SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 QSB/A
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 30, 1998
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
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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
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At November 30, 1997 and May 30, 1998, there were 3,627,151 shares of
registrant's common stock outstanding. On these dates, 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>
MICROPAC INDUSTRIES, INC.
FORM 10-QSB
MAY 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of Income for the three
months and six months ended May 30, 1998 and
May 31, 1997
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>
<TABLE>
<CAPTION>
MICROPAC INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(unaudited)
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statement
Statement of Income Statement of Income
for three months ended Year-to-date
5/30/98 5/31/97 5/30/98 5/31/97
------- ------- ------- -------
<S> <C> <C>
Sales, Net of Returns & Allowances $ 2,836,104 $ 3,795,493 $ 6,103,904 $ 7,210,723
Cost of Goods Sold (2,193,830) (2,772,694) (4,575,209) (5,290,894)
----------- ----------- ----------- -----------
Gross Margin 642,274 1,022,799 1,528,695 1,919,829
Selling, General & Administrative Expense (543,217) (672,987) (1,165,981) (1,312,183)
----------- ----------- ----------- -----------
Pre-Tax Income 99,057 349.812 362,714 607,646
Provision for Income Taxes (35,554) (118,936) (126,949) (206,601)
----------- ----------- ----------- -----------
Net Income $ 63,503 $ 230,876 $ 235,765 $ 401,045
=========== =========== =========== ===========
Net Income Per Share $ .02 $ .06 $ .06 $ .11
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>
<TABLE>
<CAPTION>
MICROPAC INDUSTRIES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
CURRENT ASSETS 5/30/98 11/30/97 5/31/97 11/30/96
------- -------- ------- --------
<S> <C> <C> <C>
Cash $ 52,810 $ 106,200 $ 117,649 $ 0
Short term investments 1,565,258 1,542,919 304,114 304,250
Receivables, net of allowance for doubtful accounts of 1,688,143 2,412,443 2,359,721 2,372,387
$95,495 on May 30, 1998 and $82,264 on May 31, 1997
Inventories:
Raw materials 1,961,953 1,559,788 1,679,812 2,135,951
Work-in process 1,249,526 1,147,572 1,395,131 1,634,940
Prepaid expenses and other current assets 65,404 63,371 (5,359) 35,735
Deferred income tax 301,951 301,951 325,951 325,951
------- ------- ------- -------
Total current assets 6,885,046 7,134,245 6,177,019 6,809,215
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80,000 80,000 80,000 80,000
Buildings 497,924 497,924 497,924 497,924
Facility improvements 692,487 694,705 694,705 694,705
Machinery and equipment 4,458,816 4,335,347 4,244,293 4,178,198
Furniture and fixtures 381,627 379,667 332,423 319,122
------- ------- ------- -------
Total property, plant, and equipment 6,110,854 5,987,643 5,849,344 5,769,949
Less accumulated depreciation (4,791,166) (4,663,958) (4,625,894) (4,514,106)
---------- ----------- ---------- ----------
Net property, plant and equipment 1,319,687 1,323,686 1,223,450 1,255,843
--------- --------- --------- ---------
Total assets $8,204,734 $8,457,930 $7,400,469 8,065,058
========== ========== ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $480,919 $806,795 $327,855 $1,261,553
Accrued payroll 326,578 343,500 295,473 286,528
Accrued professional fees 62,053 64,552 58,608 71,712
Other accrued liabilities 82,701 226,166 180,318 174,631
Income taxes payable 109,949 110,137 86,719 220,179
------- ------- ------ -------
Total current liabilities 1,062,200 1,551,150 948,971 2,014,603
DEFERRED INCOME TAXES 89,948 89,948 150,948 150,948
SHAREHOLDERS' EQUITY
Common stock ($.10 par value) 10,000,000 362,715 362,715 362,715 362,715
authorized, 3,627,151 outstanding)
Paid-in capital 885,540 885,540 885,540 885,540
Retained earnings 5,804,330 5,568,577 5,052,295 4,651,252
--------- --------- --------- ---------
Total shareholders' equity 7,052,585 6,816,832 6,300,550 5,899,507
--------- --------- --------- ---------
Total liabilities and shareholders' equity $8,204,734 $8,457,930 $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>
MICROPAC INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: 5/30/98 5/31/97
------- -------
Net Income $ 235,753 $ 401,043
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 127,209 111,788
Changes in current assets and liabilities:
Accounts receivable 724,300 12,666
Inventories (504,119) 695,948
Prepaid expenses & other current assets (2,033) 41,094
Income taxes (187) (133,460)
Accounts payable (325,876) (933,699)
Payroll & withholdings (16,922) 8,945
Accrued liabilities (145,965) (7,417)
----------- -----------
Net cash from operating activities 92,159 196,908
=========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (123,210) (79,396)
----------- -----------
Net cash from investing activities (123,210) (79,396)
Net increase (decrease) in cash (31,051) 117,512
Cash at beginning of period 1,649,119 304,250
----------- -----------
Cash at end of period $ 1,618,068 $ 421,763
=========== ===========
These statements reflect all adjustments which, in the opinion of management,
are necessary for fair statement of the results for the interim period.
<PAGE>
MICROPAC INDUSTRIES, INC.
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1. Sales for the second quarter and year to date 1998 totaled $2,836,000 and
$6,104,000 respectively which are ($959,000) are below the second quarter
of 1997 and ($1,107,000) below sales for the first half of the prior year.
Sales were down for the comparable periods due to order reschedules from a
major customer and due to reduced requirements for some of the Company's
standard products.
2. Cost of sales for the second quarter totaled approximately 77.3% of related
sales compared to 73.1 % for the same quarter in 1997. Cost of sales
overheads, as a percentage of net sales, increased due to staffing of
production and support personnel to meet anticipated revenues which the
company has not achieved. Personnel adjustments were made late in the
second quarter to match estimated production requirements for the following
quarters. Cost of sales year-to-date 1998 totaled 75.0% of related sales
compared to 73.4% for the first half of fiscal 1997. Changes in product mix
combined with a stable manufacturing overhead base were the primary reasons
for the increased cost of sales percentage for the first six months of 1998
versus 1997.
3. Selling, general and administrative expenses for the comparable quarters of
1998 and 1997 totaled approximately 19.2% and 17.7% respectively. The
increase in percentage is attributed to decreased sales for the comparable
quarters in 1998 versus 1997. Actual dollars expensed for selling, general
and administrative expenses of 1998 decreased approximately ($130,000)
compared to cost for the same quarter in 1997. Items affecting the decrease
were interest income from short and long term investments, reduced
corporate travel , reduced commission expenses due to lower sales volume
and decreased outside selling expenses. Year-to-date 1998, SG&A totaled
19.1% of revenues compared to 18.2% for the same six month period of 1997.
Total SG&A expenses for the comparable six month periods were ($146,000)
less in 1998 versus 1997 for the same reasons as indicated for the
reductions in cost for the second quarter comparison variances.
4. Income per share for the second quarter and year-to-date 1998 was
approximately $.02 and $.06 per share respectively, compared to $.06 and
$.11 per share for the same quarter and year-to-date in 1997. Reduced sales
for the comparable periods combined with constant manufacturing overhead
expenses were the primary factors in reduced profits for the quarter and
year-to-date.
5. New orders for the second quarter 1998 totaled $5,025,000 bringing
year-to-date orders to $6,954,000. New orders for the comparable second
quarter and year to date for 1997 were $3,600,000 and $6,010,000
respectively. Although new orders for the second quarter and year to date
exceed 1997 results, many are custom orders and will not impact revenues
until late fourth quarter of fiscal 1998.
6. Backlog totaled approximately $7,974,000 as of May 30, 1998 compared to
$6,564,000 for the period ended May 31, 1997. The backlog reflects a good
mix of the Company's products, and shipments of a significant amount of the
backlog are estimated to be made within the next twelve (12) months.
7. Raw material inventories increased approximately $402,000 since November
30, 1997 due primarily to product being brought in house to support
increased shipments to one of the Company's primary customers. The down
turn in the Asian economy has impacted requirements for our customer's
products which has resulted in the reschedules of orders until later in
1998. Work-in process inventories have increased approximately $102,000
with the major increases in some of the Company's standard optoelectronic
products.
8. Net accounts receivable decreased ($724,000) since November 30, 1997. The
reduction of accounts receivable is due to decreased sales for the six
month period ended May 30, 1998. Day's sales as of May 30, 1998 are
approximately 53 days compared to 58 days at November 30, 1997.
<PAGE>
9. Total assets, year to date, decreased approximately ($253,000) since fiscal
year ended November 30, 1997. The majority of the decrease was in current
assets. Accounts receivable and cash and cash equivalents reduced
approximately ($724,000) and ($31,000) respectively while raw materials and
work in process inventories increased $504,000. Refer to items 1and 7 for
details.
Liabilities, year to date, decreased approximately ($489,000) due primarily
to reductions of accounts payable liabilities and accrued liabilities of
approximately ($326,000) and ($143,000) respectively. The accrued
liabilities reduction pertained primarily to franchise tax and property tax
payments.
Shareholders' equity at May 30, 1998 totaled $7,053,000 and represented an
increase of approximately $236,000 for the first six months 1998.
10. Cash and cash equivalents have remained reasonably stable for this six
month period. As of May 30, 1998 cash and cash equivalents totaled
$1,618,000 compared to $1,649,000 as of November 30, 1997. The Company's
financial position remains strong enabling the Company to finance on-going
operating costs as well as new product development activities for growth.
<PAGE>
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.
6-22-98 /s/ Nicholas Nadolsky
- ------- --------------------------
Date Nicholas Nadolsky
Chairman of the Board/CEO
6-22-98 /s/ Dave Hendon
- ------- --------------------------
Date Dave Hendon
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000065759
<NAME> MICROPAC INDUSTRIES, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-30-1998
<EXCHANGE-RATE> 1
<CASH> 52,810
<SECURITIES> 1,565,258
<RECEIVABLES> 1,783,638
<ALLOWANCES> 95,495
<INVENTORY> 3,211,479
<CURRENT-ASSETS> 6,885,046
<PP&E> 6,110,854
<DEPRECIATION> 4,791,166
<TOTAL-ASSETS> 8,204,734
<CURRENT-LIABILITIES> 1,152,148
<BONDS> 0
0
0
<COMMON> 7,052,585
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,204,734
<SALES> 2,836,104
<TOTAL-REVENUES> 2,836,104
<CGS> 2,193,830
<TOTAL-COSTS> 2,193,830
<OTHER-EXPENSES> 543,217
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 99,057
<INCOME-TAX> 35,554
<INCOME-CONTINUING> 63,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,503
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
