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 30, 2000
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
3,123,392 Shares Outstanding at October 18, 2000
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 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-11
Part II. Other Information
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 30, July 1,
2000 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 141,339 $ 899,489
Receivables 15,375,153 12,881,450
Refundable income taxes 246,200 246,200
Inventories 6,224,115 6,282,373
Deferred income taxes 538,000 538,000
Other current assets 233,078 170,023
TOTAL CURRENT ASSETS 22,757,885 21,017,535
PROPERTY, PLANT AND EQUIPMENT, at cost 13,697,699 13,541,935
Less, Accumulated depreciation and
amortization 6,166,766 5,959,946
PROPERTY, PLANT AND EQUIPMENT, NET 7,530,933 7,581,989
Deferred compensation plan investments 680,716 666,163
Excess acquisition cost over fair
value of acquired net assets, net 3,975,309 4,012,167
Other assets 170,494 175,084
TOTAL ASSETS $35,115,337 $33,452,938
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, July 1,
2000 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 809,908 $ 795,190
Accounts payable 4,700,844 3,888,942
Accrued income taxes 372,991 204,449
Accrued expenses and other 2,398,745 2,391,255
TOTAL CURRENT LIABILITIES 8,282,488 7,279,836
Long-term debt, less current maturities 4,198,032 4,329,013
Deferred compensation liabilities 680,716 666,163
Deferred income taxes 294,000 294,000
Other 299,931 10,733
TOTAL LIABILITIES 13,755,167 12,579,745
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value - -
Common stock, $.01 par value 42,506 42,506
Additional paid-in capital 13,848,920 13,848,920
Retained earnings 12,860,057 12,409,303
26,751,483 26,300,729
Less, Treasury stock, at cost 5,391,313 5,427,536
TOTAL STOCKHOLDERS' EQUITY 21,360,170 20,873,193
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $35,115,337 $33,452,938
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 30, October 2,
2000 1999
Net sales $20,603,030 $16,883,211
Costs and expenses:
Cost of products sold 17,078,405 13,652,765
Selling, general and administrative 1,994,485 1,908,330
Gain on sale of property
and equipment - (208,329)
Interest expense 92,094 115,317
Other income, principally interest (5,665) (7,624)
Nonrecurring items 753,992 -
INCOME BEFORE INCOME TAXES 689,719 1,422,752
Income taxes 262,000 541,000
NET INCOME $ 427,719 $ 881,752
Earnings per share of common stock:
Basic $ .14 $ .26
Diluted $ .13 $ .26
Number of shares used in computation
of earnings per share:
Basic 3,075,241 3,360,481
Diluted 3,184,312 3,406,391
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 30, October 2,
2000 1999
Net cash provided by (used in)
operating activities $ (530,828) $ 1,121,264
Cash flows provided by (used in)
investing activities:
Purchase of property, plant
and equipment (155,764) (79,552)
Proceeds from sale of property
and equipment - 1,000,000
Increase in deferred compensation
plan investments (14,553) (36,269)
Net cash provided by (used in)
investing activities (170,317) 884,179
Cash flows provided by (used in)
financing activities:
Proceeds from short-term borrowings 665,000 5,300,000
Reduction of short-term borrowings (665,000) (7,100,000)
Payments of long-term debt (116,263) (119,362)
Purchase of treasury stock - (58,004)
Proceeds from exercise of
stock options 59,258 -
Net cash (used in)
financing activities (57,005) (1,977,366)
Increase (decrease) in cash
and cash equivalents (758,150) 28,077
Cash and cash equivalents:
Beginning of period 899,489 55,503
End of period $ 141,339 $ 83,580
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" or the "Company"). 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 30, 2001. The
Annual Report on Form 10-K for the year ended July 1, 2000 should be
read in conjunction with these statements.
The July 1, 2000 condensed consolidated balance sheet was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Note B - BUSINESS SEGMENTS
Miller has one reportable segment, designing, manufacturing,
marketing and servicing factory-built buildings, which includes three
product lines: Structures, Telecom and Construction Services. Year-
to-date net sales by product line are as follows:
Three Months Ended
September 30, 2000 October 2, 1999
Structures $ 8,024,345 $ 7,784,411
Telecom 11,854,632 8,439,333
Construction Services 724,053 659,467
$ 20,603,030 $16,883,211
Note C - INVENTORIES
Inventories consist of the following:
September 30, 2000 July 1,2000
Raw materials $ 5,046,903 $ 4,544,025
Work in process 1,123,137 1,598,838
Finished goods 54,075 139,510
$ 6,224,115 $ 6,282,373
Note D - EARNINGS PER SHARE
The number of shares used in the computation of basic and
diluted earnings per share are as follows:
Three Months Ended
September 30, October 2,
2000 1999
Weighted average number
of common shares outstanding
(used for basic earnings
per share) 3,075,241 3,360,481
Effect of dilutive
stock options 109,071 45,910
Diluted shares outstanding
(used for diluted earnings
per share) 3,184,312 3,406,391
Note E - RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in
Financial Statements"; SAB 101 outlines the basic criteria that must
be met to recognize revenue, and provides guidelines for disclosure
related to revenue recognition policies. This quidance is required
to be implemented by Miller in the fourth fiscal quarter of 2001.
The Company is currently reviewing this quidance in order to
determine the impact, if any, on its consolidated financial
statements.
Note F - DISPOSITION OF KANSAS OPERATION
On August 20, 1999, Miller entered into an Asset Purchase Agreement
with Andrew Corporation (the "Buyer") to sell certain assets used in
the business operations of its Kansas facility. The Asset Purchase
Agreement provided for the assignment of Miller's lease of its Kansas
facility. The purchase price consisted of $3.5 million from the
Buyer plus the Buyer's assumption of certain liabilities of the
Kansas operation, including the Kansas facility lease which had
previously been capitalized by Miller. The $3.5 million consisted of
a $1.0 million base purchase price, which was paid at closing on
August 20, 1999, and a contingent purchase price of $2.5 million,
which was paid by the Buyer to Miller upon the assignment and
transfer of a lease agreement for the Kansas facility. The
assignment and transfer of the lease agreement for the Kansas
facility by Miller to the Buyer was approved by the lessor, Coffey
County, in November 1999. Miller reported a pre-tax gain on the sale
of certain Kansas assets of $208,329 in the quarter ended October 2,
1999 and an additional gain of $1,238,379 during the quarter ended
January 1, 2000 upon consumation of the assignment and transfer of
the lease agreement.
Note G - NONRECURRING ITEMS
During the first fiscal quarter ended September 30, 2000, Miller
recognized nonrecurring expenses aggregating $753,992, consisting of
$206,325 of costs related to its recent merger activities and costs
of $547,667 associated with contractual obligations for a retiring
executive. Miller has incurred $649,440 in additional nonrecurring
costs principally related to its merger activity after September 30,
2000.
Note H - COMMITMENTS AND CONTINGENCIES
On August 31, 2000, Miller entered an Agreement and Plan of Merger
with Coachmen Industries, Inc. ("Coachmen") to acquire all of
Miller's outstanding common stock for $8.40 in cash per share, plus
up to an additional $.30 in cash per share provided certain
conditions have been met by Miller, including the resolution of the
dispute discussed in the following paragraph. Coachmen successfully
completed its tender offer on October 19, 2000 and the merger was
completed on October 31, 2000.
On August 22, 2000, Miller notified Modtech Holdings, Inc.
("Modtech") that it had entered into an agreement with Coachmen with
respect to Coachmen's offer. Modtech indicated that they intended to
hold Miller liable for the payment of a $1 million termination fee
pursuant to the June 9, 2000 letter agreement between Miller and
Modtech. On the same day, Miller filed a Complaint for Summary
Judgement requesting the court's declaration that Miller, among other
things, had properly terminated its letter agreement with Modtech and
that it had no obligation to pay the $1 million termination fee or
any other amount to Modtech. On September 7, 2000, Modtech filed a
Complaint against Miller requesting that, among other things, that
Modtech did not breach its letter agreement with Miller and that
Modtech is entitled to payment of the $1 million termination fee. In
addition, Modtech requested that the Court order Miller to promptly
consummate a merger with Modtech at a price of $8.05 per share and
restrain Miller from taking any action in furtherance of the
consummation of the transaction with Coachmen. Miller is unable to
determine the success of its request for Summary Judgement and, accordingly,
no provision has been made in Miller's September 30, 2000 financial statements
for any termination fee or other amount due to Modtech.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Report contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended. Those
statements are dependent on certain risks and uncertainties. Such factors,
among others, are the mix between products with varying profit margins, the
ability to achieve forecasted production levels through the second half of
fiscal 2001, the strength of the economy in the various sections of the country
served by the Company, the impact of our competitors on the profitability of
our products, the future availability of raw materials, the anticipated
adequacy of the Company's operating cash flows and credit facilities to finance
operations, capital expenditures and other needs of its business. Readers are
cautioned that reliance on any forward-looking statement involves risks and
uncertainties. Forward-looking statements contained herein are based on
reasonable assumptions, any of which could prove to be inaccurate given the
inherent uncertainties as to the occurrence or nonoccurrence of future events.
There can be no assurance that the forward-looking statements contained in
this Report will prove to be accurate. The inclusion of a forward-looking
statement herein should not be regarded as a representation by the Company
that the Company's objectives will be achieved.
Financial Condition - September 30, 2000 compared to July 1, 2000
At September 30, 2000, Miller's working capital was $14,475,397
compared to $13,737,699 at July 1, 2000. The working capital ratio
was 2.8 to 1 at September 30, 2000 and 2.9 to 1 at July 1, 2000.
Miller has an unsecured bank credit agreement which provides for
advances up to $8,000,000 through November 30, 2000 and Miller
expects this credit facility will be renewed through November 30,
2001. There were no outstanding borrowings under this credit
agreement at September 30, 2000 and July 1, 2000.
Miller believes operating cash flows and the bank credit
agreement are sufficient to meet its operating needs.
Results of Operations - Three months ended September 30, 2000
compared to the three months ended October 2, 1999
Net sales for the first quarter of fiscal 2001 increased 22.0%
from the corresponding quarter in fiscal 2000. Net sales for the
Structures product line ("Structures") increased 3.1% over the first
quarter last year. Net sales increases at the Structures
Pennsylvania and South Dakota locations were nearly offset by lower
production levels at the Indiana plant and softness in the market at
the Vermont plant. Net sales for the Telecom product line
("Telecom") increased 40.5% over the first quarter last year. This
increase was the result of higher sales at all Telecom operations,
particularly at the United operation. The Structures business is
beginning to soften, however, the Telecom backlog is over 52% higher
than last year at this time. The current backlogs should provide the
basis for Miller to have strong second quarter sales and earnings.
We believe the United Telecom facility will continue to be a strong
contributor to Miller's overall profitability.
During the three-month period ended September 30, 2000, cost of
products sold was 82.9% of net sales compared to 80.9% for the
comparable period of fiscal 2000. The increase in cost of goods sold
was principally the result of higher warranty, group health and
workers compensation costs.
Selling, general and administrative expenses for the three-month
period ended September 30, 2000 increased 4.5% when compared to the
similar period of fiscal 2000. The higher selling, general and
administrative expenses were generally the result of higher salary
and administrative expenses at the United operation. As a percentage
of net sales, selling, general and administrative expenses for the
three-month period ended September 30, 2000 were 9.7%, compared to
11.3% in the comparable three-month period in fiscal 2000.
During the first fiscal quarter ended September 30, 2000, Miller
recognized nonrecurring expenses aggregating $753,992 consisting of
$206,325 of costs related to its recent merger activities and costs
of $547,667 associated with contractual obligations for a retiring
executive. Miller has incurred $649,440 in additional nonrecurring
costs principally related to its merger activity after September 30,
2000.
Interest expense decreased $23,223 to $92,094 during the current
three-month period compared to the similar period of the prior year.
The decrease was attributable to lower levels of outstanding debt
during the period.
The provision for income taxes was 38.0% of income before income
taxes for both the three months ended September 30, 2000 and for the
comparable three-month period of fiscal 2000.
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
The following reports on Form 8-K were filed during the
three months ended September 30, 2000.
July 14, 2000, press release announcing that Miller has received
two indications of interest with respect to the acquisition of
Miller. And a press release reporting that Reuters and possibly
other news services, incorrectly released certain news about Miller.
July 31, 2000, press release announcing that Miller has
terminated merger negotiations with Modtech Holdings, Inc. And
continues discussions with two other parties with respect to the
acquisition of Miller.
August 31, 2000, Miller Building Systems, Inc., Coachmen
Industries, Inc., COA Housing Group, Inc. and Miller Acquisition
Corporation, executed an Agreement and Plan of Merger.
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 13, 2000 \Rick J. Bedell
Rick J. Bedell
President
(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
(27) Financial Data Schedule
