SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _______________
Commission File No. 1-5926
MILLER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 59-0996356
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
16295 N.W. 13TH AVE., MIAMI, FLORIDA 33169
(Address of Principal Executive Offices)
(305) 621-0501
(Registrant's telephone number, including area code)
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 [ ] No [X]
The number of shares outstanding of each of the issuer's classes of common
stock, par value $.05 per share, as of April 30, 1996 is 2,982,662 shares.
Total Pages: 15 Exhibit Index: N/A
<PAGE>
MILLER INDUSTRIES, INC.
FORM 10-QSB
JULY 31, 1995
INDEX
PAGE NO.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets -
July, 1995 and April 30, 1995......................... 3
Statements of Operations and (Deficit) -
Three Months Ended July 31, 1995 and 1994............. 4
Statements of Cash Flows -
Three Months Ended July 31, 1995 and 1994............. 5
Notes to Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 8
PART II: OTHER INFORMATION
Items 1 to 6......................................................... 11
Signatures........................................................... 15
2
<PAGE>
MILLER INDUSTRIES, INC.
BALANCE SHEETS
AS OF JULY 31, 1995 AND APRIL 30, 1995
(DOLLARS IN THOUSANDS)
July 31, April 30,
1995 1995
------- -------
ASSETS
Investment Property:
Land $ ........................................ 161 $ 161
Building and Improvements ..................... 699 698
Machinery and Equipment ....................... 22 22
Tenant Improvements ........................... 70 0
Furniture and Fixtures ........................ 10 10
------- -------
962 892
Less Accumulated Depreciation ................. (682) (682)
------- -------
$ 280 $ 210
------- -------
Other Assets:
Cash $ ........................................ 159 $ 167
Inventory ..................................... 27 30
Prepaid Expenses .............................. 52 60
Deferred Lease Incentive ...................... 0 69
Other Assets .................................. 26 26
------- -------
$ 264 $ 352
------- -------
TOTAL ASSETS ....................................... $ 544 $ 562
======= =======
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
Liabilities:
Mortgage Payable .............................. $ 1,379 $ 1,384
Accounts Payable and Accrued Expenses ......... 131 139
Deposits ...................................... 32 31
------- -------
TOTAL LIABILITIES .................................. $ 1,542 $ 1,554
------- -------
Shareholders' Equity (Deficit):
Preferred stock
$10 par, 25,000 shares
authorized; issued and
outstanding, none ......................... $ 0 $ 0
Common stock, $.05 par value,
5, 000,000 shares authorized,
2,982,662 shares issued and
outstanding ............................... 149 149
Paid-in capital ............................... 1,127 1,127
(Deficit) ................................. (2,274) (2,268)
------- -------
TOTAL SHAREHOLDERS' (DEFICIENCY) ................... (998) (992)
------- -------
$ 544 $ 562
======= =======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MILLER INDUSTRIES, INC.
STATEMENTS OF OPERATIONS AND (DEFICIT)
THREE MONTHS ENDED JULY 31, 1995 AND 1994
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
THREE MONTHS ENDED
JULY 31,
----------------------------
1995 1994
----------- -----------
REVENUES:
Rental .................................. $ 42 $ 20
Net Sales ............................... 16 9
Interest and other ...................... 2 6
----------- -----------
TOTAL REVENUES ............................... 60 35
EXPENSES:
Rental and Administration ............... 31 44
Cost of Sales ........................... 4 1
Interest Expense ........................ 31 39
----------- -----------
TOTAL EXPENSES ............................... 66 84
----------- -----------
Net (Loss) ................................... $ (6) $ (49)
=========== ===========
EARNINGS PER COMMON SHARE: ................... $ 0 $ (.02)
=========== ===========
Shares used in computing earnings
per share ........................... 2,982,662 2,104,406
=========== ===========
The accompanying note are an integral part of these financial statements.
4
<PAGE>
MILLER INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 1995 AND 1994
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
THREE MONTHS ENDED
JULY 31,
---------------------
1995 1994
----- -----
OPERATING ACTIVITIES:
Net Income (Loss) $ .............................. (6) $ (50)
Depreciation and amortization .................... 7 7
gain on sale of fixed assets ..................... (2) (2)
Changes in operating
assets and liabilities -
Receivables ............................. 0 (0)
Inventories ............................. (15) 16
Prepaid expenses ........................ 6 (13)
Accounts payable ........................ (3) (18)
Accrued expenses ........................ (5) (13)
Tenants deposits ........................ 29 0
----- -----
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES ..................... 11 (73)
----- -----
FINANCING ACTIVITIES:
Reduction of long-term debt ...................... (21) 0
----- -----
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES .......................... (10) (73)
----- -----
INVESTMENT ACTIVITIES:
Proceeds from property, plant and
equipment sales ............................. 2 2
----- -----
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............................ (8) (71)
Cash and Cash Equivalents as of
of April 30, 1994 and 1993 .................. 167 478
----- -----
Cash and Cash Equivalents as of
of July 31, 1995 and 1994 ................... $ 159 $ 407
===== =====
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
(UNAUDITED)
NOTE 1 - GENERAL
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position as of July 31, 1995, and April 30,
1995, and the results of operations and cash flows for the three month periods
ended July 31, 1995 and 1994.
Balance sheet information as of April 30, 1995, is derived from the audited
balance sheet as of April 30, 1995 contained in the Company's Annual Report on
Form 10-K.
The results of operations for the three months ended January 31, 1995, are not
necessarily indicative of the results to be expected for the full year.
All footnotes and other disclosures required under generally accepted accounting
principles are not shown in this report.
See the Company's notes to financial statements contained in its Annual Report
on Form 10-K, for the year ended April 30, 1995, for disclosure of significant
accounting policies and pertinent disclosures.
NOTE 2 - OPERATIONS
During its 1992 fiscal year, the Company discontinued its Mildoor sliding glass
door and window operations. These activities comprised the Company's only
business unit. However, effective September 15, 1994, the Company refinanced its
mortgage debt, which allowed the Company to continue to operate in a new type of
business. This consisted of leasing its building to third parties. Consequently,
the results of the Company's operations for fiscal 1995 are shown as continuing
operations. Prior year results have been reclassified from discontinued
operations to continuing operations.
6
<PAGE>
MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1995
(UNAUDITED)
NOTE 3 - INVENTORIES
The inventories at July 31, 1995 and at April 30, 1995 are valued at the lower
of cost (first in, first out method) or market.
Inventories, by classification, at July 31, 1995 and April 30, 1995 were as
follows:
July 31, April 30,
(Thousands of dollars) 1995 1995
---- ----
Raw Materials ................. $ 0 $ 0
Work in process ................ 0 0
Finished goods ................. 27 30
--- ---
$27 $30
=== ===
NOTE 4 - INCOME TAXES
The Company has net operating loss carry forwards of approximately $2,386,000
which will expire at various dates through 2010. Additionally, the Company has
tax credit carryforwards of approximately $26,000 which will expire at various
dates through 2001.
NOTE 5 - SUBSEQUENT EVENT
On September 15, 1994, the Company received the proceeds from a $1,400,000 loan
from Intercontinental Bank, which is secured by a lien on the Company's
building. The Company used these funds to repay Granite Management &
Disposition, Inc. ("GMD"), the assignee of the Company's prior mortgage. GMD
accepted such loan proceeds as payment in full of all sums due under the prior
loan documents. Both the Company and GMD agreed to dismiss the pending mortgage
foreclosure litigation and related claims.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATION
In 1991, the Company discontinued the operation of its aluminum door and window
business. Prior to that time, these operations comprised the Company's only
business unit. Between 1991 and 1994, the Company's income and expenses were
accounted for under the "discontinued operations" method of accounting. However,
in 1995, the Company decided to report its financial results on the assumption
that it was engaged in continuing operations. This decision was based upon the
Company's new business plan, in which the Company plans to operate as a real
estate holding company. Due to this decision, the Company's results of
operations have been restated to reflect the Company's continuing operations.
See Note 1 to Financial Statements.
For the first quarter ended July 31, 1995, the Company had rental income of
$42,000, compared with rental income of $20,000 for the same period in 1994.
During these periods, less than half of the Company's warehouse was leased. The
Company needs to lease the balance of the space in order to achieve positive
cash flow from operations. Rental income was offset by rental and administrative
expense of $31,000 in the first quarter of the 1996 fiscal year, compared to
$44,000 in 1995.
During the first quarter of 1996, the Company continued to operate a hardware
sales business, in which it sells replacement parts for the sliding glass door
and window products formerly sold by the Company. The Company also continued to
liquidate the equipment and product lines for the Company's former business.
Sales in the first quarter of 1996 were $16,000 (with cost of goods sold of
$4,700), compared to sales of $9,000 in 1995 (and cost of goods sold of $1,000).
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash decreased by $8,000 during the first quarter of the 1996
fiscal year compared with an decrease of $79,000 during the same period of
fiscal year 1995. As of July 31, 1995, the Company's cash position was
approximately $159,000.
On September 15, 1994, the Company entered into a settlement agreement with its
principal mortgage lender. As a result of this settlement, the Company's prior
lender agreed to accept a payment of $1,400,000 in full and complete
satisfaction of all the Company's obligations under its mortgage loan. As of the
date of the settlement, the Company owed the mortgage lender approximately
$2,600,000 for principal, interest and other expenses. The Company financed the
settlement through a new loan of $1,400,000.
8
<PAGE>
The Company has accrued approximately $60,000 to complete the cleanup of the
environmental problem at its building. However, there is no assurance that this
will be sufficient to cover this cost.
The Company's working capital remains extremely limited. The Company intends to
generate cash flow by leasing its building and continuing hardware sales. The
Company believes that its working capital needs over the next twelve months will
include repairing the roof of its building, routine maintenance of its building,
and alterations to the interior of the building to accommodate new tenants. The
Company believes that it has enough cash to continue operations at their current
level for at least 12 more months. However, the Company's long term prospects
ultimately depend on the Company's ability to lease the remainder of its
building at attractive rates.
CURRENT OPERATIONS
The Company has modified its business plan. Under the new plan, the Company now
operates as a real estate investment and management company. The Company is
currently seeking to obtain additional commercial tenants for its existing
building. The Company has entered into a five-year lease, which commenced in
January 1995, which provides for rent of approximately $10,000 per month. The
Company also has an existing short-term lease for approximately 10,800 square
feet which provides for rental of $4,400 per month. This lease is currently
scheduled for expiration in June 1996, although it may be further extended based
on negotiations between the parties.
The Company's principal operating expenses consist of management and
professional fees associated with the administration of the Company, interest
expense on the Company's new mortgage loan, real estate taxes and insurance. The
Company believes that it can generate positive cash flow from operations if it
is able to find additional tenants for the building. However, at the present
time, the Company does not receive enough in lease payments to cover its
expenses.
The Company's business plan also contemplates the acquisition of additional
income-producing properties. The Company hopes to acquire such properties
through a combination of cash, financing from third parties, seller financing
and issuance of the Company's equity securities.
The Company's business plan is subject to substantial uncertainty. There can be
no assurance that the Company will be able to obtain a sufficient number of
additional tenants in order to fully lease its existing building and to meet its
debt service requirements and operating expenses. Furthermore, there can be no
assurance that
9
<PAGE>
the Company will be able to locate or acquire suitable properties in order to
expand its holdings of real property. Finally, the Company continues to be
subject to several potentially significant contingent liabilities. These include
the environmental problem at the Company's existing building and certain other
environmental matters. See Part II - Item 1 - Legal Proceedings. If any of these
items should result in significant additional liabilities, the Company's
financial condition could be adversely affected.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
CONTAMINATION AT COMPANY WAREHOUSE
In March 1990, the Company received an environmental report on the Company's
building prepared by an outside consulting firm. The report indicated the
presence of soil and groundwater contamination in a limited area behind and to
one side of the building.
Prior to 1988, the Company utilized this area to store paints and other
chemicals used in the Company's paint line. The Company terminated its painting
operations in April 1987, and dismantled and sold the paint line in the fall of
1987. Therefore, it appears that the contamination is of a residual nature.
In November 1990, the Company submitted the report to the Dade County Department
of Environmental Resources Management ("DERM"). In March 1991, DERM responded to
the report. DERM requested that the Company provide an expanded groundwater
assessment plan, an expanded soil assessment and a soil remediation plan.
In April 1991, the Company engaged the services of another outside consultant to
assist the Company in responding to DERM's request. Meetings were held with DERM
personnel to clarify the nature of its request. In May 1991, the Company
submitted a response to DERM. The Company's response suggested that the
Company's limited funds should be used for soil remediation rather than for
additional testing.
In June 1991, DERM requested that the Company submit, within 30 days, a formal
Initial Remedial Action Plan ("IRAP"). The Company submitted an IRAP to DERM in
July 1991. DERM approved the Company's IRAP with certain modifications in
September 1991.
During October 1991, the Company excavated a 30 foot by 13 foot by 3 foot area
on the south side of its building and a 50 foot by 50 foot by 5 foot area on the
east side of the building. After a short period of aeration, various soil
samples were taken and analyzed. The laboratory results were submitted to DERM
in December 1991.
In February 1992, DERM authorized the Company to transport approximately 300
tons of excavated soil to an approved facility for incineration. DERM also
advised the Company that the Florida Department of Environmental Regulation
("FDER") would oversee the remainder of the cleanup. The excavated soil was
incinerated in March 1992. Clean soil was purchased to fill in the holes.
In May 1992, FDER drafted and sent to the Company a proposed Consent Order
outlining the steps deemed necessary by FDER for an acceptable resolution of the
contamination problem. After several
11
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months of negotiation, the Consent Order was signed by the Company
in February 1993.
Under the terms of the Consent Order, a Contamination Assessment Plan ("CAP")
was prepared and submitted to the FDER in April 1993. The CAP proposed specific
steps to be taken to identify and quantify the nature and extent of pollution.
The Company's CAP was approved with certain minor modifications and new testing
wells were installed. The laboratory analysis of the samples taken from these
wells revealed the presence of one contaminate. The Company is awaiting
notification from FDER as to which course of action should be taken to address
this finding.
In July 1994, the Company obtained another environmental report from an
independent consultant which estimated that all remaining remedial work could be
completed for $60,000. This report has been submitted to FDER for its
consideration. The Company has expended approximately $18,000 of the $60,000
estimated for clean-up activities.
SEABOARD CHEMICAL CORPORATION
In September 1991, the Company was identified by the North Carolina Department
of Environment, Health, and Natural Resources ("DEHNR") as a generator of
hazardous substances which had been shipped to Seaboard Chemical Corporation
("Seaboard"). Accordingly, DEHNR issued a Notice of Responsibility to advise the
Company of its liability as a potentially responsible party ("PRP") with respect
to the site.
Seaboard had operated a facility in Jamestown, North Carolina for the treatment,
storage, and disposal of hazardous substances from approximately 1976 until
1989, when Seaboard ceased its operations and declared bankruptcy. The
bankruptcy trustee started to close the facility in 1990 in accordance with the
terms of the Resource Conservation and Recovery Act ("RCRA"), but had
insufficient funds to complete the closure. Work remaining to be done included
decontamination of tanks and equipment, removal of bulk hazardous substances,
and, perhaps, cleanup of contaminated soil and groundwater. The EPA and DEHNR
indicated that if the PRP's did not take response action at the site, DEHNR
would issue a unilateral order under North Carolina law, and /or EPA would
complete the cleanup under authority of the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA") and sue responsible parties to recover
its costs.
In October 1991, the Company entered into a Participation Agreement with many
other PRP's in order to work together as the "Seaboard Group." As of June 8,
1992, the Seaboard Group consisted of 1,025 PRP's. According to the records of
Seaboard, the Seaboard Group was responsible for 10,078,000 gallons of hazardous
materials at the
12
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Seaboard site, which represented approximately 75% of the total. The Seaboard
Group has created a subgroup known as the "De Minimis PRP's" consisting of all
entities which are responsible for less than 85,000 gallons of hazardous
materials. The Company is a member of the De Minimis PRP's because its
documented volume was 7,265 gallons. The initial cost to join the Seaboard Group
was $100.
In May 1992, the DEHNR issued an Imminent Hazard Order ("IHO") directing all
generators, transporters and owner/operators to initiate action at the site. In
response, the Seaboard Group and DEHNR entered into an Administrative Order of
Consent ("AOC") under which the Seaboard Group agreed to undertake Phase I
response action at the site in accordance with the Seaboard Group's work plan.
The Company executed the AOC in June 1992. The estimated cost of Phase I Work
was expected to be $2,600,000.
In connection with the AOC, the Seaboard Group entered into a Phase I Buyout
Agreement with the De Minimis PRP's, including the Company. Under the agreement,
the remaining members of the Seaboard Group agreed to pay for actual Phase I
clean-up costs and certain other expenses, up to the first $5,200,000 of
expense. This amount is double the estimated cost of $2,600,000. The buy out
agreement required the payment of $.40 per gallon from each De Minimis PRP. The
Company's payment was $2,906. Phase I clean-up was completed as of May 1, 1994.
The Phase I Work Plan only included a Work Plan for Surface removal action and a
work plan for remedial site investigation. Accordingly, the buy out agreement
did not include a remedial investigation or feasibility study beyond the scope
of the plans and any remedial design or remedial action with respect to soil,
surface water and groundwater contamination in the vicinity of the site, or any
matters arising out of or relating to the City of High Point Landfill.
In 1994, the Company joined a group to complete Phase II of the clean-up plan.
The cost of completing Phase II has not yet been established. The Company was
required to pay $200 at the time of joining and may be required to pay
additional amounts in the future. The Company is unable to determine the amount
of any further clean-up costs, and thus has not accrued any amounts with respect
to this matter.
GOLD COAST OIL
In 1981, the Company was named by the U.S. Environmental Protection Agency
("EPA") as one of many PRPs with respect to chemical pollution discovered at a
site known as "Gold Coast Oil."
In 1988, a settlement was negotiated between the EPA and certain PRP's including
the Company which resulted in a settlement of the EPA claim. The PRPs
subsequently negotiated a settlement among
13
<PAGE>
themselves in which the Company agreed to pay $50,000 of the anticipated clean
up costs. The Company's insurance carrier at the time of the alleged violations
agreed to pay $45,000 of this amount in return for a release from any future
additional claims.
In January 1993, it was determined that additional funds would be required to
complete the clean up of the Gold Coast Oil site. The Company received an
assessment of $10,000 for this obligation. As of April 30, 1995, the Company had
accrued, but not paid this amount.
OTHER LEGAL MATTERS
On November 20, 1992, Charter Cay Condominium Association filed a complaint in
the Circuit Court of Palm Beach County, Florida against the developer of the
condominium project. The complaint alleged that the developer was liable for
certain construction defects, including defects related to windows manufactured
by the Company. On June 11, 1993, the developer added the Company as a third
party defendant. The developer alleged that the Company was liable for defects
in the project related to the windows. The Company's insurance company provided
defense for the Company. In July 1995, the case was settled and the Company's
insurance carrier subsequently paid the entire settlement cost of $70,500.
On July 14, 1991, Clubside at Boca West, a condominium association, filed a
complaint in the Circuit Court for Palm Beach County, Florida against the
developer of the condominium project. The complaint alleged that the developer
was liable for certain construction defects, including defects related to
windows manufactured by the Company. On November 11, 1993, the developer added
the Company as a third party defendant. The developer alleged that the Company
was liable for defects relating to the windows. In May, 1995, this case was
settled. Under the terms of the settlement, the Company agreed to pay $73,000,
which amount was paid by the Company's insurance carrier.
14
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. - None.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended
July 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MILLER INDUSTRIES, INC.
---------------------------
(Registrant)
Date: 6/3/96 , 1996 /S/ ANGELO NAPOLITANO
---------------------------
Angelo Napolitano
Chairman of the Board of Directors
Chief Executive Officer
Principal Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITS JULY 31,
1995 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 159,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 27,000
<CURRENT-ASSETS> 0
<PP&E> 962,000
<DEPRECIATION> 682,000
<TOTAL-ASSETS> 544,000
<CURRENT-LIABILITIES> 1,542,000
<BONDS> 0
0
0
<COMMON> 149,000
<OTHER-SE> (1,147,000)
<TOTAL-LIABILITY-AND-EQUITY> 544,000
<SALES> 0
<TOTAL-REVENUES> 60,000
<CGS> 4,000
<TOTAL-COSTS> 4,000
<OTHER-EXPENSES> 31,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,000
<INCOME-PRETAX> (6,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
