SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter
Ended March 31, 1995 Commission File Number 0-13433
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MILTOPE GROUP INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2693062
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 Richardson Road South
Hope Hull, AL 36043
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (334) 284-8665
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Not Applicable
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Former name, former address and former fiscal year, if changed
since last report
Indicate by check mark whether the 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 such 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
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the period
covered by this report. Outstanding at May 5, 1994: 5,834,148
shares of Common Stock, $.01 par value.
<PAGE>
PART I - FINANCIAL INFORMATION
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31,
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ASSETS 1994 1995
------ ---- ----
(unaudited)
CURRENT ASSETS:
Cash $ 811,000 $ 534,000
Accounts receivable 14,623,000 12,739,000
Inventories 19,414,000 18,198,000
Income tax receivable 2,524,000 2,533,000
Advances and other 328,000 283,000
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Total current assets 37,700,000 34,287,000
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PROPERTY AND EQUIPMENT - at cost:
Machinery and equipment 7,847,000 7,197,000
Furniture and fixtures 1,438,000 1,468,000
Land, building and
improvements 7,105,000 6,896,000
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Total property and
equipment 16,390,000 15,561,000
Less accumulated depreciation 4,400,000 4,234,000
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Property and equipment
- net 11,990,000 11,327,000
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OTHER ASSETS 3,472,000 4,602,000
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TOTAL $53,162,000 $50,216,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $13,950,000 $11,379,000
Current maturities of
long-term debt 230,000 230,000
Accrued expenses 3,815,000 2,855,000
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Total current liabilities 17,995,000 14,464,000
LONG-TERM LIABILITIES 17,937,000 19,954,000
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Total liabilities 35,932,000 34,418,000
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STOCKHOLDERS' EQUITY:
Common stock 68,000 68,000
Capital in excess of par value 20,154,000 20,154,000
Retained earnings 10,597,000 9,264,000
Net unrealized appreciation on
investment available for sale,
net of deferred income tax
liability of $386,000 and
$328,000 respectively 657,000 558,000
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31,476,000 30,044,000
Less treasury stock 14,246,000 14,246,000
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Total stockholders' equity 17,230,000 15,798,000
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TOTAL $53,162,000 $50,216,000
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirteen Weeks Ended March 31,
------------------------------
1994 1995
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NET SALES $20,089,000 $16,199,000
COSTS AND EXPENSES:
Cost of sales 15,043,000 13,653,000
Selling, general and
administrative 2,578,000 2,424,000
Engineering, research and
development 1,155,000 1,042,000
Relocation and restructuring
charge 8,300,000 -
----------- -----------
Total 27,076,000 17,119,000
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LOSS FROM OPERATIONS (6,987,000) (920,000)
INTEREST EXPENSE - net 318,000 412,000
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LOSS BEFORE INCOME TAXES (7,305,000) (1,332,000)
INCOME TAX BENEFIT (2,191,000) -
----------- -----------
NET LOSS $(5,114,000) $(1,332,000)
=========== ===========
LOSS PER COMMON SHARE $(0.88) $(0.23)
====== ======
Weighted average number of shares: 5,834,000 5,834,000
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 1994 AND 1995
(unaudited)
1994 1995
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(5,114,000) $(1,332,000)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation and amortization 351,000 408,000
Deferred income taxes (90,000) -
Provision for slow-moving
and obsolete inventories 120,000 200,000
Provision for doubtful accounts
receivable 30,000 19,000
Change in operating assets
and liabilities:
Accounts receivable 3,540,000 1,866,000
Inventories (1,155,000) 1,016,000
Advances and other (434,000) 45,000
Other assets - (264,000)
Accounts payable and
accrued expenses 6,412,000 (3,095,000)
Income taxes receivable (1,566,000) (9,000)
Asset available for sale (349,000) -
----------- -----------
Cash provided by (used in)
operating activities 1,745,000 (1,146,000)
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CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment (520,000) (126,000)
Investment restricted for
capital expenditures - (1,091,000)
Proceeds from sale of
property and equipment - 11,000
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Cash used in investing
activities (520,000) (1,206,000)
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CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term debt - 6,100,000
Payments of revolving credit
loan-net (1,400,000 (650,000)
Payments of other long-term
debt - (3,375,000)
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Cash provided by (used in)
financing activities (1,400,000) 2,075,000
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NET DECREASE IN CASH (175,000) (277,000)
CASH, BEGINNING OF PERIOD 434,000 811,000
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CASH, END OF PERIOD $ 259,000 $ 534,000
=========== ==========
SUPPLEMENTAL DISCLOSURE:
Payments made (refunds received):
Income taxes $ (543,000) $ 9,000
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Interest $ 307,000 $ 491,000
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements - In the opinion of the Company, the
accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary (consisting of only
normal and recurring accruals) to present fairly the financial
position of the Company and its subsidiaries as of December 31,
1994 and March 31, 1995 and the results of operations and cash
flows for the thirteen weeks ended March 31, 1994 and 1995.
The results for the thirteen weeks ended March 31, 1994 and 1995
are not necessarily indicative of the results for an entire year.
It is suggested that these consolidated financial statements be
read in conjunction with the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.
2. Inventories - Net
Inventories consist of the following:
December 31, 1994 March 31, 1995
----------------- --------------
Purchased parts and
subassemblies $ 3,268,000 $ 3,055,000
Work-in-process 13,769,000 12,635,000
Inventoried costs related
to long-term contracts
and programs, net of
amounts attributed to
revenues recognized
to date 2,687,000 2,818,000
------------ ------------
Total $ 19,724,000 $ 18,508,000
Less progress billings
received 310,000 310,000
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Total $ 19,414,000 $ 18,198,000
============ ============
3. Other Assets - The Company has an investment available for
sale, with an original cost of $5,000, in M-Systems Flash Disk
Pioneers, Ltd. ( M-Systems ), a company based in Israel. The
Company is a major customer of M-Systems. The Company currently
owns 252,864 shares of M-Systems stock. The Company also has an
option, which expires September 10, 1995, to purchase an
additional 153,242 shares of M-Systems stock at a price of
$325,000. No value has been ascribed to the option at March 31,
1995. The fair market value of the Company s investment in M-
Systems stock on March 31, 1995 is $885,000 and is included in
other assets and as a separate component of stockholders equity
(net of deferred income taxes) on the accompanying balance sheet.
-5-
<PAGE>
4. Relocation and Restructuring Charge - On March 4, 1994, the
Company decided to relocate and restructure substantially all of
the manufacturing, engineering and administrative functions
located in Melville, New York to Alabama and Vermont. A pre-tax
charge of $8.3 million was recorded during the first quarter of
1994 and an additional $.8 million was recorded in the fourth
quarter of 1994, to cover the costs associated with the
relocation and restructuring including severance and related
human resource programs, employee relocation, transfer of
assets to Alabama and Vermont and production inefficiencies.
At March 31, 1995, $.5 million of these charges, representing
certain relocation related costs, is included in accrued expenses
on the accompanying balance sheet and is expected to be paid
during 1995.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
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The following discussion and analysis presents certain
factors affecting the Company's results of operations for the
thirteen weeks ended March 31, 1995 and March 31, 1994.
RESULTS OF OPERATIONS
---------------------
Net sales for the thirteen week period ended March 31, 1995
(first quarter) were $16.2 million compared to first quarter 1994
net sales of $20.1 million. The loss from operations in the
first quarter of 1995 was $.9 million compared to a loss from
operations of $7 million in the same period in 1994. The 1994
first quarter loss from operations was impacted by a relocation
and restructuring charge in the amount of $8.3 million. The
charge reflected the cost associated with the relocation and
restructuring of substantially all of the manufacturing,
engineering and administrative functions from Melville, New York
to Alabama and Vermont.
Sales levels and operating performance in the first quarter
of 1995 reflect the impact of the relocation difficulties
originally encountered in 1994. Factors contributing to these
difficulties included system changes involving the planning,
ordering and distribution of material to the factory, system
changes for producing, controlling and releasing engineering
drawings for production and manufacturing processes that proved
difficult for new production personnel in a new location. The
1995 first quarter sales levels and operating results were in
line with the Company s operating plan.
The gross margin percentage for the first quarter of 1995
was 15.7% compared to 25.1% for the same period in 1994. The
decline in gross margin was primarily due to the operational
impact of the relocation transition and the effect of fixed
operating expenses on lower sales volume.
Selling, general and administrative expenses of $2.4 million
for the first quarter of 1995 decreased by 6% when compared to
the first quarter of 1994. Selling, general and administrative
expenses as a percent of sales were 15% in the first quarter of
1995 compared to 12.8% in 1994. The increase in 1995 as a
percent of sales principally reflects the lower sales volume when
compared to the prior year.
Company sponsored engineering, research and development
expenses for the first quarter of 1995 were $1.0 million compared
to $1.2 million for the same period in 1994. The decrease
primarily relates to the cost benefits of the relocation.
Interest expense, net of interest income, was $.4 million in
the first quarter of 1995 compared to $.3 million in 1994. The
increase reflects increased debt and higher interest rates over
prior year levels.
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<PAGE>
The net loss for the first quarter of 1995 was $1.3 million
or $.23 per share compared to $5.1 million or $.88 per share in
the same period of 1994. The 1994 net loss was impacted by a
charge for relocation and restructuring expenses. Excluding
the relocation and restructuring charge, net income and earnings
per share would have been $.6 million and $.11, respectively,
for the quarter ended March 31, 1994.
No tax benefit has been recognized on the net operating
losses in the 1995 first quarter. A net deferred tax asset could
be recognized in future periods if the probability of realization
increases.
LIQUIDITY AND CAPITAL RESOURCES
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Working capital approximated $19.8 million at March 31, 1995
compared to $19.7 million at December 31, 1994.
In February 1995, the Company amended its revolving credit
facility to an amount not to exceed $19 million. As of March
31, 1995, the Company had approximately $6.3 million available
under such facility. The revolving credit facility balance was
$12.7 million at March 31, 1995 compared to $13.3 million at
December 31, 1994. The revolving credit facility is scheduled to
mature on May 31, 1996 at which time the outstanding amount would
be converted into a term loan, payable in twelve (12) equal
quarterly installments. However, the bank may extend the
revolving credit facility for successive one (1) year periods
based upon a review of the Company's financial position. The
Company's accounts receivable, contract rights and inventories
are pledged as collateral to the agreement.
-8-
<PAGE>
PART II - OTHER INFORMATION
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Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K
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None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
MILTOPE GROUP INC.
By: /s/ Randolph J. Straka
----------------------
Randolph J. Straka,
Chief Financial Officer
(Principal Accounting and
Financial Officer)
Dated: May 12, 1995
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MILTOPE
GROUP INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 534,000
<SECURITIES> 0
<RECEIVABLES> 12,739,000
<ALLOWANCES> 0
<INVENTORY> 18,198,000
<CURRENT-ASSETS> 34,287,000
<PP&E> 15,561,000
<DEPRECIATION> 4,234,000
<TOTAL-ASSETS> 50,216,000
<CURRENT-LIABILITIES> 14,464,000
<BONDS> 0
<COMMON> 68,000
0
0
<OTHER-SE> 15,730,000
<TOTAL-LIABILITY-AND-EQUITY> 50,216,000
<SALES> 16,199,000
<TOTAL-REVENUES> 16,199,000
<CGS> 13,653,000
<TOTAL-COSTS> 17,119,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 412,000
<INCOME-PRETAX> (1,332,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,332,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,332,000)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
