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 October 7, 1995 Commission file No. 0-11201
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MERRIMAC INDUSTRIES, INC.
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(Exact name of the registrant as specified in its charter)
New Jersey 22-1642321
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
41 Fairfield Place
West Caldwell, New Jersey 07007-0986
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(Address of principal (Zip Code)
Executive offices)
Registrant's telephone number, including area code (201) 575-1300
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed be 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 _______ 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 November 7, 1995
-------------------------- -----------------------------------
Common Stock ($.50 par value) 1,625,148
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
------------------------------------------------
October 07,
1995
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ASSESTS (Unaudited)
- -------
Current Assets:
Cash and cash equivalents ............................... $ 2,470,461
Available-for-sale securities (D)........................ 3,038,664
Accounts receivable ..................................... 1,835,730
Inventories:
Finished goods ................................. 1,070,449
Work in process ................................ 1,454,331
Parts and raw materials ........................ 1,359,530
-----------
Total Inventories ..................... 3,884,310
Prepaid expenses ........................................ 124,457
Prepaid income taxes .................................... 104,083
Deferred income taxes ................................... 652,644
-----------
Total current assets .................. 12,110,349
Property, plant and equipment ........................... 12,245,811
Less accumulated depreciation ...................... 9,039,459
-----------
Net property, plant and equipment ..... 3,206,352
Intangible assets, less accumulated
amortization of $614,074 ........................... 285,516
Other assets ............................................ 134,800
-----------
$15,737,017
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities:
Accounts payable ........................................ $ 429,975
Accrued liabilities ..................................... 962,990
Income tax payable ...................................... 166,801
-----------
Total current liabilities ...................... 1,559,766
Deferred income taxes ............................................ 141,500
Stockholders' equity:
Common stock, par value $.50 per share:
Authorized: 5,000,000 shares
Issued: 2,545,530 shares .......................... 1,272,765
Additional paid-in capitol .............................. 8,679,296
Retained earnings........................................ 10,675,100
Unrealized holding loss on available-for-sale
securities, less deferred tax benefit (D) ............. 29,793
-----------
20,597,368
Less treasury stock at cost:
Purchased: 830,739 shares ........................... 6,561,617
Total stockholders' equity .................. 14,035,751
-----------
$15,737,017
===========
See notes to consolidated financial statements.
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<PAGE>
MERRIMAC INDUSTRIES, INC
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
SIXTEEN WEEKS ENDED FORTY WEEKS ENDED
OCT 07 OCT 08 OCT 07 OCT 08
1995 1994 1995 1994
--------- --------- ---------- -----------
Net Sales................... $4,355,200 $3,948,675 $10,884,345 $10,440,442
Cost and expenses:
Cost of sales ......... 2,300,286 2,059,412 5,590,990 5,240,741
Selling, general and
administrative....... 1,399,129 1,435,437 3,586,888 3,808,209
---------- ---------- ---------- ----------
3,699,415 3,494,849 9,177,878 9,048,950
---------- ---------- ---------- ----------
Operating income............ 655,785 453,826 1,706,467 1,391,492
Other income................ 68,235 49,024 163,122 132,513
---------- ---------- ---------- ----------
Income before income taxes.. 724,020 502,850 1,869,589 1,524,005
Provision for
income taxes (D)......... 255,000 194,000 671,000 565,000
---------- ---------- ---------- ----------
Net income.................. $ 469,020 $ 308,850 $1,198,589 $ 959,005
========== ========== ========== ==========
Net income per common share
and common equivalent
share..................... $.26 $.18 $.68 $.54
==== ==== ==== ====
Cash dividend per share of
common stock............. $.10 $.10 $.30 $.30
==== ==== ==== ====
Common and common equivalent
shares outstanding...... 1,769,915 1,738,953 1,765,402 1,775,931
========= ========= ========= =========
See notes to financial statements
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<PAGE>
MERRIMAC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Forty Weeks Ended
Oct 07, Oct 08,
1995 1994
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Cash flows from operating activities:
Net Income ................................... $1,198,589 $ 959,005
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 705,361 667,760
Accounts receivable...................... 215,923 259,674
Inventories.............................. (236,480) (53,235)
Prepaid expenses......................... (41,640) 22,279
Other assets............................. 32,050 --
Accounts payable......................... 111,725 54,043
Other liabilities........................ 22,116 (15,800)
Income taxes payable..................... (125,556) (254,295)
----------- ----------
Total adjustments.................... 683,499 680,426
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Net cash provided by
operating activities............... 1,882,088 1,639,431
Cash flows from investing activities:
Purchase of capital assets.................... (341,723) (1,014,094)
Proceeds from sales of capital assets......... 617 13,349
Proceeds from maturity of available-for-sale
securities................................ 499,503 400,000
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Net cash provided by (used in) investing
activities................................ 158,397 (600,745)
Cash flows from financing activities:
Proceeds from the issuance of 24,334 and
45,723 shares of common stock................ 154,005 214,361
Purchase of treasury stock at cost............ (46) (903,906)
Dividends paid................................ (513,135) (521,893)
----------- -----------
Net cash used in financing activities.... (359,176) (1,211,438)
Net increase (decrease) in cash and
cash equivalents............................... 1,681,309 (172,752)
Cash and cash equivalents at beginning of year..... 789,152 574,107
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Cash and cash equivalents at end of period......... $2,470,461 $ 401,355
=========== ===========
Supplemental disclosures of cash flows information:
Cash paid during the quarter for:
Income taxes............................. $ 796,703 $ 819,295
=========== ===========
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
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 October 7, 1995 are set fourth below by contractual maturity.
--------------------------------------------------------------------------
Date Due Amortized Estimated Fair
(years) Cost Market Value
--------------------------------------------------------------------------
After 1 through 5 $ 201,120 $ 198,640
After 5 through 10 2,587,147 2,550,516
After 10 300,000 289,506
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$3,088,267 $3,038,662
The gross unrealized holding loss on available-for-sale securities at
October 7, 1995 was $49,606. The loss, net of Federal and State income
taxes, is included as a separate component in stockholders' equity. There
were no gross unrealized gains.
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<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
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-Quarter 3- Year-to-Date
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-16- Weeks -40- Weeks
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Ended Ended Ended Ended
----- ----- ----- -----
Oct 7 Oct 8 Oct 7 Oct 8
1995 1994 1995 1994
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Net sales ............................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales .................... 52.8 52.1 51.4 50.2
Selling, general and
administrative ................ 32.1 36.4 32.9 36.5
------ ------ ------ ------
84.9 88.5 84.3 86.7
------ ------ ------ ------
Operating income ...................... 15.1 11.5 15.7 13.3
Other income .......................... 1.5 1.2 1.5 1.3
------ ------ ------ ------
Income begore income taxes ............ 16.6 12.7 17.2 14.6
Provisions for income taxes ........... 5.8 4.9 6.2 5.4
------ ------ ------ ------
Net income ............................ 10.8% 7.8% 11.0% 9.2%
====== ====== ====== ======
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<PAGE>
RESULTS OF OPERATIONS
---------------------
SALES
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The results for the first three quarters affirm that Merrimac is still in
a growth mode for 1995. When compared to 1994, the third quarter's sales
increased by 10.3%. Sales for the forty week period show an increase of 4.2%
when compared to the same period of fiscal 1994. The booking of new orders for
the forty week period is up by 13.5%, the increase is attributed to order
inputs from the commercial and international business sectors. Our backlog
also shows an increase of 25.1% when compared to 1994 level.
COST OF SALES
- -------------
The cost of sales as a percentage of sales for the third quarter and forty
week period of fiscal 1995 are up by .7% and 1.2% respectively when compared to
fiscal 1994. The higher cost of sales is attributed to a number of factors:
diversion of productive labor to training in TQM and ISO-9000 Quality Standards,
shipments of prototypes for programs which are still in the development phase,
and the effects of merit/incentive raises given to employees at the end of the
second quarter.
SELLING, GENERAL AND ADMINISTRATIVE
- -----------------------------------
The SG&A expenses as a percentage of sales for the third quarter and forty
week period of fiscal 1995 are down 4.3% and 3.6% respectively when compared to
fiscal 1994. Increases in commission and profit sharing expenses due to higher
commission rates and operating income, were offset by decreases in
administrative, selling, proposal and development expenses for both the third
quarter and forty week period.
OTHER INCOME
- ------------
Other income represents interest realized from investments. The increase
of approximately 0.2% is due to an increase in short term investments classified
as cash equivalents and higher yields on these investments.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's liquidity and financial condition remained strong throughout
the forty week period of fiscal 1995. The cash and invesment accounts show a
balance of $5.5 million. Working capital stood at $10.5 million at the end of
the third quarter for fiscal 1995 compared to $8.7 million in 1994. Current
ratios were at 7.8 and 7.7 repectively.
The Company invested $342,000 in plant improvements and equipment during
the forty week period of fiscal 1995 compared to $1,014,000 during the same
period of fiscal 1994. In addition the Company paid $513,000 cash dividends in
1995 compared to $522,000 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 October 7, 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 possiblity of acquiring similar
manufacturers of electronic devices, although currently has no definite plans
or agreements for such acquisition. The company is in the process of
establishing a low cost manufacturing facility in Costa Rica, it is anticipated
that the facility will be operational in the first quarter of 1996. Management
believes that such activities could be financed with the liquid and capital
resources currently available as described above, and/or borrowing or the
issuance of equity securities.
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<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Exhibit No.
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(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.
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* Incorporated herein by reference to the Company's
Registration Statement (No. 2-79455) of Form S-1
effective October 29, 1982.
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<PAGE>
Exhibit (11)
MERRIMAC INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Unaudited)
SIXTEEN FORTY
WEEKS ENDED WEEKS ENDED
----------- -----------
OCT 7, OCT 7,
1995 1995
----------- -----------
Net income ............................ $469,020 $1,198,589
======== ==========
PRIMARY EARNINGS PER SHARE
--------------------------
Average number of shares outstanding
Common stock ...................... 1,727,117 1,719,850
Stock options (1) ................. 35,222 29,141
--------- ---------
Shares outstanding as adjusted ........ 1,762,339 1,748,991
========= =========
Net income per common share and common
equivalent share .................. $.27 $.69
==== ====
FULLY DILUTED EARNINGS PER SHARE
--------------------------------
Average number of shares outstanding
Common stock ...................... 1,727,117 1,719,850
Stock options (1) ................. 42,798 45,552
--------- ---------
Shares outstanding as adjusted ........ 1,769,915 1,765,402
========= =========
Net income per common share assuming
full dilution ..................... $.26 $.68
==== ====
(1) Represents additional shares resulting from assumed conversion of
stock options less shares purchased with the proceeds thereof.
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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: November 8, 1995 By /s/ Eugene W. Niemiec
----------------------------------
(Eugene W. Niemiec, Chief Executive
Officer, Acting Chief Financial
Officer and Treasurer)
Date: November 8, 1995 By /s/ John J. Antonich
----------------------------------
(John J. Antonich, Secretary,
Controller and Principal
Accounting Officer)
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> OCT-07-1995
<CASH> 2,470,461
<SECURITIES> 3,038,664
<RECEIVABLES> 1,835,730
<ALLOWANCES> 0
<INVENTORY> 3,884,310
<CURRENT-ASSETS> 12,110,349
<PP&E> 12,245,811
<DEPRECIATION> 9,039,459
<TOTAL-ASSETS> 15,737,017
<CURRENT-LIABILITIES> 1,559,766
<BONDS> 0
<COMMON> 1,272,765
0
0
<OTHER-SE> 12,762,986
<TOTAL-LIABILITY-AND-EQUITY> 15,737,017
<SALES> 10,884,345
<TOTAL-REVENUES> 10,884,345
<CGS> 5,590,990
<TOTAL-COSTS> 5,590,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,869,589
<INCOME-TAX> 671,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,198,589
<EPS-PRIMARY> .69
<EPS-DILUTED> .68
</TABLE>
