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 March 31,June 30, 1996
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) 437-3953
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 - 3,534,2003,538,958 shares as of March
31,June
30, 1996.
This document contains ten (10) pages.
PART I. - FINANCIAL INFORMATION
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIXNINE MONTHS
ENDED MARCH 31,JUNE 30, 1996 AND 1995
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended SixNine months ended
March 31 March 31June 30 June 30
1996 1995 1996 1995
[S] [C] [C] [C] [C]
Net sales $1,861 $2,028 $3,952 $3,992$1,877 $1,860 $5,829 $5,852
Cost of goods sold 1,167 1,417 2,420 2,7101,171 1,215 3,591 3,925
------- ------- ------- -------
Gross profit 694 611 1,532 1,282706 645 2,238 1,927
Selling, general and
administrative expenses 625 736 1,271 1,387613 673 1,884 2,060
------- ------- ------- -------
Income (loss) from
operations 69 (125) 261 (105)93 (28) 354 (133)
Other income (expense) 3 1 49 (3) 13 (6)
------- ------- ------- -------
Income (loss) before
income taxes 72 (124) 265 (108)102 (31) 367 (139)
Provision (benefit)
for income taxes 25 (43) 91 (37)35 (11) 127 (48)
------- ------- ------- -------
NET INCOME (LOSS) $47$67 ($81) $17420) $240 ($71)91)
======= ======= ======= =======
Earnings (loss) per share $0.01$0.02 ($0.02) $0.050.01) $0.07 ($0.02)0.03)
======= ======= ======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
MARCH 31,JUNE 30, 1996 SEPTEMBER 30, 1995
(Unaudited)
[S] [C] [C]
Assets
Current Assets:
Cash and cash equivalents $ 1,0151,208 $ 521
Accounts receivable-trade,net 705647 879
Inventories 1,5451,319 1,969
Prepaid expenses and other
current assets 272211 215
-------- --------
Total current assets 3,5373,385 3,584
Property,plant and equipment,net 1,5201,525 1,625
Other assets 6055 65
-------- --------
Total assets $ 5,1174,965 $ 5,274
======== ========
Liabilities And Stockholders' Equity
Current liabilities:
Current portion of long term
debt $ 14952 $ 147
Accounts payable 221299 362
Customer deposits 190170 282
Accrued federal and state
income taxes 124151 43
Accrued payroll and related
expenses 9385 91
Accrued compensated absences 213231 183
Other current liabilities 7198 83
-------- --------
Total current liabilities 1,0611,086 1,191
-------- --------
Long term debt, less current
portion 365117 440
Deferred compensation and
other liabilities 5756 59
-------- --------
Total liabilities 1,4831,259 1,690
-------- --------
Stockholders' Equity:
Common stock,$.10 par value 425 400
Additional paid-in capital 3,1803,185 2,881
Retained earnings 667734 940
-------- --------
4,2724,344 4,221
Common stock in treasury,
at cost (638) (637)
-------- --------
Total stockholders' equity 3,6343,706 3,584
-------- --------
Total liabilities and
stockholders' equity $ 5,1174,965 $ 5,274
======== ========
[FN]
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIXNINE MONTHS ENDED
MARCH 31,JUNE 30, 1996 AND 1995
(Unaudited)
(Amounts in thousands)
Three months ended SixNine months ended
March 31 March 31June 30 June 30
1996 1995 1996 1995
[S] [C] [C] [C] [C]
Cash flows from operating
activities:
Net income $ 4767 $ (82)(20) $ 174240 $ (71)(91)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 8284 100 166 198251 299
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable 65 109 174 3059 315 233 346
Inventories 295 136 423 (146)225 (206) 649 (352)
Prepaid expenses & other
assets (58) (26) (61) (46)62 17 1 (29)
Increase (decrease) in:
Accounts payable & accrued
expenses (183) (83) (133) 1625 (102) (107) (86)
Deferred compensation &
other liabilities (1) (1) (2) (2)(4) (3)
------- ------- --------------- -------
Net cash provided by
operating activities 247 153 741 (21)521 103 1,263 84
------- ------- ------- -------
Cash flows from investing activities:
Capital expenditures (31) (65) (52) (88)(86) (19) (138) (107)
Cash flows from financing activities:
Principal payments on
long-term debt (37) (36) (72) (69)(248) (38) (320) (107)
Proceeds from sale of
common stock 42 34 46 376 7 51 43
Purchase of treasury
stock (1) (1) (1) (97)
Dividend paid (168) (168)
------- ------- ------- -------
Net cash used in
financing activities (163) (3) (195) (129)(242) (31) (438) (161)
Increase (decrease) in cash
and cash equivalents 193 53 85 494 (238)687 (184)
Cash and cash equivalents
at beginning of period 962 3341,015 419 521 657656
------- ------- ------- -------
Cash and cash equivalents
at end of period $1,015$1,208 $ 419 $1,015472 $1,208 $ 419472
======= ======= ======= =======
[FN]
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,JUNE 30, 1996
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 1995 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
of common stock outstanding used for the computations were 3,512,3983,520,194 for
the sixnine months and 3,532,4893,535,786 for the three months ending March 31,June 30, 1996
and 3,472,4263,475,280 for the sixnine months and 3,477,2363,515,320 for the three months ending
March 31,June 30, 1995.
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:
March 31,June 30, September 30,
1996 1995
Raw materials and stock parts $ 865711 $ 1,107
Work-in-process 309220 394
Finished goods 371388 468
------- -------
$ 1,5451,319 $ 1,969
======= =======
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MARCH 31,JUNE 30, 1996
Net income increased $128,879$86,864 to $47,306$66,802 during the three months ended
March 31,June 30, 1996 when compared to a net loss of $81,573$20,062 during the same period
last year. Net income increased $244,493$331,357 to $173,559$240,361 during the sixnine months
ended March 31,June 30, 1996 when compared to a net loss of $70,934$90,996 during the same
period last year.
The increase in net income can primarily be attributed to the improvements
in gross profit and reductions in selling, general and administrative
expenses.
As a percentage of sales, gross profit increased to 37.3%37.6% during the three
months ended March 31,June 30, 1996 when compared to 30.1%34.7% during the same period
last year. Gross profit increased to 38.8%38.4% of sales during the sixnine months
ended March 31,June 30, 1996 when compared to 32.1%32.9% of sales during the same period
last year. These improvements can primarily be attributed to product sales
mix and the reduction in the manufacturing costs which were associated with
new product development in fiscal 1995.
Selling, general and administrative (SG&A) expenses decreased $110,666$59,873 or
15%8.9% to $625,455$612,814 during the three months ended March 31,June 30, 1996 when compared
to $736,121$672,687 during the same period last year. As a percentage of sales,
SG&A expenses decreased to 33.6%32.7% during the three months ended March 31,June 30,
1996 when compared to 36.3%36.2% during the same period last year. For the sixnine
months ended March 31,June 30, 1996, SG&A expenses decreased to 32.2%32.3% of sales
when compared to 34.8% during the same period last year.
Net sales decreased $166,522 or 8.2% to $1,861,488 during the three months
ended March 31, 1996 when compared to net sales of $2,028,01035.2% during the same period last year.
For the sixthree months and nine months ended March 31,June 30, 1996, net sales are
essentially identical (down $39,224 or 1%when compared to $3,952,503)the same periods last year. Net sales
increased $16,397 to $1,876,806 during the three months ended June 30, 1996
when compared to net sales of $3,991,727$1,860,409 during the same period last year.
For the nine months ended June 30, 1996, net sales are down $22,827 to
$5,829,309 when compared to net sales of $5,852,136 during the same period
last year.
Cash and cash equivalents increased $494,505$687,366 to $1,015,181$1,208,042 at March 31,June 30,
1996 when compared to $520,676 at September 30, 1995. The increase is a
result of $741,836$1,262,975 in net cash provided by operating activities, $51,984$137,571
in net cash used for capital expenditures and $195,347$438,038 in net cash used in
financing activities.
At March 31,June 30, 1996, 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.
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
a. The Annual meeting of the Shareholders was held on April 4,
1996 at the Holiday Inn, Carrier Circle, East Syracuse, New
York 13057 at 10:00 A.M. pursuant to notice to the shareholders.
The following matters were submitted to the vote of shareholders:
Proposal 1. The election of nine directors to hold office until
the Annual Meeting of the Shareholders at which their term expires
or until their successors have been duly elected.
Proposal 2. To consider and act upon a proposed Amendment to the
Bylaws to provide for the classification of the Board of Directors
into three classes.
Proposal 3. To consider and act upon a proposed Amendment to the
Bylaws to provide that the size of the Board of Directors shall
be nine or less.
Proposal 4. To consider and act upon a proposed Amendment to the
Bylaws that Directors may be removed only for cause by a majority
vote of the Board then in office or by a two thirds (2/3) vote of
the shareholders.
Proposal 5. To consider and act upon a proposed Amendment to
the Bylaws that any vacancy on the Board shall be filled by the
remaining Directors then in office, whether or not there is a
quorum, only until the next annual meeting and thereafter until a
successor shall be elected and shall qualify.
Proposal 6. To consider and act upon a proposed Amendment to
the Bylaws to provide that a special meeting of the shareholders
may be called by the Chairman of the Board or the President, and
shall be called by the Chairman of the Board or the Corporate
Secretary upon written request from a majority of the Board of
Directors or two thirds (2/3) of the outstanding shares entitled to
vote in the election of Directors.
Proposal 7. To consider and act upon a proposed Amendment
to the Certificate of Incorporation to provide that advance notice
of shareholder nominations for the election of Directors and of
shareholder proposals for action at annual and special shareholder
meetings shall be given and certain information shall be provided
with respect to shareholder nominees and shareholder proposals.
This proposed Amendment to the Certificate of Incorporation
currently exists as Article III "Notice of Shareholder Business and
Nominations" of the Bylaws.
Proposal 8. To consider and act upon a proposed Amendment
to the Certificate of Incorporation to adopt Article XII -
"Indemnification and Insurance" of the Company Bylaws as an
Amendment to the Certificate of Incorporation.
Proposal 9. To consider and act upon a proposed Amendment
to the Certificate of Incorporation to provide that Directors'
liability to the Company or its shareholders shall be limited to
the fullest extent permitted by New York law.
Proposal 10. To consider and act upon a proposed Amendment
to the Certificate of Incorporation to provide that the shareholder
vote required to alter, amend or repeal the foregoing Amendments is
increased from a majority vote of the shareholders to two thirds
(2/3) of the outstanding shares entitled to vote in the election of
Directors.
Proposal 11. The ratification of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the fiscal year ending
September 30, 1996.
Proposal 12. To consider and act upon a proposed shareholder
resolution by Mr. David Silver, with regard to the rescindment and
replacement of Bylaw Article XII "Indemnification and Insurance".
b. The following named persons received the number of votes set opposite
their respective names for election to the Board of Directors:
DIRECTORS VOTES FOR VOTES AGAINST ABTENTIONS
Trudi Artini 3,014,676 149,972 0
Milo Peterson 3,019,579 145,069 0
David Robinson 3,007,452 157,196 0
Robert Andrews 3,091,193 73,455 0
Sidney Chong 3,016,219 148,429 0
Louis Misenti 3,016,585 148,063 0
Carl Fahrenkrug 3,017,954 146,694 0
Daniel Galbally 3,013,526 151,122 0
Frank Markovich 3,090,205 74,443 0
c. The following propositions received the number of votes set opposite
their respective number:
VOTES FOR VOTES AGAINST ABSTENTIONS
Proposal 2 2,194,344 307,787 15,695
Proposal 3 2,931,133 199,659 9,736
Proposal 4 2,130,595 331,566 23,788
Proposal 5 2,857,348 233,496 18,118
Proposal 6 2,130,643 328,853 26,453
Proposal 7 2,712,541 286,390 23,183
Proposal 8 2,785,112 336,543 19,184
Proposal 9 2,881,702 236,380 14,169
Proposal 10 2,167,131 354,760 19,224
Proposal 11 3,004,663 147,719 11,746
Proposal 12 439,086 2,000,532 78,208None during this reporting period.
Item 6. Exhibits and Reports on Form 8-K
None.None during this reporting period.
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.
MayAugust 14, 1996 Carl F. Fahrenkrug
(Date) --------------------------
Carl F. Fahrenkrug
Chief Executive Officer
MayAugust 14, 1996 Richard L. Jones
(Date) --------------------------
Richard L. Jones
Chief Financial Officer