SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDED
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities exchange Act of 1934
Date of Report (Date of earliest even reported): September 1, 1998
(June 30, 1998)
MILLER DIVERSIFIED CORPORATION
------------------------------
(Exact Name of Registrant as specified in its charter.)
Nevada 0-19001 84-1070932
- --------------- ------------ --------------------
(State or other (Commission (IRS Employer
juridication of File Number) Identification Number)
incorporation)
23360 Weld County Road, #35, LaSalle, Colorado 80645
- ---------------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
(970) 284-5556
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits.
----------------------------------
(a) Financial Statements
--------------------
Audited financial statements of Miller Feed Lots, Inc. are filed herewith.
(b) Proforma Financial Statements
-----------------------------
Pro forma financial information of Registrant and Miller Feed Lots, Inc.
are filed herewith.
(c) Exhibits
--------
10.1 Exchange Agreement and Plan of Exchange (previously filed).
<PAGE>
MILLER FEED LOTS, INC.
AND SUBSIDIARIES
FINANCIAL STATEMENTS
Years Ended August 31, 1997 and 1996
<PAGE>
TABLE OF CONTENTS
Independent Auditors' Report ............................................ 2
CONSOLIDATED BALANCE SHEETS ............................................. 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ......................... 5
CONSOLIDATED STATEMENTS OF OPERATIONS ................................... 6
CONSOLIDATED STATEMENTS OF CASH FLOWS ................................... 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .............................. 9
-1-
<PAGE>
Independent Auditors' Report
----------------------------
Board of Directors
Miller Feed Lots, Inc.
La Salle, Colorado
We have audited the accompanying consolidated balance sheets of Miller Feed
Lots, Inc. and subsidiaries as of August 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Miller Feed
Lots, Inc. and subsidiaries as of August 31, 1997 and 1996, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
/s/ Anderson & Whitney, P.C.
-----------------------------
June 29, 1998
-2-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
August 31 1997 1996
- --------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash $ 18,219 $ 21,581
Trade accounts receivable 60,877 66,963
Receivable from officers/directors 426,715 386,265
Income tax refunds receivable 7,995 --
Inventories 40,892 40,892
Prepaid expenses -- 99
- --------------------------------------------------------------------------------
Total Current Assets 554,698 515,800
- --------------------------------------------------------------------------------
Property and equipment:
Land 56,924 56,924
Buildings and improvements 243,136 243,136
Equipment 563,157 418,300
------------------------
863,217 718,360
Less: Accumulated depreciation and amortization 415,914 309,503
- --------------------------------------------------------------------------------
Total Property and Equipment 447,303 408,857
- --------------------------------------------------------------------------------
Other Assets:
Net investment in sales type leases 27,915 59,605
Other investments 30,415 61,226
Deferred income taxes 51,016 59,177
Deposits and other 94,972 45,019
- --------------------------------------------------------------------------------
Total Other Assets 204,318 225,027
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 1,206,319 $ 1,149,684
================================================================================
Continued on next page.
-3-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
August 31 1997 1996
- --------------------------------------------------------------------------------
LIABILITIES
Current Liabilities:
Note payable - related party $ 13,000 $ 13,000
Trade accounts payable 59,613 86,021
Accounts payable - related parties 9,415 81,102
Accrued expenses 25,389 28,978
Income taxes payable -- 116,765
Current portion:
Long-term debt 125,571 67,672
Long-term debt - related party 333,722 98,819
- --------------------------------------------------------------------------------
Total Current Liabilities 566,710 492,357
Long-term Debt 316,012 444,955
Long-term Debt - related party 414,044 318,056
- --------------------------------------------------------------------------------
Total Liabilities 1,296,766 1,255,368
- --------------------------------------------------------------------------------
Commitments
STOCKHOLDERS' EQUITY
Common Stock, par value $100 per share; 2,500 shares
authorized; 1,016 shares issued and outstanding 101,600 101,600
Additional Paid-In Capital 11,860 11,860
Retained Earnings (Deficit) (203,907) (219,144)
- -------------------------------------------------------------------------------
Total Stockholders Equity (90,447) (105,684)
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,206,319 $ 1,149,684
================================================================================
See Accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------
Additional Retained
Common Paid-In Earnings
Years Ended August 31, 1996 and 1997 Stock Capital (Deficit) Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances, September 1, 1995 $ 101,600 $ 11,660 $ (308,467) $ (195,007)
Net earnings for the year ended
August 31, 1996 -- -- 114,549 114,549
Dividends paid -- -- (25,226) (25,226)
- --------------------------------------------------------------------------------------------------
Balances August 31, 1996 101,600 11,860 (219,144) (105,684)
Net earnings for the year ended
August 31, 1997 -- -- 35,732 35,732
Dividends paid -- -- (20,495) (20,495)
- --------------------------------------------------------------------------------------------------
Balances, August 31, 1996 $ 101,600 $ 11,860 $ (203,907) $ (90,447)
==================================================================================================
See Accompanying Notes to Consolidated Financial Statements.
-5-
</TABLE>
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Years Ended August 31 1997 1996
- --------------------------------------------------------------------------------
Revenue:
Freight services income $ 314,548 $ 320,644
Cattle sales -- 671,557
Rent and lease income 219,276 165,165
Commodity sales commissions 521,345 196,881
Speculative trading gains 29,864 236,822
Interest income 24,814 32,230
Other 9,598 43,504
- -------------------------------------------------------------------------------
Total Revenue 1,119,445 1,666,803
- -------------------------------------------------------------------------------
Costs and Expenses:
Cost of:
Freight services 252,371 237,822
Cattle sold -- 714,323
Rent and lease income 59,853 47,698
Commodity sales commissions 308,282 108,852
Selling, general, and administrative 324,435 219,092
Interest 122,999 142,536
- -------------------------------------------------------------------------------
Total Costs and Expenses 1,067,940 1,470,323
- -------------------------------------------------------------------------------
Earnings Before Taxes 51,505 196,480
Income Tax Expense 15,773 81,931
- -------------------------------------------------------------------------------
NET EARNINGS $ 35,732 $ 114,549
===============================================================================
Net Earnings per Common Share $ 35.17 $ 112.75
===============================================================================
Weighted Average Number
of Common Shares Outstanding 1,016 1,016
===============================================================================
See Accompanying Notes to Consolidated Financial Statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------
Years Ended August 31 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 1,060,267 $ 1,523,957
Cash paid to suppliers and employees (939,714) (574,264)
Interest received 24,814 32,230
Interest paid (123,457) (163,783)
Income taxes paid (132,372) (77,326)
- ---------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Operating Activities (110,462) 740,814
- --------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Acquisition of property and equipment (144,800) (182,027)
Payments received on sales type leases 31,690 94,518
Proceeds from other investments 30,811 --
Payments for other investments -- (31,658)
Payment of other deposits (49,953) (10,244)
- ---------------------------------------------------------------------------------------------
Net Cash Used by Investing Activities (132,252) (129,411)
- ---------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Advances on:
Long-term debt -- 29,110
Long-term debt - related parties 402,000 174,500
Payments on:
Notes payable -- (529,989)
Notes payable - related parties -- (146,781)
Long-term debt (55,690) (44,675)
Long-term debt - related parties (86,463) (59,358)
Dividends paid (20,495) (25,226)
- ---------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Financing Activities 239,352 (602,419)
- ---------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash (3,362) 8,984
Cash, beginning of year 21,581 12,597
- --------------------------------------------------------------------------------------------
Cash, end of year $ 18,219 $ 21,581
============================================================================================
Continued on next page.
-7-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- Continued
- ----------------------------------------------------------------------------------------------
Years Ended August 31 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of Net Earnings to Net Cash Provided
(Used) by Operating Activities:
Net earnings $ 35,732 $ 114,549
Adjustments:
Depreciation and amortization 106,354 89,949
Deferred income taxes 8,161 (20,062)
(Increase) decrease in:
Trade accounts receivable 6,086 (36,803)
Receivable from officer/directors (40,450) (73,813)
Income tax refunds receivable (7,995) --
Inventories -- 680,542
Prepaid expenses 99 19,995
Increase (decrease) in:
Accounts payable (98,095) (22,673)
Accrued expenses (3,589) (35,537)
Income taxes payable (116,765) 24,667
- ----------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Operating Activities $ (110,462) $ 740,814
==============================================================================================
See Accompanying Notes to Consolidated Financial Statements.
-8-
</TABLE>
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies:
The accounting and reporting policies of Miller Feed Lots, Inc.
(the Company) and its subsidiaries conform to generally accepted
accounting principles. The following summary of significant
accounting policies is presented to assist the reader in evaluating
the Company's consolidated financial statements.
-------------------------------------------------------------------
Description of Business:
The Company's primary business is a trucking operation for a
feedlot facility near La Salle, Colorado. Most of the customers
to which the Company has granted credit either operate in the
cattle industry or feed cattle as an investment.
-------------------------------------------------------------------
Principles of Consolidation:
The consolidated financial statements include Miller Feed Lots,
Inc. and its wholly-owned subsidiaries, D & M Feeders (D&M - a
cattle feeding operation), Miller Trading Company (MTC - a
commission agent for the execution of retail commodities
contracts), and La Salle Commodity and Cattle Services Co. (LCCS
- a commission agent for the execution of commercial commodities
contracts). During the year ended August 31, 1996, MTC and LCCS
were purchased from an affiliate. All material intercompany
profits, transactions, and balances have been eliminated.
-------------------------------------------------------------------
Cash Equivalents:
The Company considers all highly-liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
-------------------------------------------------------------------
Trade Accounts Receivable:
No allowance for doubtful accounts receivable has been recorded
based on the history of the Company and the nature of the
receivables.
-------------------------------------------------------------------
Concentration of Credit Risk:
At August 31, 1997 and 1996, the Company has trade accounts
receivable from an unrelated customer, totaling $38,103 and
$51,662, respectively, which exceeded 10% of the Company's total
trade accounts receivable.
-------------------------------------------------------------------
Inventories:
Inventories are stated at the lower of cost (weighted average)
or market.
-------------------------------------------------------------------
Property and Equipment:
Property and equipment are recorded at acquisition cost.
Depreciation is computed using the accelerated and straight line
methods over the estimated useful lives of the assets.
-------------------------------------------------------------------
-9-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies - Continued:
Income Taxes:
Deferred tax assets or liabilities, net of any applicable
valuation allowance for deferred tax assets, are recognized for
the estimated future tax effects attributable to temporary
differences and carryforwards. Deferred tax assets and
liabilities are classified as current or noncurrent based on the
classification of the asset and liability to which they relate.
Deferred tax assets and liabilities not related to an asset or
liability for financial reporting, including deferred tax assets
related to carryforwards, are classified as current or
noncurrent according to the expected reversal date of the
temporary difference. The Company and its subsidiaries file
consolidated corporate income tax returns.
-------------------------------------------------------------------
Earnings per Common Share:
Earnings per common share is computed by using the weighted
average number of common shares outstanding during the period
presented. Fully diluted earnings per share amounts are not
presented for 1997 and 1996 as there are no stock options or
warrants outstanding.
-------------------------------------------------------------------
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
- --------------------------------------------------------------------------------
Note 2 - Sales-type Leases:
The Company leases various pieces of equipment to an affiliate,
Miller Diversified Corporation, under various agreements expiring
through 2000. Following is a summary of the components of the
Company's investment in the sales-type leases
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
August 31 1997 1996
----------------------------------------------------------------------------
<S> <C> <C>
Total minimum lease payments to be received $ 31,971 $ 70,619
Less: Unearned income 4,056 11,014
----------------------------------------------------------------------------
Net Investment $ 27,915 $ 59,605
============================================================================
</TABLE>
Minimum lease payments to be received as of August 31, 1997 for
each of the next three years are: 1998, $14,086; 1999, $12,646;
2000, $6,305.
- --------------------------------------------------------------------------------
-10-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3 - Note Payable - Related Party:
The Company has a $13,000 note payable with an officer/director
that is payable on demand. The note is non-interest bearing and
without collateral.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 4 - Long-term Debt:
----------------------------------------------------------------------------------------------------
August 31 1997 1996
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Unrelated:
Mortgage payable to an insurance company maturing
in April 2005, with quarterly payments of principal and
interest at 10.25%, collateralized by feedlot facilities $ 341,738 $ 369,320
Note payable to bank maturing in September 1997, with monthly
payments of principal and interest at 8.75%,
collateralized by a house near the feedlot facilities 84,206 85,103
Various notes payable to a financing company maturing in various
amounts from 1997 to 2001, monthly payments of principal and
interest at from 7.5% to 14%,
collateralized by equipment 15,639 58,204
---------------------------------------------------------------------------------------------------
441,583 512,627
Less: Current portion 125,571 67,672
---------------------------------------------------------------------------------------------------
$ 316,012 $ 444,955
===================================================================================================
Related Parties:
Notes payable to Miller Diversified Corporation, interest
payable monthly at 6%, $250,000 due May 1998, $300,000 due May
2002, without collateral,
subordinated to mortgager $ 550,000 $ 250,000
Various notes payable to a related party maturing in varying
amounts from 1998 to 2008 with monthly payments of principal and
interest at 12% to 14%,
collateralized by equipment 152,766 81,875
Note payable to a related party maturing in 2007, with monthly
payments of principal and interest at 8%,
collateralized by a condominium 45,000 85,000
---------------------------------------------------------------------------------------------------
747,766 416,875
Less: Current portion 333,722 98,819
---------------------------------------------------------------------------------------------------
$ 414,044 $ 318,056
===================================================================================================
-11-
</TABLE>
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 4 - Long-term Debt - Continued:
The current maturities of long term debt for each of the next five
years and thereafter are as follow:
---------------------------------------------------
Year Ending August 31 Amount
---------------------------------------------------
1998 $ 464,918
1999 84,420
2000 82,270
2001 59,457
2002 45,751
2003 - 2007 452,533
---------------------------------------------------
- --------------------------------------------------------------------------------
Note 5 - Income Taxes:
-------------------------------------------------------------------
Years Ended August 31 1997 1996
-------------------------------------------------------------------
Current income taxes $ 7,612 $ 101,993
Deferred income taxes 8,161 (20,062)
-------------------------------------------------------------------
Income Tax $ 15,773 $ 81,931
===================================================================
Significant components and the related tax effect of temporary
differences and carryforwards are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
August 31 1997 1996
---------------------- --------------------------
Current Long-Term Current Long-Term
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred Tax Assets:
Capital loss carryforward $ -- $ 14,473 $ 8,161 $ 14,473
Allowance for Note Receivable -- 51,000 -- 51,000
Deferred Tax Liabilities:
D & M Cash basis for tax -- (14,457) -- (14,457)
----------------------------------------------------------------------------------------------
Net Deferred Tax Asset $ -- $ 51,016 $ 8,161 $ 59,177
=============================================================================================
</TABLE>
The capital loss carryforward expires in 1999.
-12-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 5 - Income Taxes - Continued:
The differences between income tax expense (benefit) and the amount
computed by applying the federal statutory rates are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Years Ended August 31 1997 1996
-----------------------------------------------------------------------------
<S> <C> <C>
Computed at expected federal statutory rate $ 9,938 $ 69,700
Change in deferred tax asset 8,161 (20,062)
Cash conversion for subsidiary -- 115,585
Capital loss carryover utilized (8,161) (76,118)
Tax credits -- (22,180)
Other 5,835 15,005
-----------------------------------------------------------------------------
Income Tax $ 15,773 $ 81,931
=============================================================================
Note 6 - Related Party Transactions:
The Company is affiliated through partial common ownership and
management with Miller Diversified Corporation (MDC). The following
schedule summarizes transactions between the Company and MDC.
-------------------------------------------------------------------------
Years Ended August 31 1997 1996
-------------------------------------------------------------------------
Paid by MDC:
Freight $ 274,302 $ 163,080
Operating lease of feedlot facility 129,000 129,000
Capital lease of equipment 36,010 101,454
Operating lease of equipment 75,844 24,000
Housing rent 9,000 9,000
Paid to MDC:
Interest expense on long-term debt 18,000 15,000
</TABLE>
In August 1992, the Company purchased substantially all of MDC's
operating equipment and leased a portion of the equipment back to
MDC under a lease which terminated during the year ended August 31,
1997.
- --------------------------------------------------------------------------------
-13-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 7 - Operating Leases:
The Company leases feedlot facilities to MDC under an operating
lease agreement expiring in 2016. Monthly lease payments are two
and one-third cents (21/3(cent)) per head per day for cattle
actually in the feedlot, subject to a minimum of $10,750 and
maximum of $13,300. MDC is responsible for all maintenance,
insurance, utilities, and taxes on the property, and has the option
to purchase the feedlot facility for $1,300,000 during the lease
term. The feedlot facilities consist of $48,014 of land and $52,066
of buildings and improvements, less accumulated depreciation of
$37,594.
Future minimum lease payments for the feedlot facilities are
$129,000 per year through 2016, totaling $2,375,750.
The Company also leases certain equipment and a house to MDC on a
month-to-month basis. Rents received during the years ended August
31, 1997 and 1996 were $84,844 and $33,000, respectively.
- --------------------------------------------------------------------------------
Note 8 - Fair Value of Financial Instruments:
The Company's financial instruments include cash, accounts
receivable, notes receivable, accounts payable, and notes payable.
The Company estimates that the fair value of all financial
instruments at August 31, 1997 and 1996 does not differ materially
from the aggregate carrying values of its financial instruments
recorded in the accompanying balance sheet.
The estimated fair value amounts have been determined using
available market information and appropriate valuation
methodologies. The carrying amount of cash, accounts receivable,
and accounts payable approximates fair value because of the short
maturity of these instruments. The carrying amount of notes
receivable and notes payable approximates fair value as interest
rates approximate current rates for loans with similar terms and
remaining maturities.
- --------------------------------------------------------------------------------
Note 9 - Purchase of subsidiaries:
Effective May 1, 1996, the Company purchased LCCS and MTC from MDC.
The companies were purchased for $50,010 of which $20,000 is
recorded as goodwill, which is being amortized on a straight line
basis over fifteen years. The business combination was recorded as
a purchase, with the operating results of the acquired companies
from May 1, 1996 included in these financial statements.
- --------------------------------------------------------------------------------
Note 10 - Subsequent Events:
On May 26, 1998, the officers and shareholders of the Company and
MDC approved a merger agreement. The Company and subsidiaries will
be merged into MDC upon approval of the shareholders.
- --------------------------------------------------------------------------------
-14-
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the acquisition by the Company of all of the outstanding shares of MFL stock
pursuant to the Exchange Agreement and Plan of Exchange and are based on the
estimates and assumptions set forth herein and in the notes to such statements.
This pro forma information has been prepared utilizing the historical
consolidated financial statements. The pro forma financial data is provided for
comparative purposes only and does not purport to be indicative of the results
which actually would have been obtained if the exchange had been effected on the
date indicated or of those results which may be obtained in the future.
The pro forma financial information is based on the pooling of interests
method of accounting for the proposed exchange. The pro forma adjustments are
described in the accompanying Note to Unaudited Pro Forma Combined Financial
Statements. The unaudited pro forma combined income statements assume that the
acquisition of MFL had occurred on September 1, 1996 (combining the results for
the year ended August 31, 1997 for the Company and MFL, and the nine months
ended May 31, 1998, for the Company and MFL).
15
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
---------------------------- --------------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
May 31, 1998 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
- ------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 68,009 $ 29,491 $ -- $ 97,500
Trade accounts receivable 886,939 43,813 -- 930,752
Receivable from officers/directors -- 274,442 -- 274,442
Accounts receivable - related parties 80,470 -- (80,470)(C) --
Current portion of note receivable 50,000 -- -- 50,000
Income tax refunds receivable -- 24,545 -- 24,545
Inventories 1,230,730 -- -- 1,230,730
Prepaid expenses 14,325 4,238 -- 18,563
- ---------------------------------------------------------------------------------------------------------------------
Total Current Assets 2,330,473 376,529 (80,470) 2,626,532
- ---------------------------------------------------------------------------------------------------------------------
Property and Equipment:
Land -- 56,924 -- 56,924
Buildings and improvements -- 243,137 -- 243,137
Feedlot facilities under capital lease -
related party 1,497,840 -- (1,497,840)(C)
Equipment 77,454 672,168 -- 749,622
Equipment under capital lease -- 4,547 -- 4,547
Equipment under capital lease - related party 30,649 -- (30,649)(C)
Leasehold improvements 92,335 -- -- 92,335
-------------------------------------------------------------------
1,698,278 976,776 (1,528,489) 1,146,565
Less: Accumulated depreciation and
amortization 559,248 505,080 (457,371)(C) 606,957
- ---------------------------------------------------------------------------------------------------------------------
Total Property and Equipment 1,139,030 471,696 (1,071,118) 539,608
- ---------------------------------------------------------------------------------------------------------------------
Other Assets:
Net investment in sales type leases -- 14,572 (14,572)(C) --
Securities available for sale 16,382 -- -- 16,382
Other investments 118,418 82,566 -- 200,984
Notes receivable:
Miscellaneous 15,000 12,000 -- 27,000
Related party 300,000 -- (300,000)(C) --
Deferred income taxes 176,962 51,016 -- 227,978
Deposits and other 15,886 17,511 (17,112)(C) 16,285
- ---------------------------------------------------------------------------------------------------------------------
Total Other Assets 642,648 177,665 (331,684) 488,629
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 4,112,151 $ 1,025,890 $(1,483,272) $ 3,654,769
=====================================================================================================================
Continued on next page.
16
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
----------------------------- -----------------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
May 31, 1998 Consolidated Consolidated Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------
Current Liabilities:
Bank overdraft $ 2,757 $ -- $ -- $ 2,757
Notes payable 474,024 40,481 -- 514,505
Notes payable - officers/directors -- 13,000 -- 13,000
Trade accounts payable 604,551 20,315 -- 624,866
Accounts payable - related parties -- 80,470 (80,470)(C) --
Accrued expenses 28,432 14,029 -- 42,461
Income taxes payable 6,195 -- -- 6,195
Customer advance feed contracts 52,906 -- -- 52,906
Current portion:
Capital lease obligations - related party 24,284 -- (24,284)(C) --
Notes payable -- 158,906 -- 158,906
- ----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,193,149 327,201 (104,754) 1,415,596
Long-Term Notes Payable -- 498,072 -- 498,072
Long-Term Notes Payable - related party -- 300,000 (300,000)(C) --
Capital Lease Obligations - related party 993,565 -- (993,565)(C) --
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,186,714 1,125,273 (1,398,319) 1,913,668
- ----------------------------------------------------------------------------------------------------------------------
Commitments
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock -- -- -- --
Common Stock 636 101,600 (100,100)(A) 2,136
Additional Paid-In Capital 1,351,693 11,860 (112,743)(A)(B) 1,250,810
Unrealized Loss - Securities Available
for Sale (3,718) -- -- (3,718)
Retained Earnings 576,826 (212,843) 127,890(B)(C) 491,873
- ----------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 1,925,437 (99,383) (84,953) 1,741,101
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,112,151 $ 1,025,890 $(1,483,272) $ 3,654,769
======================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statements.
17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
- ------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
------------------------------ --------------------------------
Miller Miller
Diversified Feed
For the Nine Months Corporation Lots, Inc.
Ended May 31, 1998 Consolidated Consolidated Adjustments Combined
- -------------------------------------------------------------------------------------------------------------------
Revenue:
<S> <C> <C> <C> <C>
Feed and other sales $ 7,417,840 $ -- $ -- $ 7,417,840
Feedlot services 1,235,426 -- -- 1,235,426
Freight services income -- 247,255 -- 247,255
Rent and lease income -- 188,309 (188,309)(C) --
Commodity sales commissions -- 351,943 -- 351,943
Interest income 21,775 847 -- 22,622
Interest income - related party 19,750 -- (19,750)(C) --
Other 24,742 -- (1,350)(C) 23,392
- -------------------------------------------------------------------------------------------------------------------
Total Revenue 8,719,533 788,354 (209,409) 9,298,478
- -------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of:
Feed and other sales 6,844,964 -- -- 6,844,964
Feedlot services 1,091,950 -- (140,573)(C) 951,377
Freight services -- 176,442 -- 176,442
Rent and lease income -- 62,012 -- 62,012
Speculative trading losses -- 44,080 -- 44,080
Selling, general, and administrative 649,746 453,227 (2,311)(C) 1,100,662
Interest 17,688 57,064 -- 74,752
Interest - related party 85,064 19,750 (104,814)(C) --
- -------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 8,689,412 812,575 (247,698) 9,254,289
- -------------------------------------------------------------------------------------------------------------------
Earnings Before Taxes 30,121 (24,221) 38,289 44,189
Income Tax Expense (Benefit) 6,195 (15,286) -- (9,091)
- -------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 23,926 $ (8,935) $ 38,289 $ 53,280
===================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
- ---------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
-------------------------------- ----------------------------------
Miller Miller
Diversified Feed
For the Year Ended Corporation Lots, Inc.
August 31, 1997 Consolidated Consolidated Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------
Revenue:
<S> <C> <C> <C> <C>
Feed and other sales $ 9,215,851 $ -- $ -- $ 9,215,851
Feedlot services 2,040,105 -- -- 2,040,105
Freight services income -- 314,548 -- 314,548
Rent and lease income -- 219,276 (219,276)(C) --
Speculative trading gains -- 24,004 -- 24,004
Commodity sales commissions -- 555,757 -- 555,757
Interest income 23,561 -- -- 23,561
Interest income - related party 18,000 -- (18,000)(C) --
Other 80,052 -- (1,800)(C) 78,252
- ----------------------------------------------------------------------------------------------------------------------
Total Revenue 11,377,569 1,113,585 (239,076) 12,252,078
- ----------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of:
Feed and other sales 8,483,551 -- -- 8,483,551
Feedlot services 1,844,037 -- (179,840)(C) 1,664,197
Freight services -- 252,371 -- 252,371
Rent and lease income -- 59,853 -- 59,853
Selling, general, and administrative 704,296 626,857 (10,342)(C) 1,320,811
Loss of sale of land and water rights 178,452 -- -- 178,452
Interest 12,146 96,754 -- 108,900
Interest - related party 117,130 18,000 (135,130)(C) --
- ----------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 11,339,612 1,053,835 (325,312) 12,068,135
- ----------------------------------------------------------------------------------------------------------------------
Earnings Before Taxes 37,957 59,750 86,236 183,943
Income Tax Expense (Benefit) (141,284) 24,018 -- (117,266)
- ----------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 179,241 $ 35,732 $ 86,236 $ 301,209
======================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
19
</TABLE>
<PAGE>
NOTE TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
The following note is included to assist the reader in understanding the
adjustment needed to illustrate the business combination of the Company and MFL.
(a) To record issuance of 15,000,000 of the Company's Common Stock to acquire
all outstanding shares of MFL.
(b) To eliminate MFL retained earnings.
(c) To eliminate intercompany transactions.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by the
undersigned duly authorized officer.
MILLER DIVERSIFIED CORPORATION
(Registrant)
By: /s/ James E. Miller
-----------------------------------
James E. Miller
President
Dated: September 1, 1998
