UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 13, 1998 (November 13, 1998)
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Date of Report (Date of earliest event reported)
MERRIMAC INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 0-11201 22-1642321
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
41 Fairfield Place, West Caldwell, New Jersey 07006-6287
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 575-1300
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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Registrant's press release dated November 13, 1998 is filed herewith as
Exhibit 20 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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20. Press Release of Registrant dated November 13, 1998.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned thereunto duly authorized.
MERRIMAC INDUSTRIES, INC.
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(Registrant)
By /s/ Robert V. Condon
Robert V. Condon
Vice President, Finance and
Chief Financial Officer
Date: November 13, 1998
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press Release of Registrant dated
November 13, 1998.
Exhibit 20
Merrimac Reports Third Quarter and Nine Months 1998 Sales and
Earnings; Plans Restructuring Charge and Reaffirms Stock Repurchase
Program
West Caldwell, N.J., November 13, 1998: Merrimac Industries, Inc. (Amex: MRM)
results for the third quarter and nine months of 1998 reflect increases in sales
volume and nine months earnings.
Third quarter 1998 sales of $5,121,000 increased 2.7% over sales in the third
quarter of the prior year of $4,984,000. Net income decreased $102,000 or 29.1%
to $248,000 for the third quarter of 1998 compared to 1997. Diluted net income
per share was $.14, a decrease of $.05 or 26.3%, compared to the diluted per
share amount of $.19 reported for the third quarter of the prior year on a
similar number of weighted average diluted common shares outstanding in both
years.
For the first nine months of 1998 sales of $16,487,000 increased 15.7% over
prior year nine-month sales of $14,245,000. Net income increased 7.8% to
$1,084,000 compared to $1,006,000 reported in the first nine months of 1997, and
diluted net income per share increased to $.59, up 3.5% compared to diluted net
income per share of $.57 reported in the first nine months of the prior year.
The diluted weighted average number of common shares outstanding increased by
63,000 shares or 3.6% for the first nine months compared to the first nine
months of the prior year. The increase resulted from common stock issued during
the second half of 1997 and first half of 1998 from the exercise of stock
options and the sale of common stock from its treasury.
Chairman and CEO Mason N. Carter commented: "Technology reinvestment exceeding
$700,000 continues at a record pace more than doubling from last year.
Multi-Mix(TM) Microtechnology, a proprietary 3-dimensional microwave packaging
technology, has recently appeared in important electronics industry trade
publication articles and is featured on the cover of the November issue of
Microwave Journal, a leading RF/Microwave industry publication. Customer
response to our new products has been extremely positive.
"Multi-Mix(TM) is a unique packaging technology that provides for the
integration of a variety of different types of functionality by combining
several components creating an MMFM(TM) (Micro Multi-Function Module), that
provides customers with what they want, which is a 'total integrated packaging
solution'. It is based on a platform strategy that provides predesigned modules
that combine the benefits of standard and custom design. During this development
process, we have emphasized the need for technology innovation, process
excellence and market focus. This successful effort provides us with an enabling
technology that meets and exceeds customer requirements. "Multi-Mix(TM) adds
tremendous capability and dimension for our key account customers. Beyond our
traditional components business we are successfully involved with subassembly
and subsystem applications. This allows us to provide per unit value many times
our historic average. Multi-Mix(TM) is creating a new business model
establishing diversification into high growth commercial market segments.
"Within our core product technology, we have been notified by the US Patent
Office that our patent application for a 15GHz bi-phase modulator has been
allowed and that we will be receiving a patent for that design. This proprietary
design, nicknamed the 'flatliner' for its outstanding performance, has
application in space and Ku band frequency applications."
The Company entered the fourth quarter of 1998 with a backlog of $6.4 million, a
decrease of $3.7 million or 37% from the same time last year. Major satellite
and defense customers continued to defer purchases as a result of delays in
certain programs. Management of the Company believes that many of the satellite
constellation programs that have been delayed may resume and translate into
orders during the remainder of 1998 and continue positively into 1999. Customer
requests for design work are on the increase and are currently under development
utilizing the Company's proprietary Multi-Mix(TM) Microtechnology. This
technology provides greater per unit content and enables the Company's entry
into new markets for increased order opportunities.
Because of the current weakness in orders, the Company is preparing to layoff
approximately 15% of its workforce and to offer early retirement packages to
certain employees during the fourth quarter of 1998. The Company plans to report
a restructuring charge in the fourth quarter of 1998 of approximately $200,000
before taxes for the reduction in workforce and voluntary early retirements. The
saving in costs for future fiscal years from this restructuring should
approximate at least $800,000 annually, depending upon the number of employees
accepting early retirement. The Company further estimates that sales will
decline for the fourth quarter 1998, as a result of the decline in backlog for
the previous quarters, and it expects to report an operating loss before the
restructuring charge. Mr. Carter commented: "This restructuring will allow for
greater focus and emphasis on the growth segments of our business. Management is
taking appropriate action to right-size the business given current market
conditions."
The Board of Directors of Merrimac Industries, Inc. reaffirms the stock
repurchase program, whereby the Company has been authorized to repurchase up to
100,000 shares, from time to time, depending on market conditions.
Certain statements in this news release are forward-looking statements based on
current management expectations and are subject to risks and uncertainties.
Factors that could cause future results to differ from these expectations
include general economic and industry conditions, competitive products and
pricing pressures, risks relating to governmental regulatory actions in
communications and defense programs, and inventory risks due to technological
innovation. Additional factors to which the Company's performance is subject are
described in the Company's reports filed from time to time with the Securities
and Exchange Commission.
Merrimac Industries, Inc., with locations in West Caldwell, NJ and San Jose,
Costa Rica, has approximately 160 co-workers in the design and manufacture of
components, micro-multifunction modules (MMFM(TM)) and subsystems providing
Total Integrated Packaging Solutions for communications, defense and aerospace
applications. Merrimac (MRM) is listed on the American Stock Exchange.
Contact: Mason N. Carter Fax: (973) 882-5989
Chairman and CEO Email: [email protected]
Phone: (973) 575-1300, ext. 202 Internet: http://www.merrimacind.com
Note: Merrimac Industries, Inc. news releases are available in fax form by
calling Company News On-Call. Dial (800) 758-5804, ext. 567525. These news
releases are also available on the Internet at: http://www.prnewswire.com.
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Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
October 3 September 27
1998 1997
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<S> <C> <C>
Net sales $5,121,000 $4,984,000
Gross profit 2,269,000 2,249,000
Selling, general and administrative expenses 1,675,000 1,546,000
Research and development 282,000 162,000
Income before income taxes 349,000 564,000
Provision for income taxes 101,000 214,000
Net income 248,000 350,000
Net income per common share - basic $.14 $.21
Net income per common share - diluted $.14 $.19
Weighted average number of shares outstanding - basic 1,783,000 1,694,000
Weighted average number of shares outstanding - diluted 1,806,000 1,807,000
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
October 3 September 27
1998 1997
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<S> <C> <C>
Net sales $16,487,000 $14,245,000
Gross profit 7,386,000 6,534,000
Selling, general and administrative expenses 5,033,000 4,650,000
Research and development 746,000 344,000
Income before income taxes 1,673,000 1,611,000
Provision for income taxes 589,000 605,000
Net income 1,084,000 1,006,000
Net income per common share - basic $.62 $.60
Net income per common share - diluted $.59 $.57
Weighted average number of shares outstanding - basic 1,759,000 1,680,000
Weighted average number of shares outstanding - diluted 1,831,000 1,768,000
</TABLE>
Note: The basic and diluted weighted average number of shares outstanding and
net income per share information for all prior reporting periods have been
restated to reflect the effects of the 10% stock dividend which became effective
June 5, 1998.
