| REPORT TO STOCKHOLDERS | ||
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Nine-Month Sales Exceed Last Full-Year Sales; |
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Results for the third quarter and the first nine months of 1997, reflect increases in earnings on record nine-month sales volume with its backlog continuing to grow. Third quarter 1997 fully diluted net income per share was $.21 compared to the third quarter net loss of $.73 per share after the restructuring charge in the prior year. Third quarter sales of $4,984,000 increased $1,986,000 or 66% over the third quarter sales of the prior year of $2,998,000. Net income of $350,000 for the third quarter of 1997 compares to the net loss of $1,139,000 after the restructuring charge in 1996. For the first nine months of 1997, fully diluted net income per share increased to $.60 compared to the $.36 per share loss in the prior year. Nine-month sales of $14,245,000 increased $4,134,000 or 41% over the prior year nine-month sales of $10,111,000. Net income for the first nine months of 1997 was $1,006,000 compared to the net loss of $574,000 after the restructuring charge reported in 1996.
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The fully diluted weighted average number of common shares outstanding for the first nine months of 1997 increased by 71,000 compared to that of the prior year. This increase was due mainly to the "in-the-money" value of Company-issued stock options, which resulted from higher Company stock prices during the quarter, and contributed to the inclusion of an additional 108,000 common equivalent shares produced from the assumed conversion of the stock options. Common stock repurchases during 1996 partially offset this increase. The increase in the number of weighted shares outstanding at the end of the third quarter impacted nine-month primary net income per share of $.63 by $.03 per share, causing nine-month fully diluted net income per share of $.60 to be reported.
Comparison of the $10.1 million backlog at the end of the third quarter of 1997 to that of the third quarter of the prior year of $6.8 million reflects a 48% increase in backlog, and is 23% above year-end 1996. Orders are expected to continue to be strong for Merrimac products in the fourth quarter. Merrimac Industries has recently entered into a $7 million revolving credit and term loan agreement with Summit Bank of Hackensack, NJ Up to $2.5 million of borrowings may be used for capital expenditures under the term loan. The full line of credit facility is available for working capital and general corporate purposes. Our Team has achieved a sales milestone by exceeding the last full year’s sales by almost $100,000 within this year’s first nine months. Our co-workers are meeting the demanding challenge of achieving record sales levels while implementing infrastructure changes. This extraordinary effort is part of our ongoing commitment to put our customers first. We are pleased with the third quarter booking level, which outpaced sales, thus overcoming the traditional softness during this time of year.
November 7, 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 | ||
| September 27 1997 |
September 28 1996 |
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| Net sales | $4,983,793xxx | *$2,997,905)xxx |
| Gross profit | 2,249,174xxx | 1,007,343)xxx |
| Restructuring charge | 1,526,709)xxx | |
| Income (loss) before income taxes | 564,015xxx | (1,843,257)xxx |
| Provision (credit) for income taxes | 241,000xxx | (704,000)xxx |
| Net income (loss) | $350,015xxx | *$(1,139,257)xxx |
| Net income (loss) per common share-fully diluted | $.21xxx | *$(.73)xxx |
| Weighted average number of shares outstanding | 1,672,993xxx | 1,564,609)xxx |
| Net income (loss) per common share-primary | $.21xxx | *$(.73)xxx |
| *The restructuring charge (adjusted from those amounts originally reported last year) was $916,000 net of related tax benefits or $.57 per share in 1996. | ||
SUMMARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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| Nine Months Ended | ||
| September 27 1997 |
September 28 1996 |
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| Net sales | $14,245,236xxx | $10,110,778)xxx |
| Gross profit | 6,534,427xxx | 4,322,943)xxx |
| Restructuring charge | 1,526,709)xxx | |
| Income (loss) before income taxes | 1,610,861xxx | (984,005)xxx |
| Provision (credit) for income taxes | 605,000xxx | (410,000)xxx |
| Net income (loss) | $1,005,861xxx | *$(574,005)xxx |
| Net income (loss) per common share-fully diluted | $.60xxx | *$(.36)xxx |
| Weighted average number of shares outstanding | 1,665,869xxx | 1,595,455)xxx |
| Net income (loss) per common share-primary | $.63xxx | *$(.36)xxx |
| *The restructuring charge (adjusted from those amounts originally reported last year) was $916,000 net of related tax benefits or $.57 per share in 1996. | ||
SUMMARY CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| September 27, 1997 and September 28, 1996 | ||
| xx1997 | xx1996 | |
| ASSETS | ||
| Current assets: | ||
| xxxxxCash and cash equivalents | $00,974,390xxx | $01,386,744xxx |
| xxxxxAvailable-for-sale securities* | 1,336,014xxx | 1,016,625xxx |
| xxxxxAccounts receivable | 3,426,988xxx | 1,764,444xxx |
| xxxxxInventories | 4,290,007xxx | 3,895,181xxx |
| xxxxxOther current assets | 1,176,123xxx | 1,384,910xxx |
| Total current assets | 11,203,522xxx | 9,447,904xxx |
| Property, plant and equipment, net | 3,778,351xxx | 3,282,803xxx |
| Other assets | 170,095xxx | 91,851xxx |
| Total Assets | $15,151,968xxx ==========xxx |
$12,822,558xxx =========xxx |
SUMMARY CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| September 27, 1997 and September 28, 1996 | ||
| xx1997 | xx1996 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Liabilities: | ||
| xxxxxTotal current liabilities | $02,618,979xxx | $01,492,306xxx |
| xxxxxOther liabilities | 355,629xxx | 223,000xxx |
| xxxxxDeferred tax liabilities | _______xxx | 154,500xxx |
| xxxxxTotal liabilities | 2,974,608xxx | 1,869,806xxx |
| Stockholders' equity: | ||
| xxxxxCommon stock | 1,319,249xxx | 1,284,878xxx |
| xxxxxAdditional paid-in capital | 9,446,399xxx | 8,860,261xxx |
| xxxxxRetained earnings | 10,598,534xxx | 9,925,060xxx |
| xxxxxUnrealized gain (loss) on securities* | 40,243xxx | _______xxx |
| 21,404,425xxx | 20,070,199xxx | |
| xxxxxLess treasury stock, at cost | 9,227,065xxx | 9,117,447xxx |
| xxxxxTotal stockholders' equity | 12,177,360xxx | 10,952,752xxx |
| Total Liabilities and Stockholders' Equity | $15,151,968xxx ==========xxx |
$12,822,558xxx =========xxx |
| * 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© Copyright 1997 Merrimac Industries, Inc.
