UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
Amendment 1
(Mark
One)
[X] Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the transition period from ________ to ________.
Commission file number 0-14870
QUIPP, INC.
(Exact Name of Registrant's as Specified in
Its Charter)
FLORIDA 59-2306191
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
4800 N.W. 157TH STREET, 33014
MIAMI, FLORIDA
(Address of Principle (Zip Code)
Executive Offices)
(305) 623-8700
(Registrants Telephone Number, Including
Area Code)
(Former Name, Former Address and Former
Fiscal Year, if Changed Since Last Report)
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 filed 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 June 30, 1997 was 1,567,296.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION...................................3
ITEM 1. FINANCIAL STATEMENTS...............................3
Consolidated Balance Sheets...........................3
Consolidated Statements of Income.....................8
Consolidated Statements of Cash Flows................12
Notes to Consolidated Financial Statements...........14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK...............................................19
PART II. OTHER INFORMATION.....................................19
ITEM 4. Submission of Matters to a Vote of Securities Holders
...................................................19
ITEM 6. Exhibits and Reports on Form 8-K.................21
SIGNATURES................................................21
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Quipp, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
1997 1996
(Unaudited) (Summarized from
auditied finacial
statements)
----------- ------------
Current Assets:
Cash and cash equivalents $11,056,602 $ 8,612,260
Accounts receivable, net 5,654,900 6,075,292
Inventories 4,495,804 3,595,199
Deferred tax asset-current 1,087,619 1,087,619
Prepaid expenses and other
receivables 177,718 125,749
----------- ------------
Total current assets 22,472,643 19,496,119
Property, plant and equipment,
net 1,762,100 1,828,668
Goodwill 452,692 468,302
Other assets 174,576 232,623
Deferred tax asset 48,576 48,576
----------- ------------
$24,910,587 $ 22,074,288
Current Liabilities:
Current portion of long-term
debt $ 400,000 $ 700,000
Accounts payable 841,236 1,066,185
Accrued salaries and wages 455,561 601,455
Deferred revenues 3,066,182 1,824,898
Income taxes payable 181,613 44,786
Other accrued liabilities 2,394,410 1,604,524
----------- ------------
Total current liabilities 7,339,002 5,841,848
Long-term debt 1,150,000 1,150,000
Total liabilities 8,489,002 6,991,848
Stockholders' equity:
Common stock - $.01 par value
per share,8,000,000 shares
authorized. 1,635,996 and
1,634,465 shares issued and
1,567,296 and 1,565,765
shares outstanding,
respectively, in 1997 and
1996. 16,360 16,345
Additional paid-in capital 5,128,335 5,113,190
Retained earnings 11,572,290 10,248,305
Treasury stock, at cost,
68,700 shares (295,400) (295,400)
----------- ------------
Total shareholders' equity 16,421,585 15,082,440
----------- ------------
Total liabilities and
shareholders' equity $ 24,910,587 $ 22,074,288
=========== ============
See accompanying notes to the consolidated financial statements.
<TABLE>
Quipp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
Three Months Ended, Six months Ended,
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 6,491,179 $ 4,454,063 $ 12,404,247 $ 8,848,504
Cost of sales 4,212,055 2,790,346 7,957,857 5,571,821
------------- ------------- ------------- -------------
Gross profit 2,279,124 1,663,717 4,446,390 3,276,683
Selling, general and administrative
expenses 1,204,233 964,515 2,400,013 1,862,235
Research and development 69,716 221,727 131,575 354,077
------------- ------------- ------------- -------------
1,273,949 1,186,242 2,531,588 2,216,312
Operating income 1,005,175 477,475 1,914,802 1,060,371
Other income (expense):
Interest income 146,187 88,349 211,026 151,736
Interest expense (13,295) (13,421) (24,266) (21,683)
------------- ------------- ------------- -------------
132,892 74,928 186,760 130,053
------------- ------------- ------------- -------------
Income before income taxes 1,138,067 552,403 2,101,562 1,190,424
Income taxes 421,085 211,047 777,578 440,452
------------- ------------- ------------- -------------
Net income $ 716,982 $ 341,356 $ 1,323,984 $ 749,972
============= ============= ============= =============
Per share amounts:
Net income per common and common
equivalent share $ 0.38 $ 0.19 $ 0.71 $ 0.44
============= ============= ============= =============
Weighted average number of common and
common equivalent shares outstanding 1,897,508 1,720,976 1,858,629 1,675,468
============= ============= ============= =============
</TABLE>
See accompanying notes to the consolidated financial statements.
Quipp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Cash provided by operations:
Net income $ 1,323,984 $ 749,972
Reconciliation of net income to net cash
provided by operations:
Depreciation and amortization 168,560 166,265
Changes in operational assets and
liabilities:
Accounts receivable 420,392 3,536,316
Inventories (900,605) (25,398)
Other assets and prepaid expenses
and other receivables (29,015) 50,449
Accounts payable and other accrued
liabilities 564,936 (391,749)
Accrued salaries and wages (145,894) (89,002)
Deferred revenues 1,241,284 (2,742,508)
Income taxes payable 136,827 (57,062)
----------- -----------
Net cash provided by operations 2,780,469 1,197,283
----------- -----------
Cash flow from investing
activities:
Capital expenditures (36,127) (7,791)
----------- -----------
Net cash (used in) by investing
activities (36,127) (7,791)
----------- -----------
Cash flow from financing
activities:
Repayment of debt (300,000) -
----------- -----------
Net cash used in financing
activities (300,000) -
----------- -----------
Increase in cash and cash equivalents 2,444,342 1,189,492
Cash and cash equivalents at
beginning of year 8,612,260 6,737,458
----------- -----------
Cash and cash equivalents at end of
quarter $ 11,056,602 $ 7,926,950
============ ============
Supplemental disclosure of cash
payments made for:
Interest $ 25,266 $ 21,579
============ ============
Income taxes $ 635,000 $ 480,000
============ ============
See accompanying notes to the consolidated financial statements.
Quipp, Inc. and Subsidiary
Notes to Consolidated Financial Statement
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited and include the
accounts of Quipp, Inc. and Quipp Systems, Inc. (a wholly-owned subsidiary).
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, 1996 and, in
the opinion of management, reflect all adjustments (principally consisting of
normal recurring accruals) considered necessary to present fairly the financial
position of Quipp, Inc. as of June 30, 1997, and the results of its operations
and cash flows for the six months ended June 30, 1997. The results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the results to be expected for the full year ending December 31, 1997. These
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and the instructions of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The condensed Consolidated Balance Sheet data at December
31, 1996 was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. Certain
previously reported amounts have been reclassified to conform with the current
period's presentation.
NOTE 2 - INVENTORIES
Inventories at June 30, 1997 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 June 30, 1997 and December 31, 1996 is as follows:
June 30, December 31,
1997 1996
Raw materials $ 1,640,131 $ 1,916,968
Work in progress 2,384,917 1,157,605
Finished goods 470,756 136,626
------------ ------------
$ 4,495,804 $ 3,595,199
NOTE 3 _ EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No.128 "Earnings per Share" ("SFAS
128"). This statement establishes standards for computing and presenting
earnings per share (EPS) and supersedes APB Opinion No. 15, "Earnings per Share"
("APB 15"). SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS which excludes dilution and is computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding during the period. SFAS 128 also requires dual presentation
of basic EPS and diluted EPS on the face of the income statement for all periods
presented. Diluted EPS is computed similarly to fully diluted EPS pursuant to
APB 15, with some modifications. The provisions of SFAS 128 are effective for
financial statements for both interim and annual periods ending after December
15, 1997. After adoption, all prior period EPS data presented shall be restated
to conform with the provisions of SFAS 128. The Company will adopt the
provision, of SFAS 128, as required.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE AND SIX MONTHS ENDED JUNE 30, 1997 VS 1996
The following table set forth contains items expressed as a percentage of Net
Sales for the periods indicated:
Percentage of Net Sales
Three Months Ended, Six Months Ended,
June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
Net Sales 100.0% 100.0% 100.0% 100.0%
Gross Profit 35.0% 37.4% 35.8% 37.0%
Selling, general and
administrative
expenses 18.6% 21.7% 19.3% 21.0%
Research and
development 1.1% 5.0% 1.1% 4.0%
Interest Income 2.3% 2.0% 1.7% 1.7%
Net Income 11.0% 7.7% 10.7% 8.5%
NET SALES for the three and six months ended June 30, 1997 were $6,491,179 and
$12,404,247, an increase of $2,037,116 or 45.7% and $3,555,743 or 40.2% over net
sales of $4,454,063 and $8,848,504 for the corresponding periods in 1996. The
increases in net sales reflect several significant shipments to domestic and
international newspaper publishers.
GROSS PROFIT for the three and six months ended June 30, 1997 was $2,279,124 and
$4,446,390, as compared to $1,663,717 and $3,276,683 for the corresponding
periods in 1996. The decrease in gross profit as a percentage of sales was due
to higher shipments of equipment purchased from other manufacturers which
contribute lower margins to gross profit than products manufactured by the
Company.
SELLING, GENERAL AND ADMINISTRATIVE expenses for the three and six months ended
June 30, 1997 were $1,204,233 and $2,400,013, an increase of $239,718 or 24.9%
and $537,778 or 28.9% over the corresponding periods of 1996. However, as a
percentage of net sales, selling, general and administrative expenses for the
three and six months ended June 30, 1996 declined to 18.6% and 19.3% from 21.7%
and 21% during the corresponding periods in 1996. Selling, general and
administrative expenses decreased as a percent of sales due to the fixed nature
of certain operating costs that do not increase in direct relationship to sales.
RESEARCH AND DEVELOPMENT expenses for the three and six months ended June 30,
1997 were $69,716 and $131,575, a decrease of $152,011 or 68.6% and $222,502 or
62.8% from expenses of $221,727 and $354,077 for the corresponding periods in
1996. The decrease is primarily due to the allocation of engineering personnel
to support the higher level of shipments during 1997, resulting in the
classification of a greater portion of engineering expense to cost of sales.
INTEREST INCOME for the quarter ended June 30, 1997 was $146,187 as compared to
$88,349, for the respective 1996 period, and $211,026 for the six months ended
June 30, 1997 as compared to $151,736 for the same 1996 period. The increase in
interest income was mainly attributable to the higher cash and cash equivalents
as of June 30, 1997. This increase in both the cash balances and interest
income resulted, in part, from the higher level of customer deposits on orders
received in the current six month period in conjunction with the collection of
the higher sales volume.
NET INCOME, as a percentage of sales, increased to 11.0% and 10.7% for the three
and six month periods ended June 30, 1997 as compared to 7.7% and 8.59% for the
comparable periods in 1996.
GENERAL
The Company's backlog as of June 30, 1997 was approximately $9,198,624, compared
to $6,876,993 at June 30, 1996. The Company expects to ship all backlog within
the next twelve months. Management is optimistic that the increased backlog
will have a positive impact on net sales for the quarter ended September 30,
1997.
LIQUIDITY
The Company believes that its cash and securities available for sale of
$11,056,602 at June 30, 1997 are adequate to support the Company's operations
at its current level.
FORWARD LOOKING STATEMENTS
The statements contained above regarding expected shipments of backlog and the
impact of the increased backlog on net sales, are forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. A
number of important factors that could cause actual results to differ materially
from those in the forward looking statements include, among others, cancellation
of orders and delays in shipments to customers for the quarter ended September
30, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
NOT APPLICABLE
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Securities Holders
On April 29, 1997, the Company held its Annual Meeting of
Shareholders. At the Meeting, the shareholders voted on the election
of the seven members of the Board of Directors and ratified the
appointment of KMPG Peat Marwick LLP as the independent public
accountants to examine the financial statements of the Company for
1997.
The voting results are set forth below:
1. Election of Directors:
Name of Nominee For Withheld
--------------- --------- --------
Ralph M. Branca 1,401,657 14,870
Richard E. Campbell 1,401,657 14,870
Jack D. Finley 1,401,657 14,870
Cristina H. Kepner 1,401,657 14,870
Louis D. Kipp 1,401,657 14,870
William E. Rose 1,401,657 14,870
Ralph S. Roth 1,401,657 14,870
2. Ratification of the appointment of KMPG Peat Marwick LLP as
independent public accountants to examine the financial
statements for the Company for 1997:
For Against Abstain
1,401,307 12,270 2,950
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
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.
(Registrant)
Date August 8, 1997 By: \s\Ralph M. Branca
Ralph M. Branca
President and Chief Executive
Officer
Date August 8, 1997 By: \s\Jeffery S. Barocas
Jeffery S. Barocas
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Quipp, Inc.
Second Quarter 1997 Form 10-Q and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<CIK> 0000796577
<NAME> QUIPP, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,056,602
<SECURITIES> 0
<RECEIVABLES> 6,370,175
<ALLOWANCES> (715,275)
<INVENTORY> 4,495,804
<CURRENT-ASSETS> 22,472,643
<PP&E> 3,638,892
<DEPRECIATION> (1,876,792)
<TOTAL-ASSETS> 24,910,587
<CURRENT-LIABILITIES> 7,339,002
<BONDS> 1,150,000
0
0
<COMMON> 16,360
<OTHER-SE> 16,405,225
<TOTAL-LIABILITY-AND-EQUITY> 24,910,587
<SALES> 12,404,247
<TOTAL-REVENUES> 12,615,273
<CGS> 7,957,857
<TOTAL-COSTS> 10,489,445
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (24,266)
<INCOME-PRETAX> 2,101,562
<INCOME-TAX> 777,578
<INCOME-CONTINUING> 1,323,984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,323,984
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
