UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended July 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________.
Commission file No. 0-14651
MILLER BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3228778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
58120 County Road 3 South
Elkhart, Indiana 46517
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 295-1214
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
(Title of class)
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. (x) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (x)
Aggregate market value of voting stock held by nonaffiliates of the registrant,
based on the closing price of the stock as reported by the National Association
of Securities Dealers' Automated Quotation Systems, on August 31, 1995:
$8,081,136.
As of August 31, 1995, the Registrant had 3,100,963 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following are incorporated into this Annual Report on Form 10-K:
o Portions of Registrant's Proxy Statement for its 1995 Annual Meeting of
Stockholders (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission no later than 120 days after the end of
the Registrant's fiscal year, are incorporated into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
The Company
Miller Building Systems, Inc. ("Miller") is the parent of Miller
Structures, Inc. ("Structures") and Miller Telecom Services, Inc. ("Telecom").
All operations of Miller are conducted through its two wholly-owned subsidiaries
which design, manufacture, and market factory-built buildings. Miller ceased all
operations at PME Pacific Systems, Inc. ("PME") after its final contract was
completed in early 1994.
Miller originally was organized as an Indiana corporation in November 1982
under the name of "Graylyon Corp." and then merged, effective April 1983, into
a Delaware corporation named "Gray Lyon Company". In November 1986, the Company
amended its Certificate of Incorporation to change its name to "Modular
Technology, Inc." In November 1988, the Company again amended its Certificate
of Incorporation to change its name to "Miller Building Systems, Inc." All
references to Miller herein refer to Miller Building Systems, Inc., a Delaware
corporation, and its predecessor Indiana corporation.
Miller maintains its Executive Offices at 58120 County Road 3 South,
Elkhart, Indiana 46517; telephone number (219) 295-1214. The Executive Office
is Miller's principal operating office from which it manages and coordinates the
activities of Structures and Telecom.
STRUCTURES
Structures is headquartered in Elkhart, Indiana and operates all
administrative, sales and production from that location. The Structures office
controls manufacturing facilities in Bennington, Vermont, Elkhart, Indiana,
Leola, Pennsylvania, Sioux Falls, South Dakota and Patterson, California. A
Residential division, which operated as Miller Residential ("Residential") a
division of Structures was closed during the third quarter of fiscal 1995.
Miller has discontinued all operations of the Residential division and the plant
was closed with all substantially all assets disposed of by the end of fiscal
1995.
Structures - Modular and Mobile Office Buildings
Products
The buildings produced by Structures are generally movable or relocatable
and are composed of either single or multiple units often referred to as modular
units. Individual units are either 8, 10, 12, or 14 feet in width and up to 80
feet in length. These individual units can be combined into buildings varying
in size from several hundred to several thousand square feet. Although most
buildings are one story, they can be built to be two or three stories high
depending on user requirements.
The factory-built buildings produced by Structures meet the specialized
needs of users, which include architectural and engineering firms, churches,
construction companies, correctional or prison authorities, educational and
financial institutions, libraries, medical and dental facilities, military
installations, post offices, real estate firms, restaurants and retail
businesses. The cost of the building varies depending on its application or its
specifications and may, in certain instances, be less expensive than comparable
conventional site-built buildings. Structures' cost portion of a completed
building does not include transportation, site preparation, foundation and other
installation work which is the responsibility of the user and is often provided
and charged to the user by Structures' customer. In addition to all the
aforementioned costs, the price charged to the user by Structures' customer will
reflect a "mark-up" which is determined by Structures' customer and not by
Structures.
Buildings or units (modules) of buildings produced by Structures are
usually built on a steel frame. Attached to the frame, customarily, is a chassis
with wheels and axles. This chassis will either become a permanent portion of
the building, permitting it to be easily transported to another site, or be
removed at the building installation site. The chassis facilitates the
transportation of the individual units over the highways from Structures'
factory to either its customer's facilities or the user's installation site.
The floor, roof and walls of any building are constructed of conventional
building materials, primarily wood or comparable materials. The building or
module is fabricated in a process similar to conventional sitebuilt construction
with appropriate variations. Structures also produces buildings utilizing non-
combustible materials. For these types of buildings, the floor is made of
concrete. The wall studs and roof frame are made of steel and other components.
The buildings utilize various other non-combustible materials.
Interiors and exteriors of the buildings are completed to customer
specifications. Finished buildings or modules include required electrical
wiring, plumbing, heating and air conditioning, and floor coverings. Exteriors
are constructed of wood, aluminum or other specified exterior materials such as
brick facing, etc.
Buildings produced by Structures are designed and engineered before
production. Detailed plans and other documentation prepared by Structures are
submitted to its customers and users as well as to various regulatory agencies
for approval prior to commencement of construction. Structures maintains its own
engineering and design staff which is capable of handling virtually all types of
building orders. On occasion, however, Structures may retain the services of
outside engineering and design firms.
Marketing
Structures does not sell its buildings directly to ultimate users of the
buildings. Structures' customers do not represent Structures on an exclusive
basis. Structures competes for customer orders based on price, quality, timely
delivery, engineering capability and general reputation for reliability.
Structures sells its products to approximately 75 customers. Customers may be
national, regional or local in nature. Customers will sell, rent or lease the
buildings purchased from Structures to the users. Structures believes a
significant portion of its product is either rented or leased by the users from
its customers.
Structures' sales staff calls on prospective customers in addition to
maintaining continuing contact with existing customers. The sales staff assists
its customers and their prospective customers in developing building
specifications in order to facilitate the preparation by Structures of a
quotation. The sales staff, in conjunction with the engineering staff,
maintains ongoing contact with the customer base.
Certain customers maintain rental fleets of standardized units such as
construction-site buildings or buildings for general office space requirements.
These buildings are generally rented or leased for a specific requirement, and
when the requirement has been satisfied, the buildings are returned to
Structures' customer for re-renting or leasing to other users. Other buildings
are produced to a specific user's requirements and Structures' customer will
either lease it to its customer or sell it outright. As a result of
transportation costs, the effective distribution range of buildings produced by
Structures is limited to an area within 400-600 miles from each manufacturing
facility.
Structures believes that the various leasing plans offered to the users by
its customers are a significant benefit of factory-built buildings over similar
conventional site-built buildings. Other significant benefits to the customer
are the speed with which a factory-built building can be made available for use
compared to on-site construction and the ability to relocate the building to
another site if the customer's utilization requirements change.
Certain companies within the industry served by Structures, including some
who are customers of Structures, have their own manufacturing facilities to
provide all or a portion of their building requirements. Structures does not
believe there is any specific identifiable industry trend or direction of its
customers having their own captive manufacturing capabilities. Certain customers
have acquired or started their own manufacturing facilities and other customers
have closed or reduced their manufacturing capability. Structures believes that
its customers are best served by having the flexibility of outside product
sources and avoiding the possible inefficiencies of captive manufacturing
facilities.
Structures is highly dependent on a limited number of customers, the loss
of which could have a material adverse effect on the operations of Miller. For
the fiscal years ended July 1, 1995 and July 2, 1994, the following customer
represented 10% or more of net sales of Miller: Transport International Pool,
Inc. d/b/a GE Capital Modular Space, a division of General Electric Capital
Corporation, represented 23% and 21% respectively.
Competition
Competition in the factory-built building industry is intense and
Structures competes with a number of entities, some of which may have greater
financial resources than Miller and Structures. To the extent that factory-built
buildings become more widely accepted as an alternative to conventional on-site
construction, competition from local contractors and manufacturers of other pre-
engineered building systems may increase. In addition to competition from firms
designing and constructing on-site buildings, Structures competes with numerous
factory-built building manufacturers that operate in particular geographical
regions.
Structures competes for orders from its customers primarily on the basis
of price, quality, timely delivery, engineering capability and reliability.
Structures believes that the principal basis on which it competes with on-site
construction is the combination of the timeliness of factory versus on-site
construction, the cost of its products relative to on-site construction, the
quality and appearance of its buildings, its ability to design and engineer
buildings to meet unique customer requirements (including local and state
regulatory compliance) and reliability in terms of completion time. The
manufacturing efficiencies and generally lower wage rates of factory
construction, even with the added transportation expense, in many instances
result in the cost of factory-built buildings being equal to or lower than the
cost of on-site construction of comparable quality. Quality, reliability and the
ability to comply with regulatory requirements in a large number of states and
localities depend upon the engineering and manufacturing expertise of the
management and staff of Structures. The relative importance of these factors
varies from customer to customer. Most of Structures' orders are awarded by its
customers on the basis of competitive bidding.
TELECOM
Telecom is located in Elkhart, Indiana and operates all administrative,
sales and manufacturing activities from that location. Telecom manufactures
specialized buildings which utilize modular construction techniques.
Products
Telecom manufactures modular factory-built buildings using pre-cast
concrete, steel, wood or fiberglass construction. Each building is custom-built
to the end users specifications and is typically finished to include electrical,
grounding, sensing alarm, mechanical and air conditioning systems.
The pre-cast concrete technology available through Telecom allows for
vandal-proof and environmental protection necessary for the telecommunication
industry. Telecom produces single and multiple module buildings with modules
ranging in size from 8' x 10' to modules as large as 14' x 30'. Telecom has
provided buildings, when assembled, consisting of a single module of 80 square
feet to multiple module buildings ranging up to 1,440 square feet. Multiple
story technology is currently being developed by Telecom. Telecom can provide
complete site installation of the building, if required by the customer
specifications. Opportunities in pre-cast concrete also exist for the
containment of hazardous material in specialized shelters and in correctional
facilities requiring pre-cast modular cells. The latter product can be provided
to existing customers of Structures.
Marketing
Telecom generally sells its product directly to the end user of the
buildings, which has been principally telecommunication and utility companies,
military bases and municipalities. Telecom also provides building transportation
and site placement services, if required by the scope of the work. Telecom
generally competes for orders by providing a quotation developed from
specifications received from the potential customer. While price is often a key
factor in the potential customer's purchase decision, other factors may also
apply, including delivery time, quality and prior experience with a certain
manufacturer. Several customers have designated Telecom as their nationwide
supplier. Telecom is prepared, if necessary, to provide a potential customer a
bid or performance bond to ensure Telecom's performance. The potential shipping
radius of these type of buildings is not as restrictive as that of Modular and
Mobile Office buildings; however, Telecom has concentrated its marketing efforts
in geographic areas where, Telecom believes, it has a freight advantage over a
significant portion of its competitors.
Competition
Telecom competes with a number of national and regional firms. Some of
these competitor companies may have greater financial strength or capabilities
than Miller and Telecom; however, Telecom believes Miller's financial strength,
engineering capabilities and experience in producing other types of factory-
built structures are elements in providing a competitive advantage to Telecom.
General
(Applicable to all of Miller's principal markets)
Backlog
The backlog of orders by market at August 31, 1995 and 1994 was as follows:
1995 1994
Structures $4,791,000 $7,699,000
Telecom 1,895,000 950,000
Backlog is broadly defined as firm order commitments not yet produced into
a final building product. The 38% decrease from the prior year's backlog
position for the Structures' modular and mobile office buildings is a result of
some slowness in certain parts of the economy and Miller's decision to shift
sales toward the more profitable technical and specific use units. Structures'
management believes it is to early to determine if the current decline in
backlog related to the economic slowness will have a negative impact on future
earnings. Telecom's backlog nearly doubled as this subsidiary continues to
develop its reputation and customer base. The management of Telecom believes
that their backlogs will continue to increase with the ongoing development of
their customer bases.
Regulation
Customers of Miller's factory-built buildings, or Miller's subsidiaries if
they complete the on site work, are generally required to obtain building
installation permits from applicable governmental agencies. In certain cases,
however, conditional use permits may be obtained in lieu of installation
permits. Conditional use permits usually are granted for a stated period and may
be renewable. Buildings completed by Miller's subsidiaries are manufactured and
installed in accordance with applicable building codes set forth by the
applicable state or local regulatory agencies.
State building code regulations applicable to factory-built buildings vary
from state to state. Many states have adopted codes that apply to the design and
manufacture of factory-built buildings, such as those manufactured by Miller's
subsidiaries, even if the units are manufactured outside the state and delivered
to a site within that state's boundaries. Obtaining state approvals is generally
the responsibility of the manufacturer. Some states also require certain
customers to be licensed in order to sell or lease factory-built buildings.
Additionally, certain states require a contractor's license from customers for
the construction of the foundation, building installation, and other on-site
work when this work is completed by the customer.
Miller's subsidiaries, on occasion, have experienced regulatory delays in
obtaining the various required building plan approvals. Miller's subsidiaries,
in addition to some of its customers, actively seek assistance from various
regulatory agencies in order to facilitate the approval process and reduce the
regulatory delays.
Raw Materials
Raw materials for products of Miller's subsidiaries are readily available
from multiple sources and the subsidiaries have not experienced any difficulty
in obtaining materials on a timely basis and in adequate quality and quantity.
Miller's subsidiaries, in certain instances, have entered into national purchase
arrangements with various suppliers. The benefit to Miller's subsidiaries of
these type of arrangements is often lower material costs and a higher level of
service and commitment.
Patents and Trademarks
Miller has a patent for non-combustible modular buildings.
Seasonality
Miller's subsidiaries historically have experienced greater sales during
the first and fourth fiscal quarters with lesser sales during the second and
third fiscal quarters. This reflects the seasonality of sales for products used
in various applications, including classrooms and other educational buildings,
and also the impact of weather on general construction related activities. See
unaudited interim financial information contained in Note H of Notes to
Consolidated Financial Statements.
Employees
As of August 31, 1995, Miller and its subsidiaries had approximately 325
employees of which approximately 240 were direct production employees.
Engineering and Design
Miller's subsidiaries engage in extensive engineering and design work to
meet customers' requirements, as well as to prepare bid proposals for new
projects. Engineering and design functions include structural, electrical, and
mechanical design and specifications work.
ITEM 2. PROPERTIES
The principal office and production facilities of Miller and its
subsidiaries consist of the following:
Approximate Square Footage
Location Total Production Office Owned or Leased
Elkhart, IN 77,500 61,500 16,000 Owned (1)
Elkhart, IN 54,800 50,600 4,200 Owned (2)
Leola, PA 61,900 58,900 3,000 Owned
Sioux Falls, SD 36,100 34,200 1,900 Leased (3)
Patterson, CA 44,600 41,400 3,200 Owned
Bennington, VT 28,900 27,000 1,900 Owned
_______________ _______ ______ _______
Total approximate
square footage 303,800 273,600 30,200
(1) Structures' administrative, sales, engineering and manufacturing
facility. The Executive offices of Miller are also at this location.
(2) Telecom administrative, sales and manufacturing facility.
(3) Leased until April 15, 1996 with three successive two-year renewal
options.
ITEM 3. LEGAL PROCEEDINGS
Neither Miller, Structures, nor Telecom is subject to any material
pending litigation other than ordinary routine litigation incidental to the
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS
Steven F. Graver (age 43) has been a Director of Miller since April 1991
and was elected Chairman of the Board of Directors on August 11, 1994. Effective
July 1, 1995, Graver, Bokhof & Goodwin ("GraverBokhof") became Graver, Bofhof,
Goodwin & Sullivan ("GBGS") GBGS is a subsidiary of the Optimum Group which has
over 800 million in assets under management. Mr. Graver is President and Chief
Portfolio Manager of the Optimum Group. In July 1991, GraverReich & Company
("GraverReich"), merged with Graver, Bokhof & Goodwin, an investment management
firm, and Mr. Graver became a General Partner of GraverBokhof. From December
1986 until July 1991, Mr. Graver was the President and Chief Executive Officer,
and Executive Vice President from February 1981 until November 1986, of
GraverReich, an investment management firm which Mr. Graver co-founded.
Edward C. Craig (age 60) became the Chief Executive Officer of Miller and
Vice Chairman of the Board of Directors of Miller effective on July 2, 1994. Mr.
Craig was elected President of Miller on August 11, 1994. From July 1991 until
April 1994, Mr. Craig was President and Chief Executive Officer of IBG, a
modular housing company. From April 1986 to July 1991, Mr. Craig was President
of Ryland Building Systems, a division of Ryland Homes, Inc. Mr. Craig is a
Director of Regional Building Systems.
Thomas J. Martini (age 47) in April 1992 became the Secretary and
Treasurer of Miller. Mr. Martini has been the Chief Financial Officer of Miller
since February 1991. From May 1986 to February 1991, he was the Corporate
Controller of Starcraft, Inc., a manufacturer of recreational vehicles.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Miller's Common Stock is quoted on the National Association of Securities
Dealers' Automated Quotation (NASDAQ) system under the ticker symbol "MTIK." The
following table sets forth the quarterly range of high and low quotations for
these securities as reported on the NASDAQ National Market System for the two
most recent fiscal years.
Fiscal 1995 Fiscal 1994
High Low High Low
1st Quarter 4 3 3 1/4 2 3/4
2nd Quarter 4 3 1/8 4 2 1/2
3rd Quarter 4 1/4 3 1/4 4 1/4 3
4th Quarter 4 2 5/8 3 3/4 3
As of August 31, 1995, Miller estimates there were approximately 1,600
stockholders of Miller's Common Stock. Of this total, approximately 250 were
stockholders of record and shares for approximately 1,350 stockholders were held
in street name. Harris Trust & Savings Bank, Chicago, is Miller's Transfer Agent
and Registrar.
Miller did not pay dividends on its Common Stock in fiscal 1995 or
fiscal 1994, as the Board of Directors ceased the payment of dividends in the
third fiscal quarter of 1993. Miller does not intend to pay dividends in the
foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included elsewhere herein.
Years Ended
July 1, July 2, June 30, June 30, June 30,
1995 1994 1993 1992 1991
(In thousands, except per share data)
Net sales $41,455 $38,569 $40,623 $40,757 $37,776
Net income (loss) 320(A) 312(A) (2,014)(A) (224) 1,951
Net income (loss)
per share .10 .10 (.61) (.06) .52
Cash dividends per
share - - .075 .10 .08
Total assets 16,522 15,308 16,411 17,954 17,491
Long-term debt, less
current maturities 1,385 110 210 302 -
(A) Miller's operating results were for fiscal years 1995, 1994 and 1993
were adversely impacted by nonrecurring items of $361,123, $159,252 and
$2,345,363, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Fiscal 1995 Compared to Fiscal 1994
Net sales increased $2.9 million or approximately 7% in fiscal 1995
from the corresponding amount in fiscal 1994. Structures reported a $3.4
million or approximately an 11% increase in net sales. Net sales in the Eastern
plants of Structures increased $4.4 million or approximately 20%, while net
sales in the West decreased $1.0 million or approximately 14%. All Structures'
Eastern plants experienced net sales growth as the economy in these markets
remained strong. The decline in net sales in the West was the result of the
continuing sluggishness in the California economy. Telecom recorded a $1.0
million or approximately 23% increase in net sales as this subsidiary continues
to build its reputation and customer base. Net sales at the closed residential
division of Structures was virtually unchanged.
Miller's gross profit during the 1995 fiscal year approximated 15% of
net sales compared to approximately 12% of net sales in fiscal 1994. During
fiscal 1995 Miller was able to shift a portion of the sales from the low end
fleet business to the more profitable technical and specific use applications.
Miller plans to continue the expansion of the technical and specific use
markets.
Selling, general and administrative expenses increased $.7 million in
fiscal 1995. These expenses were 12% of net sales in fiscal 1995 compared to 11%
of net sales in fiscal 1994. The increase in administrative expenses was
primarily the result of higher payroll and other administrative expenses related
to the growth at both Structures and Telecom.
During the year, Miller recorded nonrecurring items of $361,123. These
nonrecurring items consist primarily of a $265,514 charge which resulted from
the final resolution of disputed warranty issues with a customer, a charge of
$186,198 for exit costs associated with the closing of the residential division,
and the reversal of $90,589 of certain restructuring charges recorded in fiscal
1993. The earlier than anticipated exit from the lease at the Fontana plant, a
favorable arbitration settlement and the reversal of warranty reserves at the
closed PME operations, partially offset by additional interest expense for an
IRS audit, were the principal causes for the reversal of restructuring costs.
At July 1, 1995, $239,639 in nonrecurring items remain outstanding of
which $193,857 is a current liability. These items consist of severance and
noncompete agreements with former officers, interest payable on the Internal
Revenue audit and worker's compensation and relocation reserves related to the
closed Western plants. $45,782 related to the noncompete agreement with a former
officer is reflected as long-term. Of this total, approximately $4,000 will be
paid in fiscal 1996, with the balance payable through fiscal 2004.
The increase in interest expense in fiscal 1995 compared to fiscal 1994
of $42,808 was the result of a $55,349 increase in interest expense for the
industrial revenue bond issued to finance the plant expansion at Telecom. Lower
debt outstanding on the revolving line of credit was the principal cause for a
$12,541 offsetting decrease in interest expense.
During fiscal 1995 Miller recorded an income tax provision of $189,000
or 37% of pre-tax profit. In fiscal 1994, Miller recorded an income tax credit
of $66,000. A provision of $91,000 or 37% of the pre-tax profit was offset by a
reversal of $157,000 for a provision of federal and state income taxes related
to an Internal Revenue Service audit settled favorably by Miller.
Fiscal 1994 Compared to Fiscal 1993
Net sales decreased $2.1 million in fiscal 1994 from the corresponding
amount in fiscal 1993. Structures reported a $2.3 million or approximately a 7%
decrease in net sales. Net sales in the Eastern plants of Structures remained
virtually unchanged, while net sales in the West decreased $3.4 million or
approximately 32%. The decline in net sales in the West was the result of
closing the plants in Woodburn, Oregon and Fontana, California. Net sales in the
residential division of Structures increased $1.2 million or approximately 68%.
The increase at the residential division of Structures was the result of the
development of the divisions' dealer/builder customer base. Telecom recorded a
$2.1 million or approximately 90% increase in net sales as this subsidiary
continues to build its customer base. Net sales at PME decreased $1.9 million
or approximately 55% as a result of the closing of the subsidiary.
Miller's gross profit during the 1994 fiscal year approximated 12% of
net sales compared to approximately 13% of net sales in fiscal 1993. During
1994, the Company experienced a shift in demand away from the more profitable
technical and specific use applications.
Selling, general and administrative expenses decreased $.9 million in
fiscal 1994. These expenses were 11% of net sales in fiscal 1994 compared to 13%
of net sales in fiscal 1993. The decrease in administrative expenses was
primarily the result of reduced expenses related to the closed West Coast plants
and the phase-out of PME's operations. These reductions were partially offset
by increased administrative costs related to the growth at Structures'
residential division and Telecom.
During the year, Miller recorded nonrecurring items of $159,252. These
nonrecurring items consisted of $264,150 for a severance agreement with a former
officer and the reversal of $104,898 in certain restructuring charges recorded
in fiscal 1993. The earlier than anticipated sale of the Woodburn plant,
eliminating property taxes and costs for the maintenance of the building, and
the elimination of the office lease at the PME operations were the principle
causes for the reversal of restructuring costs. A $193,242 gain on the sale of
the Woodburn plant was recorded during the current fiscal year and is reflected
in the gain on sale of property and equipment.
At July 2, 1994, $612,594 in nonrecurring items remained outstanding of
which $498,198 was classified as a current liability and $144,396 was reflected
as long-term. These items consisted of severance and noncompete agreements with
former officers, a lease commitment for the Fontana plant, warranty reserves
related to the PME operations, interest payable on the Internal Revenue audit
and worker's compensation and relocation reserves related to the closed Western
plants.
Miller recorded a $120,220 provision for doubtful receivables in fiscal
1994 (applicable to the closed PME operations). The allowance related to
disputes over delays and change orders for the completed PME project at the
Denver International Airport.
The increase in interest expense in fiscal 1994 compared to fiscal 1993
of $15,942 was the result of higher interest rates and higher debt outstanding
on the revolving line of credit.
During fiscal 1994, Miller recorded an income tax credit of $66,000. A
provision of $91,000 or 37% of the pre-tax profit was offset by a reversal of
$157,000 for a provision of federal and state income taxes related to an
Internal Revenue Service audit settled favorably by Miller. In fiscal 1993,
Miller recorded an income tax credit of $593,000 or 23% of the pre-tax loss
which included $309,000 for federal and state income taxes resulting from an
Internal Revenue Service audit, which was being appealed.
Liquidity and Capital Resources
Miller's working capital as of July 1, 1995 was $5,254,456 compared to
$5,373,230 as of July 2, 1994. The working capital ratio as of July 1, 1995 and
July 2, 1994 was 2.0 to 1.
During fiscal 1995, operations provided cash flows of $66,335 consisting
primarily of net income and certain noncash charges offset by reductions in
accounts payable and other accrued liabilities. Miller utilized cash of
$1,959,893 in investing activities, consisting of the Telecom plant expansion to
support the subsidiary's growth and other purchases of plant and equipment. The
investments made by Miller were financed through increased borrowings on the
revolving line of credit and the proceeds from the industrial revenue bond.
An unsecured revolving credit agreement with a bank makes available
advances up to $5,000,000 through November 30, 1995. There was $1,550,000
outstanding on the revolving credit line at July 1, 1995 and $525,000 at July 2,
1994. The $5,000,000 availability under the present loan agreement has been
reduced by $134,344 for a standby letter of credit issued in connection with an
obligation payable to a former officer.
Miller believes it has adequate resources available to fund the
continuation of its internal growth during the coming fiscal year. The
unsecured revolving credit line assures that resources will be available for
future growth.
Impact of Inflation
Inflation has not had an identifiable effect on Miller's operating
margins during the last three fiscal years. Product selling prices are quoted
reflecting current material prices and other related costs and expenses.
Accordingly, any impact of inflation is reflected in the product selling prices.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 of Part II is incorporated herein by
reference to the Consolidated Financial Statements filed with this report; see
Item 14 of Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Information with respect to the Directors of Miller is set forth in the
Election of Directors section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
(b) Executive Officers
Information regarding the executive officers of Miller is set forth in
Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Compensation
and Executive Officers section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Principal
Shareholder and Share Ownership of Director and Executive Officers section of
the Proxy Statement to be filed pursuant to Regulation 14A and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Transactions
with Management and Others section of the Proxy Statement to be filed pursuant
to Regulation 14A and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Consolidated Financial Statements of Miller Building Systems,
Inc. and Subsidiaries
Report of Independent Accountants........................................F-1
Consolidated Balance Sheets as of July 1, 1995 and July 2, 1994..........F-2
Consolidated Statements of Operations for the years ended July 1,
1995, July 2, 1994 and June 30,1993......................................F-3
Consolidated Statements of Stockholders' Equity for the years
ended July 1, 1995, July 2, 1994 and June 30, 1993.......................F-4
Consolidated Statements of Cash Flows for the years ended July 1,
1994, July 2, 1994 and June 30, 1993.....................................F-5
Notes to Consolidated Financial Statements...............................F-6
(2) Financial Statement Schedule
II - Valuation and Qualifying Accounts..................................F-13
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable, or the information is included in the
Notes to Consolidated Financial Statements, and therefore have been omitted.
(3) See Index to Exhibits
(b) Reports on Form 8-K filed in the fourth quarter of fiscal 1995:
The following report on Form 8-K was filed during the three months
ended July 1, 1995.
May 19, 1995, reporting a Resolution adopted by the Board of
Directors on April 27, 1995 to amend the By-Laws which increased
the number of Directors from seven (7) to eight (8); and elected
Myron C. Noble to the Board of Directors on April 27, 1995 filling
the vacancy created by the foregoing amendment.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MILLER BUILDING SYSTEMS, INC.
September 12, 1995 \Edward C. Craig
Edward C. Craig
President and Chief
Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
\Edward C. Craig President, Chief September 12, 1995
Edward C. Craig Executive Officer
and Director
(Principal Executive
Officer)
\Thomas J. Martini Secretary and September 12, 1995
Thomas J. Martini Treasurer (Principal
Financial and
Accounting Officer)
\Ronald L. Chez Director September 12, 1995
Ronald L. Chez
\David E. Downen Director September 12, 1995
David E. Downen
\Steven F. Graver Director September 12, 1995
Steven F. Graver
\William P. Hall Director September 12, 1995
William P. Hall
\Myron C. Noble Director September 12, 1995
Myron C. Noble
\David H. Padden Director September 12, 1995
David H. Padden
\Jeffrey C. Rubenstein Director September 12, 1995
Jeffrey C. Rubenstein
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of Miller Building Systems, Inc.:
We have audited the consolidated financial statements and the financial
statement schedule of Miller Building Systems, Inc. and subsidiaries listed in
Item 14(a) of this Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standard. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Miller Buildings
Systems, Inc. and subsidiaries as of July 1, 1995 and July 2, 1994, and the
consolidated results of their operations and their cash flows for the years
ended July 1, 1995, July 2, 1994 and June 30, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
\Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
August 15, 1995
F-1
<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 1, July 2,
1995 1994
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $ 351,860 $ 132,084
Receivables, less allowance for doubtful
receivables of $59,000 in 1995 and
$120,000 in 1994 5,960,110 6,186,820
Inventories:
Raw materials 2,945,366 2,933,238
Work in process 441,366 287,106
Finished goods 146,887 152,060
3,533,619 3,372,404
Deferred federal income taxes 320,000 399,000
Other current assets 126,752 400,826
TOTAL CURRENT ASSETS 10,292,341 10,491,134
PROPERTY, PLANT AND EQUIPMENT
Land 847,336 764,857
Buildings and leasehold improvements 5,357,144 4,208,163
Machinery and equipment 3,906,285 3,487,256
10,110,765 8,460,276
Less, Accumulated depreciation
and amortization 4,083,640 3,666,270
6,027,125 4,794,006
OTHER ASSETS 202,166 22,887
TOTAL ASSETS $16,521,632 $15,308,027
The accompanying notes are a part of the consolidated financial statements.
F-2<PAGE>
July 1, July 2,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 1,550,000 $ 525,000
Current maturities of long-term debt 224,925 100,481
Accounts payable 2,074,510 3,202,938
Accrued income taxes 89,827 140,542
Accrued expenses and other 904,766 680,745
Accrued nonrecurring items 193,857 468,198
TOTAL CURRENT LIABILITIES 5,037,885 5,117,904
LONG-TERM DEBT, less current maturities 1,385,000 109,925
DEFERRED FEDERAL INCOME TAXES 134,000 146,000
OTHER 45,782 144,396
TOTAL LIABILITIES 6,602,667 5,518,225
COMMITMENTS AND CONTINGENCIES - Notes C and G
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, issued
4,023,548 shares 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 1,563,201 1,250,434
13,058,339 12,745,572
Less, Treasury stock, at cost 3,139,374 2,955,770
TOTAL STOCKHOLDERS' EQUITY 9,918,965 9,789,802
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $16,521,632 $15,308,027
F-2<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended
July 1, July 2, June 30,
1995 1994 1993
Net sales $41,454,500 $38,568,812 $40,622,923
Costs and expenses:
Cost of products sold 35,373,322 33,791,773 35,489,137
Selling, general and
administrative 5,018,490 4,362,530 5,281,693
Nonrecurring items 361,123 159,252 2,345,363
Provision for doubtful receivables 67,528 120,220 49,361
(Gain) loss on sale property
and equipment 3,379 (183,910) (3,485)
Interest expense 134,833 92,025 76,083
Interest income (13,087) (18,938) (7,990)
INCOME (LOSS) BEFORE
INCOME TAX CREDIT 508,912 245,860 (2,607,239)
Income tax (credit) 189,000 (66,000) (593,000)
NET INCOME (LOSS) $ 319,912 $ 311,860 $(2,014,239)
Earnings (loss) per share of common
stock, based upon weighted average
number of common shares and
equivalent shares outstanding $ .10 $ .10 $ (.61)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND EQUIVALENT SHARES
OUTSTANDING 3,130,207 3,197,421 3,275,700
The accompanying notes are a part of the consolidated financial statements.
F-3<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Issued
(Authorized - Additional Total
7,500,000 shares) Paid-In Retained Treasury Stock Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1992 4,023,548 $40,235 $11,454,903 $3,198,519 712,970 $(2,506,091) $12,187,566
Treasury stock acquired - - - - 61,500 (175,500) (175,500)
Cash dividends ($.075 per share) - - - (245,706) - - (245,706)
Net loss - - - (2,014,239) - - (2,014,239)
BALANCE, JUNE 30, 1993 4,023,548 40,235 11,454,903 938,574 774,470 (2,681,591) 9,752,121
Treasury stock acquired - - - - 90,500 (274,179) (274,179)
Net income - - - 311,860 - - 311,860
BALANCE, JULY 2, 1994 4,023,548 40,235 11,454,903 1,250,434 864,970 (2,955,770) 9,789,802
Treasury stock acquired - - - - 80,000 (260,000) (260,000)
Treasury stock sold - - - (2,572) (15,385) 52,573 50,001
Exercise of stock options using
treasury stock - - - (4,573) (7,000) 23,823 19,250
Net income - - - 319,912 - - 319,912
BALANCE, JULY 1, 1995 4,023,548 $40,235 $11,454,903 $1,563,201 922,585 $(3,139,374) $9,918,965
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-4<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
July 1, July 2, June 30,
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ 319,912 $ 311,860 $(2,014,239)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Nonrecurring items 361,123 159,252 2,345,363
Depreciation and amortization 612,359 574,243 626,323
Amortization of other assets 17,886 1,944 144,216
Deferred income taxes 67,000 (44,000) (297,000)
(Gain) loss on sale of property
and equipment 3,379 (183,910) (1,485)
Changes in certain assets and liabilities:
Receivables 226,710 (528,709) (877,320)
Refundable income taxes - 684,000 (273,290)
Inventories (161,215) 20,835 (545,225)
Other current assets 274,074 (138,791) 650,763
Accounts payable (1,128,428) 297,474 353,361
Accrued income taxes (50,715) (145,394) 285,936
Accrued expenses and other 224,021 18,735 (240,038)
Accrued nonrecurring items (699,771) (456,033) (162,273)
Net cash provided by (used in)
operating activities 66,335 571,506 (4,908)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 51,268 1,155,412 31,750
Purchase of property, plant and equipment (1,934,432) (394,918) (351,437)
Unexpended industrial revenue bond proceeds (76,729) - -
Net cash provided by (used in)
investing activities (1,959,893) 760,494 (319,687)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from short-term borrowings 19,838,000 18,772,000 17,344,000
Reduction of short-term borrowings (18,813,000) (19,649,000) (17,692,000)
Proceeds from long-term debt 1,500,000 - -
Bond issuance costs (120,436) - -
Payments of long-term debt (100,481) (91,849) (83,957)
Purchase of treasury stock (260,000) (274,179) (175,500)
Proceeds from sale of treasury stock 50,001 - -
Proceeds from exercise of stock options 19,250 - -
Payment of cash dividends - - (245,706)
Net cash provided by (used in)
financing activities 2,113,334 (1,243,028) (853,163)
Increase (decrease) in cash and temporary
cash investments 219,776 88,972 (1,177,758)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of year 132,084 43,112 1,220,870
End of year $ 351,860 $ 132,084 $ 43,112
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 113,167 $ 87,664 $ 76,764
Income taxes (net of refunds) 172,715 (560,606) (315,003)
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Principles of Consolidation - The consolidated financial statements include
the accounts of Miller Building Systems, Inc. and its subsidiaries,
all of which are wholly-owned, (individually and collectively referred to
herein as "Miller").
Fiscal Year - Effective July 1, 1993, Miller adopted a fiscal year ending
on the Saturday closest to June 30. Prior to this change, Miller's
fiscal year ended on June 30.
Revenue Recognition - Miller generally recognizes revenues from the sales
of its products upon the completion of manufacturing and the transfer
of title.
Inventories - Inventories are stated at the lower of cost or market, with
cost determined under the first-in, first-out method.
Property, Plant and Equipment - Property, plant and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation
and amortization of plant and equipment are computed using the straight-
line method over the estimated useful lives of the assets. Costs of
purchased software and, under certain conditions, internal software
development costs are capitalized and the amortized over a future period.
Capitalized software costs, for both internally developed and purchased
software products, are amortized using the straight-line method over sixty
months. As of July 1, 1995 and July 2, 1994, capitalized software costs,
included with machinery and equipment, (and the related accumulated
amortization) aggregated $199,007 ($8,251) and $148,010 ($27,222),
respectively.
Bond Issuance Cost - Bond issuance costs aggregating $120,436, which
related to issuance of the industrial revenue bond, are being amortized
using the straight-line method over the term of the bond.
Income Taxes - Effective July 1, 1993, Miller adopted Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for
Income Taxes," which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the differences
between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the years in which the differences
are expected to reverse. As permitted by SFAS No. 109, Miller elected not
to restate the financial statements of any prior years, and the adoption of
SFAS No. 109 did not have a material effect on Miller's consolidated
financial statements.
Prior to July 1, 1993, the provision for income taxes was based on income
and expenses included in the consolidated statements of operations.
Differences between taxes so computed and taxes payable under applicable
statutes and regulations were classified as deferred taxes arising from
timing differences.
F-6<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Concluded.
Employee Benefit Plan - Miller maintains a simplified 401(k) savings plan
(the "Plan") for eligible participating employees of Miller. The Plan
is a defined contribution plan under which employees may voluntarily
contribute a percentage of their compensation. The Plan allows Miller to
make discretionary matching contributions before the end of the Plan's
calendar year-end. During the years ended July 1, 1995 and July 2, 1994,
Miller expensed $17,237 and $17,017, respectively, under this Plan. No
amounts were expensed for the fiscal year ended June 30, 1993.
Earnings (Loss) Per Share - Per share amounts are based upon the weighted
average number of common shares outstanding and common equivalent shares
(dilutive stock options) assumed outstanding during each period. The
common equivalent shares did not enter into the computation of loss per
share for the year ended June 30, 1993 because their inclusion would have
been antidilutive.
Consolidated Statements of Cash Flows - Miller considers all highly liquid
investments purchased with an original maturity of three months or less to
be temporary cash investments for purposes of the consolidated statements of
cash flows.
Note B: NONRECURRING ITEMS.
During the fiscal year ended July 1, 1995, Miller recorded a pre-tax charge
of $265,514 which resulted from the final resolution of disputed warranty
issues with a customer. Also, Miller recorded a pre-tax charge of $186,198
for exit costs associated with the closing of its residential division,
which manufactured factory-built modular residential housing.
During the fourth quarter of fiscal year ended July 2, 1994, Miller recorded
a severance agreement with a former officer which consisted of seventeen
months compensation and certain benefits. The agreement is payable monthly
through December 31, 1995.
During the fiscal year ended June 30, 1993, Miller commenced certain
restructuring actions which resulted in a pre-tax restructuring charge of
$2,345,363. The restructuring costs included the write-off of a non-compete
agreement with a former officer and the closing of certain West coast
operations. These included the plants in Woodburn, Oregon and Fontana,
California and the termination of PME Pacific Systems, Inc. ("PME").
During fiscal 1995 and 1994 certain accruals for these restructuring costs,
principally related to the closed Woodburn and Fontana plants and the PME
operations were settled at amounts less than originally accrued.
F-7<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note B: NONRECURRING ITEMS, Concluded.
Years Ended
July 1, July 2, June 30,
1995 1994 1993
Settled warranty issues $265,514 $ - $ -
Residential exit costs 186,198 - -
Severance agreement - 264,150 -
Restructuring costs (90,589) (104,898) 2,345,363
$361,123 $ 159,252 $2,345,363
At July 1, 1995, $45,782 ($144,396 at July 2, 1994) of the accrual for
liabilities and costs associated with the nonrecurring items is reflected
as a long-term liability and the remaining accrual is classified as a current
liability.
Note C: DEBT.
Short-term borrowings
Miller maintains an unsecured revolving line of credit with a bank. The
loan agreement makes available up to $5 million through November 30, 1995.
Interest is payable monthly at prime or a margin over the London Interbank
Offering Rate, depending on the pricing option selected by Miller. At
July 1, 1995 and July 2, 1994, the weighted average interest rate on
outstanding borrowings was 8.68% and 7.25%, respectively. As of July 1, 1995
and July 2, 1994, outstanding borrowings under the loan agreement aggregated
$1,550,000 and $525,000, respectively. The loan agreement contains, among
other provisions, certain covenants including: maintenance of a required
current ratio, tangible net worth and liabilities to tangible net worth
ratio.
Long-term debt
Long-term debt consists of the following:
July 1, July 2,
1995 1994
Industrial revenue bond, variable rate
(4.15% at July 1, 1995), payable in annual
installments of $115,000, with an
installment of $120,000 at final maturity
in November 2007. $1,500,000 $ -
Obligation payable to a former officer
of Miller payable in semi-monthly installments
of $4,798 through June 15, 1996. Interest at
9% imputed for financial reporting purposes. 109,925 210,406
Total 1,609,925 210,406
Less, Current maturities 224,925 100,481
Long-term debt $1,385,000 $109,925
F-8<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended July 1, 1995, July 4, 1994 and June 30, 1993
Note C: Debt, Concluded.
Aggregate maturities of long-term debt for each of the next five years are as
follows: 1996 - $224,925; 1997 - $115,000; 1998 - $115,000; 1999 -$115,000 and
2000 $115,000.
In connection with the industrial revenue bond obligation, Miller obtained,
as a credit enhancement for the bondholders, an irrevocable letter of credit
in favor of the bond trustee. Miller, at its discretion, can convert the
industrial revenue bond from a variable rate to a fixed rate. The fixed rate
would be determined contemporaneously with the decision to convert. Miller
may redeem the bonds at any time in increments of $100,000. In the event the
bonds have been converted to a fixed rate, such redemption is at a premium
determined by the number of years from conversion to the original maturity.
In addition, in connection with the note payable to a former officer, Miller
obtained an irrevocable letter of credit in favor of that officer
approximating the outstanding principal balance. Availability under the
$5 million bank line of credit agreement is reduced by the amount of this
standby letter of credit.
Note D: STOCKHOLDERS' EQUITY.
On June 30, 1994, the Board of Directors adopted the Miller Building Systems,
Inc. 1994 Stock Option Plan (the "1994 Plan") under which 300,000 shares of
common stock were reserved for future grant. The 1994 Plan expires June 30,
2004. On August 26, 1991, the Board of Directors adopted the 1991 Stock
Option Plan (the "1991 Plan") under which 250,000 shares of common stock were
reserved for future grant. The 1991 Plan expires August 26, 2001. The
1994 Plan and 1991 Plan provide that options can be granted by Miller at a
price not less than 100% of fair market value (or 110% of fair market value if
the optionee owns 10% or more of Miller's common stock). The term of an
option granted under the 1994 Plan and 1991 Plan cannot exceed ten years, and
options are either exercisable upon grant or contain a specific vesting
schedule, except in the event of a change of control, as defined, at which
time all outstanding options become fully exercisable by the optionee.
Changes in options are summarized as follows:
Number Per Share
Of Shares Option Price
Outstanding at July 1, 1992 129,500 $3.00 - $4.63
Granted 72,000 2.50 - 2.75
Outstanding at June 30, 1993 201,500 2.50 - 4.63
Canceled (41,500) 3.00 - 4.25
Outstanding at July 2, 1994 160,000 2.50 - 4.63
Granted 329,000 3.25 - 6.00
Exercised (7,000) 2.75
Canceled (88,000) 2.75 - 4.63
Outstanding at July 1, 1995 394,000 $2.50 - $6.00
Exercisable at July 1, 1995 188,600
F-9<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note E: INCOME TAXES.
The provision (credit) for income taxes is summarized as follows:
Years Ended
July 1, July 2, June 30,
1995 1994 1993
Current:
Federal $ 72,000 $(18,000) $(349,000)
State 50,000 (4,000) 53,000
122,000 (22,000) (296,000)
Deferred tax (credit) 67,000 (44,000) (297,000)
Total $189,000 $(66,000) $(593,000)
The provision (credit) for income taxes included in the consolidated
statements of operations differs from that computed by applying the federal
statutory tax rate (34%) to income (loss) before income taxes as follows:
Years Ended
July 1, July 2, June 30,
1995 1994 1993
Computed federal income
tax (credit) $173,000 $ 83,600 $(886,500)
Increase (decrease)
resulting from:
Federal income taxes recorded
(reversed) for Internal
Revenue Service exam-
ination - (120,400) 251,000
State income taxes, net
of federal income tax
impact 33,000 (2,600) 35,000
Other, net (17,000) (26,600) 7,500
Total $189,000 $ (66,000) $(593,000)
F-10<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note E: INCOME TAXES, Continued
Deferred income taxes reflect the estimated future net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
The components of the net deferred tax asset and liability at July 1, 1995
and July 2, 1994 are as follows:
July 1, July 2,
1995 1994
Current deferred tax asset:
Inventories $ 140,000 $ 130,000
Accrued warranty 59,000 93,000
Accrued nonrecurring items 24,000 122,000
Allowance for doubtful receivables 76,000 49,000
Other 21,000 5,000
Total $ 320,000 $ 399,000
Long-term deferred tax asset (liability):
Property, plant and equipment $ (149,000) $(205,000)
Accrued nonrecurring items 15,000 59,000
Total $ (134,000) $(146,000)
During the year ended June 30, 1993, the Internal Revenue Service ("IRS")
completed an audit for Miller's federal income tax returns for the fiscal
years 1989, 1990 and 1991 and the revenue agent proposed adjustments related
to the valuation and amortization of certain intangible assets.
During fiscal 1994, Miller settled these audit issues with the IRS and,
accordingly, a federal and state tax benefit (reversal of previously accrued
income taxes) of $157,000 was recorded in the year ended July 2, 1994.
Note F: MAJOR CUSTOMERS.
Miller's primary business involves the design and manufacture of factory
built buildings. Miller sells its products primarily to independent
customers who, in turn, sell or lease to the end users.
One customer individually accounted for 23% of net sales in fiscal 1995,
21% of net sales in fiscal 1994 and 34% of net sales in fiscal 1993.
At July 1, 1995, 15% of receivables is concentrated with this one customer
and 37% concentrated in five other customers. At July 2, 1994, 28% of
receivables was concentrated with this one customer and 33% was concentrated
with five other customers.
Note G: COMMITMENTS AND CONTINGENCIES.
Lease Commitments:
Miller leases certain real estate under a noncancellable operating lease
expiring April 1996. The lease may be extended at Miller's option.
Miller generally is responsible for utilities, taxes and insurance on the
leased facility. Future minimum lease payments under this noncancellable
lease are $35,833 in fiscal year 1996 with no commitments thereafter.
Rental expense under all operating leases aggregated $159,225, $179,620 and
$164,832 for the years ended July 1, 1995, July 2, 1994 and June 30, 1993,
respectively.
F-11<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Concluded
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993
Note H: UNAUDITED INTERIM FINANCIAL INFORMATION.
Presented below is certain selected unaudited quarterly financial
information for the years ended July 1, 1995 and July 2, 1994:
Earnings
Net Gross Net Income (Loss)
Sales Profit (Loss) Per Share
1995:
Fourth $11,298,949 $1,899,047 $ 263,885 $ .08
Third 9,225,932 1,131,982 (370,960) (.12)
Second 9,691,497 1,440,865 118,817 .04
First 11,238,122 1,609,284 308,170 .10
Total $41,454,500 $6,081,178 $ 319,912 $ .10
1994:
Fourth $10,804,983 $1,263,563 $ (87,561) $(.03)
Third 8,279,366 773,141 23,624 .01
Second 7,232,812 973,156 53,351 .02
First 12,251,651 1,767,179 322,446 .10
Total $38,568,812 $4,777,039 $ 311,860 $ .10
F-12<PAGE>
MILLER BUILDING SYSTEM, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expenses Accounts Deductions of Period
<S> <C> <C> <C> <C> <C>
Year ended July 1, 1995:
Allowance for
doubtful receivables $120,220 $ 67,528 $ - $128,724 <F1> $ 59,024
Year ended July 2, 1994:
Allowance for
doubtful receivables $ 49,361 $120,220 $ - $ 49,361 <F1> $120,220
Property held
for sale $153,259 $ - $ - $153,259 <F2> $ -
Year ended June 30, 1993:
Allowance for
doubtful receivables $ - $ 49,361 $ - $ - $ 49,361
Property held
for sale $ - $153,259<F2> $ - $ - $153,259
<FN>
<F1>
Uncollectible accounts written off.
<F2>
Valuation allowance originally established in fiscal year 1993 to reflect "Property
held for sale" at its net realizable value was utilized when the property was
disposed of in fiscal year 1994.
</FN>
</TABLE>
F-13<PAGE>
MILLER BUILDING SYSTEMS, INC., AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
23.3 Consent of Independent Accountants
10.53 Employment agreement between Registrant and Edward C. Craig, dated
July 1, 1994.
10.54 Agreement between Registrant and Ronald L. Chez, dated September 9,
1994.
10.55 Agreement to Terminate Lease between Miller Structures, Inc., an
Indiana corporation, and Malcolm O. Koons dated June 12, 1995 with
respect to property located at Elkhart, Indiana.
11 Statement regarding computation of per share earnings.
The exhibits listed below are filed as part of this report and incorporated by
reference as indicated.
3.1 Certificate of Incorporation, as amended (a)
3.2 By-Laws, as amended (a) (d) (f) (i) (k) (l) (n)
4.1 Specimen Common Stock Certificate (e)
4.2 Certificate of Incorporation, Articles Fourth, Eighth, and Tenth;
By-Laws, Articles II, VII, and IX (a)
10.9 Employee Incentive Stock Option Plan adopted by the Registrant's
stockholders on April 11, 1983 and Form of Option Agreement (a) (b)
(c)
10.11 Lease Agreement between Sioux Falls Structures, Inc. (now known as
Miller Structures, Inc.), a South Dakota corporation, and Toboll
Corporation dated April 15, 1985 with respect to property located in
Sioux Falls, South Dakota (a) and Amendments thereto dated February
3, 1988 and December 31, 1989 (h)
10.12 Lease Agreement between Toboll properties and Miller Structures, Inc.
(South Dakota) dated August 1, 1990 with respect to the lease of land
in Sioux Falls, South Dakota (h)
10.14 Lease between Miller Structures, Inc.), a California corporation, and
C&W dated as of March 20, 1985 with respect to property located in
Fontana, California (a)
10.44 Employment Agreement between Registrant and John M. Davis, dated March
16, 1990 and effective as of February 1, 1990 (g)
10.47 Agreement between Registrant and Frederick H. Goldberger, dated May 6,
1991, which replaces an employment agreement dated April 26, 1988
and amendments thereto which was to expire on June 30, 1995 (j)
10.48 1991 Stock Option Plan adopted by the Registrant's stockholders on
October 30, 1991 and Form of Option Agreement (m)
10.49 Miller Building Systems, Inc. 401(k) Plan (o)
10.50 Letter to Frederick H. Goldberger, dated April 28, 1993, declaring the
non-competition covenant, of the Agreement of May 6, 1991, to have no
value (o)
10.51 First amendment to employment agreement between Registrant and John M.
Davis, dated March 16, 1994 (q)
10.52 Commercial Lease and Option to Purchase between Miller Structures,
Inc., and Indiana corporation, and Malcolm O. Koons dated March 2,
1993 with respect to property located at Elkhart, Indiana (q)
10.53 1994 Stock Option Plan adopted by the Registrant's stockholders on
October 25, 1994 and For of Option Agreement (p)
21.1 Subsidiaries of the Registrant (o)
______________
(a) Registration Statement on Form S-1, as amended (File No. 0-14651)
(b) Form S-8, Date of Report - October 28, 1987
(c) Form 8-K, Date of Report - November 1, 1988
(d) Form 8-K, Date of Report - July 20, 1989
(e) Form 10-K for year ended June 30, 1989
(f) Form 8-K, Date of Report - January 31, 1990
(g) Form 8-K, Date of Report - March 16, 1990
(h) Form 10-K for year ended June 30, 1990
(i) Form 8-K, Date of Report - April 23, 1991
(j) Form 8-K, Date of Report - May 6, 1991
(k) Form 8-K, Date of Report - July 25, 1991
(l) Form 8-K, Date of Report - August 26, 1991
(m) Form S-8, Date of Report - July 31,1992
(n) Form 8-K, Date of Report - April 22, 1993
(o) Form 10-K for year ended June 30, 1993
(p) Form S-8, Date of Report - Dated December 30, 1994
(q) Form 10-K, for year ended July 2, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 351,860
<SECURITIES> 0
<RECEIVABLES> 5,960,110
<ALLOWANCES> 0
<INVENTORY> 3,533,619
<CURRENT-ASSETS> 10,292,341
<PP&E> 10,110,765
<DEPRECIATION> 4,083,640
<TOTAL-ASSETS> 16,521,632
<CURRENT-LIABILITIES> 5,037,885
<BONDS> 1,385,000
<COMMON> 40,235
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,521,632
<SALES> 41,454,500
<TOTAL-REVENUES> 41,454,500
<CGS> 35,373,322
<TOTAL-COSTS> 40,391,812
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,833
<INCOME-PRETAX> 508,912
<INCOME-TAX> 189,000
<INCOME-CONTINUING> 319,912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,912
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Miller Building Systems, Inc. on Form S-8 (File Nos. 33-88158 and 33-50512), and
in the related Prospectus, of our report dated August 15, 1995, on our audits of
the consolidated financial statements and financial statement schedule of Miller
Building Systems, Inc. and subsidiaries as of July 1, 1995 and July 2, 1994, and
for the years ended July 1, 1995, July 2, 1994 and June 30, 1993, which report
is included in this Annual Report on Form 10-K.
\Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
September 12, 1995
EXHIBIT 10.53
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into
as of July 1, 1994 (the "Effective Date"), between Miller Building
Systems, Inc., a Delaware corporation (the "Company") and Edward
Craig (the "Employee").
RECITALS
A. The Company's primary business is manufacturing and
distributing factory built buildings having various commercial,
residential, governmental, and telecommunication applications and
uses (the "Business").
B. The Company desires to hire the employee as its Chief
Executive Officer and Vice Chairman of the Board of Directors, and
the Employee desires to perform such services for the Company.
CLAUSES
In consideration of the foregoing, and the covenants, duties,
rights and obligations set forth below, the parties agree as
follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
1.1 Duties. Subject to the terms and conditions of this
Agreement, the Company employs the Employee as its Chief Executive
Officer and Vice Chairman of the Board, located in Elkhart,
Indiana, to perform the usual duties of such offices as described
in the Company's by-laws. The Employee accepts such employment
with the Company. The Employee shall devote his exclusive and
full-time attention and best efforts to the Company's Business as
is necessary for him to perform his duties.
1.2 Term.
(a) Scheduled Term. The term of the Employee's employment
under this Agreement shall be for a period of two (2) years,
commencing on July 1, 1994, and continuing through June 30, 1996
(the "Term"), unless terminated sooner for "Cause" under subsection
1.2(b) below.
(b) Termination for Cause. The Company shall have the right,
at any time during the Term of this Agreement, to terminate the
Employee's employment under this Agreement without prior notice, if
such termination is for "Cause". For purposes of this Agreement,
"Cause" shall mean dishonesty, fraud, conviction of a felony or of
any crime involving moral turpitude, willful refusal to perform the
material duties under this Agreement, gross dereliction or gross
neglect of duty, or material breach of the restrictive covenants
set forth in Section 6 of this Agreement.
ARTICLE 2
COMPENSATION
2.1 Base Salary. In consideration of the services to be
rendered by the Employee to the Company under this Agreement, the
Company shall pay the Employee an annual base salary (the "Base
Salary") in the amount of one hundred thirty thousand dollars
($130,000). The Company shall pay the Base Salary to the Employee
in equal installments in accordance with the Company's standard
payroll practices, less all applicable payroll, FICA, withholding
and other taxes.
2.2 Incentive Bonus. In addition to all other compensation
payable to the Employee under this Agreement, for each fiscal year
during the Term, the Company shall pay a bonus (the "Bonus") to the
Employee, predicated on the Company's consolidated publicly
reported pre-tax profits generated from continuing operations (and
excluding non-recurring gains, profits and losses) ("Pre-Tax
Profits"), as shown on the audited financial statements prepared by
the Company's independent certified public accountants. Such
determination of Pre-Tax Profits shall be final, conclusive and
binding upon the parties. The Bonus shall be computed each fiscal
year as follows:
(a) If Pre-Tax Profits are between $0 and $500,000, the
Employee shall receive no Bonus.
(b) The Employee shall receive a Bonus of: one percent (1%)
of the excess amount of Pre-Tax Profits over $500,000 up to
$1,000,000; plus two percent (2%) of the excess amount of Pre-Tax
Profits over $1,000,000 up to $1,500,000; plus three percent (3%)
of the excess amount of Pre-Tax Profits over $1,500,000 up to
$2,000,000; plus four percent (4%) of the excess amount of Pre-Tax
Profits over $2,000,000 up to $3,000,000; plus five percent (5%) of
the excess amount of Pre-Tax Profits over $3,000,000.
The Bonus awarded to the Employee shall be paid within
seventy-five (75) days after the end of each fiscal year.
2.3 Expense Reimbursement. The Company shall reimburse the
Employee for those out-of-pocket expenses the Employee incurs while
performing his obligations under this Agreement, including without
limitation a car allowance for the use of his car in the
performance of his duties as an employee of the Company, which: (i)
are reasonable; (ii) conform with all applicable policies of the
Company; and (iii) are evidenced by appropriate documentation.
2.4 Benefit Plans. During the Term of this Agreement, the
Company shall provide the Employee with all medical and life,
including accidental death and dismemberment coverage, insurance
coverage under the Company's benefit programs or plans of any type
or nature which the Company has in effect from time to time, in
accordance with the provisions of such programs or plans. In
addition, the Employee shall be included in any other benefit
programs awarded to senior executives of the Company.
2.5 Vacation. The Employee shall be entitled to vacation in
accordance with the Company's vacation policy for senior executives
and shall be eligible, as of the effective date of this Agreement,
to four (4) weeks of paid vacation.
2.6 Moving and Temporary Housing. The Company shall
reimburse the Employee for those out-of-pocket expenses the
Employee incurs in connection with: (i) moving from his current
residence to Elkhart, Indiana, and (ii) temporary housing in
Elkhart, Indiana for a period not to exceed the earlier of six (6)
months or upon the Employee obtaining a permanent residence.
ARTICLE 3
CERTAIN STOCK MATTERS
3.1 Treasury Stock. The Employee shall purchase fifty
thousand dollars ($50,000) of the Company's treasury stock at its
June 28, 1994 price of $3.25 per share and shall make full payment
to the Company for such shares prior to August 15, 1994. The
Company shall promptly register such shares with the Securities and
Exchange Commission.
3.2 Option Plan. The Company will issue to the Employee
stock options covering a total of 170,000 shares of the Company's
stock pursuant to a Company Stock Option Agreement. The terms of
such options shall be substantially as follows:
(a) The Employee shall have the option to purchase the first
50,000 shares at an exercise price which shall be equal to $3.50
per share;
(b) The Employee shall have the right to purchase the next
70,000 shares at an exercise price which shall be equal to $4.50
per share; and
(c) The Employee shall have the right to purchase the last
50,000 shares at an exercise price which shall be equal to $6.00
per share.
The vesting of the foregoing shares shall be as follows: (i)
the first 25,000 shares shall vest as of the Effective Date; (ii)
the next 40,000 shares shall vest twelve (12) months from the
Effective Date; (iii) the next 55,000 shares shall vest twenty-four
(24) months from the Effective Date and (iv) the remaining 50,000
shares shall vest thirty-six (36) months from the Effective Date.
All vesting shall accelerate upon the sale of the Company or of
substantially all of the Company's assets.
ARTICLE 4
DISABILITY
4.1 Disability. If the Employee becomes disabled during the
Term, this Agreement shall terminate; provided, however, that the
Employee shall continue to be compensated at his then existing Base
Salary for a period of six (6) months after inception of the
Employee's "Disability" (as that term is defined below) or the
expiration of the Term, whichever is earlier. For purposes of this
Agreement, "Disability" shall mean that the Employee shall, because
of a mental or physical condition that has existed for a period of
at least thirty (30) consecutive days, be incapable of
satisfactorily discharging his regular duties as required under
this Agreement. The determination, from time to time, of whether
the Employee has become disabled or is no longer disabled, shall be
made by agreement of the parties, or if no agreement can be
reached, the Employee shall, upon ten (10) days written notice from
the Company, choose a physician and the Company shall likewise
choose a physician, and each such physician shall, within five (5)
days thereafter, agree on the appointment of a third physician who
shall examine the Employee and determine from said examination if
he has a Disability. The decision of such physician shall be
binding on all parties. The physician so chosen shall be a
licensed physician in the State of Indiana.
ARTICLE 5
DEATH
5.1 Death. If the Employee dies during the Term, this
Agreement shall terminate; provided, however, that the Employee's
estate, or designated beneficiary, shall be paid his then existing
monthly Base Salary for a period of six (6) months from the date of
his death, or the balance of the Term, whichever is earlier.
ARTICLE 6
RESTRICTIVE COVENANTS
6.1 Confidentiality. The Employee acknowledges that during
the course of his association and employment with the Company, he
will be in contact with suppliers and customers of the Company and
will have access to trade secrets and other confidential and
proprietary information with respect to the business and affairs of
the Company and its affiliates and their respective operations,
including without limitation, their properties, research and
development, accounts, books and records, sales, know-how,
techniques, profits, products, customer lists, requirements,
suppliers, cost data, memoranda, devices, processes, methods,
procedures, formulas, contract prices, pricing and other corporate
activities (collectively, "Confidential Information"). Recognizing
that the disclosure or improper use of such Confidential
Information will cause serious and irreparable injury to the
Company, the Employee agrees that he will not at any time, directly
or indirectly, disclose Confidential Information to any third party
or otherwise use Confidential Information for his own benefit or
the benefit of others unless authorized by the Company.
The restrictions set forth in this paragraph shall not apply
to information known to the general public or reasonably
ascertainable through general public knowledge.
6.2 Non-Competition. The Employee agrees that during the
term of his employment with the Company and for a period of twelve
(12) months following the termination of such employment, he will
not, directly or indirectly, alone or in association with others,
either as a principal, agent, owner, shareholder, officer,
director, partner, employee, investor, consultant, manager or in
any other capacity, divert, take away, solicit or interfere with
any of the customers, accounts or employees of the Company or its
affiliates existing as of the Effective Date or thereafter acquired
by the Company or its affiliates during the Term.
6.3 Damages.
(a) Money Damages. If the Employee breaches the restrictive
covenants contained in this Agreement, the Employee shall pay the
Company's actual, direct, indirect and consequential damages which
arise from or are associated with such breach.
(b) Continuing Nature of Damages. The Employee acknowledges
that upon breaching the restrictive covenants contained in this
Agreement, the Employee will cause damages of an irreparable and
continuing nature to the Company, for which money damages will not
provide adequate relief. Therefore, the Employee agrees that in
addition to money damages, the Company is also entitled to obtain
an injunction (including but not limited to a temporary restraining
order) for the remainder of the period specified in the restrictive
covenant which the Employee breached. The Company shall have the
right to obtain such injunctive relief without having to post any
bond or prove any specific damages.
6.4 Cumulative Remedies. The remedies contained in this
Agreement are in addition to and not to the exclusion of any other
remedies whether specified in this Agreement, available at law, in
equity or otherwise.
6.5 Survival of Covenants. The Employee's duties and
obligations under this Agreement shall survive the termination of
this Agreement or any of its provisions.
6.6 Return of Material. Upon the termination of the
Employee's employment with the Company for any reason, with or
without Cause, the Employee immediately shall deliver to the
Company all documents, instruments and/or electronic, magnetic or
other media which in any way contain any information involving the
Confidential Information, or other information, materials,
equipment or items of the Company. The Employee shall not retain
any copies of the preceding.
ARTICLE 7
GENERAL
7.1 Termination of Agreement. This Agreement shall terminate
pursuant to Sections 1.2(b), 4.1 or 5.1, or upon the execution of
any instrument which both the parties sign that specifically
terminates this Agreement.
Nothing contained in this Section shall affect or impair any
rights or obligations which arise prior to or at the time this
Agreement terminates, or which may arise due to any event which
causes this Agreement to terminate.
7.2 Notices. All notices concerning this Agreement shall be
given in writing, as follows: (i) by actual delivery of the notice
into the hands of the party entitled to receive it, in which case
such notice shall be effective upon such delivery; (ii) by mailing
such notice by registered or certified mail, return receipt
requested, in which case the notice shall be deemed given four (4)
days from the date of its mailing; (iii) by Federal Express or any
other overnight carrier, in which case the notice shall be deemed
to be given on the date next succeeding the date of its
transmission; or (iv) by Facsimile, in which case the notice shall
be deemed given as of the date it is sent.
All notices which concern this Agreement shall be addressed as
follows:
If to the Company: If to the Employee:
Miller Building Systems, Inc. Edward Craig
58120 County Road 3 South _________________________
Elkhart, IN 46517 _________________________
Attn.: Ronald Chez<PAGE>
with a copy to:
Jeffrey C. Rubenstein
Much, Shelist, Freed,
Denenberg & Ament, P.C.
200 N. LaSalle St.
Suite 2100
Chicago, IL 60601-1095
7.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and its respective successors
and assigns and the Employee and his respective heirs, personal
representatives and assigns.
7.4 Complete Understanding. This Agreement constitutes the
complete understanding between the parties. No alteration or
modification of any of this Agreement's provisions shall be valid
unless made in writing and signed by the parties to this Agreement.
7.5 Applicable Law. The laws of the State of Indiana shall
govern all aspects of this Agreement, irrespective of the fact that
one or more of the parties now is or may become a resident of a
different state, or that the Company relocates its principal office
outside the State of Indiana.
7.6 Descriptive Headings. All section headings, titles and
subtitles are inserted in this Agreement for the convenience of
reference only, and are to be ignored in any construction of this
Agreement's provisions.
7.7 Severability. If a court of competent jurisdiction rules
that any one or more of this Agreement's provisions are invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any of this
Agreement's other provisions, and this Agreement shall be construed
as if it had never contained such invalid, illegal or unenforceable
provision.
7.8 Prior Agreements Superseded. This Agreement supersedes
any prior understandings, written agreements or oral arrangements
among the parties respecting the subject matter of this Agreement.
<PAGE>
The parties have executed this Agreement as of the Effective
Date.
THE EMPLOYEE: THE COMPANY:
Miller Building Systems, Inc.,
a Delaware corporation
\Edward Craig By: \Ronald Chez
Edward Craig, Individually Ronald Chez, Chairman of
the Board
EXHIBIT 10.54
MILLER BUILDING SYSTEMS, INC.
AGREEMENT
THIS AGREEMENT, made as of this 9th day of September, 1994, by
and between Ronald L. Chez (hereinafter called "Chez") and Miller
Building Systems, Inc., a Delaware corporation (hereinafter called
the "Company");
WITNESSETH:
WHEREAS, Chez has recently served the Company as its Chairman
of the Board of Directors; and
WHEREAS, both Chez and the Company, based on circumstances
which changed subsequent to the meeting of the Board of Directors
of the Company on June 30, 1994, believed that their separate
interests were best served if such service were terminated upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, it is agreed as follows:
1. The service of Chez as Chairman of the Board of Directors
of the Company (as well as his services, if any, for or in behalf
of the Company in all other capacities, whether as officer, agent,
representative or otherwise) terminated as of August 11, 1994; it
being understood and agreed, however, that the service of Chez as
a member of the Board of Directors of the Company, as the chairman
of its executive committee and as a member of its nominating
committee were not terminated as of such date.
2. The Company as partial compensation for such services
described in paragraph 1 hereof has paid to Chez (by way of wire
transfer to Ronald L. Chez, Inc., a wholly-owned corporation of
Chez) the sum of $29,000.00, receipt whereof is hereby
acknowledged.
3. The Company as further compensation for such services and
for the termination described in paragraph 1 hereof and for all
compensation pursuant to the "Terms of Ronald Chez's Position as
the Chairman of the Board of Miller Building Company, Inc.", as
approved by the Company's Board of Directors on June 30, 1994,
hereby grants to Chez options to purchase Common Stock, par value
$0.01 per share, of the Company, as follows:
Number of Shares
of Common Stock Exercise
Subject to Option Price
(A) 25,000 $3.50
(B) 25,000 $3.50
(C) 15,000 $4.50,
all such options (i) to be granted and fully vested under the
Company's 1994 stock option plan, (ii) not to be qualified
incentive options under Section 422A of the Internal Revenue Code,
as amended, (iii) as to the option covering 25,000 shares of Common
Stock referred to in clause (A) of the foregoing table, to be
exercised at any time and from time to time in whole or in part
during the period from and after the date hereof until July 1,
1999, and, as to the options covering the 40,000 shares of Common
Stock referred to in clauses (B) and (C) of the foregoing table, to
be exercised at any time and from time to time in whole or in part
during the period from and after June 30, 1995 until July 1, 1999,
(iv) as to the options covering the 40,000 shares of Common Stock
referred to in clauses (B) and (C) of the foregoing table, to
become null and void to the extent unexercised immediately as of
the occurrence of a "Termination Event" (as hereinafter defined),
and (v) to be evidenced by a stock option agreement, dated the date
of this Agreement, in form similar to the Company's standard form
of stock option agreement with such changes thereto as shall be
necessary to evidence the parties' agreement with respect thereto
as set forth in this paragraph 3 and paragraph 5 hereof.
4. The Company will slate Chez at the Company's 1994 Annual
Meeting of Stockholders as a nominee for election to one three year
term as a member of the Company's Board of Directors.
5. During the period from the date hereof until July 1,
1995, neither Chez nor any Affiliate or Associate (as those terms
are defined in Rule 405 under the Securities Act of 1933) of Chez
(regardless of whether such person or entity is an Affiliate or
Associate on the date hereof) will (i) make, or in any way
participate, directly or indirectly, in any "solicitation" of
"proxies" to vote (as such terms are used in the proxy rules of the
Securities and Exchange Commission), or solicit any person or
entity with respect to the voting of any voting securities of the
Company, (ii) form, join or in any way participate in any "group"
within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934 with respect to any voting securities of the Company,
or (iii) other than solely in Chez's capacity as a member of the
Company's Board of Directors, act, alone or in concert with others,
directly or indirectly, to seek to control the management, board of
directors or policies of the Company (the occurrence of any event
covered by any of the foregoing clauses (i) through (iii), but only
if such event is "hostile" within the meaning of the definition set
forth in the following sentence, being herein called a "Termination
Event"). For the purposes of the foregoing sentence the word
"hostile" shall mean any event or series of events which may fall
within the scope of any of the aforementioned clauses (i) through
(iii) of the foregoing sentence, other than communications by Chez
to any member or members of the Board of Directors of the Company,
which the Board of Directors of the Company in good faith by
resolution within a reasonable time determines to be materially
adverse to the best interests of the Company and its stockholders;
provided, however, if Chez shall in advance notify (in person, by
telephonic means or in writing) the Chairman of the Board of
Directors of the Company or the President of the Company of any
event or series of events which may fall within the scope of any of
the aforementioned clauses (i) through (iii) of the foregoing
sentence and which Chez proposes to effectuate or commence to
effectuate within the following 20 days and if such Chairman or
President shall in writing take a "no objection" position with
respect thereto within 72 hours thereafter, then the Board of
Directors of the Company may not thereafter resolve such event or
series of events to be materially adverse to the best interests of
the Company and its stockholders within the meaning of this
sentence. No resolution of the Board of Directors pursuant to the
foregoing sentence shall in any manner preclude the Company from
asserting in any judicial proceeding any right or remedy which the
Company may have against Chez for any event or series of events
which may be resolved to be "hostile" as aforesaid.
6. All representations, warranties and covenants contained
herein shall survive the execution of this Agreement and the
consummation of the transactions contemplated hereby.
7. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns, Affiliates and Associates,
but shall not be assignable by any party hereto without the prior
written consent of the other party hereto.
8. Except as set forth in the last sentence of paragraph 5
hereof, any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be
given by delivery, by telex, telecopier or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the
respective parties as follows:
If to the Company:
Miller Building Systems, Inc.
58120 County Road 3 South
P.O. Box 1283
Elkhart, Indiana 46515
Attention: Chief Executive Officer
If to Chez:
Ronald L. Chez
c/o Ronald L. Chez, Inc.
555 West Madison Street
Suite 3508, Tower 1
Chicago, IL 60661
or to such other address with respect to a party as such party
shall notify the other in writing.
9. No party may waive any of the terms or conditions of this
Agreement, except by a duly signed writing referring to the
specific provision to be waived.
10. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
11. The parties hereto acknowledge that, except as set forth
in this Agreement, there are no written or oral understandings,
arrangements or agreements between them or pursuant to which they
have any rights or obligations.
12. This agreement constitutes the entire agreement, and
supersedes all other and prior agreements, arrangements and
understandings, both written and oral, among the parties hereto.
13. This Agreement may be executed in three counterparts,
each of which shall be deemed an original but both of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the day and year first
above written.
MILLER BUILDING SYSTEMS, INC.
By:\Edward C. Craig
Title: President and Chief
Executive Officer
By:\Steven F. Graver
Title: Chairman of the
Board of Directors
/Ronald L. Chez
RONALD L. CHEZ
Exhibit 10.55
AGREEMENT TO TERMINATE LEASE
THIS AGREEMENT is made and entered into this 12th day of June, 1995, by and
between Malcolm O. Koons (hereafter referred to as "Koons") and Miller
Structures, Inc. (hereinafter referred to as "Miller").
W I T N E S S E T H :
WHEREAS, on or about March 2, 1993, Koons (as the "Lessor") and Miller
(as the "Lessee") entered into a Commercial Lease and Option to Purchase
(hereinafter referred to as the "Lease"), and a Memorandum pertaining to the
Lease was recorded in the Office of the Recorder of Elkhart County, Indiana,
on March 8, 1993, as Document Number 93004990; and
WHEREAS, by the Lease, Koons agreed to lease to Miller, and Miller agreed to
lease from Koons, the real estate commonly known as 28384 County Road 20 West,
Elkhart, Indiana, which real estate is more fully described on Exhibit "A"
attached hereto and is hereinafter referred to as the "Property"; and
WHEREAS, Koons has entered into an agreement to sell the Property, and Koons
and Miller wish to enter into this written Agreement to memorialize their
agreements and understandings with respect to the Property and the termination
of the Lease.
NOW, THEREFORE, in consideration of the mutual terms and provisions
contained herein, the parties hereto agree as follows:
1. Effective upon the execution of this Agreement and the payment of the
amounts to be paid by Miller to Koons specified in paragraph 2 hereof, the Lease
shall be deemed terminated in all respects, and Koons and Miller shall have no
further liability, obligation and/or duties with respect to each other by virtue
of the Lease.
2. Miller agrees to pay certain obligations totalling $100,000.00 to or on
behalf of Koons. This shall be paid by a direct cash payment by Miller to Koons
in the amount of $ 37,500.00, at the time of the closing when Koons sells the
Property, plus Miller's agreement to pay the real estate commission in the
amount of $ 62,500.00 arising from Koons' sale of the Property.
3. Except for the payments to be made by Miller specified in the preceding
paragraph, Koons and Miller hereby completely release and discharge each other
from any and all claims, obligations, liabilities, duties and causes of action
of each and every nature and description, now existing or arising in the future,
that either of them has or may have against the other arising from or relating
in any way to the Lease and/or the Property.
4. Time is of the essence in the performance of all obligations provided
for herein. In the event of any litigation arising from or pertaining to this
Agreement, the prevailing party shall be entitled to recover its costs and
attorney fees from the non-prevailing party.
IN WITNESS WHEREOF, the parties hereunto have executed this Agreement in
Elkhart, Indiana, on the day and year first above written.
"KOONS"
\Malcolm O. Koons
Malcolm O. Koons
"MILLER"
MILLER STRUCTURES, INC.
By: \Edward Craig
Edward Craig, President
STATE OF INDIANA )
) SS:
COUNTY OF ELKHART )
Before me, the undersigned, a Notary Public in and for said County and
State, personally appeared Malcolm O. Koons for and on his own behalf, and
acknowledged the execution of the above and foregoing document this 13 day of
June, 1995.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
\Rita A. Merrill
Notary Public
Rita A. Merrill
Print Name
Residing in St. Joseph
County, Indiana
My Commission Expires: 3-25-98
STATE OF INDIANA )
) SS:
COUNTY OF ELKHART )
Before me, the undersigned, a Notary Public in and for said County and
State, personally appeared Edward Craig, President of Miller Structures, Inc.,
and on behalf of said corporation acknowledged the execution of the above and
foregoing document this 13 day of June, 1995.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
\Rita A. Merrill
Notary Public
Rita A. Merrill
Print Name
Residing in St. Joseph
County, Indiana
My Commission Expires: 3-25-98
This instrument prepared by: Steven L. Hostetler, Thorne, Grodnik, Ransel,
Duncan, Byron & Hostetler, P.O. Box 1210, Mishawaka, Indiana 46546-1210.
Exhibit 11
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
Statement Regarding Computation of Per Share Earnings
Twelve Months Ended
July 1, July 2,
1995 1994
Calculation of primary earnings
per common share:
Net income $ 319,912 $ 311,860
========== ==========
Shares outstanding, net of
treasury shares, at beginning of
period 3,158,578 3,249,078
Weighted average number of shares arising
from the exercise of stock options 4,507 -
Additional shares assuming
exercise as of the beginning of
the fiscal year of dilutive stock
options, based on the treasury
stock method using the average
market price for the period 19,868 18,214
Weighted average number of shares from
the sale of treasury stock 13,446 -
Weighted average number of shares purchased
as treasury stock (66,192) (69,871)
---------- ----------
Weighted average shares and
equivalent shares outstanding 3,130,207 3,197,421
========== ==========
Primary earnings per share: $ .10 $ .10
========== ==========
Fully dilutive earnings per share do not differ from primary earnings per share.
