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, 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 - 3,545,057 shares as of December
31, 1997.
<PAGE>
PART I. - FINANCIAL INFORMATION
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS
ENDED DECEMBER 31, 1997 AND 1996
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended
Dec. 31
1997 1996
[S] [C] [C]
Net sales $1,840 $1,722
Cost of goods sold 1,126 1,095
------- -------
Gross profit 714 627
Selling, general and
administrative expenses 659 586
------- -------
Income from operations 55 41
Other income (expense) 16 16
------- -------
Income before income
taxes 71 57
Provision for income
taxes 24 20
------- -------
NET INCOME $47 $37
======= =======
Earnings per share $0.01 $0.01
======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 SEPTEMBER 30, 1997
(Unaudited)
[S] [C] [C]
Assets
Current Assets:
Cash and cash equivalents $ 1,158 $ 1,434
Accounts receivable-trade,net 761 545
Inventories 1,321 1,262
Deferred tax asset - current 259 259
Prepaid expenses and other
current assets 100 104
-------- --------
Total current assets 3,599 3,604
Property,plant and equipment,net 1,611 1,562
Deferred Tax asset - noncurrent 8 8
-------- --------
Total assets $ 5,218 $ 5,174
======== ========
Liabilities And Stockholders' Equity
Current liabilities:
Current portion of long term
debt $ 56 $ 56
Accounts payable 335 320
Customer deposits 57 50
Accrued federal and state
income taxes 48 30
Accrued payroll and related
expenses 70 103
Accrued compensated absences 231 222
Other current liabilities 252 78
-------- --------
Total current liabilities 1,050 859
Long term debt, less current
portion 31 46
Deferred compensation and
other liabilities 17 18
-------- --------
Total liabilities 1,098 923
-------- --------
Stockholders' Equity:
Common stock,$.10 par value 428 428
Additional paid-in capital 3,206 3,206
Retained earnings 1,124 1,255
-------- --------
4,758 4,889
Common stock in treasury,
at cost (638) (638)
-------- --------
Total stockholders' equity 4,120 4,251
-------- --------
Total liabilities and
stockholders' equity $ 5,218 $ 5,174
======== ========
[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, 1997 AND 1996
(Unaudited)
Three months ended
December 31
1997 1996
[S] [C] [C]
Cash flows from operating
activities:
Net income $ 47 $ 37
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 77 78
Stock compensation 0 8
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (216) 105
Inventories (59) 198
Prepaid expenses & other
assets 4 (25)
Increase (decrease) in:
Accounts payable & accrued
expenses 13 (414)
Deferred compensation &
other liabilities (1) 4
------- -------
Net cash provided by (used in)
operating activities (135) (9)
Cash flows from investing activities:
Capital expenditures (127) (72)
Cash flows from financing activities:
Principal payments on
long-term debt (14) (13)
------- -------
Increase (decrease) in cash
and cash equivalents (276) (94)
Cash and cash equivalents
at beginning of period 1,434 1,281
------- -------
Cash and cash equivalents
at end of period $1,158 $1,187
======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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 1997 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 3,545,057 and 3,547,398 for the three months
ending December 31, 1997 and December 31, 1996, 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,
1997 1997
Raw materials and stock parts $ 872 $ 832
Work-in-process 198 185
Finished goods 251 245
------- -------
$ 1,321 $ 1,262
======= =======
<PAGE>
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
DECEMBER 31, 1997
Net sales for the three months ended December 31, 1997 equalled $1,839,943,
an increase of $117,521 or 6.8% when compared to net sales of $1,722,422 for
the three months ended December 31, 1996.
The increase in sales can primarily be attributed to an increase in the
sales of the Company's RF/Microwave products to OEMs (Original Equipment
Manufacturers.) Part of the Company's long term growth strategy (see the
FY96 annual report) is to invest in product and infrastructure development
to exploit new markets such as LMDS (Cellular TV), PCS and PCN; and, continue
to develop OEM relationships. This strategy is proving successful and has
helped offset the hiatus in demand in Wireless Cable; as well as a decrease
in sales in the Schroeder Machines Division of Niagara Scientific, Inc., a
wholly owned subsidiary.
Net income for the three months ended December 31, 1997 equalled $46,724,
an increase of $9,313 or 24.9% when compared to net income of $37,411 for
the three months ended December 31, 1996. The increase in net income can
primarily be attributed to the increase in sales and the improvement in gross
profit as a percentage of sales when compared to the same period last year.
Gross profit increased $87,221 or 13.9% to $713,958 during the three
months ended December 31, 1997 when compared to gross profit of $626,737
during the three months ended December 31, 1996. The dollar increase in gross
profit during the three months ended December 31, 1997 can be attributed
equally to the increase in sales and the improvement in gross profit as a
percentage of sales when compared to the same period last year. The increase
in gross profit as a percentage of sales during the three months ended
December 31, 1997 when compared to the same period last year can primarily
be attributed to lower manufacturing overhead cost per sales dollar.
Selling, general and administrative (SG&A) expenses increased $72,948
to $659,203 during the three months ended December 31, 1997 when compared
to SG&A expenses of $586,255 during the three months ended December 31,
1996. Increases were realized in advertising and promotional expenses, sales
commissions, salary and salary related expenses.
Cash and cash equivalents decreased $276,042 to $1,158,431 at December 31,
1997 when compared to September 30, 1997. The decrease was a result of
$135,308 in net cash used in operating activities, $126,829 in net cash
used for capital expenditures and $13,905 in net cash used in financing
activities.
At December 31, 1997, 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>
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.
<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.
February 13, 1998 Carl F. Fahrenkrug
(Date) --------------------------
Carl F. Fahrenkrug
Chief Executive Officer
February 13, 1998 Richard L. Jones
(Date) --------------------------
Richard L. Jones
Chief Financial Officer
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