DEFA14A 1 Proxy12A-5.htm DEFA14A DEFA14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Preliminary Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[]  Preliminary Proxy Statement
[ ]  Confidential, for Use of the Commission Only (as permitted by
     Rule 14a-6(e)(2))
[ ]  Definitive Proxy Statement
[X ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Section 240.14a-11(c) or
     Section 240.14a-12

Microwave Filter Company, Inc.
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
       1) Title of each class of securities to which transaction applies:
       2) Aggregate number of securities to which transaction applies:
       3) Per unit price or other underlying value of transaction computed
          pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
          the filing fee is calculated and state how it was determined):
       4) Proposed maximum aggregate value of transaction:
       5) Total fee paid:
[ ]  Fee paid previously with preliminary materials.
[ ]  Check box if any part of the fee is offset as provided by Exchange Act
     Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
     paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.
       1) Amount Previously Paid:
       2) Form, Schedule or Registration Statement No.:
       3) Filing Party:
       4) Date Filed:
<page>
Supplement #1 to Definitive Proxy Statement

This supplemental information should be read in conjunction with the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) by the Company on February 9, 2012, which should be read in its entirety.

<page>

MFC - Microwave Filter Company, Inc.



Please vote ONLY the enclosed “White” proxy and …
 DO NOT sign (& return) ANY “blue” proxy you receive from Furlong!


Dear Shareholders:

By now, you may have received proxy material from a Mr. Daniel Rudewicz (or Furlong Financial, LLC) in connection with our upcoming Annual Meeting.  The mailing of his material was not authorized by our Board of Directors and is being done in direct opposition to our Board.

All Boards of publicly held companies have the fiduciary responsibility to act (at all times) in the best interests of the company’s shareholders; the Board of Directors of Microwave Filter Company, Inc. (hereinafter “MFCO”) is no different.  

Microwave Filter Company Board Nominees vs. Dissident (Rudewicz Nominees)

The responsibility of the nominating committee of the Board is to select qualified candidates to serve as Directors on the Company’s Board; our nominating committee continues to provide that service to our Board … as it has in the past.

Let’s look at the facts:

MFCO Board nominees: An experienced business law attorney and retired partner of a prominent law firm in Central New York (Robert Essig, Esq.) and a senior partner (and former GM Manufacturing Executive) of an Upstate New York management consulting firm (John Kennedy, MBA).

Rudewicz’s nominees: A 27 year old Canadian citizen and a 28 year old law student from Washington, D.C.  who  apparently have no operational experience in a manufacturing company.  We suspect both have the accumulated wisdom and business acumen that could reasonably be found in young men in their late 20’s.

While we accept the possibility that both of these young men may have good intentions, we respectfully submit that they are simply too young and inexperienced to take board seats away from …our more qualified candidates.




6743 Kinne Street, East Syracuse, NY 12057


 

Page 2

Shareholder Letter 1

Creating Shareholder Value

Mr. Rudewicz (Furlong Financial LLC) claims that his nominees are primarily concerned about shareholder value whereas the current Board is not.  He suggests the repurchase of shares and the payment of dividends, among other things.

Let’s look at the facts:

Fact No. 1: Return on Shareholder’s Equity has been consistently improving over the last five years to the current level of 17% (annualized) for the 1st quarter of FY12 as shown in Figure 1.
           

Chart Return on Equity


Fact No. 2:
 Return on Sales (a measure of profitability per unit sales) has also been improving to almost 8% for the 1st quarter of FY12 as shown in Figure 2.


Chart - Return on Sales




Page 3

Shareholder Letter 1

Fact No. 3:  The Board of Directors has authorized the payment of $678,850 in cash dividends to our shareholders over the last six years ($0.10 in 2006 and $0.15 in 2011).

Fact No. 4:  The Board of Directors has authorized and executed  the repurchase of 323,073 shares which represent an 11.1% buy back of the Company shares since FY2006.

Rudewicz  (Furlong Financial, LLC) Proposal No. 2

The second proposal that has been put forward by Mr. Rudewicz (Furlong Financial, LLC) (Proposal No. 2) would amend the MFC bylaws to provide mandatory access to your Company’s proxy material to a group of not more than 5 shareholders who own 15% of your Company’s stock for a period of as little as one month.

This would effectively bypass the Board of Directors nominating committee and provide leverage to a minority group of shareholders who have owned shares in your Company for a very brief period.  Your Company’s Directors have a fiduciary duty to represent all the shareholders interest. This proposal would empower a small minority who may use the extremely brief holding period for short term advantage by threatening the expense and disruption of a dissident slate of directors running against Board nominees with your Company paying the total cost of the proxy contest!

We feel strongly that this proposed amendment to our Company’s Bylaws is simply unnecessary since shareholders already have the ability to contact our Board and let us know of superior candidates to serve as outside Directors.  Should a vacancy come up and if the best candidate (for that vacancy) happened to be the one recommended by a shareholder, our Board (like any other) would naturally embrace that superior candidate.  

Essentially, Mr. Rudewicz is trying to “fix” a problem … that doesn’t exist.

We have enclosed our most recent quarterly earnings report.  You can read for yourself how well our present Board & Management Team have performed for you … our shareholders.

Our fundamental and all-consuming goal is to increase long term shareholder value for all shareholders, particularly in these difficult and volatile economic times.  We believe we are on the right track and appreciate the loyalty and confidence of our shareholders.

Thank you for taking the time to read this letter.  Enclosed you will find another “WHITE” proxy.  We again ask you to please sign, date and return the “WHITE” proxy today, or cast your vote via the internet or telephone.  You are also urged to discard any blue proxy that you receive.



Robert R. Andrews
Carl F. Fahrenkrug
Robert R. Andrews
Carl F. Fahrenkrug, P.E.
Chairman
President and CEO




MFC Logo

MICROWAVE FILTER COMPANY, INC.
2012 First Quarter Report
for 3 months ended
December 31, 2011
6743 KINNE STREET
EAST SYRACUSE, N.Y. 13057
315/438-4700 FAX: 315/463-1467


To: The Shareholders of Microwave Filter Company, Inc.


  I am pleased to report net income for the quarter ending December 31, 2011 increased to $102,817 (4 cents per share) as compared to net income of $47,593 (2 cents per share) for the same period last year (quarter ending December 31, 2010). 

  While sales increased modestly (1.7%), higher profit margins were achieved through manufacturing and engineering cost improvements (overhead and materials), as well as, product sales mix.

  Figure 1 is a bar graph of Return on Sales (including the unaudited first quarter of FY 2012 results) indicating the progress Management has made in increasing the profitability per unit of sales.

Chart - Return on Sales


   Figure 2 depicts the improvement in the Return on Equity over the last five years (with the first quarter of FY 2012 annualized).

Chart - Return on Equity


  Management remains focused upon increasing shareholder value through the current volatile business climate.

   You are encouraged to review Microwave Filter Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 and other Securities and Exchange Commission filings.

Sincerely,
Carl F. Fahrenkrug
Robert R. Andrews
Carl F. Fahrenkrug, P.E. Robert R. Andrews
President and CEO Chairman



Microwave Filter Company and Subsidiaries
Consolidated Statements of Operations (unaudited)
For the Three Months Ended December 31, 2011 and 2010













Three months ended




December 31,




2011

2010










Net sales
$
1,317,207
$ 1,294,567










Cost of goods sold

813,995

827,308




 


 


Gross profit

503,212

467,259










  Selling, general and administrative expenses

421,970

421,214




 


 


Income from operations

81,242

46,045










Other income (net)

21,575


1,548











Income before income taxes

102,817

 47,593










Provision (benefit) for income taxes

0

0










NET INCOME

$
102,817
$ 47,593




 





Per share data:
















Basic and diluted earnings  per share
$
0.04
$
0.02










Shares used in computing net







     earnings per share:

2,586,227

2,589,885



Microwave Filter Company and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)
For the Three Months Ended December 31, 2011 and 2010





Three months ended



December 31
 


2011



2010










Cash flows from operating activities:


















Net income
$
102,817

$
47,593










Adjustments to reconcile net income









     to net cash provided by (used in)








     operating activities:








Depreciation

37,583



22,759
Gain on sale of fixed assets

(
20,000
)



0










Change in assets and liabilities:








Accounts receivable

130,368



67,268  
Federal and state income tax recoverable


25,402




0

Inventories
 
49,870


( 17,252 )
Prepaid expenses and other assets

12,247



20,292
Accounts payable and customer deposits
(
37,811 )


91,436
Accrued payroll, compensated absences








     and related expenses
(
39,691 )

(
36,128 )
Other current liabilities
(
51,899 )


5,375



 




 

Net cash provided by (used in)








     operating activities

208,886



201,343  



 




 

Cash flows from investing activities:








Capital expenditures

(
189,078
)


(
4,470
)
Proceeds from sale of fixed assets

 
20,000

 

0










Net cash (used in) provided by








     investing activities
(
169,078 )

(
4,470 )



 




 

Cash flows from financing activities:








Purchase of treasury stock

0



(
1,912 )



 


 

 

Net cash (used in) provided by








     financing activities

0



(
1,912 )



 




 

Net increase (decrease) in cash








     and cash equivalents

39,808



194,961










Cash and cash equivalents








     at beginning of period

1,258,885



1,466,719



 




 

Cash and cash equivalents








     at end of period $
1,298,693

$
1,661,680










Supplemental Schedule of Cash Flow Information:









     Income taxes paid
$

15,000


$

0



Microwave Filter Company and Subsidiaries
Consolidated Balance Sheets
December 31, 2011 (unaudited) and September 30, 2011



December 31, 2011
September 30, 2011

Assets










Current Assets:










Cash and cash equivalents 
$

1,298,693

$

1,258,885

Accounts receivable-trade, net of


 




 


     allowance for doubtful accounts










     of $26,000 and $26,000


221,686



352,054

Federal and state income tax recoverable



0




24,828


Inventories, net



517,391



567,261

Prepaid expenses and other current assets


81,867



94,114





 




 


Total current assets


2,119,637



2,297,142













Property, plant and equipment, net


769,313



617,818





 




 


Total assets
$

2,888,950

$

2,914,960





 




 














Liabilities and Stockholders' Equity






















Current liabilities:










Accounts payable
$

151,701

$

195,535

Customer deposits


57,909



51,886

Accrued federal and state income taxes


574



0


Accrued payroll and related expenses


39,421



57,514

Accrued compensated absences


228,845



250,443

Other current liabilities


31,755



83,654





 




 


Total current liabilities


510,205



639,032





 




 


Total liabilities


510,205



639,032





 




 


Stockholders' Equity:










Common stock, $.10 par value


 




 


     Authorized 5,000,000 shares, Issued










     4,324,140 shares in 2012 and 2011,










     Outstanding 2,586,227 shares in 2012










     and 2011


432,414



432,414

Additional paid-in capital


3,248,706



3,248,706

Retained earnings


388,302



285,485










 


Common stock in treasury, at cost










     1,737,913 shares in 2012 and 2011


(
1,690,677 
)


(
1,690,677 
)













Total stockholders' equity


2,378,745



2,275,928





 




 


Total liabilities and  stockholders' equity
$

2,888,950

$

2,914,960
















PROXY

This proxy is Solicited by The Board of Directors of Microwave Filter Company, Inc.

Proxy for 2012 Annual Meeting of Shareholders


The undersigned hereby appoints Robert R. Andrews and Carl F. Fahrenkrug proxies of the undersigned, with full power of substitution, to vote shares of common stock of the Company which the undersigned is entitled to vote at the 2012 Annual Meeting of the Shareholders to be held on Wednesday, March 28, 2012 at 10:00 a.m. and any adjournments thereof as follows:

(1)  ELECTION OF DIRECTORS
    
     
Instructions:
To vote for all nominees, place an X in box number 1.  To withhold authority to vote for any individual nominee, place an X in box number 2, and draw a line through his/her name in the list below.

                           1.    [  ] For All Nominees
    
                           2.    [  ] For All Nominees Except Those With A Line Through Their Name
       
Robert D. Essig    John J. Kennedy    Anne Tindall          

The Board of Directors recommends a vote FOR all nominees.


(2)  Proposal to ratify the appointment of EFP Rotenberg, LLP as the Company’s independent auditors for the fiscal year ending September 30, 2012.    

The Board of Directors recommends a vote FOR this proposal.
         

FOR [  ]     AGAINST [  ]    ABSTAIN [  ]

(3)  In their discretion, the proxies are authorized to vote upon other matters properly coming before the meeting or any adjournments thereof.

The Board of Directors recommends a vote FOR this proposal.
         

FOR [  ]     AGAINST [  ]    ABSTAIN [  ]

This proxy will be voted as directed by the undersigned.  IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL (1), (2) and (3).


NOTE:  Please date and sign exactly as your name or names appear below and return in the enclosed postage paid envelope.

When signing as an Attorney, Executor, Trustee, Guardian or Officer of a Corporation, please give title as such.

                                                         


_______________________ _________


Signature Date






_______________________ _________


Signature if held jointly Date

                            
IMPORTANT:
  To assist the Company in planning the Annual Meeting please check the following:
          
I plan to attend the Annual Meeting  _____    I do not plan to attend the Annual Meeting  _____