MICROPAC INDUSTRIES, INC.
FORM 10-Q
March 2, 2013
INDEX
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PART I - FINANCIAL INFORMATION
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ITEM 1 - FINANCIAL STATEMENTS
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Condensed Balance Sheets as of March 2, 2013 (unaudited) and November 30, 2012
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Condensed Statements of Operations for the three months ended March 2, 2013 and February 25, 2012 (unaudited)
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Condensed Statements of Cash Flows for the three months ended March 2, 2013 and February 25, 2012 (unaudited)
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Notes to Condensed Financial Statements (unaudited)
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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 4 - CONTROLS AND PROCEDURES
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PART II - OTHER INFORMATION
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ITEM 1 - LEGAL PROCEEDINGS
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ITEM 1A -RISK FACTORS
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ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
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ITEM 4 - MINE SAFETY DISCLOSURE
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ITEM 5 - OTHER INFORMATION
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ITEM 6 - EXHIBITS
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SIGNATURES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MICROPAC INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
ASSETS
|
CURRENT ASSETS
|
|
03/02/2013 |
|
|
11/30/2012
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| |
|
(Unaudited)
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
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Cash and cash equivalents
|
|
$ |
7,721 |
|
|
$ |
7,415 |
|
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Short-term investment
|
|
|
2,005 |
|
|
|
2,004 |
|
|
Receivables, net of allowance for doubtful accounts of
$2 at March 2, 2013 and $2 at November 30, 2012
|
|
|
2,257 |
|
|
|
2,498 |
|
|
Inventories:
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
|
3,401 |
|
|
|
3,601 |
|
|
Work-in process
|
|
|
2,386 |
|
|
|
2,384 |
|
|
Total inventories
|
|
|
5,787 |
|
|
|
5,985 |
|
|
Deferred income taxes
|
|
|
659 |
|
|
|
659 |
|
|
Prepaid income tax
|
|
|
242 |
|
|
|
349 |
|
|
Prepaid expenses and other assets
|
|
|
128 |
|
|
|
121 |
|
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Total current assets
|
|
|
18,799 |
|
|
|
19,031 |
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| |
|
|
|
|
|
|
|
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PROPERTY, PLANT AND EQUIPMENT, at cost:
|
|
|
|
|
|
|
|
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Land
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|
|
80 |
|
|
|
80 |
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Buildings
|
|
|
498 |
|
|
|
498 |
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|
Facility improvements
|
|
|
1,074 |
|
|
|
1,074 |
|
|
Machinery and equipment
|
|
|
7,958 |
|
|
|
7,914 |
|
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Furniture and fixtures
|
|
|
677 |
|
|
|
677 |
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|
Total property, plant, and equipment
|
|
|
10,287 |
|
|
|
10,243 |
|
|
Less accumulated depreciation
|
|
|
(8,298 |
) |
|
|
(8,220 |
) |
|
Net property, plant, and equipment
|
|
|
1,989 |
|
|
|
2,023 |
|
|
Total assets
|
|
$ |
20,778 |
|
|
$ |
21,054 |
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| |
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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|
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|
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CURRENT LIABILITIES:
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|
|
|
|
|
|
|
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Accounts payable
|
|
$ |
336 |
|
|
$ |
501 |
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|
Accrued compensation
|
|
|
418 |
|
|
|
511 |
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Deferred revenue
|
|
|
323 |
|
|
|
189 |
|
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Other accrued liabilities
|
|
|
118 |
|
|
|
215 |
|
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Income taxes payable
|
|
|
114 |
|
|
|
112 |
|
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Total current liabilities
|
|
|
1,309 |
|
|
|
1,528 |
|
| |
|
|
|
|
|
|
|
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DEFERRED INCOME TAXES
|
|
|
471 |
|
|
|
471 |
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| |
|
|
|
|
|
|
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SHAREHOLDERS’ EQUITY
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|
|
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|
|
|
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Common stock, ($.10 par value), authorized 10,000,000
shares, 3,078,315 issued and 2,578,315 outstanding at
March 2, 2013 and November 30, 2012
|
|
|
308 |
|
|
|
308 |
|
|
Paid-in capital
|
|
|
885 |
|
|
|
885 |
|
|
Treasury stock, 500,000 shares, at cost
|
|
|
(1,250 |
) |
|
|
(1,250 |
) |
|
Retained earnings
|
|
|
19,065 |
|
|
|
19,112 |
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| |
|
|
|
|
|
|
|
|
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Total shareholders’ equity
|
|
|
19,008 |
|
|
|
19,055 |
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| |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
$ |
20,788 |
|
|
$ |
21,054 |
|
See accompanying notes to financial statements.
MICROPAC INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except share data)
(Unaudited)
| |
|
Three months ended
|
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03/02/13
|
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02/25/12
|
|
| |
|
|
|
|
|
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|
|
|
|
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NET SALES
|
|
$ |
4,638 |
|
|
$ |
3,714 |
|
| |
|
|
|
|
|
|
|
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COST AND EXPENSES:
|
|
|
|
|
|
|
|
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| |
|
|
|
|
|
|
|
|
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Cost of goods sold
|
|
|
(2,982 |
) |
|
|
(2,605 |
) |
| |
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
(339 |
) |
|
|
(122 |
) |
| |
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses
|
|
|
(989 |
) |
|
|
(868 |
) |
| |
|
|
|
|
|
|
|
|
|
Total cost and expenses
|
|
|
(4,310 |
) |
|
|
(3,595 |
) |
| |
|
|
|
|
|
|
|
|
|
OPERATING INCOME BEFORE INTEREST
AND TAXES
|
|
|
328 |
|
|
|
119 |
|
| |
|
|
|
|
|
|
|
|
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Interest and other income
|
|
|
1 |
|
|
|
3 |
|
| |
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAXES
|
|
$ |
329 |
|
|
$ |
122 |
|
| |
|
|
|
|
|
|
|
|
|
Provision for taxes
|
|
|
(118 |
) |
|
|
(44 |
) |
| |
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ |
211 |
|
|
$ |
78 |
|
|
NET INCOME PER SHARE, BASIC AND DILUTED
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
| |
|
|
|
|
|
|
|
|
|
DIVIDENDS PER SHARE
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
| |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE OF SHARES, basic and diluted
|
|
|
2,578,315 |
|
|
|
2,578,315 |
|
See accompanying notes to financial statements.
MICROPAC INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| |
|
Three months ended
|
|
| |
|
3/02/13
|
|
|
2/25/12
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income
|
|
$ |
211 |
|
|
$ |
78 |
|
|
Adjustments to reconcile net income to
|
|
|
|
|
|
|
|
|
|
net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
78 |
|
|
|
85 |
|
|
Changes in certain current assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
|
241 |
|
|
|
(208 |
) |
|
Decrease in inventories
|
|
|
198 |
|
|
|
17 |
|
|
Decrease in prepaid expenses and other current
|
|
|
|
|
|
|
|
|
|
assets
|
|
|
100 |
|
|
|
115 |
|
|
Decrease in accounts payable
|
|
|
(165 |
) |
|
|
(16 |
) |
|
Decrease in accrued compensation
|
|
|
(93 |
) |
|
|
(209 |
) |
|
Increase (decrease) in deferred revenue
|
|
|
134 |
|
|
|
(136 |
) |
|
Decrease in other accrued liabilities
|
|
|
(97 |
) |
|
|
(110 |
) |
|
Increase in income taxes payable
|
|
|
2 |
|
|
|
2 |
|
| |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
609 |
|
|
|
(382 |
) |
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of short term investments
|
|
|
(1 |
) |
|
|
(3 |
) |
|
Additions to property, plant and equipment
|
|
|
(44 |
) |
|
|
(64 |
) |
| |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(45 |
) |
|
|
(67 |
) |
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Cash dividend
|
|
|
(258 |
) |
|
|
(258 |
) |
| |
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(258 |
) |
|
|
(258 |
) |
| |
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
306 |
|
|
|
(707 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
7,415 |
|
|
|
8,488 |
|
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
7,721 |
|
|
$ |
7,781 |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosure:
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$ |
10 |
|
|
$ |
- |
|
See accompanying notes to financial statements.
MICROPAC INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 BASIS OF PRESENTATION
Business Description
Micropac Industries, Inc. (the “Company”), a Delaware corporation, manufactures and distributes various types of hybrid microelectronic circuits, solid state relays, power operational amplifiers, and optoelectronic components and assemblies. The Company’s products are used as components in a broad range of military, space and industrial systems, including aircraft instrumentation and navigation systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200o C) products. The Company’s products are either custom (being application specific circuits designed and manufactured to meet the particular requirements of a single customer) or standard, proprietary components such as catalog items.
The Company’s facilities are certified and qualified by Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level), MIL-PRF-19500 JANS (space level), and MIL-PRF-28750 (class K-space level) and is certified to ISO 9001-2002. Micropac is a National Aeronautics and Space Administration (NASA) core supplier, and is registered to AS9100-Aerospace Industry standard for supplier certification.
The Company’s core technology is the packaging and interconnecting of miniature electronic components, utilizing thick film substrates, forming microelectronics circuits. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors used in the Company’s optoelectronic components and assemblies.
In the opinion of management, the unaudited financial statements include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position as of March 2, 2013, the results of operations for the three months ended March 2, 2013 and February 25, 2012, and the cash flows for the three months ended March 2, 2013 and February 25, 2012. Unaudited financial statements are prepared on a basis substantially consistent with those audited for the year ended November 30, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission. However, management believes that the disclosures contained are adequate to make the information presented not misleading.
Note 2 SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenues are recorded as shipments are made based upon contract prices. Any losses anticipated on fixed price contracts are provided for currently. Sales are recorded net of sales returns, allowances and discounts.
The Company recognizes revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-10-S99, Revenue Recognition (ASC 605-10-S99). ASC 605-10-S99 requires that four basic criteria must be met before revenues can be recognized: (1) persuasive evidence of an arrangement exists; (2) shipment has occurred or services have been rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably assured.
Deferred revenue represents prepayments from customers and will be recognized as revenue when the products are shipped per the terms of the contract.
Short-Term Investments
The Company has $2,005,000 in short term investments at March 2, 2013. Short-term investments consist of certificates of deposits with maturities greater than 90 days. These investments are reported at historical cost, which approximates fair value. All highly liquid investments with maturities of 90 days or less are classified as cash equivalents. All short-term investments are securities which the Company has the ability and intent to hold to maturity and mature within one year.
Inventories
Inventories are stated at lower of cost or market value and include material, labor and manufacturing overhead. All inventories are valued using the FIFO (first-in, first-out) method of inventory valuation. The Company writes down obsolete and overstocked inventory based on the usage of inventory over a three year period and projected usage based on current backlog.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method the Company records deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The resulting deferred tax liabilities and assets are adjusted to reflect changes in tax law or rates in the period that includes the enactment date.
Property, Plant, and Equipment
Property, plant, and equipment are carried at cost, and depreciation is provided using the straight-line method at rates based upon the following estimated useful lives (in years) of the assets:
|
Buildings
|
15
|
|
Facility improvements
|
8-15
|
|
Machinery and equipment
|
5-10
|
|
Furniture and fixtures
|
5-8
|
The Company assesses long-lived assets for impairment under ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement. When events or circumstances indicate that an asset may be impaired, an assessment is performed. The estimated future undiscounted cash flows associated with the asset are compared to the asset’s net book value to determine if a write down to market value less cost to sell is required.
Repairs and maintenance are expensed as incurred. Improvements which extend the useful life of property, plant, and equipment are capitalized.
Research and Development Costs
Costs for the design and development of new products are expensed as incurred.
Note 3 FAIR VALUE MEASUREMENT
The Company had no financial assets and liabilities measured at fair value on a recurring basis as of March 2, 2013 and November 30, 2012. The fair value of financial instruments such as cash and cash equivalents, short term investments, accounts receivable, and accounts payable approximate their carrying amount based on the short maturity of these instruments. There were no nonfinancial assets measured at fair value on a nonrecurring basis at March 2, 2013 and November 30, 2012.
Note 4 COMMITMENTS
On January 23, 2013, Micropac Industries, Inc. entered into a Loan Agreement with a Texas banking institution. The Loan Agreement replaces the Company's revolving line of credit with the Texas banking institution entered into on June 1, 2011. The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000, and specific advance loans for acquisitions to the Company with an aggregate amount not to exceed $7,500,000 in a single advance or in multiple advances. The Loan Agreement also contains financial covenants to maintain at all times including (i) minimum working capital of not less than $4,000,000, (ii) a ratio of senior funded debt, minus the Company’s balance sheet cash on hand to the extent in excess of $2,000,000, to EBITDA of not more than 3.0 to 1.0, and (iii) a ratio of free cash flow to debt service of not less than 1.2 to 1.0. The Company has not, to date, drawn any amounts under the loan agreement or the revolving line of credit.
Note 5 EARNINGS PER COMMON SHARE
Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the respective periods. Diluted earnings per share give effect to all dilutive potential common shares. For the three months ended March 2, 2013 and February 25, 2012, the Company had no dilutive potential common stock.
Note 6 SHAREHOLDERS’ EQUITY
On December 12, 2011, the Board of Directors of Micropac Industries, Inc. approved the payment of a special dividend of $0.10 per share for shareholders of record as of January 18, 2012. The dividend was paid to the Company’s shareholders on February 14, 2012.
On December 12, 2012, the Board of Directors of Micropac Industries, Inc. approved the payment of a $.10 per share special dividend to all shareholders of record as of January 15, 2013. The dividend was paid to shareholders on February 12, 2013.
Note 7 SUBSEQUENT EVENTS
Management has evaluated subsequent events after the balance sheet date, through the issuance of the financial statements, for appropriate accounting and disclosure.
MICROPAC INDUSTRIES, INC.
(Unaudited)
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business
Micropac Industries, Inc. (the “Company”), a Delaware corporation, manufactures and distributes various types of hybrid microelectronic circuits, solid state relays, power operational amplifiers, and optoelectronic components and assemblies. The Company’s products are used as components in a broad range of military, space and industrial systems, including aircraft instrumentation and navigation systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200o C) products. The Company’s products are either custom (being application specific circuits designed and manufactured to meet the particular requirements of a single customer) or standard, proprietary components such as catalog items.
The Company’s facilities are certified and qualified by Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level), MIL-PRF-19500 JANS (space level), and MIL-PRF-28750 (class K-space level) and is certified to ISO 9001-2002. Micropac is a NASA core supplier, and is registered to AS9100-Aerospace Industry standard for supplier certification.
The Company’s core technology is the packaging and interconnecting of miniature electronic components, utilizing thick film substrates, forming microelectronics circuits. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors used in the Company’s optoelectronic components and assemblies.
Results of Operations
| |
|
Three months ended
|
|
| |
|
3/02/2013
|
|
|
2/25/2012
|
|
|
NET SALES
|
|
|
100.0 |
% |
|
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
COST AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
64.3 |
% |
|
|
70.1 |
% |
|
Research and development
|
|
|
7.3 |
% |
|
|
3.3 |
% |
|
Selling, general & administrative expenses
|
|
|
21.3 |
% |
|
|
23.4 |
% |
|
Total cost and expenses
|
|
|
92.9 |
% |
|
|
96.8 |
% |
| |
|
|
|
|
|
|
|
|
|
OPERATING INCOME BEFORE INTEREST
|
|
|
|
|
|
|
|
|
|
AND INCOME TAXES
|
|
|
7.1 |
% |
|
|
3.2 |
% |
| |
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
- |
|
|
|
0.1 |
% |
| |
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAXES
|
|
|
7.1 |
% |
|
|
3.3 |
% |
| |
|
|
|
|
|
|
|
|
|
Provision for taxes
|
|
|
2.5 |
% |
|
|
1.2 |
% |
| |
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
4.6 |
% |
|
|
2.1 |
% |
Sales for the first quarter ended March 2, 2013 totaled $4,638,000. Sales for the first quarter increased 24.9% or $924,000 above sales for the same period of 2012. Sales were 19% in the commercial market, 52% in the military market, and 29% in the space market compared to 21% in the commercial market, 59% in the military market, and 20% in the space market for the same period of 2012. The major increase in sales was in microcircuits standard products.
One customer accounted for 18% of the Company’s sales for the first quarter of 2013 while two customers accounted for 13% and 10% of the Company’s sales for the first quarter of 2012.
Cost of goods sold for the first quarter of 2013 and 2012 totaled 64.3% and 70.1% of net sales, respectively. The decrease in cost of goods sold as a percentage of sales resulted from the higher sales realized during the first quarter of 2013 with lower overhead cost. Cost of goods sold increased $377,000 in the first quarter of 2013 as compared to 2012 with an increase in material cost of $362,000, labor cost of $78,000 and a decrease in overhead cost of $63,000. The majority of the overhead cost decrease was associated with a reduction in overhead support employees.
Research and development cost increased $217,000 for the first quarter of 2013 compared to the same period of 2012. The research and development expenditures were associated with the development of power management products and high voltage optocouplers.
Selling, general and administrative expenses for the first quarter of 2013 totaled 21.3% of net sales, compared to 23.4% for the same period in 2012. Selling, general and administrative expenses increased $121,000 in the first quarter of 2013 as compared to 2012. The major increase was associated with an increase in commission expenses with the higher sales and consultant expenses.
Provisions for taxes increased $74,000 for the first quarter of 2013 compared to the same period in 2012. The estimated effective tax rate was 36% for both periods.
Liquidity and Capital Resources
Cash and cash equivalents totaled $7,721,000 as of March 2, 2013 compared to $7,415,000 on November 30, 2012, an increase of $306,000. The increase in cash and cash equivalents is attributable to $609,000 cash from operations offset by the payment of a cash dividend of $258,000, short-term investment of $1,000 and the investment of $44,000 in equipment.
On January 23, 2013, Micropac Industries, Inc. entered into a Loan Agreement with a Texas banking institution. The Loan Agreement replaces the Company's current revolving line of credit with the Texas banking institution entered into on June 1, 2011. The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000, and specific advance loans for acquisitions to the Company with an aggregate amount not to exceed $7,500,000 in a single advance or in multiple advances. The Loan Agreement also contains financial covenants to maintain at all times including (i) minimum working capital of not less than $4,000,000, (ii) a ratio of senior funded debt, minus the Company’s balance sheet cash on hand to the extent in excess of $2,000,000, to EBITDA of not more than 3.0 to 1.0, and (iii) a ratio of free cash flow to debt service of not less than 1.2 to 1.0. The Company has not, to date, drawn any amounts under the loan agreement or the revolving line of credit.
Outlook
New orders for the first quarter of 2013 totaled $4,346,000 compared to $4,174,000 for the comparable period of 2012, an increase of 4.1%.
Backlog totaled $9,558,000 on March 2, 2013 compared to $6,768,000 as of February 25, 2012 and $9,850,000 on November 30, 2012. The backlog increased with new orders for various microcircuits standard products. The majority of the backlog is shippable in the next twelve months.
The Company cannot assure that the results of operations for the interim period presented are indicative of total results for the entire year due to fluctuations in customer delivery schedules, or other factors over which the Company has no control.
Cautionary Statement
This Form 10-Q contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially. Investors are warned that forward-looking statements involve risks and unknown factors including, but not limited to, customer cancellation or rescheduling of orders, problems affecting delivery of vendor-supplied raw materials and components, unanticipated manufacturing problems and availability of direct labor resources.
The Company produces silicon phototransistors and light emitting diode die for use in certain military, standard and custom products. Fabrication efforts sometimes may not result in successful results, limiting the availability of these components. Competitors offer commercial level alternatives and our customers may purchase our competitors’ products if the Company is not able to manufacture the products using these technologies to meet the customer demands. Approximately $2,547,000 of the Company’s backlog is dependent on these semiconductors.
The Company disclaims any responsibility to update the forward-looking statements contained herein, except as may be required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
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(a)
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Evaluation of disclosure controls and procedures.
|
The Chief Executive Officer and Chief Financial Officer of the Company evaluated the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e)) as of March 2, 2013 and, based on this evaluation, concluded that the Company’s disclosure controls and procedures are functioning in an effective manner to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
|
(b)
|
Changes in internal controls.
|
There has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting during the three month period ended March 2, 2013.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any material current or pending legal proceedings.
Information about risk factors for the three months ended March 2, 2013 does not differ materially from that set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended November 30, 2012.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(a) Exhibits
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31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of theSarbanes- Oxley Act of 2002
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31.2
|
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
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|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. section 1350,as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
|
|
32.2
|
Certification of Chief Accounting Officer pursuant to 18 U. S. C. section 1350,as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
|
| 101 |
Interactive data files pursuant to Rule 405 of Regulation S-T. |
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 duly authorized.
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April 16, 2013
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/s/ Mark King |
|
Date
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Mark King
|
| |
Chief Executive Officer
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| |
|
| |
|
|
|
/s/ Patrick Cefalu |
|
Date
|
Patrick Cefalu |
| |
Chief Financial Officer |