-----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, Vc6h+QdCH5fJm1TP5cxVU6K6HFAGlOuF9vysXD4ov9RjQYBz0PAy0D5Fe6A/9+BW qH5XDtk+8ECaRDP/TkFhcg== 0000716688-01-500005.txt : 20010515 0000716688-01-500005.hdr.sgml : 20010515 ACCESSION NUMBER: 0000716688-01-500005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 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 SEC ACT: SEC FILE NUMBER: 000-10976 FILM NUMBER: 1633402 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 1 mfc10q2.txt 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, 2001 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 - 2,904,786 shares as of March 31, 2001. PART I. - FINANCIAL INFORMATION MICROWAVE FILTER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands) MARCH 31, 2001 SEPTEMBER 30, 2000 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 885 $ 625 Investments 0 925 Accounts receivable-trade, net 728 897 Inventories 1,416 1,104 Deferred tax asset - current 178 178 Prepaid expenses and other current assets 138 78 -------- -------- Total current assets 3,345 3,807 Property, plant and equipment, net 1,382 1,336 -------- -------- Total assets $ 4,727 $ 5,143 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 379 $ 392 Customer deposits 189 155 Accrued federal and state income taxes 106 189 Accrued payroll and related expenses 105 100 Accrued compensated absences 264 267 Other current liabilities 61 121 -------- -------- Total current liabilities 1,104 1,224 Deferred tax liability - noncurrent 48 48 -------- -------- Total liabilities 1,152 1,272 -------- -------- Stockholders' Equity: Common stock,$.10 par value 432 432 Additional paid-in capital 3,240 3,240 Retained earnings 1,409 1,323 -------- -------- 5,081 4,995 Common stock in treasury, at cost (1,506) (1,124) -------- -------- Total stockholders' equity 3,575 3,871 -------- -------- Total liabilities and stockholders' equity $ 4,727 $ 5,143 ======== ========
[FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited) (Amounts in thousands, except per share data) Three months ended Six months ended March 31 March 31 2001 2000 2001 2000 Net sales $1,679 $1,899 $3,609 $3,468 Cost of goods sold 1,116 1,274 2,367 2,208 ------- ------- ------- ------- Gross profit 563 625 1,242 1,260 Selling, general and administrative expenses 573 553 1,156 1,105 ------- ------- ------- ------- (Loss) income from operations (10) 72 86 155 Other income (net), principally interest 22 26 46 41 ------- ------- ------- ------- Income before income taxes 12 98 132 196 Provision for income taxes 4 34 46 68 ------- ------- ------- ------- NET INCOME $8 $64 $86 $128 ======= ======= ======= ======= Basic earnings per share $0.00 $0.02 $0.03 $0.04 ======= ======= ======= =======
[FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited) (Amounts in thousands) Three months ended Six months ended March 31 March 31 2001 2000 2001 2000 Cash flows from operating activities: Net income $ 8 $ 64 $ 86 $ 128 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 76 77 147 153 Change in assets and liabilities: (Increase) decrease in: Accounts receivable 40 47 169 (8) Inventories (309) 72 (312) (72) Prepaid expenses & other assets (8) 1 (60) (58) Increase (decrease) in: Accounts payable & accrued expenses (37) 95 (120) 395 Deferred compensation & other liabilities 0 (1) 0 (3) ------- ------- -------- ------- Net cash provided by (used in) operating activities (230) 355 (90) 535 ------- ------- -------- ------- Cash flows from investing activities: Investments 943 775 925 775 Capital expenditures (99) (24) (193) (43) ------- ------- -------- ------- Net cash provided by investing activities 844 751 732 732 Cash flows from financing activities: Principal payments on long-term debt 0 0 0 0 Purchase of treasury stock (54) 0 (382) (61) Cash dividend paid 0 (158) 0 (158) ------- ------- ------- ------- Net cash (used in) financing activities (54) (158) (382) (219) Increase in cash and cash equivalents 560 947 260 1,048 Cash and cash equivalents at beginning of period 325 365 625 264 ------- ------- ------- ------- Cash and cash equivalents at end of period $ 885 $1,312 $ 885 $1,312 ======= ======= ======= =======
[FN] See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2001 Note 1. Summary of Significant Accounting Policies The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended September 30, 2001. Note 2. Industry Segment Data The Company's primary business segments involve (1) operations of Microwave Filter Company, Inc. (MFC) which manufactures filters used for preventing interference or signal processing in cable television, satellite, broadcast, aerospace and government markets; and (2) operations of Niagara Scientific, Inc. (NSI) which manufactures industrial automation equipment. Information by segment is as follows: Three months ended Six months ended (thousands of dollars) March 31 March 31, 2001 2000 2001 2000 Net Sales (Unaffiliated): MFC $1,546 $1,481 $3,200 $2,984 NSI 133 418 409 484 ------ ------ ------ ------ Total $1,679 $1,899 $3,609 $3,468 ====== ====== ====== ====== Operating profit (loss): (a) MFC $27 $89 $175 $184 NSI (37) (17) (89) (29) ------ ------ ------ ------ Total ($10) $72 $86 $155 ====== ====== ======= ======= Identifiable assets: (b) MFC $3,231 $2,990 $3,231 $2,990 NSI 611 704 611 704 ------ ------ ------ ------ Subtotal 3,842 3,694 3,842 3,694 Corporate Assets - Cash And Cash Equivalents 885 1,312 885 1,312 ------ ------ ------ ------ Total $4,727 $5,006 $4,727 $5,006 ====== ====== ====== ====== (a) Operating profit (loss) is total revenue less operating expenses. In computing operating profit, none of the following items have been added or deducted: interest expense, income taxes and miscellaneous income. Expenses incurred on behalf of both Companies are allocated based upon estimates of their relationship to each entity. (b) Identifiable assets by industry are those assets that are used in the Companies operations in each industry. Note 3. Inventories Inventories net of provision for obsolescence consisted of the following: March 31, 2001 September 30, 2000 Raw materials and stock parts $797,025 $675,120 Work-in-process 514,639 325,270 Finished goods 104,050 103,440 ---------- ---------- $1,415,714 $1,103,830 ========== ========== The Company's provision for obsolescence equaled $323,101 at March 31, 2001 and September 30, 2000. Note 4. Recent Accounting Pronouncements In December 1999, the Securities and Exchange Commission issued Staff Bulletin No. 101 ("SAB 101"), which provides guidance in applying generally accepted accounting principles to revenue recognition in financial statements. SAB 101, as amended, will require implementation by the Company in the fourth quarter of fiscal 2001. The Company is in the process of reviewing SAB 101 and believes the Bulletin will not have a significant effect on its financial statements. MICROWAVE FILTER COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Microwave Filter Company, Inc. operates primarily in the United States and principally in two industries. The Company extends credit to business customers based upon ongoing credit evaluations. Microwave Filter Company, Inc. (MFC) designs, develops, manufactures and sells electronic filters, both for radio and microwave frequencies, to help process signal distribution and to prevent unwanted signals from disrupting transmit or receive operations. Markets served include cable television, television and radio broadcast, satellite broadcast, mobile radio, commercial and defense electronics. Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, custom designs case packing machines to automatically pack products into shipping cases. Customers are typically processors of food and other commodity products with a need to reduce labor cost with a modest investment and quick payback. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2001 vs. THREE MONTHS ENDED MARCH 31, 2000. Net sales for the three months ended March 31, 2001 equaled $1,679,454, a decrease of $219,674 or 11.6% when compared to net sales of $1,899,128 for the three months ended March 31, 2000. The decrease in sales for the quarter ended March 31, 2001, when compared to the same period last year, can primarily be attributed to the decrease in sales of NSI. NSI sales for the three months ended March 31, 2001 equaled $132,834, a decrease of $284,637 or 68.1% when compared to sales of $417,471 for the three months ended March 31, 2000. Sales of NSI related equipment, on a quarter to quarter basis, can be impacted by the timing of the shipment of the custom designed equipment and the customer's scheduled delivery dates. MFC sales for the three months ended March 31, 2001 equaled $1,546,620, an increase of $64,963 or 4.4% when compared to sales of $1,481,657 for the three months ended March 31, 2000. The increase in MFC sales can primarily be attributed to the increase in the sales of MFC's RF/Microwave products to original equipment manufacturers (OEMs). MFC continues to invest in production engineering and infrastructure development to penetrate OEM market segments as they become popular. This is part of a concerted effort to provide substantial growth. The Company's sales order backlog equaled $923,514 at March 31, 2001 compared to $831,388 at September 30, 2000. MFC's sales order backlog equaled $454,334 at March 31, 2001, a decrease of $176,100 when compared to sales order backlog of $630,434 at September 30, 2000. MFC has experienced a reduction in sales orders during the quarter ended March 31, 2001, when compared to both the same period last year and the quarter ended December 31, 2000, primarily due to market conditions. Eighty-five percent (85%) of MFC's sales order backlog is scheduled to ship during the fiscal year ended September 30, 2001. NSI's sales order backlog equaled $469,180 at March 31, 2001, an increase of $268,226 when compared to sales order backlog of $200,954 at September 30, 2000. One hundred percent (100%) of NSI's sales order backlog is scheduled to ship during the quarter ended June 30, 2001. If market conditions or demand does not improve, there can be no assurance that the Company's sales levels or growth will remain at, reach or exceed historical levels in any future period. Based on the reduction in sales orders, the Company was forced to layoff employees in an effort to reduce operating costs. Net income for the three months ended March 31, 2001 equaled $8,091, a decrease of $55,931 or 87.4% when compared to net income of $64,022 for the three months ended March 31, 2000. The decrease in net income can primarily be attributed to the decrease in sales. Gross profit for the three months ended March 31, 2001 equaled $563,248, a decrease of $61,839 or 9.9% when compared to gross profit of $625,087 for the three months ended March 31, 2000. As a percentage of sales, gross profit equaled 33.5% for the three months ended March 31, 2001 compared to 32.9% for the three months ended March 31, 2000. The dollar decrease can primarily be attributed to the decrease in sales. The improvement in gross profit as a percentage of sales can primarily be attributed to product sales mix. Selling, general and administrative (SGA) expenses for the three months ended March 31, 2001 equaled $572,675, an increase of $19,492 or 3.5% when compared to SG&A expenses of $553,183 for the three months ended March 31, 2000. As a percentage of sales, SGA expenses increased to 34.1% for the three months ended March 31, 2001 when compared to 29.1% for the three months ended March 31, 2000, primarily due to the decrease in sales this year when compared to the same period last year. SIX MONTHS ENDED MARCH 31, 2001 vs. SIX MONTHS ENDED MARCH 31, 2000. Net sales for the six months ended March 31, 2001 equaled $3,609,072, an increase of $140,495 or 4.1% when compared to net sales of $3,468,577 for the six months ended March 31, 2000. NSI sales for the six months ended March 31, 2001 equaled $408,969, a decrease of $74,873 or 15.5% when compared to sales of $483,842 for the six months ended March 31, 2000. MFC sales for the six months ended March 31, 2001 equaled $3,200,103, an increase of $215,368 or 7.2% when compared to sales of $2,984,735 for the six months ended March 31, 2000. The increase in MFC sales can be attributed to the increase in the sales of MFC's RF/Microwave products to OEMs. Net income for the six months ended March 31, 2001 equaled $86,666, a decrease of $41,865 or 32.6% when compared to net income of $128,531 for the six months ended March 31, 2000. Gross profit for the six months ended March 31, 2001 equaled $1,241,666, a decrease of $18,763 or 1.5% when compared to gross profit of $1,260,429 for the six months ended March 31, 2000. As a percentage of sales, gross profit equaled 34.4% for the six months ended March 31, 2001 compared to 36.3% for the six months ended March 31, 2000. SG&A expenses for the six months ended March 31, 2001 equaled $1,155,926, an increase of $50,708 or 4.6% when compared to SG&A expenses of $1,105,218 for the six months ended March 31, 2000. The increases can primarily be attributed to planned increases in advertising and promotional expenses when compared to the same periods last year. On an industry segment basis, MFC's income from operations for the six months ended March 31, 2001 equaled $174,752, a decrease of $9,366 or 5.1% when compared to income from operations of $184,118 for the six months ended March 31, 2000. The decrease in MFC's income from operations can primarily be attributed to lower profit margins primarily due to product sales mix. NSI recorded a loss from operations of $89,012 for the six months ended March 31, 2001 compared to a loss from operations of $28,907 for the six months ended March 31, 2000 primarily due to planned increases in advertising and promotional expenses. LIQUIDITY and CAPITAL RESOURCES Cash and cash equivalents increased $259,193 to $884,670 at March 31, 2001 when compared to $625,477 at September 30, 2000. The increase was a result of $91,897 in net cash used in operating activities, $732,624 in net cash provided by investing activities and $381,534 in net cash used in financing activities. The decrease of $168,768 in accounts receivable at March 31, 2001 when compared to September 30, 2000 is attributable to decreased shipments during the month of March 2001 when compared to September 2000. The increase of $311,884 in inventories and work in process at March 31, 2001 when compared to September 30, 2000 is attributable to the scheduled ship dates of NSI's sales order backlog and the purchase by MFC of a critical raw material where a minimum purchase amount was required. Cash provided by investing activities during the six months ended March 31, 2001 consisted of funds provided by the sale of investments ($925,067) and funds used for capital expenditures ($192,443). Cash used in financing activities during the six months ended March 31, 2001 consisted of funds used to repurchase common stock of the Company ($381,534). At March 31, 2001, the Company had unused 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. Management believes that its working capital requirements for the forseeable future will be met by its existing cash balances, future cash flows from operations and its current credit arrangements. RECENT ACCOUNTING PRONOUNCEMENTS In December 1999,the Securities and Exchange Commission issued Staff Bulletin No. 101 ("SAB 101"), which provides guidance in applying generally accepted accounting principles to revenue recognition in financial statements. SAB 101, as amended, will require implementation by the Company in the fourth quarter of fiscal 2001. The Company is in the process of reviewing SAB 101 and believes the Bulletin will not have a significant effect on its financial statements. 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 a. The Annual meeting of the Shareholders was held on April 19, 2001 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 three 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. The ratification of PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending September 30, 2001. 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 AUTHORITY WITHHELD Robert R. Andrews 2,586,009 16,882 Sidney K. Chong 2,585,445 17,446 Louis S. Misenti 2,585,428 17,463 c. The following proposition received the number of votes set opposite its respective number: VOTES FOR VOTES AGAINST ABSTENTIONS Proposal 2 2,575,808 7,717 4,457 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. May 14, 2001 Carl F. Fahrenkrug (Date) -------------------------- Carl F. Fahrenkrug Chief Executive Officer May 14, 2001 Richard L. Jones (Date) -------------------------- Richard L. Jones Chief Financial Officer EX-27 2 fds-ex27.frm
5 Article 5 Fin. Data Schedule for 2ND Qtr 10-Q 1,000 U.S.DOLLARS 6-MOS Oct-01-2000 Sep-30-2001 Mar-31-2001 1 885 0 728 44 1,416 3,345 6,268 4,886 4,727 1,104 0 0 0 432 3,143 4,727 3,609 3,609 2,367 3,523 0 0 0 132 46 86 0 0 0 86 0.03 0.03
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