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 December 31, 1996
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) 437-3953
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 - 3,552,838 shares as of December
31, 1996.
<PAGE>
PART I. - FINANCIAL INFORMATION
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS
ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended
Dec. 31
1996 1995
[S] [C] [C]
Net sales $1,722 $2,091
Cost of goods sold 1,095 1,253
------- -------
Gross profit 627 838
Selling, general and
administrative expenses 586 646
------- -------
Income from operations 41 192
Other income (expense) 16 1
------- -------
Income before income
taxes 57 193
Provision for income
taxes 20 67
------- -------
NET INCOME 37 126
======= =======
Earnings per share $0.01 $0.04
======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 SEPTEMBER 30, 1996
(Unaudited)
[S] [C] [C]
Assets
Current Assets:
Cash and cash equivalents $ 1,187 $ 1,281
Accounts receivable-trade,net 619 724
Inventories 1,301 1,499
Prepaid expenses and other
current assets 348 323
-------- --------
Total current assets 3,455 3,827
Property,plant and equipment,net 1,577 1,583
-------- --------
Total assets $ 5,032 $ 5,410
======== ========
Liabilities And Stockholders' Equity
Current liabilities:
Current portion of long term
debt $ 53 $ 53
Accounts payable 241 300
Customer deposits 113 199
Accrued federal and state
income taxes 71 289
Accrued payroll and related
expenses 107 127
Accrued compensated absences 196 198
Other current liabilities 52 81
-------- --------
Total current liabilities 833 1,247
-------- --------
Long term debt, less current
portion 89 103
Deferred compensation and
other liabilities 86 82
-------- --------
Total liabilities 1,008 1,432
-------- --------
Stockholders' Equity:
Common stock,$.10 par value 427 426
Additional paid-in capital 3,199 3,193
Retained earnings 1,035 997
-------- --------
4,661 4,616
Common stock in treasury,
at cost (637) (638)
-------- --------
Total stockholders' equity 4,024 3,978
-------- --------
Total liabilities and
stockholders' equity $ 5,032 $ 5,410
======== ========
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND 1995
(Unaudited)
Three months ended
December 31
1996 1995
[S] [C] [C]
Cash flows from operating
activities:
Net income $ 37 $ 126
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 78 85
Stock compensation 8 4
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable 105 108
Inventories 198 129
Prepaid expenses & other
assets (25) (3)
Increase (decrease) in:
Accounts payable & accrued
expenses (414) 50
Deferred compensation &
other liabilities 4 (1)
------- -------
Net cash provided by (used in)
operating activities (9) 498
------- -------
Cash flows from investing activities:
Capital expenditures (72) (21)
Cash flows from financing activities:
Principal payments on
long-term debt (13) (36)
------- -------
Increase (decrease) in cash
and cash equivalents (94) 441
Cash and cash equivalents
at beginning of period 1,281 521
------- -------
Cash and cash equivalents
at end of period $1,187 $ 962
======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
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
used for the computations were 3,547,398 and 3,492,307 for the three months
ending December 31, 1996 and December 31, 1995, respectively.
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:
December 31, September 30,
1996 1996
Raw materials and stock parts $ 833 $ 958
Work-in-process 260 299
Finished goods 208 242
------- -------
$ 1,301 $ 1,499
======= =======
<PAGE>
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
DECEMBER 31, 1996
Net sales decreased $368,593 or 17.6% to $1,722,422 during the three
months ended December 31, 1996 when compared to sales of $2,091,015 during
the same period last year. Management believes the decrease in sales can
be attributed primarily to market conditions.
The Company's two largest markets, Cable TV and Wireless Cable, both
realized decreases in sales during the first quarter of fiscal 1997 when
compared to the same period last year. Management believes both increased
competition (i.e., Direct Broadcast Satellite) and the delays in the
implementation of digital technology have had a negative impact on the
Cable TV and Wireless Cable markets and; consequently, on first quarter
sales.
In an effort to mitigate these conditions, the Company is emphasizing
new product and new market development, such as the PCS market, and
converting the efficiencies and the cost reductions the Company's realized
over the last two years into more competitive pricing. Management believes
the Company's strong financial position will enable it to make the requisite
investments in new product development and promotion necessary to maximize
long term growth and shareholder value.
Net income decreased $88,842 to $37,411 during the three months
ended December 31, 1996 when compared to net income of $126,253 during
the same period last year. The decrease in net income can primarily be
attributed to the decrease in sales.
As a percentage of sales, cost of goods sold increased to 63.6% during
the three months ended December 31, 1996 when compared to 59.9% during
the same period last year. The increase can be attributed to the lower
sales volume and product sales mix.
Selling, general and administrative expenses decreased $59,546 to
$586,255 during the three months ended December 31, 1996 when compared
to selling, general and administrative expenses of $645,801 during the
same period last year.
Cash and cash equivalents decreased $93,527 to $1,187,472 at December 31,
1996 when compared to September 30, 1996. The decrease was a result of
$8,363 in net cash used in operating activities, $71,996 in net cash
used for capital expenditures and $13,168 in net cash used in financing
activities.
At December 31, 1996, the Company had available aggregate lines of credit
totaling $600,000. In addition, the Company has a Letter of Credit facility
available, for up to $500,000, which will be secured by specified inventory
being 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>
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.
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.
February 14, 1997 Carl F. Fahrenkrug
(Date) --------------------------
Carl F. Fahrenkrug
Chief Executive Officer
February 14, 1997 Richard L. Jones
(Date) --------------------------
Richard L. Jones
Chief Financial Officer
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