-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VOl/Fo0aQO/GamzzJEKPRgeRuRkNlTw6aeqvoC+ojyweZTHE45VVWgIESS7XaUYf 0KSB/KVG8+cQz/DA8u5mKw== 0000716688-98-000006.txt : 19981203 0000716688-98-000006.hdr.sgml : 19981203 ACCESSION NUMBER: 0000716688-98-000006 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19981202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROWAVE FILTER CO INC /NY/ CENTRAL INDEX KEY: 0000716688 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 160928443 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-10976 FILM NUMBER: 98762694 BUSINESS ADDRESS: STREET 1: 6743 KINNE ST CITY: E SYRACUSE STATE: NY ZIP: 13057 BUSINESS PHONE: 3154373953 MAIL ADDRESS: STREET 1: 6743 KINNE ST CITY: EAST SYRACUSE STATE: NY ZIP: 13057 10-Q/A 1 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 June 30, 1998 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) 438-4700 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 - 3,549,565 shares as of June 30, 1998. PART I. - FINANCIAL INFORMATION MICROWAVE FILTER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands) JUNE 30, 1998 SEPTEMBER 30, 1997 [S] [C] [C] Assets Current Assets: Cash and cash equivalents $ 1,206 $ 1,434 Accounts receivable-trade,net 552 545 Inventories 1,459 1,262 Deferred tax asset - current 259 259 Prepaid expenses and other current assets 103 104 -------- -------- Total current assets 3,579 3,604 Property,plant and equipment,net 1,508 1,561 Deferred tax asset - noncurrent 0 8 -------- -------- Total assets $ 5,087 $ 5,173 ======== ======== Liabilities And Stockholders' Equity Current liabilities: Current portion of long term debt $ 59 $ 56 Accounts payable 334 320 Customer deposits 87 50 Accrued federal and state income taxes 14 30 Accrued payroll and related expenses 92 103 Accrued compensated absences 267 222 Other current liabilities 67 78 -------- -------- Total current liabilities 920 859 Long term debt, less current portion 0 46 Deferred compensation and other liabilities 60 18 -------- -------- Total liabilities 980 923 -------- -------- Stockholders' Equity: Common stock,$.10 par value 428 428 Additional paid-in capital 3,210 3,206 Retained earnings 1,107 1,255 -------- -------- 4,745 4,889 Common stock in treasury, at cost (638) (638) -------- -------- Total stockholders' equity 4,107 4,251 -------- -------- Total liabilities and stockholders' equity $ 5,087 $ 5,173 ======== ======== [FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited) (Amounts in thousands, except per share data) Three months ended Nine months ended June 30 June 30 1998 1997 1998 1997 [S] [C] [C] [C] [C] Net sales $1,640 $1,669 $5,215 $4,598 Cost of goods sold 1,025 911 3,244 2,736 ------- ------- ------- ------- Gross profit 615 758 1,971 1,862 Selling, general and administrative expenses 708 669 1,966 1,810 ------- ------- ------- ------- Income (loss) from operations (93) 89 5 52 Other income (expense) 11 24 41 66 ------- ------- ------- ------- Income (loss) before income taxes (82) 113 46 119 Provision (benefit) for income taxes (28) 39 16 41 ------- ------- ------- ------- NET INCOME (LOSS) $(54) $74 $30 $78 ======= ======= ======= ======= Earnings (loss) per share $(0.01) $0.02 $0.01 $0.02 ======= ======= ======= ======= [FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited) (Amounts in thousands) Three months ended Nine months ended June 30 June 30 1998 1997 1998 1997 [S] [C] [C] [C] [C] Cash flows from operating activities: Net income $ (54) $ 74 $ 30 $ 78 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 81 79 238 235 Stock Compensation 0 0 4 15 Change in assets and liabilities: (Increase) decrease in: Accounts receivable 169 (124) (7) 182 Inventories (51) 52 (198) 210 Prepaid expenses & other assets 34 51 9 (22) Increase (decrease) in: Accounts payable & accrued expenses 25 (63) 57 (559) Deferred compensation & other liabilities 45 (1) 42 (4) ------- ------- -------- ------- Net cash provided by operating activities 249 68 175 135 ------- ------- -------- ------- Cash flows from investing activities: Capital expenditures (24) (29) (184) (217) Cash flows from financing activities: Principal payments on long-term debt (14) (14) (42) (40) Cash dividend paid 0 0 (177) (178) ------- ------- ------- ------- Net cash used in financing activities (14) (14) (219) (218) Increase (decrease) in cash and cash equivalents 211 25 (228) (300) Cash and cash equivalents at beginning of period 995 956 1,434 1,281 ------- ------- ------- ------- Cash and cash equivalents at end of period $1,206 $ 981 $1,206 $ 981 ======= ======= ======= ======= [FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 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 1997 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 3,548,063 for the nine months and 3,549,565 for the three months ending June 30, 1998 and 3,549,301 for the nine months and 3,545,115 for the three months ending June 30, 1997. 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: June 30, September 30, 1998 1997 Raw materials and stock parts $ 963 $ 832 Work-in-process 219 185 Finished goods 277 245 ------- ------- $ 1,459 $ 1,262 ======= ======= Note 4. Stock Options On April 9, 1998, the Board of Directors and Shareholders of Microwave Filter Company, Inc. approved the 1998 Microwave Filter Company, Inc. Incentive Stock Plan (the "1998 Plan"). Under the 1998 Plan, The Company may grant incentive stock options ("ISOs"), non-qualified stock options ("NQSOs") and stock appreciation rights. The 1998 Plan reserves 150,000 shares for issuance. Participation in the 1998 Plan is limited to directors, officers and employees of the Company and its affiliates. The exercise price of the ISOs and NQSOs granted under the 1998 Plan will be 100% of the fair market value of the Common Stock on the date of grant of such ISOs and NQSOs. The 1998 Plan will terminate on April 10, 2008. There were no stock options outstanding at June 30, 1998. MICROWAVE FILTER COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 1998 Net sales for the nine months ended June 30, 1998 equaled $5,214,698, an increase of $616,251 or 13.4% when compared to net sales of $4,598,447 for the nine months ended June 30, 1997. The increase in sales can primarily be attributed to an increase in the sales of the Company's RF/Microwave products to OEMs (Original Equipment Manufacturers). Part of the Company's long term growth strategy is to invest in product and infrastructure development to exploit new markets such as LMDS (Cellular TV), PCS and PCN; and, continue to develop OEM relationships. Microwave Filter Company's (MFC) RF/Microwave product sales increased $1,204,490 or 277% to $1,639,377 for the nine months ended June 30, 1998 when compared to sales of $434,887 for the same period last year. MFC's Cable TV product sales increased $158,351 or 7.3% to $2,313,211 for the nine months ended June 30, 1998 when compared to sales of $2,154,860 for the same period last year. MFC's Broadcast TV product sales, which include wireless cable products, decreased $79,496 or 9.9% to $722,575 for the nine months ended June 30, 1998 when compared to sales of $802,071 for the same period last year continuing the downward trend in the industry that began in 1996. MFC's Satellite TV product sales decreased $179,152 or 28% to $460,607 for the nine months ended June 30, 1998 when compared to sales of $639,759 for the same period last year. Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, sales decreased $487,942 or 86% to $78,928 for the nine months ended June 30, 1998 when compared to $566,870 for the same period last year. During the last nine months, NSI has expanded its effort to develop new products and has increased its advertising and promotion in an effort to increase sales. Net sales for the three months ended June 30, 1998 equaled $1,639,399, a decrease of $29,595 or 1.8% when compared to net sales of $1,668,994 for the three months ended June 30, 1997. An increase in MFC's RF/Microwave product sales were offset by sales decreases in other product groups during the quarter. MFC's RF/Microwave product sales were up $298,337. MFC's Cable TV product sales were down $58,815, MFC's Broadcast TV product sales were down $29,596, MFC's Satellite TV product sales were down $90,760 and NSI's sales were down $148,761 when compared to the same quarter last year. Gross profit for the nine months ended June 30, 1998 equaled $1,970,577, an increase of $108,519 or 5.8% when compared to gross profit of $1,862,058 for the nine months ended June 30, 1997. The dollar increase in gross profit can primarily be attributed to the increase in sales. As a percentage of sales, gross profit equaled 37.8% for the nine months ended June 30, 1998 when compared to 40.5% for the nine months ended June 30, 1997. Gross profit for the three months ended June 30, 1998 equaled $614,795, a decrease of $143,426 or 18.9% when compared to gross profit of $758,221 for the three months ended June 30, 1997. As a percentage of sales, gross profit equaled 37.5% for the three months ended June 30, 1998 compared to 45.4% for the three months ended June 30, 1997. The decreases in gross profit as a percentage of sales when compared to the same periods last year can primarily be attributed to product sales mix (higher RF/Microwave product sales as a percentage of total sales) and higher manufacturing (excess scrap and rework) costs associated with new product development. Selling, general and administrative (SG&A) expenses for the nine months ended June 30, 1998 equaled $1,965,536, an increase of $155,618 or 8.6% when compared to SG&A expenses of $1,809,918 for the nine months ended June 30, 1997. SG&A expenses for the three months ended June 30, 1998 equaled $708,318, an increase of $39,034 or 5.8% when compared to SG&A expenses of $669,284 for the three months ended June 30, 1997. The increases can primarily be attributed to increases in research and development costs, advertising expense, sales commissions, and salary and salary related expenses when compared to the same periods last year. Income from operations for the nine months ended June 30, 1998 equaled $5,041, a decrease of $47,099 or 90.3% when compared to income from operations of $52,140 for the nine months ended June 30, 1997. On an industry segment basis, MFC reported income from operations of $330,901 and NSI reported an operating loss of $325,860 for the nine months ended June 30, 1998. NSI's operating loss can primarily be attributed to low sales volume, the investments in new product development and advertising and promotion and the absorption of fixed overhead expenses. For the three months ended June 30, 1998, the Company reported a loss from operations of $93,523 compared to income from operations of $88,937 for the three months ended June 30, 1997. The decreases can primarily be attributed to the higher cost of goods sold as a percentage of sales and higher SG&A expenses this year when compared to the same periods last year. Cash and cash equivalents decreased $228,761 to $1,205,712 at June 30, 1998 when compared to $1,434,473 at September 30, 1997. The decrease was a result of $175,193 in net cash provided by operating activities, $184,155 in net cash used for capital expenditures and $219,799 in net cash used in financing activities ($42,321 used for principal payments on long-term debt and $177,478 used for a cash dividend paid). At June 30, 1998, the Company had aggregate lines of credit totaling $600,000. Of these lines, $100,000 is for the purchase of equipment and is collateralized by equipment and $500,000 is for working capital and is collateralized by accounts receivable, inventories and equipment. The equipment line of credit provides for interest at the bank's base rate plus one half percent (1/2%). The working capital line of credit provides for interest at the bank's base rate plus one quarter percent (1/4%). Management believes that its working capital requirements for the foreseeable future will be met by its existing cash balances, future cash flows from operations and its current credit arrangements. YEAR 2000 READINESS DISCLOSURE The Company is working to resolve the potential impact of the year 2000 on the ability of the Company's computerized information systems to accurately process information that may be date-sensitive. Any of the Company's programs that recognize a date using "00" as the year 1900 rather than the year 2000 could result in errors or system failures. The Company utilizes a number of computer programs across its entire operation. The Company has not completed its assessment, but currently believes that costs of addressing this issue will not have a material adverse impact on the Company's financial position. However, if the Company and third parties upon which it relies are unable to address this issue in a timely manner, it could result in a material financial risk to the Company. In order to assure that this does not occur, the Company plans to devote all resources required to resolve any significant year 2000 issues in a timely manner. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Any statements contained in this report which are not historical facts are forward looking statements; and, therefore, many important factors could cause actual results to differ materially from those in the forward looking statements. Such factors include, but are not limited to, changes (legislative, regulatory and otherwise) in the MMDS, LPTV or Cable industry, demand for the Company's products (both domestically and internationally), the development of competitive products, competitive pricing, market acceptance of new product introductions, technological changes, general economic conditions, litigation and other factors, risks and uncertainties which may be identified in the Company's Securities and Exchange Commission filings. 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 None during this reporting period. Item 6. Exhibits and Reports on Form 8-K None. 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. August 13, 1998 Carl F. Fahrenkrug (Date) -------------------------- Carl F. Fahrenkrug Chief Executive Officer August 13, 1998 Richard L. Jones (Date) -------------------------- Richard L. Jones Chief Financial Officer EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-Q
5 1,000 9-MOS SEP-30-1998 OCT-01-1997 JUN-30-1998 1,206 0 552 0 1,459 3,578 5,584 4,076 5,087 919 0 428 0 0 3,680 5,087 5,215 5,215 3,244 5,210 0 0 5 46 16 30 0 0 0 30 .01 .01
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