<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, 1996
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)
(205) 663-8011
--------------------
(Registrant's telephone number, including area code)
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 10, 1996
<PAGE> 2
MOORE-HANDLEY, INC.
INDEX
<TABLE>
<CAPTION>
Item No. Page No.
- -------- --------
<S> <C>
PART I. FINANCIAL INFORMATION
1. Financial Statements - Unaudited
Balance Sheets -
September 30, 1996 and 1995
and December 31, 1995 ...................................... 3
Statements of Operations -
Three Months and Nine Months Ended
September 30, 1996 and 1995 ................................ 4
Statements of Cash Flows -
Nine Months Ended September 30, 1996
and 1995 ................................................... 5
Note to Financial Statements ................................... 6
2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations .............................................. 7-10
PART II. OTHER INFORMATION
6. Exhibits and Reports on Form 8-K ............................... 11
Signature ............................................................. 11
</TABLE>
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<PAGE> 3
MOORE-HANDLEY, INC.
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995 AND DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
----------------------------------- ------------
1996 1995 1995
------------ -------------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents ........................... $ 331,000 $ 126,000 $ 197,000
Trade receivables, net ............................... 23,469,000 22,719,000 21,267,000
Other receivables ................................... 2,383,000 2,105,000 1,798,000
Merchandise inventory ............................... 16,820,000 14,429,000 15,331,000
Prepaid expenses ..................................... 62,000 223,000 215,000
Refundable income tax ............................... 435,000 --- 319,000
Deferred income taxes ............................... 470,000 714,000 470,000
----------- ----------- -----------
Total current assets ........................... 43,970,000 40,316,000 39,597,000
Prepaid pension cost ................................... 727,000 729,000 735,000
Loan to officer ......................................... --- 22,000 19,000
Property and equipment ................................. 18,765,000 15,970,000 16,500,000
Less accumulated depreciation ....................... (9,986,000) (8,802,000) (9,079,000)
----------- ----------- -----------
Net property and equipment ..................... 8,779,000 7,168,000 7,421,000
Deferred charges, net ................................... 38,000 45,000 43,000
----------- ----------- -----------
$53,514,000 $48,280,000 $47,815,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans ........................................... $ 8,000,000 $ 4,500,000 $ 7,750,000
Accounts payable ..................................... 20,386,000 19,389,000 15,606,000
Accrued payroll ..................................... 543,000 553,000 417,000
Other accrued liabilities ........................... 1,901,000 1,626,000 1,575,000
Long-term debt due in one year ....................... 831,000 892,000 968,000
----------- ----------- -----------
Total current liabilities ....................... 31,661,000 26,960,000 26,316,000
Long-term debt ......................................... 5,043,000 4,024,000 3,996,000
Deferred income taxes ................................... 1,059,000 988,000 1,059,000
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 ........................... 15,500,000 16,057,000 16,193,000
----------- ----------- -----------
Total stockholders' equity ..................... 15,751,000 16,308,000 16,444,000
----------- ----------- -----------
$53,514,000 $48,280,000 $47,815,000
=========== =========== ===========
</TABLE>
See accompanying notes.
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<PAGE> 4
MOORE-HANDLEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales ............................. $39,280,000 $37,579,000 $113,803,000 $110,021,000
Cost of merchandise sold .............. 33,325,000 31,772,000 96,120,000 92,461,000
Warehouse and delivery expense ........ 2,703,000 2,035,000 7,501,000 6,036,000
----------- ----------- ------------ ------------
Cost of sales ......................... 36,028,000 33,807,000 103,621,000 98,497,000
----------- ----------- ------------ ------------
Gross profit .......................... 3,252,000 3,772,000 10,182,000 11,524,000
Selling and administrative expense .... 3,593,000 3,382,000 10,664,000 9,927,000
----------- ----------- ------------ ------------
Operating income (loss) ............... (341,000) 390,000 (482,000) 1,597,000
Interest expense, net ................. 246,000 155,000 621,000 521,000
----------- ----------- ------------ ------------
Income (loss) before provision
for income tax (benefit) ........... (587,000) 235,000 (1,103,000) 1,076,000
Income tax (benefit) .................. (215,000) 87,000 (410,000) 403,000
----------- ----------- ------------ ------------
Net income (loss) ..................... $ (372,000) $ 148,000 $ (693,000) $ 673,000
=========== =========== ============ ============
Net income (loss) per
common share ....................... $ (.17) $ .07 $ (.32) $ .30
=========== =========== ============ ============
Weighted average common
shares outstanding ................. 2,165,000 2,192,000 2,165,000 2,221,000
=========== =========== ============ ============
</TABLE>
See accompanying notes.
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<PAGE> 5
MOORE-HANDLEY, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................................... $ (693,000) $ 673,000
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ............................................. 907,000 805,000
Provision for doubtful accounts ........................................... 180,000 168,000
Gain on sale of equipment ................................................. --- (17,000)
Change in assets and liabilities:
Trade and other receivables ............................................. (2,967,000) (2,696,000)
Merchandise inventory ................................................... (1,489,000) 4,284,000
Accounts payable and accrued expenses ................................... 5,232,000 1,717,000
Other assets ............................................................. 69,000 (120,000)
---------- ----------
Total adjustments ....................................................... 1,932,000 4,141,000
---------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ............................................... 1,239,000 4,814,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................................... (2,265,000) (752,000)
Proceeds from sale of equipment ................................................. --- 17,000
---------- ----------
NET CASH USED IN
INVESTING ACTIVITIES ....................................................... (2,265,000) (735,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings of bank loans ......................................... 250,000 (4,000,000)
Principal (payments) borrowings
of long-term debt ............................................................. 910,000 (626,000)
Purchase of treasury stock ..................................................... --- (108,000)
---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ....................................................... 1,160,000 (4,734,000)
---------- ----------
Net increase (decrease) in cash and
cash equivalents ............................................................... 134,000 (655,000)
Cash and cash equivalents
at beginning of period ......................................................... 197,000 781,000
---------- ----------
Cash and cash equivalents
at end of period ............................................................... $ 331,000 $ 126,000
========== ==========
</TABLE>
See accompanying notes.
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<PAGE> 6
MOORE-HANDLEY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995 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 29, 1996.
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.
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<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Operations during the second and third quarters were disrupted due to
major changes and improvements being made to the warehouse. We estimate that
additional expenses and a lower than normal service level resulting from the
disruption reduced net income for the quarter and nine months by about $500,000
and $950,000, respectively.
NET SALES
Warehouse shipments for the quarter and year to date were up about 4%
compared to the same quarter last year. However, the Company estimates that
warehouse shipments would have been about $1,100,000 and $2,600,000 higher for
the quarter and nine months, respectively, if a normal service level had been
maintained.
The following table sets forth the major elements of net sales:
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------------------
1996 1995
----------------------- ------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Warehouse shipments .................................. $ 26,126 66.5% $ 25,008 66.5%
Factory direct shipments ............................. 13,154 33.5 12,571 33.5
-------- ----- -------- -----
Net Sales ........................................ $ 39,280 100.0% $ 37,579 100.0%
======== ===== ======== =====
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------------
1996 1995
----------------------- ------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Warehouse shipments .................................. $ 77,708 68.3% $ 74,875 68.1%
Factory direct shipments ............................. 36,095 31.7 35,146 31.9
-------- ----- -------- -----
Net Sales ........................................ $113,803 100.0% $110,021 100.0%
======== ===== ======== =====
</TABLE>
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<PAGE> 8
OPERATIONS
The following table sets forth certain financial data as a percentage of
net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------
1996 1995 1996 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales ................................................... 100.0 % 100.0 % 100.0 % 100.0 %
===== ===== ===== =====
Gross margin ............................................... 15.2 15.4 15.5 16.0
Warehouse and delivery expense ............................. 6.9 5.4 6.6 5.5
----- ----- ----- -----
Gross profit ............................................... 8.3 10.0 8.9 10.5
Selling and administrative expenses ......................... 9.1 9.0 9.4 9.0
----- ----- ----- -----
Operating income (loss) ..................................... (.9) 1.0 (.4) 1.5
Interest expense, net ....................................... .6 .4 .5 .5
----- ----- ----- -----
Income (loss) before provision
for income tax (benefit) ................................. (1.5)% .6 (1.0)% 1.0 %
===== ===== ===== =====
</TABLE>
GROSS MARGIN
The gross margin percentage for the quarter ended September 30, 1996
decreased by .2% compared to the same quarter last year and for the nine months
decreased by .5% compared to the prior year.
The following table shows the gross margin trend in 1995 and the first
three quarters of 1996:
<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>
1995 - 1st $5,829 16.3 $ 14 (.8)
2nd 5,924 16.2 12 (1.3)
3rd 5,807 15.5 (129) (.7)
4th 5,388 16.8 (158) (.6)
1996 - 1st 5,913 15.3 $ 84 (1.0)
2nd 5,815 16.2 (109) --
3rd 5,955 15.2 148 (.3)
</TABLE>
-8-
<PAGE> 9
WAREHOUSE AND DELIVERY EXPENSES
As a percentage of warehouse shipments, warehouse and delivery expenses
for the quarter ended September 30, 1996 increased to 10.3% compared to 8.1%
for the same quarter last year. This increase and the similar increase that
occurred in the second quarter were due to increased costs associated with the
warehouse modernization project. This project was completed, for the most
part, in the middle of the third quarter. We anticipate that productivity will
begin to improve in the fourth quarter.
The following table shows the trend in warehouse and delivery expenses
in 1995 and the first three quarters of 1996:
<TABLE>
<CAPTION>
Increase (Decrease)
vs. Same Quarter
Warehouse and Delivery Expenses in Previous Year
- ------------------------------------------------------ ----------------------------------
Percentage
Amount of Warehouse Amount Percentage
Quarter (in thousands) Sales (in thousands) Points
- ---------- -------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
1995 - 1st $1,982 8.0 $ 62 .1
2nd 2,019 8.0 28 (.1)
3rd 2,035 8.1 41 .2
4th 1,831 7.7 (182) (.7)
1996 - 1st 2,203 8.5 $ 221 .5
2nd 2,595 10.1 576 2.1
3rd 2,703 10.3 668 2.2
</TABLE>
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for the quarter ended September 30,
1996 were up $211,000 or 6.2% compared to the same quarter last year. However,
as a percent of sales these expenses increased by only .1% in same quarter of
1995. A large part of the increase was due to one time expense reductions
which occurred in the third quarter of 1995. For the nine months these
expenses were up $737,000 compared to the prior year. Almost half of the
increase was due to the accrual in the second quarter of severance pay to two
terminated employees.
The following table shows the trend in selling and administrative
expenses in 1995 and the first three quarters of 1996.
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<PAGE> 10
<TABLE>
<CAPTION>
Increase (Decrease)
vs. Same Quarter
Selling and Administrative Expenses in Previous Year
- ----------------------------------------------------- ----------------------------------
Amount Percentage Amount Percentage
Quarter (in thousands) of Sales (in thousands) Points
- ---------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
1995 - 1st $3,145 8.8 $ 115 (.1)
2nd 3,400 9.3 296 .1
3rd 3,382 9.0 84 --
4th 3,167 9.9 239 .7
1996 - 1st $3,339 8.6 $ 194 (.2)
2nd 3,732 10.4 332 1.1
3rd 3,593 9.1 211 .1
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures of $1,670,000 for warehouse modernization were made
during the nine months ended September 30, 1996 which were financed under a
$2,000,000 five year term loan.
Trade receivables at September 30, 1996 were up $2,202,000 from December
1995. The increase was due to the higher level of sales in September 1996
(which include orders taken at a Dealers' Mart in August) compared to December
1995. 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.
At September 30, 1996 the Company had unused working capital lines of
credit of $3,000,000, which it believes are adequate to finance its working
capital requirements.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this report (other than the
financial statements and other statements of historical fact) are
forward-looking statements. There can be no assurance that future developments
will be in accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by management.
Among the factors that could cause actual results to differ materially from
estimates reflected in such forward-looking statements are the following:
- competitive pressures on sales and pricing, including those from
other wholesale distributors and those from retailers in competition
with the Company's customers;
- the Company's ability to achieve projected cost savings from its
warehouse modernization program and ongoing cost reduction efforts;
- changes in cost of goods and the effect of differential terms and
conditions available to larger competitors of the Company;
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<PAGE> 11
- uncertainties associated with any acquisition the Company may seek
to implement; and
- changes in general economic conditions.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- 27 Financial Data Schedule (for SEC use only).
(b) There were no reports on Form 8-K filed by the Company during
the nine month period ended September 30, 1996.
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 there unto duly authorized.
MOORE-HANDLEY, INC.
---------------------------
(Registrant)
Date: November 5, 1996
/S/ L. Ward Edwards
---------------------------
L. Ward Edwards
Vice President, Treasurer
and Secretary
(Principal Accounting and
Financial Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MOORE-HANDLEY, INC. FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 331
<SECURITIES> 0
<RECEIVABLES> 23,469
<ALLOWANCES> 0
<INVENTORY> 16,820
<CURRENT-ASSETS> 43,970
<PP&E> 18,765
<DEPRECIATION> (9,986)
<TOTAL-ASSETS> 53,514
<CURRENT-LIABILITIES> 31,661
<BONDS> 5,043
0
0
<COMMON> 251
<OTHER-SE> 15,500
<TOTAL-LIABILITY-AND-EQUITY> 53,514
<SALES> 113,803
<TOTAL-REVENUES> 113,803
<CGS> 96,120
<TOTAL-COSTS> 96,120
<OTHER-EXPENSES> 10,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 621
<INCOME-PRETAX> (1,103)
<INCOME-TAX> (410)
<INCOME-CONTINUING> (693)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (693)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
