10-K filed with the Commission on March 8, 1995.
The financial information presented herein reflects all adjustments (con
sisting 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 June 30, 1995 increased by approximately
8% compared to the same quarter in the prior year and for the six months
increased by 7%. Factory direct shipments increased 24% for the quarter and
19% for the six months. The Company believes this 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 June 30,
--------------------------------------
1995 1994
--------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Warehouse shipments.............. $25,202 68.7% $24,553 72.6%
Factory direct shipments......... 11,474 31.3 9,272 27.4
------- ----- ------- -----
Net Sales................... $36,676 100.0% $33,825 100.0%
======= ===== ======= =====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------
1995 1994
--------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Warehouse shipments.............. $49,867 68.8% $48,828 72.0%
Factory direct shipments......... 22,575 31.2 18,981 28.0
------- ----- ------- -----
Net Sales................... $72,442 100.0% $67,809 100.0%
======= ===== ======= =====
</TABLE>
In the second quarter of 1994 the Company began a program of hiring
sales service assistants to work with certain of the more senior territory
managers. Because of this, comparisons of sales per territory manager are no
longer meaningful. During the second quarter of 1995 the Comapny had an
average of 82 field sales personnel as compared to 75 in 1994.
Operations
The following table sets forth certain financial data as a percentage of
net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales...............................100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Gross margin............................ 16.2 17.5 16.2 17.3
Warehouse and delivery expense.......... 5.5 5.9 5.5 5.8
----- ----- ----- -----
Gross profit............................ 10.7 11.6 10.7 11.5
Selling & administrative expenses....... 9.3 9.2 9.0 9.0
----- ----- ----- -----
Operating income........................ 1.4 2.4 1.7 2.5
Interest expense, net................... .4 .4 .5 .4
----- ----- ----- -----
Income before provision
for income taxes...................... 1.0% 2.0% 1.2% 2.1%
===== ===== ===== =====
</TABLE>
7
<PAGE> 8
Gross Margin
The gross margin percentage for the second quarter of 1995 was 16.2%, down
from 17.5% in the second 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 factory direct shipments which carry a lower gross margin
percent age. The balance of the decrease was due to more competitive pricing.
The following table sets forth the trend of gross margin dollars, gross
margin percentages and year-over-year changes for 1994 and the first and second
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>
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)
</TABLE>
Warehouse & Delivery Expenses
Warehouse and delivery expenses increased from $1,991,000 in the second
quarter of 1994 to $2,019,000 in the current year. However, they decreased
slightly as a percent of warehouse shipments. The following table shows the
trend of warehouse and delivery expenses in 1994 and the first and second
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 8.4 98 (.2)
1995 - 1st 1,982 8.0 62 .1
2nd 2,019 8.0 28 (.1)
</TABLE>
Selling & Administrative Expense
Selling and administrative expenses for the quarter ended June 30, 1995
increased by $296,000 or 9.5% compared to the corresponding quarter of 1994.
As a percentage of sales these expenses increased slightly from 9.2% in the
second quarter of 1994 to 9.3% in the second quarter of 1995. This increase
was due in part to upgrading the company's computer system and in part to the
increase in sales personnel.
The following table shows the quarterly trend of selling and
administrative expenses in 1994 and the first and second quarters of 1995:
8
<PAGE> 9
<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 2,928 9.2 (186) (1.4)
1995 - 1st 3,145 8.8 115 (.1)
2nd 3,400 9.3 296 .1
</TABLE>
Liquidity and Capital Resources
The company's trade receivables increased by $801,000 from December 31,
1994 to June 30, 1995 as a result of the higher level of sales.
At June 30, 1995 the Company had unused lines of credit of $5,500,000,
which it believes are adequate to finance its working capital requirements.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the Registrant was held on Thursday, April 27, 1995
at 10:00 a.m. At the meeting, each of Messrs. William Riley, Pierce E. Marks,
Jr., L. Ward Edwards, Michael B. Stubbs and Ronald J. Juvonen was re-elected as
a director of the Registrant.
The following table sets forth the distribution of votes cast with regard
to each of the nominees:
<TABLE>
<CAPTION>
Votes Cast Votes
Nominee for Nominee Withheld
- ------- ----------- --------
<S> <C> <C>
William Riley 2,193,067 500
----------- --------
Pierce E. Marks, Jr. 2,193,067 500
----------- --------
L. Ward Edwards 2,193,067 500
----------- --------
Michael B. Stubbs 2,193,067 500
----------- --------
Ronald J. Juvonen 2,193,067 500
----------- --------
</TABLE>
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits --
10.1 Employment Agreement, dated as of June 5, 1995, between the
Company and Emery H. White.
10.2 Letter Agreement, dated June 5, 1995, between the Company
the Company and Emery H. White.
27 Financial Data Schedule (for SEC purposes only)
(b) There were no reports on Form 8-K filed by the Company during the
six month period ended June 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: July 21, 1995 /s/ L. Ward Edwards
-------------------- -------------------------------
L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
11
<PAGE> 12
MOORE-HANDLEY, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3(a) Restated Certificate of Incorporation of Company, filed as Exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1987 and incorporated herein by reference.
(a)-1 Amendment to Restated Certificate of Incorporation dated May 7, 1987, filed as Exhibit 3(a)-1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by
reference.
(b) By-laws of the Company, filed as Exhibit 3(d) to the Company's Registration Statement on Form S-1 (Reg.
No. 33-3032) and incorporated herein by reference.
(b)-1 Article VII of By-laws of the Company, as amended May 7, 1987, filed as Exhibit 3(b)-1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by reference.
4(a) Lease Agreement, dated as of December 1, 1981, as amended, between the Company and the Industrial
Development Board of the Town of Pelham (the "Board"), filed as Exhibit 10(a) to the Company's
Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(b) Guarantee Agreement, dated as of December 1, 1981, between the Company and the First Alabama Bank of
Birmingham, as Trustee ("Trustee"), filed as Exhibit 10(b) to the Company's Registration Statement on Form
S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(c) Mortgage and Trust Indenture, dated as of December 1, 1981, between the Trustee and the Board, filed as
Exhibit 10(c) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated
herein by reference.
(d) Lease Agreement, dated as of December 1, 1982, between the Company and the Board, filed as Exhibit 10(d)
to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by
reference.
(e) Guarantee Agreement, dated as of December 1, 1982, between the Company and the Trustee, filed as Exhibit
10(e) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by
reference.
(f) Mortgage and Trust Indenture, dated as of December 1, 1982, between the Trustee and the Board, filed as
Exhibit 10(f) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated
herein by reference.
(g) Guarantee Agreement, dated as of December 30, 1986, between the Company and the First Alabama Bank of
Birmingham, as Trustee ("Trustee"), filed as Exhibit 10(dd) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987 and incorporated herein by reference.
(h) Mortgage and Trust Indenture, dated as of December 30, 1986, between the Trustee and the Board, filed as
Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the year ended December 31, 1987 and
incorporated herein by reference.
(i) Master Lease Agreement, dated as of September 30, 1993, between the Company and The CIT Financing, related
to the lease of 10 Navistar Tractors for the term of 36 months and incorporated herein by reference.
*10(n)-3 Amended and Restated Moore-Handley, Inc. Salaried Pension Plan, dated February 10, 1992 but effective
January 1, 1989, filed as Exhibit 10(n)-3 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference.
*(n)-4 Amendment No. 6 to The Moore-Handley Incorporated Salaried Pension Plan, dated February 10, 1992, filed as
Exhibit 10(n)-4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference.
(n)-5 Amendment No. 2 to The Moore-Handley Incorporated Salaried Pension Plan, dated December 29, 1994, filed as
Exhibit 10(n)-5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
(o)-3 Amended and Restated Moore-Handley, Inc. Hourly Employees' Retirement Plan dated February 10, 1992 but
effective January 1, 1989, filed as Exhibit 10(o)-3 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 and incorporated herein by reference.
(o)-4 Amendment No. 2 to the Moore-Handley, Inc. Hourly Employees' Retirement Plan, dated December 29, 1994,
filed as Exhibit 10(0)-4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
*(p)-1 Amended and restated The Moore-Handley Salaried Employees' Savings Plan and Trust dated February 4, 1994
but effective January 1, 1989, filed as Exhibit 10(p)-1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(q)-3 Collective Bargaining Agreement between the Company and United Wholesale and Warehouse Employees' Union,
effective December 23, 1992 through December 23, 1995, filed as Exhibit 10(q)-3 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference.
*(r) The Moore-Handley Return-on-Investment Bonus Program, dated February 23, 1983, filed as Exhibit 10(r) to
the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
*(aa) Form of Stock Subscription Agreement, dated as of January 29, 1986, between the Company and certain
managers of the Company, filed as Exhibit 10(aa) to the Company's Registration Statement on Form S-1 (Reg.
No. 33-3032) and incorporated herein by reference.
(bb) Form of Amendatory Agreements, dated as of March 3, 1986 between the Company, the Trustee and the Board,
relating to the Lease Agreements listed as items 10(c) and 10(d), respectively, filed as Exhibit 10(bb) to
the Company's Registration Statement on Form S-1 (Reg. No. 33-3032) and incorporated herein by reference.
(cc) Lease Agreement, dated as of December 30, 1986, between the Company and the Industrial Development Board
of the Town of Pelham (the "Board"), filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987 and incorporated herein by reference.
*(dd) Agreement dated August 15, 1989 between the Company and John L. Sawyer related to the purchase of common
stock, filed as Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by refer ence.
*(ee) Agreement dated August 15, 1989 between the Company and J. Franklin West related to the purchase of common
stock, filed as Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989 and incorporated herein by reference.
*(ff) 1991 Incentive Compensation Plan, filed as Exhibit A to the Company's Proxy Statement dated April 30, 1991
and incorporated herein by reference.
*(gg) The Moore-Handley, Inc. Employees' 401(k) Profit Sharing Prototype Non-Standardized Adoption Agreement
effective July 1, 1993 and incorporated herein by reference.
*10.1 Employment Agreement, dated June 5, 1995, between the Company and Emery H. White.
*10.2 Letter Agreement, dated June 5, 1995, between the Company and Emery H. White.
27 Financial Data Schedule (for SEC purposes only)
</TABLE>
_________________
* Management contract or management compensation plan or arrangement.
13
<PAGE> 1
June 5, 1995
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 5, 1995, by and between
Moore-Handley, Inc., a Delaware corporation (the "Company"), and Emery H. White
("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of Executive and
to enter into an agreement embodying the terms of such employment (the
"Agreement"); and
WHEREAS, Executive desires to accept such employment and enter into
such Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. Employment.
a. Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, the Company hereby employs Executive and
Executive hereby accepts employment by the Company.
b. Term of Employment. Subject to Paragraph 6(a), the Company shall
employ Executive for the period commencing on June 15, 1995 (the "Commencement
Date") and ending on December 31, 1995. Subject to Paragraph 6(a), on the last
day of each calendar month during which this Agreement is in effect, the term
of this Agreement shall automatically be extended without further action by the
Company or the
<PAGE> 2
Executive for one full calendar month beyond the date on which such Agreement
would otherwise have expired (after taking into account all prior extensions
under this Paragraph), provided that in no event shall the term of this
Agreement be extended beyond the end of the month in which Executive reaches
his 65th birthday. The period during which Executive is employed pursuant to
this Agreement shall be referred to as the "Employment Period".
2. Position and Duties.
During the Employment Period, Executive shall serve as President and
Chief Executive Officer of the Company and shall have the duties,
responsibilities and obligations customarily assigned to individuals serving in
that position. Executive shall devote his full time to the services required
of him hereunder, except for vacation time and reasonable periods of absence
due to sickness, personal injury or other disability, and shall use his best
efforts, judgement, skill and energy to perform such services in a manner
consonant with the duties of his position and to improve and advance the
business and interests of the Company and its subsidiaries. Nothing contained
herein shall preclude Executive from (i) serving on the board of directors of
any business corporation with the consent of the Board of Directors of the
Company (the "Board"), (ii) serving on the board of, or working for, any
charitable or community organization or (iii) pursuing his personal financial
and legal affairs, so long as such activities, individually or collectively, do
not interfere with the performance of Executive's duties hereunder. Executive
represents that his employment hereunder and compliance by him with the terms
and conditions of this Agreement will not conflict with or result in the breach
of any agreement to which he is a party or by which he may be bound.
3. Compensation.
2
<PAGE> 3
a. Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of $150,000 through December 31,
1995 and $180,000 thereafter. The annual base salary payable under this
paragraph shall be reduced, however, to the extent Executive elects to defer
such salary under the terms of any deferred compensation or savings plan or
arrangement maintained or established by the Company or any of its
subsidiaries. The Board shall annually review Executive's base salary in light
of the base salaries paid to other executive officers of the Company and the
performance of Executive and the Company may, in its discretion, increase such
base salary by an amount it determines to be appropriate. Any such increase
shall not reduce or limit any other obligation of the Company hereunder.
Executive's annual base salary payable hereunder, as it may be increased from
time to time and without reduction for any amounts deferred as described above,
is referred to herein as "Base Salary". The Company shall pay Executive the
portion of his Base Salary not deferred in equal monthly installments or in
such other installments as the parties may agree.
b. Incentive Compensation. Commencing in 1996, Executive shall be
eligible to participate in the Company's existing and future annual and long
term incentive compensation programs at a level to be determined by the Board.
The Company may amend or terminate any such plan in its discretion.
4. Stock Option Grants. As soon as practicable after the Commencement
Date, the Company shall recommend to the Compensation Committee of the Board
that, pursuant to the Company's 1991 Incentive Compensation Plan, Executive be
awarded an option (the "Option") to purchase 100,000 shares of the Company's
Common Stock at an exercise price per share equal to the fair market value of a
share of such stock (determined in accordance with the terms of the Plan) on
the
3
<PAGE> 4
date of grant and to the Board that the Board authorize and submit to the
Company's stockholders for their approval not later than the next annual
meeting thereof an increase in the number of shares authorized for issuance
under the Plan to facilitate such award. The Option shall become exercisable
in five equal annual installments commencing on the first anniversary of the
date of grant, provided that in the event the Employment Period is terminated
pursuant to Paragraph 6(a) by reason of a Termination Without Cause or a
Termination for Good Reason, the Option shall become immediately exercisable in
full for a period of 30 days following such termination, but shall expire to
the extent not exercised by the end of such 30-day period.
5. Benefits, Perquisites and Expenses.
a. Benefits. During the Employment Period, Executive shall be
eligible to participate in (i) each welfare benefit plan sponsored or
maintained by the Company, including, without limitation, each group life,
hospitalization, medical, dental, health, accident or disability insurance or
similar plan or program of the Company, and (ii) each pension, profit sharing,
retirement, deferred compensation or savings plan sponsored or maintained by
the Company, in each case, whether now existing or established hereafter, to
the extent that Executive is eligible to participate in any such plan under the
generally applicable provisions thereof. The Company may amend or terminate
any such plan in its discretion.
b. Perquisites. During the Employment Period, Executive shall be
entitled to receive such perquisites as are generally provided to other senior
officers of the Company in accordance with the then current policies and
practices of the Company.
4
<PAGE> 5
c. Business Expenses. During the Employment Period, the Company
shall pay or reimburse Executive for all reasonable expenses incurred or paid
by Executive in the performance of Executive's duties hereunder, upon
presentation of expense statements or vouchers and such other information as
the Company may require and in accordance with the generally applicable
policies and procedures of the Company.
6. Termination of Employment.
a. Early Termination of the Employment Period. Notwithstanding
Paragraph 1(b), the Employment Period shall end upon the earliest to occur of
(i) a termination of Executive's employment on account of Executive's death,
(ii) a Termination due to Disability, (iii) a Termination for Cause, (iv) a
Termination Without Cause, (v) a Termination for Good Reason or (iv) a
termination of Executive's employment by Executive other than a Termination for
Good Reason.
b. Benefits Payable Upon Termination. Following the end of the
Employment Period pursuant to Paragraph 6(a), Executive (or, in the event of
his death, his surviving spouse, if any, or his estate) shall be paid the type
or types of compensation determined to be payable in accordance with the
following table at the times established pursuant to Paragraph 6(c):
5
<PAGE> 6
<TABLE>
<CAPTION>
Earned Vested Accrued Severance
Salary Benefits Bonus Benefit
------ -------- ------- ---------
<S> <C> <C> <C> <C>
Termination due Not
to death Payable Payable Payable Payable
Termination due Not
to Disability Payable Payable Payable Payable
Termination for Not Not
Cause Payable Payable Payable Payable
Termination
Without Cause Payable Payable Payable Payable
Termination for
Good Reason Payable Payable Payable Payable
Termination by
Executive other
than for Good Not Not
Reason Payable Payable Payable Payable
</TABLE>
c. Timing of Payments. Earned Salary and Accrued Bonus shall be
paid in a single lump sum as soon as practicable, but in no event more than 30
days, following the end of the Employment Period. Vested Benefits shall be
payable in accordance with the terms of the plan, policy, practice, program,
contract or agreement under which such benefits have accrued except as
otherwise expressly modified by this Agreement. Severance Benefits shall be
paid on a monthly basis during the period commencing on the date of Executive's
termination of employment and ending on the last day of the calendar month
which is coincident with or immediately following the date which is twelve
months after such termination, each such payment to be made on the last day of
each month ending during such period, except that such payments shall
6
<PAGE> 7
cease if (x) Executive obtains other employment which reduces Executive's
Severance Benefit to zero; or (y) Executive breaches any of the provisions of
Paragraph 7.
d. Definitions. For purposes of Paragraphs 6 and 7, capitalized
terms have the following meanings:
"Accrued Bonus" means a pro-rated amount equal to the product of (i)
the incentive compensation Executive would have been entitled to receive under
Paragraph 3(b) for the calendar year in which his employment terminates
pursuant to Paragraph 6(a) had he remained employed for the entire year,
multiplied by (ii) a fraction, the numerator of which is equal to the number of
days in the calendar year of Executive's termination of employment which have
elapsed as of the date of such termination and the denominator of which is 365.
"Earned Salary" means any Base Salary earned, but unpaid, for services
rendered to the Company on or prior to the date on which the Employment Period
ends (other than Base Salary deferred pursuant to Executive's election, as
provided in Paragraph 3(a) or (b) hereof).
"Severance Benefit" means an amount equal to one-twelfth of the
greater of (x) the annual Base Salary payable to Executive immediately prior to
the end of the Employment Period and (y) the annual Base Salary payable to
Executive commencing January 1, 1996; provided, however, that the first
Severance Benefit payment made pursuant to Paragraph 6(c) hereof shall be
reduced by the amount of any Earned Salary payable, and Base Salary earned but
deferred, for the month of Executive's termination of employment and the last
such Severance Benefit shall be a pro-rated amount equal to the product of (i)
the Severance Benefit amount multiplied by (ii) a fraction, the numerator of
which is equal to the number of
7
<PAGE> 8
days in the calendar month which includes the last day of the Employment Period
(determined without regard to the early termination provisions of Paragraph
6(a)) which have elapsed as of such last day and the denominator of which is
31; and, provided further, that if Executive obtains other employment
(including self-employment) during any portion of the period during which
Executive is entitled to receive Severance Benefits hereunder Executive shall
immediately notify the Company in writing of such employment and the terms
thereof and (regardless of whether or when such notice is given) the amount
payable as a Severance Benefit shall be reduced, on a dollar for dollar basis,
but not below zero, by any salary or other fixed or guaranteed compensation
payable to Executive in connection with such employment (whether payable
currently or deferred). In the event that any fixed or guaranteed amount is
payable other than in periodic installments payable at least monthly, such
amount shall be converted into a monthly installment by dividing such amount by
the number of months of service required to be performed by Executive to
receive such compensation or, if no service is required, the number of
remaining months with respect to which Executive is entitled to receive
Severance Benefits. Notwithstanding the foregoing, the Severance Benefit shall
be zero for all periods (or portion thereof) prior to October 15, 1995.
"Termination due to Disability" means a termination of Executive's
employment by the Company because Executive has been incapable of substantially
fulfilling the positions, duties, responsibilities and obligations set forth in
this Agreement because of physical, mental or emotional incapacity resulting
from injury, sickness or disease for a period of (i) at least four consecutive
months or (ii) more than six months in any twelve month period. Any question
as to the existence, extent or potentiality of Executive's disability upon
which Execu-
8
<PAGE> 9
tive and the Company cannot agree shall be determined by a qualified,
independent physician selected by the Company. The determination of any such
physician shall be final and conclusive for all purposes of this Agreement.
"Termination for Cause" means a termination of Executive's employment
by the Company due to (i) Executive's conviction of or the entering by
Executive of a plea of nolo contendere with respect to, a felony, (ii)
Executive's gross negligence, dishonesty, willful malfeasance or gross
misconduct in connection with his employment hereunder, or (iii) a substantial
and continual refusal by Executive in breach of this Agreement to perform the
duties, responsibilities or obligations assigned to Executive pursuant to the
terms hereof.
"Termination Without Cause" means any termination of Executive's
employment by the Company other than (i) a Termination due to Disability or
(ii) a Termination for Cause.
"Termination for Good Reason" means a termination of Executive's
employment by Executive within 90 days following (i) a reduction in Executive's
annual Base Salary or incentive compensation opportunity (other than a
reduction which is proportionate to the reductions applicable to other senior
executives pursuant to a cost-saving plan that includes substantially all
senior executives), (ii) a material reduction in Executive's positions, duties
and responsibilities from those described in Section 2 hereof or (iii) a
material breach of this Agreement by the Company. Notwithstanding the
foregoing, a termination shall not be treated as a Termination for Good Reason
(i) if Executive shall have consented in writing to the occurrence of the event
giving rise to the claim of Termination for Good Reason or (ii) unless
Executive shall have delivered a written notice to
9
<PAGE> 10
the Board within 30 days of his having actual knowledge of the occurrence of
one of such events stating that he intends to terminate his employment for Good
Reason and specifying the factual basis for such termination, and such event,
if capable of being cured, shall not have been cured within 30 days of the
receipt of such notice.
"Vested Benefits" means amounts which are vested or which Executive is
otherwise entitled to receive under the terms of or in accordance with any
plan, policy, practice or program of, or any contract or agreement with, the
Company or any of its subsidiaries, at or subsequent to the date of his
termination without regard to the performance by Executive of further services
or the resolution of a contingency.
e. Full Discharge of Company Obligations. The amounts payable to
Executive pursuant to this Paragraph 6 following termination of his employment
(including amounts payable with respect to Vested Benefits) shall be in full
and complete satisfaction of Executive's rights under this Agreement and any
other claims he may have in respect of his employment by the Company or any of
its subsidiaries. Such amounts shall constitute liquidated damages with
respect to any and all such rights and claims and, upon Executive's receipt of
such amounts, the Company shall be released and discharged from any and all
liability to Executive in connection with this Agreement or otherwise in
connection with Executive's employment with the Company and its subsidiaries.
7. Noncompetition and Confidentiality.
a. Noncompetition. During the Employment Period and during the
applicable period specified below (the "Restriction Period") following any
termination of Executive's employment, Executive shall not become
10
<PAGE> 11
associated with any entity, whether as a principal, partner, employee,
consultant or shareholder (other than as a holder of not in excess of 1% of the
outstanding voting shares of any publicly traded company), that is actively
engaged in any geographic area in which the Company then operates in any
business which is in competition with the business of the Company, which is the
wholesale distribution of hardware and home center products and services. The
Restriction Period shall be 18 months, except that it shall be six months in
the case of any association with a national cooperative, such as True-Value,
Ace, Service-Star or HSI.
b. Confidentiality. Without the prior written consent of the
Company, except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency, Executive
shall not disclose or use (except in connection with the provision of services
to the Company hereunder) any trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization information (including data and
other information relating to members of the Board of Directors and
management), operating policies or manuals, business plans, financial records,
packaging design or other financial, commercial, business or technical
information relating to the Company or any of its subsidiaries or information
designated as confidential or proprietary that the Company or any of its
subsidiaries may receive belonging to suppliers, customers or others who do
business with the Company or any of its subsidiaries (collectively,
"Confidential Information") to any third person unless such Confidential
Information has been previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's breach of this Section
7(b)).
11
<PAGE> 12
c. Company Property. Promptly following Executive's termination of
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control.
d. Non-Solicitation of Employees. During the Employment Period and
the Restriction Period, Executive shall not directly or indirectly induce any
employee of the Company or any of its subsidiaries to terminate employment with
such entity, and shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by the Company or a subsidiary thereof unless
such person shall have ceased to be employed by such entity for a period of at
least 6 months.
e. Injunctive Relief with Respect to Covenants. Executive
acknowledges and agrees that the covenants and obligations of Executive with
respect to noncompetition, nonsolicitation, confidentiality and Company
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at
law. Therefore, Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any violation
of the covenants and obligations contained in this Paragraph 7. These
injunctive remedies are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity. In connection with the
foregoing provisions of this Paragraph 8, Executive represents that his
economic means and circumstances are such that such provisions will not
12
<PAGE> 13
prevent him from providing for himself and his family on a basis satisfactory
to him.
8. Miscellaneous.
a. Survival. Paragraphs 6 (relating to early termination), 7
(relating to noncompetition, nonsolicitation and confidentiality) and
8(relating to miscellaneous matters, insofar as applicable to paragraphs 6 and
7) shall survive the termination hereof, whether such termination shall be by
expiration of the Employment Period or an early termination pursuant to
Paragraph 6 hereof.
b. Binding Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the Company and any person or entity that succeeds to
the interest of the Company (regardless of whether such succession does or does
not occur by operation of law) by reason of the sale of all or a portion of the
Company's stock, a merger, consolidation or reorganization involving the
Company or, unless the Company otherwise elects in writing, a sale of the
assets of the business of the Company (or portion thereof) in which Executive
performs a majority of his services. This Agreement shall also enure to the
benefit of Executive's heirs, executors, administrators and legal
representatives.
c. Assignment. Except as provided under Paragraph 8(b), neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
d. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein. No
other
13
<PAGE> 14
agreement relating to the terms of Executive's employment by the Company, oral
or otherwise, shall be binding between the parties unless it is in writing and
signed by the party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is
entering into this Agreement of his own free will and accord, and with no
duress, that he has read this Agreement and that he understands it and its
legal consequences.
e. Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event any of
Paragraph 7(a), (b) or (c) is not enforceable in accordance with its terms,
Executive and the Company agree that such Paragraph shall be reformed to make
such Paragraph enforceable in a manner which provides the Company the maximum
rights permitted at law.
f. Waiver. Waiver by any party hereto of any breach or default by
the other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall
be implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
g. Notices. Any notice required or desired to be delivered under
this Agreement shall be in writing and shall be delivered personally, by
courier service, by registered mail, return receipt requested, or by telecopy
14
<PAGE> 15
and shall be effective upon actual receipt by the party to which such notice
shall be directed, and shall be addressed as follows (or to such other address
as the party entitled to notice shall hereafter designate in accordance with
the terms hereof):
If to the Company:
Moore-Handley, Inc.
745 Fifth Avenue
Suite 1803
New York, New York 10151
Attention: William Riley
If to Executive:
Emery H. White
Moore-Handley, Inc.
P.O. Box 2607
Birmingham, Alabama 35202
or if by hand or courier
Moore-Handley, Inc.
Highway 31 South
Pelham, Alabama 35124
h. Amendments. This Agreement may not be altered, modified or
amended except by a written instrument signed by each of the parties hereto.
i. Headings. Headings to paragraphs in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
15
<PAGE> 16
j. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
k. Withholding. Any payments provided for herein shall be reduced by
any amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
l. Governing Law. This Agreement shall be governed by the laws of
the State of Alabama, without reference to principles of conflicts or choice of
law under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Executive has hereunto set his hand
as of the day and year first above written.
MOORE-HANDLEY, INC.
WITNESS:
/s/ Sandy D'Andrea By: /s/ William Riley
- ------------------- -------------------------
William Riley,
Chairman of the Board
WITNESS:
/s/ Steven T. Waldschmidt /s/ Emery H. White
- ------------------------- -----------------------------
Steven T. Waldschmidt Emery H. White
16
<PAGE> 1
June 5, 1995
Mr. Emery H. White
23834 Village Blacksmith Road
San Antonio, Texas 78255
Dear Mr. White:
In connection with your entering into an employment agreement
with Moore-Handley, Inc., a Delaware corporation (the "Company"), this will
confirm that the Company will reimburse you for all reasonable moving expenses
incurred or paid by you in connection with relocating from San Antonio, Texas
to Birmingham, Alabama, upon presentation of expense statements or vouchers and
such other information as the Company may require. In addition, the Company
will reimburse you for any loss (defined as the excess of your cost basis over
the sales proceeds, net of closing costs) you may sustain on resale of your
principal residence in San Antonio, Texas up to an aggregate amount not to
exceed $45,000, upon presentation of such evidence of your cost basis in such
residence and the sales price obtained therefor, net of closing costs as the
Company may require.
Very truly yours,
MOORE-HANDLEY, INC.
By: /s/ William Riley
-----------------------------
Name: William Riley
Title: Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 387
<SECURITIES> 0
<RECEIVABLES> 21,150
<ALLOWANCES> 0
<INVENTORY> 15,772
<CURRENT-ASSETS> 40,249
<PP&E> 15,797
<DEPRECIATION> (8,580)
<TOTAL-ASSETS> 48,144
<CURRENT-LIABILITIES> 26,635
<BONDS> 4,253
<COMMON> 251
0
0
<OTHER-SE> 16,017
<TOTAL-LIABILITY-AND-EQUITY> 48,144
<SALES> 72,442
<TOTAL-REVENUES> 72,442
<CGS> 64,690
<TOTAL-COSTS> 64,690
<OTHER-EXPENSES> 6,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 366
<INCOME-PRETAX> 841
<INCOME-TAX> 316
<INCOME-CONTINUING> 525
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 525
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
