-----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, Wj+prBrGpBl5dBHjTdtBNOz552/KRJmpBR5HMo3Xp5Ihz3PuncRavpYMwx2h5aQR HGi/0fYNLNmR1qRpkZfzaw== 0000950144-97-011321.txt : 19971030 0000950144-97-011321.hdr.sgml : 19971030 ACCESSION NUMBER: 0000950144-97-011321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971029 SROS: NASD 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: 97702675 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 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 SEPTEMBER 30, 1997 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) (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 2,154,543 shares - -------------------------------- --------------------------------- Class Outstanding at October 13, 1997 2 MOORE-HANDLEY, INC. INDEX
Item No. Page No. - -------- -------- PART I. FINANCIAL INFORMATION 1. Financial Statements - Unaudited Balance Sheets - September 30, 1997 and 1996 and December 31, 1996.................................... 3 Statements of Operations - Three Months and Nine Months Ended September 30, 1997 and 1996.............................. 4 Statements of Cash Flows - Nine Months Ended September 30, 1997 and 1996................................................. 5 Notes 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............................................................ 12 Exhibit Index........................................................ 12 Financial Data Schedule (for SEC purposes only)...................... 13
- 2 - 3 MOORE-HANDLEY, INC. BALANCE SHEETS SEPTEMBER 30, 1997 AND 1996 AND DECEMBER 31, 1996 (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, ---------------------------------- ------------ 1997 1996 1996 ------------ ------------- ------------ ASSETS: Current assets: (unaudited) (unaudited) Cash and cash equivalents................................ $ 809,000 $ 331,000 $ 596,000 Trade receivables, net................................... 25,254,000 23,469,000 21,995,000 Other receivables........................................ 2,219,000 2,383,000 1,969,000 Merchandise inventory.................................... 14,927,000 16,820,000 17,693,000 Prepaid expenses......................................... 426,000 62,000 243,000 Refundable income taxes.................................. 408,000 435,000 870,000 Deferred income taxes.................................... 510,000 470,000 510,000 ----------- ----------- ----------- Total current assets................................ 44,553,000 43,970,000 43,876,000 Prepaid pension cost........................................ 863,000 727,000 789,000 Property and equipment...................................... 19,629,000 18,765,000 19,019,000 Less accumulated depreciation............................ (11,020,000) (9,986,000) (10,248,000) ----------- ----------- ----------- Net property and equipment.......................... 8,609,000 8,779,000 8,771,000 Deferred charges, net....................................... 31,000 38,000 36,000 ----------- ----------- ----------- $54,056,000 $53,514,000 $53,472,000 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank loans............................................... $ --- $ 8,000,000 $10,450,000 Accounts payable......................................... 22,711,000 20,386,000 18,134,000 Accrued payroll.......................................... 646,000 543,000 453,000 Other accrued liabilities................................ 1,884,000 1,901,000 1,690,000 Long-term debt due in one year........................... 1,181,000 831,000 1,133,000 ----------- ----------- ----------- Total current liabilities........................... 26,422,000 31,661,000 31,860,000 Long-term debt.............................................. 12,030,000 5,043,000 5,111,000 Deferred income taxes....................................... 1,129,000 1,059,000 1,129,000 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............................... 14,224,000 15,500,000 15,121,000 ----------- ----------- ----------- Total stockholders' equity.......................... 14,475,000 15,751,000 15,372,000 ----------- ----------- ----------- $54,056,000 $53,514,000 $53,472,000 =========== =========== ===========
See accompanying notes. - 3 - 4 MOORE-HANDLEY, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1997 1996 1997 1996 ----------- ----------- ------------ ------------ Net sales.................................. $40,000,000 $39,280,000 $113,266,000 $113,803,000 Cost of merchandise sold................... 34,157,000 33,325,000 96,518,000 96,120,000 Warehouse and delivery expense................................. 2,329,000 2,703,000 7,093,000 7,501,000 ----------- ----------- ------------ ------------ Cost of sales.............................. 36,486,000 36,028,000 103,611,000 103,621,000 ----------- ----------- ------------ ------------ Gross profit............................... 3,514,000 3,252,000 9,655,000 10,182,000 Selling and administrative expense................................. 3,212,000 3,593,000 10,237,000 10,664,000 ----------- ----------- ------------ ------------ Operating income (loss).................... 302,000 (341,000) (582,000) (482,000) Interest expense, net...................... 236,000 246,000 734,000 621,000 ----------- ----------- ------------ ------------ Income (loss) before provision for income tax (benefit)................ 66,000 (587,000) (1,316,000) (1,103,000) Income tax (benefit)....................... 21,000 (215,000) (419,000) (410,000) ----------- ----------- ------------ ------------ Net income (loss).......................... $ 45,000 $ (372,000) $ (897,000) $ (693,000) =========== =========== ============ ============ Net income (loss) per common share............................ $ .02 $ (.17) $ (.42) $ (.32) =========== =========== ============ ============ Weighted average common shares outstanding...................... 2,154,000 2,165,000 2,154,000 2,165,000 =========== =========== ============ ============
See accompanying notes. - 4 - 5 MOORE-HANDLEY, INC. STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
1997 1996 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss............................................... $ (897,000) $ (693,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization..................... 947,000 907,000 Provision for doubtful accounts................... 180,000 180,000 Gain on sale of equipment......................... (84,000) --- Change in assets and liabilities: Trade and other receivables..................... (3,689,000) (2,967,000) Merchandise inventory........................... 2,766,000 (1,489,000) Accounts payable and accrued expenses........... 4,964,000 5,232,000 Other assets.................................... 226,000 69,000 ----------- ---------- Total adjustments............................... 5,310,000 1,932,000 ----------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES....................... 4,413,000 1,239,000 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures................................... (819,000) (2,265,000) Proceeds from sale of equipment........................ 102,000 --- ----------- ---------- NET CASH USED IN INVESTING ACTIVITIES.............................. (717,000) (2,265,000) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings of bank loans................ (10,450,000) 250,000 Principal (payments) borrowings of long-term debt................................... 6,967,000 910,000 ----------- ---------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.............................. (3,483,000) 1,160,000 ----------- ---------- Net increase (decrease) in cash and cash equivalents....................................... 213,000 134,000 Cash and cash equivalents at beginning of period................................. 596,000 197,000 ----------- ---------- Cash and cash equivalents at end of period....................................... $ 809,000 $ 331,000 =========== ==========
See accompanying notes. - 5 - 6 MOORE-HANDLEY, INC. NOTES TO FINANCIAL STATEMENTS (INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 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 27, 1997. 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. The Financial Accounting Standards Board has issued Statement No. 128, Earnings per Share. This must be adopted by the Company on December 31, 1997 at which time it must restate earnings per share for all prior periods. The impact, if any, of Statement 128 on the calculation of earnings per share for the third quarter of 1997 and 1996 is not expected to be material. 2. REVENUE RECOGNITION The Company recognizes revenues when goods are shipped. 3. LINES OF CREDIT On August 7, 1997 the Company entered into a credit agreement under which it may borrow up to 85% of eligible receivables up to a maximum of $15,000,000. The borrowings bear interest at the prime interest rate or, at the Company's option, 2 1/2 % over LIBOR, and are secured by the Company's trade receivables. This credit facility replaces the Company's lines of credit with banks totaling $10,000,000 of which $9,800,000 was outstanding as of June 30, 1997 and one of which was amended in the second quarter to avoid a violation of a debt covenant. - 6 - 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) NET SALES Total sales increased 1.8% for the quarter compared to the same quarter last year as an increase of 14.6% in factory direct shipments more than offset a decline of 4.6% in warehouse shipments for the quarter compared to the prior year's quarter. For the nine months ended September 30, 1997, net sales were down slightly compared to the prior year period, as a 5.9% decrease in warehouse shipments more than offset an increase of 11.2% in factory direct shipments. The increase in factory direct shipments for the quarter and nine months is due to the Company's expanded efforts to increase sales of lumber and building materials. Gross margins on direct shipments are lower than gross margins on warehouse shipments; however, expenses related to direct shipments are also lower. While the trend toward factory direct shipments has resulted in decreased gross margins, 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 major elements of net sales:
Three Months Ended September 30, ------------------------------------- 1997 1996 ----------------- ---------------- (dollars in thousands) Net Sales: Warehouse shipments......... $24,931 62.3% $26,126 66.5% Factory direct shipments.... 15,069 37.7 13,154 33.5 ------- ----- ------- ----- Net Sales............... $40,000 100.0% $39,280 100.0% ======= ===== ======= =====
Nine Months Ended September 30, ------------------------------------- 1997 1996 ----------------- ---------------- (dollars in thousands) Net Sales: Warehouse shipments......... $73,124 64.6% $ 77,708 68.3% Factory direct shipments.... 40,142 35.4 36,095 31.7 -------- ----- -------- ----- Net Sales............... $113,266 100.0% $113,803 100.0% ======== ===== ======== =====
- 7 - 8 OPERATIONS The following table sets forth certain financial data as a percentage of net sales for the periods indicated:
Three Months Ended Nine Months Ended September 30, September 30, ------------------ --------------- 1997 1996 1997 1996 ----- ------ ------ ----- Net sales.............................. 100.0% 100.0% 100.0% 100.0 % ===== ===== ===== ===== Gross margin........................... 14.6 15.2 14.8 15.5 Warehouse and delivery expense......... 5.8 6.9 6.3 6.6 ----- ----- ----- ---- Gross profit........................... 8.8 8.3 8.5 8.9 Selling and administrative expenses.... 8.0 9.1 9.0 9.4 ----- ----- ----- ---- Operating income (loss)................ .8 ( .9) ( .5) ( .4) Interest expense, net.................. .6 .6 .6 .5 ----- ----- ----- ---- Income (loss) before provision for income tax (benefit)............ .2% (1.5)% (1.2)% (1.0)% ===== ===== ===== ====
GROSS MARGIN The gross margin percentage for the quarter and nine months ended September 30, 1997 was down 0.6% and 0.7%, respectively, compared to the same periods last year. The decreases were due to the increase in factory direct shipments as a percent of total sales. For the quarter this was offset in part by an increase in the gross margin percentage on warehouse shipments. Although total gross margin dollars in the 1st and 3rd quarters are higher than in other quarters, the gross margin percentages for the first and third quarters are typically lower than in other quarters. This is because of increased sales generated at Dealers' Marts held during the 1st and 3rd quarters which include a higher proportion of factory direct shipments at lower gross margins. The following table shows the gross margin trend in 1996 and the first three quarters of 1997:
Increase (Decrease) vs. Same Quarter Gross Margin in Previous Year - ----------------------------------------- ---------------------------- Amount Percentage Amount Percentage Quarter (in thousands) of Sales (in thousands) Points - ---------- -------------- ---------- -------------- ---------- 1996 - 1st $5,913 15.3 $ 84 (1.0) 2nd 5,815 16.2 (109) -- 3rd 5,955 15.2 148 (.3) 4th 5,681 17.8 293 1.0 1997 - 1st $5,511 14.6 $ (402) ( .7) 2nd 5,394 15.2 (421) (1.0) 3rd 5,843 14.6 (112) ( .6)
- 8 - 9 WAREHOUSE AND DELIVERY EXPENSES Warehouse and delivery expenses were down $374,000 or 13.8% for the quarter compared to the same period last year, partially as a result of an $84,000 gain on sale of equipment. As a percentage of warehouse shipments, these expenses decreased to 9.3% compared to 10.3% for the same quarter last year. For the nine months these expenses were down $408,000 or 5.4% compared to the same period last year but flat as a percent of warehouse shipments. The Company is taking several steps to improve service level, increase warehouse efficiency, and reduce error rates. These steps thus far have significantly improved service level and somewhat improved error rates. Ongoing efforts to reduce expenses include resetting the mezzanine and partial resetting of the main warehouse, both of which are about one-third complete. The resetting and related expenses began in the second quarter of 1997 and the Company expects these efforts will be completed sometime in the 1st quarter of 1998. In 1996 the Company expanded and modernized its warehouse. This project disrupted warehouse operations and increased warehouse expense. The following table shows the trend in warehouse and delivery expenses in 1995, before the warehouse expansion and disruption, in 1996, during it, and during the first three quarters of 1997:
Increase (Decrease) Warehouse and Delivery vs. Same Quarter Expenses in Previous Year - --------------------------------------------- --------------------------- Percentage Amount of Warehouse Amount Percentage Quarter (in thousands) Sales (in thousands) Points - ------------------------------ ------------ -------------- ---------- 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 4th 2,407 10.5 576 2.8 1997 - 1st $2,294 9.4 $ 91 .9 2nd 2,470 10.3 (125) .2 3rd 2,329 9.3 (374) (1.0)
SELLING AND ADMINISTRATIVE EXPENSES As a result of personnel and other expense reductions made during the first half of the year, selling and administrative expenses for the - 9 - 10 quarter decreased $381,000 or 10.6% compared to the same quarter last year. These expenses decreased $316,000 or 9.0% compared to the prior quarter which included an accrual of $175,000 for severance pay and expenses. For the nine months selling and administrative expenses decreased $427,000 or 4.0% compared to the same period last year. Included in expenses for the nine months this year is $400,000 of severance pay and expenses. Severance pay and expenses in the first nine months last year was $240,000. The following table shows the trend in selling and administrative expenses in 1996 and the first three quarters of 1997.
Increase (Decrease) Selling and Administrative vs. Same Quarter Expenses in Previous Year - ----------------------------------------- ---------------------------- Amount Percentage Amount Percentage Quarter (in thousands) of Sales (in thousands) Points - ---------- -------------- ---------- -------------- ---------- 1996 - 1st $3,339 8.6 $ 194 (.2) 2nd 3,732 10.4 332 1.1 3rd 3,593 9.1 211 .1 4th 3,476 10.9 309 1.0 1997 - 1st $3,497 9.2 $ 159 .7 2nd 3,528 10.0 (204) (.3) 3rd 3,212 8.0 (381) (1.1)
LIQUIDITY AND CAPITAL RESOURCES Capital expenditures of $819,000 were made during the nine months ended September 30, 1997 which were financed from working capital. On August 7, 1997 the Company entered into a credit agreement under which it may borrow up to 85% of eligible receivables up to a maximum of $15,000,000. The borrowings bear interest at the prime interest rate or, at the Company's option, 2 1/2 % over LIBOR, and are secured by the Company's trade receivables. This credit facility replaces the Company's lines of credit with banks. At September 30, 1997 the Company had unused availability under the new credit facility of $7,256,000 and believes the new facility will be adequate to finance its working capital needs. Trade receivables at September 30, 1997 were up $3,259,000 or 14.8% from December 1996 and $1,785,000 or 7.6% from September 30, 1996. The increase was due to the higher level of sales in September 1997 (which included sales arising from orders taken at a Dealers' Mart in August) compared to December 1996 and September 1996 (which also included sales arising from orders taken a Dealers' Mart in August 1996). 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. Largely due to a reduction of excess stock, inventories at September - 10 - 11 30, 1997 are down $2,766,000 or 15.6% from December 31, 1996 and $1,893,000 or 11.3% from September 30, 1996. 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 implement and 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; - changes in the mix of merchandise sold including the relative purcentage of sales consisting of factory direct shipments compared to warehouse shipments; - 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 purposes only). (b) There were no reports on Form 8-K filed by the Company during the nine month period ended September 30, 1997. - 11 - 12 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: October 29, 1997 /s/ L. Ward Edwards --------------------- ------------------------------ L. Ward Edwards Vice President, Treasurer and Secretary (Principal Accounting and Financial Officer) EXHIBIT INDEX
Exhibit No. Page No. - ----------- -------- 27 Financial Data Schedule (for SEC purposes only).... 13
- 12 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MOORE-HANDLEY, INC. FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 809 0 25,254 0 14,927 44,553 19,629 (11,020) 54,056 26,422 12,030 0 0 251 14,224 54,056 113,266 113,266 96,518 96,518 10,237 0 734 (1,316) (419) (897) 0 0 0 (897) (.42) (.42)
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