UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 27, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________.
Commission file No. 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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
(Title of class)
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. (x) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
Aggregate market value of voting stock held by nonaffiliated of the registrant,
based on the closing price of the stock as reported by the National Association
of Securities Dealers' Automated Quotation Systems, on August 28, 1998:
$25,910,627.
As of August 28, 1998, the Registrant had 3,312,021 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into this Annual Report on
Form 10-K:
Portions of Registrant's Proxy Statement for its 1998 Annual Meeting of
Stockholders (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission no later than 120 days after the end of
the Registrant's fiscal year, are incorporated into Part III.
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 belief that previous
growth rates in the telecommunication shelter market will return, 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 and the ability of the Company to
become year 2000 compliant. Readers are cautioned that reliance on any forward-
looking statement involves risks and uncertainties. Although the Company
believes that the assumptions on which the forward-looking statements contained
herein are based are reasonable, any of those assumptions 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.
PART I
ITEM 1. BUSINESS
The Company
Miller Building Systems, Inc. ("Miller") is the parent of Miller Building
Systems of Indiana, Inc., Miller Building Systems of Pennsylvania, Inc., Miller
Building Systems of Kansas, Inc., United Structures, Inc.("United"), and Miller
Construction Services, Inc. ("Construction Services"). All operations of Miller
are conducted through its five wholly owned subsidiaries which design,
manufacture, market and service factory-built buildings. Miller has two product
lines, Structures and Telecom. The factory-built buildings produced by
Structures are modular and mobile buildings, which are generally movable and
relocatable, and designed to meet the specialized needs of a wide variety of
users. Structures products are sold to independent customers who, in turn, sell
or lease to the end users. The Structures division has manufacturing facilities
in Elkhart, Indiana; Burlington, Kansas; Leola, Pennsylvania; Sioux Falls, South
Dakota and Bennington, Vermont. The Telecom division manufactures specialized
buildings, which utilize modular construction techniques and pre-cast concrete
technology, and are designed principally for customers in the telecommunications
industry. Telecom's products are sold directly to the end user. Telecom has
manufacturing facilities in Elkhart, Indiana; Burlington, Kansas; Binghamton,
New York and Leola, Pennsylvania. Miller's Structures and Telecom products are
sold throughout the United States. Construction Services provides complete
turnkey services from site preparation through setting and installation.
Miller originally was organized as an Indiana corporation in November 1982
under the name of "Graylyon Corp." and then merged, effective April 1983, into
a Delaware corporation named "Gray Lyon Company". In November 1986, the Company
amended its Certificate of Incorporation to change its name to "Modular
Technology, Inc." In November 1988, the Company again amended its Certificate
of Incorporation to change its name to "Miller Building Systems, Inc." All
references to Miller herein refer to Miller Building Systems, Inc., a Delaware
corporation, and its predecessor Indiana corporation.
As discussed in Note B of Notes to Consolidated Financial Statements,
effective January 1, 1998, Miller acquired all of the issued and outstanding
shares of common stock of United.
Miller maintains its Executive Offices at 58120 County Road 3 South,
Elkhart, Indiana 46517; telephone number (219) 295-1214. The Executive Office
is Miller's principal operating office from which it manages and coordinates the
activities of their wholly owned subsidiaries.
STRUCTURES PRODUCT LINE
Sales and engineering for the Structures product line are headquartered in
Elkhart, Indiana. The sales and engineering staff support the manufacturing
facilities in Elkhart, Indiana; Burlington, Kansas; Leola, Pennsylvania; Sioux
Falls, South Dakota and Bennington, Vermont.
Structures - Modular and Mobile Office Buildings
Products
The buildings sold by Structures are generally movable or relocatable and
are composed of either single or multiple units often referred to as modular
units. Individual units are either 8, 10, 12, or 14 feet in width and up to 80
feet in length. These individual units can be combined into buildings varying
in size from several hundred to several thousand square feet. Although most
buildings are one story, they can be built to be two or three stories high
depending on user requirements.
The factory-built buildings sold by Structures meet the specialized needs
of users, which include architectural and engineering firms, churches,
construction companies, correctional or prison authorities, educational and
financial institutions, libraries, medical and dental facilities, military
installations, post offices, real estate firms, restaurants and retail
businesses. The cost of the building varies depending on its application or its
specifications and may, in certain instances, be less expensive than a
comparable conventional site-built building. Structures' cost portion of a
completed building does not include transportation, site preparation, foundation
and other installation work which is the responsibility of the user and is often
provided and charged to the user by Structures' customer. In addition to all the
aforementioned costs, the price charged to the user by Structures' customer will
reflect a "mark-up" which is determined by Structures' customer and not by
Structures.
Buildings or units (modules) of buildings sold by Structures are usually
built on a steel frame. Attached to the frame, customarily, is a chassis with
wheels and axles. This chassis will either become a permanent portion of the
building, permitting it to be easily transported to another site, or be removed
at the building installation site. The chassis facilitates the transportation
of the individual units over the highways from Structures' factory to either its
customer's facilities or the user's installation site.
The floor, roof and walls of any building are constructed of conventional
building materials, primarily wood or comparable materials. The building or
module is fabricated in a process similar to conventional site-built
construction with appropriate variations. Structures also sells buildings
utilizing non-combustible materials. For these types of buildings, the floor is
made of concrete. The wall studs and roof frame are made of steel and other
components. The buildings utilize various other non-combustible materials.
Interiors and exteriors of the buildings are completed to customer
specifications. Finished buildings or modules include required electrical
wiring, plumbing, heating and air conditioning, and floor coverings. Exteriors
are constructed of wood, aluminum or other specified exterior materials such as
brick facing, etc.
Buildings sold by Structures are designed and engineered before production.
Detailed plans and other documentation prepared by Structures are submitted to
its customers and users as well as to various regulatory agencies for approval
prior to commencement of construction. Structures maintains its own engineering
and design staff which is capable of handling virtually all types of building
orders. On occasion, however, Structures may retain the services of outside
engineering and design firms.
Marketing
Structures does not sell its buildings directly to ultimate users of the
buildings. Structures' customers do not represent Structures on an exclusive
basis. Structures competes for customer orders based on price, quality, timely
delivery, engineering capability and general reputation for reliability.
Structures sells its products to approximately 75 customers. Customers may be
national, regional or local in nature. Customers will sell, rent or lease the
buildings purchased from Structures to the users. Structures believes a
significant portion of its product is either rented or leased by the users from
its customers.
Structures' sales staff calls on prospective customers in addition to
maintaining continuing contact with existing customers. The sales staff assists
its customers and their prospective customers in developing building
specifications in order to facilitate the preparation by Structures of a
quotation. The sales staff, in conjunction with the engineering staff,
maintains ongoing contact with the customer base.
Certain customers maintain rental fleets of standardized units such as
construction-site buildings or buildings for general office space requirements.
These buildings are generally rented or leased for a specific requirement, and
when the requirement has been satisfied, the buildings are returned to
Structures' customer for re-renting or leasing to other users. Other buildings
are sold to a specific user's requirements and Structures' customer will either
lease it to its customer or sell it outright. As a result of transportation
costs, the effective distribution range of buildings sold by Structures is
limited to an area within 400-600 miles from each manufacturing facility.
Structures believes that the various leasing plans offered to the users by
its customers are a significant benefit of factory-built buildings over similar
conventional site-built buildings. Other significant benefits to the customer
are the speed with which a factory-built building can be made available for use
compared to on-site construction and the ability to relocate the building to
another site if the customer's utilization requirements change.
Certain companies within the industry served by Structures, including some
who are customers of Structures, have their own manufacturing facilities to
provide all or a portion of their building requirements. Structures does not
believe there is any specific identifiable industry trend or direction of its
customers having their own captive manufacturing capabilities. Certain
customers have acquired or started their own manufacturing facilities and other
customers have closed or reduced their manufacturing capability. Structures
believes that its customers are best served by having the flexibility of outside
product sources and avoiding the possible inefficiencies of captive
manufacturing facilities.
Structures is highly dependent on a limited number of customers, the loss
of which could have a material adverse effect on the operations of Miller. For
the fiscal years ended June 27, 1998 and June 28, 1997, the following customers
represented 10% or more of net sales of Miller: Transport International Pool,
Inc., d/b/a GE Capital Modular Space, a division of General Electric Capital
Corporation ("GE Capital"), represented 13% of Miller's net sales for the fiscal
year ended June 27, 1998 and In-Roads, Inc. represented 15% for the fiscal year
ended June 28, 1997.
Competition
Competition in the factory-built building industry is intense and
Structures competes with a number of entities, some of which may have greater
financial resources than Miller and Structures. To the extent that factory-
built buildings become more widely accepted as an alternative to conventional
on-site construction, competition from local contractors and manufacturers of
other pre-engineered building systems may increase. In addition to competition
from firms designing and constructing on-site buildings, Structures competes
with numerous factory-built building manufacturers that operate in particular
geographical regions.
Structures competes for orders from its customers primarily on the basis
of price, quality, timely delivery, engineering capability and reliability.
Structures believes that the principal basis on which it competes with on-site
construction is the combination of the timeliness of factory versus on-site
construction, the cost of its products relative to on-site construction, the
quality and appearance of its buildings, its ability to design and engineer
buildings to meet unique customer requirements (including local and state
regulatory compliance), and reliability in terms of completion time. The
manufacturing efficiencies and generally lower wage rates of factory
construction, even with the added transportation expense, in many instances
result in the cost of factory-built buildings being equal to or lower than the
cost of on-site construction of comparable quality. Quality, reliability and
the ability to comply with regulatory requirements in a large number of states
and localities depend upon the engineering and manufacturing expertise of the
management and staff of Miller. The relative importance of these factors varies
from customer to customer. Most of Structures' orders are awarded by its
customers on the basis of competitive bidding.
TELECOM PRODUCT LINE
Sales and engineering for the Telecom product line are located in Elkhart,
Indiana. Telecom provides all administrative, sales and production services
from that location. The sales and engineering staff support manufacturing
facilities in Elkhart, Indiana; Burlington, Kansas; Binghamton, New York and
Leola, Pennsylvania.
Products
Telecom manufactures modular factory-built buildings using pre-cast
concrete, steel and concrete, wood or fiberglass construction. Each building is
custom-built to the end users' specifications and is typically finished to
include electrical, grounding, sensing alarm, mechanical and air conditioning
systems.
The pre-cast concrete technology available through Telecom allows for
vandal-proof and environmental protection necessary for the telecommunication
industry. Telecom produces single and multiple module buildings with modules
ranging in size from 8' x 10' to modules as large as 14' x 30'. Telecom has
provided buildings, when assembled, consisting of a single module of 80 square
feet to multiple module buildings ranging up to 1,440 square feet. Multiple
story technology is currently being developed by Telecom. Telecom can provide
building transportation and complete site installation of the building and
equipment, if required by the customer specifications. Opportunities in
pre-cast concrete also exist for the containment of hazardous material in
specialized shelters and in correctional facilities requiring pre-cast modular
cells. The latter product can be provided to existing customers of Structures.
Telecom has complemented the traditional pre-cast concrete technology with
a lightweight concrete/steel building which will reduce the overall building
weight by 40%. A Cam-Lock series of buildings has been developed which allows
speedy installation of interlocking steel and foam panels for difficult site
placement, such as rooftops, mountaintop, or inside an existing building. An
exportable Containerized Shelter, transforms a standard 20' and 40' steel
shipping container into a virtually indestructible completely outfitted
telecommunication shelter. Also, mobile shelters meet the challenge of light
weight, portable shelters for emergency communications, starter or test sites,
temporary facilities or for special events broadcasting.
Marketing
Telecom participates in an expanding market for telecommunication shelters
which service the cellular and personal communication industries. Telecom
expects the growth in these markets to continue. Telecom sells its product
directly to the end users of the buildings, which have been principally
telecommunication and utility companies, military bases and municipalities.
Telecom competes for orders by providing a quotation developed from
specifications received from the potential customer. While price is often a key
factor in the potential customer's purchase decision, other factors may also
apply, including delivery time, quality and prior experience with a certain
manufacturer. Several customers have designated Telecom as their nationwide
supplier. Telecom is prepared, if necessary, to provide a potential customer a
bid or performance bond to ensure Telecom's performance.
The potential shipping radius of these type of buildings is not as
restrictive as that of Modular and Mobile Office buildings; however, Telecom has
concentrated its marketing efforts in geographic areas where, Telecom believes,
it has a freight advantage over a significant portion of its competitors.
Competition
Telecom competes with a number of national and regional firms. Some of
these competitor companies may have greater financial strength or capabilities
than Miller and Telecom; however, Telecom believes Miller's financial strength,
engineering capabilities and experience in producing other types of factory-
built structures are key elements in providing a competitive advantage to
Telecom.
Construction Services
Construction Services is located in Elkhart, Indiana and operates all
administrative, sales and service activities from that location. This office
manages the service crews that support the Telecom facilities in Elkhart,
Indiana; Burlington, Kansas; Leola, Pennsylvania and to some extent Binghamton,
New York.
Services
Construction Services provides one contact point for complete turnkey
services for telecommunication site construction. These services include the
management and execution of the entire construction process, from site
preparation, equipment transportation, through building and tower setting and
installation, or any combination thereof.
The service crews are fully outfitted with service trucks and equipment to
handle any site construction, even in remote locations. The crews are highly
trained in all phases of construction and have experience with heavy equipment,
site civil work and permitting, steel fabrication, concrete and cam-lock
building installations, electrical and electronic hookups, tower erection,
antenna sets and fencing. Construction Services specializes in completing sites
in difficult remote locations or sites which must be completed in a short time
frame. The service crews can "quick turn" a building, principally cam-lock
buildings, in five days from the initiation of the field work. The traditional
concrete shelter can also be assembled and finished in remote locations where
the site is inaccessible to a building fully completed in the factory.
In addition, to site preparation and installation, Construction Services
is developing a full maintenance program, not only for buildings supplied by
Miller but any building, whether site built or modular. These maintenance
projects, which include roof and fencing repair, have also been completed for
businesses outside the customary telecommunication industry, such as buildings
utilized by pipelines and power companies. The major maintenance projects are
also complemented by a general maintenance program. These programs allow a
customer to have routine maintenance and general preventive maintenance on
equipment performed by Construction Services while they concentrate on building
new sites and servicing their own customers needs.
Marketing
Construction Services primarily markets its services to the cellular and
personal communications industry. They contract directly with the end user of
the construction services being supplied. Most of Construction Services sales
contacts come from existing telecommunications' customers and the group competes
for projects by providing a quotation developed from specifications supplied by
the potential customer. Quality and speed are most often the prime
considerations of their customers. This allows Construction Services to obtain
a better margin on their projects than is customarily obtainable in the general
marketplace. The group has developed several close relationships with Telecom's
customers to supply site construction services.
Competition
Construction Services competes with national design-build firms which use
third-party subcontractors for the completion of turnkey service projects and
with various local contractors when bidding on specific portions of a site
project. The relationships and contacts that both the Structures and Telecom
divisions have developed with customers, while supplying buildings, has provided
Construction Services with key contacts and competitive advantages. In addition,
support from Miller's corporate engineering department also provides
Construction Services with in-house engineering specifications and state and
local code requirements.
General
(Applicable to all of Miller's principal markets)
Backlog
The backlog of orders by market at August 31, 1998 and 1997 was as follows:
1998 1997
Structures $5,877,000 $8,699,000
Telecom 9,794,000 2,456,000
Construction Services 232,000 249,000
During fiscal 1997, the Structures' backlog contained orders in excess of
production capacity, especially in the Elkhart, Indiana facility. This led to
delays for several customers projects. The backlog in fiscal 1998 was reduced
to more closely match production capacity and minimize these project delays. The
current backlog level should provide the basis to achieve forecasted production
levels through the second quarter of fiscal 1999; however, management believes
it is too early to determine whether this current business activity will extend
to the second half of fiscal 1999. The backlog at United, which was acquired
January 1, 1998, was $4,333,000 and accounted for a significant portion of the
increase in Telecom's backlog. The remainder of the increase in Telecom's
backlog is related to a resurgence in order activity as the build-out of the
telecommunication infrastructure resumes. Miller believes that the continued
build-out of the telecommunication infrastructure and the addition of United
should have a favorable impact on sales and production during Miller's 1999
fiscal year.
Regulation
Customers of Miller's factory-built buildings, or Miller's subsidiaries if
they complete the on-site work, are generally required to obtain building
installation permits from applicable governmental agencies. In certain cases,
however, conditional use permits may be obtained in lieu of building
installation permits. Conditional use permits usually are granted for a stated
period and may be renewable. Buildings completed by Miller's subsidiaries are
manufactured and installed in accordance with applicable building codes set
forth by the applicable state or local regulatory agencies.
State building code regulations applicable to factory-built buildings vary
from state to state. Many states have adopted codes that apply to the design and
manufacture of factory-built buildings, such as those manufactured by Miller's
subsidiaries, even if the units are manufactured outside the state and delivered
to a site within that state's boundaries. Generally, obtaining state approvals
is the responsibility of the manufacturer. Some states require certain customers
to be licensed in order to sell or lease factory-built buildings. Additionally,
certain states require a contractor's license from customers for the
construction of the foundation, building installation, and other on-site work
when this work is completed by the customer.
On occasion, Miller's subsidiaries have experienced regulatory delays in
obtaining the various required building plan approvals. In addition to some of
its customers, Miller's subsidiaries actively seek assistance from various
regulatory agencies in order to facilitate the approval process and reduce the
regulatory delays.
Raw Materials
Raw materials for products of Miller's subsidiaries are readily available
from multiple sources and the subsidiaries have not experienced any difficulty
in obtaining materials on a timely basis and in adequate quality and quantity.
Miller's subsidiaries, in certain instances, have entered into national purchase
arrangements with various suppliers. The benefit to Miller's subsidiaries of
these type of arrangements is often lower material costs and a higher level of
service and commitment.
Seasonality
Historically, Miller's subsidiaries have experienced greater sales during
the first and fourth fiscal quarters with lesser sales during the second and
third fiscal quarters. This reflects the seasonality of sales for products used
in various applications, including classrooms and other educational buildings,
and also the impact of weather on general construction related activities. See
unaudited interim financial information contained in Note J of Notes to
Consolidated Financial Statements.
Employees
As of August 31, 1998, Miller and its subsidiaries had approximately 520
employees of which approximately 400 were direct production employees.
Engineering and Design
Miller's subsidiaries engage in extensive engineering and design work to
meet customers' requirements, as well as to prepare bid proposals for new
projects. Engineering and design functions include structural, electrical, and
mechanical design and specifications work.
ITEM 2. PROPERTIES
The principal office and production facilities of Miller and its
subsidiaries consist of the following:
Approximate Square Footage
Location Total Production Office Owned or Leased
Elkhart, IN 132,300 112,100 20,200 Owned (1)
Burlington, KS 155,000 150,000 5,000 Capitalized Lease
Binghamton, NY 55,900 52,400 3,500 Leased (3)
Leola, PA 113,100 103,400 9,700 Owned
Sioux Falls, SD 36,100 34,200 1,900 Leased (2)
Bennington, VT 28,900 27,000 1,900 Owned
________________ _______ _______ ______
Total approximate
square footage 521,300 479,100 42,200
(1) Structures and Telecom administrative, sales, engineering and
manufacturing facility. The Executive offices of Miller are also at
this location.
(2) Leased until April 15, 2000 with a three-year renewal option.
(3) Leased until December 31, 2002 with a five-year renewal option and an
option to purchase the facility after February 28, 2000.
ITEM 3. LEGAL PROCEEDINGS
Neither Miller or its operating subsidiaries are subject to any
material pending litigation other than ordinary routine litigation incidental to
the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS
Steven F. Graver (age 46) has been a Director of Miller since April
1991 and was elected Chairman of the Board of Directors on August 11, 1994.
Effective July 1, 1995, Graver, Bokhof & Goodwin ("GraverBokhof") became Graver,
Bokhof, Goodwin & Sullivan ("GBGS"). GBGS is a subsidiary of the Optimum Group
which has over $800 million in assets under management. Mr. Graver is President
and Chief Portfolio Manager of the Optimum Group. In July 1991, GraverReich &
Company ("GraverReich"), merged with GraverBokhof, an investment management
firm, and Mr. Graver became a General Partner of GraverBokhof. From December
1986 until July 1991, Mr. Graver was the President and Chief Executive Officer,
and Executive Vice President from February 1981 until November 1986, of
GraverReich.
Edward C. Craig (age 63) became the Chief Executive Officer of Miller
and Vice Chairman of the Board of Directors of Miller effective on July 3, 1994.
Mr. Craig was elected President of Miller on August 11, 1994. From July 1991
until April 1994, Mr. Craig was President and Chief Executive Officer of IBG, a
modular housing company. From April 1986 to July 1991, Mr. Craig was President
of Ryland Building Systems, a division of Ryland Homes, Inc. Mr. Craig is a
Director of Regional Building Systems.
Thomas J. Martini (age 50) became the Vice President of Finance of
Miller in July 1994. Mr. Martini was elected Secretary and Treasurer of Miller
on April 28, 1992 and has been the Chief Financial Officer of Miller since
February 1991.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Miller's Common Stock is quoted on the National Association of
Securities Dealers' Automated Quotation (NASDAQ) system under the ticker symbol
"MBSI." The following table sets forth the quarterly range of high and low
quotations for these securities as reported on the NASDAQ National Market System
for the two most recent fiscal years.
Fiscal 1998 Fiscal 1997
High Low High Low
1st Quarter 10 1/16 5 1/2 6 5/8 5 1/2
2nd Quarter 9 3/4 8 1/4 8 3/4 5 3/8
3rd Quarter 10 3/4 9 9 3/8 6 1/4
4th Quarter 10 3/4 9 5/8 8 6 1/4
As of August 28, 1998, Miller estimates there were approximately 1,300
stockholders of Miller's Common Stock. Of this total, approximately 130 were
stockholders of record and shares for approximately 1,170 stockholders were held
in street name. Harris Trust & Savings Bank, Chicago, is Miller's Transfer
Agent and Registrar.
Miller did not pay cash dividends on its Common Stock from fiscal 1994,
through fiscal 1998 as the Board of Directors ceased the payment of dividends in
the third fiscal quarter of 1993. Miller does not intend to pay cash dividends
in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included elsewhere herein.
Years Ended
June 27, June 28, June 29, July 1, July 2,
1998 1997 1996 1995 1994
(In thousands,
except per share data)
Net sales $54,700 $46,287 $37,858 $41,455 $38,569
Net income 2,140 1,574 486 320 312
Earnings per common share:
Basic .65 .50 .16 .10 .10
Diluted .62 .47 .16 .10 .10
Total assets 30,230 19,768 16,920 16,522 15,308
Long-term debt, less
current maturities 6,094 1,357 1,270 1,385 110
(A) Net sales (in thousands) for fiscal year 1998 include $7,523 for
United, which was acquired January 1, 1998 (see Note B of Notes to Consolidated
Financial Statements). Net sales (in thousands) for fiscal years ended
1997, 1996, 1995, and 1994 include $1,636; $5,787; $6,414 and $7,440,
respectively, of Miller's California subsidiary which was sold on October
21, 1996. Net sales (in thousands) for fiscal 1997 include $2,139 for the
new Kansas facility which commenced operations in January 1997.
(B) Miller's operating results for fiscal years 1996, 1995, and 1994 were
adversely impacted by nonrecurring items (in thousands) of $358, $361,
and $159, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Fiscal 1998 Compared to Fiscal 1997
Net sales increased $8.4 million or approximately 18% in fiscal 1998
from the corresponding period in fiscal 1997. Structures reported a $.3
million, or approximately a 1% decrease in net sales during fiscal 1998. The
decrease in net sales was primarily the result of lower sales in the Eastern
markets which were bolstered last year by several large contracts, and the
decline in sales related to the California plant which was closed after the
first quarter of fiscal 1997. The California operation had net sales of $1.6
million in fiscal 1997. Telecom's net sales increased $7.7 million, or nearly
57% during fiscal 1998. Nearly all of the net sales gain in Telecom related to
sales from United which was acquired January 1, 1998. Net sales for United for
the six months ended June 27, 1998 were $7.5 million. During fiscal 1998,
Telecom's business was soft as the telecommunications industry slowed their
shelter orders. The industry concentrated on generating revenue by placing
existing infrastructure in service. These factors led to the small increase in
Telecom sales, excluding United for fiscal 1998. Miller believes that this
trend has reversed and expects the previous growth rates in the
telecommunication shelter market to return.
Miller's gross profit during the 1998 fiscal year approximated 19% of
net sales and was virtually unchanged from fiscal 1997. During fiscal 1998,
improved margins from United's lightweight, rooftop telecommunications shelters,
offset a decline in Structures' gross profit related to the decline in higher
margin custom projects. The gross profit from Telecom's concrete shelter
business remained relatively unchanged from fiscal 1997.
Selling, general and administrative expenses increased $.3 million in
fiscal 1998. These expenses were 12% of net sales in fiscal 1998 compared to
14% of net sales in fiscal 1997. The increase in administrative expense was
primarily the result of the addition of administrative expense at United. The
increased administrative expenses at United were partially offset by lower
administrative expenses at the closed California operation and lower
performance-based compensation.
The increase in interest expense in fiscal 1998 compared to fiscal 1997
of $134,771 was primarily the result of higher interest rates and higher debt
outstanding on the revolving line of credit. The Company funded the
construction of the Pennsylvania plant and the acquisition of United through its
line of credit until permanent long-term financing was put in place.
During fiscal 1998, Miller recorded an income tax provision of
$1,306,000 or 38% of pre-tax profit compared to an income tax provision of
$1,006,000 or 39% of pre-tax profit in fiscal 1997. The effective tax rate
varies from year to year depending on the levels of income in states where
Miller is subject to state income tax.
Fiscal 1997 Compared to Fiscal 1996
Net sales increased $8.4 million or approximately 22% in fiscal 1997
from the corresponding period in fiscal 1996. Structures reported a $5.1
million, or approximately a 19% increase in net sales during fiscal 1997. The
increase in net sales was achieved despite the decline in sales related to the
California operation which was sold at the end of the first quarter of fiscal
1997. The Eastern and Midwest Structures' plants benefited from several large
contracts which kept the plants busy during the traditionally slow winter months
and at nearly full capacity during the fourth quarter. In addition, Structures
expanded its customer base to provide greater access to the construction
markets. The sold Structures' operation in California had net sales of $1.6
million in fiscal 1997 and $5.8 million in fiscal 1996. Telecom's net sales
increased $3.3 million, or nearly 30% during fiscal 1997. Telecom continued to
gain market share in fiscal 1997 and was a competitive force in the
telecommunications shelter industry. The Kansas facility, which began
operations in January 1997, produced both Structures and Telecom product lines.
Net sales for the Structures' products was $.4 million and was $1.7 million for
Telecom's products.
Miller's gross profit during the 1997 fiscal year approximated 19% of
net sales compared to approximately 18% of net sales in fiscal 1996. During
fiscal 1997, net sales from Telecom were nearly a third of Miller's total net
sales. The increased sales volume in the Structures' plants, which consisted
primarily of higher margin custom projects, accounted for the improved gross
profit.
Selling, general and administrative expenses increased $.7 million in
fiscal 1997. These expenses were 14% of net sales in fiscal 1997 compared to
15% of net sales in fiscal 1996. The increase in administrative expense was
primarily the result of additional headcount, performance based compensation and
start-up expenses at the Kansas plant.
The increase in interest expense in fiscal 1997 compared to fiscal 1996
of $23,140 was primarily the result of higher interest rates, higher debt
outstanding on the revolving line of credit, and the capital lease obligation
for the Kansas facility.
During fiscal 1997, Miller recorded an income tax provision of
$1,006,000 or 39% of pre-tax profit compared to an income tax provision of
$334,000 or 41% of pre-tax profit in fiscal 1996. The decrease in the effective
tax rate for fiscal 1997 was attributable to a lower effective tax rate for
state income taxes. The effective tax rate varies from year to year depending
on the levels of income in states where Miller is subject to state income tax.
Liquidity and Capital Resources
Miller's working capital as of June 27, 1998 was $8,610,205 compared to
$6,987,990 as of June 28, 1997. The working capital ratio as of June 27, 1998
and June 28, 1997 was 1.9 and 2.1 to 1, respectively.
For the fiscal year ended June 27, 1998, Miller's operating activities
provided net cash of $510,307. Increases in cash from operating activities
consisted primarily of net income, depreciation and amortization, the provision
for deferred income taxes and decreases in receivables. These increases were
offset by the $1.3 million increase in inventories, the $948,000 decrease in
accrued income taxes and the $1.49 million decrease in accrued expenses and
other. Miller's investing activities used net cash of $6,392,620. The
acquisition of United utilized $2.7 million and $3.0 million was used for
capital expenditures, principally the Pennsylvania plant addition. In addition,
$1.1 million in unexpended industrial revenue bond proceeds were partially
offset by $458,000 from the sale of property. Miller's financing activities
provided net cash of $5,904,816. Increases in financing cash flows of $5.5
million from long-term debt, the $580,000 net increase on the line of credit and
$501,000 in proceeds from the exercise of stock options were partially offset by
$301,000 of payments on long-term debt and $382,000 cash expended for the
purchase of treasury stock. The net increase in cash and cash equivalents for
the fiscal year ended June 27, 1998 was $22,503 which resulted in cash and cash
equivalents at the end of the year of $111,620.
An unsecured revolving credit agreement with a bank makes available
advances up to $5,000,000 through November 30, 1998. Miller expects to renew
this credit facility. There was $3,550,000 outstanding on the revolving credit
line at June 27, 1998 and $1,870,000 at June 27, 1998.
Miller believes it has adequate resources available to fund the
continuation of its internal growth during the coming fiscal year. The
unsecured revolving credit line assures that resources will be available for
future growth.
Impact of Inflation
Inflation has not had an identifiable effect on Miller's operating
margins during the last three fiscal years. Product selling prices are quoted
reflecting current material prices and other related costs and expenses.
Accordingly, any impact of inflation is reflected in the product selling prices.
Accounting and Regulatory Developments
In June 1997, FASB issued SFAS No. 131, "Disclosures 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 any, will be required by SFAS No. 131.
Year 2000 Compliance
Miller is currently in the process of identifying, evaluating, and
implementing changes to computer programs necessary to address the year 2000
issue. This issue affects computer systems that have date-sensitive programs
that may not properly recognize the year 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail, resulting in business interruption. Miller does not believe the cost of
converting all internal systems to be year 2000 compliant will be material to
its consolidated financial condition or results of operations. Costs related to
the year 2000 issue are being expensed as incurred. The year 2000 issue is
expected to affect the systems of various entities with which Miller interacts,
including customers and vendors. There can be no assurance that the systems of
other companies on which Miller's systems rely will be timely converted, or that
a failure by another company's systems to be year 2000 compliant would not have
a material adverse effect on Miller. Based on information currently available,
management believes its systems will be year 2000 compliant.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 of Part II is incorporated herein by
reference to the Consolidated Financial Statements filed with this report; see
Item 14 of Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Information with respect to the Directors of Miller is set forth in the
Election of Directors section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
(b) Executive Officers
Information regarding the Executive Officers of Miller is set forth in
Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Compensation
of Executive Officers section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Ownership of
Miller Building Systems, Inc. Common Stock section of the Proxy Statement to be
filed pursuant to Regulation 14A and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Certain
Relationships and Related Transactions section of the Proxy Statement to be
filed pursuant to Regulation 14A and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Consolidated Financial Statements of Miller Building Systems,
Inc. and Subsidiaries
Report of Independent Accountants . . . . . . . . . . . . . . . . .F-1
Consolidated Balance Sheets as of June 27, 1998 and June 28, 1997 .F-2
Consolidated Statements of Income for the years ended
June 27, 1998, June 28, 1997 and June 29, 1996 . . . . . . . . . .F-3
Consolidated Statements of Stockholders' Equity for the years
ended June 27, 1998, June 28, 1997 and June 29, 1996 . . . . . . .F-4
Consolidated Statements of Cash Flows for the years ended
June 27, 1998, June 28, 1997 and June 29, 1996 . . . . . . . . . .F-5
Notes to Consolidated Financial Statements . . . . . . . . . . . .F-6
(2) Financial Statement Schedule
II - Valuation and Qualifying Accounts . . . . . . . . . . . . . .F-17
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(3) See Index to Exhibits
(b) Reports on Form 8-K filed:
The following reports on Form 8-K were filed during the three
months ended June 27, 1998:
April 14, 1998, amendment to Item 7, Financial Statements and
Exhibits of its Current Report on Form 8-K/A-1,
dated February 27, 1998.
May 28, 1998, amendment to Item 7, Financial Statements and
Exhibits of its Current Report on Form 8-K/A-1, dated
February 27,1998 and as last amended by Form 8-K/A-2, dated
April 14, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
September 16, 1998 \Edward C. Craig
Edward C. Craig
President and Chief
Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
\Edward C. Craig President, Chief September 16, 1998
Edward C. Craig Executive Officer
and Director
(Principal Executive
Officer)
\Thomas J. Martini Secretary and September 16, 1998
Thomas J. Martini Treasurer (Principal
Financial and
Accounting Officer)
\David E. Downen Director September 16, 1998
David E. Downen
\Steven F. Graver Director September 16, 1998
Steven F. Graver
\William P. Hall Director September 16, 1998
William P. Hall
\Kenneth H. Granat Director September 16, 1998
Kenneth H. Granat
Director September 16, 1998
Myron C. Noble
\David H. Padden Director September 16, 1998
David H. Padden
\Jeffrey C. Rubenstein Director September 16, 1998
Jeffrey C. Rubenstein
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Miller Building Systems, Inc.:
In our opinion, the consolidated financial statements listed in the accompanying
index appearing under Item 14(a)(1) of Form 10-K present fairly, in all material
respects, the financial position of Miller Building Systems, Inc. and its
subsidiaries at June 27, 1998 and June 28, 1997, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended June 27, 1998, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
listed in the accompanying index appearing under Item 14(a)(2) presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
South Bend, Indiana
July 31, 1998
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 27, June 28,
1998 1997
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 111,620 $ 89,117
Receivables, less allowance for doubtful
receivables of $50,000 in 1998 and
$48,000 in 1997 11,126,444 8,450,479
Refundable income taxes 20,000 -
Inventories 6,140,647 3,712,664
Deferred income taxes 230,000 341,000
Property held for sale - 412,106
Other current assets 204,107 66,713
TOTAL CURRENT ASSETS 17,832,818 13,072,079
PROPERTY, PLANT AND EQUIPMENT
Land 1,106,156 598,237
Buildings and leasehold improvements 7,962,454 5,918,922
Machinery and equipment 5,084,595 4,382,960
14,153,205 10,900,119
Less, Accumulated depreciation
and amortization 5,141,452 4,308,543
PROPERTY, PLANT AND EQUIPMENT, NET 9,011,753 6,591,576
Unexpended industrial revenue bond proceeds 1,115,854 -
Excess acquisition costs over fair value of acquired
net assets, net of accumulated amortization of
$63,446 in 1998 and $26,870 in 1997 2,058,409 17,055
Other assets 210,754 87,507
TOTAL ASSETS $30,229,588 $19,768,217
The accompanying notes are a part of the consolidated financial statements.
June 27, June 28,
1998 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 3,550,000 $ 1,870,000
Current maturities of long-term debt 762,900 207,971
Accounts payable 3,246,373 1,478,675
Accrued income taxes 17,469 965,464
Accrued expenses and other 1,645,871 1,561,979
TOTAL CURRENT LIABILITIES 9,222,613 6,084,089
Long-term debt, less current maturities 6,094,389 1,357,374
Deferred income taxes 316,000 133,000
Other 15,276 16,601
TOTAL LIABILITIES 15,648,278 7,591,064
COMMITMENTS AND CONTINGENCIES - Note I
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value
50,000 shares authorized, none issued - -
Common stock, $.01 par value, 7,500,000 shares
authorized, 4,023,548 shares issued 40,235 40,235
Additional paid-in capital 11,600,191 11,454,903
Retained earnings 5,770,243 3,596,049
17,410,669 15,091,187
Less, Treasury stock, at cost 2,829,359 2,914,034
TOTAL STOCKHOLDERS' EQUITY 14,581,310 12,177,153
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $30,229,588 $19,768,217
(This page intentionally left blank.)
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
June 27, June 28, June 29,
1998 1997 1996
NET SALES $54,699,660 $46,286,770 $37,857,968
Costs and expenses:
Cost of products sold 44,434,537 37,323,073 31,002,433
Selling, general and
administrative 6,568,481 6,286,184 5,558,322
Provision for doubtful receivables 54,881 51,293 1,287
Gain on sale of property
and equipment (63,628) (3,667) (12,323)
Interest expense 290,056 155,285 132,145
Interest income (30,719) (105,226) (1,699)
Nonrecurring items - - 358,180
INCOME BEFORE
INCOME TAXES 3,446,052 2,579,828 819,623
Income taxes 1,306,000 1,006,000 334,000
NET INCOME $ 2,140,052 $ 1,573,828 $ 485,623
Earnings per share of common stock:
Basic $ .65 $ .50 $ .16
Diluted $ .62 $ .47 $ .16
Shares used in the computation of
earnings per share:
Basic 3,268,344 3,157,706 3,100,963
Diluted 3,474,706 3,316,132 3,121,205
The accompanying notes are a part of the consolidated financial statements.
F-3
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Additional Total
Common Stock Paid-In Retained Treasury Stock Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
BALANCE, JULY 2, 1995 4,023,548 $40,235 $11,454,903 $1,563,201 922,585 $(3,139,374) $ 9,918,965
Net income - - - 485,623 - - 485,623
BALANCE, JUNE 29, 1996 4,023,548 40,235 11,454,903 2,048,824 922,585 (3,139,374) 10,404,588
Treasury stock acquired - - - - 45,730 (351,063) (351,063)
Exercise of stock options using
treasury stock - - - (26,603) (162,200) 576,403 549,800
Net income - - - 1,573,828 - - 1,573,828
BALANCE, JUNE 28, 1997 4,023,548 40,235 11,454,903 3,596,049 806,115 (2,914,034) 12,177,153
Treasury stock acquired - - - - 39,312 (381,967) (381,967)
Exercise of stock options using
treasury stock - - - 34,142 (125,100) 466,642 500,784
Tax benefit arising from exercise
of stock options - - 145,288 - - - 145,288
Net income - - - 2,140,052 - - 2,140,052
BALANCE, JUNE 27, 1998 4,023,548 $40,235 $11,600,191 $5,770,243 720,327 $(2,829,359) $14,581,310
The accompanying notes are a part of the consolidated financial statements.
F-4
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
June 27, June 28, June 29,
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,140,052 $ 1,573,828 $ 485,623
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization of
plant and equipment 769,186 636,287 632,277
Amortization of intangible assets
and deferred bond issuance costs 51,983 10,293 10,582
Deferred income taxes 294,000 (92,000) 70,000
Nonrecurring items - - 358,180
Other (24,040) (6,612) (12,323)
Changes in certain assets and
liabilities, net of effect of
acquisition and disposition of
businesses:
Receivables 831,920 (2,591,757) (789,120)
Refundable income taxes (20,000) 241,158 (241,158)
Inventories (1,258,521) (991,266) (7,381)
Other current assets (137,394) 11,550 43,665
Accounts payable 299,813 (431,901) 216,938
Accrued income taxes (947,995) 886,026 (10,389)
Accrued expenses and other (1,488,697) 507,784 (378,701)
Net cash provided by (used in)
operating activities 510,307 (246,610) 378,193
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 457,700 7,250 28,998
Purchase of property, plant
and equipment (3,023,732) (1,123,324) (395,526)
Acquisition of business, net
of $294,576 cash acquired (2,710,734) - -
Proceeds from sale of subsidiary - 1,516,390 -
Unexpended industrial revenue
bond proceeds (1,115,854) - 76,729
Net cash provided by (used in)
investing activities (6,392,620) 400,316 (289,799)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 26,860,000 14,695,000 10,440,000
Reduction of short-term borrowings (26,280,000) (14,325,000) (10,490,000)
Proceeds from long-term debt 5,500,000 - -
Payments of long-term debt (300,635) (798,655) (224,925)
Bond issuance costs (138,654) - -
Purchase of treasury stock (381,967) (351,063) -
Proceeds from exercise of stock
options 500,784 549,800 -
Tax benefit from stock options
exercised 145,288 - -
Net cash provided by (used in)
financing activities 5,904,816 (229,918) (274,925)
Increase (decrease) in cash and
cash equivalents 22,503 (76,212) (186,531)
CASH AND CASH EQUIVALENTS
Beginning of year 89,117 165,329 351,860
End of year $ 111,620 $ 89,117 $ 165,329
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest, net of capitalized
interest in 1998 $ 198,435 $ 151,783 $ 127,246
Income taxes (net of refunds) 1,839,254 (29,184) 515,547
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of United
Structures, Inc.:
Liabilities assumed 4,108,000 - -
Unpaid cash portion of
purchase price 125,000 - -
Building capitalized under capital
lease and related capital
lease obligation - 979,000 -
The accompanying notes are a part of the consolidated financial statements.
F-5
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Miller Building Systems, Inc. ("Miller") is the parent of Miller Building
Systems of Indiana, Inc., Miller Building Systems of Pennsylvania, Inc.,
Miller Building Systems of Kansas, Inc., United Structures, Inc., and
Miller Construction Services, Inc. All operations of Miller are
conducted through its five wholly owned subsidiaries which design,
manufacture, market and service factory-built buildings. Miller has two
product lines, Structures and Telecom. The factory-built buildings
produced by Structures are modular and mobile buildings, which are
generally movable and relocatable, and designed to meet the specialized
needs of a wide variety of users. Structures' products are sold to
independent customers who, in turn, sell or lease to the end users. The
Structures division has manufacturing facilities in Elkhart, Indiana;
Burlington, Kansas; Leola, Pennsylvania; Sioux Falls, South Dakota and
Bennington, Vermont. The Telecom division manufactures specialized
buildings, which utilize modular construction techniques and pre-cast
concrete technology, and are designed principally for customers in the
telecommunications industry. Telecom's products are sold directly to the
end user. Telecom has manufacturing facilities in Elkhart, Indiana;
Burlington, Kansas; Leola, Pennsylvania and Binghamton, New York.
Miller's Structures and Telecom products are sold throughout the United
States. Miller Construction Services, Inc. provides complete turnkey
services from site preparation through setting and installation.
The following is a summary of the significant accounting policies used
in the preparation of the accompanying consolidated financial statements.
Fiscal Year - Miller's fiscal year is a 52 or 53 week period ending on
the Saturday closest to June 30.
Principles of Consolidation - The consolidated financial statements
include the accounts of Miller Building Systems, Inc. and its wholly
owned subsidiaries.
Use of Estimates in the Preparation of Financial Statements - The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition and Concentration of Credit Risk - Miller recognizes
revenues from the sales of its products upon the completion of
manufacturing and the transfer of title. One customer individually
accounted for 13% of net sales in fiscal 1998 and fiscal 1996, a
different customer accounted for 15% of net sales in fiscal 1997. At
June 27, 1998, 20% of receivables is concentrated with Miller's largest
customer and at June 28, 1997, 41% of receivables was concentrated with
Miller's largest customer.
F-6
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued.
Cash and Cash Equivalents - Miller considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
Inventories - Inventories are stated at the lower of cost or market, with
cost determined under the first-in, first-out method.
Property, Plant and Equipment - Property, plant and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation and
amortization of plant and equipment are computed using the straight-line
method over the estimated useful lives of the assets. Costs of purchased
software and, under certain conditions, internal software development
costs are capitalized and are amortized using the straight-line method
over sixty months. As of June 27, 1998 and June 28, 1997, capitalized
software costs, included with machinery and equipment, (and the related
accumulated amortization) aggregated $265,587 ($148,766), and $256,953
($93,644), respectively. Interest is capitalized in connection with the
construction of major facilities. The capitalized interest is recorded
as part of the asset to which it relates and is amortized over the
asset's estimated useful life. Capitalized interest costs were $63,933
during the year ended June 27, 1998. No interest was capitalized in
fiscal years 1997 and 1996.
Excess Acquisition Costs over Fair Value of Acquired Net Assets - Excess
acquisition costs over fair value of acquired net assets (goodwill) are
amortized using the straight-line method over periods ranging from 20 to
30 years. The carrying value of goodwill is periodically reviewed by
Miller based on the expected future undiscounted operating cash flows of
the related business unit.
Bond Issuance Costs - Bond issuance costs aggregating $259,090, which
related to issuance of the industrial revenue bonds, are being amortized
using the straight-line method over the terms of the bonds.
Income Taxes - Deferred income taxes are determined using the liability
method.
Employee Benefit Plan - Miller maintains a simplified 401(k) savings plan
(the "Plan") for eligible participating employees of Miller. The Plan
is a defined contribution plan under which employees may voluntarily
contribute a percentage of their compensation. The Plan allows Miller
to make discretionary matching contributions before the end of the Plan's
calendar year-end. During the years ended June 27, 1998, June 28, 1997
and June 29, 1996, Miller expensed $68,908, $77,546 and $22,560
respectively, under this Plan.
Earnings Per Share - Miller has adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share." Under SFAS No. 128,
"primary" earnings per share was replaced by "basic" earnings per share.
Basic earnings per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued.
period. Diluted earnings per share is computed by dividing net income
by the weighted average number of shares of common stock outstanding plus
the effect of potential dilutive common shares outstanding during the
reporting period. Earnings per share amounts for prior periods have been
restated to conform with the provisions of SFAS No. 128. Shares used in
the computation of basic and diluted earnings per share ("EPS") are as
follows:
1998 1997 1996
Weighted average number of common
shares (used for basic EPS) 3,268,344 3,157,706 3,100,963
Effect of dilutive securities:
Stock options 138,022 158,426 20,242
Contingently issuable
shares (see Note B) 68,340 - -
Shares used for diluted EPS 3,474,706 3,316,132 3,121,205
Fair Value of Financial Instruments - The carrying amounts of cash and
cash equivalents, receivables, short-term borrowings and accounts payable
approximated their fair value as of June 27, 1998 and June 28, 1997
because of the relatively short maturities of these instruments. The
carrying amount of long-term debt, including current maturities,
approximated fair value as of June 27, 1998 and June 28, 1997 based upon
terms and conditions currently available to Miller in comparison to the
terms and conditions of the outstanding long-term debt.
Note B: ACQUISITION OF NEW YORK OPERATION
Effective January 1, 1998, Miller acquired all of the issued and
outstanding shares of common stock of United Structures, Inc. ("United"),
a New York corporation. United is engaged in the business of designing,
manufacturing and marketing factory-built structures primarily for the
telecommunications industry. The purchase price (the "minimum purchase
price"), including direct acquisition costs, consisted of cash of $3.1
million and assumed liabilities of $4.1 million. The excess of the
minimum purchase price over the fair value of acquired tangible assets
aggregated $2.1 million and was allocated to goodwill to be amortized on
a straight-line basis over 30 years. In addition to the minimum purchase
price, Miller agreed to pay the seller a contingent purchase price
("contingent purchase price"), which is payable in shares of Miller's
common stock, based on United's earnings for the six-month period ended
June 27, 1998. United's earnings for the six-month period ended June 27,
1998 exceeded the targeted amount and, accordingly, Miller will pay the
maximum additional contingent purchase price of $2,250,000 (227,082
shares of Miller's common stock). The contingent purchase price is
payable September 1, 1998 at which time such contingent purchase price
will be recorded as goodwill. The acquisition of United was accounted
for using the purchase method and United's operating results have been
included in Miller's consolidated financial statements since the
Note B: ACQUISITION OF NEW YORK OPERATION, Continued.
acquisition date of January 1, 1998. The following unaudited pro forma
financial information for the years ended June 27, 1998 and June 28, 1997
were developed assuming United had been acquired at the beginning of each
of the respective fiscal years. The unaudited pro forma earnings per
share (basic and diluted) reflect the issuance of 227,082 additional
shares which are issuable as contingent purchase price, as though these
shares were issued and outstanding during each of the periods presented.
Years Ended
June 27, 1998 June 28, 1997
Net sales $61,547,000 $52,882,000
Net income 2,493,000 1,733,000
Earnings per share:
Basic .71 .51
Diluted .69 .49
The unaudited pro forma financial information is not necessarily
indicative of what actually would have occurred if the acquisition had
been completed as of the beginning of each of the respective fiscal
periods presented, nor is it indicative of future operating results.
Note C: INVENTORIES.
Inventories consist of the following:
June 27, June 28,
1998 1997
Raw materials $4,604,615 $3,133,958
Work in process 1,215,552 578,706
Finished goods 320,480 -
Total $6,140,647 $3,712,664
Note D: DEBT.
Short-term borrowings
Miller maintains an unsecured revolving line of credit with a bank. The
loan agreement makes available up to $5 million through November 30, 1998.
As of June 27, 1998 and June 28, 1997, outstanding borrowings under the
loan agreement aggregated $3,550,000 and $1,870,000, respectively.
Interest is payable monthly at prime or a margin over the London Interbank
Offering Rate ("LIBOR"), depending on the pricing option selected by
Miller. At June 27, 1998 and June 28, 1997, the weighted average interest
rate on outstanding borrowings was 7.47% and 8.34%, respectively. The
loan agreement contains, among other provisions, certain covenants
including: maintenance of a required current ratio, tangible net worth
and liabilities to tangible net worth ratio.
Note D: DEBT, Continued.
Long-term debt
Long-term debt consists of the following: June 27, June 28,
1998 1997
Bank term note, payable in monthly installments $2,500,000 $ -
of $50,000 including interest at a variable
rate, as determined by prime or a margin over
the LIBOR offering rate (6.94% at June 27,
1998), final maturity in June 2003, unsecured
Industrial revenue bond, variable rate (3.70%
at June 27, 1998), principal payable in annual
installments of $200,000 through June 2004
and $300,000 thereafter until final maturity
in June 2010 3,000,000 -
Industrial revenue bond, variable rate
(3.70% at June 27, 1998), principal
payable in annual installments of
$115,000 with an installment of $120,000
at final maturity in November 2007 1,155,000 1,270,000
Capitalized lease, interest imputed at
5.63%, payable monthly through
December 2006 202,289 295,345
Total 6,857,289 1,565,345
Less, Current maturities 762,900 207,971
Long-term debt $6,094,389 $1,357,374
On August 12, 1996, Miller entered into a ten-year lease agreement with
the Board of County Commissioners of Coffey County, Kansas to lease a
155,000 square foot manufacturing facility. The lease agreement provides
for payments of $2,500 per month with an option to purchase the building
at the end of the lease for a balloon payment of $250,000. The balloon
payment is reduced if certain full-time employee levels are attained
during the term of the lease. In connection with the lease agreement,
Miller also entered into an agreement with the then current tenant of the
property, whereby Miller agreed to pay the tenant $750,000. Miller has
accounted for this transaction as a capital lease whereby Miller recorded
the leased property under the capital lease and the related obligation on
its balance sheet. As of June 27, 1998, and June 28, 1997, the cost of
the capitalized lease property was $979,000 and the accumulated
amortization was $32,633 in 1998 and $13,597 in 1997.
As of June 27, 1998, the annual maturities of long-term debt, excluding
payments under the capitalized lease, for each of the next five fiscal
years are as follows: 1999 - $743,889; 2000 - $776,818; 2001 - $812,275;
2002 - $850,454 and 2003 - $891,564.
Note D: DEBT, Continued.
As of June 27, 1998, the future minimum lease payments under the
capitalized lease obligation are as follows:
Fiscal Years Capitalized
Ending Lease
1999 $ 30,000
2000 30,000
2001 30,000
2002 30,000
2003 30,000
Thereafter 105,000
255,000
Less: Amount representing interest 52,711
$202,289
In connection with the industrial revenue bond obligations, Miller
obtained, as a credit enhancement for the bondholders, irrevocable letters
of credit in favor of the bond trustees. Miller, at its discretion, can
convert the industrial revenue bonds from a variable rate, as determined
by the current market rate for this type of debt instrument, to a fixed
rate. The fixed rate would be determined contemporaneously with the
decision to convert. Miller may redeem the bonds at any time in
increments of $100,000. In the event the bonds have been converted to a
fixed rate, such redemption is at a premium determined by the number of
years from conversion to original maturity.
Note E: STOCK COMPENSATION PLANS.
Stock Option Plans
On November 5, 1997, Miller's stockholders approved the Miller Building
Systems, Inc. 1997 Stock Option Plan under which 500,000 shares of common
stock were reserved for future grant. The 1997 Plan expires February 20,
2007. On June 30, 1994, the Board of Directors adopted the Miller
Building Systems, Inc. 1994 Stock Option Plan under which 300,000 shares
of common stock were reserved for future grant. The 1994 Plan expires
June 30, 2004. On August 26, 1991, the Board of Directors adopted the
Miller Building Systems, Inc. 1991 Stock Option Plan under which 250,000
shares of common stock were reserved for future grant. The 1991 Plan
expires August 26, 2001.
Miller's stock option plans provide that options can be granted by Miller
at a price not less than 100% of fair market value (or 110% of fair market
value if the optionee owns 10% or more of Miller's common stock). The
term of an option granted under the stock option plans cannot exceed ten
years, and options are either exercisable upon grant or contain a specific
vesting schedule, except in the event of a change of control, as defined,
at which time all outstanding options become fully exercisable by the
optionee.
Note E: STOCK COMPENSATION PLANS, Continued.
The following table summarizes stock option activity:
Number Weighted Average
of Shares Exercise Price
Outstanding at July 2, 1995 394,000 $3.83
Granted 215,000 4.64
Canceled (126,000) 5.04
Outstanding at June 29, 1996 483,000 3.87
Granted 58,000 6.29
Exercised (162,200) 3.39
Outstanding at June 28, 1997 378,800 4.45
Granted 291,500 9.95
Canceled (15,200) 5.00
Exercised (125,100) 4.01
Outstanding at June 27, 1998 530,000 7.56
Exercisable at June 27, 1998 150,100 4.85
Options outstanding at June 27, 1998 are exercisable at prices ranging
from $2.50 to $11.25 per share and have a weighted average remaining
contractual life of 6.86 years. The following table summarizes
information about stock options outstanding at June 27, 1998.
Outstanding Exercisable
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise June 27, Contractual Exercise June 27, Exercise
Price 1998 Life Price 1998 Price
$ 2.50 -$4.00 131,300 5.67 $ 3.41 85,700 $3.23
4.01 - 5.50 5,000 4.28 5.38 1,000 5.38
5.51 - 7.00 104,200 4.95 6.24 45,400 6.26
7.01 - 8.50 25,500 5.47 8.25 - -
8.51 -10.00 139,000 7.54 9.48 18,000 9.00
10.01 -11.25 125,000 9.33 10.85 - -
530,000 150,100
At June 28, 1997 and June 29, 1996, there were exercisable options to
purchase 180,600 and 241,200 shares at weighted average exercise prices
of $4.00 and $3.31 per share, respectively. The weighted average grant
date fair value of options granted during the years ended June 27, 1998,
June 28, 1997 and June 29, 1996 were $3.53, $2.89 and $1.94 respectively.
As of June 27, 1998, 225,700 shares were reserved for the granting of
future stock options, compared with 2,000 shares at June 28, 1997.
Note E: STOCK COMPENSATION PLANS, Continued.
Had Miller adopted the provisions of SFAS No. 123, "Accounting for Stock-
Based Compensation," Miller's net income and earnings per share would have
been:
June 27, June 28, June 29,
1998 1997 1996
Pro forma net income $1,881,853 $1,458,654 $394,177
Pro forma diluted earnings
per share .56 .44 .13
The pro forma amounts shown above and the weighted-average grant-date fair
value of options granted are estimated using the Black-Scholes option-
pricing model with the following assumptions:
Risk free interest rate 5.64% 6.30% 5.77%
Expected life 3.4 years 3.3 years 2.6 years
Expected volatility 50% 50% 50%
Stock Purchase Plan
The Company has an employee stock purchase plan under which a total of
500,000 shares of the Company's common stock are reserved for purchase by
full-time employees through payroll deductions at a price equal to 85% of
the fair market value on the purchase date. Certain restrictions in the
plan limit the amount of payroll deductions and the amount of ownership
in the Company an employee may acquire under the plan. As of June 27,
1998, the Company has not implemented the employee stock purchase plan.
Note F: INCOME TAXES
The provision for income taxes is summarized as follows:
Years Ended
June 27, June 28, June 29,
1998 1997 1996
Current:
Federal $ 833,000 $ 934,000 $185,000
State 179,000 164,000 79,000
1,012,000 1,098,000 264,000
Deferred tax (credit) 294,000 (92,000) 70,000
Total $1,306,000 $1,006,000 $334,000
Although not affecting the total provision, the amounts previously
reported for the allocation of federal and state income taxes between
current and deferred for 1997 have been revised based upon determinations
made when the related tax returns were filed.
Note F: INCOME TAXES, Continued.
The provision for income taxes included in the consolidated statements of
income differs from that computed by applying the federal statutory tax
rate (34%) to income before income taxes as follows:
Years Ended
June 27, June 28, June 29,
1998 1997 1995
Computed federal income
tax $1,172,000 $ 877,000 $279,000
Increase (decrease)
resulting from:
State income taxes, net
of federal income tax
benefit 170,000 94,000 59,000
Other, net (36,000) 35,000 ( 4,000)
Total $1,306,000 $1,006,000 $334,000
Deferred income taxes reflect the estimated future net tax effects of
temporary differences between the carrying amounts of assets and liabili-
ties for financial reporting purposes and the amounts used for income tax
purposes. The components of the net deferred tax asset and liability at
June 27, 1998 and June 28, 1997 are as follows:
June 27, June 28,
1998 1997
Current deferred tax asset (liability):
Receivables $ (20,000) $ (87,000)
Inventories 110,000 154,000
Property held for sale - 62,000
Accrued warranty 42,000 70,000
Other accrued liabilities 98,000 142,000
Total $ 230,000 $ 341,000
Long-term deferred tax asset (liability):
Receivables $(168,000) -
Property, plant and equipment (150,000) (140,000)
Other 2,000 7,000
Total $(316,000) $(133,000)
Note G: 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, which approximated the
carrying value of the underlying net assets and, accordingly, there was
no gain or loss on the sale. 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
Note G: SALE OF CALIFORNIA OPERATION, Continued.
Miller rental payments of $4,500 per month. On January 16, 1998, with the
issuance of an acceptable expanded environmental report on the Patterson
Property, Miller and Buyer mutually agreed to cancel the lease agreement,
and the Buyer acquired the Patterson Property from Miller for a cash
purchase price of $450,000, which resulted in a $37,894 gain on sale of
property held for sale.
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 H: NONRECURRING ITEMS.
During the fiscal year ended June 29, 1996, nonrecurring items consisted
of: a pre-tax charge of $256,792 related to costs associated with the
terminated acquisition of Whitley Manufacturing Company, Inc.; $76,613 of
additional exit costs associated with the closing of Miller's residential
division, which manufactured factory-built modular residential housing;
and $24,775 of other nonrecurring charges.
Note I: COMMITMENTS AND CONTINGENCIES.
Lease Commitments
Miller leases two of its manufacturing facilities under noncancellable
operating leases expiring through December 2002. The lease for the Sioux
Falls, South Dakota facility may be extended at Miller's option. The
lease for the Kirkwood, New York facility has an option to renew for an
additional five-year term and contains an option to purchase the facility
after February 28, 2000. Miller generally is responsible for utilities,
taxes and insurance on the leased facilities. Future minimum lease
payments under these noncancellable leases aggregate $1,084,383 and are
payable as follows: 1999 - $270,489, 2000 - $263,322, 2001 - $220,085,
2002 - $220,085, and 2003 - $110,402.
Rental expense under all operating leases aggregated $196,277, $97,654 and
$70,691 for the years ended June 27, 1998, June 28, 1997 and June 29,
1996, respectively.
Self-Insurance
Miller is self-insured for the portion of its employee health care costs
not covered by insurance. Miller is liable for medical claims up to
$40,000 per eligible employee annually, and aggregate annual claims up to
approximately $861,000. The aggregate annual deductible is determined by
the number of eligible covered employees during the year and the coverage
they elect. Miller accrues for the estimated losses occurring from both
asserted and unasserted claims. The estimate of the liability for
unasserted claims arising from incurred, but not reported, claims is based
on an analysis of historical claims data.
Note J: UNAUDITED INTERIM FINANCIAL INFORMATION.
Presented below is certain selected unaudited quarterly financial
information for the years ended June 27, 1998 and June 28, 1997:
Net Gross Net Earnings Per Share
Sales Profit Income Basic Diluted
1998:
Fourth $16,528,679 $3,312,056 $919,497 $.28 $.25
Third 14,449,832 2,368,307 278,980 .08 .08
Second 10,405,750 1,956,890 315,351 .10 .09
First 13,315,399 2,627,870 626,224 .19 .18
1997:
Fourth $13,007,704 $2,900,872 $629,292 $.20 $.19
Third 10,235,248 1,786,365 159,691 .05 .05
Second 10,007,430 1,957,654 280,076 .09 .09
First 13,036,388 2,318,806 504,769 .16 .16
The sum of quarterly diluted earnings per share for the four quarters of
fiscal 1998 and fiscal 1997 may not equal annual diluted earnings per
share due to the effect of dilutive securities.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Col. A Col. B Col. C Col. D Col. E
Additions Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expenses Accounts Deductions of Period
Year ended June 27, 1998:
Allowance for
doubtful receivables $ 48,239 $ 54,881 $ - $ 52,726(A) $ 50,394
Year ended June 28, 1997:
Allowance for
doubtful receivables $ 53,605 $ 51,293 $ - $ 56,659(A) $ 48,239
Year ended June 29, 1996:
Allowance for
doubtful receivables $ 59,024 $ 1,287 $ - $ 6,706(A) $ 53,605
(A) Uncollectible accounts written off.
MILLER BUILDING SYSTEMS, INC., AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
10.66 Third Amendment to Lease Agreement between Toboll Properties Limited
Partnership and Sioux Fall Structures, Inc. (now known as Miller
Building Systems of South Dakota, Inc.) dated August 20, 1997, with
respect to the leased property at Sioux Falls, South Dakota.
10.67 First Amendment to Employment Agreement between Registrant and Edward
C. Craig, dated October 22, 1997.
10.68 Lease agreement between United Kirkwood, L.L.C. and United Structures,
Inc., with respect to the leased property at Kirkwood, New York.
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedule
The exhibits listed below are filed as part of this report and incorporated by
reference as indicated.
3.1 Certificate of Incorporation, as amended (a)
3.2 By-Laws, as amended (a) (c) (e) (g) (I) (j) (l)
4.1 Specimen Common Stock Certificate (d)
4.2 Certificate of Incorporation, Articles Fourth, Eighth, and Tenth;
By-Laws, Articles II, VII, and IX (a)
10.11 Lease Agreement between Sioux Falls Structures, Inc. (now known as
Miller Structures, Inc.), a South Dakota corporation, and Toboll
Corporation dated April 15, 1985 with respect to property located in
Sioux Falls, South Dakota (a) and Amendments thereto dated February 3,
1988 and December 31, 1989 (f)
10.47 Agreement between Registrant and Frederick H. Goldberger, dated May 6,
1991, which replaces an employment agreement dated April 26, 1988 and
amendments thereto which was to expire on June 30, 1995 (h)
10.48 1991 Stock Option Plan adopted by the Registrant's stockholders on
October 30, 1991 and Form of Option Agreement (k)
10.49 Miller Building Systems, Inc. 401(k) Plan (m)
10.53 1994 Stock Option Plan adopted by the Registrant's stockholders on
October 25, 1994 and Form of Option Agreement (n)
10.57 Employment agreement between Registrant and Edward C. Craig, dated
February 29, 1996 (p) (I)
10.58 Lease agreement between the Board of County Commissioners of Coffey
County, Kansas dated August 12, 1996 with respect to property located
in Burlington, Kansas (p)
10.59 Agreement between Registrant and American Quality Manufacturing, Inc.
dated July 25, 1996, to vacate the leased property located in
Burlington, Kansas (p)
10.60 Lease agreement between Toboll Property Limited Partnership and Miller
Structures, Inc. dated May 21, 1996, with respect to the lease of land
in Sioux Falls, South Dakota (p)
10.61 Agreement for Purchase and Sale of all of the outstanding Capital
Stock of Miller Structures, Inc., a California Corporation, dated
September 30, 1996, between Miller Structures, Inc., an Indiana
Corporation, and MODTECH, Inc. (q)
10.62 Non-Competition Agreement, dated October 1, 1996, between Miller
Structures, Inc., an Indiana Corporation, and MODTECH, Inc. with
respect to sale of the Capital Stock of Miller Structures, Inc., a
California Corporation (q)
10.63 Supplemental Closing Agreement, dated October 21, 1996, between Miller
Structures, Inc., an Indiana Corporation, and MODTECH, Inc. with
respect to the sale of the Capital Stock of Miller Structures, Inc., a
California Corporation (q)
10.64 Stock Purchase Agreement, dated February 27, 1998, between Registrant
and David Newman and Marc Newman to purchase all of the issued and
outstanding shares of capital stock of United Structures, Inc., a New
York Corporation (r)
10.65 1997 Stock Option Plan adopted by the Registrant's stockholders on
November 5, 1997 (s)
10.66 Registration Statement to register 227,082 shares of the Registrants
common stock owned by David and Marc Newman (t)
(a) Registration Statement on Form S-1, as amended (File No. 0-14651)
(b) Form S-8, Date of Report - October 28, 1987
(c) Form 8-K, Date of Report - July 20, 1989
(d) Form 10-K for year ended June 30, 1989
(e) Form 8-K, Date of Report - January 31, 1990
(f) Form 10-K for year ended June 30, 1990
(g) Form 8-K, Date of Report - April 23, 1991
(h) Form 8-K, Date of Report - May 6, 1991
(I) Form 8-K, Date of Report - July 25, 1991
(j) Form 8-K, Date of Report - August 26, 1991
(k) Form S-8, Date of Report - July 31,1992
(l) Form 8-K, Date of Report - April 22, 1993
(m) Form 10-K for year ended June 30, 1993
(n) Form S-8, Date of Report - Dated December 30, 1994
(o) Form 10-K, for year ended July 1, 1995
(p) Form 10-K, for year ended June 29, 1996
(q) Form 8-K, Date of Report - October 21, 1996
(r) Form 8-K/A-1, Date of Report - February 27, 1998
(s) Form S-8, Date of Report - March 20, 1998
(t) Form S-3, Date of Report - August 5, 1998
(I) Indicates a management contract or compensation plan or arrangement.