-----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, SPYWMlgwigU1XcBJXy2kryMEQt7V+SdNvcpLx/fL9kSAjFwicuB7lQYSKUm0haEG isY34AL3iDFTHoDezukkMA== 0001157523-04-007454.txt : 20040806 0001157523-04-007454.hdr.sgml : 20040806 20040806081716 ACCESSION NUMBER: 0001157523-04-007454 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040627 FILED AS OF DATE: 20040806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALPEY FISHER CORP CENTRAL INDEX KEY: 0000085608 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 060737363 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04184 FILM NUMBER: 04956185 BUSINESS ADDRESS: STREET 1: 75 SOUTH ST CITY: HOPKINTON STATE: MA ZIP: 01748 BUSINESS PHONE: 5084359039 MAIL ADDRESS: STREET 1: 75 SOUTH STREET CITY: HOPKINTON STATE: MA ZIP: 01748 FORMER COMPANY: FORMER CONFORMED NAME: MATEC CORP/DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RSC INDUSTRIES INC DATE OF NAME CHANGE: 19840515 FORMER COMPANY: FORMER CONFORMED NAME: REEVES INDUSTRIES INC DATE OF NAME CHANGE: 19710520 10-Q 1 a4695886.txt VALPEY-FISHER CORPORATION 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-4184 Valpey-Fisher Corporation (Exact name of registrant as specified in its charter) Maryland 06-0737363 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 75 South St., Hopkinton, Massachusetts 01748 (Address of principal executive offices) (Zip Code) (508) 435-6831 (Registrant's telephone number, including area code) Indicate by check mark whether the 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 such 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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes [ ] No [X] As of August 5, 2004, the number of shares outstanding of Registrant's Common Stock, par value $.05 was 4,217,315. - 1 - Valpey-Fisher Corporation INDEX PAGE ----- ---- PART I. FINANCIAL INFORMATION ITEM 1. - Financial Statements - Unaudited Consolidated Condensed Balance Sheets - June 27, 2004 and December 31, 2003 3 Consolidated Statements of Operations - Three Months and Six Months Ended June 27, 2004 and June 29, 2003 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 27, 2004 and June 29, 2003 5 Notes to Consolidated Condensed Financial Statements 6-8 ITEM 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 ITEM 3. - Quantitative and Qualitative Disclosures About Market Risk 12 ITEM 4. - Controls and Procedures 12 PART II. OTHER INFORMATION ITEM 4. - Submission of Matters to a Vote of Security Holders 13 ITEM 6. - Exhibits and Reports on Form 8-K 13 SIGNATURES 14 - 2 - PART I - FINANCIAL INFORMATION
Item 1. Financial Statements Valpey-Fisher Corporation and Subsidiaries Consolidated Condensed Balance Sheets (In thousands, except share data) 6/27/04 12/31/03 -------- -------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,161 $ 4,209 Receivables, net 2,812 2,467 Inventories, net 1,945 1,571 Deferred income taxes and other current assets 731 675 - --------------------------------------------------------------------------------------------------- Total current assets 9,649 8,922 Property, plant and equipment, at cost 10,741 10,752 Less accumulated depreciation 7,406 7,064 - --------------------------------------------------------------------------------------------------- 3,335 3,688 Other assets 143 134 - --------------------------------------------------------------------------------------------------- $13,127 $12,744 =================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 910 $ 540 Accrued liabilities 1,092 900 - --------------------------------------------------------------------------------------------------- Total current liabilities 2,002 1,440 Deferred income taxes 626 646 Stockholders' equity: Preferred stock, $1.00 par value- Authorized 1,000,000 shares; issued none - - Common stock, $.05 par value- Authorized 10,000,000 shares; Issued and outstanding: 4,216,315 and 4,184,815 shares 211 209 Capital surplus 5,077 4,999 Retained earnings 5,398 5,667 Less unearned compensation (187) (217) - --------------------------------------------------------------------------------------------------- Total stockholders' equity 10,499 10,658 - --------------------------------------------------------------------------------------------------- $13,127 $12,744 =================================================================================================== See notes to consolidated condensed financial statements.
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Valpey-Fisher Corporation and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended 6/27/04 6/29/03 6/27/04 6/29/03 ------------------- ----------------- Net sales $ 3,151 $ 2,180 $ 5,918 $ 3,891 Cost of sales 2,229 1,898 4,209 3,524 - --------------------------------------------------------------------------------------------------------------------- Gross profit 922 282 1,709 367 Operating expenses: Selling and advertising 401 371 797 746 General and administrative 515 522 988 895 Research and development 50 38 111 75 - --------------------------------------------------------------------------------------------------------------------- 966 931 1,896 1,716 Operating (loss) (44) (649) (187) (1,349) Other income (loss): Interest income 8 12 14 32 Interest (expense) - - - (12) Gain on sale of assets 13 - 13 - - --------------------------------------------------------------------------------------------------------------------- 21 12 27 20 (Loss) from continuing operations before income taxes (23) (637) (160) (1,329) Income tax benefit - 208 - 443 - --------------------------------------------------------------------------------------------------------------------- (Loss) from continuing operations (23) (429) (160) (886) (Loss) from discontinued operations, net of taxes (110) - (110) - - --------------------------------------------------------------------------------------------------------------------- Net (loss) $ (133) $ (429) $ (270) $ (886) ===================================================================================================================== Basic and diluted (loss) per share: Continuing operations $ (.01) $ (.10) $ (.04) $ (.21) Discontinued operations (.02) - (.02) - - --------------------------------------------------------------------------------------------------------------------- $ (.03) $ (.10) $ (.06) $ (.21) ===================================================================================================================== Basic and diluted weighted average shares 4,216 4,186 4,205 4,191 See notes to consolidated condensed financial statements.
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Valpey-Fisher Corporation and Subsidiaries Consolidated Condensed Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended ----------------- 6/27/04 6/29/03 ----------------- Cash flows from operating activities: Net (loss) from continuing operations $ (160) $ (886) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Depreciation and amortization 418 408 Deferred income taxes (26) 43 Net non-cash stock compensation 20 16 Gain on sale of assets (13) - Changes in operating assets and liabilities, excluding the effects of the purchase of MF Electronics (253) (17) - ------------------------------------------------------------------------------------------------- Net cash (used) by operating activities (14) (436) - ------------------------------------------------------------------------------------------------- Cash flows from investing activities: Purchase of MF Electronics - (799) Capital expenditures (75) (46) Collection of note receivables 19 10 Proceeds from sale of assets 25 - Other, net (8) (8) - ------------------------------------------------------------------------------------------------- Net cash (used) by investing activities (39) (843) - ------------------------------------------------------------------------------------------------- Cash flows from financing activities: Stock options exercised 5 - Payments on long-term debt - (1,277) Purchases of common stock - (60) - ------------------------------------------------------------------------------------------------- Net cash provided (used) by financing activities 5 (1,337) - ------------------------------------------------------------------------------------------------- Net cash (used) by discontinued operations - - - ------------------------------------------------------------------------------------------------- Net (decrease) in cash and cash equivalents (48) (2,616) Cash and cash equivalents: Beginning of period 4,209 5,758 ----------------- End of period $ 4,161 $ 3,142 ================= Noncash Investing and Financing Activities: In 2004, the Company issued 29,500 shares of stock valued at $85,500 to four employees in payment for a bonus accrued in 2003. See notes to consolidated condensed financial statements.
- 5 - Valpey-Fisher Corporation and Subsidiaries Notes to Consolidated Condensed Financial Statements 1. Financial Presentation: The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company's 2003 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. 2. Stock Compensation Plans: The Company applies the intrinsic value method, Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock option plans. The Company provides the disclosure requirements of Statement of Financial Accounting Standards Nos. 123 and 148, "Accounting for Stock-Based Compensation," and related interpretations and amendments. The Company adopted the disclosure-only option under SFAS No.123 "Accounting for Stock-Based Compensation." The following table illustrates the effect on net (loss) per share if the Company had applied the fair value recognition provisions of SFAS No.123 to stock-based compensation.
Three Months Ended (in thousands, except per share amounts) 6/27/04 6/29/03 - --------------------------------------------------------------------------------------------------------- (unaudited) Net (loss), as reported $ (133) $ (429) Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax benefit (8) (25) ------------------------- Pro forma net (loss) $ (141) $ (454) ========================= Basic and diluted (loss) per share, as reported $ (.03) $ (.10) ========================= Basic and diluted (loss) per share, pro forma $ (.03) $ (.11) =========================
- 6 -
Six Months Ended (in thousands, except per share amounts) 6/27/04 6/29/03 - --------------------------------------------------------------------------------------------------------- (unaudited) Net (loss), as reported $ (270) $ (886) Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax benefit (31) (60) ------------------------- Pro forma net (loss) $ (301) $ (946) ========================= Basic and diluted (loss) per share, as reported $ (.06) $ (.21) ========================= Basic and diluted (loss) per share, pro forma $ (.07) $ (.23) =========================
3. Acquisition: On May 28, 2003, pursuant to an Asset Purchase Agreement dated April 30, 2003, the Company purchased certain assets consisting primarily of inventories, machinery and equipment and the customer order backlog from MF Electronics Corp. ("MF"), a privately held company located in New Rochelle, NY. MF designs and manufactures a wide range of frequency control products. The results of MF's operations have been included in the consolidated financial statements since the date of acquisition. During the week of June 30, 2003, the purchased assets and operations of MF were moved to the Company's facility located in Hopkinton, MA. The following unaudited pro forma financial information presents the results of the Company as if the acquisition of MF was completed January 1, 2003 (in thousands, except for per share amounts): Three Months Ended Six Months Ended 6/29/03 6/29/03 ------------------ ---------------- Net sales $ 2,859 $ 5,782 Net (loss) (638) (1,298) Basic and diluted (loss) per share $ (.15) $ (.31) This pro forma financial information is presented for informational purposes and is not necessarily indicative of the Company's operating results if the acquisition had been in effect for the period presented. In addition, they are not intended to be a projection of future results and do not reflect any anticipated cost savings or operating efficiencies that the Company believes are achievable. 4. Comprehensive Income (Loss): During the three months and six months ended June 27, 2004 and June 29, 2003, there were no differences between comprehensive (loss) and net (loss). - 7 - 5. Receivables, net:
Receivables, net of allowances, consist of the following: (in thousands) 6/27/04 12/31/03 ----------------------------------------------------------------------------------------------------- (unaudited) Accounts receivable, less allowance for doubtful accounts of $124 and $80 $ 1,525 $ 1,161 Refundable income taxes 1,287 1,287 Other - 19 ------------------------ $ 2,812 $ 2,467 ========================
6. Inventories, net:
Inventories, net of reserves, consist of the following: (in thousands) 6/27/04 12/31/03 ----------------------------------------------------------------------------------------------------- (unaudited) Raw materials $ 1,259 $ 1,110 Work in process 377 275 Finished goods 309 186 ------------------------ $ 1,945 $ 1,571 ========================
7. Discontinued Operations: During 1998, the Company sold the assets of its Bergen Cable Technologies, Inc. subsidiary. As a result of the sale, the Company was required to perform environmental cleanup at the site. During the second quarter of 2004, the Company expensed $110,000 to increase the environmental expense accrual to reflect the revised estimate to complete the next phase of the remediation. This after-tax expense of $110,000 is presented in the Consolidated Statements of Operations under the caption "(Loss) from discontinued operations". As of June 27, 2004, $1,060,000 has been expensed for the cleanup and accrued liabilities include $146,000 for future payments. These costs represent the Company's best estimate, but the ultimate costs will not be known until the remediation is complete. 8. (Loss) Per Share: The computation of basic and diluted (loss) per share is computed using the weighted average number of common shares outstanding during the three months and six months ended June 27, 2004 and June 29, 2003. During the three months and six months ended June 27, 2004, 500,938 of common shares issuable under stock options have not been included in the computation of "Diluted (Loss) per Share". During the three months and six months ended June 29, 2003, 578,438 of common shares issuable under stock options have not been included in the computation of "Diluted (Loss) per Share". These shares were not included because of the antidilutive effect of the options since the Company reported a loss from operations in these periods. 9. Reclassifications: Certain reclassifications have been made to the 2003 financial statements to conform to the current year presentation. - 8 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Management believes that judgments and estimates related to the following critical accounting estimates could materially affect its consolidated financial statements. Accounts receivable - The Company performs on-going credit evaluations of its customers and assesses the collectibility of its accounts receivable based on a number of factors including the customer's financial condition and collection history, and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Inventory - The Company estimates the carrying value of its inventory based upon historic usage and management's assumptions relating to projected customer purchases, product design changes and product obsolescence. The changing technology markets that we supply also affect these estimates. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Income Taxes - The Company has recorded deferred tax assets and liabilities resulting from differing treatment of items for tax and financial statement reporting purposes. The Company must estimate its income tax valuation allowance by assessing which deferred tax assets are more likely than not to be recovered in the future. Based on our assessment of the realization of these assets, the Company has recorded a valuation allowance of $704,000 at June 27, 2004. In reaching our conclusion, we evaluated the existence of deferred tax liabilities that can be used to absorb deferred tax assets, the deductibility of the disposal of scrap and worthless inventory, taxable income in prior carryback years and taxable income by jurisdiction in which we operate and the period over which the deferred tax assets would be recoverable. In the event that actual results differ from these estimates in future periods, the Company may need to establish an additional valuation allowance or reduce the valuation allowance, which could materially impact our financial position and results of operations. Liquidity and Capital Resources Cash and cash equivalents decreased $48,000 during the six months ended June 27, 2004. During this period, the Company's continuing operations used cash of $14,000, investing activities used cash of $39,000 and financing activities generated $5,000 in cash. Cash used for continuing operations of $14,000 resulted mainly from the net loss of $160,000 adjusted for the non-cash effect of depreciation of $418,000 and the $253,000 increase in working capital. The net increase in working capital was mainly due to a $408,000 increase in trade accounts receivables, a $374,000 increase in inventory offset in part by a $370,000 increase in accounts payable and a $192,000 increase in accrued liabilities. The increase in accounts receivable is mainly due to the increased sales level. Days sales outstanding were 47 days at June 27, 2004 compared to 47 days at December 31, 2003. The inventory increase is mainly to support the increased level of sales and backlog. The increase in accounts payable is primarily due to the timing of inventory purchases. The increase in accrued liabilities was mainly attributable to increases in commissions payable, employee compensation, environmental costs and professional fees. - 9 - During the six months ended June 27, 2004, the Company sold certain pieces of machinery and equipment, received $25,000 in cash and recorded a $13,000 gain on the sale. Capital expenditures amounted to $75,000 during the six months ended June 27, 2004. While the Company is projecting a loss in 2004 based on the current conditions in the telecom market, management believes that based on its current working capital and the expected cash flows from operations, the Company's resources are sufficient to meet its financial needs in 2004 including a remaining capital expenditures budget of approximately $175,000. Off-Balance Sheet Arrangements The Company does not maintain any off-balance sheet financing arrangements. Contractual Obligations During the normal course of business, we incur certain commitments to make future payments for the purchase of inventory and production supplies based on projected requirements. At June 27, 2004, the Company has outstanding purchase commitments totaling approximately $666,000, all of which are expected to be fulfilled in 2004. Results of Operations For the quarter and six months ended June 27, 2004, net sales increased $971,000 or 45% and $2,027,000 or 52%, respectively, over the comparable periods in 2003. Sales from the MF Electronics product line acquired at the end of May 2003 accounted for approximately 50% of the sales increase during both these periods. Increased unit sales from the remaining product lines accounted for the majority of the remaining sales increase during these periods. The book-to-bill ratio during the six months ended June 27, 2004 was 1.08 or slightly better than 1.06 during the comparable period in 2003. The Company's backlog amounted to $2.3 million at June 27, 2004 compared to $1.8 million at December 31, 2003 and $1.6 million at June 29, 2003. The Company saw increased activity in the IT markets (servers, switches and storage) and some slight increase in the telecom market beginning during the 1st quarter of 2004. Management believes that the market conditions for the Company's products, in particular those for the telecom market, are slowly starting to stabilize and in fact show modest growth. However, our near-term visibility continues to be poor and we continue to see customer orders for small quantities with near-term delivery dates. Management is not sure of the potential impact on its future operations from the current continuing telecom market uncertainties and our industry's over capacity issues. The Company reported a $922,000 gross profit (29% of net sales) in the quarter ended June 27, 2004 versus a $282,000 gross profit (13% of net sales) in the 2003 quarter. For the six months ended June 27, 2004, the gross profit was $1,709,000 (29% of net sales) compared to $367,000 (9% of net sales) in the 2003 period. About 50% of the dollar increase during both of these periods was due to the gross profit provided by the MF Electronics product line sales. During these periods, the remaining increases were generated from the higher margins from the existing product lines resulting mainly from the favorable effect of spreading the fixed overhead costs over the higher sales level. As a percentage of sales, direct labor and raw material costs remained fairly constant during these periods. During the quarter ended June 27, 2004, selling and advertising expenses increased $30,000 (8%) over the comparable period in 2003. As a result of the sales increase during 2004, sales commission expense to outside manufacturers' representatives increased $43,000 over 2003 quarter. This commission expense increase was partially offset by reductions in various expense accounts. During the six months ended June 27, 2004, selling and advertising expenses increased $51,000 (7%) over the same period in 2003. Sales commission expense to outside manufacturers' representatives increased $90,000 and travel expenses increased about $12,000 as a result of increased customer visits. These expense increases were partially offset by a $54,000 decrease in personnel expenses. - 10 - During the quarter ended June 27, 2004, general and administrative expenses decreased $7,000 from the comparable 2003 period. A $48,000 reduction in personnel expenses resulting mainly from the integration of the MF Electronics acquisition, offset in part by a $35,000 increase in professional fees, primarily as a result of costs relating to the new financial reporting and corporate governance requirements were the main reasons for the expense reduction. During the six months ended June 27, 2004, general and administrative expenses increased $93,000 (10%) over the same period in 2003. Increases in professional fees of $70,000 and MIS expenses of $31,000, partially offset by reductions in various expense accounts were the main reasons for the expense increase. For the quarter and six months ended June 27, 2004, research and development expenses increased $12,000 and $36,000 over the comparable 2003 periods. These increases were primarily due to increased personnel expenses. The decreases in interest income during the quarter and six months ended June 27, 2004 from the 2003 periods were mainly due to the lower average cash balances in 2004 and, to a lesser extent, lower interest rates during the current year. The decrease in interest expense from the 2003 amount is due to the Company paying-off the balance of its outstanding term-debt in the first quarter of 2003. During the quarter ended June 27, 2004, the Company sold equipment and realized a $13,000 gain. During the quarter and six months ended June 27, 2004, the Company did not provide for income taxes based on the estimated taxable loss this year due to the uncertainty surrounding the realization of these future tax benefits. The estimated effective federal and state income tax rate for 2003 is 33%. The Company is providing a valuation allowance for the full amount of the state income tax benefit in 2003 due to the uncertainty of realization. For the quarter ended June 27, 2004, the Company reported an operating loss of $44,000 compared to an operating loss of $649,000 in comparable quarter of 2003. The reduction in operating loss was mainly due to the increases in sales and gross margin in 2004, offset in part by higher operating expenses. During the quarter ended June 27, 2004 the Company reported a $23,000 net loss from continuing operations compared to a net loss of $429,000 from continuing operations in comparable 2003 period. During the quarter ended June 27, 2004, the Company reported an $110,000 loss from discontinued operations. As a result, for the quarter ended June 27, 2004, the Company reported a net loss of $133,000 versus a net loss of $429,000 in 2003. For the six months ended June 27, 2004, the Company reported an operating loss of $187,000 compared to an operating loss of $1,349,000 in comparable period of 2003. The reduction in operating loss was mainly due to the increases in sales and gross margin in 2004, offset in part by higher operating expenses. During the six months ended June 27, 2004 the Company reported a $160,000 net loss from continuing operations compared to a net loss of $886,000 from continuing operations in comparable 2003 period. During the six months ended June 27, 2004, the Company reported an $110,000 loss from discontinued operations. As a result, for the six months ended June 27, 2004, the Company reported a net loss of $270,000 versus a net loss of $886,000 in 2003. - 11 - Forward-Looking Statements Certain statements made herein contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Words such as "expects", "believes", "estimates", "plans" or similar expressions are intended to identify such forward-looking statements. The forward-looking statements are based on the Company's current views and assumptions and involve risks and uncertainties that include, but not limited to: the Company's ability to achieve profitability, the current production over-capacity within the suppliers frequency control devices, the ability to develop, market and manufacture new innovative products competitively, the fluctuations in product demand of the telecommunications industry, the ability of the Company and its suppliers to produce and deliver materials and products competitively, and the ability to limit the amount of the negative effect on operating results caused by pricing pressure. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's cash balances in excess of operating requirements are currently invested in money market accounts. These money market accounts are subject to interest rate risk and interest income will fluctuate in relation to general money market rates. Based on the cash and cash equivalent balance at June 27, 2004, and assuming the balance was totally invested in money market instruments for the full year, a hypothetical 1% point change in interest rates would result in an approximate $41,600 increase or decrease in interest income. The Company purchases certain inventory from and sells product in foreign countries. As these activities are currently transacted in U.S. dollars, they are not subject to foreign currency exchange risk. However, significant fluctuation in the currencies where the Company purchases inventory or sells product could make the U.S. dollar equivalent of such transactions more or less favorable to the Company and the other involved parties. Item 4. Controls and Procedures Evaluation of disclosure controls and procedures. At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective. Changes in internal control. During the second quarter of 2004, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. - 12 - PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders was held on May 6, 2004. Listed below are the matters submitted to stockholders and the results of the stockholder votes. (1) Election of seven directors - ------------------------------- Nominee "For" "Withheld" - -------------------------------------------------------------------------------- Mario Alosco 3,648,299 17,716 Richard W. Anderson 3,634,142 31,873 Michael J. Ferrantino 3,648,087 17,928 Eli Fleisher 3,648,889 17,116 Lawrence Holsborg 3,611,378 54,637 John J. McArdle III 3,611,099 54,916 Ted Valpey, Jr. 3,611,180 54,835 (2) To approve the amendment to the 2003 Stock Option Plan - ---------------------------------------------------------- For 2,528,575 Against 100,528 Abstain 16,624 Broker non-votes 1,020,288 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 2003 Stock Option Plan, as amended as of March 24, 2004 (incorporated by reference to Appendix D to the Proxy Statement of Registrant for its Annual Meeting of Stockholders held on May 6, 2004). 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 32.1 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. (b) Reports on Form 8-K On May 6, 2004, the Registrant filed a report on Form 8-K dated May 6, 2004 reporting under Item 7.(c) Exhibits and Item 12. Results of Operations and Financial Condition. - 13 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Valpey-Fisher Corporation Date: August 6, 2004 By /s/ Michael J. Ferrantino ---------------------------- Michael J. Ferrantino, President and Chief Executive Officer Date: August 6, 2004 By /s/ Michael J. Kroll ----------------------- Michael J. Kroll Vice President, Treasurer and Chief Financial Officer - 14 - EX-31.1 2 a4695886ex311.txt VALPEY-FISHER CORPORATION EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael J. Ferrantino, certify that: 1. I have reviewed this report on Form 10-Q of Valpey-Fisher Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) (Intentionally omitted) c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 6, 2004 By /s/ Michael J. Ferrantino ---------------------------- Michael J. Ferrantino President and Chief Executive Officer - 15 - EX-31.2 3 a4695886ex312.txt VALPEY-FISHER CORPORATION EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael J. Kroll, certify that: 1. I have reviewed this report on Form 10-Q of Valpey-Fisher Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) (Intentionally omitted) c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 6, 2004 By /s/ Michael J. Kroll ----------------------- Michael J. Kroll Vice President, Treasurer and Chief Financial Officer - 16 - EX-32.1 4 a4695886ex321.txt VALPEY-FISHER CORPORATION EXHIBIT 32.1 Exhibit 32.1 Certification Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Valpey-Fisher Corporation (the "Company"), does hereby certify, to such officer's knowledge, that: 1. The Company's Quarterly Report on Form 10-Q for the quarter ended June 27, 2004 ("Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 6, 2004 By /s/ Michael J. Ferrantino ---------------------------- Michael J. Ferrantino, President and Chief Executive Officer Date: August 6, 2004 By /s/ Michael J. Kroll ----------------------- Michael J. Kroll Vice President, Treasurer and Chief Financial Officer The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. - 17 - -----END PRIVACY-ENHANCED MESSAGE-----