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 April 1, 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
3,101,898 Shares Outstanding at May 8, 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 9-12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Index to Exhibits 14
Part I. Financial Information
Item 1. Financial Statements
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, July 3,
2000 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 870,420 $ 55,503
Receivables 12,690,745 12,837,571
Refundable income taxes - 16,200
Inventories 5,488,406 5,502,052
Deferred income taxes 218,000 218,000
Other current assets 422,934 143,984
TOTAL CURRENT ASSETS 19,690,505 18,773,310
PROPERTY, PLANT AND EQUIPMENT, at cost 13,449,835 14,962,620
Less, Accumulated depreciation and
amortization 5,816,087 5,731,885
PROPERTY, PLANT AND EQUIPMENT, NET 7,633,748 9,230,735
Deferred compensation plan investments 665,746 417,143
Excess acquisition cost over fair
value of acquired net assets, net 4,024,663 4,159,600
Other assets 179,913 194,398
TOTAL ASSETS $32,194,575 $32,775,186
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, July 3,
2000 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ - $ 2,000,000
Current maturities of long-term debt 795,890 806,119
Accounts payable 3,876,754 3,954,923
Accrued income taxes 54,407 132,635
Accrued expenses and other 2,076,841 1,407,365
TOTAL CURRENT LIABILITIES 6,803,892 8,301,042
Long-term debt, less current maturities 4,644,079 5,276,854
Deferred compensation liabilities 665,746 417,143
Deferred income taxes 310,000 310,000
Other 11,547 13,300
TOTAL LIABILITIES 12,435,264 14,318,339
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value - -
Common stock, $.01 par value 42,506 42,506
Additional paid-in capital 13,847,920 13,847,920
Retained earnings 11,128,706 8,325,154
25,019,132 22,215,580
Less, Treasury stock, at cost 5,259,821 3,758,733
TOTAL STOCKHOLDERS' EQUITY 19,759,311 18,456,847
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $32,194,575 $32,775,186
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
April 1, March 27,
2000 1999
Net sales $19,770,814 $14,325,764
Costs and expenses:
Cost of products sold 16,387,538 11,835,910
Selling, general and administrative 2,226,257 1,594,181
Interest expense 99,793 137,050
Other income, principally interest (23,008) (884)
INCOME BEFORE INCOME TAXES 1,080,234 759,507
Income taxes 411,000 269,000
NET INCOME $ 669,234 $ 490,507
Earnings per share of common stock:
Basic $ .21 $ .14
Diluted $ .21 $ .14
Number of shares used in computation
of earnings per share:
Basic 3,168,744 3,543,309
Diluted 3,209,254 3,625,180
Nine Months Ended
April 1, March 27,
2000 1999
Net sales $52,190,387 $47,942,796
Costs and expenses:
Cost of products sold 42,901,725 39,574,872
Selling, general and administrative 5,836,877 5,153,670
Gain on sale of property
and equipment (1,434,157) -
Interest expense 306,545 458,133
Other income, principally interest (50,548) (8,112)
Nonrecurring item 101,391 -
INCOME BEFORE INCOME TAXES 4,528,554 2,764,223
Income taxes 1,721,000 1,051,000
NET INCOME $ 2,807,554 $ 1,713,233
Earnings per share of common stock:
Basic $ .86 $ .48
Diluted $ .84 $ .47
Number of shares used in computation
of earnings per share:
Basic 3,277,013 3,538,399
Diluted 3,328,014 3,623,039
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
April 1, March 27,
2000 1999
Net cash provided by
operating activities $ 1,892,418 $ 4,180,252
Cash flows provided by (used in)
investing activities:
Purchase of property, plant
and equipment (357,385) (1,064,644)
Decrease in unexpended industrial
revenue bond proceeds - 1,049,763
Proceeds from sale of property
and equipment 3,500,000 -
Increase in deferred compensation
plan investments (248,603) (161,214)
Net cash provided by (used in)
investing activities 2,894,012 (176,095)
Cash flows provided by (used in)
financing activities:
Proceeds from short-term borrowings 6,750,000 21,155,000
Reduction of short-term borrowings (8,750,000) (24,705,000)
Payments of long-term debt (466,424) (457,349)
Purchase of treasury stock (1,510,089) -
Proceeds from exercise of
stock options 5,000 57,907
Net cash (used in)
financing activities (3,971,513) (3,949,442)
Increase in cash
and cash equivalents 814,917 54,715
Cash and cash equivalents:
Beginning of period 55,503 111,620
End of period $ 870,420 $ 166,335
Noncash investing and financing activities:
Issuance of 227,082 shares of
common stock in connection
with business acquisition $ - $ 2,250,000
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" 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 July 1, 2000. The
Annual Report on Form 10-K for the year ended July 3, 1999 and the
Quarterly Report on Form 10-Q for the quarters ended October 2, 1999
and January 1, 2000, should be read in conjunction with these
statements.
The July 3, 1999 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:
Nine Months Ended
April 1, 2000 March 27, 1999
Structures $ 23,235,978 $20,835,834
Telecom 27,147,106 25,677,226
Construction Services 1,807,303 1,429,736
$52,190,387 $47,942,796
Note C - INVENTORIES
Inventories consist of the following:
April 1, 2000 July 3,1999
Raw materials $ 3,822,875 $ 4,369,472
Work in process 1,233,608 885,957
Finished goods 431,923 246,623
$ 5,488,406 $ 5,502,052
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
April 1, March 27,
2000 1999
Weighted average number
of common shares outstanding
(used for basic earnings
per share) 3,168,744 3,543,309
Effect of dilutive
stock options 40,510 81,871
Diluted shares outstanding
(used for diluted earnings
per share) 3,209,254 3,625,180
Nine Months Ended
April 1, March 27,
2000 1999
Weighted average number
of common shares outstanding
(used for basic earnings
per share) 3,277,013 3,538,399
Effect of dilutive
stock options 51,001 84,640
Diluted shares outstanding
(used for diluted earnings
per share) 3,328,014 3,623,039
Note E - SALE OF KANSAS ASSETS
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 also provided for the assignment of Miller's lease of its
Kansas facility. The purchase price consisted of $3.5 million in
cash from the Buyer plus the Buyer's assumption of certain
liabilities of the Kansas operation. 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 with the assignment and
transfer of a lease agreement for the Kansas facility on November 9,
1999. Miller reported pre-tax gains on the sale of certain Kansas
assets of $208,329 in the quarter ended October 2, 1999 and
$1,225,828 in the quarter ended January 1, 2000.
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 fourth quarter of
fiscal 2000, 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 - April 1, 2000 compared to July 3, 1999
At April 1, 2000, Miller's working capital was $12,886,613
compared to $10,472,268 at July 3, 1999. The working capital ratio
was 2.9 to 1 at April 1, 2000 and 2.3 to 1 at July 3, 1999.
Miller has an unsecured bank credit agreement which provides for
advances up to $8,000,000 through November 30, 2000. There were no
outstanding borrowings under this credit agreement at April 1, 2000
compared to $2,000,000 at July 3, 1999.
Miller believes operating cash flows and the bank credit
agreement are sufficient to meet its operating needs.
Results of Operations - Three months ended April 1, 2000 compared to
the three months ended March 27, 1999
Net sales for the third quarter of fiscal 2000 increased 38.0%
from the corresponding quarter in fiscal 1999. Net sales for the
Structures product line ("Structures") increased 67.2% over the third
quarter last year. This increase was primarily the result of a large
contract for the manufacturer and sale of luxury suites. Net sales
for the Telecom product line ("Telecom") increased 20.1% over the
third quarter last year. This increase was the result of higher
sales at all Telecom operations, particularly at the United
operation. The Structures business remains strong as their backlogs
will provide a base of business well into the next fiscal year. The
Telecom backlog is over 40% higher than last year. These current
backlogs should provide the basis for Miller to have strong fourth
quarter sales and earnings. We believe United and the Pennsylvania
Telecom facility will continue to be strong contributors to Miller's
overall profitability during the remainder of fiscal 2000.
During the three-month period ended April 1, 2000, cost of
products sold was 82.9% of net sales compared to 82.6% for the
comparable period of fiscal 1999. The increase in cost of goods sold
was the result of a higher mix of Structures product which generally
carry a lower gross profit than the Telecom product.
Selling, general and administrative expense for the three-month
period ended April 1, 2000 increased 39.6% when compared to the
similar period of fiscal 1999. The higher selling, general and
administrative expenses were generally the result of higher
administrative expenses at the United operation, coupled with higher
group health and incentive compensation expense. As a percentage of
net sales, selling, general and administrative expenses for the
three-month period ended April 1, 2000 were 11.3%, compared to 11.1%
in the comparable three-month period in fiscal 1999.
Interest expense decreased $37,257 to $99,793 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 the three months ended April 1, 2000 and 35.4% for the
comparable three-month period of fiscal 1999. The prior period
provision for income taxes was adjusted for anticipated lower state
income tax expense for the fiscal year ending July 3, 1999.
Results of Operations - Nine months ended April 1, 2000 compared to
the nine months ended March 27, 1999
Net sales increased $4,247,591 during the first nine months of
fiscal 2000 or approximately 8.9% from the corresponding period in
fiscal 1999. Net sales for the Structures product line increased
11.5% over the nine months last year. The increase at Structures was
primarily the result of the strong third quarter sales volume which
more than offset lost sales from the sold Kansas facility. Net sales
for the Telecom product line increased 5.7% over the first nine
months last year. This increase was the primarily the result of
strong sales at the United and Pennsylvania facilities, which also
offset the lost sales volume from the sale of the Kansas facility.
During the nine-month period ended April 1, 2000, cost of
products sold was 82.2% of net sales compared to 82.5% for the
comparable period of fiscal 1999. This decrease from the comparable
period last year is primarily the result of a higher mix of Telecom
products, which carry a higher gross profit than Structures products.
Selling, general and administrative expense for the nine-month
period ended April 1, 2000 increased 13.3% when compared to the
similar period of fiscal 1999. The higher selling, general and
administrative expense was generally the result of higher group
insurance costs, travel expenses, consulting fees, prototyping
expense and incentive compensation. As a percentage of net sales,
selling, general and administrative expenses for the nine-month
period ended April 1, 2000 were 11.2%, compared to 10.7% in the
comparable nine-month period in fiscal 1999.
Interest expense decreased $151,588 to $306,545 during the
current nine-month period compared to the similar period of the prior
year. The decrease was attributable to lower levels of outstanding
debt.
The provision for income taxes was 38.0% of income before income
taxes for the nine months ended April 1, 2000 and for the comparable
nine-month period of fiscal 1999.
Year 2000 Compliance
Miller has completed the process of identifying, evaluating and
implementing changes to its computer programs necessary to address
the Year 2000 issue. Miller's current computer hardware and software
programs are Year 2000 compliant. Costs related to the Year 2000
issue have been expensed as incurred. Costs incurred to date have
been less than $50,000 and management does not believe any material
additional costs will be incurred.
Miller has not experienced any significant interruption to its
operations because of Year 2000 problems. Miller's products do not
have Year 2000 readiness issues because they do not contain date-sensitive
functions.
Miller has completed the process of contacting all third parties
with which it has significant relationships, to determine the extent
to which Miller could be vulnerable to failure by any of them to be
Year 2000 compliant. Miller is not aware of any third parties with
a Year 2000 issue that could materially impact Miller's operations,
liquidity or capital resources. However, Miller has no means of
ensuring that all third parties are Year 2000 compliant and the
potential effect of third-party non-compliance is currently not
determinable.
Miller will continue to devote the resources necessary to ensure
that all Year 2000 issues are properly addressed. However, there can
be no assurance that all Year 2000 problems will be detected.
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 report on Form 8-K was filed during the
three months ended April 1, 2000.
January 5, 2000, Steven F. Graver resigned as a Director of
Miller Building Systems, Inc.
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: May 12, 2000 \Edward C. Craig
Edward C. Craig
Chairman, 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
(27) Financial Data Schedule
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<FISCAL-YEAR-END> JUL-01-2000
<PERIOD-END> APR-01-2000
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<SECURITIES> 0
<RECEIVABLES> 12,690,745
<ALLOWANCES> 0
<INVENTORY> 5,488,406
<CURRENT-ASSETS> 19,690,505
<PP&E> 13,449,835
<DEPRECIATION> 5,816,087
<TOTAL-ASSETS> 32,194,575
<CURRENT-LIABILITIES> 6,803,892
<BONDS> 3,725,000
0
0
<COMMON> 42,506
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,194,575
<SALES> 52,190,387
<TOTAL-REVENUES> 52,190,387
<CGS> 42,901,725
<TOTAL-COSTS> 47,661,833
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 306,545
<INCOME-PRETAX> 4,525,554
<INCOME-TAX> 1,721,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,807,554
<EPS-BASIC> .86
<EPS-DILUTED> .84
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