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 December 30, 1995
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
3,100,963 Shares Outstanding at January 31, 1996
The index to Exhibits is at page 14 in the sequential numbering
system. Total pages: 15
MILLER BUILDING SYSTEMS, INC.
CONTENTS
Pages
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3-4
Consolidated Condensed Statements of Operations 5
Consolidated Condensed Statements of Cash Flows 6
Notes to Consolidated Condensed Financial
Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-11
Part II. Other Information 12
Signatures 13
Index to Exhibits 14
Part I. Financial Information
Item 1. Financial Statements
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 30, July 1,
1995 1995
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 89,100 $ 351,860
Receivables 4,416,402 5,960,110
Inventories 2,736,361 3,533,619
Deferred federal income taxes 320,000 320,000
Other current assets 213,320 126,752
TOTAL CURRENT ASSETS 7,775,183 10,292,341
PROPERTY, PLANT AND EQUIPMENT, at cost 10,338,097 10,110,765
Less, Accumulated depreciation and
amortization 4,396,745 4,083,640
5,941,352 6,027,125
OTHER ASSETS, net 205,745 202,166
TOTAL ASSETS $13,922,280 $16,521,632
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 30, July 1,
1995 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ - $ 1,550,000
Current maturities of long-term debt 171,095 224,925
Accounts payable 1,560,991 2,074,510
Accrued income taxes 178,310 89,827
Accrued expenses and other 218,502 904,766
Accrued nonrecurring items 152,448 193,857
TOTAL CURRENT LIABILITIES 2,281,346 5,037,885
LONG-TERM DEBT, less current maturities 1,270,000 1,385,000
DEFERRED FEDERAL INCOME TAXES 134,000 134,000
OTHER 45,782 45,782
TOTAL LIABILITIES 3,731,128 6,602,667
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 1,835,388 1,563,201
13,330,526 13,058,339
Less, Treasury stock, at cost 3,139,374 3,139,374
TOTAL STOCKHOLDERS' EQUITY 10,191,152 9,918,965
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $13,922,280 $16,521,632
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
December 30, December 31,
1995 1994
Net sales $ 7,670,294 $ 9,691,497
Costs and expenses:
Cost of products sold 6,394,902 8,250,632
Selling, general and administrative 1,220,152 1,225,341
Interest expense 25,239 29,269
Interest income - (4,562)
INCOME BEFORE INCOME TAXES 30,001 190,817
Income taxes 11,000 72,000
NET INCOME $ 19,001 $ 118,817
Earnings per share of common stock $ .01 $ .04
Weighted average number of common
shares and equivalents outstanding 3,105,349 3,120,883
Six Months Ended
December 30, December 31,
1995 1994
Net sales $ 17,742,442 $ 20,929,619
Costs and expenses:
Cost of products sold 14,598,810 17,879,470
Selling, general and administrative 2,642,255 2,439,834
Nonrecurring items - (66,000)
Interest expense 62,943 46,390
Interest income (753) (7,062)
INCOME BEFORE INCOME TAXES 439,187 636,987
Income taxes 167,000 210,000
NET INCOME $ 272,187 $ 426,987
Earnings per share of common stock $ .09 $ .14
Weighted average number of common
shares and equivalents outstanding 3,105,674 3,143,471
See notes to the consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
December 30, December 31,
1995 1994
Net cash provided by
operating activities $ 1,683,402 $ 234,541
Cash flows (used in)
investing activities:
Purchase of property, plant
and equipment (227,332) (1,510,416)
Cash flows provided by (used in)
financing activities:
Proceeds from short-term
borrowing 3,600,000 10,623,000
Payments on short-term
borrowing (5,150,000) (10,663,000)
Payments of long-term debt (168,830) (49,112)
Proceeds from Industrial
Revenue Bond - 1,500,000
Proceeds from exercise of
stock options - 19,250
Purchase of treasury stock - (260,000)
Proceeds from sale of
treasury stock - 50,001
Net cash provided by (used in)
financing activities (1,718,830) 1,220,139
Decrease in cash and
temporary cash investments (262,760) (55,736)
Cash and temporary cash investments:
Beginning of period 351,860 132,084
End of period $ 89,100 $ 76,348
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying consolidated condensed financial statements include
the accounts of Miller Building Systems, Inc. and its subsidiaries
(individually and collectively referred to herein as "Miller"). The
unaudited interim consolidated condensed 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 29, 1996.
The July 1, 1995 consolidated condensed 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:
December 30, 1995 July 1, 1995
Raw materials $ 2,365,902 $ 2,945,366
Work in process 242,763 441,366
Finished goods 127,696 146,887
$ 2,736,361 $ 3,533,619
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 six months ended December 30, 1995
compared to a 33.0% in the comparable six month period of fiscal
1994. During the first quarter of fiscal 1995, Miller reversed
$32,000 of previously accrued federal and state income taxes as a
result of a settlement of the audit by the Internal Revenue Service.
Note D - NONRECURRING ITEMS
During the first quarter of fiscal 1995, Miller reversed certain
restructuring accruals recorded during the third fiscal quarter of
1993. These reversals included $25,000 for the early release from
the Fontana property lease agreement, $23,000 for lower than expected
legal costs to settle disputes on the Denver International Airport
project at the closed PME Pacific Systems, Inc. ("PME") operations
and $18,000 for lower interest expense on the final settlement with
the Internal Revenue Service.
Note E - PENDING ACQUISITION
On November 3, 1995, Miller signed a letter of intent to acquire all
of the issued and outstanding common stock of Whitley Manufacturing,
Inc., a manufacturer of modular structures. It is anticipated the
closing date will occur during Miller's fourth quarter of fiscal year
1996. The acquisition and purchase price are subject to, among other
things, due diligence investigations by Miller and negotiation of a
definitive purchase agreement.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition - December 30, 1995 compared to July 1, 1995
At December 30, 1995, Miller's working capital was $5,493,837
compared to $5,254,456 at July 1, 1995. The working capital ratio
was 3.4 to 1 at December 30, 1995 and 2.0 to 1 at July 1, 1995.
Miller has an unsecured bank credit agreement that provides for
advances up to $5,000,000 through January 31, 1996. There were no
borrowings outstanding under this agreement at December 30, 1995 and
$1,550,000 at July 1, 1995.
Miller believes operating cash flows and the bank credit agreement
are sufficient to meet operating needs.
On November 3, 1995, Miller signed a letter of intent to acquire all
of the outstanding common stock of Whitley Manufacturing, Inc. (see
Note E.). Miller intends to use bank financing and authorized but
unissued common shares to finance the acquisition.
Results of Operations - Three months ended December 30, 1995 compared
to the three months ended December 31, 1994
Net sales decreased $2,021,203 during the second quarter of fiscal
1996 or approximately 20.9% from the corresponding quarter in fiscal
1995. Miller Structures, Inc. ("Structures") recorded a 25.4% or
$1,943,004 decrease. During the first and second quarter Structures
experienced a significant decrease in order activity which led to the
decline in sales volume. The decline in order activity is
attributable to high dealer inventories, which caused many dealers to
reconfigure buildings versus ordering new, and a general softness in
the commercial modular building industry. Management does not
believe this decrease in net sales at Structures represents a trend.
Miller Telecom Services, Inc. ("Telecom") attained a 67.1% sales
increase as this subsidiary continues to increase market share.
Management believes Telecom will continue to increase its market
share and is positioned to post strong sales increases during the
second half of fiscal 1996. During the second quarter of fiscal
1995, net sales at the Structures' Residential division
("Residential"), which was closed in the third quarter of fiscal
1995, were $861,523.
During the three-month period ended December 30, 1995, cost of sales
was 83.4% of net sales compared to 85.1% for the comparable period of
fiscal 1995. 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 because of varying product mix. The decrease in
the cost of sales percentage for the quarter ended December 30, 1995
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 December 30, 1995, decreased $5,189 compared to the
similar period of fiscal 1995. The slight decrease in selling,
general and administrative expenses for the quarter was primarily the
result of reduced expenses related to the closed Structures'
Residential division and overall lower administrative expense at
Structures, partially offset by higher administrative costs to
support the growth at Telecom. During the quarter, approximately
$38,000 in major program costs for marketing and plant efficiency
programs were expensed. As a percentage of net sales, selling,
general and administrative expenses for the three-month period ended
December 30, 1995 were 15.9%, on lower sales volume, compared to
12.6% in the comparable three-month period in fiscal 1995.
Interest expense decreased $4,030 to $25,239 during the current
three-month period compared to the similar period in the prior year.
The decrease during the quarter was a result of lower average levels
of debt outstanding on the line of credit and lower interest rates on
the debt converted to the Industrial Revenue Bonds.
The provision for income taxes was 36.7% before income taxes for the
three months ended December 30, 1995 compared to a 37.7% provision in
the comparable three-month period of fiscal 1995. The difference is
not considered material.
Results of Operations - Six months ended December 30, 1995
compared to six months ended December 31, 1994
Net sales decreased $3,187,177 for the six-month period ended
December 30, 1995 or 15.2% compared to the similar period of fiscal
1994. Net sales at Structures decreased 19.9% from the six-month
period last year. The sales decline was the result of slowing
business activity in the commercial modular building industry. Net
sales at Telecom increased 95.4% over the same period last year.
Telecom continues to increase market share and improve its position
in the rapidly expanding telecommunication markets. During the first
six months of fiscal 1995, net sales at Residential, which was closed
in the third quarter of fiscal 1995, were $1,940,286.
During the three-month period ended December 31, 1994, cost of sales
was 82.3% of net sales compared to 85.4% for the comparable period of
fiscal 1994. 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.
Selling, general and administrative expenses for the six-month period
ended December 30, 1995, increased $202,422 compared to the similar
period of fiscal 1995. Lower selling, general and administrative
expenses at the closed Residential division was offset by increased
administrative costs related to the growth at Telecom and increased
staffing in the Structures' sales, costing and engineering
departments. In addition, approximately $108,000 in major program
costs for marketing, research and development, and plant efficiency
programs were expensed during the current six month period. As a
percentage of net sales, selling general and administrative expenses
for the six-month period ended December 30, 1995 were 14.9%, on lower
sales volume, compared to 11.7% in the comparable six-month period in
fiscal 1995.
During the first quarter of fiscal year 1995, nonrecurring items of
$66,000 resulted from the reversal of certain accruals related to an
early release from the Fontana property lease agreement, lower than
expected legal costs to settle disputes on the Denver International
Airport project and lower interest expense for a settlement with the
Internal Revenue Service.
Interest expense increased $16,553 to $62,943 during the current six-
month period compared to the similar period of the prior year. The
increase was attributable to interest paid on the Industrial Revenue
Bonds which funded the Telecom plant expansion, partially offset by
lower levels of outstanding debt on the line of credit.
The provision for income taxes was 38.0% of income before income
taxes for the six-month period ended December 30, 1995 compared to a
provision of 33.0% in the comparable six-month period of fiscal 1994.
During the first quarter of fiscal 1995, Miller reversed $32,000 of
previously accrued federal and state income taxes as a result of the
final settlement of the audit by the Internal Revenue Service.
Part II. Other Information
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
December 30, 1995.
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: February 1, 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 Six Months Ended
December December December December
1995 1994 1995 1994
Calculation of primary earnings
per common share:
Net income $ 19,001 $ 118,817 $ 272,187 $ 426,988
Shares outstanding, net of
treasury shares, at beginning of
period 3,100,963 3,093,963 3,100,963 3,158,578
Average number of shares arising
from the exercise of stock options - 4,109 - 2,054
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 4,386 22,811 4,711 23,909
Average number of shares from the
sale of treasury stock - - - 11,539
Average number of shares purchased
as treasury stock - - - (52,609)
Weighted average shares and
equivalent shares outstanding 3,105,349 3,120,883 3,105,674 3,143,471
Primary earnings per share: $ .01 $ .04 $ .09 $ .14
Fully dilutive earnings per share do not differ from primary earnings per share.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> DEC-30-1995
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