<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 March 1, 1997
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, 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
MARCH 1, 1997
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of Income for the three months
ended March 1, 1997 and February 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
for the quarters ended
3/01/97 2/24/96
------------ ------------
<S> <C> <C>
Sales, Net of Returns & Allowances $ 3,415,230 $ 2,765,264
Cost of Goods Sold (2,518,199) (2,284,583)
------------ ------------
Gross Margin 897,030 480,681
Selling, General & Administrative Expense (639,196) (630,987)
------------ ------------
Pre-Tax Income 257,834 (150,306)
Provision for Income Taxes (87,665) 51,104
------------ ------------
Net Income $ 170,169 (99,202)
============ ============
Net Income Per Share $ .05 $ (.03)
Dividends per Share -- --
Weighted Average Number of Shares 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 3/01/97 11/30/96
------------ ------------
<S> <C> <C>
Cash $ 18,829 $ 0
Short term investments 304,250 304,250
Receivables, net of allowance for doubtful accounts
approximately $76,291 on March 1, 1997
and $70,291 on November 30, 1996 2,313,183 2,372,387
Inventories:
Raw materials 1,771,398 2,135,951
Work-in process 1,845,623 1,634,940
Prepaid expenses and other current assets 3,009 35,735
Deferred income tax 325,951 325,951
------------ ------------
Total current assets 6,582,242 6,809,215
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80,000 80,000
Buildings 497,924 497,924
Facility improvements 694,705 694,705
Machinery and equipment 4,177,383 4,178,198
Furniture and fixtures 325,164 319,122
------------ ------------
Total property, plant, and equipment 5,775,176 5,769,949
Less accumulated depreciation (4,571,428) (4,514,106)
------------ ------------
Net property, plant and equipment 1,203,747 1,255,843
------------ ------------
Total assets $ 7,785,989 $ 8,065,058
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 971,600 1,261,553
Accrued payroll 305,565 286,528
Accrued professional fees 55,654 71,712
Other accrued liabilities 59,704 174,631
Income taxes payable 172,844 220,179
------------ ------------
Total current liabilities 1,565,367 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 4,821,419 4,651,252
------------ ------------
Total shareholder's equity 6,069,674 5,899,507
Total liabilities and shareholders' equity $ 7,785,989 $ 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: 3/01/97 2/24/96
---------- -----------
<S> <C> <C>
Net Income $ 170,167 $ (99,202)
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 57,323 50,936
Changes in current assets and liabilities:
Accounts receivable 59,204 170,287
Inventories 153,870 (193,709)
Prepaid expenses & other current assets 32,726 32,954
Income taxes (47,335) (175,567)
Accounts payable (289,953) 175,366
Payroll & withholdings 19,037 (56,474)
Accrued liabilities (130,985) (87,608)
Deferred income taxes - -
========== ==========
Net cash from operating activities 24,055 (183,016)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (5,227) (63,614)
---------- ----------
Net cash from investing activities (5,227) (63,614)
Net increase (decrease) in cash 18,829 (246,330)
Cash at beginning of period 304,250 721,099
---------- ----------
Cash at end of period $ 323,079 $ 474,769
========== ==========
</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 first quarter ended March 1, 1997 increased
approximately $650,000 and $408,000 respectively compared to the first
quarter 1996. Improved revenues in the first quarter 1997 versus
1996 are attributable to a strong beginning backlog with current
quarter ship date requirements, combined with new orders also
shippable in the first quarter.
2. Cost of sales for the first quarter increased approximately $234,000
compared to the first quarter 1996, based on higher sales volume. As
a percentage of net sales, cost of sales for the first quarter 1997
was 73.7% versus 82.7% for the first quarter 1996. The improved ratio
is attributed to changes in product mix and stable overhead costs.
3. Selling, general and administrative expenses increased approximately
$8,000 for the first quarter over the same period in 1996. As a
percent of revenues, SG&A was 18.7% of revenues for the first quarter
1997 compared to 22.8% for the same period in 1996.
4 Net income per share for the first quarter 1997 was approximately $.04
versus a loss of ($.03) per share for the same quarter in 1996.
Improved results are attributed to increased sales and stable
operating cost.
5. New orders for the first quarter 1997 totaled approximately $2,410,000
compared to $3,301,000 for the same period in 1996.
6. Backlog on March 1, 1997 was approximately $6,816,000 compared to
$8,845,000 for the period ended February 24, 1996. 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 ($365,000) 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 upcoming shipments in the immediate future. Work-in
process inventories increased approximately $211,000 to support
contract delivery requirements.
8. Net receivables increased approximately $487,000 when comparing first
quarter 1997 to 1996. The increase is attributed to increased sales
for the current year. Days sales have increased from approximately
58 days for the same period 1996 to 61 days as of March 1, 1997.
9. Capital expenditures for the first quarter have been minimal and were
related to continued implementation of the materials management
software module which deals with improved controls for the purchasing
of raw materials by the Company.
10. Total assets decreased approximately ($279,000) since fiscal year
ended November 30, 1996. The decrease is attributed primarily to the
reduction of raw materials inventories as previously mentioned in item
#7 above.
Liabilities decreased for the quarter due to reductions of accounts
payable and accrued liabilities pertaining to payment of 1996 fourth
quarter federal income taxes.
Shareholders' equity increased approximately $170,000 for the first
quarter 1997, an average of approximately $.04 per share.
11. Cash and cash equivalents increased approximately $19,000 for the
first quarter. Cash of approximately $24,000 was generated through
changes from operating activities and was offset by ($5,000) used for
capital expenditures.
<PAGE> 7
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
On February 18, 1997, the Company held its annual
Shareholder's meeting at which time directors were elected to
serve until the next annual meeting of Shareholders to be held
in February 1998.
ITEM 4. OTHER INFORMATION
None
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 - Financial Data Schedule
(9) Changes in Control of Registrant - On August 30, 1991, the
Company entered into a Proxy Agreement with Heinz-Wener
Hempel, a citizen of West Germany. The Proxy Agreement was
adopted to permit the Company to gain facility security
clearance from the Department of Defense. In 1993, the
Company terminated its Department of Defense facility security
clearance due to lack of classified contracts from the
Government. On January 10, 1997, Mr. Hempel notified the
Company that he was revoking and terminating the Proxy
Agreement.
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.
4/4/97 /s/ NICHOLAS NADOLSKY
- -------------------------- -------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
4/4/97 /s/ DAVE HENDON
- -------------------------- -------------------------
Date Dave Hendon
Controller
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> MAR-01-1997
<CASH> 18,829
<SECURITIES> 304,250
<RECEIVABLES> 2,389,474
<ALLOWANCES> 76,291
<INVENTORY> 3,617,021
<CURRENT-ASSETS> 6,582,242
<PP&E> 5,775,176
<DEPRECIATION> 4,571,428
<TOTAL-ASSETS> 7,785,989
<CURRENT-LIABILITIES> 1,565,367
<BONDS> 0
0
0
<COMMON> 362,715
<OTHER-SE> 5,706,959
<TOTAL-LIABILITY-AND-EQUITY> 7,785,989
<SALES> 3,415,230
<TOTAL-REVENUES> 3,415,230
<CGS> (2,518,199)
<TOTAL-COSTS> (2,518,199)
<OTHER-EXPENSES> (639,196)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 257,834
<INCOME-TAX> (87,665)
<INCOME-CONTINUING> 170,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170,169
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
