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 February 26, 2000
For the Transition Period from_________ to _________
Commission File Number 0-5109
MICROPAC INDUSTRIES, INC.
Delaware 75-1225149
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(State of Incorporation) (IRS Employer Identification No.)
905 E. Walnut, Garland, Texas 75040
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(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, 1999, and February 26, 2000 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.
Traditional Small Business Disclosure Format
Yes X No
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<PAGE>
MICROPAC INDUSTRIES, INC.
FORM 10-QSB
FEBRUARY 26, 2000
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Statements of Operations for the three months
ended February 26, 2000 and February 27, 1999
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
(Dollars in thousands except share data )
(unaudited)
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statement
For the three months ended
2/26/00 2/27/99
<S> <C> <C>
Sales, Net of Returns & Allowances $ 2,958 $ 2,627
Cost of Goods Sold (2,191) (1,984)
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Gross Margin 767 643
Selling, General & Administrative Expense (557) (531)
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Pre-Tax Income 210 112
Provision for Income Taxes (84) (45)
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Net Income $ 126 $ 67
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Net Income Per Share $ .03 $ .02
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>
<TABLE>
<CAPTION>
MICROPAC INDUSTRIES, INC.
BALANCE SHEET
(Dollars in thousands )
(Unaudited)
ASSETS
CURRENT ASSETS 2/26/00 11/30/99
<S> <C> <C>
Cash $ 414 $ 502
Short term investments 3,265 2,933
Receivables, net of allowance for doubtful accounts 1,626 1,579
approximately $95 on February 26, 2000
and $92 on November 30, 1999
Inventories:
Raw materials, process supplies 1,171 1,246
Work-in process 760 908
Prepaid income taxes 82 166
Prepaid and other current assets 28 57
Deferred income taxes 249 249
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Total current assets 7,595 7,640
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 80 80
Buildings 498 498
Facility improvements 678 678
Machinery and equipment 4,595 4,493
Furniture and fixtures 366 340
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Total property, plant, and equipment 6,217 6,089
Less accumulated depreciation (5,007) (4,945)
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Net property, plant and equipment 1,210 1,144
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Total assets $ 8,805 $ 8,784
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 337 $ 365
Accrued payroll 154 214
Accrued professional fees 79 75
Other accrued liabilities 162 182
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Total current liabilities 732 836
DEFERRED INCOME TAXES 42 43
SHAREHOLDER' EQUITY
Common stock, $.10 par value, authorized 10,000,000 shares 363 363
3,627,151 outstanding at February 26, 2000 and November 30, 1999
Paid in capital 885 885
Retained earnings 6,783 6,657
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Total shareholders' equity 8,031 7,905
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Total liabilities and shareholders' equity $ 8,805 $ 8,784
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</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 FLOWS
(Dollars in thousands)
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: 2/26/00 2/27/99
Net Income $ 126 $ 67
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 62 59
Changes in current assets and liabilities:
Accounts receivable (47) 109
Inventories 223 241
Prepaid expenses & other current assets 29 6
Income taxes, prepaid and deferred 83 (56)
Accounts payable (28) (72)
Payroll & withholdings (60) (28)
Accrued liabilities (16) (50)
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Net cash from operating activities 372 276
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short term investments (332) (209)
Additions to property, plant and equipment (128) (12)
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Net cash used in investing activities (460) (221)
Net increase (decrease) in cash (88)
Cash at beginning of period 502 420
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Cash at end of period $ 414 $ 475
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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 first quarter of 2000 totaled $2,958,000 compared to
$2,627,000 for the same period of 1999. Current period sales
increased over the first quarter 1999, due to increased quick turn
orders for some of the Company's products. Profits after taxes for
the comparable periods of 2000 versus 1999 totaled $126,000 and
$67,000 respectively. Net earnings were impacted primarily by
changes in product mix shipped for the comparable quarters and
lower manufacturing costs in the current period. The down turn of
new orders for military, space and some of the Company's commercial
products continue to hamper overall growth of the Company.
2. Cost of sales for the comparable first quarters of 2000 and 1999
totaled $2,191,000 and $1,984,000 respectively. Cost of goods sold
in the first quarter 2000 totaled 74.1% of related revenues
compared to 75.5% in the same quarter 1999. The decrease in total
cost of sales for the comparable periods is primarily related to
decreased cost of labor and manufacturing overheads. Materials cost
increased for the same period due to changes in product mix.
Research and development expenses decreased as a percentage of net
sales while actual dollars expensed were relatively stable.
3. Selling, general and administrative expenses totaled $557,000 or
18.8% of net revenues in the first quarter 2000 compared to
$531,000 or 20.2% of net revenues in the first quarter 1999.
Commission expenses were stable at 3.9% of net revenues compared to
4.0% for inside sales expenses and 10.9% for general and
administrative expenses. In actual dollars expensed, selling
general and administrative expenses increased approximately $26,000
with inside sales expenses increasing $2,000 compared to an
increase of $13,000 for commission expense and $11,000 for general
and administrative expenses.
4. Net income per share for the first quarter 2000 versus 1999 totaled
$0.03 and $0.02 respectively. The Company has not offered stock
incentives to its executive officers or employees and does not have
this liability; therefore, the diluted value per share remains at
$0.03 and $0.02 per share for the respective quarters.
5. New orders for the first quarter 2000 totaled approximately
$2,318,000 compared to $2,277,000 in the first quarter 1999, an
increase of 1.5%.
6. Backlog for the first quarter 2000 totals $3,703,000 compared to
$4,863,000 for the first quarter of 1999 and represents a 24%
decrease in the comparable periods. The reduction in backlog is
largely related to lack of new and repeat orders from the military,
space and oil exploration industries. The Company is addressing the
backlog decline by developing new standard products which are
suited to both industrial and high reliability market applications;
and has recently reorganized and increased staffing of the sales
/marketing departments to execute new sales initiatives and
increase market penetration. The current backlog represents a good
mix of the Company's product and most of the backlog is scheduled
to ship in 2000.
7. Raw materials and process supply inventories decreased
approximately ($75,000) and work in process inventories decreased
($148,000) since November 30, 1999. The decrease in inventories is
related to a decreased backlog, and improved controls in raw
material purchases and scheduling.
8. Accounts receivable increased approximately $47,000 since November
30, 1999. The increase is related to increased sales in the first
quarter. Days of revenue outstanding totaled 48 days for the
quarter ended February 26, 2000 compared to 50 days at November 30,
1999.
9. Liabilities decreased ($104,000) for the first quarter 2000 due to
reductions in accrued payroll , accounts payable and accrued
liabilities.
<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
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES -None
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ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS - None
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ITEM 5. OTHER INFORMATION - None
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on
its behalf by the undersigned duly authorized.
MICROPAC INDUSTRIES, INC.
April 7, 2000 /S/ Nicholas Nadolsky
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Date Nicholas Nadolsky
Chairman of the Board/CEO
April 7, 2000 /S/ Dave Hendon
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Date Dave Hendon
Controller
