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 MARCH 25, 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 principle (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 practicle date.
Class Outstanding at April 28, 1995
----------------------------- -----------------------------
Common Stock ($.50 par value) 1,706,063
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
---------------------------
March 25,
1995
------------
ASSETS (Unaudited)
------
Current Assets:
Cash and cash equivalents .......................$ 1,680,697
Available-for-sale securities (D) .................3,104,998
Accounts receivable ...............................2,313,131
Inventories:
Finished goods ..................................1,127,155
Work in process .................................1,182,426
Parts and raw materials .........................1,360,742
---------
Total inventories ............................3,670,323
Prepaid expenses ...................................127,789
Prepaid income taxes ...............................104,083
Deferred income taxes ..............................705,615
----------
Total current assets .........................11,706,636
Property, plant and equipment ......................12,024,756
Less accumulated depreciation ....................8,642,498
---------
Net property, plant and equipment .............3,382,258
Intangible assets, less accumulated
amortization of $518,909 and $478,124 ..............380,681
Other assets ..........................................157,235
-----------
$15,626,810
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable .................................$ 464,440
Accrued liabilities ................................985,424
Income tax payable .................................548,504
----------
Total current liabilities .....................1,998,368
Deferred income taxes .................................141,500
Stockholders' equity:
Common stock, par value $.50 per share:
Authorized: 5,000,000 shares
Mar 25, 1995 Dec 31,1995
Issued: 2,535,745 2,521,196 shares 1,267,873
Additional paid-in capital .......................8,621,125
Retained earnings ...............................10,268,963
Unrealized holding loss on available-for-
sale securities, less deferred tax benefit (D) (109,448)
----------
20,048,513
Less treasury stock at cost:
Mar 25,1995 Dec 31,1994
Purchased: 830,735 830,735 shares 6,561,571
Total stockholders' equity ..................13,486,942
----------
$15,626,810
===========
See notes to consolidated financial statements.
-1-
<PAGE>
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
TWELVE WEEKS ENDED
Mar 25, 1995 Mar 26, 1994
----------- ------------
Net sales .................................... $ 3,452,193 $3,061,241
Cost and expenses:
Cost of sales ............................. 1,641,120 1,476,270
Selling, general and
administrative ......................... 1,154,970 1,078,086
--------- ---------
2,796,090 2,554,356
--------- ---------
Operating income ............................. 656,103 506,885
Other income.................................. 49,658 46,087
--------- ---------
Income before income taxes ................... 705,761 552,972
Provision for income taxes ................... 256,000 202,000
--------- ---------
Net Income ................................... $ 449,761 $ 350,972
========== =========
Net income per common share and common
and common equivalent share ............... $.26 $.19
==== ====
Cash dividend per share of
common stock .............................. $.10 $.10
==== ====
Common and common equivalent
shares outstanding ........................ 1,722,932 1,800,942
========= =========
See notes to consolidated financial statements.
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<PAGE>
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twelve Weeks Ended
Mar 25, 1995 Mar 26, 1994
Cash flows from operating activities:
Net Income ...................................... $ 449,761 $ 350,972
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................. 207,943 189,737
Accounts receivable ........................... (261,478) 351,430
Inventories ................................... (22,493) (156,937)
Prepaid expenses .............................. (44,972) (12,049)
Other assets .................................. 9,615 -
Accounts payable .............................. 146,190 78,259
Other liabilities ............................. 44,550 143,101
Income taxes payable .......................... 256,147 196,236
----------- ----------
Total adjustments............................. 335,502 789,777
----------- ----------
Net cash provided by operating activities .... 785,263 1,140,749
Cash flows from investing activities:
Purchase of capital assets ...................... (114,782) (216,561)
Proceeds from sales of capital assets ........... 617 160
Proceeds from maturity of available-for-sale
security ...................................... 300,000 -
----------- ----------
Net cash provided by (used in) investing
activities ................................ 185,835 (216,401)
Cash flows from financing activities:
Proceeds from the issuance of 14,549 and 26,109
shares of common stock ......................... 90,942 72,854
Dividend paid .................................... (170,495) (176,401)
----------- ----------
Net cash used in financing activities ....... (79,553) (103,547)
----------- ----------
Net increase in cash and cash equivalents 891,545 820,801
Cash and cash equivalents at beginning of quarter .. 789,152 574,107
----------- ----------
Cash and cash equivalents at end of quarter ........ $1,680,697 $1,394,408
============ ===========
Supplemental disclosures of cash flows information:
Cash paid during the quarter for:
Income taxes ...................................$ - $ 5,764
============ ===========
See notes to consolidated financial statements.
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<PAGE>
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. Year 1992 contained 53 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
March 25, 1995 are set forth below by contractual maturity.
------------------------------------------------------------------
Date Due Amortized Estimated Fair
(years) Cost Market Value
------------------------------------------------------------------
After 1 through 5 $ 201,137 $ 192,910
After 5 through 10 2,786,091 2,633,829
After 10 300,000 278,257
------------------------------------------------------------------
$3,287,228 $3,104,996
------------------------------------------------------------------
The gross unrealized holding loss on available-for-sale securities at
March 25, 1995 was $182,232. The loss, net of Federal and State income taxes,
is included as a separate component in stockholders' equity. There were no
gross unrealized gains.
-4-
<PAGE>
Item 2. 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 1 -
Twelve Weeks
Ended Ended
--------- ---------
March 25, March 26,
1995 1994
--------- ---------
Net Sales .................. 100.0% 100.0%
Costs and expenses:
Cost of sales ............ 47.5 48.2
selling, general and
administrative ........... 33.5 35.2
81.0 83.4
---- ----
Operating income............ 19.0 16.6
Other income................ 1.4 1.5
---- ----
Income before income taxes.. 20.4 18.1
Provision for income taxes.. 7.4 6.6
Net income 13.0% 11.5%
===== =====
-5-
<PAGE>
RESULTS OF OPERATIONS
SALES
- -----
The 1995 first quarter results when compared to fiscal 1994 show order
inputs up by 20%, sales and backlog are up 12.8% and 8.3% respectively. This is
due to renewed strenght from the Southern California marketplace, particularly
for high reliability components for space satellites and from Pacific Rim
markets where 1995 export shipments are 49.3% higher than 1994.
COST OF SALES
- -------------
The cost of sales as a percentage of sales for the first quarter of fiscal
1995 is lower by .7% from 1994 level. The decrease is attributed to lower
overhead and improved efficiency throughout the plant due to introduction of
TQM principles.
SELLING, GENERAL AND ADMINISTRATIVE
- -----------------------------------
The SG&A expenses as a percentage of sales show a net decrease of 1.7% for
the first quarter of fiscal 1995. Selling, administrative, proposal and
development expenses decreased by 3.8% whereas commission and profit sharing
expenses incerased by 2.1% due to increased sales and operating income.
OTHER INCOME
- ------------
Other income represents interest and dividends realized from investments.
The increase of approximately $3,500 is due to higher amounts of investments.
-6-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The company's liquidity and financial condition remained strong throughout
the twelve week period of fiscal 1995. The cash and investment accounts show a
balance of $4.7 million. Working capital stood at $9.7 million at the end of
the first quarter for both fiscal 1995 and 1994. Current ratio stands at 5.9
and 6.1 respectively.
The Company invested $114,000 in plant improvements and equipment during
the twelve week period of fiscal 1995 compared to $216,00 during the same period
of fiscal 1994. In addition the Company paid $170,495 cash dividends in 1995
compared to $176,401 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 March 25, 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 be 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 activites. Management believes that such activities could be financed
through the liquid and capitol resources currently available as described above,
and/or through additional borrowing or the issuance of equity securities.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit No.
(a) - Statement re Computation of earnings Per Share
(b) - A report on Form 8-K dated January 30, 1995, was filed with the
Exchange re: Registrant's press release regarding the
resignation of Paul Terranova and Victor P. Terranova from the
Board of Directors of Merrimac Industries, Inc.
-8-
<PAGE>
Exhibit (11)
MERRIMAC INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
TWELVE TWELVE
WEEKS ENDED WEEKS ENDED
Mar 25, 1995 Mar 26, 1994
------------ ------------
Net income ............................ $ 449,761 $ 350,972
========= ==========
PRIMARY EARNINGS PER SHARE
--------------------------
Average number of shares outstanding
Common stock ........................ 1,708,737 1,771,887
Stock options (1) ................... 14,195 29,055
---------- ---------
Shares outstanding as adjusted ........ 1,722,932 1,800,942
========== =========
Net income per common share and common
equivalent share .................... $.26 $.19
==== ====
FULLY DILUTED EARNINGS PER SHARE
--------------------------------
Average number of shares outstanding
Common stock ........................ 1,708,737 1,771,887
Stock options (1) ................... 14,195 29,055
--------- ---------
Shares outstanding as adjusted ........ 1,722,932 1,800,942
========= =========
Net income per common share assuming
full dilution ....................... $.26 $.19
(1) Represents additional shares resulting from assumed conversion of
stock options less shares purchased with the proceeds thereof.
-9-
<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: May 5, 1995 By /s/ Eugene W. Niemiec
-------------------------------------
(Eugene W. Niemiec, Chief Executive
Officer, Acting Chief Financial
Officer and Treasurer)
Date: May 5, 1995 By /s/ John J. Antonich
--------------------------------------
(John J. Antonich, Secretary,
Controller and Principle
Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> MAR-25-1995
<CASH> 1,680,697
<SECURITIES> 3,104,998
<RECEIVABLES> 2,313,131
<ALLOWANCES> 0
<INVENTORY> 3,670,323
<CURRENT-ASSETS> 11,706,636
<PP&E> 12,024,756
<DEPRECIATION> 8,642,498
<TOTAL-ASSETS> 15,626,810
<CURRENT-LIABILITIES> 1,998,368
<BONDS> 0
<COMMON> 1,267,873
0
0
<OTHER-SE> 12,219,069
<TOTAL-LIABILITY-AND-EQUITY> 15,626,810
<SALES> 3,452,193
<TOTAL-REVENUES> 3,452,193
<CGS> 1,641,120
<TOTAL-COSTS> 1,641,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 705,761
<INCOME-TAX> 256,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 449,761
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
