<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 1.3 or 15 (d)
of the Securities Exchange Act of 1934
for the Quarter Ended May 25, 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 (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, 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.
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MICROPAC INDUSTRIES, INC.
FORM 10-Q
MAY 25, 1996
INDEX
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Condensed Statements of Operations for the three months and six
months ended May 25, 1996 and May 27, 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
2
<PAGE> 3
MICROPAC INC.
STATEMENTS OF OPERATIONS
(unaudited)
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
May 25, May 27, May 25, May 27,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales, Net of Returns & Allowances $ 4,181,005 $ 3,159,505 $ 6,946,268 $ 4,868,735
Cost of Goods Sold (2,860,194) (2,138,020) (5,144,776) (3,430,316)
------------ ------------ ------------ ------------
Gross Margin 1,320,811 1,021,485 1,801,492 1,438,419
Selling, General & Administrative Expense (713,614) (682,417) (1,344,600) (1,244,078)
------------ ------------ ------------ ------------
Pre-Tax Income 607,197 339,068 456,892 194,341
Provision for Income Taxes (206,444) (115,283) (155,349) (66,076)
------------ ------------ ------------ ------------
Net Income $ 400,753 $ 223,785 $ 301,543 $ 128,265
============ ============ ============ ============
Net Income per Share $ 0.11 $ 0.06 $ 0.08 $ 0.04
------------ ------------ ------------ ------------
Dividends per Share $ 0.00 $ 0.00 $ .00 $ .00
------------ ------------ ------------ ------------
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.
3
<PAGE> 4
MICROPAC INDUSTRIES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
May 25, November 30,
1996 1995
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 31,363 $ 213,405
Short term investments 303,136 507,694
Receivables, net of allowance for doubtful accounts of
approximately $106,719 for both May 25, 1996, and
November 30, 1995 2,373,277 1,996,595
Inventories:
Raw materials 1,777,527 1,551,171
Work-in process/inventories 1,343,716 1,182,326
Prepaid expenses and other current assets 37,451 28,463
Deferred income tax 243,456 243,456
------------ ------------
Total current assets 6,109,926 5,723,110
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80,000 80,000
Buildings 497,924 497,924
Facility improvements 666,148 649,261
Machinery and equipment 4,083,106 4,005,823
Furniture and fixtures 284,135 244,651
------------ ------------
Total property, plant, and equipment 5,611,313 5,477,659
Less accumulated depreciation (4,401,775) (4,297,980)
------------ ------------
Net property, plant and equipment 1,209,538 1,179,679
TOTAL ASSETS $ 7,319,464 $ 6,902,789
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,040,755 $ 866,481
Accrued payroll 266,807 297,590
Accrued professional fees 75,510 95,043
Other accrued liabilities 251,834 291,535
Income taxes payable 140,516 109,639
------------ ------------
Total current liabilities 1,775,422 1,660,288
DEFERRED INCOME TAXES 174,899 174,899
SHAREHOLDER'S EQUITY:
Common stock ($.10 par value) 10,000,000
authorized, 3,727,151 outstanding) 362,715 362,715
Paid-in capital 885,540 885,540
Retained earnings 4,120,888 3,819,347
------------ ------------
Total shareholder's equity 5,369,143 5,067,602
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 7,319,464 $ 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.
4
<PAGE> 5
MICROPAC INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
May 25, May 27,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 301,541 $ 128,265
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 103,795 93,233
Changes in current assets and liabilities
Accounts receivable (376,681) (648,324)
Inventories (387,748) (56,977)
Prepaid expenses & other current assets (8,988) 32,207
Income taxes 30,877 29,589
Accounts payable 174,274 356,394
Payroll & withholdings (30,782) (23,414)
Accrued liabilities (59,234) (124,772)
Deferred income taxes -- 10,554
------------ ------------
Net cash flows from operating activities (252,946) (202,245)
CASH FLOWS FROM INVESTING ACTIVITIES:
Addition to property, plant, and equipment (133,654) (234,687)
------------ ------------
Net cash flows from investing activities (133,654) (234,687)
NET INCREASE (DECREASE) IN CASH (386,600) (436,932)
CASH AT BEGINNING OF PERIOD 721,099 1,066,216
------------ ------------
CASH AT END OF PERIOD $ 334,499 $ 629,284
============ ============
</TABLE>
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
5
<PAGE> 6
MICROPAC INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1. Sales and profits for the second quarter ended May 25, 1996, increased
approximately $1,021,500 and $268,129 respectively compared to the second
quarter 1995. Year-to-date sales have increased approximately $2,078,000
over the same period in 1995, while profits increased $173,000. Improved
sales in the second 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 second quarter and year-to-date
1996 totaled $4,258,000 and $7,599,000 respectively, compared to
$3,910,000 and $7,099,000 respectively for the same periods in 1995.
2. Cost of sales for the second quarter and year-to-date increased
approximately $772,000 and $1,714,000 respectively compared to the same
periods in 1995. As a percentage of sales, cost of sales for the second
quarter 1996 was 68,4% versus 74.8% in 1995. Year-to-date cost of sales,
as a percentage of net sales, was 74.1% in 1996 compared to 70.5% in 1995.
Materials accounted for the increase, primarily attributable to product
mix changes.
3. Selling, general and administrative expenses increased approximately
$31,000 for the quarter and $101,000 year-to-date. The increase in both
periods is attributed to (1) increased travel expense incurred by the
sales staff and management in efforts to identify and capture new business
and (2) increased commission expenses paid to the sales representatives
due to increased sales.
4. The net income per share for the second quarter 1996 versus 1995 was
approximately $.11 and $.06 respectively. The increase in income per
share is attributed to increased sales and stable selling, general, and
administrative expenses. Income per share year-to-date was approximately
$.08 compared to $.04 for the same six months in 1995. Despite the slow
performance for the first quarter, the company's performance for the year
has doubled 1995's first half performance.
5. New orders for the second quarter 1996 and year-to-date totaled
approximately $4,258,000 and $7,559,000 respectively and represent an
increase of $348,000 and $460,000 respectively compared to the same
periods in 1995. The increased new orders are attributed to new product
development, aggressive field sales efforts, and qualification by the
company for class "K" and Jan "S" (space) products.
6. Backlog on May 25, 1996 was approximately $8,945,000 compared to
$5,910,000 for the period ended May 27, 1995. The backlog reflects a good
mix of the Company's products, and is scheduled to ship within the next
twelve (12) months.
7. Raw material and work-in process inventories increased approximately
$506,000 and $407,000 respectively compared to the periods ended May 27.
1996. The increase in inventories of $913,000 is due to the increased
backlog requirements.
8. Net receivables have increased approximately $379,000 when comparing
year-to-date May 25, 1996 to May 27, 1995, with the increase attributed to
increased sales in the current year. Despite increased revenues, day's
sales have decreased from approximately 57 days for the same period 1995
to 53 days as of May 25, 1996.
9. Capital expenditures for the first six months of 1996 totaled
approximately $134,000 compared to $235,000 for the first six 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 $417,000 since November 30, 1995.
the increase is comprised of increases in current assets of approximately
$387,000 and plant, property and equipment of $30,000. The increase in
current assets is primarily due to increased accounts receivables
resulting from increased billings.
6
<PAGE> 7
Total liabilities increased approximately $115,000 for the first six
months of 1996 and is primarily attributed to increased accounts payable
and taxes offset by reductions 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.
Shareholder's equity increased approximately $301,000 for the first half
of the year, an increase of $.08 per share. Cash flows decreased
approximately ($387,000) since November 30, 1995 and is derived from
operating activities ($253,000) and purchases of production equipment and
software, ($134,000).
11. Cash generated through operating activities from net income, tax
liabilities, depreciation expense and increased payables totaled $610,000
through May 31, 1996. Cash was used to offset cash outflow of ($863,000)
caused by increases in accounts receivable (higher billings) and
inventories (due to increase backlog) and due to decrease in accrued
liabilities (payment of property and franchise taxes).
Investing activities used cash of ($134,000) 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.
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 Nick Nadolsky
Chairman of the Board/CEO
- ---------------------------------- ------------------------------------
Date Dave Hendon
Controller
7
<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> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> MAY-25-1996
<CASH> 31,363
<SECURITIES> 303,136
<RECEIVABLES> 2,479,996
<ALLOWANCES> 106,719
<INVENTORY> 3,121,243
<CURRENT-ASSETS> 6,109,926
<PP&E> 5,611,313
<DEPRECIATION> 4,401,775
<TOTAL-ASSETS> 7,319,464
<CURRENT-LIABILITIES> 1,775,422
<BONDS> 0
<COMMON> 362,715
0
0
<OTHER-SE> 5,006,428
<TOTAL-LIABILITY-AND-EQUITY> 7,319,464
<SALES> 6,946,268
<TOTAL-REVENUES> 6,946,268
<CGS> 5,144,776
<TOTAL-COSTS> 5,144,776
<OTHER-EXPENSES> 1,344,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 456,892
<INCOME-TAX> 155,349
<INCOME-CONTINUING> 301,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301,543
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
