<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 30, 1997
For the Transition Period from_________ to _________
Commission File Number 0-5109
MICROPAC INDUSTRIES, INC.
<TABLE>
<S> <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 (972) 272-3571
</TABLE>
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, 1996, 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-QSB
AUGUST 30, 1997
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of Income for the three months and
nine months ended August 30, 1997 and August 24, 1996
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
8/30/97 8/24/96 8/30/97 8/24/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales, Net of Returns & Allowances $ 3,785,685 $ 3,492,174 $ 10,996,408 $ 10,438,442
Cost of Goods Sold (2,714,718) (2,422,795) (8,006,612) (7,567,572)
------------ ------------ ------------ ------------
Gross Margin 1,069,967 1,069,378 2,989,796 2,870,870
Selling, General & Administrative Expense (630,530) (646,431 (1,942,713) (1,991,030)
------------ ------------ ------------ ------------
Pre-Tax Income 439,437 422,948 1,047,083 879,839
Provision for Income Taxes (149,407) (143,802) (356,008) (299,145)
------------ ------------ ------------ ------------
Net Income $ 290,030 $ 279,146 $ 691,075 $ 580,694
============ ============ ============ ============
Net Income Per Share $ .08 $ .07 $ .19 $ .16
Dividends per Share -- -- -- --
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 8/30/97 11/30/96
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<S> <C> <C>
Cash $ 423,707 $ 0
Short term investments 1,137,727 304,250
Receivables, net of allowance for doubtful accounts
approximately $88,264 on August 30, 1997
and $70,291 on November 30, 1996 2,100,070 2,372,387
Inventories:
Raw materials 1,394,229 2,135,951
Work-in process 1,200,180 1,634,940
Prepaid expenses and other current assets (9,636) 35,735
Deferred income tax 325,951 325,951
----------- -----------
Total current assets 6,572,230 6,809,215
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80,000 80,000
Buildings 497,924 497,924
Facility improvements 709,068 694,705
Machinery and equipment 4,284,362 4,178,198
Furniture and fixtures 347,033 319,122
----------- -----------
Total property, plant, and equipment 5,918,387 5,769,949
Less accumulated depreciation (4,678,563) (4,514,106)
----------- -----------
Net property, plant and equipment 1,239,824 1,255,843
----------- -----------
Total assets $ 7,812,054 $ 8,065,058
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 404,654 1,261,553
Accrued payroll 354,260 286,528
Accrued professional fees 64,173 71,712
Other accrued liabilities 166,313 174,631
Income taxes payable 81,127 220,179
----------- -----------
Total current liabilities 1,070,528 2,014,603
DEFERRED INCOME TAXES 150,948 150,948
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 5,342,323 4,651,252
----------- -----------
Total shareholders' equity 6,590,578 5,899,507
----------- -----------
Total liabilities and shareholders' equity $ 7,812,054 $ 8,065,058
=========== ===========
</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: 8/30/97 8/24/96
----------- -----------
<S> <C> <C>
Net Income $ 691,072 $ 580,687
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 164,457 158,161
Changes in current assets and liabilities:
Accounts receivable 272,317 (187,395)
Inventories 1,176,481 (1,038,467)
Prepaid expenses & other current assets 45,371 (13,305)
Income taxes (139,051) 18,679
Accounts payable (856,900) 412,846
Payroll & withholdings 67,732 (10,573)
Accrued liabilities (15,857) (139,928)
----------- -----------
Net cash from operating activities 1,405,622 (219,295)
=========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (148,438) (194,211)
----------- -----------
Net cash from investing activities (148,438) (194,211)
Net increase (decrease) in cash 1,257,184 (413,507)
Cash at beginning of period 304,250 721,099
----------- -----------
Cash at end of period $ 1,561,434 $ 307,592
=========== ===========
</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 for the third quarter ended August 30, 1997 totaled $3,786,000
and were approximately $294,000 above sales for the comparable quarter
in 1996. The increase in sales for the third quarter is associated
primarily with increased bookings for the same period. Year-to-date
sales for 1997 total $10,996,000, an increase of $558,000 or 5%
compared to the comparable nine months in 1996. Increased sales for
the first nine months are attributed to increased shipments on
developmental contracts received in 1996, combined with new orders
received in the current period with accelerated delivery schedules.
2. Cost of sales for the third quarter totaled approximately $2,715,000
or 71.7% of related sales compared to $2,423,000 or 69.4 % for the
same quarter in 1996. Cost of sales year-to-date 1997 totaled
$8,006,000 or 72.8% of related sales compared to $7,568,000 or 72.5%
for the same nine months of fiscal 1996.
3. Selling, general and administrative expenses for the third quarter
1997 and 1996 totaled $631,000 and $646,000 respectively. a decrease
of approximately ($16,000). Due to the increase in sales for the
comparable quarters, selling, general and administrative expenses
represent 16.7% of sales for the third quarter 1997 versus 18.5% for
the comparable quarter in 1996. Year-to-date selling, general and
administrative expenses total $1,943,000 for 1997 compared to
$1,991,000 for the same nine month period in 1996. As a percent of
sales, selling, general and administrative expenses total 17.7%
year-to-date 1997 versus 19.1% in 1996.
4. Net income per share for the third quarter and year-to-date 1997 are
approximately $.08 per share and $.19 per share respectively, compared
to $.07 and $.16 per share for the same quarter and year-to-date in
1996. Improved results are attributed to increased sales and stable
operating and administrative cost.
5. New orders for the third quarter 1997 totaled approximately $3,585,000
compared to $3,347,000 in 1996. Year-to-date new orders total
$9,595,000 compared to $10,906,000 for the comparable nine months in
1996. Reduced orders from the Company's distribution network for
certain standard components and decreased requirements for custom
products supplied to space programs, due to timing differences, are
the primary reasons for the decrease in new orders.
6. Backlog on August 30, 1997 totaled approximately $6,349,000 compared
to $7,809,000 for the period ended November 30, 1996. The decrease in
backlog is attributed to increased shipment of product discussed in
paragraph 1 above, combined with decreased new orders for the nine
month period ended August 30, 1997, as discussed in paragraph 5. 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 inventories decreased approximately ($742,000) since
November 30, 1996 with the decrease related primarily to : (1)
purchase of raw materials by a customer for inventories purchased
specifically for a custom product, and (2) releases of materials to
the line for shipments in the immediate future. Work-in process
inventories decreased approximately ($435,000) as the Company began to
ship new products with long cycle production times.
8. Net receivables decreased approximately ($272,000) since November 30,
1996. Days' sales as of August 30 1997 are approximately 50 days
compared to 54 days as of November 30, 1996.
9. Total assets decreased approximately ($254,000) since fiscal year
ended November 30, 1996. The decrease is attributed primarily to
current assets with reductions in raw materials, work-in-process and
accounts receivable being offset by increased cash.
Liabilities decreased ($944,000) due primarily to reductions of vendor
accounts payable and accrued liabilities pertaining to income taxes.
Shareholders' equity at August 30, 1997 was $6,590,578 an increase of
approximately $691,000 for the first nine months 1997.
<PAGE> 7
10. Cash from all aspects increased approximately $1,257,000 since
November 30, 1996. Cash derived from Net Income for the nine month
period ending August 30, 1997 totaled approximately $691,000. Cash was
also generated through other operating activities and totaled an
additional $715,000. The primary changes in cash from other operating
activities dealt with decreased inventories and accounts receivable.
The influx of other cash was offset partially by reductions in the
Company's accounts payable and income taxes. Net cash from operating
activities increased by $1,406,000. Approximately $148,000 was used
for investing in equipment and machinery to improve productivity for
the Company.
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
Exhibit 27 - Financial Data Schedule.
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.
September 30, 1997 /s/ NICHOLAS NADOLSKY
- ------------------ -------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
September 30, 1997 /s/ DAVE HENDON
- ------------------ -------------------------
Date Dave Hendon
Controller
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-30-1997
<CASH> 423,707
<SECURITIES> 1,137,727
<RECEIVABLES> 2,188,334
<ALLOWANCES> 88,264
<INVENTORY> 2,594,409
<CURRENT-ASSETS> 6,572,230
<PP&E> 5,918,387
<DEPRECIATION> 4,678,563
<TOTAL-ASSETS> 7,812,054
<CURRENT-LIABILITIES> 1,070,528
<BONDS> 0
0
0
<COMMON> 362,715
<OTHER-SE> 6,227,863
<TOTAL-LIABILITY-AND-EQUITY> 7,812,054
<SALES> 10,996,408
<TOTAL-REVENUES> 10,996,408
<CGS> (8,006,612)
<TOTAL-COSTS> (8,006,612)
<OTHER-EXPENSES> (1,942,713)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,047,083
<INCOME-TAX> (356,008)
<INCOME-CONTINUING> 691,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 691,075
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
