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 March 30, 1996
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 10, 1996
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
March 30, July 1,
1996 1995
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 86,439 $ 351,860
Receivables 5,138,257 5,960,110
Inventories 3,414,741 3,533,619
Deferred federal income taxes 320,000 320,000
Other current assets 405,202 126,752
TOTAL CURRENT ASSETS 9,364,639 10,292,341
PROPERTY, PLANT AND EQUIPMENT, at cost 10,367,409 10,110,765
Less, Accumulated depreciation and
amortization 4,556,582 4,083,640
5,810,827 6,027,125
OTHER ASSETS, net 118,213 202,166
TOTAL ASSETS $15,293,679 $16,521,632
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 30, July 1,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 715,000 $ 1,550,000
Current maturities of long-term debt 143,190 224,925
Accounts payable 2,305,090 2,074,510
Accrued income taxes - 89,827
Accrued expenses and other 562,841 904,766
Accrued nonrecurring items 106,889 193,857
TOTAL CURRENT LIABILITIES 3,833,010 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 5,282,792 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 1,655,123 1,563,201
13,150,261 13,058,339
Less, Treasury stock, at cost 3,139,374 3,139,374
TOTAL STOCKHOLDERS' EQUITY 10,010,887 9,918,965
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,293,679 $16,521,632
See notes to consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
March 30, April 1,
1996 1995
Net sales $ 8,170,244 $ 9,225,932
Costs and expenses:
Cost of products sold 6,832,057 8,093,950
Selling, general and administrative 1,271,859 1,230,291
Nonrecurring Items 334,820 465,515
Interest expense 22,773 38,330
Interest income - (4,194)
LOSS BEFORE INCOME TAXES (291,265) (597,960)
Income tax credit (111,000) (227,000)
NET LOSS $ (180,265) $ (370,960)
Loss per share of common stock $ (.06) $ (.12)
Weighted average number of common
shares and equivalents outstanding 3,100,963 3,100,963
Nine Months Ended
March 30, April 1,
1996 1995
Net sales $ 25,912,686 $ 30,155,551
Costs and expenses:
Cost of products sold 21,430,867 25,973,420
Selling, general and administrative 3,914,114 3,670,125
Nonrecurring items 334,820 399,515
Interest expense 85,716 84,720
Interest income (753) (11,256)
INCOME BEFORE INCOME TAXES 147,922 39,027
Income taxes (credit) 56,000 (17,000)
NET INCOME $ 91,922 $ 56,027
Earnings per share of common stock $ .03 $ .02
Weighted average number of common
shares and equivalents outstanding 3,110,904 3,136,806
See notes to the consolidated condensed financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
March 30, April 1,
1996 1995
Net cash provided by
operating activities $ 1,022,958 $ 28,921
Cash flows (used in)
investing activities:
Purchase of property, plant
and equipment (256,644) (1,736,773)
Cash flows provided by (used in)
financing activities:
Proceeds from short-term
borrowing 4,600,000 15,843,000
Payments on short-term
borrowing (5,435,000) (15,438,000)
Payments of long-term debt (196,735) (74,508)
Proceeds from long-term debt - 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 (1,031,735) 1,639,743
Decrease in cash and
temporary cash investments (265,421) (68,109)
Cash and temporary cash investments:
Beginning of period 351,860 132,084
End of period $ 86,439 $ 63,975
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:
March 30, 1996 July 1, 1995
Raw materials $ 2,776,527 $ 2,945,366
Work in process 437,641 441,366
Finished goods 200,573 146,887
$ 3,414,741 $ 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 37.9% of income before income taxes
for the nine months ended March 30, 1996 compared to a credit of 43.6%
in the comparable nine month period of fiscal 1995. 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 an audit
by the Internal Revenue Service.
Note D - NONRECURRING ITEMS
Fiscal 1996
During the third quarter of fiscal 1996, Miller recorded a pre-tax charge of
$256,792, related to costs associated with the terminated acquisition of
Whitley Manufacturing Company, Inc. and a pre-tax charge of $78,028 for
warranty and other costs at the closed PME and Residential operations.
Fiscal 1995
During the third quarter of fiscal 1995, Miller recorded a pre-tax charge of
$265,515, which resulted from the final resolution of disputed warranty issues
with a customer. Also, in the third quarter of fiscal 1995, Miller recorded
a pre-tax charge of $200,000 for exit costs associated with the closing of the
Residential operation.
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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition - March 30, 1996 compared to July 1, 1995
At March 30, 1996, Miller's working capital was $5,531,629 compared to
$5,254,456 at July 1, 1995. The working capital ratio was 2.4 to 1 at
March 30, 1996 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 November 30, 1996. There was
$715,000 outstanding under this agreement at March 30, 1996 compared
to $1,550,000 at July 1, 1995.
Miller believes operating cash flows and the bank credit agreement are
sufficient to meet operating needs.
Results of Operations - Three months ended March 30, 1996 compared to
the three months ended April 1, 1995
Net sales decreased $1,055,688 during the third quarter of fiscal 1996
or approximately 11.4% from the corresponding quarter in fiscal 1995.
(55% of this decrease is attributable to closed Residential division
("Residential") Miller Structures, Inc. ("Structures") recorded a
21.2% or $1,457,699 decrease. During the first half of fiscal 1996
Structures experienced a significant decrease in order activity which
depleted backlogs going into the third quarter. While the order rates
increased during the third quarter, project delays and poor weather in
the East hindered production and sales. Management does not believe
this decrease in net sales at Structures represents a trend, as order
activity and backlogs continue to increase. Miller Telecom Services,
Inc. ("Telecom") attained a 55.7% sales increase as this subsidiary
continues to increase its market share. Management believes Telecom
will continue to increase its market share and is positioned to post
strong sales increases during the fourth quarter of fiscal 1996.
Residential, which was closed in the third quarter of fiscal 1995 had
net sales of $583,596 in the third quarter of fiscal 1995.
During the three-month period ended March 30, 1996, cost of sales was
83.6% of net sales compared to 87.7% 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 March 30, 1996 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 March 30, 1996, increased $41,568 compared to the similar
period of fiscal 1995.
The increase in selling, general and administrative expenses for the
quarter was primarily the result of higher administrative costs to
support the growth at Telecom, partially offset by reduced
administrative expenses related to the closed Residential division and
overall lower administrative expenses at Structures. During the
quarter, approximately $29,000 in major program costs for marketing,
plant efficiency programs, and research and development were expensed.
As a percentage of net sales, selling, general and administrative
expenses for the three-month period ended March 30, 1996 were 15.6%,
on lower sales volume, compared to 13.3% in the comparable three-
month period in fiscal 1995.
During the third quarter of fiscal 1996, Miller recorded a pre-tax
charge of $256,792, related to costs associated with the terminated
acquisition of Whitley Manufacturing Company, Inc. and a pre-tax
charge of $78,028 for warranty and other costs at the closed PME and
Residential operations.
During the third quarter of fiscal 1995, Miller recorded a pre-tax
charge of $265,515, which resulted from the final resolution of
disputed warranty issues with a customer. Also, in the third quarter
of fiscal 1995, Miller recorded a pre-tax charge of $200,000 for exit
costs associated with the closing of the Residential operation.
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.
Interest expense decreased $15,557 to $22,773 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 interest rates
and lower average levels of debt outstanding on the line of credit.
The credit for income taxes was 38.1% of the loss before income taxes
for the three months ended March 30, 1996 compared to a 38.0% credit
in the comparable three-month period of fiscal 1995.
Results of Operations - Nine months ended March 30, 1996
compared to nine months ended April 1, 1995
Net sales decreased $4,242,865 for the nine-month period ended March
30, 1996 or 14.1% compared to the similar period of fiscal 1995.
During the first nine months of fiscal 1995, net sales at Residential,
which was closed in the third quarter of fiscal 1995, were $2,523,882.
Net sales at Structures decreased 20.3% from the nine-month period
last year. The sales decline was the result of slow business activity
in the commercial modular building industry. Net sales at Telecom
increased 77.7% over the same period last year. Telecom continues to
increase its market share and improve its position in the rapidly
expanding telecommunication markets.
During the nine-month period ended March 30, 1996, cost of sales was
82.7% of net sales compared to 86.1% 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 also as a result of varying product mix.
Selling, general and administrative expenses for the nine-month period
ended March 30, 1996, increased $243,990 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 $137,000 in major program
costs for marketing, research and development, and plant efficiency
programs were expensed during the current nine-month period.
As a percentage of net sales, selling general and administrative
expenses for the nine-month period ended March 30, 1996 were 15.1%, on
lower sales volume, compared to 12.2% in the comparable nine-month
period in fiscal 1995.
Nonrecurring charges of $334,820 for the nine months ended March 30, 1996,
consist of a $256,792 charge for costs associated with the terminated
acquisition of Whitley Manufacturing Company, and $78,028 for warranty and
other costs at the closed PME and Residential operations.
Nonrecurring charges of $399,515 for the nine months ended April 1, 1995,
consist of a $265,515 charge for the settlement of warranty issues 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
setlement with the Internal Revenue Service.
Interest expense increased $996 to $85,716 during the current nine-
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 37.9% of income before income taxes
for the nine-month period ended March 30, 1996 compared to a credit of
43.6% in the comparable nine-month period of fiscal 1995. 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.
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 March 30, 1996.
March 5, 1996, reporting information contained in press releases
related to the discontinuance of negotiations to acquire Whitley
Manufacturing Company, Inc. and a $1.9 million supply contract for
Miller Telecom Services, 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 13, 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 Nine Months Ended
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
Calculation of primary earnings
per common share:
Net income (loss) $ (180,265) $ (370,960) $ 91,922 $ 56,028
Shares outstanding, net of
treasury shares, at beginning of
period 3,100,963 3,100,963 3,100,963 3,158,578
Average number of shares arising
from the exercise of stock options - - - 3,679
Additional shares assuming
exercise as of the beginning of
the fiscal period of dilutive stock
options, based on the treasury
stock method using the average
market price for the period (a)- (a)- 9,941 23,353
Average number of shares from the
sale of treasury stock - - - 12,802
Average number of shares purchased
as treasury stock - - - (61,606)
Weighted average shares and
equivalent shares outstanding 3,100,963 3,100,963 3,110,904 3,136,806
Primary earnings (loss) per share: $ (.06) $ (.12) $ .03 $ .02
(a) Common stock equivalents not considered since effect is antidilutive.
(b) Fully dilutive earnings (loss) per share do not differ from primary
earnings (loss) per share.