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<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 May 31, 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
MAY 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of Income for the three
months and six months ended May 31, 1997
and May 25, 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
5/31/97 5/25/96 5/31/97 5/25/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales, Net of Returns & Allowances $3,795,493 $4,181,005 $7,210,723 $6,946,268
Cost of Goods Sold (2,772,694) (2,860,194) (5,290,894) (5,144,776)
---------- ---------- ---------- ----------
Gross Margin 1,022,799 1,320,811 1,919,829 1,801,492
Selling, General & Administrative Expense (672,987) (713,614) (1,312,183) (1,344,600)
---------- ---------- ---------- ----------
Pre-Tax Income 349,812 607,197 607,646 456,891
Provision for Income Taxes (118,936) (206,444) (206,601) (155,349)
---------- ---------- ---------- ----------
Net Income $ 230,876 $ 400,753 $ 401,045 $ 01,542
========== ========== ========== ==========
Net Income Per Share $ .06 $ .11 $ .11 $ .08
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 5/31/97 11/30/96
------- --------
<S> <C> <C>
Cash $ 117,679 $ 0
Short term investments 304,114 304,250
Receivables, net of allowance for doubtful accounts
approximately $82,264 on May 31, 1997
and $70,291 on November 30, 1996 2,359,721 2,372,387
Inventories:
Raw materials 1,679,812 2,135,951
Work-in process 1,395,131 1,634,940
Prepaid expenses and other current assets (5,359) 35,735
Deferred income tax 325,951 325,951
---------- ----------
Total current assets 6,177,019 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 4,244,293 4,178,198
Furniture and fixtures 332,423 319,122
---------- ----------
Total property, plant, and equipment 5,849,344 5,769,949
Less accumulated depreciation (4,625,894) (4,514,106)
---------- ----------
Net property, plant and equipment 1,223,450 1,255,843
---------- ----------
Total assets $7,400,469 $8,065,058
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 327,855 1,261,553
Accrued payroll 295,473 286,528
Accrued professional fees 58,608 71,712
Other accrued liabilities 180,318 174,631
Income taxes payable 86.719 220,179
---------- ----------
Total current liabilities 948,971 2,014,603
DEFERRED INCOME TAXES 150,948 150,948
SHAREHOLDERS' EQUITY
Common stock ($.10 par value) 10,000,000 362,715 362,715
authorized, 3,627,151 outstanding)
Paid-in capital 885,540 885,540
Retained earnings 5,052,295 4,651,252
---------- ----------
Total shareholders' equity 6,300,550 5,899,507
---------- ----------
Total liabilities and shareholders' equity $7,400,469 $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: 5/31/97 5/26/96
-------- --------
<S> <C> <C>
Net Income $401,043 $301,541
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 111,788 103,795
Changes in current assets and liabilities:
Accounts receivable 12,666 (376,681)
Inventories 695,948 (387,748)
Prepaid expenses & other current assets 41,094 8,987
Income taxes (133,460) 30,877
Accounts payable (933,699) 174,274
Payroll & withholdings 8,945 (30,782)
Accrued liabilities (7,417) (59,234)
-------- --------
Net cash from operating activities 196,908 (252,946)
======== ========
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (79,396) (133,654)
-------- --------
Net cash from investing activities (79,396) (133,654)
Net increase (decrease) in cash 117,512 (386,600)
Cash at beginning of period 304,250 721,099
-------- --------
Cash at end of period $421,763 $334,499
======== ========
</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 second quarter ended May 31, 1997 were approximately
($386,000) below sales for the comparable quarter in 1996. Startup
delays for certain custom product orders and lower than anticipated
orders for some of the Company's standard products combined to reduce
sales for the quarter. Year-to-date 1997 sales have increased $264,000
compared to the first six months in 1996.
2. Cost of sales for the second quarter totaled approximately 73.1% of
related sales compared to 68.4 % for the same quarter in 1996. Cost of
sales year-to-date 1997 totaled 73.3% of related sales compared to
74.1% for the first half of fiscal 1996. Changes in product mix and
increased investments in new product development accounted for the
increase in the second quarter 1997 versus the second quarter 1996.
3. Selling, general and administrative expenses for the second quarter
are approximately ($21,000) below the second quarter of 1996 and
($32,000) below the first six months of last year. As a percent of
revenues, SG&A was 18.2% of revenues for the second quarter and
year-to-date 1997, compared to 17.1% for the second quarter and 19.4%
year-to-date for 1996.
4. Net income per share for the second quarter and year-to-date 1997 was
approximately $.06 per share and $.11 per share respectively, compared
to $.11 and $.08 per share for the same quarter and year-to-date in
1996. Improved results are attributed to increased sales and stable
operating cost.
5. New orders for the second quarter and year-to-date 1997 totaled
approximately $3,600,000 and $6,010,000 respectively compared to
$4,258,000 and $7,559,000 for the comparable periods in 1996. Lower
demand for the Company's product for Space programs, combined with
reduced requirements for custom products for one of the Company's
major industrial customers resulted in decreased orders in the first
half of 1997, compared to 1996.
6. Backlog on May 31, 1997 totaled approximately $6,564,000 compared to
$8,945,000 for the period ended May 26, 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 ($456,000) 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 ($240,000) as the Company began to
ship new products with long cycle production times.
8. Net receivables have decreased approximately ($13,000) since November
30, 1996. Day's sales as of May 31, 1997 are approximately 56 days
compared to 53 days at May 25, 1996.
9. Total assets decreased approximately ($665,000) 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 due to reductions in vendor accounts payable
liabilities and accrued liabilities pertaining to payment of 1996
fourth quarter federal income taxes.
Shareholders' equity at May 31, 1997 was $6,300,500 an increase of
approximately $401,000 for the first six months 1997.
10. Cash and cash equivalents increased approximately $118,000 since
November 30, 1996. Cash of approximately $197,000 was generated
through operating activities and was offset by ($79,000) 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
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.
July 3, 1997 /s/ Nicholas Nadolsky
- ------------ -------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
July 3, 1997 /s/ Dave Hendon
- ------------ -------------------------
Date Dave Hendon
Controller
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Item
- ------- ----
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 117,679
<SECURITIES> 304,114
<RECEIVABLES> 2,441,985
<ALLOWANCES> 82,264
<INVENTORY> 3,074,943
<CURRENT-ASSETS> 6,177,019
<PP&E> 5,849,344
<DEPRECIATION> 4,625,894
<TOTAL-ASSETS> 7,400,469
<CURRENT-LIABILITIES> 948,971
<BONDS> 0
0
0
<COMMON> 362,715
<OTHER-SE> 5,937,835
<TOTAL-LIABILITY-AND-EQUITY> 7,400,469
<SALES> 3,795,493
<TOTAL-REVENUES> 3,795,493
<CGS> (2,772,694)
<TOTAL-COSTS> (2,772,694)
<OTHER-EXPENSES> (672,987)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 349,812
<INCOME-TAX> (118,936)
<INCOME-CONTINUING> 230,876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 230,876
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
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