SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14870
QUIPP, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2306191
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
4800 N.W. 157th Street, Hialeah, Florida 33014
(Address of principal executive offices)
Registrant's telephone number, including area code (305) 623-8700
Indicate by check mark whether the 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 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 X No
The number of shares of the registrant's common stock. $.01 par value,
outstanding at October 31, 1995 was 1,609,465.
QUIPP, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets - three months at
March 31, 1996 and March 31, 1995
Consolidated Statements of Operations - three months
ended March 31, 1996 and 1995
Consolidated Statements of Changes in Stockholders' Equity -
three months ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows - three months
ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2 - Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
(Unaudited) (Summarized from
audited financial
statements)
ASSETS
Cash and cash equivalents $3,918,330 $1,251,020
Securities available for sale-current 4,499,999 5,486,438
Accounts receivable, net 2,760,490 6,907,402
Inventories 3,160,343 3,474,885
Deferred tax asset-current 1,177,920 1,177,920
Prepaid expenses and other receivables 54,104 85,281
TOTAL CURRENT ASSETS 15,571,186 18,382,946
Property, plant and equipment, net 1,948,300 1,991,665
Goodwill 491,717 499,522
Other assets 323,890 354,315
Deferred tax assets 38,680 38,680
$18,373,773 $21,267,128
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Current portion of long-term debt $ 400,000 $ 400,000
Accounts payable 185,749 821,957
Accrued salaries and wages 463,255 499,041
Customer deposits and deferred income 658,135 3,159,502
Current tax liability 413,391 213,997
Other accrued liabilities 1,432,015 1,760,019
TOTAL CURRENT LIABILITIES 3,552,545 6,854,516
Long-term debt 1,550,000 1,550,000
TOTAL LIABILITIES 5,102,545 8,404,516
Shareholders Equity
Common stock - par value $.01 per share, authorized
3,000,000 shares 1,634,465 and 1,469,465
shares issued and outstanding 16,345 16,345
Additional paid-in capital 5,113,190 5,113,190
Retained earnings 8,437,093 8,028,477
Less treasury stock 68,700 shares at cost (295,400) (295,400)
TOTAL SHAREHOLDERS EQUITY 13,271,228 12,862,612
$18,373,773 $21,267,128
See accompanying notes to the consolidated financial statements.
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
Sales $4,394,440 $5,190,381
Cost of sales 2,781,475 3,505,056
Gross profit 1,612,965 1,685,325
Selling, general and
administrative expenses 923,885 914,069
Research and development 32,350 45,055
1,056,235 959,124
Operating income 556,730 726,201
Other income (expenses)
Interest income 89,541 53,692
Interest expense (8,261) (14,995)
81,280 38,697
Income before income taxes 638,010 764,898
Income taxes 229,394 287,602
Net income 408,616 477,296
Net income per share $.25 $.30
Weighted average number of
shares outstanding 1,634,465 1,617,336
See accompanying notes to the consolidated financial statement
<TABLE>
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<CAPTION>
ADDITIONAL COMMON TREASURY STOCK
COMMON STOCK PAID-IN RETAINED STOCK AT COST
SHARES AMOUNT CAPITAL EARNINGS SUBSCRIBED SHARES AMOUNT TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,469,465 $14,695 $4,596,090 $5,932,249 300,000 68,700 ($295,400) $10,547,634
Net income 477,296 477,296
Conversion of employee
stock options 60,000 600 104,000 105,000
Issuance of shares
for acquisition 40,00 400 299,600 (300,000) 0
Balance, March 31, 1995 1,569,465 15,695 5,000,090 6,409,545 0 68,700 (295,400) 11,129,930
Balance, December 31, 1995 1,634,465 16,345 5,113,190 8,028,477 0 68,700 (295,400) 12,862,612
Net income 408,616 408,616
Balance, March 31, 1996 1,634,465 16,345 5,113,190 8,437,093 0 68,700 (295,400) 13,271,228
</TABLE>
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS*
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
Net cash provided by operation $ 408,616 $ 477,296
Cash inflows (outflows) from investment
in property, plant and equipment 2,258,694 (1,096,748)
Increase (Decrease) in cash 2,667,310 (619,452)
Cash, at beginning of year 1,251,020 744,770
Cash, at June 30 3,818,330 125,318
Supplemental disclosure of
cash payments made for:
Interest 8,261 40,465
Income taxes 30,000 1,298,600
See accompanying notes to the consolidated financial statements
*Excluding current securities available for sale
QUIPP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The financial information included herein includes the accounts of Quipp, Inc.
and Quipp Systems, Inc. (a wholly-owned subsidiary) and is unaudited. The
accompanying consolidated financial statements have been prepared on a basis
consistent with that used as of and for the year ended December 31, 1995, in
conformity with generally accepted accounting principles, (GAAP) and, in the
opinion of management, reflect all adjustments (principally consisting of normal
recurring accruals) necessary to present fairly the financial position of Quipp,
Inc. as of March 31, 1996 and the results of its operations, the changes in its
stockholders equity and cash flows for the three months ended March 31, 1996
and 1995. All significant intercompany transactions have been eliminated.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year of 1996.
NOTE 2 - INVENTORIES
Inventories at March 31, 1996 have been recorded at the lower cost of market.
Cost is determined using the first-in, first-out (FIFO) method. The composition
of inventories at March 31, 1996 and December 31, 1995 is as follows:
March 31, December 31,
1996 1995
Raw materials $1,814,772 $2,945,575
Work in process 980,983 247,572
Finished goods 364,588 281,738
$3,160,343 $3,474,885
QUIPP, INC. AND SUBSIDIARY
MANAGEMENT S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 VS 1995
Net sales for the three months ended March 31, 1996 were $4,394,440 as compared
to $5,190,381 for the corresponding period in 1995. The decrease in net sales
reflects a lower level of minimum orders which management believes reflects
concerrn by the newspaper industry over increased paper costs. Although sales
decreased for the quarter, gross profit as a percentage of sales increased from
32% in 1995 to 37%. This was due to higher margins on products sold.
Selling, general and administrative expenses for the three months ended March
31, 1996 were $923,885 as compared to $914,069 for the same period in 1995. The
increase reflects increased marketing expense relating to, among other things,
the addition of one person to the sales staff.
Research and development expenses for the three months ended March 31, 1996
increased to $132,350 from $45,055 in the corresponding period in 1995. The
increase reflects the Company s investment in two new projects relating to two
products.
GENERAL
The Company s backlog as of March 31, 1996 was approximately $5,286,679 as
compared to $9,136,366 at March 31, 1996. In light of the decline in backlog,
management anticipates that revenue will decline over the next several months as
compared to the same period in 1995. The Company expects to ship all backlog
within the next twelve months.
LIQUIDITY
The Company believes that its cash and securities available for sale of
$8,418,329 at March 31, 1996 are adequate to support the Company s operations at
its current level.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Schedule
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is being filed
SIGNATURE
Pursuant to the requirements 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.
QUIPP, INC.
Date: May 14, 1996 By: s\Ralph M. Branca
Ralph M. Branca
President and Chief Executive Officer
By: s\ Louis D. Kipp
Louis D. Kipp
Treasurer (Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUIPP
, INC. 10Q AND IS QUALIFIED IN ITS ENTIETY BY REFERENCE TO SUCH 10Q."
</LEGEND>
<CIK> 0000796577
<NAME> QUIPP, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,918,330
<SECURITIES> 4,499,999
<RECEIVABLES> 3,569,421
<ALLOWANCES> (808,931)
<INVENTORY> 3,160,343
<CURRENT-ASSETS> 15,571,186
<PP&E> 3,576,844
<DEPRECIATION> 1,628,544
<TOTAL-ASSETS> 18,373,773
<CURRENT-LIABILITIES> 3,552,545
<BONDS> 1,250,000
<COMMON> 16,345
0
0
<OTHER-SE> 13,254,883
<TOTAL-LIABILITY-AND-EQUITY> 18,373,773
<SALES> 4,394,440
<TOTAL-REVENUES> 4,483,981
<CGS> 2,781,475
<TOTAL-COSTS> 2,781,475
<OTHER-EXPENSES> 1,056,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,261)
<INCOME-PRETAX> 638,010
<INCOME-TAX> 229,394
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 408,616
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
