-----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, C5F6s8gVaYDT6kQML6CKJ8KDTX25ga4JRZLr6uZXaS2HSl8sV5CjwNRFEy64/vAp 5S+12gNv+IL/EaOBBrCl7Q== 0000950144-01-501639.txt : 20010509 0000950144-01-501639.hdr.sgml : 20010509 ACCESSION NUMBER: 0000950144-01-501639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOORE HANDLEY INC /DE/ CENTRAL INDEX KEY: 0000788951 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE [5072] IRS NUMBER: 630819773 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14324 FILM NUMBER: 1624990 BUSINESS ADDRESS: STREET 1: 133 PEACHTREE STREET STREET 2: SUITE 4710 CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 2056638011 MAIL ADDRESS: STREET 2: 3140 PELHAM PKWY CITY: PELHAM STATE: AL ZIP: 35124 10-Q 1 g69084e10-q.txt MOORE-HANDLEY, INC. 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 MARCH 31, 2001 OR Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from to ------- ------- COMMISSION FILE NUMBER 0-14324 ------- MOORE-HANDLEY, INC. ------------------- (Exact name of registrant as specified in its charter) DELAWARE 63-0819773 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 3140 PELHAM PARKWAY, PELHAM, ALABAMA 35124 ---------------------------------------- ------------- (Address of principal executive offices) (Zip Code) 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 1,808,443 Shares ---------------------------- ----------------------------- Class Outstanding at March 31, 2001 1 2 MOORE-HANDLEY, INC. INDEX
Item No. Page No. - -------- -------- PART I. FINANCIAL INFORMATION - UNAUDITED 1. Balance Sheets - March 31, 2001 and 2000 and December 31, 2000 3 Statements of Operations - Three Months Ended March 31, 2001 and 2000 4 Statements of Cash Flows - Three Months Ended March 31, 2001 and 2000 5 Notes to Financial Statements 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 3. Quantitative and Qualitative Disclosures About Market Risk (The information required by this item is contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations.") 10 PART II. OTHER INFORMATION 4. Submission of Matters to a Vote of Security Holders 11 6. Exhibits and Reports on Form 8-K 11 Signatures 12
2 3 MOORE-HANDLEY, INC. BALANCE SHEETS MARCH 31, 2001 AND 2000 AND DECEMBER 31, 2000
MARCH 31 DECEMBER 31 ----------------------------------- ------------ 2001 2000 2000 ------------ ------------ ------------ (unaudited) (unaudited) (Note 1) ASSETS: Current Assets: Cash and cash equivalents $ 65,000 $ 77,000 $ 38,000 Trade receivables, net 26,771,000 29,148,000 22,318,000 Other receivables 3,924,000 4,362,000 3,283,000 Merchandise inventory 19,486,000 17,574,000 17,622,000 Prepaid expenses 169,000 535,000 312,000 Refundable income tax 82,000 -- 223,000 Deferred income taxes 615,000 456,000 615,000 ------------ ------------ ------------ Total current assets 51,112,000 52,152,000 44,411,000 Prepaid pension cost 919,000 1,104,000 1,008,000 Property and Equipment 18,620,000 21,336,000 18,538,000 Less accumulated depreciation (10,038,000) (13,060,000) (9,726,000) ------------ ------------ ------------ Net property and equipment 8,582,000 8,276,000 8,812,000 Deferred charges, net 7,000 10,000 8,000 ------------ ------------ ------------ $ 60,620,000 $ 61,542,000 $ 54,239,000 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Accounts Payable $ 23,819,000 $ 24,706,000 $ 16,927,000 Accrued Payroll 417,000 369,000 464,000 Other accrued liabilities 1,350,000 2,482,000 1,229,000 Long-term debt due in one year 1,158,000 1,253,000 1,158,000 ------------ ------------ ------------ Total current liabilities 26,744,000 28,810,000 19,778,000 Long-term debt 20,832,000 17,835,000 21,664,000 Deferred income taxes 671,000 1,076,000 671,000 Stockholders' equity: Common stock, $.10 par value; 10,000,000 shares authorized, 2,510,000 shares issued 251,000 251,000 251,000 Other stockholders' equity 12,122,000 13,570,000 11,875,000 ------------ ------------ ------------ Total stockholders' equity 12,373,000 13,821,000 12,126,000 ------------ ------------ ------------ $ 60,620,000 $ 61,542,000 $ 54,239,000 ============ ============ ============
See accompanying notes. 3 4 MOORE-HANDLEY, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31 --------------------------------- 2001 2000 ------------ ------------ Net Sales $ 39,402,000 $ 43,755,000 Cost of merchandise sold 33,012,000 36,839,000 Warehouse and delivery expense 2,297,000 2,656,000 ------------ ------------ Cost of sales 35,309,000 39,495,000 ------------ ------------ Gross Profit 4,093,000 4,260,000 Selling and administrative expense 3,267,000 3,772,000 ------------ ------------ Operating Income 826,000 488,000 Interest expense, net 434,000 373,000 ------------ ------------ Income before income tax 392,000 115,000 Income tax 142,000 44,000 ------------ ------------ Net income $ 250,000 $ 71,000 ============ ============ Net income per common share - basic and diluted $ 0.14 $ 0.04 ============ ============ Weighted average common shares outstanding 1,814,000 1,933,000 ============ ============
See accompanying notes. 4 5 MOORE-HANDLEY, INC. STATEMENTS OF CASH FLOW (UNAUDITED)
THREE MONTHS ENDED MARCH 31 2001 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 250,000 $ 71,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 313,000 347,000 Provision for doubtful accounts 75,000 75,000 Gain on sale of equipment -- (16,000) Change in assets and liabilities: Trade and other receivables (5,169,000) (6,805,000) Merchandise inventory (1,864,000) 735,000 Accounts payable and accrued expenses 6,966,000 6,110,000 Other assets 370,000 -- ------------ ------------ Total Adjustments 691,000 446,000 ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 941,000 517,000 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (82,000) (373,000) Proceeds from sale of equipment -- 16,000 ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (82,000) (357,000) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under bank loans (518,000) -- Principal payments under long-term debt (314,000) (129,000) ------------ ------------ NET CASH USED IN FINANCING ACTIVITIES (832,000) (129,000) ------------ ------------ Net increase in cash and cash equivalents 27,000 31,000 Cash Equivalents at beginning of period 38,000 46,000 ------------ ------------ $ 65,000 $ 77,000 ============ ============
See accompanying notes. 5 6 MOORE-HANDLEY, INC. NOTES TO FINANCIAL STATEMENTS (INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 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 30, 2001. The financial information presented herein reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of the interim periods. The results for interim periods are not necessarily indicative of results to be expected for the year. 2. INCOME PER COMMON SHARE Basic net income per share is based on the weighted average number of common shares outstanding and net income. Diluted net income per share is based on the weighted average number of common shares outstanding plus the effect of dilutive employee stock options and net income. Basic and diluted earnings per share were the same for the first quarter of 2001 and 2000. 3. REVENUE RECOGNITION The Company recognizes revenues when goods are shipped. 4. DERIVATIVE INVESTMENTS AND HEDGING ACTIVITIES As of January 1, 2001, the Company adopted Financial Accounting Standards Board (FASB) Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. FASB Statement 133 requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. As of and since the adoption of FASB 133, the Company has not entered into any derivative instruments, as defined in the statement. 6 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) SUMMARY Net sales for the quarter ended March 31, 2001, decreased $4,353,000 or 9.9% from the same quarter in 2000. Net income is 14 cents per share on 1,814,000 average common shares outstanding compared to 4 cents per share on 1,933,000 average common shares outstanding as of March 31, 2000. Although gross margin decreased by $526,000 in the first quarter of 2001 over the same period in 2000, gross margin as a percentage of sales increased by 0.4%. Despite the decrease in net sales and gross margin dollars, net income improved $179,000 on a quarter to quarter basis due to a decrease in operating expenses and increases in vendor allowances and gross margin rate as a percentage of sales. NET SALES Net sales decreased $4,353,000 or 9.9% compared to the three months ended March 31, 2000. While the Company has experienced softness in sales in its core business, the Company is making a concerted effort to develop new business utilizing new distribution channels. Gross margins on direct shipments are lower than gross margins on warehouse shipments; however, expenses related to direct shipments are also lower. Although factory direct shipments result in lower over all gross margin percentages, the Company believes that direct shipments are an important part of its business as a full-service wholesale distributor. The following table sets forth the trend in net sales for 2000 and the first quarter of 2001:
Increase (Decrease) vs. Same Quarter Net Sales in Previous Year -------------- ------------------- Amount Amount Percent (in thousands) (in thousands) Change -------------- -------------- ------- Quarter 2000 - 1st................................... 43,755 (908) (2.0) 2nd................................... 38,642 (4,062) (9.6) 3rd................................... 38,903 (4,663) (10.7) 4th................................... 32,765 (3,518) (9.7) 2001 - 1st................................... 39,402 (4,353) (9.9)
OPERATIONS The following table sets forth certain financial data as a percentage of net sales for the periods indicated:
Three Months Ended March 31, ---------------------- 2001 2000 ------ ------ Net Sales 100.0% 100.0% ====== ====== Gross margin 16.2 15.8 Warehouse and delivery expense 5.8 6.1 ------ ------ Gross profit 10.4 9.7 Selling and administrative expenses 8.3 8.6 ------ ------ Operating income 2.1 1.1 Interest expense, net 1.1 0.9 ------ ------ Income before provision for income tax 1.0% 0.2% ====== ======
7 8 GROSS MARGIN The gross margin percentage for the quarter ended March 31, 2001 was 16.2%, up from 15.8% in the first quarter of 2000. The following table sets forth the gross margin dollars, gross margin percentages and year-over-year changes for 2000 and the first quarter of 2001:
Increase (Decrease) vs. Same Quarter Gross Margin in Previous Year ---------------------------- ----------------------------- Amount Percentage Amount Percentage (in thousands) of Sales (in thousands) Points ------------- ---------- -------------- ---------- Quarter 2000 - 1st................................... $ 6,916 15.8% $ 460 1.3% 2nd................................... 6,506 16.8 (320) 0.8 3rd................................... 6,101 15.7 (831) (0.2) 4th................................... 4,634 14.1 (2,059) (4.3) 2001 - 1st................................... 6,390 16.2 (526) 0.4
WAREHOUSE AND DELIVERY EXPENSE As a percentage of warehouse shipments, warehouse and delivery expense decreased to 8.9% in the first quarter of 2001 from 9.2% in the same quarter last year. The following table sets forth the trend in warehouse and delivery expense in 2000 and the first quarter of 2001:
Increase (Decrease) Warehouse and Delivery vs. Same Quarter Expense in Previous Year -------------------------- ------------------------------ Percent of Amount Warehouse Amount Percentage (in thousands) Shipments (in thousands) Points -------------- ---------- -------------- ---------- Quarter 2000 - 1st........................................ $ 2,656 9.2% $ (37) (0.4)% 2nd........................................ 2,546 9.6 (309) (0.4) 3rd........................................ 2,451 9.6 (351) (0.3) 4th........................................ 2,479 10.9 7 2.3 2001 - 1st........................................ 2,297 8.9 (359) (0.3)
SELLING AND ADMINISTRATIVE EXPENSE Selling and administrative expense for the first quarter of 2001 decreased by $505,000 or 13.4% over the same period in 2000. 8 9 The following table sets forth the quarterly trend in selling and administrative expense in 2000 and the first quarter of 2001:
Increase (Decrease) Selling and Administrative vs. Same Quarter Expense in Previous Year --------------------------- ------------------------------ Percent of Amount Warehouse Amount Percentage (in thousands) Shipments (in thousands) Points -------------- ---------- -------------- ---------- Quarter 2000 - 1st........................................ $ 3,772 8.6% $ 192 0.6% 2nd........................................ 3,812 9.9 192 1.4 3rd........................................ 3,309 8.5 (512) (0.3) 4th........................................ 3,794 11.6 581 2.7 2001 - 1st........................................ 3,267 8.3 (505) (0.3)
INTEREST EXPENSE Interest expense increased $61,000 or 16.3% during the first quarter of 2001 compared to the same period during 2000. The increase was primarily due to increased average borrowings to finance higher average inventories. Interest-sensitive borrowings increased $3,284,000 or 18.4% during the first quarter 2001 compared to the same period in 2000. Interest on the Company's working capital line of credit is charged at the prime rate that averaged 8.8% during the first quarter of 2001 and 8.6% during the same period in 2000. Net trade receivables decreased during the first quarter 2001 by $2,377,000 or 8.2% compared to the first quarter 2000 while inventory levels have increased $1,912,000 or 10.9% compared to the first quarter in 2000. LIQUIDITY AND CAPITAL RESOURCES From December 31, 2000 to March 31, 2001, the Company's net trade receivables increased by $4,453,000 or 20.0%. The increase was primarily due to the February Dealers' Mart. Net trade receivables decreased $2,377,000 or 8.2% compared to March 31, 2000. The decrease is in direct correlation to the percentage decrease in net sales. Inventories increased by $1,864,000 or 10.6% in the three months ended March 31, 2001 compared with December 31, 2000. Inventories increased $1,912,000 or 10.9% compared to March 31, 2000. The increase in inventories can be attributed to the support of new distribution channels and the February Dealers' Mart. The Company continues its efforts to manage and control inventory levels while maintaining its high "fill rate" (the percentage of items shipped within 48 hours of the receipt of an order) on customer orders. Trade payables increased $6,892,000 or 40.7% from December 31, 2000 because of extended terms received from suppliers in connection with the February Dealers' Mart and higher inventory levels. Trade payables decreased $887,000 or 3.6% compared to March 31, 2000. At March 31, 2001, the Company had unused lines of credit of $3,449,000. In March 2000, the Company executed a working capital line increase and extension. This new line allows for a maximum borrowing of $24,000,000 and, in addition to 85% of eligible receivables, it is secured with 50% of eligible inventory up to $6,000,000. This new line becomes annually renewable in August 2002. The Company believes this credit facility is adequate to finance its working capital needs. INTEREST RATE RISK The following discussion about the Company's interest rate risk includes "forward-looking statements" that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. 9 10 The Company's principal credit agreement bears a floating interest rate based on the prime rate or at the Company's option a 2 1/2% over LIBOR. The Company's lease with respect to industrial development bonds, issued to finance the Company's principal warehouse distribution facility, bears a floating interest rate based on 92% of the prime rate. Accordingly, the Company is subject to market risk associated with changes in interest rates. At March 31, 2001, $20,551,000 was outstanding under the credit agreement and $589,000 was outstanding under the industrial development lease agreement. For 2000, the average principal amount outstanding under the credit agreement was $16,749,000. Assuming the average amount outstanding under the credit agreement during 2001 is equal to such average amount outstanding during 2000 and assuming the Company makes its scheduled amortization payments on its industrial development lease of $589,000 in 2001, a 1% increase in the applicable interest rate during 2001 would result in additional interest expense of approximately $173,000, which would reduce cash flow and pre-tax earnings dollar for dollar. 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. Words such as "expects" and "believes" indicate the presence of 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 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; - uncertainties associated with any acquisition the Company may seek to implement; and - changes in general economic conditions, including interest rates. 10 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of the Registrant was held on Thursday, April 26, 2001 at 10:00 a.m. At the meeting, Messrs. William Riley, Pierce E. Marks, Jr., Michael B. Stubbs, Michael Palmer and Michael Gaines were elected as directors of the Registrant. The following table sets forth the distribution of votes cast with regard to each of the nominees:
Votes Cast Votes Nominee for Nominee Withheld - ------- ----------- -------- William Riley 1,451,592 61,100 --------- ------ Pierce E. Marks, Jr. 1,451,592 61,100 --------- ------ Michael B. Stubbs 1,451,292 61,400 --------- ------ Michael Palmer 1,451,292 61,400 --------- ------ Michael Gaines 1,450,692 62,000 --------- ------
Also at the meeting, the proposed Moore-Handley , Inc. 2001 Stock Incentive Compensation Plan was approved. The following table sets forth the distribution of votes cast with regard to the proposal:
Number of Votes --------- For 762,915 Against 80,869 Abstain 5,700
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 3(a) - Restated Certificate of Incorporation of Company, filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by reference, 3(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, 3(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, 3(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 11 12 Report on Form 10-K for the year ended December 31, 1987 and incorporated herein by reference, (b) There were no reports on Form 8-K filed by the Company during the three-month period ended March 31, 2001. 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-HANDLEY, INC. ----------------------- (Registrant) Date: May 7, 2001 /s/ Michael J. Gaines ----------------------- Michael J. Gaines President and Chief Operating Officer /s/ Judi Watson ----------------------- Judi Watson Treasurer 12 13 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 3 (a) Restated Certificate of Incorporation of Company, filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K For the year ended December 31, 1987 and incorporated herein by reference. 3 (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. 3 (b) By-laws of the Company, filed as Exhibit 3(d) to the Company's Registration Statement on Form S-1 (Reg. No. 33-3302) and incorporated herein by reference. 3 (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, 2987 and incorporated herein by reference.
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