UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter
Ended July 1, 2001 Commission File Number 0-13433
MILTOPE GROUP INC
(Exact Name of Registrant as Specified in its Charter)
- ---------------------------------------------------------------------------
Delaware 11-2693062
- ----------------------------------- --------------------
(State or other jurisdiction (I.R.S.Employer
of incorporation or organization) Identification No.)
500 Richardson Road South
Hope Hull, AL 36043
- -------------------------- ---------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (334) 284-8665
Not Applicable
- ---------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report
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 practicable date.
Outstanding at August 7, 2001: 5,871,523 shares of Common Stock, $.01
par value.
PART I - FINANCIAL INFORMATION
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
July 1, December 31,
ASSETS 2001 2000
- ------- ----------- ------------
CURRENT ASSETS:
Cash $ 1,198,000 $ 2,711,000
Accounts receivable 6,239,000 7,933,000
Inventories 12,943,000 12,877,000
Deferred income taxes 1,095,000 952,000
Other current assets 311,000 382,000
----------- ------------
Total current assets 21,786,000 24,855,000
----------- ------------
PROPERTY AND EQUIPMENT - at cost:
Machinery and equipment 8,351,000 8,911,000
Furniture and fixtures 1,628,000 1,628,000
Land, building and improvements 6,702,000 6,732,000
----------- ------------
Total property and equipment 16,681,000 17,271,000
Less accumulated depreciation 10,665,000 10,679,000
----------- ------------
Property and equipment - net 6,016,000 6,592,000
----------- ------------
DEFERRED INCOME TAXES 3,069,000 3,212,000
OTHER ASSETS 923,000 956,000
----------- ------------
TOTAL $31,794,000 $35,615,000
=========== ============
LIABILITIES AND STOCKHOLDERS'EQUITY
- -----------------------------------
CURRENT LIABILITIES:
Short-term debt $ 725,000 $ 800,000
Accounts payable 4,748,000 5,533,000
Accrued expenses 3,873,000 4,534,000
Current maturities of long-term debt 3,769,000 4,129,000
----------- ------------
Total current liabilities 13,115,000 14,996,000
LONG-TERM DEBT 8,474,000 9,654,000
OTHER LIABILITIES 33,000 49,000
----------- ------------
Total liabilities 21,622,000 24,699,000
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value;
20,000,000 shares authorized;
6,811,112 shares outstanding
at July 1, 2001 and
December 31,2000. 68,000 68,000
Capital in excess of par value 24,519,000 24,519,000
Retained earnings (accumulated deficit) (169,000) 575,000
----------- ------------
24,418,000 25,162,000
Less treasury stock at cost 14,246,000 14,246,000
----------- ------------
Total stockholders' equity 10,172,000 10,916,000
----------- ------------
TOTAL $31,794,000 $35,615,000
=========== ============
See Notes To Condensed Consolidated Financial Statements
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirteen Weeks Ended
---------------------------
July 1, June 25,
2001 2000
----------- -----------
NET SALES $11,387,000 $10,725,000
----------- -----------
COSTS AND EXPENSES:
Cost of sales 9,798,000 8,638,000
Selling, general and administrative 1,477,000 1,855,000
Engineering, research and development 356,000 187,000
----------- -----------
Total 11,631,000 10,680,000
----------- -----------
INCOME (LOSS) FROM OPERATIONS (244,000) 45,000
INTEREST EXPENSE - net 189,000 283,000
----------- -----------
LOSS BEFORE INCOME TAXES (433,000) (238,000)
INCOME TAX BENEFIT - -
----------- -----------
NET LOSS $ (433,000) $ (238,000)
=========== ===========
BASIC AND DILUTED
NET LOSS PER SHARE $ (.08) $ (.04)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,871,523 5,871,523
=========== ===========
See Notes To Condensed Consolidated Financial Statements
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Twenty-Six Weeks Ended
---------------------------
July 1, June 25,
2001 2000
----------- -----------
NET SALES $21,380,000 $18,452,000
----------- -----------
COSTS AND EXPENSES:
Cost of sales 18,176,000 14,228,000
Selling, general and administrative 3,031,000 3,646,000
Engineering, research and development 515,000 452,000
----------- -----------
Total 21,722,000 18,326,000
----------- -----------
INCOME (LOSS) FROM OPERATIONS (342,000) 126,000
INTEREST EXPENSE - net 402,000 591,000
----------- -----------
LOSS BEFORE INCOME TAXES (744,000) (465,000)
INCOME TAX BENEFIT - -
----------- -----------
NET LOSS $ (744,000) $ (465,000)
=========== ===========
BASIC AND DILUTED
NET LOSS PER SHARE $ (.13) $ (.08)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,871,523 5,871,523
=========== ===========
See Notes To Condensed Consolidated Financial Statements
MILTOPE GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JULY 1, 2001 AND JUNE 25, 2000
(unaudited)
July 1, June 25,
2001 2000
----------- -----------
OPERATING ACTIVITIES:
Net loss $ (744,000) $ (465,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 526,000 695,000
Provision for slow-moving and obsolete inventories 520,000 630,000
Provision for doubtful accounts receivable 10,000 5,000
Gain on sale of property and equipment (5,000) (24,000)
Changes in operating assets and liabilities:
Accounts receivable 1,684,000 (3,725,000)
Inventories (586,000) 1,319,000
Other current assets 72,000 339,000
Other assets 9,000 124,000
Accounts payable and accrued expenses (1,464,000) 461,000
----------- -----------
Cash provided by (used in) operating activities 22,000 (641,000)
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (76,000) (79,000)
Sale of property and equipment 156,000 900,000
----------- -----------
Cash provided by investing activities 80,000 821,000
----------- -----------
FINANCING ACTIVITIES:
Payments of other long-term debt - net (1,615,000) (2,104,000)
----------- -----------
Cash used in financing activities (1,615,000) (2,104,000)
----------- -----------
NET DECREASE IN CASH (1,513,000) (1,924,000)
CASH, BEGINNING OF PERIOD 2,711,000 2,437,000
----------- -----------
CASH, END OF PERIOD $ 1,198,000 $ 513,000
=========== ===========
SUPPLEMENTAL DISCLOSURE:
Cash payments made for:
Income taxes $ 87,000 $ -
=========== ===========
Interest $ 522,000 $ 641,000
=========== ===========
</TABLE
See Notes To Condensed Consolidated Financial Statements
MILTOPE GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements - In the opinion of management, the
accompanying unaudited condensed consolidated financial statements
contain all adjustments necessary (consisting of only normal and
recurring accruals) to present fairly the results of the reported
interim period.
The results for the twenty-six weeks ended July 1, 2001 and June 25,
2000 are not necessarily indicative of the results for an entire year.
It is suggested that these consolidated financial statements be read in
conjunction with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
Reclassifications - Certain prior years amounts have been
reclassified to conform to the 2001 presentation.
Net Loss Per Share - Basic and diluted earnings per share are
computed by dividing the net loss by the weighted average common shares
outstanding (basic EPS) or weighted average common shares outstanding
assuming dilution (diluted EPS). Based on this computation, there is
no difference between basic and diluted net loss per share. Options
that could potentially dilute basic net income per share in the future
were not included in the computation of diluted net loss per share
because to do so would have been anti-dilutive. Anti-dilutive options
were 395,795, and 336,012 at July 1, 2001 and June 25, 2000,
respectively.
Recent Accounting Pronouncements - In June 2001, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations" (effective July 1,
2001) and SFAS No. 142, "Goodwill and Other Intangible Assets"
(effective for Miltope on January 1, 2002). SFAS No. 141 prohibits
pooling-of-interests accounting for acquisitions. SFAS No. 142
specifies that goodwill and certain intangible assets will no longer be
amortized but instead will be subject to periodic impairment testing.
The Company is in the process of evaluating the financial statement
impact of adoption of SFAS No. 142.
Statement of Financial Account Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, is
effective for all fiscal years beginning after June 15, 2000. SFAS
133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. Under SFAS
133, certain contracts that were not formerly considered derivatives
may now meet the definition of a derivative. The Company adopted SFAS
133 effective January 1, 2001. The adoption of SFAS 133 did not have a
material impact on the financial position, results of operations, or
cash flows of the Company.
2. Business Acquisitions - On April 1, 2000, the Company entered into
an agreement with Great Universal Incorporated ("GUI"), to transfer
GUI's ownership of 90% of the outstanding stock of IV Phoenix Group,
Inc. ("PGI") to the Company. Since GUI, through its controlling
interest in the Company, continues to own a controlling interest in PGI
after the transfer, the acquisition has been recorded on the Company's
books at GUI's historical cost and accounted for on an "as if pooled
basis".
Net sales and net income (loss) for the separate companies and the
combined amounts presented in the accompanying consolidated financial
statements are as follows:
Thirteen Weeks Thirteen Weeks
Ended July 1, 2001 Ended June 25,2000
------------------ -------------------
Revenues:
Miltope $10,567,000 $ 9,610,000
PGI 820,000 1,115,000
Combined (net of related party transactions) $11,387,000 $10,725,000
Net income (loss):
Miltope $ 272,000 $ 12,000
PGI (705,000) (250,000)
Combined (net of related party transactions) $ (433,000) $ (238,000)
Twenty-six Weeks Twenty-six Weeks
Ended July 1, 2001 Ended June 25,2000
------------------ -------------------
Revenues:
Miltope $20,014,000 $16,093,000
PGI 1,366,000 2,359,000
Combined (net of related party transactions) $21,380,000 $18,452,000
Net income (loss):
Miltope $ 670,000 (24,000)
PGI (1,414,000) (441,000)
Combined (net of related party transactions) $ (744,000) $ (465,000)
Certain amounts from PGI's prior financial statements were reclassified
to conform to Miltope's presentation.
3. Inventories - Net
Inventories consist of the following:
July 1, 2001 December 31, 2000
------------ -----------------
Purchased parts and
subassemblies $ 9,690,000 $ 9,911,000
Work-in-process 3,253,000 2,966,000
----------- -----------
Total $12,943,000 $12,877,000
=========== ===========
4. Income Taxes - No income tax benefit has been recognized related
to the net operating losses for the twenty-six weeks ended July 1, 2001
and June 25, 2000 as they have been fully reserved with a valuation
allowance. Although realization is not assured, management believes it
is more likely than not that the recorded deferred tax assets, net of
valuation allowance provided, will be realized. The valuation
allowances can be adjusted in future periods as the probability of
realization of the deferred tax assets change.
5. Segment Information - The Company's reportable segments are
organized around its two main products and services segments,
Military/Rugged and Commercial. Through its military/rugged segment,
the Company is engaged in the design, manufacture and testing of
computer and computer peripheral equipment for military and other
specialized applications requiring reliable operations in severe land,
sea and airborne environments. These products are generally sold by
the Company's business development group through the federal government
bid process. PGI is an operating segment of the Company which has been
aggregated within the Military/Rugged segment for financial reporting
purposes. The Company's commercial segment designs, develops,
manufactures and markets commercial computer related products primarily
for transportation, telecommunications and in-field maintenance
markets. These products are sold through an established network of
marketing representatives and Company employed sales people to a broad
base of customers both international and domestic. The accounting
policies of the segments are the same as those described in the summary
of significant accounting policies. The Company's determination of
segment operating profit or loss does not reflect other income and
expense or income taxes.
Thirteen Weeks Ended July 1, 2001 and June 25, 2000
- ---------------------------------------------------
General
July 1, 2001 Military/Rugged Commercial Eliminations Corporate Consolidated
------------ --------------- ------------ ------------ ----------- ------------
Net sales from external customers $ 8,796,000 $ 2,687,000 $ (96,000) $11,387,000
=========== =========== ========== ===========
Segment operating loss $ (235,000) $ (9,000) $ - $ (244,000)
=========== =========== ========== ===========
Identifiable assets $18,651,000 $ 6,547,000 $ - $ 6,596,000 $31,794,000
=========== =========== ========== =========== ===========
Capital expenditures $ 27,000 $ 8,000 $ - $ 35,000
=========== =========== ========== ===========
Depreciation and amortization $ 251,000 $ 1,000 $ - $ 252,000
=========== =========== ========== ===========
General
June 25, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated
------------- --------------- ----------- ------------ ----------- ------------
Net sales from external customers $ 7,308,000 $ 3,525,000 $ (108,000) $10,725,000
=========== =========== ========== ===========
Segment operating income (loss) $ (168,000) $ 250,000 $ (37,000) $ 45,000
=========== =========== ========== ===========
Identifiable assets $22,342,000 $ 6,607,000 $ 80,000 $ 5,953,000 $34,982,000
=========== =========== ========== =========== ===========
Capital expenditures $ 19,000 $ 10,000 $ - $ 29,000
=========== =========== ========== ===========
Depreciation and amortization $ 216,000 $ 84,000 $ 37,000 $ 337,000
=========== =========== ========== ===========
Twenty-Six Weeks Ended July 1, 2001 and June 25, 2000
- -----------------------------------------------------
General
July 1, 2001 Military/Rugged Commercial Eliminations Corporate Consolidated
------------- --------------- ----------- ------------ ----------- ------------
Net sales from external customers $16,060,000 $ 5,416,000 $ (96,000) $21,380,000
=========== =========== ========== ===========
Segment operating income (loss) $ (637,000) $ 302,000 $ (7,000) $ (342,000)
=========== =========== ========== ===========
Identifiable assets $18,651,000 $ 6,547,000 $ - $ 6,596,000 $31,794,000
=========== =========== ========== =========== ===========
Capital expenditures $ 56,000 $ 20,000 $ - $ 76,000
=========== =========== ========== ===========
Depreciation and amortization $ 517,000 $ 2,000 $ 7,000 $ 526,000
=========== =========== ========== ===========
General
June 25, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated
------------- --------------- ----------- ------------ ----------- ------------
Net sales from external customers $11,674,000 $ 6,985,000 $ (207,000) $18,452,000
=========== =========== ========== ===========
Segment operating income (loss) $ (532,000) $ 731,000 $ (73,000) $ 126,000
=========== =========== ========== ===========
Identifiable assets $22,342,000 $ 6,607,000 $ 80,000 $ 5,953,000 $34,982,000
=========== =========== ========== =========== ===========
Capital expenditures $ 44,000 $ 35,000 - $ 79,000
=========== =========== ========== ===========
Depreciation and amortization $ 444,000 $ 178,000 $ 73,000 $ 695,000
=========== =========== ========== ===========
General
December 31, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated
------------- --------------- ----------- ------------ ----------- ------------
Identifiable assets $18,675,000 $ 8,727,000 $ 7,000 $ 8,206,000 $35,615,000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes certain forward looking
statements which are affected by important factors including, but not
limited to, actions of competitors, termination of contracts at the
convenience of the United States government, customer funding
variations in connection with multi-year contracts and follow-on
options that could cause actual results to differ materially from
forward looking statements.
GENERAL
- -------
The following discussion and analysis presents certain factors
affecting the Company's results of operations for the thirteen weeks
and twenty-six weeks ended July 1, 2001, as compared to the thirteen
weeks and twenty-six weeks ended June 25, 2000.
RESULTS OF OPERATIONS
- ---------------------
CONSOLIDATED
- ------------
Thirteen weeks ended July 1, 2001 compared to thirteen weeks ended
June 25, 2000
- -----------------------------------------------------------------------
Net sales for the thirteen weeks ended July 1, 2001 (second
quarter of 2001) were $11,387,000 compared to net sales for the
thirteen weeks ended June 25, 2000 (second quarter of 2000) of
$10,725,000. This increase was primarily attributable to increased
sales to the government of SPORT units offset partially by a decrease
in sales of rugged workstations.
The gross margin percentage for the second quarter of 2001 was
14.0% compared to 19.5% for the same period in 2000. The decrease is
largely due to unforeseen expenditures required to complete several PGI
initial-award contracts.
Selling, general and administrative expenses for the second
quarter of 2001 decreased 20.4% from the second quarter of 2000, to
$1,477,000. These expenses as a percent of sales were 13.0% in the
second quarter of 2001 compared to 17.3% for the similar period in
2000. The decrease as a percent of sales is primarily attributable to
increased sales and the effect of planned reductions in administrative
and marketing costs at both Miltope and PGI.
Company sponsored engineering, research and development expenses
for the second quarter of 2001 increased 90.4% from the second quarter
of 2000, to $356,000. These expenses as a percent of sales were 3.1%
in the second quarter of 2001 compared to 1.7% for the similar period
in 2000. The increase is primarily attributable to efforts expended in
relation to the new five-year rugged laptop computer contract awarded
to Miltope in May of 2001.
Interest expense, net of interest income, was $189,000 in the
second quarter of 2001 compared to $283,000 for the similar period in
2000. The decrease is a result of decreased debt balances, reduced
interest rates, and increased interest income compared to the prior
year.
The consolidated net loss for the second quarter of 2001 was
$433,000 compared to a consolidated net loss of $238,000 in the second
quarter of 2000. The basic and diluted net loss per share was $0.08
for the second quarter of 2001 compared to the basic and diluted net
loss per share of $0.04 for the similar period in 2000 based on a
weighted average of 5,871,523 shares of the Company's common stock
outstanding for the second quarter of 2001 and 2000.
Twenty-six weeks ended July 1, 2001 compared to twenty-six weeks ended
June 25, 2000
- -----------------------------------------------------------------------
Net sales for the first half of 2001 were $21,380,000 compared to
net sales for the first half of 2000 of $18,452,000. The increase in
sales was primarily attributable to increased sales to the government
of SPORT units.
The gross margin percent for the first half of 2001 was 15.0%
compared to 22.9% for the same period in 2000. The decrease in gross
margin percent was largely due to unforeseen expenditures required to
complete several PGI initial-award contracts.
Selling, general and administrative expenses for the first half of
2001 decreased 16.9% from the first half of 2000, to $3,031,000. These
expenses as a percent of sales were 14.2% in the first half of 2001
compared to 19.8% for the similar period in 2000. The decrease as a
percent of sales is primarily attributable to increased sales and the
effect of planned reductions in administrative and marketing costs at
both Miltope and PGI.
Company sponsored engineering, research and development expenses
for the first half of 2001 increased 13.9% from the first half of 2000,
to $515,000. These expenses as a percent of sales remained unchanged
at 2.4% for both the first half of 2001 and the first half of 2000.
The increase in expenditures is primarily attributable to efforts
expended in relation to the new five-year rugged laptop computer
contract awarded to Miltope in May of 2001.
Interest expense, net of interest income, was $402,000 in the
first half of 2001 compared to $591,000 for the similar period in 2000.
The decrease reflects decreased debt, reduced interest rates, and
increased interest income as compared to the prior year.
The consolidated net loss for the first half of 2001 was $744,000
compared to a consolidated net loss of $465,000 in the first half of
2000. The basic and diluted net loss per share was $0.13 for the first
half of 2001 as compared to the basic and diluted net loss per share of
$0.08 for the similar period in 2000 based on a weighted average of
5,871,523 shares of the Company's common stock outstanding in 2001 and
2000.
MILTOPE CORPORATION
Approximately 94% of the consolidated net sales for the twenty-six
weeks ended July 1, 2001 are attributable to Miltope Corporation. The
following is a discussion of Miltope's operating results net of any
inter-company activity with IV Phoenix Group, Inc.
Miltope (net of eliminations)
(Amounts in thousands)
- ----------------------------------------------------------------------
26 weeks ended 26 weeks ended
July 1, 2001 June 25, 2000 %
-------------- --------------- --------
Net Sales $20,014 $16,093 24.4%
Cost of Sales 16,109 12,431 29.6%
-------------------------------------
Gross Profit 3,905 3,662 6.6%
-------------------------------------
Selling, G&A 2,421 2,745 (11.8)%
Engineering, R&D 475 386 22.7%
-------------------------------------
Income (loss) from Operations 1,009 531 89.8%
Interest Expense - net 339 555 (38.9)%
-------------------------------------
Net Income (Loss) before taxes 670 (24) 2,891.7%
Income Tax Benefit - - -
-------------------------------------
Net Income (Loss) $ 670 $ (24) 2,891.7%
=====================================
Miltope reported net income of approximately $670,000 for the
first twenty-six weeks of 2001 compared to a net loss of approximately
$24,000 for the comparable period in 2000. The basic and diluted net
income per share was $.11 for the first twenty-six weeks of 2001
compared to basic and diluted net loss per share of $.01 for the first
twenty-six weeks of 2000.
Sales for the twenty-six week period of 2001 totaled approximately
$20,014,000, an increase of approximately $3,921,000, or 24.4%, from
the first half of 2000. This change was attributable to increases in
SPORT related sales and increased airborne cockpit printer sales.
Gross profit, as a percent of sales, was 19.5% for the first
twenty-six weeks of 2001 and 22.8% for the same period in 2000. The
decrease in 2001 from 2000 was primarily attributable to variations in
product mix.
Selling, general and administrative expenses, as a percentage of
sales, were 12.1% in the first twenty-six weeks of 2001 and 17.1% in
the same period of 2000. The decrease in 2001 as a percentage of sales
was attributable to increased sales coupled with the effect of planned
reductions in administrative and marketing costs.
Engineering, research and development expenses, as a percentage of
sales, remained constant at 2.4% in the first twenty-six weeks of 2001
and 2000. The increase in expenditures is primarily attributable to
efforts expended in relation to the new five-year rugged laptop
computer contract awarded to Miltope in May of 2001.
Interest expense, net of interest income, decreased 38.9% in the
first twenty-six weeks of 2001 compared to the first twenty-six weeks
of 2000 due to a decrease in total debt, decreased interest rates, and
increased interest income.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The following is a breakdown of significant balance sheet
categories between Miltope and PGI:
Miltope PGI
(Amounts in thousands) (Amounts in thousands)
------------------------ -------------------------
July 1, December 31, July 1, December31,
2001 2000 2001 2000
------------------------ -------------------------
Cash and equivalents $ 803 $ 2,181 $ 395 $ 530
Receivables, net 5,596 7,457 643 476
Inventories & other current assets 12,213 12,233 2,136 1,978
------- ------- ------- -------
Total current assets 18,612 21,871 3,174 2,984
======= ======= ======= =======
Payables and other current liabilities 2,617 5,581 6,004 4,486
Short-term debt - - 725 800
Current portion of long-term debt 3,762 4,096 7 33
------- ------- ------- -------
Total current liabilities $ 6,379 $ 9,677 $ 6,736 $ 5,319
======= ======= ======= =======
Working capital was $8,671,000 at July 1, 2001 compared to
$9,859,000 at December 31, 2000. Accounts receivable decreased
$1,694,000 as a result of a higher volume of sales in the last quarter
of 2000. Inventory levels remained fairly constant compared to
December 31, 2000 balances. Accounts payable decreased $785,000
reflecting satisfaction of invoices relating to inventory purchases in
support of increased production in February and March of 2001. Current
maturities of long-term debt decreased reflecting more favorable
repayment terms on certain of the Company's debt instruments.
The Company's $15,000,000 revolving credit agreement with its
primary lender matured on May 31, 1999 and was converted into a term
loan payable in twelve equal quarterly installments commencing August,
1999. As of July 1, 2001 the Company was in compliance with all
requirements under the term loan. The Company has committed to continue
its search for a lender to replace the existing term loan. In the near
term the Company anticipates its cash position as being adequate to
sustain the Company's ongoing financial commitments. The Company's
accounts receivable, contract rights and inventories are pledged as
collateral to the agreement.
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
The Company, from time to time, is a party to pending or
threatened legal proceedings and arbitrations. Based upon information
presently available, and in light of legal and other defenses available
to the Company, management does not consider liability from any
threatened or pending litigation to be material.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
None
(b) Reports on Form 8-K
-------------------
None
Item 7a - Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in
market prices and interest rates. The Company is exposed to interest
risk inherent in its financial instruments. The Company is not
currently subject to foreign currency or commodity price risk. The
Company manages its exposure to these market risks through its regular
operating and financing activities.
The Company has a revolving credit loan and an Industrial
Development Authority Bond Issue that are exposed to changes in
interest rates during the course of their maturity. Both debt
instruments bear interest at current market rates and thus approximate
fair market value. The Company manages its interest rate risk by (a)
periodically retiring and issuing debt and (b) periodically fixing the
interest rate on the London Inter Bank Offered Rate (LIBOR) portion of
its revolving credit loan for 30 to 60 days in order to minimize
interest rate swings. A 10% increase in interest rates would affect
the Company's variable debt obligations and could potentially reduce
future earnings by a maximum of approximately $73,200.
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.
MILTOPE GROUP INC.
By:/s/ Thomas Dickinson
------------------------------------------
Thomas Dickinson,
President and Chief Executive Officer
(Principal Executive Officer)
Dated: August 15, 2001