<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
F O R M 10 QSB
OMB Approval
OMB Number: XXXX-XXXX
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended August 26, 1995
For the Transition Period from __________ to __________
Commission File Number 0-5109
M I C R O P A C I N D U S T R I E S, I N C.
Delaware 75-1225149
- --------------------------------------- ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
905 E. Walnut, Garland, Texas 75040
- --------------------------------------- ---------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (214) 272-3571
----------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
--- ---
At November 30, 1994, there were 3,627,151 shares of registrant's common stock
outstanding. On that date, the aggregate market value of Common Stock could
not be determined since there is no established public trading market for the
Company's Common Stock.
1
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MICROPAC INDUSTRIES, INC.
FORM 10-Q
August 26, 1995
INDEX
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Condensed Statements of Operations for the three and nine
months ended August 26, 1995 and August 27, 1994.
Condensed Balance Sheets
Condensed Statements of Cash Flows
Notes to Condensed Financial Statements
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
ITEM 2 CHANGES IN SECURITIES
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5 OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
2
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MICROPAC INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- --------------------------------
8/26/95 8/27/94 8/26/95 8/27/94
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sales, Net of Returns & Allowances $ 3,171,771 $ 2,315,651 $ 8,040,506 $ 6,975,712
Cost of Goods Sold (2,292,849) (1,632,710) (5,723,165) (4,861,093)
----------- ------------- ----------- ------------
Gross Margin 878,922 682,941 2,317,341 2,114,619
Selling, General & Administrative Expenses (689,042) (603,846) (1,933,119) (1,823,666)
Pre-Tax Income 189,880 79,095 384,222 290,953
Provision for Income Taxes (64,569) (27,289) (132,635) (103,596)
----------- ------------- ----------- ------------
Net Income $ 125,311 $ 51,805 $ 251,587 $ 187,357
=========== ============= =========== ============
Net Income per Share $ 0.03 $ 0.01 $ 0.07 $ 0.05
=========== ============= =========== ============
Weighted Average Number of Shares 3,627,151 3,627,151 3,627,151 3,627,151
=========== ============= =========== ============
Dividends per Share $ - $ - $ - $ -
=========== ============= =========== ============
</TABLE>
See accompanying notes to financial statements.
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
3
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MICROPAC INDUSTRIES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
8/26/95 11/30/94
------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 77,172 $ 264,186
Short term investments 516,177 802,030
Receivables, net of allowance for doubtful accounts
of approximately $107,000 and $140,000 on
August 26, 1995 and November 30, 1994, respectively 2,069,989 1,345,833
Inventories:
Raw materials 1,582,693 1,283,974
Work-in-process 876,282 867,188
Prepaid expenses & other current assets (7,739) 35,269
Deferred income tax 243,456 263,412
---------- ----------
Total current assets 5,358,029 4,861,892
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 80,000 80,000
Buildings 497,924 497,924
Facility improvements 649,261 628,047
Machinery and equipment 3,974,982 3,681,648
Furniture and fixtures 243,375 235,535
---------- ----------
Total plant, property and equipment 5,445,542 5,123,153
Less accumulated depreciation (4,247,835) (4,108,162)
---------- ----------
Net property, plant and equipment 1,197,707 1,014,991
TOTAL ASSETS $6,555,737 $5,876,883
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
CURRENT LIABILITIES:
Accounts payable 757,109 332,457
Accrued payroll 220,226 253,029
Accrued professional fees 89,889 73,669
Other accrued liabilities 373,109 408,658
Income taxes payable 62,149 0
---------- ----------
Total current liabilities 1,502,482 1,067,812
DEFERRED INCOME TAXES 174,899 184,301
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock ($.10 par value, 10,000,000 shares
authorized, 3,627,151 shares outstanding) 362,715 362,715
Paid-in capital 885,540 885,540
Retained earnings 3,630,101 3,376,515
---------- ----------
Total shareholders' equity 4,878,356 4,624,770
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $6,555,737 $5,876,883
========== ==========
</TABLE>
See accompanying notes to financial statements.
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
4
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MICROPAC INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
8/26/95 8/27/94
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 253,586 $ 187,357
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 139,674 138.807
Changes in current assets and liabilities
Accounts receivable (724,156) 455,324
Inventories (307,813) (129,701)
Prepaid expenses & other current assets 43,008 (7,429)
Income taxes 62,149 16,909
Accounts payable 424,652 (31,766)
Payroll & withholdings (32,803) (119,927)
Accrued liabilities (19,329) (44,309)
Deferred income taxes 10,554 0
---------- -----------
Net cash flows from operating activities (150,478) 553,883
Cash flows from investing activities:
Additions to property, plant and equipment (322,389) (135,240)
---------- -----------
Net cash flows from investing activities (322,389) (135,240)
---------- -----------
Net increase (decrease) in cash (472,867) 418,643
Cash at beginning of period 1,066,216 567,113
---------- -----------
Cash at end of period $ 593,349 $ 985,756
========== ===========
</TABLE>
See accompanying notes to financial statements.
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
5
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Item 2
MICROPAC INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1. Sales and profits for the third quarter ended August 26, 1995 increased
approximately $856,000 and $111,000 respectively compared to the third
quarter 1994. Year-to-date sales have increased approximately $1,065,000
when compared to the nine months ended August 1994. The increase in sales
is attributed to orders totalling $5,318,600 in the third quarter; an
increase of $3,507,000 compared to the comparable period of 1994.
Year-to-date new orders have increased $5,616,100 compared to the nine
months ended August 1994.
2. Cost of sales for the third quarter 1995 increased approximately $660,000
compared to the same period for 1994. As a percentage of total sales,
cost of sales for the third quarter 1995 was 72.3% versus 70.5% for the
same quarter in 1994. The increase for the quarter is associated with
changes in product mix. Cost of sales year-to-date 1995 increased
approximately $862,000 over the same nine-month period in 1994. Cost of
sales year-to-date in 1995, as a percent to total sales, was 71.1% versus
69.7% for the same nine month period in 1994. Product mix and increased
development expenses were the primary reasons for the increase.
3. Selling, general and administrative expenses increased approximately
$85,000 in the third quarter ended August 1995, compared to the prior
year. The increase in the current period is due primarily to increased
corporate personnel and reclassification of travel expenses. As a percent
of sales, selling, general and administrative expenses were approximately
21.7% for the third quarter 1995 versus 26.1% for the same period in
1994. Year-to-date 1995, selling, general and administrative expenses
increased $109,000 over the same nine months in 1994. As a percent of
sales, selling, general and administrative expenses were 24.0%
year-to-date 1995 versus 26.0% in 1994. The primary reason for the
reduction in percentage is increased sales with reasonably stable selling,
general and administrative expense.
4. Pre-tax profits for the third quarter 1995 increased approximately
$110,000 above pre-tax profits for the same quarter 1994. As a percent of
sales for the comparable periods, profit was 6.0% for the third quarter
1995 versus 3.4% in 1994. Pre-tax profits year-to-date are approximately
$93,000 above 1994 results for the same nine month period. Pre-tax profit
was 4.8% for the 1995 year-to-date, versus 4.2% for nine months in 1994.
The increased profits are primarily due to increased revenues and
relatively stable cost of sales and selling, general and administrative
cost.
After tax profit for the first nine months of 1995, is approximately $.07
per share compared to $.05 for the same period in 1994.
5. Backlog as of August 26, 1995 was approximately $8,050,000 compared to
$3,700,000 for the third quarter ended August 27, 1994; an increase of
$4,352,000. The majority of the backlog is expected to ship within the
next twelve months.
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6. Total assets increased approximately $679,000 since November 30, 1994.
Accounts receivable and inventories increased approximately $724,000 and
$308,000 respectively. Accounts Receivable increased due to timing
differences for increased sales, while inventories increased due to
buildup for future shipment requirements. Plant, property and equipment
expenditures, net of accumulated depreciation for nine months, added
approximately $183,000 in assets. The additional equipment and facility
improvements are necessitated by the increased volume as well as new
products requiring special test equipment. Cash decreased approximately
($473,000) due to the expenditures for assets and inventories.
Liabilities increased approximately $435,000 year-to-date, due primarily
to increased accounts payable.
Shareholders' equity increased approximately $254,000 for the nine month
period ended August 26, 1995. The average income per share is
approximately $.07.
7. Cash flow decreased approximately $473,000 since November 30, 1994. Cash
has been used for operating activities ($150,000) and additions to plant,
property and equipment, ($323,000). Increased receivables and inventories
referred to in Item #6 above, offset by increased accounts payable and
depreciation, combined to cause the major decrease in operating cash.
Investments were made in production equipment to support the increased
sales volume. The Company currently does not have any existing loans from
any lending institutions and does not anticipate the need to borrow cash
in the near future.
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any material current or pending legal
proceedings, other than ordinary routine litigation incidental to its
business.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 - Financial Data Schedule
7
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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 duly authorized.
MICROPAC INDUSTRIES, INC.
10/2/95 /S/ Nicholas Nadolsky
- --------------------- --------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
10/2/95 /S/ Dave E. Hendon
- --------------------- --------------------------
Date Dave Hendon
Controller
8
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
27 -- Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-26-1995
<CASH> 77,172
<SECURITIES> 516,177
<RECEIVABLES> 2,176,989
<ALLOWANCES> 107,000
<INVENTORY> 2,458,975
<CURRENT-ASSETS> 5,358,029
<PP&E> 5,445,542
<DEPRECIATION> 4,247,835
<TOTAL-ASSETS> 6,555,737
<CURRENT-LIABILITIES> 1,502,482
<BONDS> 0
<COMMON> 362,715
0
0
<OTHER-SE> 4,515,641
<TOTAL-LIABILITY-AND-EQUITY> 6,555,737
<SALES> 8,040,506
<TOTAL-REVENUES> 8,040,506
<CGS> 5,723,165
<TOTAL-COSTS> 5,723,165
<OTHER-EXPENSES> 1,933,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 384,222
<INCOME-TAX> 132,635
<INCOME-CONTINUING> 251,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 251,587
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
