Micropac Industries (MPAD) 10-Q 15 Apr 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 01, 2014	Apr. 15, 2014
Document and Entity Information	'	'
Entity Registrant Name	'MICROPAC INDUSTRIES INC	'
Document Type	'10-Q	'
Document Period End Date	1-Mar-14	'
Amendment Flag	'false	'
Entity Central Index Key	'0000065759	'
Current Fiscal Year End Date	'--11-30	'
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	'2014	'
Document Fiscal Period Focus	'Q1	'

CONDENSED_BALANCE_SHEETS_Dolla

CONDENSED BALANCE SHEETS (Dollars in thousands) (USD $)	Mar. 01, 2014	Nov. 30, 2013
CURRENT ASSETS	'	'
Cash and cash equivalents	$9,120	$9,263
Short-term investments.	2,007	2,006
Receivables, net of allowance for doubtful accounts of $2 at March 1, 2014 and $2 at November 30, 2013	2,318	2,946
Inventories:	'	'
Raw materials and supplies	3,096	2,968
Work-in process	2,984	2,901
Total inventories	6,080	5,869
Deferred income taxes.	687	738
Prepaid income tax	7	2
Prepaid expenses and other assets	138	171
Total current assets	20,357	20,995
PROPERTY, PLANT AND EQUIPMENT, at cost:	'	'
Land	80	80
Buildings	498	498
Facility improvements	1,074	1,074
Machinery and equipment	8,271	8,171
Furniture and fixtures	697	677
Total property, plant, and equipment	10,620	10,500
Less accumulated depreciation	-8,617	-8,537
Net property, plant, and equipment	2,003	1,963
Total assets	22,360	22,958
CURRENT LIABILITIES:	'	'
Accounts payable	400	713
Accrued compensation	421	597
Deferred revenue	437	622
Other accrued liabilities	129	209
Income taxes payable	159	173
Total current liabilities	1,546	2,314
DEFERRED INCOME TAXES	449	454
SHAREHOLDERS' EQUITY.	'	'
Common stock, ($.10 par value), authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding at March 1, 2014 and November 30, 2013	308	308
Additional paid-in capital	885	885
Treasury stock, 500,000 shares, at cost	-1,250	-1,250
Retained earnings	20,422	20,247
Total shareholders' equity	20,365	20,190
Total liabilities and shareholders' equity	$22,360	$22,958

CONDENSED_BALANCE_SHEETS_PAREN

CONDENSED BALANCE SHEETS PARENTHETICALS (USD $)	Mar. 01, 2014	Nov. 30, 2013
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) (Dollars in thousands except share data) (USD $)	3 Months Ended
	Mar. 01, 2014	Mar. 02, 2013
REVENUE:	'	'
NET SALES	$4,859	$4,638
COST AND EXPENSES:	'	'
Cost of goods sold	-2,744	-2,982
Research and development	-410	-339
Selling, general & administrative expenses	-1,023	-989
Total cost and expenses	-4,177	-4,310
OPERATING INCOME BEFORE INTEREST AND TAXES	682	328
Interest (expense) income, net	-4	1
INCOME BEFORE TAXES	678	329
Provision for taxes	-244	-118
NET INCOME	$434	$211
NET INCOME PER SHARE, BASIC AND DILUTED	$0.17	$0.08
DIVIDENDS PER SHARE	$0.10	$0.10
WEIGHTED AVERAGE OF SHARES, basic and diluted	2,578,315	2,578,315

CONDENSED_STATEMENTS_OF_CASH_F

CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) (USD $)	3 Months Ended
	Mar. 01, 2014	Mar. 02, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:	'	'
Net income.	$434	$211
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Depreciation and amortization.	80	78
Deferred taxes.	46	0
Changes in certain current assets and liabilities:	'	'
Decrease in accounts receivable	628	241
(Increase) decrease in inventories	-211	198
Decrease in prepaid expenses and other current assets	27	100
Decrease in accounts payable	-313	-165
Decrease in accrued compensation	-176	-93
(Decrease) increase in deferred revenue	-185	134
Decrease in other accrued liabilities	-80	-97
(Decrease) increase in income taxes payable	-14	2
Net cash provided by operating activities	236	609
CASH FLOWS FROM INVESTING ACTIVITIES:	'	'
Purchase of short term investments	-1	-1
Additions to property, plant and equipment	-120	-44
Net cash used in investing activities	-121	-45
CASH FLOWS FROM FINANCING ACTIVITIES	'	'
Cash dividend	-258	-258
Net cash used in financing activities	-258	-258
Net change in cash and cash equivalents	-143	306
Cash and cash equivalents at beginning of period.	9,263	7,415
Cash and cash equivalents at end of period.	9,120	7,721
Supplemental Cash Flow Disclosure:	'	'
Cash paid for income taxes	$217	$10

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 01, 2014
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.
	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 1, 2014, the results of operations for the three months ended March 1, 2014 and March 2, 2013, and the cash flows for the three months ended March 1, 2014 and March 2, 2013. Unaudited financial statements are prepared on a basis substantially consistent with those audited for the year ended November 30, 2013. 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	3 Months Ended
	Mar. 01, 2014
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
	Sales 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 sales 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 sales 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 sales when the products are shipped per the terms of the contract.
	Short-Term Investments
	The Company has $2,007,000 in short term investments at March 1, 2014. 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 determines the need to write inventory down below its cost via an analysis 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	3 Months Ended
	Mar. 01, 2014
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 March 1, 2014 and November 30, 2013.  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 1, 2014 and November 30, 2013.

COMMITMENTS

COMMITMENTS	3 Months Ended
	Mar. 01, 2014
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	3 Months Ended
	Mar. 01, 2014
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 gives effect to all dilutive potential common shares. For the three months ended March 1, 2014 and March 2, 2013, the Company had no dilutive potential common stock

SHAREHOLDERS_EQUITY

SHAREHOLDERS' EQUITY	3 Months Ended
	Mar. 01, 2014
SHAREHOLDERS' EQUITY	'
SHAREHOLDERS' EQUITY	'
	Note 6 SHAREHOLDERS’ EQUITY
	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.
	On December 17, 2013, 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 15, 2014.  The dividend was paid to the Company’s shareholders on February 12, 2014.

Accounting_Policies_Policies

Accounting Policies (Policies)	3 Months Ended
	Mar. 01, 2014
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
	Sales 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 sales 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 sales 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 sales when the products are shipped per the terms of the contract.
Short-Term Investments Policy	'
	Short-Term Investments
	The Company has $2,007,000 in short term investments at March 1, 2014. 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 determines the need to write inventory down below its cost via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog.
Income Taxes Policy	'
	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 Policy	'
	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)	3 Months Ended
	Mar. 01, 2014
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

Short_term_investments_Details

Short term investments (Details) (USD $)	Mar. 01, 2014
Short term investments Details	'
Short term investments maturity date more than 90 days	$2,007,000

Property_Estimated_Life_Detail

Property Estimated Life (Details)	Mar. 01, 2014
Property Estimated Life Details	'
Buildings Estimated Life	15
Facility improvements Estimated Life	'8 to 15 years
Machinery and equipment Estimated Life	'5 to 10 years
Furniture and fixtures Estimated Life	'5 to 8 years

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
A ratio of senior funded debt to EBITDA of not more than	'3.0 to 1.0
A ratio of free cash flow to debt service of not less than	'1.2 to 1.0

Payment_of_dividend_Details

Payment of dividend (Details) (USD $)	Dec. 17, 2013	Dec. 12, 2012
Payment of dividend (Details)	'	'
Payment of a special dividend of per share for shareholders of record	$0.10	$0.10