UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended June 30, 1997
Commission file number 0-10976
MICROWAVE FILTER COMPANY, INC.
(Exact name of registrant as specified in its charter.)
New York 16-0928443
(State of Incorporation) (I.R.S. Employer Identification Number)
6743 Kinne Street, East Syracuse, N.Y. 13057
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 438-4700
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for 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 practical date:
Common Stock, $.10 Par Value - 3,545,108 shares as of June
30, 1997
<PAGE>
PART I. - FINANCIAL INFORMATION
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
JUNE 30, 1997 SEPTEMBER 30, 1996
[S] [C] [C]
Assets
Current Assets:
Cash and cash equivalents $ 981 $ 1,281
Accounts receivable-trade,net 542 724
Federal and state income tax
receivable 11 -
Inventories 1,289 1,499
Prepaid expenses and other
current assets 345 323
-------- --------
Total current assets 3,168 3,827
Property,plant and equipment,net 1,566 1,583
-------- --------
Total assets $ 4,734 $ 5,410
======== ========
Liabilities And Stockholders' Equity
Current liabilities:
Current portion of long term
debt $ 55 $ 53
Accounts payable 217 300
Customer deposits 64 199
Accrued federal and state
income taxes - 289
Accrued payroll and related
expenses 116 127
Accrued compensated absences 189 198
Other current liabilities 61 81
-------- --------
Total current liabilities 702 1,247
-------- --------
Long term debt, less current
portion 78 103
Deferred compensation and
other liabilities 60 82
-------- --------
Total liabilities 840 1,432
-------- --------
Stockholders' Equity:
Common stock,$.10 par value 428 426
Additional paid-in capital 3,206 3,193
Retained earnings 897 997
-------- --------
4,531 4,616
Common stock in treasury,
at cost (638) (638)
-------- --------
Total stockholders' equity 3,894 3,978
-------- --------
Total liabilities and
stockholders' equity $ 4,734 $ 5,410
======== ========
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS
ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
June 30 June 30
1997 1996 1997 1996
[S] [C] [C] [C] [C]
Net sales $1,669 $1,877 $4,598 $5,829
Cost of goods sold 911 1,171 2,736 3,591
------- ------- ------- -------
Gross profit 758 706 1,862 2,238
Selling, general and
administrative expenses 669 613 1,810 1,884
------- ------- ------- -------
Income from
operations 89 93 52 354
Other income 24 9 66 13
------- ------- ------- -------
Income before
income taxes 113 102 119 367
Provision for
income taxes 39 35 41 127
------- ------- ------- -------
NET INCOME $74 $67 $78 $240
======= ======= ======= =======
Earnings per share $0.02 $0.02 $0.02 $0.07
======= ======= ======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
Three months ended Nine months ended
June 30 June 30
1997 1996 1997 1996
[S] [C] [C] [C] [C]
Cash flows from operating
activities:
Net income $ 74 $ 67 $ 78 $ 240
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 79 84 235 251
Stock compensation 0 6 15 51
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (124) 59 182 233
Inventories 52 225 210 649
Prepaid expenses & other
assets 51 62 (22) 1
Increase (decrease) in:
Accounts payable & accrued
expenses (63) 25 (559) (107)
Deferred compensation &
other liabilities (1) (1) (4) (4)
------- ------- ------- -------
Net cash provided by
operating activities 68 527 135 1,314
------- ------- ------- -------
Cash flows from investing activities:
Capital expenditures (29) (86) (217) (138)
Cash flows from financing activities:
Principal payments on
long-term debt (14) (248) (40) (320)
Purchase of treasury
stock - - - (1)
Cash dividend paid - - (178) (168)
------- ------- ------- -------
Net cash used in
financing activities (14) (248) (218) (489)
Increase (decrease) in cash
and cash equivalents 25 193 (300) 687
Cash and cash equivalents
at beginning of period 956 1,015 1,281 521
------- ------- ------- -------
Cash and cash equivalents
at end of period $ 981 $1,208 $ 981 $1,208
======= ======= ======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
Note 1. Summary of Significant Accounting Policies
The accompanying financial statements, which should be read in conjunction
with the financial statements of Microwave Filter Company, Inc. ("the
Company") included in the 1996 Annual Report filed on Form 10-K, are
unaudited but have been prepared in the ordinary course of business for
the purpose of providing information with respect to the interim period.
The Company believes that all adjustments (none of which were other than
normal recurring accruals) necessary for a fair presentation for such
periods have been included.
Note 2. Earnings (loss) per share
Earnings (loss) per common share are calculated based upon the weighted
average number of shares of common stock outstanding during the periods
including, when significant, any common stock equivalents and after
restatement of any stock dividends. The weighted average number of shares
of common stock outstanding used for the computations were 3,549,301 for
the nine months and 3,545,115 for the three months ending June 30, 1997
and 3,520,194 for the nine months and 3,535,786 for the three months ending
June 30, 1996.
Note 3. Inventories
Inventories are stated at the lower of cost determined on the first-in,
first-out method or market.
Inventories consisted of the following:
June 30, September 30,
1997 1996
Raw materials and stock parts $ 825 $ 958
Work-in-process 258 299
Finished goods 206 242
------- -------
$ 1,289 $ 1,499
======= =======
<PAGE>
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
JUNE 30, 1997
Net sales for the nine months ended June 30, 1997 equalled $4,598,447, a
decrease of $1,230,862 or 21.1% when compared to net sales of $5,829,309
for the nine months ended June 30, 1996. Net sales for the three months ended
June 30, 1997 equalled $1,668,994, a decrease of $207,812 or 11.1% when
compared to net sales of $1,876,806 for the three months ended June 30, 1996.
The decreases in net sales can be attributed to a slowdown in sales in the
Company's two largest market segments, Cable Television and Wireless Cable.
The Company continues to experience a slowdown in the demand for hardware
in both the Cable Television and Wireless Cable markets primarily due to
competition from Direct Broadcast Satellite and the lack of readily available
competitively priced digital compression technology in the Wireless Cable
and Wireline Cable marketplace.
Gross profit for the nine months ended June 30, 1997 equalled $1,862,058
or 40.5% of sales compared to $2,238,166 or 38.4% of sales for the nine
months ended June 30, 1996. Gross profit for the three months ended June
30, 1997 equalled $758,221 or 45.4% of sales compared to $705,860 or 37.6%
of sales during the three months ended June 30, 1996. The dollar decreases
in gross profit can primarily be attributed to the decreases in sales. The
increases in gross profit as a percentage of sales, when compared to the
same periods last year, can primarily be attributed to product sales mix,
improvements in productivity and planned reductions in manufacturing costs.
Selling, general and administrative (SG&A) expenses for the nine months
ended June 30, 1997 equalled $1,809,918, a decrease of $74,152 or 3.9% when
compared to SG&A expenses of $1,884,070 for the nine months ended June 30,
1996. SG&A expenses for the three months ended June 30, 1997 equalled
$669,284, an increase of $56,470 or 9.2% when compared to SG&A expenses of
$612,814 for the three months ended June 30, 1996. The increase in SG&A
expenses during the three months ended June 30, 1997 when compared to the
same period last year is due primarily to an increase in advertising and
promotional expenses. The Company's primary objective continues to be
the development of new products and the development of new markets, such
as LMDS and PCS.
Other income for the nine months ended June 30, 1997 equalled $66,461,
an increase of $53,594 when compared to other income of $12,867 for the
nine months ended June 30, 1996. The increase can primarily be attributed
to an increase in interest income and a decrease in interest expense when
compared to the same period last year.
Cash and cash equivalents decreased $299,669 to $981,330 at June 30, 1997
when compared to $1,280,999 at September 30, 1996. The decrease was a result
of $135,176 in net cash provided by operating activities, $217,172 in net
cash used for capital expenditures and $217,673 in net cash used in financing
activities.
At June 30, 1997, the Company had aggregate lines of credit totaling
$600,000. Of these lines, $100,000 is for the purchase of equipment and is
collateralized by equipment and $500,000 is for working capital and is
collateralized by accounts receivable, inventories and equipment.
In addition, the Company has a letter of credit facility, for up to $500,000,
which is collateralized by specific inventory to be purchased.
Management believes that its working capital requirements for the
forseeable future will be met by its existing cash balances, future cash
flows and its current credit arrangements.
<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
Any statements contained in this report which are not historical facts are
forward looking statements; and, therefore, many important factors could
cause actual results to differ materially from those in the forward looking
statements. Such factors include, but are not limited to, changes
(legislative, regulatory and otherwise) in the MMDS, LPTV or Cable industry,
demand for the Company's products (both domestically and internationally),
the development of competitive products, competitive pricing, market
acceptance of new product introductions, technological changes, general
economic conditions, litigation and other factors, risks and uncertainties
which may be identified in the Company's Securities and Exchange Commission
filings.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is unaware of any material threatened or pending
litigation against the Company.
Item 2. Changes in Securities
None during this reporting period.
Item 3. Defaults Upon Senior Securities
The Company has no senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
None during this reporting period.
Item 6. Exhibits and Reports on Form 8-K
None during this reporting period.
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MICROWAVE FILTER COMPANY, INC.
August 13, 1997 Carl F. Fahrenkrug
(Date) --------------------------
Carl F. Fahrenkrug
Chief Executive Officer
August 13, 1997 Richard L. Jones
(Date) --------------------------
Richard L. Jones
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 981,330
<SECURITIES> 0
<RECEIVABLES> 542,093
<ALLOWANCES> 0
<INVENTORY> 1,289,036
<CURRENT-ASSETS> 3,168,315
<PP&E> 5,383,068
<DEPRECIATION> 3,817,336
<TOTAL-ASSETS> 4,734,047
<CURRENT-LIABILITIES> 701,784
<BONDS> 78,121
<COMMON> 427,526
0
0
<OTHER-SE> 3,466,115
<TOTAL-LIABILITY-AND-EQUITY> 4,734,047
<SALES> 4,598,447
<TOTAL-REVENUES> 4,598,447
<CGS> 2,736,389
<TOTAL-COSTS> 4,546,307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,439
<INCOME-PRETAX> 118,601
<INCOME-TAX> 40,917
<INCOME-CONTINUING> 77,684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,684
<EPS-PRIMARY> $0.02
<EPS-DILUTED> $0.02
</TABLE>
