SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1999
[ ] 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. 1-5926
MILLER INDUSTRIES, INC.
------------------------------------------------------------------------
(Name of Small Business Issuer 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
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(Address of Principal Executive Offices)
(305) 621-0501
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b)
of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.05 PAR VALUE
------------------------------------------------------------------------
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.
Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in the definitive proxy or information
statement incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $307,130.
As of March 15, 2000, the registrant had 2,982,662 outstanding shares of common
stock $.05 par value. The aggregate market value of the common stock of the
registrant held by non-affiliates (based on the average of the closing bid and
asked prices of the common stock in the over-the-counter market as of March 15,
2000) was approximately $64,799.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
MILLER INDUSTRIES, INC. (the "Company") was incorporated under the laws
of the State of Florida on January 21, 1963. The administrative offices of the
Company are located at 16295 N.W. 13th Avenue, Miami, Florida 33169, and its
telephone number is (305) 621-0501.
The Company's principal business is the ownership and management of a
98,000 square feet warehouse located in Miami, Florida. See Item 2. Properties.
The Company also intends to acquire other income-generating properties to add to
the Company's portfolio. The Company's current President, Angelo Napolitano, has
extensive experience in the real estate industry, and believes that he can
provide the Company with the expertise to locate, acquire and manage attractive
properties. The Company hopes to finance the acquisition of properties through a
combination of debt from third parties (including outside lenders and seller
financing) and issuance of equity securities.
EMPLOYEES
The Company had no employees during the 1999 and 1998 fiscal years.
The Company's President provides services to the Company as an
independent contractor. The Company also utilizes an independent contractor to
perform administrative and bookkeeping services.
ITEM 2. PROPERTIES
DESCRIPTION OF WAREHOUSE
The Company owns a one-story concrete block building located at 16295
N.W. 13th Avenue, Miami, Florida. This facility consists of 97,813 square feet,
7,000 of which is air-conditioned. The building is zoned for use as a warehouse
or light manufacturing facility. The building has a relatively low ceiling,
which has adversely affected leasing efforts.
FINANCING
At April 30, 1999, the building was subject to an outstanding first
mortgage in favor of a commercial bank with a principal balance of approximately
$1,400,000. In October 1999, the Company refinanced the loans with the proceeds
of a new first mortgage loan of $1,800,000 obtained from another commercial
bank. The new loan accrues interest at prime less 1/2% and is payable in 120
monthly installments of $13,600, with a balloon payment of $1,445,000 due
October 2009. The loan is secured by the Company's land and building and a
personal guarantee of the Company's chairman.
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LEASING ACTIVITIES
The Company continues to seek long term commercial tenants for its
building. The building is located in an industrial park which contains many
similar facilities. Current rents for such facilities range from approximately
$3.75 per square foot to approximately $5.00 per square foot and the occupancy
rate in the area is approximately 85%.
The Company has leased approximately 80% of the building, as follows:
/bullet/ The Company has leased 24,000 square feet of the building
under a 3-year lease which commenced in January 2000. This lease provides for
rent of $11,700 per month, plus increases based on changes in the consumer price
index.
/bullet/ The Company has leased 18,500 square feet under a three year
lease commencing in 1998. This lease provides for rent of $6,650 per month.
/bullet/ The Company has leased 20,000 square feet through September
2000. This lease provides $7,000 per month in rental income.
INSURANCE, DEPRECIATION AND TAXES
The Company believes that the building is adequately insured.
Depreciation is determined using the straight-line method over five to 31.5
years for tax purposes and 5 to 30 years for accounting purposes. Real estate
taxes paid for calendar year 1998 were approximately $30,200.
BUSINESS PLAN
The Company's current business plan is to make strategic investments in
commercial real estate. At the present time, the Company has not developed any
specific investment policy with regard to its proposed real estate activities.
Accordingly, the Company has not established any limitations in the percentage
of assets which may be invested in any one investment or type of investments.
The Company generally intends to seek real estate assets for income-generation
purposes rather than capital gains. The Company has not developed any particular
criteria for the types of real estate in which it may invest. Accordingly, the
Company may invest in office and apartment buildings, shopping centers,
industrial and commercial properties, special purpose buildings and undeveloped
acreage. The Company believes that any such acquisitions will occur in South
Florida. The Company hopes to finance the acquisition of properties through a
combination of financing from third parties, financing from the seller and
issuance of equity securities of the Company. The Company may also invest in
real estate through partnerships or other similar vehicles. There can be no
assurance that any of these plans will be realized.
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ITEM 3. LEGAL PROCEEDINGS
SEABOARD CHEMICAL CORPORATION
In late 1991, the Company was identified by the North Carolina
Department of Environment, Health, and Natural Resources ("DEHNR") as a member
of a large group of companies who had shipped hazardous waste to a disposal site
owner and operated by 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 the site in Jamestown, North Carolina for the
storage, treatment and disposal of hazardous waste materials for the period from
1976 to 1989. Operations at the site ceased in 1989 when Seaboard declared
bankruptcy. Beginning in 1990, the bankruptcy trustee for Seaboard attempted to
close the site in accordance with the terms of the Resource Conservation and
Recovery Act ("RCRA"). However, insufficient funds were available to allow the
trustee to complete this work. As a result, the Federal Environmental Protection
Agency (the "EPA") and the DEHNR advised the trustee that if the clean up work
were not completed, either one or both of the agencies would complete the work
and would sue the responsible parties to recover the costs involved. To avoid
the possibility of this lawsuit, in October 1991, the Company entered into an
agreement with other responsible parties to form a group to complete the site
clean up work. Over the next two years, the necessary steps were taken to
complete the clean up of the surface contamination of the site. In 1994, the
Company joined a group to complete the groundwater clean up ("Phase II"). Phase
II was to begin as soon as a satisfactory plan was approved by the concerned
authorities. To date, the Company has been required to expend only $575 on this
matter. Therefore, no accrual has been made for further costs to this point. No
determination of the estimated additional expenditures has been furnished to the
group members.
GOLD COAST OIL
In 1981, the Company was named by the U.S. Environmental Protection
Agency ("EPA") as one of many potential 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 PRPs
including the Company which resulted in a settlement of the EPA claim. The PRPs
subsequently negotiated a settlement among 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 and has included such
amount in accrued expenses in the accompanying balance sheets.
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ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is currently traded on the over-the-counter market.
The range of the high and low bid quotations for each quarter of the past two
(2) fiscal years is as follows:
CLOSING BID CLOSING ASK
1997 HIGH LOW HIGH LOW
---- ---- --- ---- ---
MAY 1 $.02 $.02 $.06 $.06
TO
JULY 31
AUG. 1 .02 .01 .06 .04
TO
OCT. 31
NOV. 3 .01 .01 .05 .05
TO
JAN 30,
1998
1998
FEB. 2 .01 .01 .05 .05
TO
APR. 30
CLOSING BID CLOSING ASK
1998 HIGH LOW HIGH LOW
---- ---- --- ---- ---
MAY 1 $.07 $.02 $.10 $.05
TO
JULY 31
AUG. 1 .07 .05 .10 .09
TO
OCT. 31
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CLOSING BID CLOSING ASK
1998 HIGH LOW HIGH LOW
---- ---- --- ---- ---
NOV. 1 .05 .03 .09 .07
TO
JAN 30,
1999
1999
FEB. 1 .03 .03 .07 .07
TO
APR. 30
As of March 15, 2000, there were 487 holders of record of the Company's
common stock.
The Company has not paid any cash dividends during the last three
fiscal years.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATION
For fiscal year 1999, the Company had rental income of $276,000,
compared with rental income of $187,000 in 1998. During 1999, approximately 80 %
of the Company's warehouse was leased. Rental income was offset by rental
expense of $140,000 in 1999 compared to $165,000 in 1998.
During 1999, the Company continued to operate a hardware sales
business, in which it sells replacement parts for the sliding glass door and
window products formerly manufactured by the Company. Net sales in 1999 were
$29,000 (with cost of goods sold of $13,000), compared to sales of $42,000 in
1998 (and cost of goods sold of $18,000).
The Company's administration expenses were $39,000 in 1999, compared to
$49,000 in 1998. The decrease was due to further reduction in operating costs
and lower real estate taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash increased by $28,000 during fiscal year 1999
compared with a decrease of approximately $47,000 during fiscal year 1998. The
increase in 1999 in cash was primarily due to additional rental income. As of
April 30, 1999, the Company's cash position was approximately $61,000.
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<PAGE>
At April 30, 1999, the Company's principal financing consisted of a
$1,400,000 loan from a third party lender, secured by a lien on the Company's
building. During October 1999, the Company refinanced the mortgage. The new loan
amount totals $1,800,000 and bears interest at 1/2% below prime. It is payable
$13,595 per month for 120 months, with a balloon payment October 2009 in the
approximate amount of $1,445,000. The note is collateralized by the Company's
land and building, along with the personal guaranty of the Company's Chairman of
the Board in the amount of 50% ($900,000 at the closing date) of the mortgage
balance. The Company utilized the excess proceeds from the loan to make
additional improvements to the building, to increase its cash reserves and to
repay a $50,000 loan from the Company's chairman.
The Company's working capital remains extremely limited. The Company
believes that its working capital needs over the next twelve months will consist
of funding operating losses, routine maintenance of its building, and
alterations to the interior of the building to accommodate new tenants. The
Company believes that its existing cash reserves, and funds available from third
parties, will allow the Company 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 operates as a real estate investment and management
company. The Company currently has four tenants for its existing building and is
seeking to obtain additional commercial tenants.
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 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.
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 financing from third parties, seller
financing and issuance of the Company's equity securities.
The Company's business plan is subject to considerable 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 the Company will be able to locate or acquire suitable
properties in order to expand its holdings of real property.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, if not corrected, many computer
applications could fail or create erroneous results by or at the year 2000. The
financial
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impact to the Company to ensure Year 2000 compliance, however, has not been and
is not anticipated to be material to the Company. This is because the Company
relies on certain vendors to provide it with the requisite computer support, and
such vendors expect to resolve their Year 2000 issues before the fourth quarter
of 1999.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements and supplementary financial
schedules are attached as an exhibit to this report. See Items 14(a) and 14(b).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
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<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
OFFICER DIRECTOR
NAME POSITION SINCE SINCE
---- -------- ------- -------
Angelo Napolitano President, Chief 1992 1988
Executive Officer,
and Chairman of the
Board of Directors
Each director is elected for a period of one (1) year, or until his
successor is duly elected by the shareholders. Officers serve at the will of the
Board of Directors.
ANGELO NAPOLITANO, age 64, has been President and Chief Executive
Officer of the Company since 1992. He has been a Director of the Company since
1988 and Chairman since July 1989. Mr. Napolitano is the Chairman and Chief
Executive Officer of Harnap Corp., a commercial real estate management company
which he founded in 1971. Since 1975, Mr. Napolitano has served as a director
and President of Sunshine State Industrial Park Authority, the property owners'
association for the industrial park in which the Company's building is located.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3, 4 and 5 furnished to the
Company, all of the Company's directors have filed reports on a timely basis.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
paid by the Company to the Company's chief executive officer. None of the
Company's officers in 1999 received compensation in excess of $100,000.
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SUMMARY COMPENSATION TABLE
FISCAL STOCK
NAME AND POSITION YEAR SALARY (1) OPTIONS
- ----------------- ------ ---------- -------
1999 $ 36,000 -
Angelo Napolitano, 1998 $ 36,000 -
Chief Executive Officer 1997 $ 37,500 -
- ------------------------
(1) Includes management fees paid to Harnap Corp., a company controlled by
Mr. Napolitano, and director fees paid to Mr. Napolitano.
MANAGEMENT AGREEMENT
In October 1992, the Company agreed to pay Harnap Corp. a monthly
management fee of $3,000. Harnap Corp. is owned and controlled by Angelo
Napolitano, the Company's Chief Executive Officer and Chairman of the Board. At
the close of the 1999 fiscal year, accrued management fees totaled $137,000. No
fees have been paid since June 1995.
COMPENSATION OF DIRECTORS
No amounts were paid to directors during the 1999 fiscal year for
services as directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
To the knowledge of management, as of March 15, 2000, the only person
who beneficially owned 5% or more of the common stock of the Company was as
follows:
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY OWNED PERCENT OF
BENEFICIAL OWNER AS OF MARCH 15, 2000 CLASS
- ------------------- -------------------- -------
Angelo Napolitano 1,131,256(1) 37.9%
1521 N.W. 165th Street
Miami, FL 33169
- ------------------------
(1) Mr. Napolitano has sole voting and investment power with respect to
1,121,256 shares which he holds of record. Mr. Napolitano has shared
voting and investment power with respect to 10,000 shares which he owns
jointly with his wife, Mrs. Helen Napolitano.
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<PAGE>
The shares of common stock beneficially owned by each director and by
all the executive officers and directors of the Company as a group as of March
15, 2000 were as follows:
NAME OF AMOUNT BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED (1) CLASS
---------------- ------------------- ----------
Directors and Officers 1,131,256 37.9%
as a Group (consisting
of one person)
Angelo Napolitano 1,131,256(2) 37.9%(2)
- ------------------------
(1) Except as otherwise indicated, each person has sole voting and
investment power as to the listed shares.
(2) With respect to Mr. Napolitano's shares, see Note (1) to the preceding
table.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a brokerage agreement with Napolitano
Realty Corporation ("NRC") with respect to the lease of the Company's building.
The President of NRC is the son of Mr. Angelo Napolitano, the Company's
President and Chairman of the Board. The agreement provides for a 6% commission
to be paid to NRC on sales or lease proceeds received by the Company. During
fiscal 1999, commissions in the amount of $3,000 were paid to NRC for rental
income generated by the short term leases of portions of the building. In
addition, NRC will receive commissions of $18,000, payable at the rate of $3,600
per year, for a 5-year lease which commenced in January 1995. Payment of these
commissions has been delayed by mutual agreement until the Company's cash
position improves. Accordingly, the Company's accrued expenses include $18,000
representing the unpaid balance.
In March 1998, Mr. Angelo Napolitano, the Company's President and
Chairman, loaned the Company $50,000, payable on demand. The note bears interest
at the rate of prime plus 1%, payable quarterly. This loan was repaid in the
2000 fiscal year.
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PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-KSB
(a) Financial Statements
Report of Independent Certified Public
Accountants
Balance Sheets As of April 30, 1999
and 1998
Statements of Operations and (Deficit) for
Years ended April 30, 1999 and 1998
Statements of Changes in Shareholders (Deficiency)
for Years ended April 30, 1999 and 1998
Statements of Cash Flows for Years ended
April 30, 1999 and 1998
Notes to Financial Statements
(b) All schedules have been omitted because they are inapplicable,
not required or the information is included elsewhere in the
financial statements or notes thereto.
(c) Exhibits
3. (A) Articles of Incorporation (Note 1)
(B) Articles of Amendment (Note 2)
(C) By-laws (Note 1)
(D) Amendment to By-laws --
Indemnification (Note 1)
(E) Amendment to By-laws --
Control Share Acquisitions (Note 5)
10. Material Contracts
(A) Profit Sharing Plan (Note 3)
(B) Stock Option Plan (Note 3)
(C) Incentive Bonus Plan (Note 3)
(D) Indemnification Agreement
with Directors (Note 4)
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(E) Option Agreement with
Angelo Napolitano (Note 5)
(F) Settlement Agreement with
Granite (Note 6)
(G) Amended, Restated and Consolidated
Promissory Note dated October 13, 1999
made by Miller Industries, Inc. in favor of
City National Bank of Florida
27.1 Financial Data Schedule
Note 1. Incorporated by reference from the Form 10-K filed
with the Commission for the year ended April 30, 1981.
Note 2. Incorporated by reference from Form 10-K filed with
the Commission for the year ended April 30, 1985.
Note 3. Incorporated by reference from Form 10-K filed with
the Commission for the year ended April 30, 1988.
Note 4. Incorporated by reference from the Form 10-K filed
with the Commission for the year ended April 30, 1990.
Note 5. Incorporated by reference from the Form 10-K filed
with the Commission for the year ended April 30, 1993.
Note 6. Incorporated by reference from the Form 10-K filed
with the Commission for the fiscal year ended April 30,
1994.
(d) Reports on Form 8-K
There were no reports on Form 8-K for the three months
ended April 30, 1999.
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MILLER INDUSTRIES, INC.
FINANCIAL STATEMENTS
APRIL 30, 1999 AND 1998
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INDEPENDENT AUDITOR'S REPORT
Shareholders and Board of Directors
Miller Industries, Inc.
Miami, Florida
I have audited the accompanying balance sheet of Miller Industries,
Inc. as of April 30, 1999, and the related statements of operations,
shareholders' deficiency, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Miller Industries, Inc. as of April 30,
1998 were audited by other auditors whose report dated June 23, 1998 expressed
an unqualified opinion on those statements.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the 1999 financial statements referred to above present
fairly, in all material respects, the financial position of Miller Industries,
Inc. as of April 30, 1999 and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
/S/ LARRY WOLFE
-------------------------------
LARRY WOLFE
Certified Public Accountant
Miami, Florida
November 23, 1999
See Accompanying Notes to Financial Statements.
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MILLER INDUSTRIES, INC.
BALANCE SHEET
APRIL 30, 1999 AND 1998
ASSETS
1999 1998
----------- -----------
INVESTMENT PROPERTY:
Land $ 161,443 $ 161,443
Building and Improvements 898,211 894,501
Machinery and Equipment 11,106 11,106
Furniture and Fixtures 10,251 10,251
----------- -----------
Total Cost $ 1,081,011 $ 1,077,301
Less: Accumulated Depreciation 734,921 716,965
----------- -----------
Net Book Value $ 346,090 $ 360,336
----------- -----------
OTHER ASSETS:
Cash $ 61,610 $ 33,634
Inventories 8,000 16,000
Prepaid Expenses and Other Assets 9,929 9,956
Deferred Lease Incentive (Net of Accumulated
Amortization - $62,867 in 1999 and $48,247
in 1998) 10,234 24,854
Loan Costs, Less Accumulated Amortization of
$28,539 and $22,245 in 1999 and 1998,
respectively 2,932 9,226
Deferred Tax Assets -- --
----------- -----------
Total Other Assets $ 92,705 $ 93,670
----------- -----------
TOTAL ASSETS $ 438,795 $ 454,006
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
LIABILITIES:
Mortgage and Notes Payable $ 1,456,526 $ 1,486,821
Accounts Payable and Accrued Expenses 233,378 201,232
Tenant Security Deposits 51,100 48,951
----------- -----------
Total Liabilities $ 1,741,004 $ 1,737,004
----------- -----------
SHAREHOLDERS' DEFICIENCY:
Common Stock - $.05 par, 5,000,000 shares
authorized; 2,982,662 shares issued and
outstanding $ 149,133 $ 149,133
Paid-In Capital 1,126,507 1,126,507
Deficit (2,577,849) (2,558,638)
----------- -----------
Total Shareholders' Deficiency $(1,302,209) $(1,282,998)
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIENCY $ 438,795 $ 454,006
=========== ===========
See Accompanying Notes to Financial Statements.
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MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
YEARS ENDED APRIL 30, 1999 AND 1998
1999 1998
----------- -----------
REVENUES:
Rental Income $ 275,938 $ 186,998
Hardware Sales (Net) 29,324 41,826
Gain on Sale of Equipment and Other Income 1,868 4,226
----------- -----------
Total Revenues $ 307,130 $ 233,050
----------- -----------
EXPENSES:
Rental Expenses (Except Interest) $ 140,380 $ 165,584
Cost of Hardware Sales 12,853 18,173
Administrative 39,096 48,939
Interest 134,012 128,244
----------- -----------
Total Expenses $ 326,341 $ 360,940
----------- -----------
Net (Loss) Before Tax Provision (Credit) $ (19,211) $ (127,890)
Provision for Income Tax (Credit) -- --
----------- -----------
Net (Loss) $ (19,211) $ (127,890)
=========== ===========
Net (Loss) per Common Share $ (.01) $ (.04)
=========== ===========
Average Shares of Common Stock Outstanding 2,982,662 2,982,662
=========== ===========
See Accompanying Notes to Financial Statements.
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MILLER INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
YEARS ENDED APRIL 30, 1999 AND 1998
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (19,211) $(127,890)
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used For) Operating Activities:
Gain on Sale of Equipment -- (2,400)
Depreciation 17,956 17,800
Amortization 20,914 20,687
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Inventory 8,000 11,000
(Increase) Decrease in Prepaid Expenses and Other 27 1,044
Increase (Decrease) in Accounts Payable and
Accruals 32,146 30,852
Increase (Decrease) in Tenant Security Deposits 2,149 15,704
--------- ---------
Net Cash Provided by (Used in) Operating Activities $ 61,981 $ (33,203)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Property and Equipment $ (3,710) $(145,383)
Proceeds on Sale of Equipment -- 2,400
--------- ---------
Net Cash (Used by) Investing Activities $ (3,710) $(142,983)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments Under Borrowings $ (43,649) $ (19,376)
Proceeds from Borrowings 13,354 150,000
Closing Costs -- (1,138)
--------- ---------
Net Cash Provided (Used) by Financing Activities $ (30,295) $ 129,486
--------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents $ 27,976 $ (46,700)
CASH AND CASH EQUIVALENTS
at Beginning of Year 33,634 80,334
--------- ---------
CASH AND CASH EQUIVALENTS
at End of Year $ 61,610 $ 33,634
========= =========
Additional Cash Flow Information:
Cash Paid During the Year for Interest $ 134,263 $ 127,944
========= =========
See Accompanying Notes to Financial Statements.
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MILLER INDUSTRIES, INC.
STATEMENT OF SHAREHOLDERS' DEFICIENCY
YEARS ENDED APRIL 30, 1999 AND 1998
COMMON STOCK
------------------------
ADDITIONAL
SHARES PAID-IN
ISSUED AMOUNT CAPITAL (DEFICIT)
----------- ----------- ----------- -----------
Balance at April 30, 1997 2,982,662 $ 149,133 $ 1,126,507 $(2,430,748)
Net Loss - 1998 -- -- -- (127,890)
----------- ----------- ----------- -----------
Balance at April 30, 1998 2,982,662 $ 149,133 $ 1,126,507 $(2,558,638)
Net Loss - 1999 -- -- -- (19,211)
----------- ----------- ----------- -----------
Balance at April 30, 1999 2,982,662 $ 149,133 $ 1,126,507 $(2,577,849)
=========== =========== =========== ===========
See Accompanying Notes to Financial Statements.
-20-
<PAGE>
MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. NATURE OF BUSINESS -
Miller Industries, Inc., a Florida corporation, currently and since
August 1991, has been engaged in the ownership and management of 98,000
square feet of offices and warehouse located in Miami, Florida. During
August 1991, the Company discontinued its operations of manufacturing
of aluminum windows and doors pursuant to a plan of reorganization.
2. INVENTORIES -
Inventories are valued at the lower of cost or market, with cost
generally determined on a first-in, first-out basis and market based
upon the lower of replacement cost or realizable value. Inventories
consisted of the following amounts:
1999 1998
------- --------
Finished Hardware $ 8,000 $ 16,000
======= ========
3. INVESTMENT PROPERTY -
Investment property is carried at cost. The Company calculates
depreciation under the straight-line method at annual rates based upon
the estimated service lives of each type of asset. These service lives
are generally as follows:
Building and Improvements 10 to 30 years
Machinery and Equipment 7 years
Furniture and Fixtures 7 years
Real property and equipment, with an original cost of approximately
$719,000, have been fully depreciated at April 30, 1999.
4. INTANGIBLES -
Deferred lease incentive and loan costs are carried at cost. The
Company amortizes these assets on a straight line basis over 5 years.
5. INCOME TAXES -
The Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes". Under SFAS 109, deferred tax assets
and liabilities are determined based on differences between the
financial reporting and tax basis of assets and liabilities and are
measured by applying enacted tax rates and laws to taxable years in
which such differences are expected to reverse.
See Accompanying Notes to Financial Statements.
-21-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
6. INCOME (LOSS) PER SHARE -
Income (loss) per share is computed based upon the weighted average
number of common shares outstanding during each year.
7. CASH -
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
8. FINANCIAL INSTRUMENTS -
The carrying amounts of cash and cash equivalents, other assets,
accounts payable, and debt approximate fair value.
9. CONCENTRATIONS OF CREDIT RISK -
The Company is subject to credit risk arising from the concentration of
its temporary cash investments. All of the Company's temporary cash
investments are concentrated with a single financial institution. This
institution, however, has a high credit rating.
10. REVENUE RECOGNITION -
Rental income recognition is based upon the underlying lease
provisions. Hardware sales are recognized upon shipment of goods to
customers.
11. ENVIRONMENTAL CLEANUP MATTERS -
The Company expenses environmental expenditures related to existing
conditions resulting from past or current operations and from which no
current or future benefit is discernable. The Company determines its
liability on a site-by-site basis and records a liability at the time
when it is probable and can be reasonably estimated.
12. USE OF ESTIMATES -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated
financial statements and related notes to the financial statements.
Changes in such estimates may affect amounts reported in future
periods.
13. RECLASSIFICATIONS -
Certain prior year amounts have been reclassified to conform with the
current year presentation.
See Accompanying Notes to Financial Statements.
-22-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
14. IMPAIRMENT OF LONG-LIVED ASSETS -
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," was issued. Statement 121 requires that
long-lived assets and certain intangibles to be held and used or
disposed of by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The Company adopted this statement and
determined that no impairment loss need be recognized at this time.
15. RECENT PRONOUNCEMENTS IN ACCOUNTING STANDARDS -
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosure of Information About Capital Structure" which are both
effective for fiscal years beginning after December 15, 1997. SFAS No.
128 simplifies the current required calculation of earnings per share
("EPS") under APB No. 15, "Earnings per Share", by replacing the
existing calculation of primary EPS with a basic EPS calculation. It
requires a dual presentation for complex capital structures of basic
and diluted EPS on the face of the income statement and requires a
reconciliation of basic EPS factors to diluted EPS factors. SFAS No.
129 requires disclosure of the Company's capital structure.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive
Income", which is effective for fiscal years beginning after December
15, 1997. SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in a full set of
general purpose financial statements which requires the Company to (i)
classify items of other comprehensive income by their nature in a
financial statement and (ii) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of the balance sheet.
Also in June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 "Disclosures About
Segments of an Enterprise and Related Information", which is effective
for fiscal years beginning after December 15, 1997. SFAS No. 131
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise", and amends SFAS No. 94, "Consolidation of All
Majority-Owned Subsidiaries". SFAS No. 131 requires annual financial
statements to disclose information about products and services,
geographic areas, and major customers based on a management approach,
along with interim reports. The management approach requires disclosing
financial and descriptive information about an enterprise's reportable
operating segments based on reporting information the way management
organizes the segments for making business decisions and assessing
performance. It also eliminates the requirement to disclose additional
information about subsidiaries that were not consolidated. This new
management approach may result in more information being disclosed than
presently practiced and require new interim information not previously
presented.
See Accompanying Notes to Financial Statements.
-23-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
To the extent practicable the Company plans to adopt the above SFAS's
and expects no material impact to the Company's financial reporting or
presentation.
NOTE B - MORTGAGE AND NOTES PAYABLE
Principal balances outstanding and details of notes payable are
summarized as follows:
1. MORTGAGE PAYABLE -
9% (1/2% above Citibank prime) note payable,
collateralized by mortgage on land and
building, along with the personal guaranty of
the Company's Chairman of the Board in the
amount of $800,000. The note is payable in
monthly installments of $13,285 (including
interest) with a final payment of
approximately $1,385,174 due September 1999.
See Note G Subsequent Events for the details
of the refinancing of this mortgage payable $ 1,399,337
2. STOCKHOLDER NOTE -
9% (1% above prime) unsecured demand note
payable to the Company's Chairman of the Board 50,000
3. INSURANCE PREMIUM NOTE PAYABLE -
12 1/2% insurance premium financing, payable
in monthly installments of $1,224 (including
interest) through October 1999 7,189
-----------
Total Notes Payable $ 1,456,526
===========
Payments of principal required on the foregoing debt are as follows (after
taking into consideration the refinancing of the mortgage payable during October
1999 - Note G):
FISCAL YEAR
ENDING
-----------
2000 $ 92,089
2001 38,174
2002 41,755
2003 45,671
2004 49,956
Thereafter 1,188,881
----------
Total $1,456,526
==========
Land, buildings and improvements, and insurance policies with an
approximate cost of $1,070,000 and an approximate net book value of
$355,868 are pledged as collateral for these obligations.
See Accompanying Notes to Financial Statements.
-24-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
NOTE C - INCOME TAXES
The provision (credit) for income taxes consists of the following:
1999 1998
----------- ----------
Federal $ (6,172) $ (41,091)
State (1,057) (7,034)
----------- ----------
Subtotal $ (7,229) $ (48,125)
Less: Company tax benefits dependent upon
future taxable earnings and not
recognized at this time 7,229 48,125
----------- ----------
Total $ -0- $ -0-
=========== ==========
Current $ (70) $ (39,641)
Deferred (7,159) (8,484)
----------- ----------
Subtotal $ (7,229) $ (48,125)
Less: Company tax benefits not recognized
at this time 7,229 48,125
----------- ----------
Total $ -0- $ -0-
=========== ==========
Deferred income taxes arise primarily due to temporary differences in
recognizing certain revenues and expenses for tax purposes, the required use of
extended lives for calculation of depreciation for tax purposes, and the
expected use of tax loss carryforwards in future periods. The components of the
net deferred tax asset at March 31, 1999 and 1998 were as follows:
1999 1998
----------- ----------
Properties and Equipment principally due to
depreciation $ 52,905 $ 45,751
Net operating loss carryforwards 1,000,057 999,988
----------- ----------
Total gross deferred tax assets $ 1,052,962 $1,045,739
Less: Valuation allow (1,052,962) (1,045,739)
----------- ----------
Net Deferred Tax Asset $ -- $ --
=========== ==========
A valuation allowance is provided to reduce the deferred tax assets to
a level which, more likely than not, will be realized. The net deferred assets
reflect management's assessment of the amount which will be realized from future
taxable earnings or alternative tax strategies. The valuation allowance was
increased by approximately $7,200 for 1999.
-25-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
At March 31, 1999, the Company had approximately $2,660,000 of Federal
and State net operating loss carryforwards available to offset future taxable
income. The State loss carryforwards of approximately $2,660,000 is available
indefinitely. The Federal net operating loss carryforwards of a similar amount
will expire as follows:
2002 $ 248,000
2005 76,000
2006 641,000
2007 1,083,000
2008 206,000
2009 132,000
2011 100,000
2012 68,000
2013 105,800
2019 200
-----------
Total $ 2,660,000
===========
At March 31, 1999, the Company had alternative minimum tax credit
carryforwards of approximately $3,500 which may be carried forward indefinitely.
Total Federal tax expense (credit) for years ended April 30, 1999 and
1998 differed from the amount computed by applying the U.S. federal income tax
rate of 34% to income (loss) from continuing operations before income tax for
the following reasons:
<TABLE>
<CAPTION>
1999 1998
----------------------- ----------------------
PER CENT PER CENT
OF PRE-TAX OF PRE-TAX
INCOME INCOME
AMOUNT (LOSS) AMOUNT (LOSS)
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Income (loss) before provision (credit) for
income taxes $ (19,211) 100 % $(127,890) 100 %
--------- --------- --------- --------
Computed expected tax expense (credit) $ (6,532) (34)% $ (43,483) 34 %
Federal tax (benefit) of State income
tax 360 2 2,392 2
--------- --------- --------- --------
Sub-total $ (6,172) (32)% $ (41,091) 32 %
Less: Tax benefits not recognized for
financial reporting purposes 6,172 32 41,091 32
--------- --------- --------- --------
Actual Federal income tax expense
(credit) $ - - % $ - - %
========= ========= ========= ========
</TABLE>
See Accompanying Notes to Financial Statements.
-26-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
NOTE D - RENTAL INCOME
The Company leased offices and warehouse space for distribution during
fiscal 1999 to four unrelated third parties under leases with varying maturities
through 2003. Rental income approximated $276,000 and $187,000 for fiscal 1999
and 1998, respectively. Rental income from two of the Company's tenants amounted
to 76% and 94% of total rental income in 1999 and 1998, respectively.
Future minimum rental income under non-cancelable leases, excluding
cost of living adjustments are as follows:
2000 $ 248,000
2001 221,000
2002 120,000
2003 90,000
-----------
Total $ 679,000
===========
The above table of future minimum rental income DOES NOT include future
minimum rental income with respect to an additional tenant obtained during the
subsequent period (see Note G).
NOTE E - RENTAL EXPENSES (EXCEPT FOR INTEREST)
Rental expenses consisted of:
1999 1998
-------- --------
Depreciation and Amortization $ 38,870 $ 38,487
Leasing Expenses 8,203 8,997
Insurance 12,579 12,269
Management Fees 36,000 36,000
Outside Services 4,500 13,158
Repairs and Maintenance 7,023 13,687
Utilities 7,154 9,421
Taxes 26,051 33,565
-------- --------
Totals $140,380 $165,584
======== ========
NOTE F - ADMINISTRATIVE EXPENSES
Administrative expenses consisted of:
1999 1998
-------- --------
Accounting and Legal $ 21,180 $ 24,040
Contract Labor 318 5,209
Office Supplies/Postage/Other 2,194 3,553
Stockholders' Expenses 12,395 12,900
Telephone 3,009 3,237
-------- --------
Totals $ 39,096 $ 48,939
======== ========
See Accompanying Notes to Financial Statements.
-27-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
NOTE G - SUBSEQUENT EVENTS
1. ADDITIONAL TENANT -
During August 1999, the Company leased approximately 16,000 square feet
for a five year period beginning September 1, 1999. Future minimum
rental income under this non-cancelable lease, excluding cost of living
adjustments are as follows:
9/1/1999 through 8/31/2000 $ 81,702
9/1/2000 through 8/31/2001 84,153
9/1/2001 through 8/31/2002 86,604
9/1/2002 through 8/31/2003 89,055
9/1/2003 through 8/31/2004 91,506
2. REFINANCING OF MORTGAGE PAYABLE -
During October 1999, the Company refinanced the mortgage payable that
matured during September 1999. The new loan amount totals $1,800,000
bears interest at 1/2% below prime and is payable $13,595 monthly for
120 months and a balloon payment October 2009 in the approximate amount
of $1,445,000. The note is collateralized by the Company's land and
building, along with the personal guaranty of the Company's Chairman of
the Board in the amount of 50% ($900,000 at the closing date) of the
mortgage balance.
NOTE H - RELATED PARTY TRANSACTIONS
1. Management fees in the amount of $36,000 per year were incurred by the
Company for 1999, 1998 and previous years to Harnap Corp., which is
controlled by the Chairman of the Board of Miller Industries, Inc.
Included in accounts payable is approximately $137,000 and $101,000 for
1999 and 1998, respectively owed to Harnap Corp. In addition, Harnap
Corp. was reimbursed by the Company during 1999 for out-of-pocket
repairs in the amount of $1,250.
2. The Company incurred real estate leasing services from Napolitano
Realty Corporation that is considered to be a related party for fiscal
1999, 1998 and previous years. Leasing services approximated $8,000 and
$9,000 for 1999 and 1998, respectively. Included in accounts payable
and accrued expenses is approximately $18,000 and $14,400 for 1999 and
1998, respectively owed to Napolitano Realty Corporation.
See Accompanying Notes to Financial Statements.
-28-
<PAGE>
Miller Industries, Inc.
Notes to Financial Statements
NOTE I - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
1. ENVIRONMENTAL MATTERS -
During 1991, the Company was named by the North Carolina Department of
Environmental, Health and Natural Resources as one of many Potentially
Responsible Parties ("PRPs") for the closure and clean-up of a bankrupt
Environmental Protection Agency ("EPA") approved hazardous waste
processing facility in Jamestown, North Carolina. Over 1,000 of the
PRPs, including the Company, have formed the Seaboard Group II for the
purpose of limiting their exposure with respect to the site. To date,
the Company has incurred approximately $575 in costs with respect to
this site. However, the Company is unable to determine what its total
costs might be, and no accruals have been made for future clean-up
liability at this site.
In 1981, the Company was named by the 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
PRPs including the Company which resulted in a consent order in
settlement of the EPA claim. The PRPs subsequently negotiated a
settlement among themselves to raise the funds necessary to perform
specified cleanup activities. To date, all but $15,000 of the Company's
commitment has been covered by its insurance carrier, and clean-up
operations are progressing at the site. The Company has accrued $10,000
for the estimated additional costs to complete the clean-up which is
included in accrued expenses in the accompanying balance sheets.
2. YEAR 2000 COMPLIANCE -
Management has taken steps to examine the Company's potential exposure
to business interruption due to possible year 2000 computer hardware
and software failures. The Company contracts all of its computer
processing with a third party which has indicated to the Company that
their hardware and software is year 2000 compliant. Since the Company
does not maintain any of its systems on computers or hardware owned by
Miller Industries, Inc., the Company anticipates no costs of year 2000
remediation. The Company has initiated in formal communications with
other third parties having a substantial relationship to its business,
including significant suppliers, larger tenants, and financial
institutions to determine if their systems will be year 2000 compliant.
Failure to achieve year 2000 compliance by any such third party could
negatively affect Miller Industries, Inc.'s ability to conduct business
for an extended period. There can be no assurance that other companies
on which Miller Industries, Inc.'s systems and operations rely will be
fully compliant on a timely basis, and such failure could have a
material adverse effect on the Company's financial position, results of
operations, or liquidity.
See Accompanying Notes to Financial Statements.
-29-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereto duly authorized on the 12th day of May, 2000.
MILLER INDUSTRIES, INC.
/S/ ANGELO NAPOLITANO
-----------------------------------------
By: Angelo Napolitano, President
and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
indicated on the 12th day of May, 2000.
SIGNATURE TITLE
/S/ ANGELO NAPOLITANO President, Chief Executive
- ----------------------------- Officer, and Director
Angelo Napolitano (Principal Executive Officer)
(Principal Financial Officer)
(Principal Accounting Officer)
See Accompanying Notes to Financial Statements.
-30-
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10G Amended, Restated and Consolidated Promissory Note dated October
13, 1999 made by Miller Industries, Inc. in favor of City
National Bank of Florida.
27.1 Financial Data Schedule
EXHIBIT 10G
THIS NOTE EVIDENCES AN AMENDMENT AND RESTATEMENT OF THE NOTE AS DEFINED HEREIN
AND IS EXEMPT FROM DOCUMENTARY STAMPS PURSUANT TO FLORIDA ADMINISTRATIVE CODE
RULE 12B4.054(1) AND CONSOLIDATION OF FUTURE ADVANCE PROMISSORY NOTE OF EVEN
DATE HEREWITH IN THE ORIGINAL PRINCIPAL SUM OF $411,220.03 ON WHICH FLORIDA
DOCUMENTARY STAMPS HAVE BEEN PAID.
AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE
$1,800,000.00 Miami, Florida, October 13th, 1999.
FOR VALUE RECEIVED, the undersigned, MILLER INDUSTRIES, INC., a Florida
corporation, hereinafter referred to as "Borrower or Maker," promises to pay to
the order of CITY NATIONAL BANK OF FLORIDA, a national banking corporation,
hereinafter referred to as "Holder or Lender," 25 West Flagler Street, Miami,
Florida 33130, the sum of ONE MILLION EIGHT HUNDRED THOUSAND AND NO/100
($1,800,000.00) DOLLARS, with interest thereon from the date hereof as
hereinafter set forth and payable as follows:
Interest shall be calculated at the annual rate of Seven And Three -
Quarters (7.75%) Percent for the first twelve months from the date of
execution of this Note.
Commencing on the 13th day of October, 2000, interest shall be
calculated at an annual rate which is equal to One-Half of One (0.5%)
Percent under the Base Rate of City National Bank of Florida and
referred to as the "Note Rate." The Base Rate is defined as the
interest rate, as from time to time announced by Lender, at the
discretion of Lender. The Base Rate is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by Lender to any particular class or
category of its customers. Interest as aforesaid shall be calculated on
the basis of three hundred sixty (360) day year, thirty (30) day
months. The rate of interest from time to time applicable to the unpaid
balance of the principal shall be adjusted annually commencing twelve
(12) months from the date of execution of this Note (the "Adjustment
Date") so that the rate of interest for each 12-month period shall be
the Note Rate in effect on the Adjustment Date. Interest rate changes
may occur on the 13th day of October of each year during the term of
this Note.
Commencing November 13th, 1999, and on the 13th, day of each and every
month thereafter, payments of principal and interest in
<PAGE>
the sum of THIRTEEN THOUSAND FIVE HUNDRED NINETY FIVE AND 92/100
($13,595.92) DOLLARS shall be due and payable. Payments shall first be
applied to interest and the balance to principal.
Commencing November 13th, 2000, and on the 13th day of November of each
and every year thereafter, the monthly payments may change and shall be
based on the Note Rate of interest in effect on the Adjustment Date and
in an amount sufficient to amortize the outstanding principal over a
period of twenty-five (25) years minus the number of years the loan has
been outstanding.
The entire outstanding principal balance together, with all accrued
interest shall be due and payable on October l3th, 2009.
This Restated Promissory Note, hereinafter referred to as "the Restated
Note," is a restatement of and substitution and not in repayment of and not in
addition to that certain Consolidated Promissory Note dated June 13, 1997, in
the original face amount of ONE MILLION FOUR HUNDRED FORTY EIGHT THOUSAND FOUR
HUNDRED THREE AND 45/100 ($1,448,403.45) DOLLARS, which Note was executed by
Maker to NATIONSBANK, N. A. (SOUTH), f/k/a INTERCONTINENTAL BANK, now known as
BANK OF AMERICA, endorsed to CITY NATIONAL BANK OF FLORIDA on October 13th,
1999. Said Promissory Note is hereinafter referred to as "the Note." A copy of
said Note is attached hereto and made a part hereof. Documentary stamps and
Intangible Tax in the full amount due on the Note were affixed to the Mortgage
securing the Note, as amended and restated by Amended and Restated Mortgage
dated September 20, 1994, recorded in Official Records Book 16519, Page 1099,
and re-recorded in Official Records Book 16531, Page 875, as modified by Notice
of Future Advance recorded in Official Records Book 17908, Page 4881, all of the
Public Records of Miami-Dade County, Florida, which Mortgage has been assigned
to Lender and further modified by Receipt of Future Advance and Amended and
Restated Mortgage of even date herewith (the "Mortgage"). The Maker agrees that
nothing contained herein or in the Mortgage or other Loan Documents shall
extinguish or operate to extinguish the indebtedness evidenced by the Note, but
that the total principal indebtedness of ONE MILLION EIGHT HUNDRED THOUSAND AND
NO/100 ($1,800,000.00) DOLLARS shall be paid in accordance with the terms,
covenants and conditions of this Restated Note, and not in accordance with the
terms, covenants and conditions of the Note. Nothing herein is intended, nor
shall it be deemed to constitute a novation of the indebtedness evidenced by the
Note, it being acknowledged and agreed that this Restated Note is in
substitution for the Note.
This Restated Note consolidates, amends, replaces and supersedes,
without enlargement of the aggregate existing principal balances thereunder (i)
2
<PAGE>
that certain Consolidated Promissory Note (the "Original Notes) June 13, 1997,
executed by Maker and made payable to the order of NationsBank, N. A. (South),
f/k/a Intercontinental Bank, now known as Bank of America, In the original
principal amount of $1,448,403.45, which has an outstanding principal balance of
$1,388,779.97, and (ii) that certain Future Advance Promissory Note (the
"Additional Note") dated October 13th, 1999, executed by Maker and made payable
to the order of Bank in the original principal amount of $411,220.03. It is the
intention of the Maker and Bank that while this Restated Note consolidates,
amends, replaces and supersedes the Original Note and the Additional Note, it is
not in payment or satisfaction of the Original Note or the Additional Note, but
rather is the substitution of one evidence of debt for another without any
intent to extinguish the old. Should there be any conflict between any of the
terms of the Original Note, the terms of the Additional Note, and the terms of
this Restated Note, the terms of this Restated Note shall control. The Original
Note and the Additional Note are attached hereto and shall only be negotiated
with this Restated Note.
Each maker and endorser severally waives demand, protest and notice of
maturity, non-payment or protest and all requirements necessary to hold each of
them liable as makers and endorsers and consents without notice to any and all
extensions of time or changes in terms of payment by the holder of this Note.
Each maker, endorser and guarantor, jointly and severally agrees to pay
all costs of collection, including reasonable attorneys' fees, in the event it
becomes necessary to protect the security hereof, whether suit be brought or
not.
The said principal sum or the unpaid balance thereof, with interest
thereon, shall become due and payable, at the option of the Holder, after
default in the payment of any installment of principal or interest for a period
of fifteen (15) days, after delivery of written notice, or upon the occurrence
of an Event of Default, as defined in the Mortgage, which remains after the
expiration of all applicable cure and grace periods. Should the Maker fail to
pay any installment of principal or interest hereunder and remain in default for
a period of fifteen (15) days, after delivery of written notice, the Maker shall
pay a late charge in the amount of Five (5%) Percent on the installment of
principal and interest so overdue.
From and after the occurrence of an Event of Default, as such term is
defined herein, under this Note or the maturity thereof, whether normal maturity
or accelerated maturity, both the unpaid principal hereof and accrued interest
shall bear interest at the highest lawful rate.
3
<PAGE>
This Note is secured by an Amended and Restated Mortgage dated
September 20, 1994, recorded in Official Records Book 16519, Page 1099, and
re-recorded in Official Records Book 16531, Page 875, as modified by Notice of
Future Advance recorded in Official Records Book 17908, Page 4881, all of the
Public Records of Miami-Dade County, Florida, and as further modified by Receipt
of Future Advance and Amended and Restated Mortgage of even date herewith. Upon
the occurrence of an Event of Default and after the expiration of all applicable
cure and grace periods under the Mortgage, then, at the option of the Holder,
the entire principal sum remaining unpaid, together with accrued interest, shall
become immediately due and payable, without notice.
This Note may be prepaid in full at any time without premium or
penalty.
The term "Loan Documents" shall mean any and all of the documents
heretofore, now, or hereafter executed by Maker, by others or by Maker and
others which wholly or partly secure or were, are, or will be executed in
connection with the indebtedness evidenced by this Restated Note, including, but
not limited to, the Mortgage, Assignment of Rents, Leases and Licenses, UCC-1
Financing Statements, Security Agreement and associated affidavits, disclosures
and miscellaneous loan documentation.
This Note is to be construed and enforced according to the laws of the
State of Florida.
Borrower, and any endorsers, sureties, guarantors and all others who
are, or who may become liable for the payment hereof, severally, irrevocably,
and unconditionally (a) agree that any suit, action, or other legal proceeding
arising out of or relating to this Note may be brought, at the option of the
Lender, in a court of record of the State of Florida in Miami-Dade County, in
the United States District Court for the Southern District of Florida, or in any
other court of competent jurisdiction; (b) consent to the jurisdiction of each
such court in any such suit, action or proceeding; and (c) waive any objection
which it or they may have to the laying of venue of any such suit, action, or
proceeding in any such courts.
Upon the happening of any of the following events, each of which shall
constitute a default hereunder ("Event of Default"), all sums due hereunder
shall thereupon or thereafter, at Bank's option, without notice or demand,
become immediately due and payable: (a) failure of any Obligor (which term shall
mean and include each Maker, Endorser, Surety, Guarantor or other party liable
for payment of or pledging collateral or security under this Note) to pay on or
before expiration of any applicable grace period, any sum due hereunder or due
by any Obligor to Bank under any other Promissory Note or under any security
instrument or written obligation of any kind now existing or hereafter created;
(b) occurrence of default under any of the Loan Documents
4
<PAGE>
or any other loan agreement or security instrument now or hereafter in effect
which by its terms covers this Note or the indebtedness evidenced hereby; (c)
filing of any petition under the Bankruptcy Code or any similar federal or state
statute by or against any Obligor or the insolvency of any Obligor; (d) making
of a general assignment by any Obligor for the benefit of creditors, appointment
of or taking possession by a receiver, trustee or custodian or similar official
for any Obligor or for any assets of any such Obligor or institution by or
against any Obligor of any kind of insolvency proceedings or any proceeding for
dissolution or liquidation of any Obligor which is not dismissed within any
proceeding for dissolution or liquidation of any obliger which is not dismissed
within thirty (30) days of the filing thereof; (e) entry of a final judgment
against any Obligor which is not satisfied or transferred to bond within thirty
(30) days of the date of entry; (f) material falsity in any certificate,
statement, representation, warranty or audit at any time furnished to Bank by or
on behalf of any Obligor pursuant to or in connection with this Note, the Loan
Documents or any loan agreement or Security Agreements now or hereafter in
effect, which by its terms covers this Note for the indebtedness evidenced
hereby or otherwise including any omission to disclose any substantial
contingent or liquidated liabilities or any material adverse change in any facts
disclosed by any certificate, statement, representation, warranty or audit
furnished to Bank; (g) issuance of any writ or attachment or writ of
garnishment or filing of any lien against any Collateral or the property of any
Obligor which is not dismissed within thirty (30) days of the date of issuance
or filing, whichever is applicable; (h) taking f possession of any material
Collateral or of any substantial part of the property of any Obligor at the
instance of any governmental authority; (i) dissolution, merger, consolidation,
or reorganization of any Obligor; (i) assignment or sale by any Obligor of any
equity in any collateral security payment of this Note without the prior written
consent of Bank; or (k) cancellation of any guaranty with respect hereto without
the prior written consent of Bank hereof.
Bank shall have all of the rights and remedies of a creditor, mortgagee
and secured party under all applicable law. Without limiting the generality of
the foregoing, upon the occurrence of any default hereunder, Bank may, at its
option, and without notice or demand (i) declare the entire unpaid principal and
accrued interest accelerated and due and payable at once, together with any and
all other liabilities of Maker or any of such liabilities selected by Bank; and
(ii) set-off against this Note all monies owed by Bank in any capacity to Maker,
whether or not due and also set off against all other liabilities of Maker to
Bank all monies owed by Bank in any capacity to Maker, and Bank shall be deemed
to have exercised such right of set-off, and to have made a charge against any
such money immediately upon the occurrence of such default, although made or
entered on the books subsequent thereto. To the extent that any of the
Collateral is personal property and Bank elects to proceed with respect to it in
accordance with the Uniform Commercial Code, then, unless
5
<PAGE>
that collateral is perishable or threatens to decline speedily in value, or is
of a type customarily sold on a recognized market, Bank Drill give Maker
reasonable notice of the time and place of any public or private sale thereof.
The requirement of reasonable notice shall be met if such notice is, at the
option of Bank, hand delivered, sent via expedited courier, or mailed, postage
prepaid to Maker, at the address given to Bank by Maker, or any other address
shown on the records of Bank at least five (5) days before the time of sale.
Upon disposition of any Collateral after the occurrence of any default
hereunder, Maker shall be and shall remain liable for any deficiency; and Bank
shall account to Maker for any surplus, but Bank shall have the right to apply
all or part of such surplus (or to hold the same as reserve) against any and all
other liabilities of Maker to Bank.
If the calculation of interest or the imposition of a change in the
rate of interest after acceleration upon default or the payment of any fees or
other charges which are construed to be interest under applicable law, rule, or
regulation in effect from time to time, result in an effective rate of interest
higher than that permitted to be paid under applicable law, rule, or regulation
in effect from time to time, then such charges shall be reduced by a sum
sufficient to result in an effective rate of interest no greater than the
maximum effective rate of interest permitted to be paid under applicable law,
rule or regulation in effect from time to time. The Lender may, in determining
the maximum rate permitted under applicable law, rule, or regulation in effect
from time to time, take advantage of (1) the rate of interest permitted by
Florida Statutes Chapter 665 (Florida Savings Association Act), by reason of
both Section 687.12 Florida Statutes ("interest rates; parity among licensed
lenders or creditors") and 12 United States Code, Sections 85 and 86, and (ii)
any other law, rule or regulation in effect from time to time, available to
Lender which exempts Lender from any limit upon the rate of interest it may
charge or grants to Lender the right to charge a higher rate of interest than
that permitted by Florida Statutes, Chapter 687. Upon maturity of this Note,
whether by acceleration or in due course, interest shall be recalculated over
the actual life of the loan based upon the amounts outstanding, and if the total
amount of Interest theretofore paid exceeds the amount permitted to be paid
under applicable law, rule, or regulation in effect from time to time, the
excess shall be credited to Principal, or if such excess exceeds the Principal
amount due hereunder, refunded to the Borrower.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND
ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION INCLUDING
BUT NOT LIMITED TO, ANY CLAIMS, CROSS CLAIMS OR THIRD PARTY CLAIMS ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREIN. MAKER HEREBY CERTIFIES THAT NO REPRESENTATIVE
OR AGENT OF THE
6
<PAGE>
PAYEE NOR THE PAYEE'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE PAYEE WORLD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION. MAKER ACKNOWLEDGES THAT THE PAYEE HAS
BEEN INDUCED TO ENTER INTO THIS LOAN, INCLUDING THIS NOTE, BY, INTER ALIA, THE
PROVISIONS OF THIS PARAGRAPH.
MILLER INDUSTRIES, INC., a Florida
Corporation
By: /s/ ANGELO NAPOLITANO
-------------------------------
Angelo Napolitano, President
7
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> APR-30-1999
<CASH> 62
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 8
<CURRENT-ASSETS> 93
<PP&E> 1,081
<DEPRECIATION> 735
<TOTAL-ASSETS> 439
<CURRENT-LIABILITIES> 233
<BONDS> 0
0
0
<COMMON> 149
<OTHER-SE> 1,127
<TOTAL-LIABILITY-AND-EQUITY> 439
<SALES> 305
<TOTAL-REVENUES> 307
<CGS> 13
<TOTAL-COSTS> 326
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134
<INCOME-PRETAX> (19)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
