<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 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 24, 1996
For the Transition Period from to
-------- ---------
Commission File Number 0-5109
MICROPAC INDUSTRIES, INC.
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 (972) 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, 1995, 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.
<PAGE> 2
MICROPAC INDUSTRIES, INC.
FORM 10-Q
AUGUST 24, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of income for the three months and nine
months ended August 24, 1996 and August 26, 1995.
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
<PAGE> 3
MICROPAC INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(unaudited)
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statement
<TABLE>
<CAPTION>
Statement of Income Statement of Income
For Three Months Ended Year-to-Date
8/24/96 8/26/95 8/24/96 8/26/95
<S> <C> <C> <C> <C>
Sales, Net of Returns & Allowances 3,492,174 3,171,771 10,438,442 8,040,506
Cost of Goods Sold (2,422,795) (2,292,849) (7,567,572) (5,723,165)
---------- ---------- ---------- ----------
Gross Margin 1,069,379 878,922 2,870,870 2,317,341
Selling, General & Administrative Expense (646,431) (689,042) (1, 991,030) (1,933,119)
---------- ---------- ---------- ----------
Pre-Tax Income 422,948 189,880 879,840 348,222
Provision for Income Taxes (143,802) (64,569) (299,145) (132,635)
---------- ---------- ---------- ----------
Net Income 279,146 125,311 580,695 251,587
========== ========== ========== ==========
Net Income Per Share $.07 $.03 $.16 $.07
Dividends per Share 0 0 0 0
Weighted Average Number of Shares 3,627,151 3,627,151 3,627,151 3,627,151
</TABLE>
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
<PAGE> 4
MICROPAC INDUSTRIES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS 8/24/96 11/30/95
<S> <C> <C>
Cash $ 4,456 $ 213,405
Short term investments 303,136 507,694
Receivables, net of allowance for doubtful accounts
approximately $58,815 on August 24, 1996
and $107,252 on August 26, 1995. 2,183,991 1,996,595
Inventories:
Raw materials 2,221,667 1,551,171
Work-in process/inventories 1,550,297 1,182,326
Prepaid expenses and other current assets 41,769 28,463
Deferred income tax 243,456 243,456
-------------- --------------
Total current assets 6,548,772 5,723,110
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80,000 80,000
Buildings 497,924 497,924
Facility improvements 680,148 649,261
Machinery and equipment 4,115,851 4,005,823
Furniture and fixtures 297,946 244,651
-------------- --------------
Total Plant, property and equipment 5,671,869 5,477,659
Less accumulated depreciation (4,456,141) (4,297,980)
-------------- --------------
Net property, plant and equipment 1,215,728 1,179,679
-------------- --------------
TOTAL ASSETS $ 7,764,500 $ 6,902,789
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 1,279,327 866,481
Accrued payroll 287,016 297,590
Accrued professional fees 89,953 95,043
Other accured liabilities 156,697 291,535
Income taxes payable 128,318 109,639
-------------- --------------
Total current liabilities 1,941,311 1,660,288
DEFERRED INCOME TAXES 174,900 174,899
SHAREHOLDERS' EQUITY
Common stock ($.10 par value) 10,000,000 362,715 362,715
authorized, 3,627,151 outstanding)
Paid-in capital 885,540 885,540
Retained earnings 4,400,034 3,819,347
-------------- --------------
Total SHAREHOLDERS' equity 5,648,289 5,067,602
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,764,500 $ 6,902,789
============== ==============
</TABLE>
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
<PAGE> 5
MICROPAC INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 8/24/96 8/26/95
<S> <C> <C>
Net Income $ 580,695 $ 251,587
Adjustments to reconcile net income to
Cash from operating activities:
Depreciation and amortization 158,161 139,674
Changes in current assets and liabilities:
Accounts receivable (187,396) (724,156)
Inventories (1,038,467) (307,813)
Prepaid expenses & other current assets (13,306) 40,075
Income taxes 18,679 2,933
Accounts payable 412,846 424,652
Payroll & withholdings (10,581) (32,803)
Accrued liabilities (139,928) 42,818
Deferred income taxes 0 10,554
------------ ----------
Net cash flows from operating activities (219,297) (152,479)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (194,210) (322,390)
------------ ----------
Net cash flows from investing activities (194,210) (322,390)
Net increase (decrease) in cash (413,507) (474,869)
Cash at beginning of period 721,099 1,066,216
------------ ----------
Cash at end of period $ 307,592 $ 591,347
</TABLE>
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
<PAGE> 6
MICROPAC INDUSTRIES, INC.
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1. Sales and profits for the third quarter ended August 24, 1996,
increased approximately $320,000 and $154,000 respectively compared to
the third quarter 1995. Year-to-date sales have increased
approximately $2,398,000 over the same period in 1995, while profits
increased $329,000. Improved sales in the third quarter and year-
to-date 1996 are attributable to increased new quick turn orders and
1995 orders with 1996 shipping date requirements. New orders received
in the third quarter and year-to-date 1996 totaled $3,347,000 and
$10,906,000 respectively, compared to $5,319,000 and $12,434,000
respectively for the same periods in 1995.
2. Cost of sales for the third quarter and year-to-date increased
approximately $130,000 and $1,844,000 respectively compared to the
same periods in 1995. As a percentage of sales, cost of sales for the
third quarter 1996 was 69.4% versus 72.3% in 1995. Year-to-date cost
of sales, as a percentage of net sales, was 72.5% in 1996 compared to
71.2% in 1995. Cost of materials, primarily attributable to changes
in product mix, accounted for the increased cost as a percent of
sales.
3. Selling, general and administrative expenses decreased approximately
($43,000) for the quarter and increased $58,000 year-to-date. The
decrease for the quarter is attributed to reclassification of travel
expense incurred by the sales staff in efforts to identify and capture
new business. The year-to-date increase reflects higher commission
expenses paid to the sales representatives based on increased sales.
4. The net income per share for the third quarter 1996 versus 1995 was
approximately $.07 and $.03 respectively. The increase in income per
share is attributed to increased sales and stable operating , selling,
general and administrative expenses. Income per share year-to-date
was approximately $.16 compared to $.07 for the same nine months in
1995.
5. New orders for the third quarter 1996 and year-to-date totaled
approximately $3,347,000 and $10,906,000 respectively and represent
decrease of ($1,972,000) and ($1,528,000) respectively compared to the
same periods in 1995. While new orders are above the company's plan
for the nine months ended August 1996, they have not kept pace with
the 1995 record order rate, which included significant Space level
contracts.
6. Backlog on August 24, 1996 was approximately $8,688,000 compared to
$8,052,000 for the period ended August 26, 1995. The backlog reflects
a good mix of the Company's products, and shipments are estimated to
be made within the next twelve (12) months.
7. Raw material and work-in process inventories increased approximately
$639,000 and $674,000 respectively compared to the periods ended
August 26, 1995. The increase in inventories of $1,313,000 is due to
increased backlog requirements and product mix.
8. Net receivables have increased approximately $114,000 when comparing
year-to-date August 24, 1996 to August 26, 1995. The increase is
attributed to increased sales for the current year. Despite increased
revenues, day's sales have decreased from approximately 58 days for
the same period 1995 to 56 days as of August 24, 1996.
9. Capital expenditures for the first nine months of 1996 totaled
approximately $194,000 compared to $323,000 for the first nine months
in 1995. Additional production and test equipment was purchased to
support the increased production needs, while computer equipment and
software were purchased to update and improve material control and
inventory reporting systems.
10. Total assets increased approximately $862,000 since November 30, 1995.
The increase is comprised of increased current assets of approximately
$826,000 and plant, property and equipment of $36,000. The increase
in current assets is primarily due to increased accounts receivables,
raw materials and work in process resulting from increased billings.
<PAGE> 7
Total liabilities increased approximately $281,000 for the first nine
months of 1996 and is attributed to increased accounts payable and
taxes offset by reduction in accrued liabilities. The increase in
accounts payable is due primarily to increased raw materials. The
reduction of accrued liabilities was due to payment of property and
franchise taxes and reduction of reserves established earlier in the
year.
Shareholders' equity increased approximately $581,000 for the first
nine months of the year, an increase of $.16 per share.
11. Cash flows decreased approximately ($413,000) since November 30, 1995,
based on requirements for activities and purchases of production
equipment and software.
Cash generated through operating activities from net income, tax
liabilities, depreciation expense and increased payables totaled
$1,170,000 through August 24, 1996. The cash inflow was used to
offset cash outflow of ($1,390,000) to support higher sales volume,
increased inventories (due to increased backlog) and the decrease in
accrued liabilities (payment of property and franchise taxes).
Investing activities used cash of ($194,000) for the purchase of
production and test equipment to support increased business volume.
Upgraded computer software was also purchased to improve materials
control and sales information.
PART II - OTHER INFORMATION
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. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 4. OTHER INFORMATION
None
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
None
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.
- -------------------------- -------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
- -------------------------- -------------------------
Date Dave Hendon
Controller
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> AUG-24-1996
<CASH> 4,456
<SECURITIES> 303,136
<RECEIVABLES> 2,242,806
<ALLOWANCES> 58,815
<INVENTORY> 3,771,964
<CURRENT-ASSETS> 6,548,772
<PP&E> 5,671,869
<DEPRECIATION> 4,456,141
<TOTAL-ASSETS> 7,764,500
<CURRENT-LIABILITIES> 1,941,311
<BONDS> 0
0
0
<COMMON> 362,715
<OTHER-SE> 5,285,574
<TOTAL-LIABILITY-AND-EQUITY> 7,764,500
<SALES> 10,438,442
<TOTAL-REVENUES> 10,438,442
<CGS> 7,567,572
<TOTAL-COSTS> 7,567,572
<OTHER-EXPENSES> 1,991,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 879,840
<INCOME-TAX> 299,145
<INCOME-CONTINUING> 580,695
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 580,695
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
