-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KjBxULM4uMbgvqL+/xKN4C98mqvBSg0n3Xc5KVagKblEbxHmTLGLujtrdUZJZwHK NPcmsg61eXD52druLqhPKw== 0000752692-01-500007.txt : 20010517 0000752692-01-500007.hdr.sgml : 20010517 ACCESSION NUMBER: 0000752692-01-500007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010401 FILED AS OF DATE: 20010516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILTOPE GROUP INC CENTRAL INDEX KEY: 0000752692 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 112354135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13433 FILM NUMBER: 1641098 BUSINESS ADDRESS: STREET 1: 500 RICHARDSON RD S CITY: HOPE HULL STATE: AL ZIP: 36043 BUSINESS PHONE: 3342848665 MAIL ADDRESS: STREET 1: 500 RICHARDSON ROAD SOUTH CITY: HOPE HULL STATE: AL ZIP: 36043 10-Q 1 q1qtr.txt FIRST QUARTER FINANCIAL STATEMENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended April 1, 2001 Commission File Number 0-13433 - ------------------- MILTOPE GROUP INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 11-2693062 - --------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 500 Richardson Road South Hope Hull, AL 36043 - --------------------------------- ------------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (334) 284-8665 -------------- Not Applicable - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Outstanding at May 9, 2001: 5,871,523 shares of Common Stock, $.01 par value. PART I - FINANCIAL INFORMATION MILTOPE GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) April 1, December 31, 2001 2000 ASSETS ----------- ----------- - ------- CURRENT ASSETS: Cash $ 2,431,000 $2,711,000 Accounts receivable 6,724,000 7,933,000 Inventories 14,554,000 12,877,000 Deferred income taxes 952,000 952,000 Other current assets 326,000 382,000 ----------- ----------- Total current assets 24,987,000 24,855,000 ----------- ----------- PROPERTY AND EQUIPMENT - at cost: Machinery and equipment 8,316,000 8,911,000 Furniture and fixtures 1,628,000 1,628,000 Land, building and improvements 6,702,000 6,732,000 ----------- ----------- Total property and equipment 16,646,000 17,271,000 Less accumulated depreciation 10,422,000 10,679,000 ----------- ----------- Property and equipment - net 6,224,000 6,592,000 ----------- ----------- DEFERRED INCOME TAXES 3,212,000 3,212,000 OTHER ASSETS 940,000 956,000 ----------- ----------- TOTAL $35,363,000 $35,615,000 LIABILITIES AND STOCKHOLDERS'EQUITY - ----------------------------------- CURRENT LIABILITIES: Short-term debt 725,000 800,000 Accounts payable $ 6,568,000 $5,533,000 Accrued expenses 4,246,000 4,534,000 Current maturities of long-term debt 4,753,000 4,129,000 ----------- ----------- Total current liabilities 16,292,000 14,996,000 LONG-TERM DEBT 8,425,000 9,654,000 OTHER LIABILITIES 41,000 49,000 ----------- ----------- Total liabilities 24,758,000 24,699,000 =========== =========== COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock - $.01 par value; 20,000,000 shares authorized; 6,811,112 shares outstanding 68,000 68,000 at April 1, 2001 and December 31, 2000 Capital in excess of par value 24,519,000 24,519,000 Retained earnings 264,000 575,000 ----------- ----------- 24,851,000 25,162,000 Less treasury stock at cost 14,246,000 14,246,000 ----------- ----------- Total stockholders' equity 10,605,000 10,916,000 ----------- ----------- TOTAL $35,363,000 $35,615,000 =========== ===========
See Notes To Consolidated Financial Statements MILTOPE GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Thirteen Weeks Ended -------------------------- As Restated April 1, March 26, 2001 2000 ----------- ----------- NET SALES $ 9,993,000 $ 7,727,000 ----------- ----------- COSTS AND EXPENSES: Cost of sales 8,378,000 5,591,000 Selling, general and administrative 1,554,000 1,791,000 Engineering, research and development 159,000 264,000 ----------- ----------- Total 10,091,000 7,646,000 INCOME (LOSS) FROM OPERATIONS (98,000) 81,000 INTEREST EXPENSE - net 213,000 308,000 ----------- ----------- LOSS BEFORE INCOME TAXES (311,000) (227,000) INCOME TAX BENEFIT - - ----------- ----------- NET LOSS $ (311,000) $ (227,000) =========== =========== BASIC AND DILUTED NET LOSS PER SHARE $ (.05) $ (.04) =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,871,523 5,871,523 =========== ===========
See Notes To Condensed Consolidated Financial Statements MILTOPE GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED APRIL 01, 2001 AND MARCH 26, 2000 (unaudited) As Restated April 1, March 26, 2001 2000 ----------- ----------- OPERATING ACTIVITIES: Net loss $ (311,000) $ (227,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 274,000 364,000 Provision for slow-moving and obsolete inventories 270,000 315,000 Provision for doubtful accounts receivable 3,000 5,000 Loss on sale of fixed assets (6,000) - Change in operating assets and liabilities: Accounts receivable 1,207,000 (421,000) Inventories (1,947,000) 391,000 Other current assets 56,000 20,000 Other assets - (387,000) Accounts payable and accrued expenses 739,000 (145,000) ----------- ----------- Cash provided by (used in) operating activities 285,000 (85,000) ----------- ----------- INVESTING ACTIVITIES: Purchase of property and equipment (41,000) (49,000) Proceeds from sale of property and equipment 156,000 - ----------- ----------- Cash provided by (used in) investing activities 115,000 (49,000) ----------- ----------- FINANCING ACTIVITIES: Payments of other long-term debt (680,000) (487,000) ----------- ----------- Cash used in financing activities (680,000) (487,000) ----------- ----------- NET DECREASE IN CASH (280,000) (621,000) CASH, BEGINNING OF PERIOD 2,711,000 2,437,000 ----------- ----------- CASH, END OF PERIOD $ 2,431,000 $ 1,816,000 =========== =========== SUPPLEMENTAL DISCLOSURE: Cash payments made for: Income taxes $ - $ - =========== =========== Interest $ 283,000 $ 331,000 =========== ===========
See Notes To Condensed Consolidated Financial Statements MILTOPE GROUP INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Financial Statements - In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting of only normal and recurring accruals) to present fairly the financial position of the Company and its subsidiaries as of April 1, 2001 and December 31, 2000 and the results of operations and cash flows for the thirteen weeks ended April 1, 2001 and March 26, 2000. The results for the thirteen weeks ended April 1, 2001 and March 26, 2000 are not necessarily indicative of the results for an entire year. It is suggested that these consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000. Recent Accounting Pronouncement - Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, is effective for all fiscal years beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company adopted SFAS 133 effective January 1, 2001. The adoption of SFAS 133 did not have a material impact on the financial position, results of operations, or cash flows of the Company. Reclassifications - Certain prior year amounts have been reclassified to conform with the 2001 presentation. 2. Business Acquisitions - On April 1, 2000, the Company entered into an agreement with Great Universal Incorporated ("GUI"), to transfer GUI's ownership of 90% of the outstanding stock of IV Phoenix Group, Inc. ("PGI") to the Company. Since GUI, through its controlling interest in the Company, continues to own a controlling interest in PGI after the transfer, the acquisition has been recorded on the Company's books at GUI's historical cost and accounted for on an "as if pooled basis". Accordingly, the accompanying financial statements have been restated on this basis. Net sales and net income (loss) for the separate companies and the combined amounts presented in the accompanying consolidated financial statements are as follows: Thirteen Weeks Thirteen Weeks Ended April 1, 2001 Ended March 26,2000 ------------------- ------------------- Net sales: Miltope $ 9,447,000 $ 6,483,000 PGI 546,000 1,244,000 Combined (net of related party transactions) $ 9,993,000 $ 7,727,000 Net income (loss): Miltope $ 398,000 (36,000) PGI (709,000) (191,000) Combined (net of related party transactions) $ (311,000) $ (227,000)
Certain amounts from PGI's prior financial statements were reclassified to conform to Miltope's presentation. 3. Inventories - Net Inventories consist of the following: April 1, December 31, 2001 2000 ------------ ------------- Purchased parts and subassemblies $ 11,319,000 $ 9,911,000 Work-in-process 3,235,000 2,966,000 ------------ ------------ Total $ 14,554,000 $ 12,877,000 ============ ============
4. Income Taxes -No income tax benefit has been recognized related to the net operating losses for the thirteen weeks ended April 1, 2001 and March 26, 2000 as they have been fully reserved with a valuation allowance. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, net of valuation allowances provided, will be realized. The valuation allowances can be adjusted in future periods as the probability of realization of the deferred tax assets change. 5. Segment Information - The Company's reportable segments are organized around its two main products and services segments, Military/Rugged and Commercial. Through its military/rugged segment, the Company is engaged in the design, manufacture and testing of computer and computer peripheral equipment for military and other specialized applications requiring reliable operations in severe land, sea and airborne environments. These products are generally sold by the Company's business development group through the federal government bid process. The Company's commercial segment designs, develops, manufactures and markets commercial computer related products primarily for transportation, telecommunications and in-field maintenance markets. These products are sold through an established network of marketing representatives and Company employed sales people to a broad base of customers both international and domestic. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company's determination of segment operating profit (loss) does not reflect other income (expense) or income taxes. Thirteen Weeks Ended April 1, 2001 and March 26, 2000 - ----------------------------------------------------- General April 1, 2001 Military/Rugged Commercial Eliminations Corporate Consolidated ------------- --------------- ----------- ------------ ---------- ------------ Net sales from external customers $ 7,264,000 $ 2,729,000 $ - $ 9,993,000 =========== =========== ============ =========== Segment operating profit (loss) $ (402,000) $ 311,000 $ (7,000) $ (98,000) =========== =========== ============ =========== Identifiable assets $18,808,000 $ 8,694,000 $ - $ 7,861,000 $35,363,000 =========== =========== ============ =========== =========== Capital expenditures $ 29,000 $ 12,000 $ 41,000 =========== =========== =========== Depreciation and amortization $ 266,000 $ 1,000 $ 7,000 $ 274,000 =========== =========== ============ =========== General March 26, 2000 Military/Rugged Commercial Eliminations Corporate Consolidated ------------- --------------- ----------- ------------ ---------- ------------ Net sales from external customers $ 4,367,000 $ 3,459,000 $ (99,000) $ 7,727,000 =========== =========== ============ =========== Segment operating profit (loss) $ (893,000) $ 1,011,000 $ (37,000) $ 81,000 =========== =========== ============ =========== Identifiable assets $19,925,000 $ 7,828,000 $ - $ 8,149,000 $35,902,000 =========== =========== ============ =========== =========== Capital expenditures $ 23,000 $ 26,000 $ 49,000 =========== =========== =========== Depreciation and amortization $ 234,000 $ 94,000 $ 36,000 $ 364,000 =========== =========== ============ ===========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion includes certain forward looking statements which are affected by important factors including, but not limited to, actions of competitors, termination of contracts at the convenience of the United States government, customer funding variations in connection with multi-year contracts and follow-on options that could cause actual results to differ materially from forward looking statements. GENERAL - ------- The following discussion and analysis presents certain factors affecting the Company's results of operations for thirteen weeks ended April 1, 2001, as compared to thirteen weeks ended March 26, 2000. RESULTS OF OPERATIONS - --------------------- CONSOLIDATED - ------------ Thirteen weeks ended April 1, 2001 compared to thirteen weeks ended March 26, 2000 - ------------------------------------------------------------------ Net sales for the thirteen weeks ended April 1, 2001 (first quarter of 2001) were $9,993,000 compared to net sales for the thirteen weeks ended March 26, 2000 (first quarter of 2000) of $7,727,000. The increase in sales was primarily the result of increases in SPORT and airborne printer sales partially offset by decreases in PGI sales. The gross margin percentage for the first quarter of 2001 was 16.2% compared with 27.6% for the same period in 2000. The decrease is primarily attributable to product mix variations at Miltope coupled with further deteriorations in product margins at PGI. Selling, general and administrative expenses for the first quarter of 2001 decreased 13.2% from the first quarter of 2000, to $1,554,000. These expenses as a percent of sales were 15.6% in the first quarter of 2001 compared to 23.2% for the similar period in 2000. The decrease as a percent of sales was primarily attributable to increased sales and continued planned reductions in administrative and marketing costs at both Miltope and PGI. Company sponsored engineering, research and development expenses for the first quarter of 2001 decreased 39.8% from the first quarter of 2000, to $159,000. These expenses as a percentage of sales were 1.6% in the first quarter of 2001 compared to 3.4% for the similar period in 2000. The decrease is attributable to a reduced emphasis on research and development projects at PGI coupled with a larger volume of customer funded development programs at Miltope. Interest expense, net of interest income, was $213,000 in the first quarter of 2001 compared to $308,000 for the similar period in 2000. The decrease reflects decreased debt compared to the prior year. Net loss for the first quarter of 2001 increased from the first quarter of 2000 to a loss of $311,000. The basic and diluted loss per share was $0.05 for the first quarter of 2001 as compared to the basic and diluted loss per share of $0.04 for the similar period in 2000 based on a weighted average of 5,871,523 shares of the Company's common stock outstanding for the first quarter of 2001 and 2000. MILTOPE CORPORATION - ------------------- Approximately 95% of the net sales for the three months ended April 1, 2001 are attributable to Miltope Corporation. The following is a discussion of Miltope's operating results net of any inter-company activity with IV Phoenix Group, Inc. Miltope (net of Eliminations) (Amounts in thousands) -------------------------------------- April 1, March 26, % 2001 2000 change -------- --------- --------- Net Sales $ 9,447 $ 6,483 45.7% Cost of Sales 7,457 4,645 60.5% -------------------------------------- Profit Margin 1,990 1,838 8.3% -------------------------------------- Selling, G&A 1,261 1,362 (7.4)% Engineering, R&D 132 226 (41.6)% -------------------------------------- Income (loss) from Operations 597 250 138.8% Interest Expense - net 199 286 (30.4)% -------------------------------------- Net Income (Loss) before taxes 398 (36) 1,205.5% Income Tax Benefit - - - -------------------------------------- Net Income (Loss) $ 398 (36) 1,205.5% ======================================
Miltope reported net income of approximately $398,000 for the first quarter of 2001 compared to a net loss of approximately $36,000 for the comparable period in 2000. The basic and diluted net income per share was $.07 for the first quarter of 2001 compared to basic and diluted net loss per share of $.01 for the first quarter of 2000 Sales for the first quarter of 2001 totaled approximately $9,447,000, an increase of approximately $2,964,000, or 45.7%, from the first quarter of 2000. This change was attributable to increases in SPORT related sales and airborne printer products. Gross profit, as a percent of sales, was 21.1% for the first quarter of 2001 and 28.4% for the first quarter of 2000. The decrease in 2001 from 2000 was primarily attributable product mix variantions. Selling, general and administrative expenses, as a percentage of sales, were 13.3% in the first quarter of 2001 and 21.0% in the same period of 2000. The decrease in 2001 as a percentage of sales was attributable to increased sales coupled with continued planned reductions in administrative and marketing costs. Engineering, research and development expenses, as a percentage of sales, was 1.4% in the first quarter of 2001 and 3.5% in the same period of 2000. The decrease in 2001 was attributable to a larger volume of customer funded development programs. Interest expense - net decreased 30.4% in the first quarter of 2001 compared to the first quarter of 2000 due to a decrease in total debt. LIQUIDITY AND CAPITAL RESOURCES - -------------------------------- The following is a breakdown of significant balance sheet categories between Miltope and PGI: Miltope PGI (Amounts in thousands) (Amounts in thousands) -------------------- -------------------- April 1, 2001 December 31, 2000 April 1, 2001 December 31, 2000 ------------- ----------------- ------------- ----------------- Cash and equivalents $ 1,936 $ 2,181 $ 495 $ 530 Receivables, net 6,417 7,457 307 476 Inventories & other current assets 13,628 12,233 2,204 1,978 -------- -------- ------- ------- Total current assets 21,981 21,871 3,006 2,984 ======== ======== ======= ======= Payables and other current liabilities 5,662 5,581 5,153 4,486 Short-term debt - - 725 800 Current portion of long-term debt 4,746 4,096 6 33 -------- -------- ------- ------- Total current liabilities $ 10,408 $ 9,677 $ 5,884 $ 5,319 ======== ======== ======= =======
Working capital approximated $8,695,000 at April 1, 2001 compared to $9,859,000 at December 31, 2000. Accounts receivable decreased approximately $1,209,000 as a result of a higher volume of sales in the last quarter of 2000. Inventories increased approximately $1,677,000 as a result of delays in scheduled shipments of SPORT boxes partially offset by increased shipments of airborne cockpit printers. Accounts payable increased approximately $1,035,000 reflecting inventory purchases in support of increased production in February and March of 2001 and anticipated increases in production during April and May of 2001. Current maturities of long-term debt increased reflecting increased maturing amounts in certain of the Company's debt instruments. The Company's $15,000,000 revolving credit agreement with its primary lender matured on May 31, 1999 and was converted into a term loan payable in twelve equal quarterly installments commencing August, 1999. As of April 1, 2001 the Company was in compliance with all requirements under the term loan. The Company has committed to continue its search for a lender to replace the existing term loan. In the near term the Company anticipates its cash position as being adequate to sustain the Company's ongoing financial commitments. The Company's accounts receivable, contract rights and inventories are pledged as collateral to the agreement. PART II - OTHER INFORMATION - --------------------------- Item 1 - Legal Proceedings The Company, from time to time, is a party to pending or threatened legal proceedings and arbitrations. Based upon information presently available, and in light of legal and other defenses available to the Company, management does not consider liability from any threatened or pending litigation to be material. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None Item 7a - Quantitative and Qualitative Disclosures About Market Risk Market risk is the risk of loss arising from adverse changes in market prices and interest rates. The Company is exposed to interest risk inherent in its financial instruments. The Company is not currently subject to foreign currency or commodity price risk. The Company manages its exposure to these market risks through its regular operating and financing activities. The Company has a revolving credit loan and an Industrial Development Authority Bond Issue that are exposed to changes in interest rates during the course of their maturity. Both debt instruments bear interest at current market rates and thus approximate fair market value. The Company manages its interest rate risk by (a) periodically retiring and issuing debt and (b) periodically fixing the interest rate on the London Inter Bank Offered Rate (LIBOR) portion of its revolving credit loan for 30 to 60 days in order to minimize interest rate swings. A 10% increase in interest rates would affect the Company's variable debt obligations and could potentially reduce future earnings by a maximum of approximately $100,000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MILTOPE GROUP INC. By: /s/ Thomas R. Dickinson ----------------------------------------- Thomas R. Dickinson, President and Chief Executive Officer (Principle Executive Officer) Dated: May 16, 2001 -----END PRIVACY-ENHANCED MESSAGE-----