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, 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 May 9, 1995
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
April 1, July 2,
1995 1994
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 63,975 $ 132,084
Receivables 4,936,970 6,186,820
Inventories 3,855,303 3,372,404
Deferred federal income taxes 399,000 399,000
Other current assets 308,210 400,826
___________ ___________
TOTAL CURRENT ASSETS 9,563,458 10,491,134
___________ __________
PROPERTY, PLANT AND EQUIPMENT, at cost 10,197,049 8,460,276
Less, Accumulated depreciation and
amortization 4,076,362 3,666,270
___________ ___________
6,120,687 4,794,006
OTHER ASSETS, net 21,429 22,887
___________ ___________
TOTAL ASSETS $15,705,574 $15,308,027
=========== ===========
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
April 1, July 2,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 930,000 $ 525,000
Current maturities of long-term debt 222,484 100,481
Accounts payable 2,063,346 3,202,938
Accrued income taxes - 140,542
Accrued expenses and other 720,272 680,745
Accrued nonrecurring items 358,776 468,198
___________ ___________
TOTAL CURRENT LIABILITIES 4,294,878 5,117,904
LONG-TERM DEBT, less current maturities 1,413,414 109,925
DEFERRED FEDERAL INCOME TAXES 146,000 146,000
OTHER 196,201 144,396
___________ ___________
TOTAL LIABILITIES 6,050,493 5,518,225
___________ ___________
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 1,299,317 1,250,434
___________ ___________
12,794,455 12,745,572
Less, Treasury stock, at cost 3,139,374 2,955,770
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 9,655,081 9,789,802
___________ ___________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,705,574 $15,308,027
=========== ===========
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
April 1, April 2,
1995 1994
Net sales $ 9,225,932 $ 8,279,366
Costs and expenses:
Cost of products sold 8,093,950 7,506,225
Selling, general and administrative 1,230,291 1,004,410
Nonrecurring items 465,515 (80,338)
Gain on sale of property - (183,341)
Interest expense 38,330 14,816
Interest income (4,194) (21,030)
___________ ____________
INCOME (LOSS) BEFORE INCOME TAXES (597,960) 38,624
Income taxes (credit) (227,000) 15,000
___________ ____________
NET INCOME (LOSS) $ (370,960) $ 23,624
=========== ============
Earnings (loss) per share
of common stock $ (.12) $ .01
=========== ============
Weighted average number of common
shares and equivalents outstanding 3,100,963 3,212,057
=========== ============
Nine Months Ended
April 1, April 2,
1995 1994
Net sales $ 30,155,551 $ 27,763,829
Costs and expenses:
Cost of products sold 25,973,420 24,250,353
Selling, general and administrative 3,670,124 3,235,804
Nonrecurring items 399,515 (231,120)
Gain on sale of property - (183,341)
Interest expense 84,720 69,755
Interest income (11,256) (21,043)
___________ ___________
INCOME BEFORE INCOME TAXES 39,028 643,421
Income taxes (credit) (17,000) 244,000
____________ ___________
NET INCOME $ 56,028 $ 399,421
============ ===========
Earnings per share of common stock $ .02 $ .12
============ ===========
Weighted average number of common
shares and equivalents outstanding 3,136,806 3,212,057
============ ===========
See notes to the consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
April 1, April 2,
1995 1994
Net cash provided by (used in)
operating activities $ 28,921 $ (145,390)
----------- -----------
Cash flows provided by (used in)
investing activities:
Proceeds from disposition of
property, plant and equipment - 9,900
Proceeds from disposition of
property held for sale - 1,145,510
Purchase of property, plant
and equipment (1,736,773) (218,856)
----------- -----------
Net cash provided by (used in)
investing activities (1,736,773) 936,554
----------- -----------
Cash flows provided by (used in)
financing activities:
Proceeds from short-term
borrowing 15,843,000 13,581,000
Payments on short-term
borrowing (15,438,000) (14,078,000)
Payments of long-term debt (74,508) (68,107)
Proceeds from Industrial
Revenue Bond 1,500,000 -
Proceeds from exercise of
stock options 19,250 -
Purchase of treasury stock (260,000) (218,098)
Proceeds from sale of
treasury stock 50,001 -
----------- -----------
Net cash provided by (used in)
financing activities 1,639,743 (783,205)
----------- -----------
Increase (decrease) in cash and
temporary cash investments (68,109) 7,959
Cash and temporary cash investments:
Beginning of period 132,084 43,112
----------- -----------
End of period $ 63,975 $ 51,071
=========== ===========
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 it's
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
July 1, 1995.
The July 2, 1994 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:
April 1, 1995 July 2, 1994
Raw materials $ 3,146,545 $ 2,933,238
Work in process 543,663 287,106
Finished goods 165,095 152,060
----------- -----------
$ 3,855,303 $ 3,372,404
=========== ===========
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 credit for income taxes was 38.0% of
income before income taxes for the three months ended April 1, 1995
compared to a 38.8% provision in the comparable three 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 resulting in a credit for income tax of $17,000 for
the nine months ended April 1, 1995.
Note D - NONRECURRING ITEMS
During the third quarter, Miller recorded a pre-tax charge of
$265,515, which resulted from the final resolution of disputed
warranty issues with a customer. These disputed warranty issues
related to a project completed during the third quarter of fiscal
1994. Also, in the third quarter Miller recorded a pre-tax charge
of $200,000 for exit costs associated with the closing of the
Residential operation. The $200,000 charge is comprised of the
following: Costs under the noncancellable lease agreement, which
expires March 31, 1997, of $133,000; continuing costs associated
with taxes, insurance and maintenance on the leased facility during
the remaining term of the lease - $30,000; and write-down of
certain equipment, jigs and fixtures to net realizable value -
$37,000. Although Miller will attempt to sublease the facility to
reduce its carrying cost, Miller has not estimated any sublease
income since subleasing may be difficult. The accrual of exit
costs for the shutdown of the Residential division does not include
operating costs to be incurred during the shutdown period to be
completed during the fourth quarter.
In addition, during the first six months 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.
In comparison, during the first nine months of fiscal 1994,
$231,120 of restructuring accruals for warranty, employee
relocations, certain lease commitments and carrying costs related
to the sold Woodburn, Oregon facility were reversed.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition - April 1, 1995 compared to July 2, 1994
At April 1, 1995, Miller's working capital was $5,268,580
compared to $5,373,230 at July 2, 1994. The working capital ratio
was 2.2 to 1 at April 1, 1995 and 2.0 to 1 at July 2, 1994.
Miller has an unsecured bank credit agreement that provides
for advances up to $5,000,000 through November 30, 1995. There was
$930,000 outstanding under this agreement at April 1, 1995 and
$525,000 at July 2, 1994. Miller, through it's Telecom subsidiary,
placed $1,500,000 in Industrial Revenue Bonds on November 15, 1994.
The Bonds carry a floating interest rate set weekly and have twelve
annual sinking fund payments of $115,000 due November 1st each year
beginning in 1995, with the final payment of $120,000 due November
1, 2007. The proceeds from the Bond issue funded the Telecom plant
expansion.
During the nine-month period ended April 1, 1995, Miller
repurchased 80,000 shares of its common stock for $260,000.
Results of Operations - Three months ended April 1, 1995 compared
to the three months ended April 2, 1994
Net sales increased $946,566 during the third quarter of
fiscal 1995 or approximately 11.4% from the corresponding quarter
in fiscal 1994. Miller Structures, Inc. ("Structures") recorded a
12.3% increase. The Midwest and Eastern Structures plants recorded
a 58.7% increase as the economy in these markets remained strong.
The California Structures plant experienced a very difficult third
quarter as net sales decreased 73.6%. The plant was effectively
shutdown for nearly half of the quarter because of low sales
bookings and the delay of a major contract. Our backlogs at the
California plant are growing and we should see a recovery in sales
volume during the fourth quarter. Net sales at the Structures'
Residential division decreased 15.0% during the current quarter as
the operation experienced labor shortages that slowed production
levels. Telecom attained a 20.0% sales increase as the subsidiary
continued to increase market share.
During the three-month period ended April 1, 1995, cost of
sales was 87.7% of net sales compared to 90.7% 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 because of varying product
mix. The decrease in the cost of sales percentage for the
quarter ended April 1, 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 April 1, 1995, increased $225,881 compared to
the similar period of fiscal 1994. The increase in selling,
general and administrative expenses for the quarter was primarily
the result of higher compensation, employee training, and increased
administrative expenses to support the Telecom expansion. As a
percentage of net sales, selling, general and administrative
expenses for the three-month period ended April 1, 1995 were 13.3%
compared to 12.1% in the comparable three month period in fiscal
1994.
During the third quarter, Miller recorded a pre-tax charge of
$265,515, which resulted from the final resolution of disputed
warranty issues with a customer. These disputed warranty issues
related to a project completed during the third quarter of fiscal
1994. Also in the third quarter, Miller recorded a pre-tax charge
of $200,000 for exit costs associated with the closing of the
Residential operation. The $200,000 charge is comprised of the
following: Costs under the noncancellable lease agreement, which
expires March 31, 1997, of 133,000; continuing costs associated
with taxes, insurance and maintenance on the leased facility during
the remaining term of the lease - $30,000; and write-down of
certain equipment, jigs and fixtures to net realizable value -
$37,000. Although Miller will attempt to sublease the facility to
reduce its carrying cost, Miller has not estimated any sublease
income since subleasing may be difficult. The accrual of exit
costs for the shutdown of the Residential division does not include
operating costs to be incurred during the shutdown period to be
completed during the fourth quarter.
Interest expense increased $23,514 to $38,330 during the
current three-month period compared to the similar period in the
prior year. This increase was a result of higher average levels of
debt outstanding and higher interest rates during the quarter.
The credit for income taxes was 38.0% of the loss before
income taxes for the three months ended April 1, 1995 compared to a
38.8% provision in the comparable three-month period of fiscal
1994.
Results of Operations - Nine months ended April 1, 1995
compared to nine months ended April 2, 1994
Net sales increased $2,391,722 for the nine-month period ended
April 1, 1995 or 8.6% compared to the similar period of fiscal
1994. The increase in net sales for the nine-month period is
attributable to all the Miller entities. Structures recorded a
11.6% sales increase, with the Structure's Residential division
contributing a 30.7% sales increase. Net sales at Telecom
increased 27.2% over the same period last year.
During the nine-month period ended April 1, 1995, cost of sales
were 86.1% of net sales compared to 87.3% for the comparable nine-
month period last year. The cost of sales percentage is a result
of varying factors, none of which can be specifically quantified or
represent a trend. Product profitability varies in different
geographical regions served by Miller and because of varying
product types produced from time to time.
Selling, general and administrative expenses for the nine-month
period ended April 1, 1994, increased $434,320 compared to the
similar period of fiscal 1994. The increase consists primarily of
higher compensation and training along with higher legal expenses
related to the reorganization of Miller's management. As a percent
of net sales, selling general and administrative expenses for the
nine-month period ended April 1, 1995, were 12.2% compared to 11.7%
in the comparable nine month period of fiscal 1994.
Nonrecurring charges of $400,000 for the nine months ended April 1,
1995, consist of a $266,000 charge for the settlement of warranty
issue with a customer, a $200,000 charge for the exit costs
associated with the shutdown of the Residential operation and
$66,000 of gains associated with the reversal of restructuring
accruals related to the 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 on a settlement with the Internal Revenue Service.
Nonrecurring gains of $231,000 for the nine months ended April 1,
1994, related to accruals for warranty, employee relocations,
certain lease commitments and carrying costs for the Woodburn and
Fontana properties, which were reversed during the second the third
fiscal quarters of 1994.
Interest expense increased $14,965 to $84,720 during the current
nine-month period compared to the similar period of the prior year.
The increase was the result of higher average levels of debt
outstanding and higher interest rates.
The credit for income taxes was 38.0% of income before income taxes
for the three-month period ended April 1, 1995 compared to a
provision of 38.8% in the comparable three-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 the
result of a settlement of the audit by the Internal Revenue Service
resulting in a credit for income tax of $17,000 for the nine months
ended April 1, 1995.
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 April 1, 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: May 12, 1995 \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