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 June 30, 1996 Commission File Number 0-13433
MILTOPE GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2693062
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 Richardson Road South
Hope Hull, AL 36043
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (334) 284-8665
Not Applicable
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
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 August 13, 1996:
5,867,148 shares of Common Stock, $.01 par value.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
MILTOPE GROUP INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, JUNE 30,
ASSETS 1995 1996
(audited) (unaudited)
------------- ------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 301,000 $ 706,000
Accounts receivable 10,417,000 11,965,000
Inventories 16,432,000 13,116,000
Advances and other 256,000 273,000
------------ -----------
Total current assets 27,406,000 26,060,000
------------ -----------
PROPERTY AND EQUIPMENT - at cost:
Machinery and equipment 7,467,000 7,504,000
Furniture and fixtures 1,467,000 1,467,000
Land, building and improvements 7,108,000 7,180,000
------------ -----------
Total property and equipment 16,042,000 16,151,000
Less accumulated depreciation 5,313,000 6,032,000
------------ -----------
Property and equipment - net 10,729,000 10,119,000
------------ -----------
OTHER ASSETS 3,305,000 2,251,000
------------ -----------
TOTAL $ 41,440,000 $38,430,000
============ ===========
LIABILITIES AND STOCKHOLDERS'EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,956,000 $ 3,664,000
Accrued expenses 1,958,000 1,887,000
Current maturities of long-term debt 528,000 200,000
Deferred income taxes 68,000 -
------------ -----------
Total current liabilities 8,510,000 5,751,000
LONG-TERM DEBT 16,953,000 16,348,000
DEFERRED INCOME TAXES 64,000 -
------------ -----------
TOTAL LIABILITIES 25,527,000 22,099,000
------------ -----------
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; 68,000 68,000
20,000,000 shares
authorized; 5,867,148 shares
outstanding
Capital in excess of par value 20,253,000 20,253,000
Retained earnings 9,613,000 10,256,000
Net unrealized appreciation on
investment available for sale,
net of deferred income tax
liability of $132,000 at
December 31, 1995 225,000 -
------------ -----------
30,159,000 30,577,000
Less treasury stock 14,246,000 14,246,000
------------ -----------
Total stockholders' equity 15,913,000 16,331,000
------------ -----------
TOTAL $ 41,440,000 $38,430,000
============ ===========
<FN>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
</PAGE>
<PAGE>
<TABLE>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Twenty-Six Weeks Ended
------------------------------
July 1, June 30,
1995 1996
----------- -----------
<S> <C> <C>
NET SALES $37,262,000 $21,086,000
----------- -----------
COSTS AND EXPENSES:
Cost of sales 30,054,000 15,981,000
Selling, general and 5,308,000 2,889,000
administrative
Engineering, research and
development 2,293,000 982,000
----------- -----------
Total 37,655,000 19,852,000
----------- -----------
INCOME (LOSS) FROM OPERATIONS (393,000) 1,234,000
INTEREST EXPENSE - net 746,000 591,000
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (1,139,000) 643,000
INCOME TAXES - -
----------- -----------
NET INCOME (LOSS) $(1,139,000) $ 643,000
NET INCOME (LOSS) PER SHARE $ (.20) $ .11
=========== ===========
Weighted average number of shares: 5,839,000 5,867,000
=========== ===========
<SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
</TABLE)
</PAGE>
<PAGE>
</TABLE>
<TABLE>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirteen Weeks Ended
----------------------------
July 1, June 30,
1995 1996
----------- -----------
<S> <C> <C>
NET SALES $21,063,000 $11,137,000
----------- -----------
COSTS AND EXPENSES:
Cost of sales 16,401,000 8,692,000
Selling, general and administrative 2,884,000 1,233,000
Engineering, research and development 1,251,000 416,000
----------- -----------
Total 20,536,000 10,341,000
----------- -----------
INCOME FROM OPERATIONS 527,000 796,000
INTEREST EXPENSE - net 334,000 270,000
----------- -----------
INCOME BEFORE INCOME TAXES 193,000 526,000
INCOME TAXES - -
----------- -----------
NET INCOME $ 193,000 $ 526,000
=========== ===========
NET INCOME PER SHARE $ .03 $ .09
=========== ===========
Weighted average number of shares: 5,843,000 5,867,000
=========== ===========
<FN>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
</PAGE>
<PAGE>
<TABLE>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JULY 1, 1995 AND JUNE 30, 1996
(unaudited)
July 1, June 30,
1995 1996
---------- ---------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $(1,139,000) $643,000
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization 815,000 858,000
Provision for slow-moving and
obsolete inventories 400,000 450,000
Provision for doubtful accounts receivable 32,000 (265,000)
Gain on sale of investment available for sale - (522,000)
Loss on sale of fixed assets - 22,000
Deferred income taxes 70,000 (132,000)
Change in operating assets and liabilities:
Accounts receivable 1,195,000 (1,284,000)
Inventories (893,000) 2,867,000
Advances and other (67,000) (17,000)
Other assets (351,000) 695,000
Accounts payable and accrued expenses (3,093,000) (2,366,000)
Income taxes receivable 2,524,000 -
----------- ----------
Net cash provided by (used in)
operating activities (507,000) 949,000
----------- ----------
INVESTING ACTIVITIES:
Purchase of property and equipment (442,000) (139,000)
Investment restricted for capital expenditures (857,000) -
Proceeds from sale of investment available for sale - 524,000
Proceeds from sale of property and equipment 11,000 4,000
----------- ---------
Net cash provided by (used in) investing activities(1,288,000) 389,000
----------- ---------
FINANCING ACTIVITIES:
Proceeds from long-term debt 6,100,000 -
Payments of revolving credit loan-net (1,377,000) (782,000)
Payments of other long-term debt (3,375,000) (151,000)
Exercise of stock options 33,000 -
----------- --------
Net cash provided by (used in)financing activities 1,381,000 (933,000)
----------- --------
NET INCREASE (DECREASE) IN CASH (414,000) 405,000
CASH, BEGINNING OF PERIOD 811,000 301,000
----------- --------
CASH, END OF PERIOD $ 397,000 $ 706,000
=========== ==========
SUPPLEMENTAL DISCLOSURE:
Payments made (refunds received):
Income taxes $(2,533,000) $ -
=========== ==========
Interest $ 805,000 $ 560,000
=========== ==========
<FN>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
</PAGE>
<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Operations - On January 1, 1996,the Company
consolidated the operations of Miltope Corporation and Miltope
Business Products.
2. 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
June 30, 1996 and the results of operations and cash flows for
the twenty-six and thirteen weeks ended July 1, 1995 and June
30,1996.
The results for the twenty-six weeks ended July 1, 1995 and
June 30, 1996 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,
1995.
3. Inventories - Net
Inventories consist of the following:
<TABLE>
December 31, 1995 June 30,1996
----------------- ------------
<S> <C> <C>
Purchased parts and
subassemblies $ 2,766,000 $ 7,068,000
Work-in-process 13,581,000 5,860,000
Inventoried costs
related to
long-term contracts
and programs, net of
amounts attributed
to revenues recognized
to date 85,000 243,000
----------- -----------
Total 16,432,000 13,171,000
Less progress billings received - 55,000
----------- -----------
Total $16,432,000 $13,116,000
=========== ===========
</TABLE>
4. Other Assets - The Company has an investment in M-Systems
Flash Disk Pioneers, Ltd. ("M-Systems"), a company based in
Israel. The Company currently owns 153,242 restricted shares of
M-Systems stock with an original cost of $231,000. The
original cost is included in other assets.
5. Income Taxes - The income tax provision in the second
quarter was completely offset by the utilization of the
Company's net operating loss carryforward. A net deferred
tax asset could be recognized in future periods if the
probability of realization increases.
6. Contingency - During the thirteen weeks ended June 30, 1996,
an equitable adjustment claim was settled for an amount which
approximated revenue previously recognized relating to a significant
contract which was terminated in 1992.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
The following discussion and analysis presents certain
factors affecting the Company's results of operations for
thirteen weeks and twenty-six weeks ended June 30, 1996, as
compared to thirteen weeks and twenty-six weeks ended July 1,
1995.
RESULTS OF OPERATIONS
- ---------------------
Thirteen weeks ended June 30, 1996 compared to thirteen weeks
- ----------------------------------------------------------------
ended July 1, 1995.
- -------------------
Net sales for the thirteen weeks ended June 30, 1996
(second quarter of 1996) were $11.1 million compared to net
sales for the thirteen weeks ended July 1, 1995 (second
quarter of 1995) of $21.1 million. The decrease in sales
was the result of lower military product sales.
The gross margin percentage for the second quarter of
1996 was 22.0% as compared with 22.1% for the same period in
1995.
Selling, general and administrative expenses for the
second quarter of 1996 decreased 57.2% from the second quarter
of 1995, to approximately $1.2 million. These expenses as a
percent of sales were 11.1% in the second quarter of 1996
compared to 13.7% for the similar period in 1995.
Company sponsored engineering, research and development
expenses for the second quarter of 1996 decreased 66.7% from the
second quarter of 1995 to $416 thousand. These expenses as a
percentage of sales were 3.7% in the second quarter of 1996
compared to 5.9% for the similar period in 1995. The decrease
is attributable to an increased amount of research and
development funded by contracts and greater efficiencies in
research and development processes.
Interest expense net of interest income was $270 thousand
in the second quarter of 1996 compared to $334 thousand for the
similar period in 1995. The decrease reflects decreased debt
compared to the prior year.
Net earnings for the second quarter of 1996 as compared
with the same period of 1995 increased $333 thousand. Earnings
per share were $.09 for the second quarter of 1996 compared to
$.03 for the similar period a year ago based on a weighted
average of 5.9 million shares and 5.8 million shares of the
Company's common stock outstanding for the respective periods.
The income tax provision in the second quarter of
1996 was completely offset by the utilization of the Company's
net operating loss carryforward. A net deferred tax asset
could be recognized in future periods if the probability of
realization increases.
Twenty-six weeks ended June 30, 1996 compared to Twenty-six
- ----------------------------------------------------------------
weeks ended July 1, 1995.
- -------------------------
Net sales for the twenty-six weeks ended June 30, 1996
(first half of 1996) were $21.1 million compared to net sales
for the twenty-six weeks ended July 1, 1995 (first half of 1995)
of $37.3 million. The decrease in sales was the result of lower
military product sales.
The gross margin percentage for the first half of 1996 was
24.2% as compared with 19.3% for the same period in 1995. The
lower gross margin performance in the first half of 1995 was
attributable to the operational impact of the relocation
transition to Montgomery, Alabama.
Selling, general and administrative expenses for the first
half of 1996 decreased 45.6% from the first half of 1995, to
$2.9 million. These expenses as a percent of sales were 13.7%
in the first half of 1996 compared to 14.2% for the similar
period in 1995.
Company sponsored engineering research and development
expenses for the first half of 1996 decreased 57.2% from the
first half of 1995 to $982 thousand. These expenses as a
percentage of sales were 4.7% in the first half of 1996
compared to 6.2% for the similar period in 1995. The decrease
is attributable to an increased amount of research and
development funded by contracts and greater efficiencies
in research and development processes.
Interest expense net of interest income was $591 thousand
in the first half of 1996 compared to $746 thousand for the
similar period in 1995. The decrease reflects decreased debt
compared to the prior year.
Net earnings for the first half of 1996 were $643
thousand compared to a net loss of $1.1 million for the similar
period in 1995. Earnings per share for the first half of 1996
were $0.11 compared to a loss per share of $0.20 for the
similar period a year ago based on a weighted average of 5.9
million shares and 5.8 million shares of the Company's common
stock outstanding for the respective periods.
The income tax provision in the first half of 1996 was
completely offset by the utilization of the Company's net
operating loss carryforward. A net deferred tax asset could be
recognized in future periods if the probability of realization
increases.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital approximated $20.3 million at June 30,
1996 compared to $18.9 million at December 31, 1995.
A $15 million revolving credit agreement bears interest
at the bank's reference rate plus .25%. As of June 30, 1996,
the Company had approximately $5.5 million available under
such facility.
The revolving credit facility balance was $9.5 million at
June 30,1996 compared to $10.3 million at December 31, 1995.
The revolving credit facility is scheduled to mature on May
31, 1997 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.
</PAGE>
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
</PAGE>
<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:
-------------------------
James E. Matthews,
Vice President Finance and
Chief Financial Officer
(Principle Accounting and
Financial Officer)
Dated: August 13, 1996
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS
AND STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 706,000
<SECURITIES> 0
<RECEIVABLES> 11,965,000
<ALLOWANCES> 0
<INVENTORY> 13,116,000
<CURRENT-ASSETS> 26,060,000
<PP&E> 16,151,000
<DEPRECIATION> 6,032,000
<TOTAL-ASSETS> 38,430,000
<CURRENT-LIABILITIES> 5,751,000
<BONDS> 0
0
0
<COMMON> 68,000
<OTHER-SE> 16,263,000
<TOTAL-LIABILITY-AND-EQUITY> 38,430,000
<SALES> 21,086,000
<TOTAL-REVENUES> 21,086,000
<CGS> 15,981,000
<TOTAL-COSTS> 19,852,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 591,000
<INCOME-PRETAX> 643,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 643,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 643,000
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
