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 27, 1997
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
3,252,751 Shares Outstanding at November 7, 1997
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 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Index to Exhibits 12
Part I. Financial Information
Item 1. Financial Statements
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 27, June 28,
1997 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 90,086 $ 89,117
Receivables 10,069,451 8,450,479
Inventories 3,617,782 3,712,664
Deferred income taxes 448,000 448,000
Property held for sale 402,564 412,106
Other current assets 168,066 66,713
TOTAL CURRENT ASSETS 14,795,949 13,179,079
PROPERTY, PLANT AND EQUIPMENT, at cost 11,011,127 10,900,119
Less, Accumulated depreciation and
amortization 4,494,423 4,308,543
6,516,704 6,591,576
OTHER ASSETS 97,520 104,562
TOTAL ASSETS $21,410,173 $19,875,217
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 27, June 28,
1997 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 2,300,000 $ 1,870,000
Current maturities of long-term debt 208,226 207,971
Accounts payable 2,827,350 1,478,675
Accrued income taxes 493,113 1,072,464
Accrued expenses and other 1,181,032 1,561,979
TOTAL CURRENT LIABILITIES 7,009,721 6,191,089
LONG-TERM DEBT, less current maturities 1,352,700 1,357,374
DEFERRED INCOME TAXES 133,000 133,000
OTHER 16,601 16,601
TOTAL LIABILITIES 8,512,022 7,698,064
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 4,253,100 3,596,049
15,748,238 15,091,187
Less, Treasury stock, at cost 2,850,087 2,914,034
TOTAL STOCKHOLDERS' EQUITY 12,898,151 12,177,153
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $21,410,173 $19,875,217
See notes to condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 27, September 28,
1997 1996
Net sales $13,315,399 $13,036,388
Costs and expenses:
Cost of products sold 10,687,529 10,717,582
Selling, general and administrative 1,571,052 1,484,284
Interest expense 47,092 50,618
Other income, principally interest (498) (29,865)
INCOME BEFORE INCOME TAXES 1,010,224 813,769
Income taxes 384,000 309,000
NET INCOME $ 626,224 $ 504,769
Earnings per share
of common stock $ .18 $ .15
Weighted average number of common
shares and equivalents outstanding 3,419,229 3,272,244
See notes to the condensed consolidated financial statements.
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 27, September 28,
1997 1996
Net cash provided by (used in)
operating activities $ (408,377) $ 983,872
Cash flows (used in)
investing activities:
Purchase of property, plant
and equipment (111,008) (143,140)
Cash flows provided by (used in)
financing activities:
Proceeds from short-term borrowings 5,235,000 4,820,000
Payments on short-term borrowings (4,805,000) (5,320,000)
Payments of long-term debt (4,419) (400,000)
Proceeds from exercise of
stock options 94,773 5,000
Net cash provided by (used in)
financing activities 520,354 (895,000)
Increase (decrease) in cash and
cash equivalents 969 (54,268)
Cash and cash equivalents:
Beginning of period 89,117 165,329
End of period $ 90,086 $ 111,061
Noncash investing and financing activities:
Building capitalized under capital
lease and the related capital
lease obligation $ - $ 979,000
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"). 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 27, 1998. The
1997 Miller Building Systems Annual Report on Form 10-K should be
read in conjunction with these statements.
The June 28, 1997 condensed consolidated 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:
September 27, 1997 June 28, 1997
Raw materials $ 3,254,789 $ 3,133,958
Work in process 362,993 578,706
$ 3,617,782 $ 3,712,664
Note C - SALE OF CALIFORNIA OPERATION
On October 21, 1996, Miller sold all of the issued and
outstanding stock of its wholly owned California subsidiary, to
MODTECH, Inc. ("Buyer"). The California subsidiary manufactured
modular and mobile buildings in Patterson, California.
The consideration paid by the Buyer to Miller consisted of a
cash purchase price of $1,516,390. Miller and the Buyer also entered
into a three-year lease obligation for certain real property (the
"Patterson Property") which lease agreement requires the Buyer, as
lessee, to pay Miller rental payments of $4,500 per month. Upon the
issuance of an acceptable expanded environmental report on the
Patterson Property, Miller and Buyer will mutually agree to cancel
the lease agreement, and Buyer will acquire the Patterson Property
from Miller for a cash purchase price of $450,000. Miller expects to
sell the Patterson Property during fiscal year 1998 and, accordingly,
the carrying value of the Patterson Property of $402,564 is reflected
as a current asset (Property held for sale) at September 27, 1997.
In connection with this sale transaction, Miller entered into a
non-competition agreement with the Buyer which provides that Miller
will not, at any time within a five-year period following closing,
engage in any business that manufactures and markets the products
which were previously manufactured by Miller's former California
subsidiary in the states of California, Nevada and Arizona.
Note D - Accounting and Regulatory Developments
In February 1997, Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share" was issued by the Financial
Accounting Standards Board ("FASB"). Miller is required to adopt
this pronouncement during its fiscal 1998 second quarter ending
December 27, 1997. SFAS No. 128 will require Miller to make a dual
presentation of basic and diluted earnings per share on the face of
the income statement. Miller does not anticipate that SFAS No. 128
will have a significant impact on Miller's historically reported
earnings per share.
In June 1997, FASB issued SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information", which Miller will
be required to adopt in its fiscal 1999 year-end financial
statements. SFAS No. 131 specifies revised guidelines for
determining operating segments and the type and level of information
to be disclosed. Miller has not yet determined what changes in its
disclosures, if and, will be required by SFAS No. 131.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Some matters set forth herein are forward looking statements
that are dependent on certain risks and uncertainties. Such factors,
among others, are the mix between fleet and custom products, the
strength of the economy in the various sections of the country served
by Miller and the bidding and quoting process, where our competitors
can impact the profitability of our products. At times, Miller's
actual performance differs materially from its projections and
estimates regarding the economy, the modular building and
telecommunications shelter industries and other key performance
indicators. Miller's actual results could vary significantly from
the performance projected in the forward looking statements.
Financial Condition - September 27, 1997 compared to June 28, 1997
At September 27, 1997, Miller's working capital was $7,786,228
compared to $6,987,990 at June 28, 1997. The working capital ratio
was 2.1 to 1 at September 27, 1997 and June 28, 1997, respectively.
Miller has an unsecured bank credit agreement which provides for
advances up to $5,000,000 through November 30, 1997. Outstanding
borrowings under this credit agreement were $2,300,000 at September
27, 1997 compared to $1,870,000 at June 28, 1997. Miller expects
this credit agreement to be renewed as of November 30, 1997.
Miller believes operating cash flows and the bank credit
agreement are sufficient to meet operating needs.
Results of Operations - Three months ended September 27, 1997
compared to the three months ended September 28, 1996
Net sales increased $279,011 during the first quarter of fiscal
1998 or approximately 2.1% from the corresponding quarter in fiscal
1997. Net sales for the Structures product line, ("Structures")
decreased 5.6% from the first quarter last year. The net sales
decline at Structures was primarily the result of $1.6 million in
lost revenue related to the Patterson, California operation which was
sold during the first quarter of fiscal 1997. This was partially
offset by $.9 million in Structures sales at the new Burlington,
Kansas facility. Net sales for the Telecom product line, ("Telecom")
increased 25.7% over the first quarter last year. This increase was
the result of sales at the new Kansas facility. The Structures'
business is steady as our backlogs remain at last years levels. The
Telecom business has been soft for the past four to five months as
the Telecommunications industry slowed their shelter orders. The
industry has concentrated on generating revenue by placing existing
infrastructure in service. We believe that this trend will reverse
in early 1998. The anticipated increase in Telecom orders and the
continuation of the previously announced Michigan State Police
project should create strong Telecom sales during the second half of
our fiscal year. Miller recently announced a 48,000 square foot
expansion of our Leola, Pennsylvania facility to meet the increased
demand in our Eastern Region.
During the three-month period ended September 27, 1997, cost of
products sold was 80.3% of net sales compared to 82.2% for the
comparable period of fiscal 1997. The increase in gross profit and
the gross profit percentage for the quarter can be attributed to a
shift in mix at Structures to the more profitable custom units, and
a larger percentage of unit sales at Telecom which carry a higher
profit margin. The decrease in the cost of products sold percentage
for the quarter ended September 27, 1997 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 September 27, 1997, increased 5.8% when compared to the
similar period of fiscal 1997. The higher selling, general and
administrative expenses was generally the result of inflationary and
cost of living increases. As a percentage of net sales, selling,
general and administrative expenses for the three-month period ended
September 27, 1997, were 11.8%, compared to 11.4% in the comparable
three-month period in fiscal 1997.
Interest expense decreased $3,526 to $47,092 during the current
three-month period compared to the similar period of the prior year.
The decrease was attributable to lower levels of debt outstanding,
partially offset by higher interest rates.
The provision for income taxes was 38.0% of income before income
taxes for the three months ended September 27, 1997 and the
comparable three-month period of fiscal 1997.
Part II. Other Information
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting held on November 5, 1997, proxies for which
were solicited pursuant to Regulation 14 under the
Securities and Exchange Act of 1934, as amended.
(c) Matters voted upon at Annual Meeting:
Votes Cast
For Withheld
1. Election of Directors
David H. Padden 2,582,512 260,879
Jeffrey C. Rubenstein 2,582,512 260,879
2. Appointment of Coopers For 2,835,216
& Lybrand L.L.P. Against 6,875
Withheld 1,300
3. 1997 Stock Option Plan For 1,450,523
Against 526,467
Withheld 23,700
Broker non-votes 842,701
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 September 27, 1997.
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: September 11, 1997 \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
September 27, September 28,
1997 1996
Calculation of primary earnings
per common share:
Net income $ 626,224 $ 504,769
Shares outstanding, net of
treasury shares, at beginning of
the fiscal period 3,217,433 3,100,963
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 181,803 169,523
Weighted average number of shares
issued as a result of exercise
of stock options 27,323 1,758
Weighted average number of shares
acquired as treasury stock (7,330) -
Weighted average shares and
equivalent shares outstanding 3,419,229 3,272,244
Primary earnings per share: $ .18 $ .15
Fully dilutive earnings per share do not differ materially from
primary earnings per share.