Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Aug. 31, 2013 | Oct. 15, 2013 | |
Document and Entity Information | ||
Entity Registrant Name | MICROPAC INDUSTRIES INC | |
Document Type | 10-Q | |
Document Period End Date | 31-Aug-13 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 65759 | |
Current Fiscal Year End Date | -19 | |
Entity Common Stock, Shares Outstanding | 2,578,315 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2013 | |
Document Fiscal Period Focus | Q3 |
CONDENSED_BALANCE_SHEETS
CONDENSED BALANCE SHEETS (USD $) | Aug. 31, 2013 | Nov. 30, 2012 |
CURRENT ASSETS | ||
Cash and cash equivalents | $8,704 | $7,415 |
Short-term investment | 2,006 | 2,004 |
Receivables, net of allowance for doubtful accounts of $2 at AUGUST 2013 and $2 at November 30, 2012 | 2,564 | 2,498 |
Inventories: | ||
Raw materials | 2,752 | 3,601 |
Work-in process | 2,923 | 2,384 |
Total inventories | 5,675 | 5,985 |
Deferred income taxes, | 563 | 659 |
Prepaid income tax | 166 | 349 |
Prepaid expenses and other assets | 198 | 121 |
Total current assets | 19,876 | 19,031 |
Land | 80 | 80 |
Buildings | 498 | 498 |
Facility improvements | 1,074 | 1,074 |
Machinery and equipment | 8,104 | 7,914 |
Furniture and fixtures | 677 | 677 |
Total property, plant, and equipment | 10,433 | 10,243 |
Less accumulated depreciation | -8,457 | -8,220 |
Net property, plant, and equipment | 1,976 | 2,023 |
Total assets | 21,852 | 21,054 |
CURRENT LIABILITIES: | ||
Accounts payable | 360 | 501 |
Accrued compensation | 505 | 511 |
Deferred revenue | 531 | 189 |
Other accrued liabilities | 200 | 215 |
Income taxes payable | 61 | 112 |
Total current liabilities | 1,657 | 1,528 |
DEFERRED INCOME TAXES | 510 | 471 |
SHAREHOLDERS' EQUITY | ||
Common stock, ($.10 par value), authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding at August 31, 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 | 19,742 | 19,112 |
Total shareholders' equity | 19,685 | 19,055 |
Total liabilities and shareholders' equity | $21,852 | $21,054 |
CONDENSED_BALANCE_SHEETS_PAREN
CONDENSED BALANCE SHEETS PARENTHETICALS (USD $) | Aug. 31, 2013 | Nov. 30, 2012 |
Balance Sheets Parentheticals Abstract | ||
Allowance for doubtful accounts | $2 | $2 |
Common stock, par or stated value | $0.10 | $0.10 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, shares issued | 3,078,315 | 2,578,315 |
Common Stock, shares outstanding | 3,078,315 | 2,578,315 |
Treasury stock, shares | 500,000 | 500,000 |
CONDENSED_STATEMENTS_OF_OPERAT
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2013 | Aug. 25, 2012 | Aug. 31, 2013 | Aug. 25, 2012 | |
REVENUE: | ||||
NET SALES | $4,508 | $4,632 | $14,239 | $12,444 |
COST AND EXPENSES: | ||||
Cost of goods sold | -2,712 | -2,952 | -8,756 | -8,611 |
Research and development | -380 | -168 | -1,153 | -371 |
Selling, general and administrative expenses | -986 | -976 | -2,965 | -2,791 |
Total cost and expenses | -4,078 | -4,096 | -12,874 | -11,773 |
OPERATING INCOME | 430 | 536 | 1,365 | 671 |
Interest and other income | 21 | 21 | 22 | 27 |
INCOME BEFORE TAXES | 451 | 557 | 1,387 | 698 |
Provision for taxes | -162 | -200 | -499 | -251 |
NET INCOME | $289 | $357 | $888 | $447 |
NET INCOME PER SHARE, BASIC AND DILUTED | $0.11 | $0.14 | $0.34 | $0.17 |
DIVIDENDS PER SHARE | $0 | $0 | $0.10 | $0.10 |
WEIGHTED AVERAGE OF SHARES, basic and diluted | 2,578,315 | 2,578,315 | 2,578,315 | 2,578,315 |
CONDENSED_STATEMENTS_OF_CASH_F
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Aug. 31, 2013 | Aug. 25, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $888 | $447 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 237 | 240 |
Deferred tax expense | 135 | 104 |
Decrease (increase) in accounts receivable | -66 | -620 |
Decrease in inventories | 310 | -700 |
Decrease in prepaid expenses and other current assets | 106 | -53 |
Increase (decrease) in deferred revenue | 342 | -170 |
( Decrease ) increase in accounts payable | -141 | 504 |
Decrease in accrued compensation | -6 | -120 |
Decrease in other accrued liabilities | -15 | -289 |
Decrease in income taxes payable | -51 | -61 |
Net cash provided by (used in) operating activities | 1,739 | -718 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of short term investments | -2 | -3 |
Additions to property, plant and equipment | -190 | -385 |
Net cash used in investing activities | -192 | -388 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Cash dividend | -258 | -258 |
Net cash used in financing activities | -258 | -258 |
Net change in cash and cash equivalents | 1,289 | -1,364 |
Cash and cash equivalents at beginning of period | 7,415 | 8,488 |
Cash and cash equivalents at end of period | 8,704 | 7,124 |
Supplemental Cash Flow Disclosure: | ||
Cash paid for income taxes | $232 | $75 |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Aug. 31, 2013 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 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 controllers, 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 has UL approval on the new industrial power controllers. | |
The Company’s core technology is the packaging and interconnecting of multi-chip microelectronics modules. 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 August 31, 2013, the results of operations for the three months and nine months ended August 31, 2013 and August 25, 2012, and the cash flows for nine months ended August 31, 2013 and August 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. |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||
Aug. 31, 2013 | |||
SIGNIFICANT ACCOUNTING POLICIES | |||
SIGNIFICANT ACCOUNTING POLICIES | 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 $2,006,000 in short term investments at August 31, 2013. Short-term investments consist of certificates of deposits with initial maturities greater than 90 days. These investments are reported at historical cost, which approximates fair value. All highly liquid investments with initial 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 | 15-Aug | ||
Machinery and equipment | 10-May | ||
Furniture and fixtures | 8-May | ||
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 and processes are expensed as incurred. |
FAIR_VALUE_MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Aug. 31, 2013 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | Note 3 FAIR VALUE MEASUREMENT |
The Company had no financial assets or liabilities measured at fair value on a recurring basis as of August 31, 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 August 31, 2013 and November 30, 2012. |
COMMITMENTS
COMMITMENTS | 9 Months Ended |
Aug. 31, 2013 | |
COMMITMENTS | |
COMMITMENTS | Note 4 COMMITMENTS |
On January 23, 2013, the Company 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 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 and is currently in compliance with the financial covenants. |
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended |
Aug. 31, 2013 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 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 and nine months ended August 31, 2013 and August 25, 2012, the Company had no dilutive potential common stock. | |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Aug. 31, 2013 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 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. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Aug. 31, 2013 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 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. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 9 Months Ended | ||
Aug. 31, 2013 | |||
Accounting policies | |||
Use of Estimates | 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 | 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 | Short-Term Investments | ||
The Company has $2,006,000 in short term investments at August 31, 2013. Short-term investments consist of certificates of deposits with initial maturities greater than 90 days. These investments are reported at historical cost, which approximates fair value. All highly liquid investments with initial 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 | ||
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 | 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 | ||
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 | 15-Aug | ||
Machinery and equipment | 10-May | ||
Furniture and fixtures | 8-May | ||
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 | Research and Development Costs | ||
Costs for the design and development of new products and processes are expensed as incurred. | |||
Property_Plant_and_Equipment_T
Property, Plant, and Equipment (Table) | 9 Months Ended | |
Aug. 31, 2013 | ||
Property, Plant, and Equipment {1} | ||
Property, Plant and Equipment | Buildings | 15 |
Facility improvements | 15-Aug | |
Machinery and equipment | 10-May | |
Furniture and fixtures | 8-May |
Short_term_investments_Details
Short term investments (Details) (USD $) | Aug. 31, 2013 |
Short term investments Details | |
Short term investments maturity date more than 90 days | $2,006,000 |
Property_Estimated_Life_Detail
Property Estimated Life (Details) | 3 Months Ended |
Aug. 31, 2013 | |
Property Estimated Life Details | |
BuildingsAverageLife | 15 |
FacilityImprovementsUsefulLifeMinimum | 8 |
FacilityImprovementsUsefulLifeMaximum | 15 |
PropertyPlantAndEquipmentUsefulLifeMinimum | 5 |
PropertyPlantAndEquipmentUsefulLifeMaximum | 10 |
FurnitureAndFixuresUsefulLifeMinimum | 5 |
FurnitureAndFixuresUsefulLifeMaximum | 8 |
COMMITMENTS_Details
COMMITMENTS (Details) (USD $) | Jan. 23, 2013 |
loan Agreement details | |
Loan Agreement provides for revolving credit loans, | $6,000,000 |
advance loans for acquisitions to the Company with an aggregate amount not to exceed | 7,500,000 |
minimum working capital of not less than | 4,000,000 |
balance sheet cash on hand to the extent in excess | $2,000,000 |
Payment_of_dividend_Details
Payment of dividend (Details) (USD $) | Dec. 12, 2012 | Dec. 12, 2011 |
Payment of dividend (Details) | ||
Payment of a special dividend of per share for shareholders of record | $0.10 | $0.10 |