UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended June 30, 2004
Commission file number 0-10976
MICROWAVE FILTER COMPANY, INC.
(Exact name of registrant as specified in its charter.)
New York 16-0928443
(State of Incorporation) (I.R.S. Employer Identification Number)
6743 Kinne Street, East Syracuse, N.Y. 13057
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 438-4700
Indicate by check mark whether 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 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 Exchange Act).
YES ( ) NO ( x )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Stock, $.10 Par Value - 2,904,439 shares as of June
30, 2004.
PART I. - FINANCIAL INFORMATION
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
JUNE 30, 2004 SEPTEMBER 30, 2003
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 759 $ 647
Investments 856 876
Accounts receivable-trade, net 446 318
Federal and state income
tax recoverable 37 39
Inventories 567 708
Deferred tax asset - current 0 235
Prepaid expenses and other
current assets 70 93
-------- --------
Total current assets 2,735 2,916
Property, plant and equipment, net 846 975
Deferred tax asset - noncurrent 0 11
-------- --------
Total assets $ 3,581 $ 3,902
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 211 $ 172
Customer deposits 51 144
Accrued payroll and related
expenses 103 96
Accrued compensated absences 231 255
Other current liabilities 39 46
-------- --------
Total current liabilities 635 713
-------- --------
Total liabilities 635 713
-------- --------
Stockholders' Equity:
Common stock,$.10 par value 432 432
Additional paid-in capital 3,240 3,240
Retained earnings 781 1,023
-------- --------
4,452 4,695
Common stock in treasury,
at cost (1,506) (1,506)
-------- --------
Total stockholders' equity 2,946 3,189
-------- --------
Total liabilities and
stockholders' equity $ 3,581 $ 3,902
======== ========
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS
ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
June 30 June 30
2004 2003 2004 2003
Net sales $1,374 $1,323 $3,630 $3,826
Cost of goods sold 875 1,012 2,485 2,814
------- ------- ------- -------
Gross profit 499 311 1,145 1,012
Selling, general and
administrative expenses 426 432 1,290 1,550
------- ------- ------- -------
Income (loss) from
operations 73 (121) (145) (538)
Other income (net),
Principally interest 4 4 12 16
------- ------- ------- -------
Income (loss) before
income taxes 77 (117) (133) (522)
Provision (benefit) for
income taxes 27 (40) 109 (180)
------- ------- ------- -------
NET INCOME (LOSS) $50 ($77) ($242) ($342)
======= ======= ======= =======
Per share data:
Basic earnings (loss)
per share $0.02 ($0.03) ($0.08) ($0.12)
======= ======= ======= =======
Diluted earnings (loss)
per share $0.02 ($0.03) ($0.08) ($0.12)
======= ======= ======= =======
Shares used in computing
net earnings (loss) per share:
Basic 2,905 2,905 2,905 2,905
Diluted 2,921 2,905 2,916 2,905
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2004 AND 2003
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
June 30 June 30
2004 2003 2004 2003
Cash flows from operating
activities:
Net income (loss) $ 50 ($ 77) ($ 242) ($ 342)
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and amortization 55 76 166 227
Deferred tax assets 0 0 246 0
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (101) (132) (128) (65)
Federal and state income
tax recoverable 141 (42) 3 (152)
Inventories 45 279 140 304
Prepaid expenses & other
assets 28 24 23 34
Increase (decrease) in:
Accounts payable & accrued
expenses (21) (122) 15 (184)
Customer deposits 49 (103) (93) (54)
Federal and state income
taxes payable 0 0 0 (234)
------- ------- -------- -------
Net cash provided by (used
in) operating activities 246 (97) 130 (466)
------- ------- -------- -------
Cash flows from investing
activities:
Investments 5 105 20 497
Capital expenditures (9) (5) (38) (46)
------- ------- -------- -------
Net cash (used in) provided
by investing activities (4) 100 (18) 451
Cash flows from financing
activities:
Cash dividend paid 0 0 0 (290)
------- ------- ------- -------
Net cash used in
financing activities 0 0 0 (290)
Increase (decrease) in cash
and cash equivalents 242 3 112 (305)
Cash and cash equivalents
at beginning of period 517 341 647 649
------- ------- ------- -------
Cash and cash equivalents
at end of period $ 759 $ 344 $ 759 $ 344
======= ======= ======= =======
See Accompanying Notes to Consolidated Financial Statements
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004
Note 1. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. The operating results for the nine
month period ended June 30, 2004 are not necessarily indicative of the
results that may be expected for the year ended September 30, 2004. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10K for the year ended
September 30, 2003.
Note 2. Industry Segment Data
The Company's primary business segments involve (1) operations of Microwave
Filter Company, Inc. (MFC) which designs, develops, manufactures and sells
electronic filters, both for radio and microwave frequencies, to help process
signal distribution and to prevent unwanted signals from disrupting transmit
or receive operations. Markets served include cable television, television and
radio broadcast, satellite broadcast, and mobile radio, commercial
communications and defense electronics; and (2) Niagara Scientific, Inc.
(NSI), a wholly owned subsidiary, which custom designs case packing machines
to automatically pack products into shipping cases. Customers are typically
processors of food and other commodity products with a need to reduce labor
cost with a modest investment and quick payback.
Information by segment is as follows:
Three months ended Nine months ended
(thousands of dollars) June 30, June 30,
2004 2003 2004 2003
Net Sales (Unaffiliated):
MFC $1,349 $ 862 $3,405 $3,130
NSI 25 461 225 696
------ ------ ------ ------
Total $1,374 $1,323 $3,630 $3,826
====== ====== ====== ======
Operating (loss) profit: (a)
MFC $88 ($170) ($79) ($385)
NSI (15) 49 (66) (153)
------ ------ ------ ------
Total $73 ($121) ($145) ($538)
===== ====== ====== ======
Identifiable assets: (b)
MFC $2,713 $2,987 $2,713 $2,987
NSI 109 431 109 431
------ ------ ------ ------
Subtotal 2,822 3,418 2,822 3,418
Corporate Assets - Cash
And Cash Equivalents 759 344 759 344
------ ------ ------ ------
Total $3,581 $3,762 $3,581 $3,762
====== ====== ====== ======
(a) Operating profit (loss) is total revenue less cost of goods sold and
operating expenses. In computing operating profit, none of the following
items have been added or deducted: interest expense, income taxes and
miscellaneous income. Expenses incurred on behalf of both Companies are
allocated based upon estimates of their relationship to each entity.
(b) Identifiable assets by industry are those assets that are used in the
Company's operations in each segment.
Note 3. Inventories
Inventories net of provision for obsolescence consisted of the following:
(thousands of dollars) June 30, 2004 September 30, 2003
Raw materials and stock parts $418 $427
Work-in-process 71 202
Finished goods 78 79
------ ----
$567 $708
====== ====
The Company's provision for obsolescence equaled $391 at June 30,
2004 and $402 at September 30, 2003.
Note 4. Deferred Tax Assets
As a result of the Company's cumulative losses, the Company recorded a
non-cash charge to establish a valuation allowance of $246,000 against net
deferred tax assets during the quarter ended March 31, 2004. The charge was
calculated in accordance with the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109), which
requires an assessment of both positive and negative evidence when measuring
the need for a valuation allowance. Evidence, such as operating results during
the most recent three-year period, is given more weight when due to our
current lack of visibility, there is a greater degree of uncertainty that the
level of future profitability needed to record the deferred tax assets will be
achieved. Our results over the most recent three-year period have been
negatively affected by the downturn in the telecommunications marketplace, the
sluggish economy and reduced capital spending. The Company's losses in the
most recent three-year period represent sufficient negative evidence to
require a valuation allowance under the provisions of SFAS 109. The Company
will maintain a valuation allowance until sufficient positive evidence exists
to support its reduction or reversal.
Note 5. Stock Options
On April 9, 1998, the Board of Directors and Shareholders of Microwave
Filter Company, Inc. approved the 1998 Microwave Filter Company, Inc.
Incentive Stock Plan (the "1998 Plan"). Under the 1998 Plan, the Company may
grant incentive stock options ("ISOs"), non-qualified stock options ("NQSOs")
and stock appreciation rights to directors, officers and employees of the
Company and its affiliates. The 1998 Plan reserves 150,000 shares for
issuance. The exercise price of the ISOs and NQSOs will be 100% of the fair
market value of the Common Stock on the date the ISOs and NQSOs are granted.
The 1998 Plan will terminate on April 10, 2008. On June 21, 2004, the Board of
Directors granted ISOs totaling 115,000 shares and NQSOs totaling 35,000
shares at an exercise price of $1.47.
Note 6. Stock Based Compensation
The Company measures compensation expense for its stock-option based
employee compensation plans using the intrinsic value method. The following
table sets forth the pro forma effect of these plans as if the fair value-
based method had been used to measure compensation expense.
Three months ended Nine months ended
June 30 June 30
2004 2003 2004 2003
(thousands of dollars, except per share data)
Net earnings (loss), as
reported $50 ($77) ($242) ($342)
Fair value based stock
compensation cost, net
of tax (156) 0 (156) 0
------ ----- ------ ------
Pro forma earnings (loss) ($106) ($77) ($398) ($342)
====== ===== ====== ======
Earnings (loss) per share:
Basic $0.02 ($0.03) ($0.08) ($0.12)
Diluted $0.02 ($0.03) ($0.08) ($0.12)
Pro forma earnings (loss) per share:
Pro forma basic ($0.04) ($0.03) ($0.14) ($0.12)
Pro forma diluted ($0.04) ($0.03) ($0.14) ($0.12)
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Microwave Filter Company, Inc. operates primarily in the United States and
principally in two industries. The Company extends credit to business
customers based upon ongoing credit evaluations. Microwave Filter Company,
Inc. (MFC) designs, develops, manufactures and sells electronic filters, both
for radio and microwave frequencies, to help process signal distribution and
to prevent unwanted signals from disrupting transmit or receive operations.
Markets served include cable television, television and radio broadcast,
satellite broadcast, and mobile radio, commercial communications and defense
electronics. Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, custom
designs case packing machines to automatically pack products into shipping
cases. Customers are typically processors of food and other commodity products
with a need to reduce labor cost with a modest investment and quick payback.
Critical Accounting Policies
The Company's consolidated financial statements are based on the application
of generally accepted accounting principles (GAAP). GAAP requires the use of
estimates, assumptions, judgments and subjective interpretations of accounting
principles that have an impact on the assets, liabilities, revenue and expense
amounts reported. The Company believes its use of estimates and underlying
accounting assumptions adhere to GAAP and are consistently applied. Valuations
based on estimates are reviewed for reasonableness and adequacy on a
consistent basis throughout the Company. Primary areas where financial
information of the Company is subject to the use of estimates, assumptions and
the application of judgment include revenues, receivables, inventories, and
taxes. Note 1 to the consolidated financial statements in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2003 describes the
significant accounting policies used in preparation of the consolidated
financial statements. The most significant areas involving management
judgments and estimates are described below and are considered by management
to be critical to understanding the financial condition and results of
operations of the Company.
Revenues from product sales are recorded as the products are shipped and
title and risk of loss have passed to the customer, provided that no
significant vendor or post-contract support obligations remain and the
collection of the related receivable is probable. Collections in advance of
the Company's performance of such work are reflected as customer deposits in
the accompanying consolidated balance sheet.
Allowances for doubtful accounts are based on estimates of losses related to
customer receivable balances. The establishment of reserves requires the use
of judgment and assumptions regarding the potential for losses on receivable
balances.
The Company's inventories are valued at the lower of cost or market. The
Company uses certain estimates and judgments and considers several factors
including product demand and changes in technology to provide for excess and
obsolescence reserves to properly value inventory.
The Company has a warranty reserve which provides for the estimated cost of
product returns based upon historical experience and any known conditions or
circumstances. Our warranty obligation is affected by product that does not
meet specifications and performance requirements and any related costs of
addressing such matters.
The Company accounts for our stock-based compensation plan under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." No compensation expense has been recognized in the
accompanying financial statements relative to our stock option plan. Pro forma
information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," as amended, and has been determined as if we had
accounted for our stock options under the fair value method described in that
statement.
As a result of the Company's cumulative losses, the Company recorded a non-
cash charge to establish a valuation allowance of $246,000 against net
deferred tax assets during the quarter ended March 31, 2004. The charge was
calculated in accordance with the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109), which
requires an assessment of both positive and negative evidence when measuring
the need for a valuation allowance. Evidence, such as operating results during
the most recent three-year period, is given more weight when due to our
current lack of visibility, there is a greater degree of uncertainty that the
level of future profitability needed to record the deferred tax assets will be
achieved. Our results over the most recent three-year period have been
negatively affected by the downturn in the telecommunications marketplace, the
sluggish economy and reduced capital spending. The Company's losses in the
most recent three-year period represent sufficient negative evidence to
require a valuation allowance under the provisions of SFAS 109. The Company
will maintain a valuation allowance until sufficient positive evidence exists
to support its reduction or reversal.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2004 vs. THREE MONTHS ENDED JUNE 30, 2003
Net sales for the three months ended June 30, 2004 equaled $1,373,974, an
increase of $51,428 or 3.9% when compared to net sales of $1,322,546 for the
three months ended June 30, 2003.
MFC sales for the three months ended June 30, 2004 equaled $1,348,960, an
increase of $487,217 or 56.5% when compared to sales of $861,743 for the three
months ended June 30, 2003. The increase in MFC sales can be attributed to
both an increase in the sales of the Company's RF/Microwave products sold to
the Industrial/OEM (Original Equipment Manufacturer) market segment and an
increase in the sales of the Company's standard/catalog products sold
primarily to the Cable Television market segment.
MFC's sales order backlog equaled $425,843 at June 30, 2004, a decrease of
$84,369, when compared to sales order backlog of $510,212 at March 31, 2004.
However, backlog is not necessarily indicative of future sales. Accordingly,
the Company does not believe that its backlog as of any particular date is
representative of actual sales for any succeeding period. Approximately 84% of
MFC's sales order backlog at June 30, 2004 is scheduled to ship by September
30, 2004.
The Company continues to invest in production engineering and infrastructure
development to penetrate OEM market segments as they become popular. MFC is
concentrating its technical resources and product development efforts toward
potential high volume customers as part of a concentrated effort to provide
substantial long-term growth.
NSI sales for the three months ended June 30, 2004 equaled $25,014, a
decrease of $435,789 or 94.6% when compared to sales of $460,803 for the three
months ended June 30, 2003. Sales of NSI related equipment, on a quarter to
quarter basis, can be impacted by the timing of the shipment of the custom
designed equipment and the customer's scheduled delivery dates. At June 30,
2004, NSI's backlog of orders equaled $144,135, an increase of $136,434 when
compared to backlog of $7,701 at March 31, 2004. NSI's total backlog of orders
is scheduled to ship during the first quarter of fiscal 2005. Despite the
increase in backlog, NSI continues to feel the effect of a sluggish economy
and reduced capital spending.
The Company recorded net earnings of $50,381 for the three months ended June
30, 2004 compared to a net loss of $76,552 for the three months ended June 30,
2003. The improvement can primarily be attributed to the increase in gross
profit during the quarter ended March 31, 2004 when compared to the same
period last year.
Gross profit for the three months ended June 30, 2004 equaled $499,469, an
increase of $188,904 or 60.8%, when compared to gross profit of $310,565 for
the three months ended June 30, 2003. As a percentage of sales, gross profit
improved to 36.4% for the three months ended June 30, 2004 compared to 23.5%
for the three months ended June 30, 2003. The increase in gross profit as a
percentage of sales can primarily be attributed to product sales mix. MFC's
sales, whose targeted gross profits are higher than NSI's, accounted for 98.1%
of sales during the quarter ended June 30, 2004 compared to 65.2% of sales
during the quarter ended June 30, 2003.
Selling, general and administrative (SGA) expenses for the three months
ended June 30, 2004 equaled $426,647, a decrease of $4,711 or 1.1% when
compared to SG&A expenses of $431,358 for the three months ended June 30,
2003. As a percentage of sales, SGA expenses decreased to 31.1% of sales for
the three months ended June 30, 2004 compared to 32.6% of sales for the three
months ended June 30, 2003 primarily due to the increase in sales. Due to the
uncertain economic climate, the Company has been emphasizing cost controls and
cost cutting measures to minimize operating expenses. However, despite the
downturn in sales, the Company does not expect to significantly reduce its
current marketing efforts or research and development efforts.
On an industry segment basis, MFC recorded income from operations of $87,640
for the three months ended June 30, 2004 compared to a loss from operations of
$169,790 for the three months ended June 30, 2003 primarily due to the
increase in sales. NSI recorded a loss from operations of $14,818 for the
three months ended June 30, 2004 compared to income from operations of $48,997
for the three months ended June 30, 2003 primarily due to the decrease in
sales.
NINE MONTHS ENDED JUNE 30, 2004 vs. NINE MONTHS ENDED JUNE 30, 2003
Net sales for the nine months ended June 30, 2004 equaled $3,629,750, a
decrease of $195,845, or 5.1% when compared to net sales of $3,825,595 for
the nine months ended June 30, 2003.
MFC sales for the nine months ended June 30, 2004 equaled $3,404,776, an
increase of $275,348 or 8.8%, when compared to sales of $3,129,428 for the
nine months ended June 30, 2003. The increase in MFC sales can primarily be
attributed to an increase in the sales of the Company's RF/Microwave products
sold to OEMs.
NSI sales for the nine months ended June 30, 2004 equaled $224,974, a
decrease of $471,193 or 67.7% when compared to sales of $696,167 for the nine
months ended June 30, 2003. Sales of NSI related equipment, on a quarter to
quarter basis, can be impacted by the timing of the shipment of the custom
designed equipment and the customer's scheduled delivery dates. Similar to
MFC, NSI continues to feel the effects of the sluggish economy and reduced
capital spending.
The Company recorded a net loss of $241,787, for the nine months ended June
30, 2004 compared to a net loss of $341,796 for the nine months ended June 30,
2003. The improvement can be attributed to the improved margins realized this
year and the decrease in selling, general and administrative expenses this
year when compared to the same period last year.
Gross profit for the nine months ended June 30, 2004 equaled $1,145,002 or
31.5% of sales, an increase of $133,064 or 13.1%, when compared to gross
profit of $1,011,938 or 26.5% of sales for the nine months ended June 30,
2003. The increases in gross profit can primarily be attributed to product
sales mix.
SG&A expenses for the nine months ended June 30, 2004 equaled $1,290,203, a
decrease of $260,124 or 16.8% when compared to SG&A expenses of $1,550,327 for
the nine months ended June 30, 2003. Due to the uncertain economic climate,
the Company is emphasizing cost controls and cost cutting measures to minimize
operating expenses. However, despite the downturn in sales, the Company does
not expect to significantly reduce its current marketing efforts or research
and development efforts.
The Company recorded a provision for income taxes of $108,677 for the nine
months ended June 30, 2004, compared to a benefit for income taxes of $180,029
for the nine months ended June 30, 2003, primarily due to the Company
providing a full valuation allowance on the deferred tax assets in the second
quarter. In addition, during the quarter ended March 31, 2004, the Company
assessed its net current taxes payable and recorded an adjustment of
approximately $92,000 to reflect amounts recoverable. For the nine months
ended June 30, 2004, the Company has been accruing a provision (benefit) for
income taxes at an effective tax rate of 34.5%.
LIQUIDITY and CAPITAL RESOURCES
Cash and cash equivalents increased $112,182 to $759,068 at June 30,
2004 when compared to $646,886 at September 30, 2003. The increase was a
result of $130,321 in net cash provided by operating activities, $17,627
in net cash used in investing activities and $512 in net cash used to
purchase treasury stock.
The increase in accounts receivable of $127,655 at June 30, 2004, when
compared to September 30, 2003, can primarily be attributed to the increase in
sales during the month ended June 30, 2004 when compared to the month ended
September 30, 2003.
The decrease in inventories of $140,450 at June 30, 2004, when compared to
September 30, 2003, can primarily be attributed to an NSI shipment during the
month of October 2003.
The decrease of $93,943 in customer deposits at June 30, 2004, when compared
to September 30, 2003, can primarily be attributable to an NSI shipment during
the month of October 2003.
Cash provided by investing activities during the nine months ended June 30,
2004 consisted of funds provided by the sale of investments of $19,961 and
funds used for capital expenditures of $37,588.
At June 30, 2004, the Company had unused aggregate lines of credit totaling
$750,000.
Management believes that its working capital requirements for the forseeable
future will be met by its existing cash balances, future cash flows from
operations and its current credit arrangements.
Off-Balance Sheet Arrangements
At June 30, 2004 and 2003, the Company did not have any unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which might have been
established for the purpose of facilitating off-balance sheet arrangements.
RECENT ACCOUNTING PRONOUNCEMENTS
None.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Any statements contained in this report which are not historical facts are
forward looking statements; and, therefore, many important factors could cause
actual results to differ materially from those in the forward looking
statements. Such factors include, but are not limited to, changes
(legislative, regulatory and otherwise) in the MMDS, LPTV or Cable industry,
demand for the Company's products (both domestically and internationally), the
development of competitive products, competitive pricing, market acceptance of
new product introductions, technological changes, general economic conditions,
litigation and other factors, risks and uncertainties which may be identified
in the Company's Securities and Exchange Commission filings. Forward looking
statements may be made directly in this document or "incorporated by
reference" from other documents. You can find many of these statements by
looking for words like "believes," "expects," "anticipates," "estimates," or
similar expressions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in our exposures to market risk during
the three and nine months ended June 30, 2004. For a detailed discussion of
market risk, see our Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, Part II, Item 7A, Quantitative and Qualitative Disclosures
About Market Risk.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time period specified in the
rules and forms of the Securities and Exchange Commission. Based upon their
evaluation of those controls and procedures performed as of June 30, 2004, the
Chief Executive and Chief Financial Officers of the Company concluded, based
upon their best judgement, that the Company's disclosure controls and
procedures were adequate.
The Company made no significant changes in its internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of the evaluation of those controls by the Chief Executive and Chief
Financial Officers. There were no significant deficiencies or material
weaknesses identified in the evaluation and, therefore, no corrective actions
were taken. While the Chief Executive and Chief Financial Officers of the
Company believe that the Company's existing disclosure controls and procedures
have been effective to accomplish its objectives, the Chief Executive and
Chief Financial Officers of the Company intend to examine, refine and
formalize our disclosure controls and procedures and monitor ongoing
developments.
Notwithstanding the foregoing, there can be no assurance that the Company's
disclosure controls and procedures will detect or uncover all failures of
persons within the Company and its consolidated subsidiaries to disclose
material information otherwise required to be set forth in the Company's
periodic reports.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is unaware of any material threatened or pending
litigation against the Company.
Item 2. Changes in Securities
None during this reporting period.
Item 3. Defaults Upon Senior Securities
The Company has no senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
None during this reporting period.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
31.1 Section 13a-14(a)/15d-14(a) Certification of Carl F.
Fahrenkrug
31.2 Section 13a-14(a)/15d-14(a) Certification of Richard L.
Jones
32.1 Section 1350 Certification of Carl F. Fahrenkrug
32.2 Section 1350 Certification of Richard L. Jones
b. Reports on Form 8-K
None.
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICROWAVE FILTER COMPANY, INC.
August 13, 2004 Carl F. Fahrenkrug
(Date) --------------------------
Carl F. Fahrenkrug
Chief Executive Officer
August 13, 2004 Richard L. Jones
(Date) --------------------------
Richard L. Jones
Chief Financial Officer