UNITED STATES
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 September 24, 2000 Commission File Number 0-13433
------------------------
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
-------------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (334) 284-8665
--------------
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
----- -----
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 November 7, 2000: 5,871,523 shares of Common
Stock, $.01 par value.
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 24, December 31,
ASSETS 2000 1999
------ ------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,400,000 $ 2,437,000
Accounts receivable 6,052,000 4,477,000
Inventories 14,000,000 15,360,000
Deferred income taxes 789,000 535,000
Other current assets 375,000 467,000
----------- -----------
Total current assets 23,616,000 23,276,000
----------- -----------
PROPERTY AND EQUIPMENT - at cost:
Machinery and equipment 8,879,000 8,786,000
Furniture and fixtures 1,628,000 1,615,000
Land, building and improvements 6,743,000 8,449,000
----------- -----------
Total property and equipment 17,250,000 18,850,000
Less accumulated depreciation 10,388,000 10,374,000
----------- -----------
Property and equipment - net 6,862,000 8,476,000
----------- -----------
DEFERRED INCOME TAXES 3,375,000 3,629,000
OTHER ASSETS 1,192,000 1,543,000
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TOTAL $35,045,000 $36,924,000
=========== ===========
LIABILITIES AND STOCKHOLDERS'EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,466,000 $ 4,089,000
Accrued expenses 4,396,000 4,935,000
Current maturities of long-term debt 4,113,000 3,064,000
----------- -----------
Total current liabilities 12,975,000 12,088,000
LONG-TERM DEBT 10,807,000 14,830,000
----------- -----------
Total liabilities 23,782,000 26,918,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value;
20,000,000 shares authorized;
6,811,112 shares outstanding
at September 24, 2000 and
December 31, 1999. 68,000 68,000
Capital in excess of par value 20,263,000 20,263,000
Retained earnings 5,177,000 3,920,000
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25,508,000 24,251,000
Less treasury stock at cost 14,245,000 14,245,000
----------- -----------
Total stockholders' equity 11,263,000 10,006,000
----------- -----------
TOTAL $35,045,000 $36,924,000
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</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirty-Nine Weeks Ended
-------------------------------
As Restated
September 24, September 26,
2000 1999
------------ ------------
<S> <C> <C>
NET SALES $ 27,837,000 $ 27,770,000
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COSTS AND EXPENSES:
Cost of sales 21,996,000 23,256,000
Selling, general and administrative 5,509,000 6,892,000
Engineering, research and development 542,000 1,165,000
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Total 28,047,000 31,313,000
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LOSS FROM OPERATIONS (210,000) (3,543,000)
INTEREST EXPENSE - net 875,000 946,000
------------ ------------
LOSS BEFORE INCOME TAXES $ (1,085,000) $ (4,489,000)
INCOME TAX BENEFIT - -
------------ ------------
NET LOSS $ (1,085,000) $ (4,489,000)
============ ============
BASIC AND DILUTED
NET LOSS PER SHARE $ (0.18) $ (0.76)
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,871,523 5,871,523
============ ============
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirteen Weeks Ended
--------------------------------
As Restated
September 24, September 26,
2000 1999
----------- ------------
<S> <C> <C>
NET SALES $ 9,385,000 $ 11,220,000
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COSTS AND EXPENSES:
Cost of sales 7,767,000 9,115,000
Selling, general and administrative 1,863,000 2,324,000
Engineering, research and development 90,000 558,000
----------- ------------
Total 9,720,000 11,997,000
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LOSS FROM OPERATIONS (335,000) (777,000)
INTEREST EXPENSE - net 284,000 315,000
----------- ------------
LOSS BEFORE INCOME TAXES (619,000) (1,092,000)
INCOME TAX BENEFIT - -
----------- ------------
NET LOSS $ (619,000) $ (1,092,000)
=========== ============
BASIC AND DILUTED
NET LOSS PER SHARE $ (0.10) $ (0.19)
=========== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,871,523 5,871,523
=========== ============
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 24, 2000 AND SEPTEMBER 26, 1999
(unaudited)
As Restated
September 24, September 26,
2000 1999
-------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,085,000) $ (4,489,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,025,000 1,259,000
Provision for slow-moving and obsolete inventories 945,000 542,000
Provision for doubtful accounts receivable 50,000 58,000
Deferred income taxes - -
Loss (gain) on sale of property and equipment (22,000) 3,000
Change in operating assets and liabilities:
Accounts receivable (1,623,000) 1,004,000
Inventories 414,000 1,842,000
Other current assets 92,000 (1,247,000)
Other assets 219,000 68,000
Accounts payable and accrued expenses 2,177,000 643,000
------------ ------------
Cash provided by (used in) operating activities 2,192,000 (317,000)
------------ ------------
INVESTING ACTIVITIES:
Purchase of property and equipment (155,000) (502,000)
Sale of property and equipment 900,000 -
------------ ------------
Cash provided by (used in) investing activities 745,000 (502,000)
------------ ------------
FINANCING ACTIVITIES:
Proceeds (payments) from revolving credit loan - net (1,408,000) 1,220,000
Payments of other long-term debt - net (1,566,000) (236,000)
------------ ------------
Cash provided by (used in) financing activities (2,974,000) 984,000
------------ ------------
NET INCREASE (DECREASE) IN CASH (37,000) 165,000
CASH, BEGINNING OF PERIOD 2,437,000 298,000
------------ ------------
CASH, END OF PERIOD $ 2,400,000 $ 463,000
============ ============
SUPPLEMENTAL DISCLOSURE:
Cash payments made for:
Income taxes $ - $ -
============ ============
Interest $ 890,000 $ 902,000
============ ============
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements - In the opinion of management, 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 Miltope
Group, Inc. ("the Company") and its subsidiaries as of September 24,
2000 and December 31, 1999 and the results of operations and cash flows
for the thirty-nine weeks ended September 24, 2000 and September 26,
1999.
The results for the thirty-nine weeks ended September 24, 2000 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, 1999.
Reclassifications - Certain prior years amounts have been
reclassified to conform to the 2000 presentation.
2. Business Acquisitions - On April 1, 2000, the Company
entered into an agreement with Great Universal Incorporated ("GUI"), to
transfer GUI's ownership of 90% of the outstanding stock of IV Phoenix
Group, Inc. ("PGI") to the Company. Since GUI, through its controlling
interest in the Company, continues to own a controlling interest in PGI
after the transfer, the acquisition has been recorded on the Company's
books at GUI's historical cost and accounted for on an "as if pooled
basis". Accordingly, the accompanying financial statements have been
restated on this basis.
Revenues and net loss for the separate companies and the combined
amounts presented in the accompanying consolidated financial statements
for the thirteen and thirty nine week periods ended September 24, 2000
and September 26, 1999, are as follows:
<TABLE>
Thirteen Weeks Thirty Nine Weeks
Ended September 24, 2000 Ended September 24 ,2000
------------------------ ------------------------
<S> <C> <C>
Revenues:
Miltope $ 8,668,000 $ 24,828,000
PGI 752,000 3,251,000
Combined (net of related party transactions) $ 9,385,000 $ 27,837,000
Net loss:
Miltope $ (78,000) $ (101,000)
PGI (505,000) (873,000)
Combined (net of related party transactions) $ (619,000) $ (1,085,000)
Thirteen Weeks Thirty Nine Weeks
Ended September 26, 1999 Ended September 26 ,1999
------------------------ ------------------------
<S> <C> <C>
Revenues:
Miltope $ 8,305,000 $ 22,927,000
PGI 3,361,000 7,407,000
Combined (net of related party transactions) $ 11,220,000 $ 27,770,000
Net income (loss):
Miltope $ (1,343,000) $ (3,867,000)
PGI 288,000 (511,000)
Combined (net of related party transactions) $ (1,092,000) $ (4,489,000)
</TABLE>
Certain amounts from PGI's prior financial statements were reclassified
to conform to Miltope's presentation.
3. Inventories - Net
Inventories consist of the following:
<TABLE>
September 24, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Purchased parts and
sub-assemblies $ 11,912,000 $ 10,278,000
Work-in-process 2,088,000 5,082,000
------------ ------------
Total $ 14,000,000 $ 15,360,000
============ ============
</TABLE>
4. Income Taxes - No income tax benefit has been recognized related
to the net operating losses for the thirty nine weeks ended September
24, 2000 and September 26, 1999 as they have been fully reserved with a
valuation allowance. Although realization is not assured, management
believes it is more likely than not that the recorded deferred tax
assets, net of valuation allowance provided, will be realized. The
valuation allowances can be adjusted in future periods as the
probability of realization of the deferred tax assets change.
5. Segment Information - The Company's reportable segments are
organized around its two main products and services segments,
Military/Rugged and Commercial. Through its military/rugged segment,
the Company is engaged in the design, manufacture and testing of
computer and computer peripheral equipment for military and other
specialized applications requiring reliable operations in severe land,
sea and airborne environments. These products are generally sold by
the Company's business development group through the federal government
bid process. The Company's commercial segment designs, develops,
manufactures and markets commercial computer related products primarily
for transportation, telecommunications and in-field maintenance
markets. These products are sold through an established network of
marketing representatives and Company employed sales people to a broad
base of customers both international and domestic. The accounting
policies of the segments are the same as those described in the summary
of significant accounting policies. The Company's determination of
segment operating income (loss) does not reflect other income (expense)
or income taxes.
<PAGE>
<TABLE>
<CAPTION>
Thirteen Weeks Ended September 24, 2000 and September 26, 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
General
September 24, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated
--------------------------------- --------------- ---------- ------------ --------- ------------
Net sales from external customers $ 6,912,000 $ 2,509,000 $ (36,000) $ 9,385,000
=========== =========== =========== ===========
Segment operating income (loss) $ (545,000) $ 247,000 $ (37,000) $ (335,000)
=========== =========== =========== ===========
Identifiable assets $21,651,000 $ 5,922,000 $ 43,000 $7,429,000 $35,045,000
=========== =========== =========== ========== ===========
Capital expenditures $ 54,000 $ 22,000 $ 76,000
=========== =========== ===========
Depreciation and amortization $ 225,000 $ 68,000 $ 37,000 $ 330,000
=========== =========== =========== ===========
<S> <C> <C> <C> <C> <C>
As Restated General
September 26, 1999 Military/Rugged Commercial Eliminations Corporate Consolidated
--------------------------------- --------------- ---------- ------------ --------- ------------
Net sales from external customers $ 8,168,000 $3,498,000 $ (446,000) $11,220,000
=========== ========== =========== ===========
Segment operating income (loss) $ (847,000) $ 107,000 $ ( 37,000) $ (777,000)
=========== ========== =========== ===========
Identifiable assets $24,352,000 $7,981,000 $ 190,000 $5,982,000 $38,505,000
=========== ========== =========== ========== ===========
Capital expenditures $ 150,000 $ 71,000 $ 221,000
=========== ========== ===========
Depreciation and amortization $ 231,000 $ 97,000 $ 37,000 $ 365,000
=========== ========== =========== ===========
<CAPTION>
Thirty-Nine Weeks Ended September 24, 2000 and September 26, 1999
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
General
September 24, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated
--------------------------------- --------------- ---------- ------------ --------- ------------
Net sales from external customers $18,586,000 $9,494,000 $ (243,000) $27,837,000
=========== ========== =========== ===========
Segment operating income (loss) $(1,078,000) $ 978,000 $ (110,000) $ (210,000)
=========== ========== =========== ===========
Identifiable assets $21,651,000 $5,922,000 $ 43,000 $7,429,000 $35,045,000
=========== ========== =========== ========== ===========
Capital expenditures $ 98,000 $ 57,000 $ 155,000
=========== ========== ===========
Depreciation and amortization $ 669,000 $ 246,000 $ 110,000 $ 1,025,000
=========== ========== =========== ===========
<C> <C> <C> <C> <C> <C>
As Restated General
September 26, 1999 Military/Rugged Commercial Eliminations Corporate Consolidated
--------------------------------- --------------- ----------- ------------ ---------- ------------
Net sales from external customers $19,480,000 $10,853,000 $(2,563,000) $27,770,000
=========== =========== =========== ===========
Segment operating income (loss) $(2,930,000) $ (503,000) $ (110,000) $(3,543,000)
=========== =========== =========== ===========
Identifiable assets $24,352,000 $ 7,981,000 $ 190,000 $5,982,000 $38,505,000
=========== =========== =========== ========== ===========
Capital expenditures $ 304,000 $ 198,000 $ 502,000
=========== =========== ===========
Depreciation and amortization $ 802,000 $ 347,000 $ 110,000 $ 1,259,000
=========== =========== =========== ===========
</TABLE>
<PAGE>
6. Equity - In conjunction with its acquisition of 90% of the
outstanding shares of stock of PGI, the Company has also entered into a
Call Option Agreement with GUI whereby the Company grants GUI the
option and right to repurchase all and not less than all of the
acquired PGI shares. The Call Option may only be exercised for the
amount of the original purchase price of the shares during a thirty
(30) day period beginning April 1, 2001. Additionally, prior to the
purchase of PGI by the Company and subsequent to December 31, 1999, GUI
converted approximately $2,300,000 of debt from PGI into additional
equity in PGI.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes certain forward looking
statements which are affected by important factors including, but not
limited to, actions of competitors, termination of contracts at the
convenience of the United States government, customer funding
variations in connection with multi-year contracts and follow-on
options that could cause actual results to differ materially from
forward looking statements.
GENERAL
-------
The following discussion and analysis presents certain factors
affecting the Company's results of operations for the thirteen weeks
and thirty-nine weeks ended September 24, 2000, as compared to the
thirteen weeks and thirty-nine weeks ended September 26, 1999.
RESULTS OF OPERATIONS
----------------------
Thirteen weeks ended September 24, 2000 compared to thirteen weeks
ended September 26, 1999
-----------------------------------------------------------------------
Net sales for the thirteen weeks ended September 24, 2000 (third
quarter of 2000) were $9,385,000 compared to net sales for the
thirteen weeks ended September 26, 1999 (third quarter of 1999) of
11,220,000. The decrease in sales was primarily attributable to
decreased sales to the government of SPORT units due to temporary
component shortages from a vendor and lower PGI sales in the thirteen
week period ended September 24, 2000 as compared to the same period in
1999.
The gross margin percentage for the third quarter of 2000 was
17.2% compared to 18.7% for the same period in 1999. The decrease is
primarily attributable to a more favorable product mix from the
Company's revenues offset by a decline in PGI profit margins for the
third quarter of 2000 as compared to the same period in 1999.
Selling, general and administrative expenses for the third quarter
of 2000 decreased 19.8% from the third quarter of 1999, to $1,863,000.
These expenses as a percent of sales were 19.8% in the third quarter of
2000 compared to 20.7% for the similar period in 1999. The decrease as
a percent of sales is primarily attributable to continued emphasis by
company management on reducing cost in these areas.
Company sponsored engineering, research and development expenses
for the third quarter of 2000 decreased 83.8% from the third quarter of
1999, to $90,000. These expenses as a percent of sales were .9% in the
third quarter of 2000 compared to 5.0% for the similar period in 1999.
The decrease as a percent of sales is primarily attributable to timing
of certain engineering and development expenses.
Interest expense, net of interest income, was $284,000 in the
third quarter of 2000 compared to $315,000 for the similar period in
1999. The decrease reflects decreased debt compared to the prior year.
Net loss for the third quarter of 2000 was $619,000 compared to
net loss of $1,092,000 in the third quarter of 1999. The basic and
diluted net loss per share was $0.10 for the third quarter of 2000
compared to the basic and diluted net loss per share of $0.19 for the
similar period in 1999 based on a weighted average of 5,871,523 shares
of the Company's common stock outstanding for the third quarter of 2000
and 1999. The decrease in loss was primarily attributable to a more
favorable product mix and improved product margins coupled with
significantly lower selling, general and administrative expense and
engineering, research and development expense in the third quarter of
2000 compared to the third quarter of 1999.
Thirty-Nine weeks ended September 24, 2000 compared to Thirty-Nine
weeks ended September 26, 1999
-----------------------------------------------------------------------
Net sales for the thirty-nine weeks ended September 24, 2000 were
$27,837,000 compared to net sales for the thirty-nine weeks ended
September 26, 1999 of $27,770,000. The increase in sales was
insignificant.
The gross margin percent for the first three quarters of 2000 was
21.0% compared to 16.2% for the same period in 1999. The increase in
gross margin percent was primarily attributable to a more favorable
product mix and continued improvement in product margins.
Selling, general and administrative expenses for the first three
quarters of 2000 decreased 20.0% from the same period in 1999, to
$5,509,000. These expenses as a percent of sales were 19.8% in the
first three quarters of 2000 compared to 24.8% for the similar period
in 1999. The decrease as a percent of sales is primarily attributable
to a year long emphasis by company management on reducing cost in all
areas of the company.
Company sponsored engineering, research and development expenses
for the first three quarters of 2000 decreased 53.5% from the same
period of 1999, to $542,000. These expenses as a percent of sales were
1.9% in the first three quarters of 2000 compared to 4.2% for the
similar period in 1999. The decrease as a percent of sales is primarily
attributable to a year long emphasis by company management on reducing
cost in all areas of the company.
.
Interest expense, net of interest income, was $875,000 in the
first three quarters of 2000 compared to $946,000 for the similar
period in 1999. The decrease reflects decreased debt compared to the
prior year.
The net loss for the first three quarters of 2000 was $1,085,000
compared to a net loss of $4,489,000 in the similar period in 1999.
The basic and diluted net loss per share was $0.18 for the first three
quarters of 2000 as compared to the basic and diluted net loss per
share of $0.76 for the similar period in 1999 based on a weighted
average of 5,871,523 shares of the Company's common stock outstanding
in the third quarter of 2000 and 1999. The increase in earnings was
primarily attributable to continued improvements in product mix and
decreased costs as compared to 1999.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Working capital approximated $10,641,000 at September 24, 2000
compared to $11,188,000 at December 31, 1999. Accounts receivable
increased approximately $1,575,000 as a result of increased sales in
September of 2000. Inventories decreased approximately $1,360,000
primarily as a result of continued improvements in vendor delivery
terms and continued improvement in managing project dynamics. Accounts
payable increased approximately $377,000 partially reflecting purchases
of inventory that was not turned into sales by the end of the quarter.
Accrued expenses decreased approximately $539,000 primarily as a
result of the conversion from liability to capital of certain amounts
owed to GUI by PGI, a subsidiary of the Company and increases in amounts
of customer advance deposits paid to PGI by their customers. Current
maturities of long-term debt increased approximately $1,049,000
reflecting increased maturing amounts in certain of the Company's debt
instruments.
The Company's $15,000,000 revolving credit agreement with its
primary lender matured on May 31, 1999 and was converted into a term
loan payable in twelve equal quarterly installments commencing August
31, 1999. As of November 7, 2000, the Company was in compliance with
all requirements under the term loan. The Company has committed to
continue its search for a lender to replace the existing term loan. In
the near term the Company anticipates its cash position as being
adequate to sustain the Company's ongoing financial commitments and
growth. The Company's accounts receivable, contract rights and
inventories are pledged as collateral to the agreement.
The credit agreement referenced above includes various provisions
requiring the maintenance of certain financial ratios and limitations
on (i) transactions with affiliates, (ii) other debt and guarantees,
(iii) investments in, and advances to, other entities, and (iv) payment
of dividends. At December 31, 1999, the Company was in default of
certain financial ratio requirements related to minimum net worth and
cash flows measured annually and to total liabilities and tangible net
worth measured quarterly. The Company obtained a letter dated March 28,
2000, from the primary lender waiving all violations as of December 31,
1999; revising the ratio requirement for total liabilities to tangible
net worth for the measurement dates in 2000; and revising the principal
repayment requirements for 2000 to a total of $1,875,000.
YEAR 2000 ISSUES
----------------
Year 2000 Compliance
In 1998, the Company developed and began implementing a plan to
review its overall Year 2000 exposure and other issues surrounding Year
2000 compliance. The plan encompassed the Company's mission critical
information technology systems, its vendors, its customers and its
products.
As of November 7, 2000, the Company has experienced no computer
related problems as a result of the Year 2000 issue in any of the areas
referred to above. In addition, the Company is not currently aware of
any circumstances that would indicate a likely Year 2000 related
problem in the future. However, the Company will continue to monitor
its Year 2000 compliance.
The Company has spent less than $250,000 in conjunction with its
Year 2000 remediation and no significant additional expenditures are
anticipated.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings
The Company, from time to time, is a party to pending or
threatened legal proceedings and arbitrations. Based upon information
presently available, and in light of legal and other defenses available
to the Company, management does not consider liability from any
threatened or pending litigation to be material.
Item 5 - Other Information
In conjunction with its acquisition of 90% of the outstanding
shares of stock of PGI, the Company has also entered into a Call Option
Agreement with GUI whereby the Company grants GUI the option and right
to repurchase all and not less than all of the acquired PGI shares. The
Call Option may only be exercised for the amount of the original
purchase price of the shares during a thirty (30) day period beginning
April 1, 2001.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports have been filed prior to the filing of this report
on Form 10-Q.
Item 7a - Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in
market prices and interest rates. The Company is exposed to interest
risk inherent in its financial instruments. The Company is not
currently subject to foreign currency or commodity price risk. The
Company manages its exposure to these market risks through its regular
operating and financing activities.
The Company has a term credit loan and an Industrial Development
Authority Bond Issue that are exposed to changes in interest rates
during the course of their maturity. Both debt instruments bear
interest at current market rates and thus approximate fair market
value. The Company manages its interest rate risk by (a) periodically
retiring and issuing debt and (b) periodically fixing the interest rate
on the London Inter Bank Offered Rate (LIBOR) portion of its revolving
credit loan for 30 to 60 days in order to minimize interest rate
swings. A 10% increase in interest rates would affect the Company's
variable debt obligations and could potentially reduce future earnings
by a maximum of approximately $85,000.
<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/ Thomas Dickinson
-------------------------------------
Thomas Dickinson,
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Tom B. Dake
--------------------------------------
Tom B. Dake,
Vice President Finance and Chief
Financial Officer
(Principal Accounting Officer)
Dated: November 7, 2000
