UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file Number 0-14651
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
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Shares, Par Value $.01 Per Share
3,102,963 Shares Outstanding at November 8, 1996
The index to Exhibits is at page 13 in the sequential numbering
system. Total pages: 14
MILLER BUILDING SYSTEMS, INC.
CONTENTS
Pages
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3-4
Condensed Consolidated Statements of Income 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-10
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Index to Exhibits 13
Part I. Financial Information
Item 1. Financial Statements
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 28, June 29,
1996 1996
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 111,061 $ 165,329
Receivables 7,440,466 6,749,230
Refundable income Taxes 14,844 241,158
Inventories 3,834,235 3,541,000
Deferred income taxes 252,000 252,000
Other current assets 137,905 83,087
TOTAL CURRENT ASSETS 11,790,511 11,031,804
PROPERTY, PLANT AND EQUIPMENT, at cost 11,523,277 10,401,137
Less, Accumulated depreciation and
amortization 4,767,613 4,627,438
6,755,664 5,773,699
OTHER ASSETS, net 101,778 114,855
TOTAL ASSETS $18,647,953 $16,920,358
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 28, June 29,
1996 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 1,000,000 $ 1,500,000
Current maturities of long-term debt
and capitalized lease obligations 487,900 115,000
Accounts payable 3,215,238 2,291,448
Accrued income taxes 344,450 79,438
Accrued expenses and other 931,168 974,698
Accrued nonrecurring items 122,721 129,167
TOTAL CURRENT LIABILITIES 6,101,477 5,089,751
LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS, less current maturities 1,476,100 1,270,000
DEFERRED INCOME TAXES 136,000 136,000
OTHER 20,019 20,019
TOTAL LIABILITIES 7,733,596 6,515,770
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 2,551,787 2,048,824
14,046,925 13,543,962
Less, Treasury stock, at cost 3,132,568 3,139,374
TOTAL STOCKHOLDERS' EQUITY 10,914,357 10,404,588
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $18,647,953 $16,920,358
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 28, September 30,
1996 1995
Net sales $13,036,388 $10,072,148
Costs and expenses:
Cost of products sold 10,717,582 8,203,908
Selling, general and administrative 1,484,284 1,422,103
Interest expense 50,618 37,704
Other income, principally interest (29,865) (753)
INCOME BEFORE INCOME TAXES 813,769 409,186
Income taxes 309,000 156,000
NET INCOME $ 504,769 $ 253,186
Earnings per share
of common stock $ .15 $ .08
Weighted average number of common
shares and equivalents outstanding 3,272,244 3,106,001
See notes to the condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 28, September 30,
1996 1995
Net cash provided by
operating activities $ 983,872 $ 1,118,398
Cash flows (used in)
investing activities:
Purchase of property, plant
and equipment (143,140) (97,115)
Cash flows provided by (used in)
financing activities:
Proceeds from short-term borrowings 4,820,000 2,450,000
Payments on short-term borrowings (5,320,000) (3,730,000)
Payments of long-term debt and
capitalized lease obligations (400,000) (26,563)
Proceeds from exercise of
stock options 5,000 -
Net cash (used in)
financing activities (895,000) (1,306,563)
Decrease in cash and
temporary cash investments (54,268) (285,280)
Cash and temporary cash investments:
Beginning of period 165,329 351,860
End of period $ 111,061 $ 66,580
Noncash investing and financing activities:
Building capitalized under capital
lease and the related capital
obligation $ 979,000 $ -
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying condensed consolidated financial statements
include the accounts of Miller Building Systems, Inc. and its
subsidiaries (individually and collectively referred to herein as
"Miller"). The unaudited interim condensed consolidated financial
statements have been prepared in accordance with the instructions to
Form 10-Q and, therefore, do not include all information and
disclosures necessary for a fair presentation of consolidated
financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. In the
opinion of management, the information furnished herein includes all
adjustments (consisting of normal recurring accruals) necessary to
reflect a fair statement of the interim periods presented. Operating
results for the interim periods are not necessarily indicative of the
results that may be expected for the year ending June 28, 1997.
The June 29, 1996 condensed consolidated balance sheet was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Note B - INVENTORIES
Inventories consist of the following:
September 28, 1996 June 29, 1995
Raw materials $ 3,406,137 $ 2,875,527
Work in process 395,955 612,016
Finished goods 32,143 53,457
$ 3,834,235 $ 3,541,000
Note C - INCOME TAXES
The provision for income taxes includes estimated federal
and state income taxes computed using statutory rates in effect with
recognition given to various income tax versus financial reporting
differences. The provision for income taxes was 38.0% of income
before income taxes for the three-months ended September 28, 1996
compared to 38.1% in the comparable three month period of fiscal
1996.
Note D - ACQUISITION OF KANSAS FACILITY
On August 12, 1996, Miller entered into a ten-year lease
agreement with the Board of County Commissioners of Coffey County,
Kansas to lease a 155,000 square foot manufacturing facility. The
lease agreement provides for payments of $2,500 per month with an
option to purchase the building at the end of the lease for a balloon
payment of $250,000. The balloon payment can be reduced if certain
full-time employee levels are attained during the term of the lease.
In connection with the lease agreement, Miller also entered into an
agreement with the current tenant of the property, whereby Miller
agreed to pay the tenant $750,000, in three installments ($400,000 on
August 12, 1996; $300,000 on October 24, 1996; and $50,000 five days
after the tenant vacates the premises). Miller has accounted for
this transaction as a capital lease whereby Miller recorded the
leased property under the capital lease and the related obligations
on its balance sheet.
Note E - SALE OF CALIFORNIA OPERATION
On October 21, 1996, Miller Structures, Inc.("Seller"), an
Indiana corporation and a wholly owned subsidiary of Miller, sold all
of its issued and outstanding stock of its wholly owned subsidiary,
Miller Structures, Inc.,("Company") a California corporation, to
MODTECH, Inc.("Buyer"). The sale was made pursuant to an Agreement
for Purchase and Sale of all of the outstanding Capital Stock of
Miller Structures, Inc., a Non-Competition Agreement and the
Supplemental Closing Agreement.
The consideration paid by the Buyer to the Seller consists of a
cash purchase price of $1,606,022 less $82,000 pending the resolution
of a dispute over the valuation of inventories. Seller and Buyer
also entered into a three-year lease obligation for certain real
property ("Property") which lease agreement requires the Buyer, as
lessee, to pay Seller rental payments of $4,500 per month. The lease
obligation is subject to cancellation if an expanded environmental
report on the Property is performed and is satisfactory to Buyer.
Upon the issuance of an acceptable expanded environmental report,
Seller and Buyer will mutually agree to cancel the lease agreement,
and Buyer will acquire the Property from Seller for a cash purchase
price of $450,000. The Non-Competition Agreement provides that the
Seller will not, at any time within a five-year period following
closing, engage in any business that manufactures and markets the
products currently manufactured by the Company in the states of
California, Nevada and Arizona.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition - September 28, 1996 compared to June 29, 1996
At September 28, 1996, Miller's working capital was $5,689,034
compared to $5,942,053 at June 29, 1996. The working capital ratio
at September 28, 1996 was 1.9 to 1 compared to 2.2 to 1 at June 29,
1996.
Miller has an unsecured bank credit agreement which provides for
advances up to $5,000,000 through November 30, 1996. There was
$1,000,000 outstanding under this agreement at September 28, 1996 and
$1,500,000 at June 29, 1996.
Miller believes operating cash flows and the bank credit
agreement are sufficient to meet operating needs. The proceeds from
the sale of the California operation (see Note E of Notes to
condensed consolidated financial statements) will be used to fund the
acquisition of the Kansas facility (see Note D of the Notes to the
condensed consolidated financial statements).
Results of Operations - Three months ended September 28, 1996
compared to the three months ended September 30, 1995
Net sales increased $2,964,240 during the first quarter of
fiscal 1997 or approximately 29.4% from the corresponding quarter in
fiscal 1996. The increase in sales volume for the quarter was the
result of strong business conditions at all of Millers' operating
locations. Net sales at Miller Structures, Inc. ("Structures")
increased 29.9% from the first quarter last year. All of the
Structures plants participated in significant sales increases.
Structures current backlog of business is more than double last years
backlog. Net sales at Miller Telecom Services, Inc ("Telecom")
increased 28.0% from the first quarter last year. Telecom has
increasingly become a more competitive force in the telecommunication
shelter business. Management believes the growth at Telecom will
continue during the current fiscal year.
During the three-month period ended September 28, 1996, cost of
products sold was 82.2% of net sales compared to 81.5% for the
comparable period of fiscal 1996. Generally, changes in gross profit
are a result of varying factors, none of which can be specifically
quantified, as product profitability varies in the different
geographic regions served by Miller and also as a result of varying
product mix. The increase in the cost of products sold percentage
for the quarter ended September 28, 1996 is not necessarily
indicative of the trend in cost of sales anticipated in future
periods.
Selling, general and administrative expenses for the three month
period ended September 28, 1996, increased 4.4% when compared to the
similar period of fiscal 1996. The higher selling, general and
administrative expenses was the result of higher salary and wage
expenses, partially offset by lower consulting, advertising and
moving expenses. As a percentage of net sales, selling, general and
administrative expenses for the three-month period ended September
29, 1996, were 11.4%, compared to 14.1% in the comparable three month
period in fiscal 1996.
Interest expense increased $12,914 to $50,618 during the current
three month period compared to the similar period of the prior year.
The increase was attributable to higher interest rates and higher
levels of debt outstanding.
Other income (principally interest income) was $29,865 for the
three months ended September 28, 1996 compared to $753 for the three
months ended September 30, 1995. The current period's interest
income was interest received from the Internal Revenue Service
("IRS") for tax refunds arising from filing amended income tax
returns to reflect IRS audit adjustments (timing differences) on
prior years' tax filings.
The provision for income taxes was 38.0% of income before income
taxes for the three-months ended September 28, 1996 compared to 38.1%
in the comparable three month period of fiscal 1996.
Part II. Other Information
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting held on November 6, 1996, proxies for which
were solicited pursuant to Regulation 14 under the
Securities and Exchange Act of 1934, as amended.
(c) Matters voted upon at Annual Meeting:
Votes Cast
1. Election of Directors For Withheld
Edward C. Craig 2,340,105 5,005
Steven F. Graver 2,340,105 5,005
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See Index to Exhibits
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three
months ended September 28, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MILLER BUILDING SYSTEMS, INC.
(Registrant)
DATE: November 11, 1996 \Edward C. Craig
Edward C. Craig
President and Chief Executive
Officer
(Principal Executive
Officer)
\Thomas J. Martini
Thomas J. Martini
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
FORM 10-Q
INDEX TO EXHIBITS
Number Assigned
in Regulation S-K
Item 601 Description of Exhibit
(11) Statement regarding computation of
per share earnings
Exhibit 11
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
Statement Regarding Computation of Per Share Earnings
Three Months Ended
September 28, September 30,
1996 1995
Calculation of primary earnings
per common share:
Net income $ 504,769 $ 253,186
Shares outstanding, net of
treasury shares, at beginning of
the fiscal year 3,100,963 3,100,963
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 169,523 5,038
Weighted average number of shares
issued as a result of exercise
of stock options 1,758 -
Weighted average shares and
equivalent shares outstanding 3,272,244 3,106,001
Primary earnings per share: $ .15 $ .08
Fully dilutive earnings per share do not differ materially from
primary earnings per share.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> SEP-28-1996
<CASH> 111,061
<SECURITIES> 0
<RECEIVABLES> 7,440,466
<ALLOWANCES> 0
<INVENTORY> 3,834,235
<CURRENT-ASSETS> 11,790,511
<PP&E> 11,523,277
<DEPRECIATION> 4,767,613
<TOTAL-ASSETS> 18,647,953
<CURRENT-LIABILITIES> 6,101,477
<BONDS> 1,270,000
0
0
<COMMON> 40,235
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,647,953
<SALES> 13,036,388
<TOTAL-REVENUES> 13,036,388
<CGS> 10,717,582
<TOTAL-COSTS> 12,201,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,618
<INCOME-PRETAX> 813,769
<INCOME-TAX> 309,000
<INCOME-CONTINUING> 504,769
<DISCONTINUED> 0
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