<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter ended June 17, 1995 Commission file No. 0-11201
MERRIMAC INDUSTRIES, INC.
- -------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
New Jersey 22-1642321
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
41 Fairfield Place
West Caldwell, New Jersey 07007-0986
- ------------------------------- -------------------------
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (201) 575-1300
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section S 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 24, 1995
- ----------------------------- -----------------------------
Common Stock ($.50 par value) 1,713,293
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
---------------------------
JUN 17,
1995
(Unaudited)
ASSETS
- ------
Current Assets:
Cash and cash equivalents ....................... $ 1,018,154
Available-for-sale securities (D) ............... 3,182,858
Accounts receivable ............................. 2,349,029
Inventories:
Finished goods ................................ 1,166,697
Work in process ............................... 1,381,035
Parts and raw materials ....................... 1,288,198
-------------
Total inventories ........................... 3,835,930
Prepaid expenses ............................... 134,379
Prepaid income taxes ........................... 104,083
Deferred income taxes .......................... 674,372
-------------
Total current assets ........................ 11,298,805
Property, plant and equipment ..................... 12,128,468
Less accumulated depreciation ................... 8,806,282
-------------
Net property, plant and equipment ........... 3,322,186
Intangible assets, less accumulated
amortization of $559,694 ........................ 339,896
Other assets ...................................... 147,620
-------------
$ 15,108,507
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities:
Accounts payable ................................ $ 345,150
Accrued liabilities ............................. 898,723
Income tax payable .............................. 35,301
-------------
Total current liabilities ................... 1,279,174
Deferred income taxes ............................. 141,500
Stockholders' equity:
Common stock, par value $.50 per share:
Authorized: 5,000,000 shares
Issued: 2,542,645 shares 1,271,323
Additional paid-in capital ...................... 8,662,969
Retained earnings ............................... 10,377,580
Unrealized holding loss on available-for-sale
securities, less deferred tax benefit (D) ...... 62,468
-------------
20,249,404
Less treasury stock at cost:
Purchased: 830,735 shares 6,561,571
-------------
Total stockholders' equity ................... 13,687,833
-------------
$ 15,108,507
=============
See notes to consolidated financial statements.
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MERRIMAC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED
------------------ -----------------------
June 17, June 18, June 17, June 18,
1994 1994 1995 1994
--------- -------- --------- ---------
Net sales ....................... $3,076,952 $3,430,526 $6,529,145 $6,491,767
Cost and expenses:
Cost of sales ................. 1,649,584 1,705,059 3,290,704 3,181,329
Selling, general and
administrative .............. 1,032,789 1,294,686 2,187,759 2,372,772
--------- --------- --------- ---------
2,682,373 2,999,745 5,478,463 5,554,101
--------- --------- --------- ---------
Operating income ................ 394,579 430,781 1,050,682 937,666
Other income .................... 45,229 37,402 94,887 83,489
--------- --------- --------- ---------
Income before income taxes ...... 439,808 468,183 1,145,569 1,021,155
Provision for income taxes (D) .. 160,000 169,000 416,000 371,000
--------- --------- --------- ---------
Net income ...................... $ 279,808 $ 299,183 $ 729,569 $ 650,155
========== ========== ========== ==========
Net income per common share
and common equivalent
share ......................... $.16 $.17 $.42 $.36
==== ==== ==== ====
Cash dividend per share of
common stock .................. $.10 $.10 $.20 $.20
==== ==== ==== ====
Common and common equivalent
shares outstanding ............ 1,744,781 1,802,600 1,740,024 1,801,955
========= ========= ========= =========
See notes to consolidated financial statements
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MERRIMAC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Twenty-four Weeks Ended
-----------------------
Jun 17, Jun 18,
1995 1994
------- -------
Cash flows from operating activites:
Net Income ........................................ $ 729,569 $ 650,155
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................... 418,761 387,290
Accounts receivable.............................. (297,376) 179,232
Inventories...................................... (188,100) (104,149)
Prepaid expenses................................. (51,562) (29,709)
Other assets..................................... 19,230 -
Accounts payable................................. 26,900 103,883
Other liabilities................................ (42,151) 116,100
Income taxes payable............................. (257,056) (217,095)
----------- ----------
Total adjustments............................. (371,354) 435,552
----------- ----------
Net cash provided by operating activites...... 358,215 1,085,707
Cash flows from investing activities:
Purchase of capitol assets....................... (224,379) (561,976)
Proceeds from sales of capitol assets............ 617 412
Proceeds from maturity of available-for-sale
security....................................... 300,000 250,000
----------- ---------
Net cash provided by (used in) investing
activities.................................. 76,238 (311,564)
Cash flows from financing activities:
Proceeds from the issuance of 21,449 and 34,642
shares of common stock......................... 136,235 142,472
Dividend paid.................................... (341,686) (353,756)
----------- ---------
Net cash used in financing activities......... (205,451) (211,284)
----------- ---------
Net increase in cash and cash equivalents.......... 229,002 562,859
Cash and cash equivalents at beginning of year..... 789,152 574,107
Cash and cash equivalents at end of period......... $ 1,018,154 $ 1,136,966
=========== ===========
Supplemental disclosures of cash flows information:
Cash paid during the quarter for:
Income taxes................................... $ 673,203 $ 588,095
========= =========
See notes to consolidated financial statements.
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MERRIMAC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
A. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and therefore, do not
include all information and footnote disclosures otherwise required by
Regulation S-X. The financial statements do, however, reflect all
adjustments which are, in the opinion of the management necessary for a
fair statement of the results of the interim periods presented.
B. Net Income Per Share
Net income (loss) per share is based upon the weighted average number of
common shares and common equivalent shares (based on stock options)
outstanding during the period.
C. Fiscal Quarters
The Company's fiscal year is the 52-53 week period ending on the Saturday
closest to December 31. The Company employs 13 four-week accounting
periods for closing its books. In the 52 week fiscal year, first, second,
and fourth quarter consist of 12 weeks each, third quarter consists of
16 weeks. In the 53 week fiscal year (occurs every five years) the first
and second quarter consist of 12 weeks each, the third quarter of 16 weeks
and the fourth quarter of 13 weeks.
D. Investments in Securities
The amortized cost and estimated fair market value of the Company's portfolio
of available-for-sale investments in marketable municipal debt securities at
June 17, 1995 are set forth below by contractual maturity.
- --------------------------------------------------------------------------------
Date Due Amortized Estimated Fair
(years) Cost Market Value
- --------------------------------------------------------------------------------
After 1 through 5 $ 201,145 $ 198,750
After 5 through 10 2,785,720 2,701,253
After 10 300,000 282,853
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$3,286,865 $3,182,856
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The gross unrealized holding loss on available-for-sale securities at
June 17, 1995 was $104,009. The loss, net of Federal and State income
taxes, is included as a separate component in stockholder's equity.
There were no gross unrealized gains.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INCOME STATEMENT SUMMARY
------------------------
(Unaudited)
The following table displays line items in the Consolidated Statements of
Income as a percentage of sales.
Percentage of Net Sales
-----------------------
-Quarter 2- Year-to-Date
----------- ------------
-12- Weeks -24- -24-
------------- -------------
Ended Ended Ended Ended
----- ----- ----- -----
Jun 17 Jun 18 Jun 17 Jun 18
1995 1994 1995 1994
------ ------ ------ ------
Net sales......................... 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales................... 53.6 49.7 50.4 49.0
Selling, general and
administrative.................. 33.6 37.7 33.5 36.6
---- ---- ---- ----
87.2 87.4 83.9 85.6
---- ---- ---- ----
Operating income.................. 12.8 12.6 16.1 14.4
Other income...................... 1.5 1.0 1.5 1.3
---- ---- ---- ----
Income before income taxes........ 14.3 13.6 17.6 15.7
Provision for income taxes........ 5.2 4.9 6.4 5.7
---- ---- ---- ----
Net income........................ 9.1% 8.7% 11.2% 10.0%
===== ===== ===== =====
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<PAGE>
RESULTS OF OPERATIONS
---------------------
SALES
- -----
The results for the first two quarters affirm that Merrimac is in a
growth mode for 1995. When compared to 1994, the second quarter's sales
decreased by 10.3% primarily due to customer required delivery dates being
pushed forward into the third and fourth quarters of 1995. While sales for
the twenty-four week period show an increase of only 0.6% when compared to
the same period of fiscal 1994, the booking of new orders for the twenty-four
week period is up by 24%. The ongoing increase is attributed to order inputs
from the commercial and international business sectors. Our backlog also
shows an increase of 34% when compared to 1994 level.
COST OF SALES
- -------------
The cost of sales as a percentage of sales for the second quarter and
twenty-four week period of fiscal 1995 are up by 3.9% and 1.4% respectively
when compared to fiscal 1994. The higher cost of sales is being attributed
to a slight decrease in manufacturing efficiency due to extended working hours
and also, a number of shipments with higher than normal cost of sales levels.
SELLING, GENERAL AND ADMINISTRATIVE
- -----------------------------------
The SG&A expenses as a percentage of sales for the second quarter and
twenty-four week period of fiscal 1995 are down by 4.1% and 3.1% respectively
when compared to fiscal 1994. Decreases occured in all areas of SG&A pool
for the second quarter with just slight increases in commission and profit
sharing expenses for the twenty-four week period when compared to 1994.
OTHER INCOME
- ------------
Other income represents interest realized from investments. The increase
of approximatley 0.2% is due to higher returns on investments.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's liquidity and financial condition remained strong throughout
the twenty-four week period of fiscal 1995. The cash and investments accounts
show a balance of $4.2 million. Working capital stood at $9.1 million at the
end of the secondquarter for fiscal 1995 compared to $9.8 million in 1994.
Current ratio stands at 8.8 and 7.6 respectively.
The company invested $224,000 in plant improvements and equipment during
the twenty-four week period of fiscal 1995 compared to $562,000 during the same
period of fiscal 1994. In addition the Company paid $341,686 cash dividends in
1995 compared to $353,756 in 1994.
The Company has a $2,500,000 unsecured line of credit agreement with its
bank, at the bank's floating prime rate. As of June 17, 1995, the full amount
of $2,500,000 was available for future borrowing.
Management believes that with the liquid resources, the unused line of
credit, along with cash flows expected to generated by operations, the Company
will have sufficient resources for currently contemplated operations in fiscal
1995. The Company is exploring the possibility of acquiring similar
manufacturers of electronic devices as well as establishing a low cost
manufacturing facility, although currently has no definite plans or agreements
for such activities. Management believes that such activities could be
financed through the liquid and capital resources currently available as
described above, and/or through additional borrowing or the issuance of equity
securities.
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<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 18, 1995, the Company commenced a lawsuit in the Superior Court
of New Jersey, Chancery Division, Essex County, against Electromagnetic
Technologies, Inc., Microwave Research and Development, Inc., and five former
employees of Merrimac. The lawsuit seeks damages on account of acts of unfair
competition and the breach by defendants of certain covenants not to compete
and other agreements in connection with the acquisition by the Company of
assets of Microwave Reasearch and Development, Inc., in May 1992. No
responsive pleadings have been filed by the defendants. However, the Company
anticipates that the defendants will counterclaim for breach of contract and
amounts claimed to be due pursuant to the acquisition transaction. In the
opinion of managment, resolution of this lawsuit, including any damages that
might arise out of the anticipated counterclaims, will not have a material
impact on the Company's finacial condition.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Date of the Meeting: April 27,1995
Annual Stockholders Meeting.
(b) Election of (5) Directors
Elected
-------
Nominated: Yes No
--- --
Charles F. Huber II X
Eugene W. Niemiec X
Arthur A. Oliner X
John J. Antonich X
Mason N. Carter X
For Against Abstain
--------- --------- ---------
(c) Approve the 1995 Stock
Purchase Plan 835,740 22,861 9,061
Proposition was approved
(d) Approve appointment of
independent auditors 1,466,873 5,400 4,572
Proposition was approved
-8-
<PAGE>
Item 6. Exhibits
Exhibit No.
-----------
(4) - Specimen certificate of the Common Stock of the
Company *
(11) - Statement re Computation of Earnings Per Share
The Company did not file any reports on Form 8-K
during the quarter for which this report is filed.
- -------------------------------
* Incorporated herein by reference to the Company's Registration
Statement (No. 2-79455) on Form S-1 effective October 29, 1982.
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<PAGE>
Exhibit (11)
MERRIMAC INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Unaudited)
TWELVE TWENTY-FOUR
WEEKS ENDED WEEKS ENDED
----------- -----------
June 17, June 17,
1995 1995
----------- -----------
Net income ............................ $ 279,808 $ 729,569
========== ===========
PRIMARY EARNINGS PER SHARE
--------------------------
Average number of shares outstanding
Common stock........................ 1,721,274 1,715,006
Stock options (1)................... 14,664 14,790
--------- ---------
Shares outstanding as adjusted......... 1,735,938 1,729,796
========= =========
Net income per common share and common
equivalent share.................... $.16 $.42
==== ====
FULLY DILUTED EARNINGS PER SHARE
--------------------------------
Average number of shares outstanding
Common stock........................ 1,721,274 1,715,006
Stock options (1)................... 23,507 25,018
--------- ---------
Shares outstanding as adjusted......... 1,744,781 1,740,024
========= =========
Net income per common share assuming
full dilution....................... $.16 $.42
==== ====
(1) Represents additional shares resulting from assumed conversion of stock
options less shares purchased with the proceeds thereof pursuant to the
treasury stock method.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MERRIMAC INDUSTRIES, INC.
-------------------------
(Registrant)
Date: July 27, 1995 By /s/ Eugene W. Niemiec
-----------------------------------
(Eugene W. Niemiec, Chief Executive
Officer, Acting Chief Financial
Officer and Treasurer)
Date: July 27, 1995 By /s/ John J. Antonich
-----------------------------------
(John J. Antonich, Secretary,
Controller and Principal
Accounting Officer)
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> Jun-17-1995
<CASH> 1,018,154
<SECURITIES> 3,182,858
<RECEIVABLES> 2,349,029
<ALLOWANCES> 0
<INVENTORY> 3,835,930
<CURRENT-ASSETS> 11,298,805
<PP&E> 12,128,468
<DEPRECIATION> 8,806,282
<TOTAL-ASSETS> 15,108,507
<CURRENT-LIABILITIES> 1,279,174
<BONDS> 0
<COMMON> 1,271,323
0
0
<OTHER-SE> 12,416,510
<TOTAL-LIABILITY-AND-EQUITY> 15,108,507
<SALES> 6,529,145
<TOTAL-REVENUES> 6,529,145
<CGS> 3,290,704
<TOTAL-COSTS> 3,290,704
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,145,569
<INCOME-TAX> 416,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 729,569
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
