-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AcXgxihZmhy+EDdRwCVAWsgKQKMiaCR5tCRcNzjaKqG4wl3B/4FSscb80Oel6F90 XFP15cRE+rkbaYvdNbfPJg== 0000950115-98-001389.txt : 19980814 0000950115-98-001389.hdr.sgml : 19980814 ACCESSION NUMBER: 0000950115-98-001389 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOORE PRODUCTS CO CENTRAL INDEX KEY: 0000067975 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 231427830 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00545 FILM NUMBER: 98685510 BUSINESS ADDRESS: STREET 1: SUMNEYTOWN PIKE CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2156467400 MAIL ADDRESS: STREET 1: SUMNEYTOWN PIKE CITY: SPRING HOUSE STATE: PA ZIP: 19477 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 ------------- 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 0-545 ----- Moore Products Co. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Pennsylvania 23-1427830 - -------------------------------------------------------------- ---------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Spring House, PA 19477 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (215) 646-7400 -------------- 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 such filing requirements for the past 90 days. Yes [X]. No [ ]. As of July 31, 1998, the number of shares of Registrant's Common Stock outstanding was 2,616,071. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. MOORE PRODUCTS CO. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended June 30 -------------------------- 1998 1997 ---- ---- Net sales $81,998,000 $75,715,000 Cost of sales 49,566,000 44,273,000 ----------- ----------- Gross profit 32,432,000 31,442,000 Selling, research and development, administrative and general expenses 28,195,000 28,351,000 ----------- ----------- Operating income 4,237,000 3,091,000 Interest expense 20,000 167,000 Other (income) expense (204,000) (63,000) ----------- ------------ Income before income taxes 4,421,000 2,987,000 Income tax provision 1,862,000 884,000 ----------- ----------- Net income $ 2,559,000 $ 2,103,000 =========== =========== Earnings per common share: Basic $.98 $.81 ==== ==== Diluted $.88 $.76 ==== ==== See Notes to Condensed Consolidated Financial Statements. 2 MOORE PRODUCTS CO. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30 -------------------------- 1998 1997 ---- ---- Net sales $43,642,000 $37,897,000 Cost of sales 26,669,000 21,923,000 ----------- ----------- Gross profit 16,973,000 15,974,000 Selling, research and development, administrative and general expenses 14,550,000 14,438,000 ----------- ----------- Operating income 2,423,000 1,536,000 Interest expense 20,000 83,000 Other (income) expense (116,000) (92,000) ----------- ------------ Income before income taxes 2,519,000 1,545,000 Income tax provision 1,163,000 497,000 ----------- ----------- Net income $ 1,356,000 $ 1,048,000 =========== =========== Earnings per common share: Basic $.52 $.40 ==== ==== Diluted $.47 $.38 ==== ==== See Notes to Condensed Consolidated Financial Statements. 3 MOORE PRODUCTS CO. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 1998 1997 ----------- ----------- (Unaudited) (Note A) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,364,000 $ 3,816,000 Trade accounts receivable, less allowances of $1,712,000 in 1998 and $1,771,000 in 1997 39,503,000 40,768,000 Inventories 18,951,000 18,317,000 Prepaid expenses and deferred income taxes 4,772,000 4,209,000 ------------ ------------ TOTAL CURRENT ASSETS 66,590,000 67,110,000 PROPERTY, PLANT AND EQUIPMENT 62,444,000 59,526,000 Less: Accumulated depreciation (46,036,000) (44,257,000) ------------ ------------ 16,408,000 15,269,000 OTHER ASSETS Prepaid pension costs 13,379,000 11,613,000 ------------ ------------ $ 96,377,000 $ 93,992,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 8,765,000 $ 8,861,000 Accrued compensation 3,956,000 4,890,000 Advances from customers 3,923,000 2,977,000 Accrued income taxes 1,973,000 1,893,000 Other accrued liabilities 7,906,000 7,254,000 ------------ ------------ TOTAL CURRENT LIABILITIES 26,523,000 25,875,000 OTHER LIABILITIES 7,556,000 7,628,000 STOCKHOLDERS' EQUITY Preferred Stock, 5% cumulative, voting and convertible, par value $1 per share: Authorized - 325,000 shares Issued and outstanding - 175,950 shares 176,000 176,000 Common Stock, par value $1 per share: Authorized - 7,500,000 shares Issued and outstanding - 2,614,071 shares in 1998 and 2,592,628 shares in 1997 2,614,000 2,593,000 Capital in excess of par value 11,296,000 10,980,000 Retained earnings 50,141,000 48,627,000 Foreign currency translation adjustments (1,929,000) (1,887,000) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 62,298,000 60,489,000 ------------ ------------ $ 96,377,000 $ 93,992,000 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 4 MOORE PRODUCTS CO. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 ----------------------------- 1998 1997 ---- ---- OPERATING ACTIVITIES: Net income $ 2,559,000 $ 2,103,000 Noncash (income) expenses: Depreciation 1,866,000 1,749,000 Deferred income taxes (321,000) (133,000) Pension and other postretirement benefits (1,836,000) (964,000) Changes in operating assets and liabilities: Trade accounts receivable 1,265,000 (1,565,000) Inventories (634,000) (132,000) Accounts payable (96,000) 2,514,000 Other accrued liabilities 652,000 245,000 Accrued compensation (934,000) 809,000 Advances from customers 946,000 1,416,000 Accrued income taxes 80,000 97,000 Prepaid expenses (244,000) 48,000 ----------- ----------- Net cash provided by (used in) operating activities 3,303,000 6,187,000 INVESTING ACTIVITY: Net purchase of property, plant and equipment (3,026,000) (1,197,000) FINANCING ACTIVITIES: Decrease in notes payable to bank --- (4,230,000) Proceeds from exercise of stock options 337,000 --- Dividends paid (1,044,000) --- ----------- ----------- Net cash (used in) provided by financing activities (707,000) (4,230,000) Effect of exchange rate changes (22,000) (90,000) ------------ ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (452,000) 670,000 Cash and cash equivalents at beginning of year 3,816,000 4,066,000 ----------- ----------- CASH AND CASH EQUIVALENTS END OF PERIOD $ 3,364,000 $ 4,736,000 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MOORE PRODUCTS CO. June 30, 1998 Note A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in compliance with the Instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. The balance sheet at December 31, 1997 has been derived from the audited financial statements at that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Certain reclassifications have been made in prior periods' financial statements in order to conform to the current-period basis of presentation. Note B - Inventories The components of inventory consist of the following: June 30 December 31 1998 1997 ----------- ----------- Completed instruments $ 3,300,000 $ 3,590,000 Finished parts 9,834,000 9,078,000 Work in process 5,385,000 5,196,000 Raw material 432,000 453,000 ----------- ----------- $18,951,000 $18,317,000 =========== =========== 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MOORE PRODUCTS CO. June 30, 1998 Note C - Earnings per Share The following table sets forth the computation of basic and diluted earnings per share: Six Months Ended June 30 ----------------------- 1998 1997 ---- ---- Numerator: Net income $2,559,000 $2,103,000 Preferred stock dividends (4,000) (4,000) ---------- ---------- Numerator for basic earnings per share - income available to common stockholders 2,555,000 2,099,000 Effect of dilutive securities: Preferred stock dividends 4,000 4,000 ---------- ---------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversions $2,559,000 $2,103,000 ========== ========== Denominator: Denominator for basic earnings per share - weighted average shares 2,606,281 2,585,972 Effect of dilutive securities: Stock options 234,628 104,165 Convertible preferred stock 70,380 70,380 ---------- ---------- Dilutive potential common shares 305,008 174,545 ---------- ---------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 2,911,289 2,760,517 ========== ========== Basic income per share $.98 $.81 ===== ===== Diluted income per share $.88 $.76 ===== ===== 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MOORE PRODUCTS CO. June 30, 1998 Note C - Earnings per Share (continued) Three Months Ended June 30 ----------------------- 1998 1997 ---- ---- Numerator: Net income $1,356,000 $1,048,000 Preferred stock dividends (2,000) (2,000) ---------- ---------- Numerator for basic earnings per share - income available to common stockholders 1,354,000 1,046,000 Effect of dilutive securities: Preferred stock dividends 2,000 2,000 ---------- ---------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversions $1,356,000 $1,048,000 ========== ========== Denominator: Denominator for basic earnings per share - weighted average shares 2,609,350 2,585,972 Effect of dilutive securities: Stock options 224,209 93,109 Convertible preferred stock 70,380 70,380 ---------- ---------- Dilutive potential common shares 294,589 163,489 ---------- ---------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 2,903,939 2,749,461 ========== ========== Basic income per share $.52 $.40 ==== ==== Diluted income per share $.47 $.38 ==== ==== 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MOORE PRODUCTS CO. June 30, 1998 Note D - Comprehensive Income As of January 1, 1998, the Company adopted Statement 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholders' equity. Statement 130 requires foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. During the six-month periods ended June 30, 1998 and 1997, total comprehensive income, which is comprised of net income and net change in the accumulated foreign currency translation adjustment account for the six month period, amounted to $2,517,000 and $1,926,000, respectively. For the quarters ended June 30, 1998 and 1997, total comprehensive income, which is comprised of net income and net change in the accumulated foreign currency translation adjustment account for the three month period, amounted to $1,141,000 and $977,000, respectively. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Moore Products Co. ("Moore") sales for the second quarter of 1998 were $43,642,000 compared to $37,897,000 for the same period last year, an increase of 15%. Year-to-date sales for the six months ended June 30, 1998 were $81,998,000 compared to $75,715,000 for the same period last year, an 8% increase. These increases reflect higher shipments of process control and measurement systems from operations in the United States and the United Kingdom. Order bookings for the second quarter of fiscal 1998 were $43,457,000 compared to $38,430,000 for the same period last year, a 13% increase. Year-to-date order bookings grew by 14% to $88,782,000 from $77,701,000 last year. These increases are primarily attributed to orders placed for process control automation systems products. The consolidated backlog of unshipped orders as of June 30, 1998 was $44,364,000 compared to $46,530,000 as of June 30, 1997. Gross profit for the quarter was $16,973,000, or 39% of sales, compared to $15,974,000, or 42% of sales, for the second quarter of 1997. Gross profit year-to-date was $32,432,000, or 40% of sales, compared to $31,442,000, or 42% of sales, in 1997. As a result of product mix and higher manufacturing costs, gross profit margin percentages declined compared to last year. Selling, research and development, administrative and general expenses for the second quarter were $14,550,000, or 33% of sales, compared to $14,438,000, or 38% of sales in 1997. These expenses year-to-date were $28,195,000, or 34% of sales, compared to $28,351,000, or 37% of sales, in 1997. Higher payroll, sales and marketing expenses in 1998 were offset by higher net periodic pension income related to Moore's defined benefit pension plan. Net periodic pension income for the second quarter of 1998 was $883,000 compared to $274,000 for the same period last year. For the six months ended June 30, 1998, net periodic pension income was $1,766,000 compared to $548,000 for the same period last year. Interest expense for the second quarter of 1998 was $20,000 compared to $83,000 for the same quarter last year. Year-to-date interest expense was $20,000 compared to $167,000 for the same six-month period in 1997. The decrease from last year was attributed to reduced borrowing activity in 1998. Moore's year-to-date effective tax rate was 42% of pretax income compared to 30% for the first six months of 1997. The fluctuation in the rates was attributable to a changing mix of operating results in countries for which loss benefit carryovers are available. Statutory rates are applied to pretax income in the United States. Consistent with 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued). previous reporting periods, tax benefits for losses incurred by certain international subsidiaries in tax jurisdictions outside the United States have not been fully recognized for financial reporting purposes because the realization of such benefits is not presently assured. Net income for the second quarter ended June 30, 1998 was $1,356,000 compared to net income of $1,048,000 for the same quarter of 1997. For the six months ended June 30, 1998, net income was $2,559,000 compared to $2,103,000 for the same period in 1997. Diluted net income per share was $0.47 for the second quarter of 1998 compared to $0.38 for the second quarter of 1997. For the six months ended June 30, 1998, diluted net income per share was $0.88 compared to $0.76 in 1997. Liquidity and Capital Resources Cash and cash equivalents decreased during the six-month period ended June 30, 1998 by $452,000. Positive cash flow of $3,303,000, generated from operations, was used to fund capital expenditures and a special 40-cent per share cash dividend on the common stock. Capital expenditures were related primarily to facilities and equipment in support of sales and marketing promotion, and product development. Working capital decreased $1,168,000 at June 30, 1998, to $40,067,000 from $41,235,000 at December 31, 1997. Accounts receivable declined $1,265,000 in the first six months of 1998 following record sales in the fourth quarter of 1997. During the first six months of 1998, inventory levels increased by $634,000 reflecting the increase in order backlog from the year ended December 31, 1997. Cash and cash equivalents amounted to $3,364,000 at June 30, 1998. Moore had no outstanding advances under credit arrangements at June 30, 1998. Management believes that current cash and cash equivalents, cash flow from operations, and its established credit facilities of approximately $16,000,000 should be sufficient during 1998 to fund planned capital expenditures, working capital needs, dividends, and other cash requirements. Moore has reviewed both information technology and non-information technology systems to identify and address code changes, testing, and implementation procedures necessary to make these systems Year 2000 compliant. Management believes that after modification to existing software and conversion to new software, the Year 2000 problem will not pose significant operational problems for Moore. As of June 30, 1998, the significant U.S.-based business computer systems, operating and application software have been modified and tested. Moore expects remaining information technology systems, which are primarily in subsidiary locations, and other non-information technology systems to be compliant by the end of the calendar year 1998. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued). Moore is conducting ongoing discussions with its suppliers and key customers in an attempt to ensure that those parties have taken appropriate steps to address Year 2000 issues in their systems which may interface with Moore's systems or otherwise impact operations. Moore's current product offerings are all designed to be Year 2000 compliant. We expect to have completed all testing to confirm Year 2000 compliance of all current product offerings by the end of 1998. For limited older generation products, Moore is in communications with customers with advice on recommended corrective actions. Because Moore expects to be compliant for all business critical systems, no contingency plans have been established at this time. Amounts expended for Year 2000 projects have not been and are not expected to be significant to Moore's results of operations or financial condition. The total cost of Year 2000 projects is estimated to be less than $700,000. Most of this cost involves internal resources committed to testing and evaluation of the Company's products and upgrade of existing business systems. This report contains various forward-looking statements and includes assumptions concerning Moore's operations, future results and prospects. These forward-looking statements are based on current expectations and subject to risks and uncertainties. Moore does not undertake any obligation to publicly release the results of any revisions that may be made to these forward-looking statements to reflect any future events or circumstances. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Moore provides this cautionary statement identifying important factors that, among others, could cause the actual results and events to differ materially from those set forth in or implied by forward-looking statements and related assumptions. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of global economic conditions; the impact of competitive products and pricing; product development and technological difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business conditions; and changes in government laws and regulations, including taxes. 12 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. On May 1, 1998, the Registrant held its Annual Meeting of Shareholders at which time three directors were elected to serve for terms expiring in 2002. The tabulation of votes with respect to each nominee was as follows: Donald E. Bogle, For - 3,042,602, Withheld - 11,626; F. Lawton Hindle, For - 3,032,751, Withheld - 21,477; Thomas C. Moore, For - 3,042,200, Withheld - 12,028. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit Number Description - ------- ------------------------------------------------------------------ 27 Financial Data Schedule for Quarter Ended June 30, 1998. --------------------------------- (b) No reports on Form 8-K were filed during the most recently completed fiscal quarter. 13 SIGNATURES 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 PRODUCTS CO. Dated: August 12, 1998 By: /s/R. E. Wisniewski ------------------------------------- As Secretary and Treasurer and as Principal Financial and Accounting Officer 14 EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 6-MOS DEC-31-1998 JUN-30-1998 3364000 0 41215000 1712000 18951000 66590000 62444000 46036000 96377000 26523000 0 0 176000 2614000 0 96377000 81998000 81998000 49566000 49566000 0 0 20000 4421000 1862000 2559000 0 0 0 2559000 .98 .88
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