UNITED STATES
SECURITY AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarter ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 0-14870
 QUIPP, INC.
 
 Florida
    
    59-2306191(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
  
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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QUIPP, INC.
INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1  Unaudited Condensed Consolidated Financial StatementsUnaudited Condensed Consolidated Balance Sheets 
March 31, 2008 and December 31, 2007
    
    
    3Unaudited Condensed Consolidated Statements of Operations 
Three months ended March 31, 2008 and 2007
    
    
    4Unaudited Condensed Consolidated Statements of Shareholders
Equity  Three months ended March 31, 2008
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows 
Three months ended March 31, 2008 and 2007
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3  Quantitative and Qualitative Disclosure about Market Risk
    
    
    12Item 4  Controls and Procedures
    
    
    12PART II  OTHER INFORMATIONItem 1A  Risk Factors
    
    
    13Item 6  Exhibits
    
    
    13
 2




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PART 1  FINANCIAL INFORMATION  Item 1. Unaudited Condensed Consolidated Financial Statements
 QUIPP, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2008
    
    
    December 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    830,667
    
    
    $
    1,391,100Restricted securities and cash equivalents
    
    
    1,000,000
    
    
    
    1,000,000Accounts receivable, net
of allowances of $129,061
and $179,568
    
    
    2,118,284
    
    
    
    3,641,206Inventories
    
    
    5,092,250
    
    
    
    3,941,964Prepaid expenses and other current assets
    
    
    421,136
    
    
    
    420,282Total current assets
    
    $
    9,462,337
    
    
    $
    10,394,552Property, plant and equipment, net of accumulated
depreciation and amortization of $3,397,953
and $3,289,156
    
    
    1,706,910
    
    
    
    1,810,506Intangible assets, net of accumulated amortization
of $2,018,787 and $1,921,486
    
    
    991,312
    
    
    
    1,088,613Other assets
    
    
    24,486
    
    
    
    26,586Total assets
    
    $
    12,185,045
    
    
    $
    13,320,257LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    151,660
    
    
    $
    154,162Accounts payable
    
    
    1,326,059
    
    
    
    1,867,197Accrued salaries and wages
    
    
    421,581
    
    
    
    516,196Deferred revenues
    
    
    3,689,462
    
    
    
    3,348,764Other accrued liabilities
    
    
    1,360,164
    
    
    
    1,259,276Total current liabilities
    
    
    6,948,926
    
    
    
    7,145,595Total liabilities
    
    
    6,948,926
    
    
    
    7,145,595Shareholders equity:Common stock  par value $.01 per share, 8,000,000
shares authorized, 1,477,746 issued and outstanding
    
    
    14,778
    
    
    
    14,778Additional paid in capital
    
    
    527,046
    
    
    
    518,960Retained earnings
    
    
    4,694,295
    
    
    
    5,640,9245,236,119
    
    
    
    6,174,662Total liabilities and shareholders equity
    
    $
    12,185,045
    
    
    $
    13,320,257
  3




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QUIPP INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the three months endedMarch 31, 2008
    
    March 31, 2007Net sales
    
    $
    3,672,327
    
    
    $
    4,321,637Cost of sales
    
    
    (2,966,022
    )
    
    
    (3,470,262
    )Gross profit
    
    
    706,305
    
    
    
    851,375Operating expenses:Selling, general and
administrative expenses
    
    
    (1,486,848
    )
    
    
    (1,468,642
    )Research and development
    
    
    (106,860
    )
    
    
    (93,018
    )Operating loss
    
    
    (887,403
    )
    
    
    (710,285
    )Other income (expense):Miscellaneous income
    
    
    
    
    
    
    10,000Interest income
    
    
    22,519
    
    
    
    51,659Interest expense
    
    
    (7,857
    )
    
    
    (1,694
    )14,662
    
    
    
    59,965Loss before income taxes
    
    
    (872,741
    )
    
    
    (650,320
    )Income tax benefit
    
    
    
    
    
    
    Net loss
    
    $
    (872,741
    )
    
    $
    (650,320
    )Per share amounts:Basic and diluted loss per common share
    
    $
    (0.59
    )
    
    $
    (0.44
    )Weighted average common and common
equivalent shares outstanding
    
    
    1,477,746
    
    
    
    1,458,189
  4




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QUIPP, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Additional
    
    
    
    
    
    TotalCommon Stock
    
    Paid-In
    
    Retained
    
    ShareholdersShares
    
    Amount
    
    Capital
    
    Earnings
    
    EquityBalances on December 31, 2007
    
    
    1,477,746
    
    
    $
    14,778
    
    
    $
    518,960
    
    
    $
    5,640,924
    
    
    $
    6,174,662Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    8,086
    
    
    
    
    
    
    
    8,086Dividend declared on common
stock ($.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,888
    )
    
    
    (73,888
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (872,741
    )
    
    
    (872,741
    )Balances on March 31, 2008
    
    
    1,477,746
    
    
    $
    14,778
    
    
    $
    527,046
    
    
    $
    4,694,295
    
    
    $
    5,236,119
  5




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QUIPP INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the three months endedMarch 31, 2008
    
    March 31, 2007Cash flow from operations:Net loss
    
    $
    (872,741
    )
    
    $
    (650,320
    )Reconciliation of net loss to net cash
(used in) provided by operations:Depreciation and amortization
    
    
    108,797
    
    
    
    122,334Intangible amortization
    
    
    97,301
    
    
    
    130,609Stock-based compensation
    
    
    8,086
    
    
    
    11,862Changes in operational assets and liabilities:Accounts receivable
    
    
    1,522,922
    
    
    
    (38,405
    )Inventories
    
    
    (1,150,286
    )
    
    
    (918,739
    )Prepaid and other assets
    
    
    1,246
    
    
    
    (81,786
    )Accounts payable and accrued liabilities
    
    
    (534,865
    )
    
    
    245,448Deferred revenues
    
    
    340,698
    
    
    
    1,592,787Net cash (used in) provided by operations
    
    
    (478,842
    )
    
    
    413,790Cash flow from investing activities:Securities matured
    
    
    
    
    
    
    1,474,455Capital expenditures
    
    
    (5,201
    )
    
    
    (18,249
    )Net cash (used in) provided by investing activities
    
    
    (5,201
    )
    
    
    1,456,206Cash flow from financing activities:Dividends paid to shareholders
    
    
    (73,888
    )
    
    
    (72,910
    )Repayment of debt
    
    
    (2,502
    )
    
    
    (2,378
    )Net cash used in financing activities
    
    
    (76,390
    )
    
    
    (75,288
    )(Decrease) increase in cash and cash equivalents
    
    
    (560,433
    )
    
    
    1,794,708Cash and cash equivalents at beginning of year
    
    
    1,391,100
    
    
    
    864,879Cash and cash equivalents at end of quarter
    
    $
    830,667
    
    
    $
    2,659,587
  6




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QUIPP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  BASIS OF PRESENTATION
  NOTE 2  INVENTORIES
  March 31, 2008
    
    December 31, 2007Raw materials
    
    
    2,722,461
    
    
    $
    2,841,432Work in process
    
    
    1,563,703
    
    
    
    276,733Subtotal
    
    
    4,286,164
    
    
    
    3,118,165Shipped, not recognized
    
    
    806,086
    
    
    
    823,7995,092,250
    
    
    
    3,941,964
 NOTE 3  REVENUE RECOGNITION
  7




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NOTE 4  LOSS PER SHARE
  NOTE 5  STOCK-BASED COMPENSATION
   Three months endedMarch 31,2008
    
    2007Stock Options
    
    $
    1,029
    
    
    $
    1,971Restricted Stock Awards
    
    
    7,057
    
    
    
    9,891Total stock based compensation costs included in
selling, general and administrative expenses
    
    $
    8,086
    
    
    $
    11,862
  WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Term (years)
    
    ValueOptions outstanding at December 31, 2007
    
    
    45,000
    
    
    $
    13.57
    
    
    
    4.57
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding at March 31, 2008
    
    
    45,000
    
    
    $
    13.57
    
    
    
    4.32
    
    
    
    Stock options exercisable at March 31, 2008
    
    
    45,000
    
    
    $
    13.57
    
    
    
    4.32
    
    
    
    
  8




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WeightedAverageRestricted
    
    Grant DateShares
    
    Fair PriceNon-vested stock awards as of December 31, 2007
    
    
    10,000
    
    
    $
    11.84Granted
    
    
    
    
    
    
    Vested
    
    
    (5,000
    )
    
    
    12.80Forfeited
    
    
    
    
    
    
    Non-vested stock awards as of March 31, 2008
    
    
    5,000
    
    
    $
    10.87
  NOTE 6  INCOME TAXES
       NOTE 7   RECENT DEVELOPMENTS
  9




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NOTE 8   RECENT PRONOUNCEMENTS
      10




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Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations:
 Three Months EndedMarch 31,2008
    
    2007(Unaudited)
    
    (Unaudited)Net sales
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    19.2
    %
    
    
    19.7
    %Selling, general and administrative expenses
    
    
    40.4
    %
    
    
    34.0
    %Research and development
    
    
    2.9
    %
    
    
    2.2
    %Other income, net
    
    
    0.4
    %
    
    
    1.3
    %Net loss
    
    
    (23.8
    %)
    
    
    (15.0
    %)
 Net sales
 Gross profit
 Selling, general and administrative
 Research and development
 Other income and expense (net)
 General
  11




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Liquidity
     Forward Looking Statements
  Item 3 Quantitative and Qualitative Disclosure about Market Risk
 Market Risk
  Item 4 Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures
  12




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(b)
    
    Change in Internal Control over Financial Reporting
  PART II  OTHER INFORMATION
 Item 1A Risk Factors
  Item 6 Exhibits
  3.1
    
    Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.2 to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).
 3.2
    
    By Laws, as amended (incorporated by reference to Exhibit 99.1 to Registrants Current Report
on Form
8-K filed March 5, 2008).
 31.1
    
    Certificate of the Chief Executive Officer of the Registrant required by Rule 13a-14(a) under
the Securities Exchange Act of 1934.
 31.2
    
    Certificate of the Chief Financial Officer of the Registrant required by Rule 13a-14(a) under
the Securities Exchange Act of 1934.
 32.1
    
    Certificate of the Chief Executive Officer of the Registrant required by Rule 13a-14(b) under
the Securities Exchange Act of 1934.
 32.2
    
    Certificate of the Chief Financial Officer of the Registrant required by Rule 13a-14(b) under
the Securities Exchange Act of 1934.
 13




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SIGNATURE
  QUIPP, INC.Date: May 14, 2008By:
    /s/ MICHAEL S. KADYMichael S. KadyPresident and Chief Executive OfficerBy:
    /s/ ERIC BELLOEric Bello, Chief Financial Officer(Principal financial and accounting officer) 14