DELAWARE
|
22-1642321
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of
the
Exchange Act. (Check one):
|
|||
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer x
|
Page
|
|||
PART
I. FINANCIAL INFORMATION
|
|||
Item
1.
|
Financial
Statements
|
||
Consolidated
Statements of Operations and Comprehensive Income
|
|||
for
the Quarters and Six Months Ended June 30, 2007
|
|||
and
July 1, 2006 (Unaudited)
|
1
|
||
Consolidated
Balance Sheets-June 30, 2007 (Unaudited) and
|
|||
December
30, 2006
|
2
|
||
Consolidated
Statement of Stockholders’ Equity as of
|
|||
June
30, 2007 (Unaudited)
|
3
|
||
Consolidated
Statements of Cash Flows for the Six Months
|
|||
Ended
June 30, 2007 and July 1, 2006 (Unaudited)
|
4
|
||
Notes
to Consolidated Financial Statements
|
5
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition
|
||
and
Results of Operations
|
15
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
25
|
|
Item
4.
|
Controls
and Procedures
|
25
|
|
PART
II. OTHER INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
25
|
|
Item 1A. |
Risk
Factors
|
25
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
26
|
|
Item
5.
|
Other
Matters
|
26
|
|
Item
6.
|
Exhibits
|
27
|
|
Signatures |
28
|
Quarters
Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
July
1,
|
|
June
30,
|
|
July
1,
|
|
||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
OPERATIONS
|
|||||||||||||
Net
sales
|
$
|
6,225,005
|
$
|
8,250,886
|
$
|
11,649,284
|
$
|
14,481,589
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
3,842,532
|
4,540,285
|
7,485,151
|
8,370,051
|
|||||||||
Selling,
general and administrative
|
2,284,375
|
2,645,035
|
4,775,226
|
5,130,929
|
|||||||||
Research
and development
|
360,571
|
516,096
|
871,567
|
888,044
|
|||||||||
Goodwill
impairment charge
|
2,630,000
|
-
|
2,630,000
|
-
|
|||||||||
9,117,478
|
7,701,416
|
15,761,944
|
14,389,024
|
||||||||||
Operating
income (loss)
|
(2,892,473
|
)
|
549,470
|
(4,112,660
|
)
|
92,565
|
|||||||
Interest
and other expense, net
|
(70,450
|
)
|
(32,977
|
)
|
(114,065
|
)
|
(51,681
|
)
|
|||||
Income
(loss) before income taxes
|
(2,962,923
|
)
|
516,493
|
(4,226,725
|
)
|
40,884
|
|||||||
Provision
(benefit) for income taxes
|
506,000
|
(13,000
|
)
|
506,000
|
(48,000
|
)
|
|||||||
Net
income (loss)
|
$
|
(3,468,923
|
)
|
$
|
529,493
|
$
|
(4,732,725
|
)
|
$
|
88,884
|
|||
Net
income (loss) per common share-basic
|
$
|
(1.19
|
)
|
$
|
.17
|
$
|
(1.58
|
)
|
$
|
.03
|
|||
Net
income (loss) per common share-diluted
|
$
|
(1.19
|
)
|
$
|
.17
|
$
|
(1.58
|
)
|
$
|
.03
|
|||
Weighted
average number of shares outstanding:
|
|||||||||||||
Basic
|
2,910,711
|
3,143,725
|
3,003,513
|
3,146,444
|
|||||||||
Diluted
|
2,910,711
|
3,183,322
|
3,003,513
|
3,166,243
|
|||||||||
COMPREHENSIVE
INCOME (LOSS)
|
|||||||||||||
Net
income (loss)
|
$
|
(3,468,923
|
)
|
$
|
529,493
|
$
|
(4,732,725
|
)
|
$
|
88,884
|
|||
Comprehensive
income:
|
|||||||||||||
Foreign
currency translation adjustment
|
307,131
|
327,556
|
368,514
|
318,847
|
|||||||||
Comprehensive
income (loss)
|
$
|
(3,161,792
|
)
|
$
|
857,049
|
$
|
(4,364,211
|
)
|
$
|
407,731
|
June
30, 2007
|
|
December
30, 2006
|
|
||||
|
(UNAUDITED)
|
|
(Note
1)
|
||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
2,817,408
|
$
|
5,961,537
|
|||
Accounts
receivable, net
|
5,230,332
|
5,851,617
|
|||||
Income
tax refunds receivable
|
103,000
|
99,000
|
|||||
Inventories,
net
|
4,783,787
|
3,917,473
|
|||||
Other
current assets
|
726,555
|
881,699
|
|||||
Deferred
tax assets
|
-
|
10,000
|
|||||
Total
current assets
|
13,661,082
|
16,721,326
|
|||||
Property,
plant and equipment
|
41,235,675
|
40,084,105
|
|||||
Less
accumulated depreciation and amortization
|
28,497,706
|
27,098,740
|
|||||
Property,
plant and equipment, net
|
12,737,969
|
12,985,365
|
|||||
Other
assets
|
538,654
|
491,596
|
|||||
Deferred
tax assets
|
100,000
|
552,000
|
|||||
Goodwill
|
1,062,534
|
3,503,219
|
|||||
Total
Assets
|
$
|
28,100,239
|
$
|
34,253,506
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of long-term debt
|
$
|
620,655
|
$
|
648,524
|
|||
Accounts
payable
|
1,438,141
|
994,221
|
|||||
Accrued
liabilities
|
1,322,755
|
1,420,322
|
|||||
Customer
deposits
|
305,783
|
203,783
|
|||||
Deferred
income taxes
|
100,000
|
100,000
|
|||||
Total
current liabilities
|
3,787,334
|
3,366,850
|
|||||
Long-term
debt, net of current portion
|
4,277,279
|
4,564,040
|
|||||
Deferred
liabilities
|
49,569
|
37,839
|
|||||
Total
liabilities
|
8,114,182
|
7,968,729
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders'
equity:
|
|||||||
Preferred
stock, par value $.01 per share:
|
|||||||
Authorized:
1,000,000 shares
|
|||||||
No
shares issued
|
|||||||
Common
stock, par value $.01 per share:
|
|||||||
20,000,000
shares authorized; 3,278,940 and 3,265,638 shares issued;
|
|||||||
and
2,916,035 and 3,141,433 shares outstanding, respectively
|
32,789
|
32,656
|
|||||
Additional
paid-in capital
|
19,450,788
|
19,237,130
|
|||||
Retained
earnings
|
1,867,092
|
6,599,817
|
|||||
Accumulated
other comprehensive income
|
1,757,552
|
1,389,038
|
|||||
23,108,221
|
27,258,641
|
||||||
Less
treasury stock, at cost - 362,905 shares at June 30, 2007
and
|
|||||||
124,205
shares at December 30, 2006
|
(3,122,164
|
)
|
(973,864
|
)
|
|||
Total
stockholders' equity
|
19,986,057
|
26,284,777
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
28,100,239
|
$
|
34,253,506
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
Additional
|
|
|
|
Other
|
|
|
|
|
|
|
|
||||||||
|
|
Common
Stock
|
|
Paid-in
|
|
Retained
|
|
Comprehensive
|
|
Treasury
|
|
Stock
|
|
|
|
||||||||||
|
|
Shares
|
|
Amount
|
|
Capital(A)
|
|
Earnings
|
|
Income
|
|
Shares
|
|
Amount
|
|
Total
|
|||||||||
Balance,
December 30, 2006
|
3,265,638
|
$
|
32,656
|
$
|
19,237,130
|
$
|
6,599,817
|
$
|
1,389,038
|
124,205
|
$
|
(973,864
|
)
|
26,284,777
|
|||||||||||
Net
loss
|
(4,732,725
|
)
|
(4,732,725
|
)
|
|||||||||||||||||||||
Share-based
compensation
|
132,466
|
132,466
|
|||||||||||||||||||||||
Stock
Purchase Plan sales
|
1,002
|
10
|
7,485
|
7,495
|
|||||||||||||||||||||
Exercise
of stock options
|
9,300
|
93
|
73,707
|
73,800
|
|||||||||||||||||||||
Vesting
of restricted stock.
|
3,000
|
30
|
30
|
||||||||||||||||||||||
Repurchase
of common stock
|
|||||||||||||||||||||||||
For
the treasury
|
238,700
|
(2,148,300
|
)
|
(2,148,300
|
)
|
||||||||||||||||||||
Foreign
currency translation
|
368,514
|
368,514
|
|||||||||||||||||||||||
Balance,
June 30, 2007
|
3,278,940
|
$
|
32,789
|
$
|
19,450,788
|
$
|
1,867,092
|
$
|
1,757,552
|
362,905
|
$
|
(3,122,164
|
)
|
$
|
19,986,057
|
Six
Months Ended
|
|||||||
June
30, 2007
|
July
1, 2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(4,732,725
|
)
|
$
|
88,884
|
||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
1,291,531
|
1,317,701
|
|||||
Amortization
of deferred financing costs
|
14,716
|
24,960
|
|||||
Impairment
of goodwill
|
2,630,000
|
-
|
|||||
Deferred
income taxes
|
506,000
|
-
|
|||||
Share-based
compensation
|
132,496
|
82,000
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
685,580
|
(174,158
|
)
|
||||
Income
tax refunds receivable
|
-
|
(15,228
|
)
|
||||
Inventories
|
(845,896
|
)
|
(286,625
|
)
|
|||
Other
current assets
|
166,434
|
77,199
|
|||||
Other
assets
|
(61,774
|
)
|
(21,511
|
)
|
|||
Accounts
payable
|
399,742
|
(95,417
|
)
|
||||
Accrued
liabilities
|
(122,811
|
)
|
96,469
|
||||
Customer
deposits
|
102,000
|
(737,176
|
)
|
||||
Deferred
liabilities
|
11,730
|
8,490
|
|||||
Net
cash provided by operating activities
|
177,023
|
365,588
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of capital assets
|
(927,061
|
)
|
(979,366
|
)
|
|||
Net
cash used in investing activities
|
(927,061
|
)
|
(979,366
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Borrowings
from revolving lease line
|
-
|
159,988
|
|||||
Repurchase
of common stock for the treasury
|
(2,148,300
|
)
|
-
|
||||
Repayment
of borrowings
|
(343,496
|
)
|
(464,263
|
)
|
|||
Proceeds
from the exercise of stock options
|
73,800
|
13,600
|
|||||
Proceeds
from Stock Purchase Plan sales
|
7,495
|
172,763
|
|||||
Net
cash used in financing activities
|
(2,410,501
|
)
|
(117,912
|
)
|
|||
Effect
of exchange rate changes
|
16,410
|
33,122
|
|||||
Net
decrease in cash and cash equivalents
|
(3,144,129
|
)
|
(698,568
|
)
|
|||
Cash
and cash equivalents at beginning of year
|
5,961,537
|
4,081,330
|
|||||
Cash
and cash equivalents at end of period
|
$
|
2,817,408
|
$
|
3,382,762
|
|||
Supplemental
disclosures of cash flow information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
on credit facilities
|
$
|
205,558
|
$
|
144,331
|
|||
Non
cash activities:
|
|||||||
Repurchase
of common stock for treasury
|
$
|
-
|
$
|
399,998
|
|||
Loan
to officer-stockholder repaid through repurchase of common stock
for
treasury
|
$
|
-
|
$
|
400,000
|
Quarters
Ended
|
Six
Months Ended
|
||||||||||||
June
30, 2007
|
|
July
1, 2006
|
|
June
30, 2007
|
|
July
1, 2006
|
|||||||
|
|
|
|
||||||||||
Cost
of sales
|
$
|
21,000
|
$
|
4,000
|
$
|
29,000
|
$
|
15,000
|
|||||
Selling,
general and administrative
|
60,000
|
34,000
|
103,000
|
67,000
|
|||||||||
Total
share-based compensation
|
$
|
81,000
|
$
|
38,000
|
$
|
132,000
|
$
|
82,000
|
2007
|
|
2006
|
|||||
Expected
option life (years)
|
3.0
|
3.0
|
|||||
Expected
volatility
|
22.00
|
%
|
30.00
|
%
|
|||
Risk-free
interest rate
|
4.93
|
%
|
5.15
|
%
|
|||
Expected
dividend yield
|
0.00
|
%
|
0.00
|
%
|
|||
Fair
value per share of options granted
|
$
|
2.03
|
$
|
2.57
|
|
|
|
|
Weighted-
|
|
|
|
||||||
|
|
Weighted-
|
|
|
|
Average
|
|
|
|
||||
|
|
Average
|
|
|
|
Remaining
|
|
Aggregate
|
|
||||
|
|
Exercise
|
|
|
|
Contractual
|
|
Intrinsic
|
|
||||
|
|
Price
|
|
Shares
|
|
Term
|
|
Value
|
|||||
Outstanding
at December 30, 2006
|
$
|
9.55
|
407,092
|
||||||||||
Granted
|
9.34
|
247,200
|
|||||||||||
Exercised
|
7.94
|
(9,300
|
)
|
||||||||||
Cancelled
|
11.02
|
(19,550
|
)
|
||||||||||
Outstanding
at June 30, 2007
|
$
|
9.48
|
625,442
|
6.9
|
$
|
576,000
|
|||||||
Exercisable
at June 30, 2007
|
$
|
9.09
|
320,242
|
4.3
|
$
|
429,000
|
Weighted-
|
|
|
|
||||
|
|
Average
|
|
|
|
||
|
|
Grant-Day
|
|
|
|
||
|
|
Fair
Value
|
|
Shares
|
|||
Outstanding
at December 30, 2006
|
$
|
9.52
|
9,000
|
||||
Granted
|
9.78
|
10,500
|
|||||
Vested
|
9.52
|
(3,000
|
)
|
||||
Outstanding
at June 30, 2007
|
$
|
9.69
|
16,500
|
2007
|
|
2006
|
|||||
Original
balance
|
$
|
3,179,341
|
$
|
3,179,341
|
|||
Accumulated
amortization through 2001
|
(434,603
|
)
|
(434,603
|
)
|
|||
Impairment
charge, current year
|
(2,630,000
|
)
|
-
|
||||
Accumulated
foreign currency adjustment through
|
|||||||
prior
year
|
758,481
|
756,455
|
|||||
Foreign
currency adjustment, current year
|
189,315
|
2,026
|
|||||
Balance,
end of period
|
$
|
1,062,534
|
$
|
3,503,219
|
June
30, 2007
|
December
30, 2006
|
||||||
Finished
goods
|
$
|
225,028
|
$
|
345,519
|
|||
Work
in process
|
2,406,415
|
1,634,475
|
|||||
Raw
materials and purchased parts
|
2,152,344
|
1,937,479
|
|||||
Total
|
$
|
4,783,787
|
$
|
3,917,473
|
2007
|
|
2006
|
|||||
North
Fork Bank (A):
|
|||||||
Revolving
line of credit, 2.00% above LIBOR or 0.50% below prime
|
$
|
-
|
$
|
-
|
|||
Term
loan, due October 1, 2011, 2.25% above LIBOR or 0.50%
|
|||||||
below
prime
|
1,700,000
|
1,900,000
|
|||||
Mortgage
loan, due October 1, 2016, 2.25% above LIBOR or 0.50%
|
|||||||
below
prime
|
2,887,500
|
2,962,500
|
Capital
leases, interest 7.35%, due March 2007
|
-
|
15,389
|
|||||
Capital
leases, interest 7.50%, due May 2007
|
-
|
20,590
|
|||||
Capital
leases, interest 5.80%, due January 2010
|
168,686
|
173,170
|
|||||
Capital
leases, interest 6.60%, due March 2011
|
141,748
|
140,915
|
|||||
4,897,934
|
5,212,564
|
||||||
Less
current portion
|
620,655
|
648,524
|
|||||
Long-term
portion
|
$
|
4,277,279
|
$
|
4,564,040
|
(A)
|
On
October 18, 2006, the Company entered into a financing agreement
with
North Fork Bank which consists of a two-year $5,000,000 revolving
line of
credit, a five-year $2,000,000 machinery and equipment term loan
due
October 1, 2011 (“Term Loan”) and a ten-year $3,000,000 real estate term
loan due October 1, 2016 (“Mortgage Loan”). This financing agreement
replaced the prior financing agreement with CIT. Completion of the
financing agreement resulted in additional cash loan proceeds of
approximately $2,900,000 plus the release of previously restricted
cash of
$1,500,000. The revolving line of credit is subject to an availability
limit under a borrowing base calculation (85% of eligible accounts
receivable plus up to 50% of eligible raw materials inventory plus
up to
25% of eligible electronic components, with an inventory advance
sublimit
not to exceed $1,500,000, as defined in the financing agreement).
The
revolving line of credit expires October 18, 2008. At June 30, 2007,
the
Company had available borrowing capacity under its revolving line
of
credit of $3,100,000. The revolving line of credit bears interest
at the
prime rate less 0.50% (currently 7.75%) or LIBOR plus 2.00%. The
principal
amount of the Term Loan is payable in 59 equal monthly installments
of
$33,333 and one final payment of the remaining principal balance
of
$33,333. The Term Loan bears interest at the prime rate less 0.50%
(currently 7.75%) or LIBOR plus 2.25%. The principal amount of the
Mortgage Loan is payable in 119 equal monthly installments of $12,500
and
one final payment of the remaining principal balance of $1,512,500.
The
Mortgage Loan bears interest at the prime rate less 0.50% (currently
7.75%) or LIBOR plus 2.25%. At June 30, 2007, the Company, under
the terms
of its agreement with North Fork Bank, elected to convert $1,700,000
of
the Term Loan and $2,875,000 of the Mortgage Loan from their prime
rate
base to LIBOR-based interest rate loans for one month at an interest
rate
of 7.57%, which expired July 18, 2007. The revolving line of credit,
the
Term Loan and the Mortgage Loan are secured by substantially all
assets
located within the United States and the pledge of 65% of the stock
of the
Company's subsidiaries located in Costa Rica and Canada. The provisions
of
the financing agreement require the Company to maintain certain financial
covenants.
|
(B)
|
FMI
has an amended formula-based secured revolving credit agreement in
place
with The Bank of
Nova Scotia to borrow up to $250,000 (Canadian) (approximately $235,000
US) at the prime rate
plus 2 percent. Such agreement is guaranteed by Merrimac. No borrowings
were outstanding
under this agreement at June 30,
2007.
|
Quarters
Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
July
1,
|
|
June
30,
|
|
July
1,
|
|
||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||
|
|
(In
thousands of dollars)
|
|
(In
thousands of dollars)
|
|||||||||
Industry
segments:
|
|||||||||||||
Sales
to unaffiliated customers:
|
|||||||||||||
Electronic
components and subsystems
|
$
|
5,371
|
$
|
7,102
|
$
|
9,883
|
$
|
11,784
|
|||||
Microwave
micro-circuitry
|
895
|
1,180
|
1,821
|
2,826
|
|||||||||
Intersegment
sales
|
(41
|
)
|
(31
|
)
|
(55
|
)
|
(128
|
)
|
|||||
Consolidated
|
$
|
6,225
|
$
|
8,251
|
$
|
11,649
|
$
|
14,482
|
|||||
Income
before income taxes:
|
|||||||||||||
Operating
income (loss):
|
|||||||||||||
Electronic
components and subsystems
|
$
|
55
|
$
|
697
|
$
|
(949
|
)
|
$
|
70
|
||||
Microwave
micro-circuitry
|
(2,947
|
)
|
(148
|
)
|
(3,164
|
)
|
23
|
||||||
Interest
and other expense, net
|
(71
|
)
|
(33
|
)
|
(114
|
)
|
(52
|
)
|
|||||
Consolidated
|
$
|
(2,963
|
)
|
$
|
516
|
$
|
(4,227
|
)
|
$
|
41
|
|||
Depreciation
and amortization:
|
|||||||||||||
Electronic
components and subsystems
|
$
|
587
|
$
|
591
|
$
|
1,158
|
$
|
1,185
|
|||||
Microwave
micro-circuitry
|
70
|
64
|
134
|
133
|
|||||||||
Consolidated
|
$
|
657
|
$
|
655
|
$
|
1,292
|
$
|
1,318
|
|||||
Capital
expenditures:
|
|||||||||||||
Electronic
components and subsystems
|
$
|
355
|
$
|
418
|
$
|
756
|
$
|
956
|
|||||
Microwave
micro-circuitry
|
73
|
9
|
171
|
23
|
|||||||||
Consolidated
|
$
|
428
|
$
|
427
|
$
|
927
|
$
|
979
|
June
30,
|
|
July
1,
|
|
||||
|
|
2007
|
|
2006
|
|||
Identifiable
assets:
|
|||||||
Electronic
components and subsystems
|
$
|
21,881
|
$
|
23,740
|
|||
Microwave
micro-circuitry
|
3,570
|
7,007
|
|||||
Corporate
|
2,817
|
3,383
|
|||||
Intersegment
|
(168
|
)
|
(60
|
)
|
|||
Consolidated
|
$
|
28,100
|
$
|
34,070
|
|
Quarters
Ended
|
|
Six
Months Ended
|
|
|||||||||
|
|
June
30,
|
|
July
1,
|
|
June
30,
|
|
July
1,
|
|
||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
|
|
|
|
|
|||||||||
Net
income (loss) available to common stockholders
|
$
|
(3,468,923
|
)
|
$
|
529,493
|
$
|
(4,732,725
|
)
|
$
|
88,884
|
|||
|
|||||||||||||
Basic
net income per share
|
|||||||||||||
|
|||||||||||||
Weighted
average number of shares outstanding for
|
|||||||||||||
basic
net income per share-
|
|||||||||||||
Common
stock
|
2,910,711
|
3,143,725
|
3,003,513
|
3,146,444
|
|||||||||
|
|||||||||||||
Net
income per common share - basic
|
$
|
(1.19
|
)
|
$
|
.17
|
$
|
(1.58
|
)
|
$
|
.03
|
|||
|
|||||||||||||
Diluted
net income (loss) per share
|
|||||||||||||
|
|||||||||||||
Weighted
average number of shares outstanding for
|
|||||||||||||
diluted
net income (loss) per share:
|
|||||||||||||
Common
stock
|
2,910,711
|
3,143,725
|
3,003,513
|
3,146,444
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Stock
options (1)
|
-
|
38,559
|
-
|
19,279
|
|||||||||
Restricted
stock
|
-
|
1,038
|
-
|
520
|
|||||||||
|
|||||||||||||
Weighted
average number of shares outstanding for
|
|||||||||||||
diluted
net income (loss) per share
|
2,910,711
|
3,183,322
|
3,003,513
|
3,166,243
|
|||||||||
|
|||||||||||||
Net
income (loss) per common share - diluted
|
$
|
(1.19
|
)
|
$
|
.17
|
$
|
(1.58
|
)
|
$
|
.03
|
(1)
|
Represents
additional shares resulting from assumed conversion of stock options
less
shares purchased with the proceeds
therefrom.
|
Current
assets
|
$
|
1,187,000
|
||
Property,
plant and equipment, net
|
$
|
1,364,000
|
||
Goodwill
|
$
|
1,163,000
|
||
Current
liabilities
|
$
|
954,000
|
||
Long-term
debt
|
$
|
240,000
|
|
|
Quarters
Ended
|
|
||||||||||
|
|
June
30, 2007
|
|
July
1, 2006
|
|
||||||||
|
|
|
$
|
|
%
of sales
|
|
|
$
|
|
%
of sales
|
|||
Electronic
components
|
|||||||||||||
and
subsystems
|
$
|
5,371,000
|
86.3
|
%
|
$
|
7,102,000
|
86.1
|
%
|
|||||
Microwave
micro-circuitry(1)
|
895,000
|
14.4
|
%
|
1,180,000
|
14.3
|
%
|
|||||||
Intersegment
sales
|
(41,000
|
)
|
(0.7
|
)%
|
(31,000
|
)
|
(0.4
|
)%
|
|||||
Consolidated
|
$
|
6,225,000
|
100.0
|
%
|
$
|
8,251,000
|
100.0
|
%
|
Six
Months Ended
|
|||||||||||||
June
30, 2007
|
July
1, 2006
|
||||||||||||
$
|
%
of sales
|
$
|
%
of sales
|
||||||||||
Electronic
components
|
|||||||||||||
and
subsystems
|
$
|
9,883,000
|
84.8
|
%
|
$
|
11,784,000
|
81.4
|
%
|
|||||
Microwave
micro-circuitry(1)
|
1,821,000
|
15.6
|
%
|
2,826,000
|
19.5
|
%
|
|||||||
Intersegment
sales
|
(55,000
|
)
|
(0.4
|
)%
|
(128,000
|
)
|
(0.9
|
)%
|
|||||
Consolidated
|
$
|
11,649,000
|
100.0
|
%
|
$
|
14,482,000
|
100.0
|
%
|
Net
assets:
|
||||
Property,
plant and equipment, at cost
|
$
|
14,904,000
|
||
Less
accumulated depreciation and amortization
|
8,700,000
|
|||
Property,
plant and equipment, net
|
6,204,000
|
|||
Inventories
|
509,000
|
|||
Other
assets, net
|
164,000
|
|||
Total
net assets at June 30, 2007
|
6,877,000
|
|||
Commitments:
|
||||
Planned
equipment purchases for the remainder of 2007
|
550,000
|
|||
Lease
obligations through January 2011
|
675,000
|
|||
Total
commitments
|
1,225,000
|
|||
Total
net assets and commitments
|
$
|
8,102,000
|
·
|
declines
in the market value of inventory;
|
·
|
changes
in customer demand for inventory, such as cancellation of orders;
and
|
·
|
our
purchases of inventory beyond customer needs that result in excess
quantities on hand that we are not able to return to the vendor or
charge
back to the customer.
|
Percentage
of Net Sales
|
|
Percentage
of Net Sales
|
|
||||||||||
|
|
Quarters
Ended
|
|
Six
Months Ended
|
|
||||||||
|
|
June
30,
|
|
July
1,
|
|
June
30,
|
|
July
1,
|
|
||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
61.7
|
55.0
|
64.3
|
57.8
|
|||||||||
Selling,
general and administrative
|
36.7
|
32.0
|
41.0
|
35.5
|
|||||||||
Research
and development
|
5.8
|
6.3
|
7.5
|
6.1
|
|||||||||
Goodwill
impairment charge
|
42.2
|
-
|
22.6
|
-
|
|||||||||
146.4
|
93.3
|
135.4
|
99.4
|
||||||||||
Operating
income
|
(46.4
|
)
|
6.7
|
(35.4
|
)
|
.6
|
|||||||
Interest
and other expense, net
|
(1.1
|
)
|
(.4
|
)
|
(1.0
|
)
|
(.3
|
)
|
|||||
Income
before income taxes
|
(47.5
|
)
|
6.3
|
(36.4
|
)
|
.3
|
|||||||
Provision
(benefit) for income taxes
|
8.1
|
(.1
|
)
|
4.3
|
(.3
|
)
|
|||||||
Net
income
|
(55.6
|
)%
|
6.4
|
%
|
(40.7
|
)%
|
.6
|
%
|
2007
|
2006
|
||||||
Beginning
backlog
|
$
|
12,385,000
|
$
|
13,139,000
|
|||
Plus
bookings
|
16,459,000
|
12,864,000
|
|||||
Less
net sales
|
11,649,000
|
14,482,000
|
|||||
Ending
backlog
|
$
|
17,195,000
|
$
|
11,521,000
|
|||
Book-to-bill
ratio
|
1.41
|
0.89
|
Quarter
ended June 30, 2007
|
Quarter
ended July 1, 2006
|
||||||||||||||||||
$
|
Increase/
(Decrease)
from prior period
|
%
of
Segment
Net
Sales
|
$
|
Increase/
(Decrease)
from prior period
|
%
of
Segment
Net
Sales
|
||||||||||||||
Electronic
Components and Subsystems
gross profit
|
$
|
2,367,000
|
$
|
(1,143,000
|
)
|
44.1%
|
|
$
|
3,510,000
|
$
|
738,000
|
49.4
|
%
|
||||||
Microwave
Micro-Circuitry
gross profit
|
$
|
16,000
|
$
|
(184,000
|
)
|
1.8%
|
|
$
|
200,000
|
$
|
(296,000
|
)
|
16.9
|
%
|
|||||
Consolidated
gross
profit
|
$
|
2,383,000
|
$
|
(1,327,000
|
)
|
38.3%
|
|
$
|
3,710,000
|
$
|
442,000
|
45.0
|
%
|
Six
Months ended June 30, 2007
|
Six
Months ended July 1, 2006
|
||||||||||||||||||
$
|
Increase/
(Decrease)
from prior period
|
%
of
Segment
Net
Sales
|
$
|
Increase/
(Decrease)
from prior period
|
%
of
Segment
Net
Sales
|
||||||||||||||
Electronic
Components and Sub-assemblies
gross profit
|
$
|
4,064,000
|
$
|
(1,315,000
|
)
|
41.1%
|
|
$
|
5,379,000
|
$
|
(65,000
|
)
|
45.6
|
%
|
|||||
Microwave
Micro-Circuitry
gross
profit
|
$
|
100,000
|
$
|
(633,000
|
)
|
5.5%
|
$
|
733,000
|
$
|
(126,000
|
)
|
25.9
|
%
|
||||||
Consolidated
gross
profit
|
$
|
4,164,000
|
$
|
(1,948,000
|
)
|
35.7%
|
|
$
|
6,112,000
|
$
|
(191,000
|
)
|
42.2
|
%
|
For
|
|
Withheld
|
|||||
Edward
H. Cohen
|
2,086,750
|
743,511
|
|||||
Arthur
A. Oliner
|
1,996,276
|
833,985
|
|||||
Harold
J. Raveché
|
2,096,102
|
734,159
|
For
|
|
Against
|
|
Abstain
|
|||
2,697,459
|
5,297
|
127,505
|
EXHIBIT
NUMBER
|
DESCRIPTION
OF EXHIBIT
|
|
31.1+
|
Chief
Executive Officer's Certificate, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2+
|
Chief
Financial Officer's Certificate, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1+
|
Chief
Executive Officer's Certificate, pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2+
|
Chief
Financial Officer's Certificate, pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
MERRIMAC
INDUSTRIES, INC.
|
||
|
|
|
Date: August 14, 2007 | By: | /s/ Mason N. Carter |
Mason
N. Carter
Chairman,
President and
Chief
Executive Officer
|
Date: August 14, 2007 | By: | /s/ Robert V. Condon |
Robert
V. Condon
Vice
President, Finance and
Chief
Financial Officer
|