| REPORT TO STOCKHOLDERS | |
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Earnings Increase On Record Sales-Backlog Up |
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| Results for the second quarter and six months of 1997 reflect solid increases in earnings on record sales volume and a rising backlog.
Second quarter 1997 net income per share increased to $.24 per share or 20% compared to the second quarter of the prior year. Net income increased 21% to $378,000 for the second quarter of 1997 compared to 1996, resulting from sales of $4,986,000, which increased 27% over the second quarter of the prior year of $3,926,000. For the first six months of 1997, net income per share increased to $.42 per share or 20% compared to the prior year. Net income increased 16% to $656,000 compared to 1996, resulting from sales of $9,261,000, which increased 30% over prior year six-month sales of $7,113,000. The number of weighted average common shares outstanding was reduced by 38,000 shares primarily from common stock repurchases during 1996, partly offset by the dilutive effect of stock options this year. Comparison of the backlog for the end of the second quarter of 1997 of $9.7 million to that of the second quarter of the prior year of $6.6 million reflects a 47% increase in backlog, and is 18% above year-end 1996. Orders are expected to continue to be strong for Merrimac products in the third quarter. |
Record sales volume for the quarter and six months reflects the outstanding accomplishments of the Merrimac Team effort. Our process improvement initiatives, customer service focus and reduction of total-cycle-time to market are becoming effective competitive weapons. Net income increased even though we funded important infrastructure changes and product development. In the last six months, seven new products have been developed and commercialized or are in the process of being commercialized.
Trailing nine-month sales of $13.3 million approaches the annual sales levels for each of the past four fiscal years. Our current high rate of shipments is exceeded by the sales order booking rate by 20%. There are many opportunities and challenges to optimize as we move towards our Goal of Profitable Growth. Reflecting upon the transfer of responsibilities which has taken place, we recognize that as a member of the Board of Directors for over a decade and Chairman for the past three years, Charles F. Huber II has provided guidance and leadership for which we are deeply grateful. He has helped position us to grow and has successfully led us through a difficult and challenging period of time. Charlie...Thank You!
August 6, 1997 |
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Note: The above statements include forward-looking statements based on current management expectations and are subject to risks and uncertainties. Factors that could cause future results to differ from these expectations include general economic and industry conditions, competitive products and pricing pressures, risks relating to governmental regulatory actions in communications and defense programs, and inventory risks due to technological innovation. Additional factors to which the Company’s performance is subject are described in the Company’s reports filed with the Securities and Exchange Commission. |
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SUMMARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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| Quarter Ended | ||
| June 28, 1997 | June 28, 1996 | |
| Net sales | $4,986,288 | $3,925,528 |
| Gross profit | x2,385,205 | x1,767,288 |
| Income before income taxes | xx,609,100 | xx,477,949 |
| Provision for income taxes | xx,231,000 | xx,165,000 |
| Net income | xx,378,100 | xx,312,949 |
| Net income per common share | xx,xxx$.24 | xx,xxx,$.20 |
| Weighted average number of shares outstanding | x1,579,558 | x1,587,133 |
| Six Months Ended | ||
| June 28, 1997 | June 29, 1996 | |
| Net sales | $9,261,443 | $7,112,873 |
| Gross profit | x4,285,253 | x3,315,600 |
| Income before income taxes | x1,046,846 | xx,859,252 |
| Provision for income taxes | xx,391,000 | xx,294,000 |
| Net income | xx,655,846 | xx,565,252 |
| Net income per common share | 00,000$.42 | 1,000,$.35 |
| Weighted average number of shares outstanding | x1,573,263 | x1,610,551 |
SUMMARY CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| June 28, 1997 and June 29, 1996 | ||
| ASSETS | 1997 | 1996 |
| Current assets: | ||
| xxxxxCash and cash equivalents | 0$1,078,166 | 0$1,971,374 |
| xxxxxAvailable-for-sale securities* | $01,302,635 | 001,259.384 |
| xxxxxAccounts receivable | $02,644,391 | 002,290,997 |
| xxxxxInventories | 004,475,188 | 004,657,947 |
| xxxxxOther current assets | 101,212,807 | 000,969,843 |
| Total current assets | $10,713,187 | 011,149,545 |
| Property, plant and equipment, net | $13,819,553 | 003,024,331 |
| Other Assets | $00,174,285 | 000,311,000 |
| Total Assets | $14,707,025 ========== |
$14,484,876 ========= |
| * Unrealized loss on available-for-sale securities was incurred on investments in municipal bonds in 1996. | ||
SUMMARY CONSOLIDATED BALANCE SHEETS (Unaudited) concluded |
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| June 28, 1997 and June 29, 1996 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | 1997 | 1996 |
| Liabilities: | ||
| xxxxxCurrent liabilities | 0$2,691,939 | 0$1,646,731 |
| xxxxxOther liabilities | $00,312,391 | 00 |
| xxxxxDeferred tax liabilities | x________ | 001 154,500 |
| xxxxxTotal liabilities | 003,004,330 | 001,801,231 |
| Stockholders' equity: | 10 | |
| xxxxxCommon stock | $01,304,780 | $01,281,920 |
| xxxxxAdditional paid-in capital | $19,199,080 | 008,820,609 |
| xxxxxRetained earnings | $10,397,855 | $11,217,529 |
| xxxxxUnrealized gain (loss) on securities* | $00,028,045 | 0000.(18,981) |
| $20,929,760 | $21,301,077 | |
| xxxxxLess treasury stock, at cost | $09,227,065 | $18,617,432 |
| xxxxxTotal stockholders' equity | $11,702,695 | $12,683,645 |
| Total Liabilities and Stockholders' Equity | $14,707,025 ========== |
$14,484,876 ========= |
| * Unrealized loss on available-for-sale securities was incurred on investments in municipal bonds in 1996. | ||
CONTACTS
Mason N. Carter, Chairman and CEO,
Tel: 973.575.1300, Ext. 1202; Fax: 973.882.5989; E-Mail: mnc@merrimacind.com
