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 quarterly period ended September 30, 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 (I.R.S. Employer Identification No.)
of incorporation or organization)
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, 1996 was 1,565,765.
QUIPP, INC.
THIRD QUARTER REPORT ON FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Consolidated Statements of Operations - three and nine months 4
ended September 30, 1996 and 1995
Consolidated Statement of Changes in Stockholders' Equity - 5
nine months ended September 30, 1996
Consolidated Statements of Cash Flows -nine months 6
ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Consolidated 8
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
(Unaudited) (Summarized from
audited
financial
statements)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 315,587 $ 1,251,020
Securities available for sale 7,075,000 5,486,438
Accounts receivable, net of allowance
for doubtful accounts of $ 715,275
($846,171 at December 31, 1995) 6,730,646 6,907,402
Inventories 3,731,332 3,474,885
Prepaid expenses and other receivables 1,220,621 1,263,201
TOTAL CURRENT ASSETS 19,073,186 18,382,946
Property, plant and equipment - net 1,867,528 1,991,665
Other assets 778,382 892,517
TOTAL ASSETS $21,719,096 $21,267,128
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 400,000 $ 400,000
Accounts payable - trade 853,606 821,957
Accrued salaries and wages 290,041 499,041
Deferred revenues and customer deposits 2,135,789 3,159,502
Current tax liability 323,166 213,997
Other accrued liabilities 1,807,337 1,760,019
TOTAL CURRENT LIABILITIES 5,809,939 6,854,516
Long-term debt 1,550,000 1,550,000
TOTAL LIABILITIES 7,359,939 8,404,516
STOCKHOLDERS EQUITY:
Common stock - par value $.01,
8,000,000 shares authorized 1,634,465
shares issued and 1,565,765 outstanding
(3,000,000 authorized at December 31, 1995) 16,345 16,345
Capital contributed in excess of par value 5,113,190 5,113,190
Retained earnings 9,525,022 8,028,477
Less treasury stock, 68,700 shares at cost (295,400) (295,400)
TOTAL STOCKHOLDERS EQUITY 14,359,157 12,862,612
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,719,096 $21,267,128
See accompanying notes to the consolidated financial statements.
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
NET SALES $6,009,445 $5,819,482 $14,857,950 $16 ,747,140
Cost of goods sold 3,838,800 3,846,689 9,410,622 11,259,344
GROSS PROFIT 2,170,645 1,972,793 5,447,328 5,487,796
Operating expenses
Selling, general and
administrative expenses 921,740 1,076,500 2,783,987 3,027,412
Research and development 144,706 63,370 498,783 126,570
1,066,446 1,139,870 3,282,770 3,153,982
OPERATING INCOME 1,104,199 832,923 2,164,558 2,333,814
Interest income (expense):
Interest income 92,747 112,187 248,418 269,323
Interest expense (12,446) (14,713) (38,063) (50,945)
80,301 97,474 210,355 218,378
INCOME BEFORE
INCOME TAXES 1,184,500 930,397 2,374,913 2,552,192
Provision for
income taxes 437,906 400,509 878,368 951,509
NET INCOME $746,594 $529,888 $1,496,545 $1,600,683
Net income per common
share and common
equivalent share $0.42 $0.32 $0.90 $0.99
Weighted average
number of common
equivalent shares
outstanding 1,782,293 1,631,017 1,663,993 1,624,040
See accompanying notes to the consolidated financial statements
<TABLE>
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<CAPTION>
ADDITIONAL TREASURY STOCK,
COMMON STOCK PAID-IN RETAINED AT COST
SHARES ISSUED AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1995 1,634,465 $16,345 $ 5,113,190 $ 8,028,477 68,700 ($295,400) $12,862,612
Net income 1,496,545 1,496,545
BALANCE,
SEPTEMBER 30, 1996 1,634,465 $16,345 $ 5,113,190 $ 9,525,022 68,700 ($295,400) $14,359,157
</TABLE>
QUIPP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
CASH PROVIDED BY OPERATIONS:
Net income $ 1,496,545 $ 1,600,683
Reconciliation of net income to net cash
provided by (used in) operations:
Add back noncash (income) expense items
Depreciation and amortization 249,683 190,645
Bad debt recovery (133,000) -
1,613,228 1,791,328
Changes in operational assets and liabilities:
Decrease (increase) in accounts receivable 314,246 (3,474,050)
(Increase) in inventories (256,447) (1,295,264)
Decrease in other assets and prepaid
expenses and other receivables 42,580 572,403
(Decrease) increase in accounts payable-trade 31,649 (477,910)
(Decrease) in deferred revenues and
customer deposits (1,023,713) (1,202,215)
(Decrease) increase in current tax liability 109,169 (420,090)
(Decrease) increase in accrued
salaries and wages (209,000) (421,042)
(Decrease) in other accrued liabilities 47,409 112,434
(944,107) (6,830,602)
Net cash provided by (used in) operations 669,030 (5,039,274)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in securities
available for sale (1,588,562) 3,537,854
Capital expenditures (15,901) (55,850)
Acquisition of business - (280,000)
Net cash (used in) provided by
investing activities (1,604,463) 3,202,004
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (repayment) of debt - -
Repurchase of stock - -
Conversion of stock options - 175,000
Net cash provided by financing activities - 175,000
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ( 935,433) 137,730
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,251,020 744,770
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 315,587 $ 882,500
Supplemental disclosure of cash payments made for:
Interest $ 38,062 $ 50,945
Income taxes $ 718,000 $ 1,298,600
See accompanying notes to the consolidated financial statements
QUIPP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - GENERAL
Quipp, Inc. through its subsidiary, Quipp Systems, Inc., is engaged primarily in
the manufacture of material handling equipment for the newspaper industry.
The financial information included herein, which includes the accounts of Quipp,
Inc. and Quipp Systems, Inc. (a wholly-owned subsidiary) is unaudited. All
significant intercompany transactions have been eliminated in consolidation. 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 September 30, 1996 and the results of its operations for the three
and nine months ended September 30, 1996 and 1995 , and changes in its
stockholders equity for the nine months ended September 30, 1996 and cash flows
for the nine months ended September 30, 1996 and 1995. Operating results for
the three and nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the full year ending December 31,
1996.
NOTE 2 - INVENTORIES
Inventories at September 30, 1996 have been recorded at the lower of cost or
market. Cost is determined using the first-in, first-out (FIFO) method. The
composition of inventories at September 30, 1996 and December 31, 1995 was as
follows:
SEPTEMBER 30, DECEMBER 31,
1996 1995
RAW MATERIALS $1,787,723 $2,945,575
WORK IN PROCESS 1,729,578 247,572
FINISHED GOODS 214,031 281,738
$3,731,332 $3,474,885
QUIPP, INC. AND SUBSIDIARY
MANAGEMENT S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996 VS 1995
Net sales for the nine months ended September 30, 1996 were $14,857,950 as
compared to $16,747,140 for the corresponding period in 1995. Although revenues
for the current nine months are lower than the comparable period in 1995, the
gross profit and its corresponding percentage of net sales for the nine months
ended September 30, 1996 was $5,447,328 or 37% of net sales, as compared to
$5,487,796 or 33% of net sales in 1995. Management believes that the decrease
in net sales for the nine months ended September 30, 1996 as compared to the
same period in 1995 was mainly attributable to reduced newspaper industry
demand resulting from increased newsprint costs in the earlier part of 1996.
The increase in the gross profit and its percentage of net sales is attributable
to an improved product mix, combined with the implementation of cost
improvement projects, that yielded higher gross profit margins on products sold
in the nine months ended September 30, 1996.
Selling, general and administrative expenses for the nine months ended September
30, 1996 decreased 8% to $2,783,987 as compared to $3,027,412 for the
corresponding period in 1995. The decrease is principally due to a decreased
s a les volume. As a percentage of net sales, selling, general and
administrative expenses were 18% for both the current and prior period.
Research and development expenses for the nine months ended September 30, 1996
increased to $498,783 as compared to $126,570 for the same period in the prior
year. This increase is a result of the Company's increased emphasis on product
development and product improvement. Management anticipates that the Company's
higher level of research and development expenditures will continue. R&D is
impacted from quarter to quarter by the level of the Company's backlog and the
related engineering efforts required to customize and expedite shipments within
each quarter. The costs associated with the customization are charged to cost of
goods sold as incurred.
THREE MONTHS ENDED SEPTEMBER 30, 1996 VS 1995
Net sales for the three months ended September 30, 1996 were $6,009,445 as
compared to $5,819,482 for the corresponding period in 1995. The increase of
$189,963 or 3% was mainly attributable to increased order activity which
management believes is caused by a recent decrease in newsprint costs to the
publishing industry. Gross profit for the three months ended September 30, 1996
was $2,170,645 or 36% of net sales as compared to $1,972,793 or 34% of net sales
in the same period of 1995. The increase is a result of the increased sales for
the quarter, in addition to cost efficiencies achieved in production and
purchasing.
Selling, general and administrative expenses for the three months ended
September 30, 1996 decreased 14% to $921,740 as compared to $1,076,500 in the
same period of 1995. The decrease in expenses is mainly a result of the Company
incurring one-time costs for professional services related to the upgrade of its
computer software systems in 1995.
Research and development expenses for the three months ended September 30, 1996
increased to $144,706 from $63,370 for the corresponding period in 1995.
Several R&D projects were completed during the third quarter of 1996. The
Company expects to complete its current R&D projects, as well as develop new
projects for the future.
GENERAL
The Company s backlog as of September 30, 1996 was approximately $9,305,629
compared to $8,616,651 at September 30, 1995. The Company expects to ship all
backlog within the next twelve months.
LIQUIDITY
Net income, as adjusted for non-cash income and expense items, generated
$1,613,228 of operating cash flow for the nine months ended September 30, 1996.
Net changes in operational assets and liabilities used operating cash of
$944,107, resulting in cash provided by operations of $669,030. The changes in
Operational assets and liabilities were principally a result of the decrease in
customer deposits and deferred revenues of $1,023,713 when compared to December
31, 1995. A record level of shipments in the fourth quarter of 1995 with
related deposits from customers collected in the first quarter of 1996 caused
the decrease in customer deposits and deferred revenues. The Company also
increased its investments in securities available for sale during the period by
$1,588,562, which should positively impact interest income in future periods.
Net income, as adjusted for non-cash income and expense items, generated
$1,791,328 of operating cash flow for the nine months ended September 30, 1995.
Net changes in operational assets and liabilities used operating cash of
$6,830,602 resulting in cash used by operations of $5,039,274. The acquisition
of certain assets of Hall Processing Systems and higher volume in 1995 resulted
in increases in operational assets as required to support these higher levels of
business. Additionally, the conversion of stock options during the nine months
ended September 30, 1995 generated $175,000 in cash from financing activities.
The Company believes that its cash and securities available for sale of
7,390,587 at September 30, 1996 are adequate to support the Company s operations
at its current level.
PART II - OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit number
10 Agreement, dated as of July 16, 1996 between the registrant,
Quipp Systems, Inc., and Ralph M. Branca
(b) Financial Data Schedule
27 No reports on Form 8-K were filed by the registrant 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: November 13, 1996 By: s\Ralph M. Branca
Ralph M. Branca
President and Chief Executive
Officer
By: s\Jeffrey S. Barocas
Jeffrey S. Barocas
Chief Financial Officer
QUIPP, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit 10 Agreement dated as of July 16, 1996 between the registrant, Quipp
Systems, Inc. and Ralph M. Branca
27 Financial Data Schedule<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Quipp, Inc.
10-Q and is qualified in its entirety by reference to such 10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 315,587
<SECURITIES> 7,075,000
<RECEIVABLES> 6,730,646
<ALLOWANCES> 715,275
<INVENTORY> 3,731,332
<CURRENT-ASSETS> 19,073,186
<PP&E> 1,867,528
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,719,096
<CURRENT-LIABILITIES> 5,809,939
<BONDS> 1,150,000
0
0
<COMMON> 16,345
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,179,096
<SALES> 14,857,950
<TOTAL-REVENUES> 14,857,950
<CGS> 9,410,622
<TOTAL-COSTS> 9,410,622
<OTHER-EXPENSES> 3,282,770
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,063
<INCOME-PRETAX> 2,374,913
<INCOME-TAX> 878,368
<INCOME-CONTINUING> 1,496,545
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,496,545
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
AGREEMENT
This Agreement made and entered into as of the 16th day of July, 1996, by
and between QUIPP, INC., a Florida corporation hereinafter called "COMPANY,"
which term shall include its successors or assigns, QUIPP SYSTEMS, INC., a
Florida corporation, hereinafter called "QUIPP SYSTEMS," which term shall
include its successors and assigns, and RALPH M. BRANCA, hereinafter called
"EMPLOYEE."
W I T N E S S E T H :
WHEREAS, COMPANY wholly-owns QUIPP SYSTEMS, which is engaged in the design
and manufacture of material handling equipment for the newspaper and commercial
printing industries; and
WHEREAS, EMPLOYEE has served as President of the COMPANY since May 14,
1995; and
WHEREAS, in consideration of EMPLOYEE'S past services and continued
services to COMPANY, and in recognition of the value of such services both to
COMPANY and QUIPP SYSTEMS, COMPANY, QUIPP SYSTEMS and EMPLOYEE wish to state
their understanding regarding the continuation of the availability of health
insurance for EMPLOYEE under certain circumstances:
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed between the parties as follows:
1. A. For purposes of this Agreement, the following terms shall have
the following meanings unless the context clearly otherwise requires:
(I) "Base Salary" means the annualized amount of the
aggregate cash remuneration being paid to EMPLOYEE by the COMPANY, exclusive of
any cash payments made to EMPLOYEE under any bonus or similar plan or any
contributions made for EMPLOYEE'S benefit to any pension or profit sharing plan
or other type of executive retirement plan.
(ii) "Change of Control" means an event (the"Acquisition
Event") following which any person, together with all of such person's
"affiliates" and "associates," as defined in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any group within the
meaning of Section 13(d)(3) or Rule 13d-5(b)(1) under the Exchange Act, shall
become the beneficial owner, directly or indirectly, of an aggregate of twenty
percent (20%) or more of the common stock of COMPANY then outstanding, unless
the Board of Directors of COMPANY (the "Board of Directors"), within thirty
(30) days after having been advised that such ownership level has been reached,
determines, in its sole discretion, that the Acquisition Event should not be
considered as a Change of Control for purposes of this Section 1; provided,
that at such time as the Board of Directors makes such determination, the Board
of Directors is comprised of the same persons as those on the Board of Directors
immediately prior to the Acquisition Event or (ii) if during any 24-month
period, individuals who at the beginning of such period constituted the Board of
Directors cease for any reason to constitute a majority thereof, unless the
election, or the nomination for election by COMPANY shareholders, of the
directors who were not directors at the beginning of such period was approved by
a vote of at least a majority of the directors in office at the time of such
election or nomination who were directors at the beginning of such period.
(iii) "Termination of Employment" means the termination of all
of EMPLOYEE'S actual employment relationships with COMPANY.
(iv) "Termination upon a Change of Control" means a
Termination of Employment after a Change of Control either:
<PAGE>
(a) initiated by COMPANY or any successor corporation for
any reason other than the EMPLOYEE'S fraud, or EMPLOYEE'S conviction of a crime
involving moral turpitude, or EMPLOYEE'S willful misconduct or gross negligence
in the performance of his duties or responsibilities for the COMPANY; or
(b) initiated by EMPLOYEE upon one or more of the following
occurrences:
(1) a significant reduction in the authority, duties
or responsibilities held by EMPLOYEE immediately prior to the Change of Control,
default by COMPANY, following the Change of Control, in payment of any
compensation due to EMPLOYEE, or any removal of EMPLOYEE from or any failure to
re-elect EMPLOYEE to the positions held by EMPLOYEE immediately prior to the
Change of Control, except in connection with promotions to higher office;
(2) a reduction in EMPLOYEE'S Base Salary as in effect
immediately prior to the Change of Control; or
(3) a significant increase, following the Change of
Control, in the time commitment required by EMPLOYEE in the performance of his
duties to COMPANY.
B. In the event of EMPLOYEE'S Termination upon a Change of
Control, COMPANY or, if QUIPP SYSTEMS was providing such insurance for EMPLOYEE
prior to the Change of Control, QUIPP SYSTEMS shall continue EMPLOYEE'S health
insurance until EMPLOYEE'S sixty-eighth (68th) birthday, provided EMPLOYEE pays
one hundred percent (100%) of the cost of such insurance, as determined pursuant
to subsection 1.C below; provided, however, that EMPLOYEE shall not be obligated
to pay more than the cost of such insurance with respect to a similarly situated
full-time employee. During the time of continuation of said insurance,
insurance provided by COMPANY or QUIPP SYSTEMS shall be subordinate to any other
health insurance (including Medicare or any other governmentally provided
coverage) for which EMPLOYEE is eligible; provided, that COMPANY shall reimburse
EMPLOYEE for any Medicare, Part B premiums paid by EMPLOYEE during such time.
C. For purposes of this Agreement, the cost of EMPLOYEE'S health
insurance shall be the actual premium paid to the insurance company and, if the
party (COMPANY or QUIPP SYSTEMS) providing such insurance is partially self-
insured, the cost per participant for each year or portion thereof relating to
such self-insurance. EMPLOYEE shall pay such amounts at the beginning of the
relevant year or portion thereof for which EMPLOYEE is entitled to receive
health insurance pursuant to subsection 1.B, based on the estimated average cost
per participant for equivalent coverage, and an appropriate adjustment shall be
made at the end of such period, based on the actual cost per participant for
equivalent coverage.
D. (I) In the event that COMPANY and QUIPP SYSTEMS shall fail
or refuse to make available to EMPLOYEE health insurance as provided under
subsection 1.B, COMPANY shall reimburse EMPLOYEE for any payments made by
EMPLOYEE to obtain similar insurance that are in excess of payments EMPLOYEE
would otherwise have to make pursuant to subsection 1.B (the "Excess Payments"),
plus interest, compounded quarterly, on any Excess Payments made by EMPLOYEE
from the latter of the date (1) EMPLOYEE notifies COMPANY that such Excess
Payments are being made or (2) the date EMPLOYEE makes the Excess Payments,
until the date COMPANY reimburses EMPLOYEE for such Excess Payments and all
accrued interest. In the event that COMPANY reimburses only a portion of
EMPLOYEE'S Excess Payments and accrued interest, interest will continue to
accrue on the unpaid portion. Interest payable pursuant to this subsection
1.D(I) shall be payable at the rate from time to time announced by NationsBank,
N.A. as its "prime rate" plus 3%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(ii) In addition to the payments required under subsection
1.D(I), COMPANY shall pay to EMPLOYEE, on demand, the amount necessary to
reimburse EMPLOYEE in full for all expenses (including all attorneys' fees and
expenses) incurred by EMPLOYEE in enforcing any of the obligations of COMPANY
and QUIPP SYSTEMS under subsection 1.B.
2. The invalidity of unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.
3. This Agreement shall inure to and be binding on the parties hereto
and their respective heirs, successors and assigns.
4. This document shall be construed for all purposes as a Florida
document and shall be interpreted and enforced in accordance
with the laws of the State of Florida.
5. This Agreement contains the entire understanding among the parties
hereof, and supersedes all prior agreements and understandings relating to the
provision of health insurance to EMPLOYEE in the event of EMPLOYEE'S
"Termination upon a Change of Control." The Agreement is not otherwise intended
to supersede any provision for health insurance coverage that may be available
to EMPLOYEE by virtue of resolutions of the Board of Directors of COMPANY or
QUIPP SYSTEMS, or otherwise. This Agreement may be amended by a written
agreement between COMPANY and EMPLOYEE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first
above written.
QUIPP INC.
BY:/s/ Jack D. Finley
Jack D. Finley
Chairman of the Board
QUIPP SYSTEMS, INC.
BY: /s/Louis D. Kipp
Louis D. Kipp
President
/s/Ralph Branca
Ralph Branca
