a6289313.htm

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 April 4, 2010

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act: (Check one):

	Large accelerated filer o	Accelerated filer o
	Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of May 13, 2010, the number of shares outstanding of Registrant’s Common Stock, par value $.05 was 4,297,898.

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Valpey-Fisher Corporation

INDEX		PAGE

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Consolidated Condensed Balance Sheets – April 4, 2010 (Unaudited) and December 31, 2009 (Audited)		3
Consolidated Statements of Operations – (Unaudited) Three Months Ended April 4, 2010 and March 29, 2009		4
Consolidated Statements of Cash Flows – (Unaudited) Three Months Ended April 4, 2010 and March 29, 2009		5
Notes to Consolidated Condensed Financial Statements – (Unaudited)		6-10

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10-12

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		13

ITEM 4T. Controls and Procedures		13-14



PART II. OTHER INFORMATION

ITEM 1A. Risk Factors		14
ITEM 6. Exhibits		14

SIGNATURES		15

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Valpey-Fisher Corporation and Subsidiaries

Consolidated Condensed Balance Sheets

(In thousands, except share data)

	4/4/10		12/31/09
	(Unaudited)		(Audited)

ASSETS
Current assets:
Cash and cash equivalents	$	3,793	$	4,053
Receivables, net		2,115		1,744
Inventories, net		1,391		1,105
Deferred income taxes		840		848
Other current assets		111		111
Total current assets		8,250		7,861

Property, plant and equipment, at cost		11,785		11,613
Less accumulated depreciation		10,244		10,127
		1,541		1,486

Other assets		211		202
Total assets	$	10,002	$	9,549

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,097	$	949
Accrued liabilities		1,060		861
Total current liabilities		2,157		1,810

Deferred income taxes		171		175

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: 4,297,898 and 4,297,898 shares		215		215
Capital surplus		5,682		5,667
Retained earnings		1,777		1,682
Total stockholders’ equity		7,674		7,564
Total liabilities and stockholders’ equity	$	10,002	$	9,549

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
		4/4/10			3/29/09

Net sales	$	3,567		$	2,582
Cost of sales		2,186			1,733
Gross profit		1,381			849

Operating expenses:
Selling and advertising		513			412
General and administrative		358			344
Research and development		328			147
Total operating expenses		1,199			903

Operating profit (loss)		182			(54	)

Interest income		4			10
Earnings (loss) before income taxes		186			(44	)
Income tax (expense) benefit		(91	)		28
Net earnings (loss)	$	95		$	(16	)

Basic and diluted earnings (loss) per share	$	.02		$	-

Basic weighted average shares		4,298			4,298
Diluted weighted average shares		4,343			4,298

See notes to consolidated condensed financial statements.

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Valpey-Fisher Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended
	4/4/10			3/29/09
Cash flows from operating activities:
Net earnings (loss)	$	95		$	(16	)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities of continuing operations:
Depreciation		117			101
Provisions for inventory		25			50
Deferred income taxes		4			10
Stock-based compensation		15			16
Changes in operating assets and liabilities:
ARreceivables, net		(372	)		29
Inventories		(311	)		179
Other current assets		1			17
Accounts payable and accrued liabilities		351			(618	)
Net cash (used) by operating activities of continuing operations		(75	)		(232	)
Cash flows from operating activities: - Discontinued Operations
Change in accrued expenses		(5	)		(5	)
Net cash (used) by operating activities of discontinued operations		(5	)		(5	)
Net cash (used) by operating activities		(80	)		(237	)
Cash flows from investing activities:
Capital expenditures		(172	)		(54	)
Other, net		(8	)		(9	)
Net cash (used) by investing activities		(180	)		(63	)
Net (decrease) in cash and cash equivalents		(260	)		(300	)
Cash and cash equivalents:
Beginning of period		4,053			4,515
End of period	$	3,793		$	4,215


Supplemental Cash Flow Information
Cash paid during the period by continuing operations for income taxes	$	-		$	75

See notes to consolidated condensed financial statements.

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Valpey-Fisher Corporation and Subsidiaries

Notes to Consolidated Condensed Financial Statements

(Unaudited)

1. Financial Presentation:

The unaudited interim financial statements, 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 unaudited interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s 2009 Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

In the Consolidated Statements of Cash Flows, certain amounts for 2009 have been reclassified to conform to the current year presentation.

The Company has evaluated all subsequent events through the date these financial statements are being filed with the Securities & Exchange Commission, and has determined there were no events or transactions deemed to be reportable.

2. Stock Compensation Plans:

At April 4, 2010, options for 77,090 shares are available for future grants to officers, key employees, and other individuals under the Company’s four Stock Option Plans. The option price and terms are recommended by the Company’s Compensation Committee to the Company’s Board of Directors for approval. The maximum contractual term of an option is ten years. The options granted may qualify as incentive stock options (“ISO’s”). Compensation expense related to stock options granted is recognized ratably over the vesting period of the option. The Company issues new shares upon the exercise of stock options.

The Company recorded the following stock-based compensation expense in the Consolidated Statement of Operations (in thousands):

	3 Months Ended
	4/4/10			3/29/09

Cost of sales	$	3		$	4
Selling and advertising		2			4
General and administrative		7			5
Research and development		3			3
Pre-tax stock-based compensation expense		15			16
Income tax (benefit)		(1	)		(1	)
Net stock-based compensation expense	$	14		$	15

The estimated fair value of each option grant is determined on the date of grant using the Black-Scholes option pricing model with the weighted-average assumptions for stock option grants during the three months ended April 4, 2010 listed in the table below. No options were granted during the three months ended March 29, 2009.

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	2010
Stock options granted		60,000
Weighted-average exercise price	$	1.32
Weighted-average grant date fair value	$	.55
Assumptions:
Risk-free interest rate		2.4	%
Expected volatility		46	%
Expected term in years		4.8
Expected dividend yield		0	%

The risk-free interest rate is based on the yield on zero-coupon U.S. treasury securities at the time of grant for a period commensurate with the expected term. The expected volatility is calculated using the Black-Scholes model based on the historic prices for a period commensurate with the expected term. The expected term of the option is determined by using historical data.

A summary of the activity under all the Company’s stock option plans as of April 4, 2010 and the changes during the three month period then ended are as follows:

	Number of Shares	Weighted- Average Exercise Price Per Share	Weighted- Average Remaining Contractual Life In Years	Aggregate Intrinsic Value

Outstanding at December 31, 2009	887,891	$ 1.45
Options granted	60,000	1.32
Options exercised	0
Options forfeited or expired	(385,734)	1.36
Outstanding at April 4, 2010	562,157	$ 1.50	4.1	$190,235

Exercisable at April 4, 2010	372,193	$ 1.56	3.7	$137,678

A summary of the status of the Company’s nonvested stock options as of April 4, 2010 and the changes during the three month period then ended are as follows:

	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2009		130,742		$	1.05
Granted		60,000			.55
Vested		-			-
Forfeited		(778	)		1.80
Nonvested at April 4, 2010		189,964		$	.89

At April 4, 2010, there was approximately $80,000 of total unrecognized compensation cost related to nonvested stock options granted. That cost is expected to be recognized as follows: $27,000 in 2010, $29,900 in 2011, $21,100 in 2012, and $2,000 in 2013. The total grant-date fair value of stock options that vested during the three months ended April 4, 2010 was $0.

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3. Comprehensive Income (Loss):

During the three months ended April 4, 1010 and March 29, 2009, there were no differences between comprehensive income (loss) and net income (loss).

4. Receivables, net:

Receivables, net of allowances, consist of the following:
(in thousands)	4/4/10		12/31/09
	(unaudited)
Accounts receivables, less allowance for doubtful accounts of $100,000 in 2010 and $100,000 in 2009	$	2,115	$	1,673
Refundable income taxes		-		71
	$	2,115	$	1,744

5. Inventories, net:

Inventories, net of reserves of $1,225,000 in 2010 and $1,200,000 in 2009, consist of the following:
(in thousands)	4/4/10		12/31/09
		(unaudited)
Raw materials	$	591	$	634
Work in process		434		182
Finished goods		366		289
	$	1,391	$	1,105

6. Earnings (Loss) Per Share:

Basic earnings (loss) per share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period, plus the net incremental shares that would be issued using the treasury stock method assuming dilutive outstanding stock options were exercised, except when anti-dilutive. The computation of diluted earnings per share excludes stock options with an exercise price in excess of the average market price as they are anti-dilutive. In calculating diluted earnings per share, the dilutive effect of stock options is computed using the average market price fo r the respective period.

The following table shows a reconciliation of weighted average shares (in thousands):

	Three Months Ended
	4/4/10		3/29/09

Weighted average shares outstanding		4,298		4,298
Dilutive effect of stock options outstanding, using the treasury stock method		45		-
Diluted weighted average shares outstanding		4,343		4,298

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During the quarter ended April 4, 2010, stock options to purchase 208,044 common shares were not included in the computation of "Diluted Earnings (Loss) per Share" because their inclusion would be anti-dilutive. During the quarter ended March 29, 2009, stock options to purchase 823,265 common shares were not included in the computation of "Diluted Earnings (Loss) per Share" because of the anti-dilutive effect of the options since the Company reported a loss from operations in this period.

7. Income Taxes:

At April 4, 2010 and December 31, 2009, the Company had no reserves for unrecognized tax benefits on the balance sheet.

There are currently no income tax examinations in progress. During 2009, the Company’s federal income tax return for 2007 was examined by the IRS and resulted in no changes to the tax return. The federal income tax return for 2008 and the state of Massachusetts tax returns for 2006 through 2008 are open tax years. The Company’s policy is to include interest expense on underpayments of income taxes in our income tax provision whereas penalties are included in general and administrative expense.

8. Recent Accounting Pronouncements:

In January 2010, the FASB issued ASU 2010-06, which is an update to Topic 820, “Fair Value Measurement and Disclosures”. This update establishes further disclosure requirements regarding transfers in and out of levels 1 and 2 (effective for all interim and annual reporting periods beginning after December 15, 2009) and activity in level 3 fair value measurements (effective for all interim and annual reporting periods beginning after December 15, 2010). The update also provides clarification as to the level of disaggregation for each class of assets and liabilities, requires disclosures about inputs and valuation techniques, and also includes conforming amendments to the guidance on employers’ disclosures about postretirement benefit plan assets.&# 160; The adoption of this standard has not and is not expected to have a material impact on the Company’s financial position or results of operation.

In February 2010, the FASB issued ASU 2010-09, which is an update to Topic 855, “Subsequent Events”. This update clarifies the date through which the Company is required to evaluate subsequent events. SEC filers will be required to evaluate subsequent events though the date that the financial statements are issued. ASU 2010-09 was effective upon issuance, and did not have a material impact on the Company’s financial position or results of operation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

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 our 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.

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Management believes that judgments and estimates related to our critical accounting policies could materially affect its consolidated financial statements. Our most critical accounting policies, which were discussed in our Annual Report on Form 10-K for the year ended December 31, 2009, pertain to accounts receivable, inventories and income taxes. These policies continue to be our most critical accounting policies for the period covered by this report and there were no significant changes in the application of those policies during this reporting period.

Liquidity and Capital Resources

Cash and cash equivalents amounted to $3,793,000 at April 4, 2010, a decrease of $260,000 from the December 31, 2009 balance. During this period, our operations used cash of $80,000 and investing activities used cash of $180,000.

Cash used in operations of $80,000 resulted from the net earnings of $95,000 and the net positive adjustments of $161,000 for the non-cash effects of depreciation and provisions for inventory, deferred income taxes and stock compensation offset by the net cash outflow of $331,000 from changes in our operating assets and liabilities. The net cash outflow from changes in our operating assets and liabilities were mainly due to increases of $372,000 in receivables and $311,000 in inventory offset in part by a $351,000 increase in accounts payable and accrued liabilities. The increases in accounts receivable and inventory are mainly due to the 27% increase in 2010 sales over the 4th quarter of 2009. During this period, the accounts receivable collection period improved slightly. The inventory increase is also affected by the lead times of certain items to support the current level of shipments and backlog to meet customer delivery requirements. The main item accounting for the net increase in accrued liabilities was a net increase in employee compensation and benefits. The increase in accounts payable is primarily due to the timing of inventory and equipment purchases.

Capital expenditures during the three months ended April 4, 2010 amounted to $172,000.

We believe that based on our current working capital and the expected cash flow from operations, our resources are sufficient to meet our financial needs and to fund our capital expenditures for the projected levels of business during the next twelve months.

Off-Balance Sheet Arrangements

We do 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, equipment, and production supplies based on projected requirements. At April 4, 2010, we had outstanding purchase commitments totaling approximately $1,493,000, all of which are expected to be fulfilled in 2010. At April 4, 2010, we had no contractual obligations for capital leases, no material contractual obligation for operating leases and no long-term debt.

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Results of Operations for the Three Months Ended April 4, 2010 Compared to the Three Months Ended March 31, 2009

During the three months ended April 4, 2010, net sales increased $985,000 (38%) over the comparable period in 2009. All product lines experienced sales increases resulting primarily from an increase in the overall number of units sold. The sales increase was mainly attributable to both a higher backlog level at the beginning of 2010 compared to 2009 and higher bookings in the 2010 compared to 2009. The order backlog at the beginning of the 2010 was $2,023,000 or $357,000 higher than the backlog at the beginning of 2009. Bookings during 2010 were $1,291,000 (52%) higher than in 2009. Our backlog amounted to $2,218,000 at April 4, 2010 versus $1,601,000 at March 29, 2009. & #160;During most of 2009 the global economic factors adversely impacted our bookings, revenue and operating performance. Our bookings began to improve in the 4th quarter of 2009 and have continued to improve into the current quarter.

During the three months ended April 4, 2010, gross profit as a percentage of sales was 39% compared to 33% in the comparable 2009 period. The favorable effect of spreading the fixed overhead costs over the higher sales volume offset in part by an increase in the raw material percentage was the main reason for the increase in the gross profit percentage. During the current period, raw material costs as a percentage of sales were about 3 percentage points higher than in the 2009 period mainly due to changes in the product mix of sales.

Selling and advertising expenses increased $101,000 (25%) during the three months ended April 4, 2010 over the comparable period in 2009. Increases of $42,000 in employee compensation and benefits, $41,000 in commission expense to outside sales representatives, and $13,000 in advertising expenses were the main reasons for the higher expense. Expenses related to the microwave product line accounted for about $64,000 of the increase. .

General and administrative expenses increased $14,000 (4%) during the three months ended April 4, 2010 over the comparable 2009 period mainly as a result of higher employee compensation and benefits.

During the three months ended April 4, 2010, research and development expenses increased $181,000 over the $147,000 recorded in the comparable 2009 period. Increases of $103,000 in employee compensation and benefits and $48,000 operating supplies were the main reasons for the higher expense. Expenses related to the microwave product line accounted for about $140,000 of the increase. During the 4th quarter of 2009, the Company decided to expand its product offering with the formation of a Microwave Product line that will focus on microwave components and modules.

Interest income amounted to $4,000 during the three months ended April 4, 2010 compared to $10,000 in the 2009 corresponding period as a result of the effect of interest rates being approximately 1.2 percentage points lower during the 2010 period.

The estimated annual combined federal and state income tax rate for 2010 is 49% compared to 64% in 2009. The rates differ from the expected combined rate of 40% mainly due to the estimated taxable income level and the effects of nondeductible stock option and meals and entertainment expenses.

For the three months ended April 4, 2010, we reported an operating profit of $182,000 compared to an operating loss of $54,000 in 2009. The $236,000 improvement in operating profit results from a $532,000 increase in gross profit partially offset by a $296,000 increase in operating expenses. The higher gross profit was primarily due to the 38% increase in sales. $204,000 of the increase in operating expenses relates to costs incurred in the developing and marketing of the Company’s new microwave product line. As a result, we reported pre-tax earnings of $186,000 during the 2010 period compared to a pre-tax loss of $44,000 in comparable 2009 period. For the three months ended April 4, 20010, we reported net earnings of $95,000 versus a net loss of $16,000 in 2009.

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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 our current views and assumptions and involve risks and uncertainties that include, but not limited to:

·	our results for 2010 may be negatively impacted by the current global economic conditions and uncertainties,

·	our ability to develop, market and manufacture new innovative products competitively,

·	the fluctuations in product demand of the telecommunications industry,

·	our ability, including that of our suppliers to produce and deliver materials and products competitively,

·	a significant portion of our revenues is derived from sales to a few customers and the loss of one or more of our significant customers could have an adverse impact on our operating results and financial condition,

·	a significant portion of our revenue is derived from products manufactured by one supplier and a significant change in the supplier’s manufacturing capability or in our relationship with this supplier could have an adverse impact on our operating results and financial condition,

our operating results and financial condition could be negatively affected if after receiving design wins from OEMs, which in turn outsource the manufacture of their products to electronics manufacturing services ("EMS") companies, we fail to negotiate terms and successfully obtain orders from the EMS companies directly, and

·	compliance with changing corporate governance and public disclosure regulations may result in additional expenses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our 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 April 4, 2010, and assuming the balance was totally invested in money market instruments for the full year, a hypothetical 1% point increase or decrease in interest rates would result in an approximate $37,900 increase or decrease in interest income.

We purchase certain inventory from and sell 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 we purchase inventory or sell product could make the U.S. dollar equivalent of such transactions more or less favorable to us and the other involved parties.

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Item 4T. Controls and Procedures

Evaluation of disclosure controls and procedures.

We carried out an evaluation, under the supervision and with our management, including our President and Chief Executive Officer and our Company’s Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the President and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of April 4, 2010.

Changes in internal control.

Our evaluation did not identify any change in our internal controls over financial reporting that occurred during the quarter ended April 4, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item1A. Risk Factors

Information regarding risk factors are set forth under the caption “Forward-Looking Statements” in Part I, Item 2 of this Form 10-Q and in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2009. There have been no material changes from the risk factors previously disclosed in the Company’s 2009 Annual Report on Form 10-K.

Item 6. Exhibits

10.1

Key Employee Bonus Plan for 2010. Filed herewith

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.

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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: May 14, 2010	/s/ Michael J. Ferrantino, Jr.

	Michael J. Ferrantino, Jr.
	President and Chief Executive Officer


Date: May 14, 2010	/s/ Michael J. Kroll

	Michael J. Kroll
	Vice President, Treasurer and Chief Financial Officer

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EX-10.1 2 a6289313ex10-1.htm EXHIBIT 10.1 a6289313ex10-1.htm

Exhibit 10.1

Valpey-Fisher Corporation Key Employee Bonus Plan For

Fiscal Year 2010

Purpose of Plan

To provide an incentive to those employees who have a major impact on the success, growth and profitability of the company.

Eligibility

Must be a full time employee and be in continued employment of the Company for the entire fiscal year, unless a waiver of this provision is approved in advance of hiring by the Compensation Committee. In the event the Company is sold before the end of the year, the bonuses earned through the sale date would be prorated.

Participants

The plan participants will include the CEO and the Management Staff.

Bonus Pool

The 2010 bonus pool is based on achieving certain adjusted operating profit amounts listed below. Adjusted operating profit is defined as operating profit before the bonus amount and excluding the effects of SFAS 123R and other income or expense amounts determined by the Compensation Committee.

	Adjusted Operating Profit		Cumulative Bonus Amount

	224,000		100,000
	500,000		150,000
	750,000		200,000
	1,000,000		275,000
	1,250,000		325,000
	1,500,000		375,000
	1,750,000 2,000,000		425,000 475,000
	2,500,000		575,000

For adjusted operating profit amounts between the listed amounts, the bonus amount will be prorated.

For adjusted operating profit in excess of $2,500,000 the Board of Directors will determine the bonus amount.

The bonus amount may include a profit sharing contribution for the year ended December 31, 2010 as determined by the Board of Directors and would be limited to a maximum of 10% of the total bonus payout.

Bonus Payout

Each plan participant will have up to four individual objectives based on their particular area of responsibilities. An individual objective can make up to 50% of the individual’s bonus. The CEO will decide the weights of the individual objective as part of the total payout. In the case of the CEO the Compensation Committee will decide.

A plan participant’s bonus amount will range from 0% to 100% of base salary.

The Compensation Committee will recommend the bonus payout amount for the CEO to the Board of Directors for its approval. The CEO will recommend the distribution payout for the remaining participants, which will then be reviewed by the Compensation Committee before making recommendations to the Board of Directors for its approval.

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EX-31.1 3 a6289313ex31-1.htm EXHIBIT 31.1 a6289313ex31-1.htm

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Ferrantino, Jr. certify that:

1. I have reviewed this quarterly 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptable accounting principles;

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: May 14, 2010		/s/ Michael J. Ferrantino, Jr.
		Michael J. Ferrantino, Jr.
		President and Chief Executive Officer

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EX-31.2 4 a6289313ex31-2.htm EXHIBIT 31.2 a6289313ex31-2.htm

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 quarterly report on Form 10-Q of Valpey-Fisher Corporation;

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: May 14, 2010	/s/ Michael J. Kroll
	Michael J. Kroll
	Vice President, Treasurer and Chief Financial Officer

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EX-32.1 5 a6289313ex32-1.htm EXHIBIT 32.1 a6289313ex32-1.htm

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 April 4, 2010 (“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: May 14, 2010	/s/ Michael J. Ferrantino, Jr.
	Michael J. Ferrantino, Jr.
	President and Chief Executive Officer

Date: May 14, 2010	/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.

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