Micropac Industries (MPAD) 10-Q 15 Oct 13 2013 Q3 Quarterly report Financial data

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