<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K/A No.1
----------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 15, 1996
---------------------
MILLER INDUSTRIES, INC.
----------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Tennessee 0-24298 62-1566286
----------------------------------------------------------------------
(State or other Jurisdiction (Commission File (IRS Employer
of Incorporation or Organization) Number) Identification No.)
900 Circle 75
Parkway
Atlanta, Georgia 30339
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 988-0797
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
This Amendment No 1 to Form 8-K amends the Form 8-K filed by the Registrant
on September 17, 1996 to report its acquisition of Vulcan International, Inc. on
September 3, 1996, and includes the financial statements required to be filed
pursuant to each Form 8-K as well as certain other financial statements.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements of Businesses Acquired - Vulcan International Inc. and
-------------------------------------------
Affiliates
Report of Independent Certified Public Accountants
Combined Balance Sheet as of April 30, 1996
Combined Statement of Income for the year ended April 30, 1996
Combined Statement of Stockholders' equity for the year ended April 30,
1996
Combined Statement of Cash Flows for the year ended April 30, 1996
Notes to the Consolidated Financial Statements
Condensed Combined Balance Sheet as of July 31, 1996 (unaudited)
Condensed Combined Statements of Income for the three months ended July
31, 1995 and 1996 (unaudited)
<PAGE>
Condensed Combined Statements of Cash Flow for the three months ended July
31, 1995 and 1996 (unaudited)
Notes to Condensed Combined Financial Statements (unaudited)
B. ProForma Financial Information
------------------------------
The following Supplemental Consolidated Financial Statements together with
Report of Independent Certified Public Accountants are incorporated by
reference from the Registrant's Registration Statement on Form S-3 filed
with the Commission on October 15, 1996.
Report of Independent Certified Public Accountants
Supplemental Consolidated Balance Sheets as of April 30, 1995 and 1996, and
July 31, 1996 (unaudited)
Supplemental Consolidated Statements of Income for the Nine Months Ended
April 30, 1994, the Years Ended April 30, 1995 and 1996, and the Three
Months Ended July 31, 1995 and 1996 (Unaudited)
Supplemental Consolidated Statements of Shareholders' Equity (Deficit) for
the Nine Months Ended April 30, 1994, the Years Ended April 30, 1995 and
1996, and the Three Months Ended July 31, 1996 (Unaudited)
Supplemental Consolidated Statements of Cash Flows for the Nine Months
Ended April 30, 1994, the Years Ended April 30, 1995 and 1996, and the
Three Months Ended July 31, 1995 and 1996 (Unaudited)
Notes to Supplemental Consolidated Financial Statements
C. Exhibits
--------
Exhibit 99 - Restated Consolidated Financial Statements of Miller
Industries, Inc. and Subsidiaries
Exhibit 27 - Article 5 Financial Data Schedules
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 15, 1996 MILLER INDUSTRIES, INC.
By: /s/ FRANK MADONIA
-----------------------------
Frank Madonia
Vice President
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
COMBINED FINANCIAL STATEMENTS
AND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
YEAR ENDED APRIL 30, 1996
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ----------- ----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Combined Balance Sheet 2
Combined Statement of Income 3
Combined Statement of Stockholders' Equity 4
Combined Statement of Cash Flows 5
Summary of Accounting Policies 6
Notes to Combined Financial Statements 8
</TABLE>
<PAGE>
[LETTERHEAD OF HADDOX REID BURKES & CALHOUN PLLC APPEARS HERE]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Board of Directors
Vulcan International, Inc. and Affiliates
Olive Branch, Mississippi
We have audited the combined balance sheet of Vulcan International, Inc. and
Affiliates as of April 30, 1996, and the related combined statements of income,
stockholders' equity, and cash flows for the year 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Vulcan
International, Inc. and Affiliates as of April 30, 1996, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Haddox Reid Burkes & Calhoun PLLC
-------------------------------------
Haddox Reid Burkes & Calhoun PLLC
September 23, 1996
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
COMBINED BALANCE SHEET
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
----------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 93,182
Accounts receivable, less allowance of $91,796
for possible losses - Notes 4 and 8 3,861,494
Inventories - Notes 1, 4 and 5 5,339,802
Prepaid expenses 91,287
Deferred income taxes - Note 6 176,230
----------
Total current assets 9,561,995
PROPERTY AND EQUIPMENT, less accumulated depreciation -
Notes 2 and 3 2,833,085
OTHER ASSETS 45,955
----------
</TABLE>
$12,441,035
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C>
Note payable - bank - Note 4 $ 801,552
Current maturities of long-term debt - Note 3 349,854
Floor plan notes - chassis - Note 5 2,394,618
Accounts payable - trade 3,338,704
Accrued expenses 1,165,009
-----------
Total current liabilities 8,049,737
LONG-TERM DEBT, less current maturities - Note 3 2,938,460
DEFERRED INCOME TAXES - Note 6 169,000
-----------
Total liabilities 11,157,197
-----------
COMMITMENTS AND CONTINGENCIES - Notes 10 and 12
MINORITY INTEREST 96,863
-----------
STOCKHOLDERS' EQUITY:
Common stock, $1 par - shares authorized 150,000;
3,750 shares issued and outstanding 3,750
Retained earnings 1,183,225
-----------
Total stockholders' equity 1,186,975
-----------
$12,441,035
===========
</TABLE>
The accompanying summary of accounting policies and notes are an
integral part of this combined financial statement.
-2-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
COMBINED STATEMENT OF INCOME
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
<S> <C>
NET SALES - Note 8 $22,349,884
COST OF SALES 18,296,504
-----------
GROSS PROFIT ON SALES - Note 8 4,053,380
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES - Note 8 3,646,336
-----------
OPERATING INCOME 407,044
-----------
OTHER INCOME (EXPENSE)
Interest (274,386)
Other 25,769
-----------
TOTAL OTHER INCOME (EXPENSE) (248,617)
-----------
INCOME BEFORE TAXES ON INCOME 158,427
TAXES ON INCOME - Note 6 66,139
-----------
NET INCOME $ 92,288
===========
</TABLE>
The accompanying summary of accounting policies and notes are an
integral part of this combined financial statement.
-3-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
Common Stock
----------------- Retained
Shares Amount Earnings Total
------- -------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, April 30, 1995 5,000 $ 5,000 2,089,687 2,094,687
Stock redeemed - Note 7 (1,250) (1,250) (998,750) (1,000,000)
Net income - - 92,288 92,288
------ ------- --------- ----------
BALANCE, April 30, 1996 3,750 $ 3,750 1,183,225 1,186,975
====== ======= ========= ==========
</TABLE>
The accompanying summary of accounting policies and notes are an
integral part of this combined financial statement.
-4-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
APRIL 30, 1996
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $ 92,288
Accounts receivable - litigation settlement 600,000
Deferred income taxes (106,230)
Depreciation and amortization 324,174
Changes in operating assets and liabilities:
Increase in accounts receivable (1,853,029)
Increase in inventories (2,526,431)
Increase in prepaid expenses (22,196)
Increase in accounts payable and
floor plan notes 3,401,342
Decrease in accrued expenses (310,234)
-----------
Net cash used by operating
activities (400,316)
-----------
CASH FLOWS USED BY INVESTING ACTIVITIES:
Additions to property and equipment (1,666,386)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit agreements 801,552
Proceeds from long-term debt 1,350,000
Repayment of long-term debt (333,376)
-----------
Net cash provided by investing
activities 1,818,176
-----------
DECREASE IN CASH AND CASH EQUIVALENTS - Note 7 (248,526)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 341,708
-----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 93,182
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 171,847
===========
Income Taxes $ 165,234
===========
</TABLE>
The accompanying summary of accounting policies and notes are an integral part
of this combined financial statement.
-5-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
SUMMARY OF ACCOUNTING POLICIES
APRIL 30, 1996
CONSOLIDATION
- -------------
The accompanying combined financial statements include the accounts of Vulcan
International, Inc. (the "Company"), its majority-owned subsidiaries and Vulcan
Properties, LLC. Vulcan Properties, LLC is a limited liability company
controlled by the stockholders of Vulcan International, Inc. All significant
intercompany balances and transactions have been eliminated in the combined
financial statements.
ACCOUNTS RECEIVABLE
- -------------------
The Company provides an allowance for losses on receivables (the reserve
method). Receivables are charged to the allowance account when they are deemed
to be uncollectible.
INVENTORIES
- -----------
Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
PROPERTY, EQUIPMENT AND DEPRECIATION
- ------------------------------------
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method for financial reporting purposes over the following
estimated useful lives:
<TABLE>
<CAPTION>
Years
-----------------
<S> <C>
Building 39
Machinery and equipment 10
Tooling 10
Leasehold improvements Term of the lease
Furniture and fixtures 10
Computer equipment 5
Automobiles 5
</TABLE>
For income tax purposes, depreciation is calculated using accelerated
methods.
PATENTS AND TRADEMARKS
- ----------------------
The cost of acquired patents and trademarks are capitalized and amortized
using the straight-line method over 20 years.
REVENUE RECOGNITION
- -------------------
Sales are recorded by the Company net of discounts and cost of chassis sold.
-6-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
SUMMARY OF ACCOUNTING POLICIES - CONTINUED:
APRIL 30, 1996
PRODUCT WARRANTY
- ----------------
The Company provides a one-year limited product and service warranty on its
products. The Company provides for the estimated cost of this warranty at the
time of sale.
TAXES ON INCOME
- ---------------
Taxes on income are calculated using the liability method specified by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109").
CASH EQUIVALENTS
- ----------------
For purposes of the statements of cash flows, the Company classifies cash on
hand, demand deposits and all time deposits with an original maturity of three
months or less as cash equivalents.
ESTIMATES
- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
-7-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE 1 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Finished products $ 394,000
Truck chassis 1,962,728
Work-in-process 1,383,268
Materials and parts 1,711,223
Units mounted on demos 105,237
Towing consignment 17,600
----------
5,574,056
LIFO reserve (234,254)
----------
Total inventories $5,339,802
==========
</TABLE>
NOTE 2 - PROPERTY AND EQUIPMENT
Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Land $ 200,000
Building 1,145,660
Machinery and equipment 2,240,256
Tooling 293,824
Leasehold improvements 283,275
Furniture and fixtures 127,071
Computer equipment 184,362
Automobiles 27,180
-----------
4,501,628
Accumulated depreciation (1,668,543)
-----------
Net property and equipment $ 2,833,085
===========
</TABLE>
NOTE 3 - LONG-TERM DEBT
Long-term debt consists of:
Note payable to First American
Bank, payable in monthly
installments of $13,548,
including interest at 8.82%
collateralized by real property
and guaranteed by the Company
and its stockholders (Note was
paid in full October 1, 1996) $ 1,346,374
-8-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED:
APRIL 30, 1996
NOTE 3 - LONG-TERM DEBT - CONTINUED:
<TABLE>
<CAPTION>
<S> <C>
Note payable to former stockholder,
interest due annually at 12%,
principle due on September 1, 2005,
collateralized by company stock $ 1,000,000
(Note was paid in full September,
1996)
Term notes, payable in monthly
principal installments of
approximately $10,000, plus
interest at 8%, collateralized
by certain equipment 389,945
Note payable to Internal Revenue
Service, payable in monthly
principal installments of
$6,656, plus interest at 7% 218,246
Note payable to the Mississippi
State Tax Commission, payable
in monthly installments of
$707, including interest at 8% 26,892
Obligations under capital leases
(Note 10) 199,487
Notes payable to former share-
holders, payable in 1997,
unsecured (net of unamortized
discount) 28,000
Installment notes payable to various
former suppliers, ranging from 8%
to 12% with various maturities
through 1999, unsecured (net of
unamortized discount) 79,370
---------
3,288,314
Current maturities (349,854)
---------
Long-term debt $ 2,938,460
=========
</TABLE>
-9-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED:
APRIL 30, 1996
NOTE 3 - LONG-TERM DEBT - CONTINUED:
A schedule of the long-term debt maturities is as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 349,854
1998 325,988
1999 327,239
2000 147,597
2001 65,457
Thereafter 2,072,179
----------
$3,288,314
==========
</TABLE>
Based on the borrowing rates currently available to the Company for
bank loans with similar terms and maturities, the carrying amount of the note
payable approximates its fair value.
NOTE 4 - NOTE PAYABLE - BANK
The Company has a revolving line of credit with First American Bank of
$1,000,000 at April 30, 1996. This line of credit, which expires August 31,
1996, is secured by accounts receivable and inventories, is personally
guaranteed by a shareholder up to $250,000, and has an interest rate equal to
the bank's index rate plus 1%. At April 30, 1996, $801,552 was advanced
against this line of credit. The note was paid in full in September 1996.
NOTE 5 - FLOOR PLAN NOTES
The Company had floor plan notes of $2,394,618 collateralized by truck
chassis inventory at April 30, 1996. Truck chassis securing floor plan notes
of approximately $510,000 had been sold prior to April 30, 1996. These notes
were paid subsequent to April 30, 1996.
NOTE 6 - TAXES ON INCOME
Taxes on income are calculated using the liability method specified by
Statement of Financial Accounting Standards, No. 109 "Accounting for Income
Taxes" ("FAS 109"). Under FAS 109, deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes.
-10-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS - COMBINED:
APRIL 30, 1996
NOTE 6 - TAXES ON INCOME - CONTINUED:
The components of taxes on income are as follows:
<TABLE>
<CAPTION>
<S> <C>
Current - Federal & state $ 172,369
Deferred:
Federal (94,930)
State (11,300)
-------
Taxes on income $ 66,139
=======
Deferred tax assets (liabilities) are comprised of the following:
Deferred tax assets:
Tax credit carryforwards:
Alternative minimum $ 88,800
Mississippi jobs 39,100
Warranty accrual 26,150
Accrued vacation and bonuses 69,000
Allowance for possible losses 34,650
Uniform capitalization 4,600
Other 41,930
---------
Total deferred tax assets 304,230
Deferred tax liabilities:
Depreciation (297,000)
---------
Net deferred tax asset $ 7,230
=========
Current deferred tax assets $ 176,230
=========
</TABLE>
Noncurrent deferred tax liabilities -
(net of tax credit carryforwards) $(169,000)
=========
At April 30, 1996, the Company has carryforwards of state tax credits for
Mississippi jobs which expire over time with expiration dates extending to
2001.
The following reconciles taxes at the maximum federal statutory rate with
the effective rate:
Taxes on income at maximum federal rate 34.0%
State income taxes, net of federal benefit 3.3
Other 4.9
----
Taxes on income at effective rate 42.2%
====
-11-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED:
APRIL 30, 1996
NOTE 7 - NONCASH INVESTING AND FINANCING ACTIVITIES
On September 1, 1995, the Company issued a promissory note payable of
$1,000,000 to a former stockholder in exchange for 1,250 shares of common
stock.
NOTE 8 - RELATED PARTY TRANSACTIONS
At April 30, 1996, the Company had receivables from related entities of
$15,350 and payables to related entities of $103,517.
In fiscal 1996, net sales includes approximately $805,000 to a related
party. In addition, cost of sales and selling and administrative expenses
include approximately $70,000 and $32,000, respectively, to a related party.
NOTE 9 - CREDIT RISK
The Company is primarily a manufacturer of automobile and commercial
vehicle towing equipment. The Company's products are sold worldwide, with
its primary customers being distributors throughout the United States. The
Company evaluates its need for reserves for potential losses from credit
sales to these customers, and such losses have been within management's
expectations.
NOTE 10 - LEASES
The Company leases certain manufacturing equipment and computer equipment
under capital leases which expire at various times through May 2000. Certain
data processing software and equipment are also under an operating lease
which expires in February 2001. As of April 30, 1996, future net minimum
lease payments under the capital leases and future minimum rental payments
required under operating leases were as follows:
-12-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED:
APRIL 30, 1996
<TABLE>
<CAPTION>
NOTE 10 - LEASES - CONTINUED:
<S> <C> <C>
Capital Operating
leases leases
-------- -------
1997 $ 61,554 25,331
1998 61,554 25,331
1999 61,554 25,331
2000 57,299 25,331
2001 587 21,110
-------- -------
242,548 122,434
Less amount representing interest (43,061) -
-------- -------
Present value of net minimum
lease payments $199,487 122,434
======== =======
</TABLE>
Rental expense for all operating leases for the years ended April 30, 1996,
was $197,472.
NOTE 11 - RETIREMENT PLAN
The Company has a qualified defined contribution retirement plan which
covers substantially all full-time employees and meets the requirements of
Section 401(k) of the Internal Revenue Code. Participants may contribute up
to 10 percent of their total compensation. Employer contributions to the
plan are determined on an annual basis at the discretion of the Company's
board of directors. Each participant is fully vested at all times in the
amount of their respective contributions and the amount contributed by the
Company. The Company's contributions under the plan were $12,257 for the year
ended April 30, 1996.
NOTE 12 - LITIGATION
The Company is party to certain legal proceedings incidental to its
business. The ultimate disposition of such matters presently cannot be
determined but will not, in the opinion of management, based in part on the
advice of legal counsel, have a material adverse effect on the Company's
financial position or results of operations.
-13-
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED:
APRIL 30, 1996
NOTE 13 - SUBSEQUENT EVENT
In September 1996, Miller Industries, Inc. issued 507,462 shares of its
common stock to the current stockholders and former stockholder in exchange
for 100% of the outstanding common stock of the Company and the note payable
to former stockholder.
-14
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
CONDENSED COMBINED BALANCE SHEET
(Dollars in thousands)
(unaudited)
ASSETS July 31, 1996
---------------
CURRENT ASSETS:
Cash and temporary investments $ 83
Accounts receivable, net 3,914
Inventories 5,890
Deferred income tax benefit 117
Prepaid expenses and other 22
---------------
Total current assets 10,026
PROPERTY, PLANT, AND EQUIPMENT, net 2,762
OTHER ASSETS 44
---------------
$12,832
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit $ 802
Accounts payable 6,020
Accrued liabilities and other 1,127
---------------
Total current liabilities 7,949
LONG-TERM OBLIGATIONS 3,368
DEFERRED INCOME TAXES 169
STOCKHOLDERS' EQUITY 1,346
---------------
Total Liabilities & Stockholders' Equity $12,832
===============
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
CONDENSED COMBINED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------------
1995 1996
----------------- ---------------
<S> <C> <C>
NET SALES $4,196 $6,733
COST OF SALES 3,298 5,607
----------------- ---------------
GROSS PROFIT 898 1,126
OPERATING EXPENSES:
Selling 417 522
General and administrative 323 395
----------------- ---------------
INCOME FROM OPERATIONS 158 209
INTEREST EXPENSE, net (69) 0
OTHER INCOME, net 20 0
----------------- ---------------
INCOME BEFORE INCOME TAXES 109 209
PROVISION FOR INCOME TAXES 41 79
----------------- ---------------
NET INCOME $ 68 $ 130
================= ===============
</TABLE>
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months
Ended July 31,
---------------------------
1995 1996
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES $ (387) $ (80)
----------- -----------
INVESTING ACTIVITIES:
Purchase of property, plant, and equipment (80) (10)
Other 153 0
----------- -----------
Net cash provided by (used in) investing
activities 73 (10)
----------- -----------
Payments on long-term debt (268) 0
Proceeds from long-term debt 0 80
Net payments under line of credit 309 0
----------- -----------
Net cash provided by financing activities 41 80
----------- -----------
NET DECREASE IN CASH (273) (10)
CASH, beginning of period 342 93
----------- -----------
CASH, end of period $ 69 $ 83
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest $ 35 $ 43
=========== ===========
<PAGE>
VULCAN INTERNATIONAL, INC. AND AFFILIATES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed combined financial statements of Vulcan International,
Inc. and Affiliates (the "Company") included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. Nevertheless, the
Company believes that the disclosures are adequate to make the financial
information presented not misleading. In the opinion of management, the
accompanying unaudited condensed combined financial statements reflect
all adjustments, which are of a normal recurring nature, to present
fairly the Company's financial position, results of operations and cash
flows at the dates and for the periods presented. Interim results of
operations are not necessarily indicative of results to be expected for
the fiscal year. These condensed combined financial statements should be
read in conjunction with the Company's audited financial statements
included elsewhere in this Form 8-K/A.
2. Inventories
Inventory costs include materials, labor and factory overhead.
Inventories are stated at the lower of cost or market, determined on a
first-in, first-out basis. Inventories at July 31, 1996 consisted of the
following (in thousands):
July 31, 1996
-------------
Chassis $ 2,547
Raw materials 1,521
Work in process 1,468
Finished goods 354
-------
$ 5,890
=======
3. Litigation
The company is party to certain legal proceedings incidental to its
business. The ultimate disposition of such matters presently cannot be
determined but will not, in the opinion of management, based in part on
the advice of legal counsel, have a material adverse effect on the
Company's financial position.
<PAGE>
EXHIBIT 99
- ----------
Miller Industries, Inc. and Subsidiaries
RESTATED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of April 30, 1995 and 1996 (Restated)
Consolidated Statements of Income for the Nine Months Ended
April 30, 1994 and Years Ended April 30, 1995 and 1996 (Restated)
Consolidated Statements of Shareholders' Equity (Deficit) for the Nine Months
Ended April 30, 1994 and Years Ended April 30, 1995 and 1996 (Restated)
Consolidated Statement of Cash Flows for the Nine Months Ended April 30, 1994
and Years Ended April 30, 1995 and 1996 (Restated)
Notes to Consolidated Financial Statements (Restated)
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Miller Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Miller
Industries, Inc. (a Tennessee corporation) and subsidiaries as of April 30, 1995
and 1996, and the related consolidated statements of income, shareholders'
equity and cash flows (restated) for the nine months ended April 30, 1994, and
the years ended April 30, 1995 and 1996. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 Industries,
Inc. and subsidiaries as of April 30, 1995 and 1996, and the results of their
operations and their cash flows for the nine months ended April 30, 1994, and
the years ended April 30, 1995 and 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 9 to the consolidated financial statements, effective
August 1, 1993 the Company changed its method of accounting for income taxes.
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
October 12, 1996
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (RESTATED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
ASSETS April 30, April 30,
1995 1996
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments $ 2,630 $ 24,499
Accounts receivable, net of allowance for
doubtful accounts of $518 and $966 in 1995
and 1996, respectively 18,674 27,889
Inventories 18,587 27,088
Deferred income tax benefit 1,295 1,162
Prepaid expenses and other 320 1,003
------- --------
Total current assets 41,506 81,641
PROPERTY, PLANT, AND EQUIPMENT, net 5,578 13,722
GOODWILL, net 3,536 5,071
PATENTS, TRADEMARKS, AND OTHER PURCHASED PRODUCT
RIGHTS, net 984 926
OTHER ASSETS 24 204
------- --------
$51,628 $101,564
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ 710 $ 751
Lines of credit 1,564 341
Accounts payable 17,319 21,693
Accrued liabilities and other 4,468 8,375
------- --------
Total current liabilities 24,061 31,160
------- --------
LONG-TERM OBLIGATIONS, less current portion 146 3,927
------- --------
DEFERRED INCOME TAXES 369 701
------- --------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000
shares authorized; none issued or
outstanding 0 0
Common stock, $.01 par value; 100,000,000
shares authorized; 19,670,264 and
23,341,060 shares issued and outstanding in
1995 and 1996, respectively 67 233
Additional paid-in capital 23,993 54,705
Retained earnings 2,992 10,855
Cumulative translation adjustment 0 (17)
------- --------
Total shareholders' equity 27,052 65,776
------- --------
$51,628 $101,564
======= ========
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (RESTATED)
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended April 30,
April 30, --------------------
1994 1995 1996
----------- -------- --------
<S> <C> <C> <C>
NET SALES $54,009 $107,599 $141,460
COST OF SALES 43,802 89,212 118,070
------- ------- -------
GROSS PROFIT 10,207 18,387 23,390
OPERATING EXPENSES:
Selling 3,334 5,358 6,170
General and administrative 3,233 4,081 4,742
------- ------- -------
INCOME FROM OPERATIONS 3,640 8,948 12,478
INTEREST INCOME (EXPENSE), net (116) (119) 243
OTHER INCOME (EXPENSE), net 51 40 (133)
------- ------- -------
INCOME BEFORE INCOME TAXES,
EXTRAORDINARY GAIN AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 3,575 8,869 12,588
PROVISION FOR INCOME TAXES (1,262) (3,293) (4,626)
------- ------- -------
INCOME BEFORE EXTRAORDINARY GAIN
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 2,313 5,576 7,962
EXTRAORDINARY GAIN ON DEBT
RETIREMENT (LESS APPLICABLE
INCOME TAXES OF $175) -- 288 --
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES 379 -- --
------- ------- -------
NET INCOME 2,692 5,864 7,962
PREFERRED STOCK DIVIDENDS (38) -- --
------- ------- -------
NET INCOME AVAILABLE FOR COMMON
SHAREHOLDERS $ 2,654 $ 5,864 $ 7,962
======= ======= =======
NET INCOME PER COMMON SHARE:
Before extraordinary gain
and cumulative effect of
accounting change $ 0.18 $ 0.31 $ 0.38
Extraordinary gain on debt
retirement -- 0.01 --
Cumulative effect of change
in accounting for income
taxes 0.03 -- --
------- ------- -------
$ 0.21 $ 0.32 $ 0.38
======= ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 12,513 18,085 21,200
======= ======= =======
</TABLE>
The accompanying notes are an integral part of
these consolidated statements.
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY (DEFICIT) (RESTATED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Retained
Additional Earnings Cumulative
Common Paid-In (Accumulated (Translation
Stock Capital Deficit) Adjustment) Total
------ ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE, July 31, 1993, as previously
reported $100 $ 480 $(2,046) $ - $ (1,466)
Adjustments for Pooled Entities 2 - 69 - 71
---- ------- ------- ------ --------
BALANCE, July 31, 1993, as restated 102 480 (1,977) - (1,395)
Issuance of management shares by MGI - 574 - - 574
Effect of the Reorganization (Note 1):
Exchange of common stock (59) 59 - - -
Issuance of Reorganization Note - - (3,600) - (3,600)
Accrued dividends on preferred stock, net - - (38) - (38)
Contributions of capital from Pooled
Entities - - 234 - 234
Net income - - 2,692 - 2,692
---- ------- ------- ------ --------
BALANCE, April 30, 1994 43 1,113 (2,689) - (1,533)
Issuance of 7,156,876 common shares
through a public offering 24 22,186 - - 22,210
Unamortized restructuring credit from
redemption of preferred stock - 694 - - 694
Distributions to former shareholders of
Pooled Entities - - (183) - (183)
Net income - - 5,864 - 5,864
---- ------- ------- ------ --------
BALANCE, April 30, 1995 67 23,993 2,992 - 27,052
Issuance of 3,600,000 common shares
through a public offering 12 30,166 - - 30,178
Issuance of 53,668 shares in purchase of
Boniface Engineering - 615 - - 615
Exercise of stock options - 37 - - 37
Other stock issuance - 48 - - 48
Three-for-two stock split 38 (38) - - -
Distributions to former shareholders of
Pooled Entities - - (99) - (99)
Two-for-one stock split 116 (116) - - -
Net income - - 7,962 - 7,962
Net translation adjustments - - - (17) (17)
---- ------- ------- ------ --------
BALANCE, April 30, 1996 $233 $54,705 $10,855 $ (17) $ 65,776
==== ======= ======= ====== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated statements.
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended April 30,
April 30, --------------------
1994 1995 1996
----------- --------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,692 $ 5,864 $ 7,962
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 305 453 902
Gain on sales and disposals
of property, plant, and
equipment - - (29)
Extraordinary gain - (288) -
Cumulative effect of
accounting change (379) - -
Deferred income taxes (112) (58) 479
Changes in operating assets
and liabilities:
Accounts receivable (4,096) (8,907) (7,727)
Inventories (2,849) (8,810) (4,293)
Prepaid expenses and other (64) (123) (370)
Accounts payable 4,104 8,614 2,467
Accrued liabilities 709 1,217 798
Other assets 5 (14) 17
Income taxes payable to
MGI (Note 9) 1,115 (1,736) -
------- -------- -------
Total adjustments (1,262) (9,652) (7,756)
------- -------- -------
Net cash provided by
(used in) operating
activities 1,430 (3,788) 206
------- -------- -------
INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment (480) (1,930) (5,603)
Proceeds from sales of property,
plant, and equipment - - 111
Proceeds from notes receivable 35 39 -
Purchases of subsidiaries, net of
cash acquired - - (3,567)
Other (22) (165) (91)
------- -------- -------
Net cash used in
investing activities (467) (2,056) (9,150)
------- -------- -------
FINANCING ACTIVITIES:
Proceeds from issuance of common
stock - 22,210 30,178
Proceeds from exercise of
options - - 37
Contributions of capital by
Pooled Entities 234 - -
Net (payments) borrowing under
lines of credit - 1,564 (1,324)
Proceeds from long-term obligations 80 - 2,545
Payments on long-term obligations (841) (12,034) (558)
Redemption of preferred stock - (3,400) -
Distributions to former shareholders
of Pooled Entities - (183) (99)
Settlement of obligation to
affiliate - (236) -
Other - - 36
------- -------- -------
Net cash provided by
(used in) financing
activities (527) 7,921 30,815
------- -------- -------
NET INCREASE IN CASH 436 2,077 21,871
EFFECT OF EXCHANGE RATE CHANGES ON
CASH - - (2)
CASH, beginning of period 117 553 2,630
------- -------- -------
CASH, end of period $ 553 $ 2,630 $24,499
======= ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash payments for interest $ 288 $ 137 $ 80
======= ======== =======
Cash payments for income taxes $ 45 $ 2,817 $ 4,383
======= ======== =======
New equipment under capital
lease financing $ - $ - $ 51
======= ======== =======
</TABLE>
The accompanying notes are an integral part of
these consolidated statements.
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
1. ORGANIZATION AND NATURE OF OPERATIONS
Miller Industries, Inc. ("Miller Industries") was formed on April 28, 1994
in connection with a reorganization effective April 30, 1994 (the
"Reorganization"). In the Reorganization all 100 shares of the no par value
common stock of Century Holdings, Inc. ("Century Holdings"), a manufacturer
of towing and recovery equipment, were transferred to Miller Industries by
Miller Group, Inc. ("MGI") in exchange for 12,315,000 shares of Miller
Industries' $.01 par value common stock and a $3,600,000 promissory note
(the "Reorganization Note"). The assets received by MGI in the
Reorganization were distributed as follows: (1) 12,000,000 shares of common
stock to an officer, (2) 315,000 shares of common stock to certain members
of management, and (3) the Reorganization Note to certain former minority
stockholders of MGI. The Reorganization required the complete liquidation
and dissolution of MGI. The issuance of the Reorganization Note to the
former minority stockholders of MGI was in exchange for their 17.5% common
stock ownership interest in MGI. The issuance of the Reorganization Note
resulted in a $3,600,000 charge to accumulated deficit. As a result of the
Reorganization, Century Holdings became a wholly-owned subsidiary of Miller
Industries. The Reorganization was accounted for in a manner similar to a
pooling of interests.
The accompanying consolidated financial statements include the financial
position and results of operations of B&B Associated Industries, Inc.
("B&B") and Mid-America Wrecker and Equipment Sales, Inc. of Colorado ("Mid-
America"), (collectively, the "Pooled Entities"), with which Miller
Industries merged in July 1996. These transactions were accounted for under
the pooling-of-interests method of accounting and, accordingly, Miller
Industries' consolidated financial statements have been restated as if
Miller Industries, B&B, and Mid-America (collectively, the "Company") had
operated as one entity since inception. See Note 3, Business Combinations,
for further discussion of these transactions.
Nature of Operations
The Company is a manufacturer and distributor of vehicle towing and recovery
equipment which is installed on truck chassis. The principal markets for the
towing and recovery equipment are independent distributors of towing and
recovery equipment located primarily throughout the United States, Canada,
Europe, Japan, Taiwan, Hong Kong, China, and the Middle East. The Company's
products are marketed under the brand names of Century, Challenger, Holmes,
Champion, Eagle, Jige, and Boniface. The truck chassis are either purchased
by the Company or provided by customers. Sales of Company-purchased chassis
represent approximately 16%, 24%, and 31% of net sales in 1994, 1995, and
1996, respectively.
<PAGE>
Public Offerings of Common Stock
On August 9, 1994, the Company completed an initial public offering of
7,156,876 shares of its common stock at $3.50 per share (the "Offering").
The net proceeds of the Offering were used to repay long-term debt, redeem
the cumulative preferred stock of a wholly-owned subsidiary, increase
working capital, provide funds for capital additions, and for other general
corporate purposes (Notes 4 and 9).
On January 31, 1996, the Company completed a public offering of 3,600,000
shares of previously unissued common stock at $9.17 per share. The net
proceeds were used to repay debt, including the debt incurred in the
acquisition of S.A. Jige Lohr Wreckers (Note 3), increase working capital,
provide funds for capital additions, and for other general corporate
purposes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year-End
In connection with the Reorganization, the Company adopted an April 30
year-end. The nine months ended April 30, 1994 will be referred to herein as
"1994".
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Consolidation
The accompanying consolidated financial statements include the accounts of
Miller Industries, Inc. and its wholly-owned subsidiaries including the
Pooled Entities. All significant intercompany transactions and balances have
been eliminated in consolidation.
Cash and Temporary Investments
Cash and temporary investments include all cash and cash equivalent
investments with original maturities of three months or less, primarily
consisting of repurchase agreements.
Inventories
Inventory costs include materials, labor, and factory overhead. Inventories
are stated at the lower of cost or market, determined on a first-in,
first-out basis. Inventories at April 30, 1995 and 1996 consisted of the
following categories (in thousands):
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Chassis $ 5,466 $ 5,225
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Raw materials 5,427 10,028
Work in process 3,290 5,772
Finished goods 4,404 6,063
--------- ---------
$18,587 $27,088
========= =========
</TABLE>
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Depreciation for
financial reporting purposes is provided using the straight-line method over
the estimated useful lives of the assets. Accelerated depreciation methods
are used for income tax purposes. Estimated useful lives range from 20 to 30
years for buildings and improvements and 5 to 10 years for machinery and
equipment, and furniture, fixtures, and vehicles. Expenditures for
maintenance and repairs are charged to expense as incurred.
The property, plant, and equipment balances at April 30, 1995 and 1996
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Land $ 307 $ 1,156
Buildings and improvements 3,735 9,388
Machinery and equipment 1,691 3,166
Furniture, fixtures, and
vehicles 603 1,485
Construction in progress 787 781
--------- ---------
7,123 15,976
Less accumulated depreciation (1,545) (2,254)
--------- ---------
Property, plant, and
equipment, net $ 5,578 $13,722
========= =========
</TABLE>
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 ("SFAS 121") on accounting for the impairment of long-lived assets,
identifiable intangibles, and goodwill related to assets to be held
and used. SFAS 121 also establishes accounting standards for the disposal of
long-lived assets and certain identifiable intangibles. The Company adopted
SFAS 121 effective May 1, 1996. The adoption of SFAS 121 did not have a
significant impact on the Company's consolidated financial position and
results of operations.
Net Income Per Common Share
Net income per common share is calculated using the weighted average number
of common and common equivalent shares outstanding. Net income per common
share for 1994 gives retroactive effect to the 12,315,000 shares issued in
connection with the Reorganization.
In April 1996, the Company effected a three-for-two common stock split in
the form of a stock dividend. In September 1996, the Company effected a two-
for-one common stock split in the form of a dividend. The Company's par
value of $.01 per share remained unchanged. As a result, $38,000 and
$116,000 respectively, was transferred from additional paid-in capital to
common stock.
<PAGE>
All historical share and per share amounts have been retroactively restated
to reflect the common stock splits.
Goodwill
Goodwill is being amortized on a straight-line basis over 40 years. The
Company continually evaluates whether later events and circumstances have
occurred which would indicate that the goodwill is not recoverable.
Accumulated amortization of goodwill was $477,000 and $578,000 at April 30,
1995 and 1996, respectively. Amortization expense for 1994, 1995, and 1996
was $75,000, $100,000, and $101,000, respectively.
Patents, Trademarks, and Other Purchased Product Rights
The cost of acquired patents, trademarks, and other purchased product rights
are capitalized and amortized using the straight-line method over 20 years.
Total accumulated amortization of these assets at April 30, 1995 and 1996
was $151,000 and $208,000, respectively. Amortization expense for 1994,
1995, and 1996 was $40,000, $50,000, and $57,000, respectively.
Accrued Liabilities and Other
Accrued liabilities and other consisted of the following at April 30, 1995
and 1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Accrued wages, commissions, bonuses,
and benefits $ 982 $1,883
Accrued income taxes 2,010 1,995
Other 1,476 4,497
-------- --------
$4,468 $8,375
======== ========
</TABLE>
Product Warranty
The Company provides a one-year limited product and service warranty on its
products. The Company provides for the estimated cost of this warranty at
the time of sale. Warranty expense for 1994, 1995, and 1996 was $363,000,
$486,000, and $551,000, respectively.
Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
trade accounts receivable. The Company places its cash investments with high
quality financial institutions and limits the amount of credit exposure to
any one institution. The Company's trade receivables are primarily from
independent distributors of towing and recovery equipment and such
receivables are generally not collateralized. The Company monitors its
exposure for credit losses and maintains allowances for anticipated losses.
<PAGE>
Revenue Recognition
Sales are recorded by the Company when equipment is shipped to independent
distributors or other customers.
3. BUSINESS COMBINATIONS
In January 1996, the Company purchased all of the outstanding capital stock
of S.A. Jige Lohr Wreckers ("Jige Lohr"), a French manufacturer of towing
and recovery equipment, at a total cash purchase price of approximately
$2,950,000.
In April 1996, the Company purchased all of the outstanding capital stock of
Boniface Engineering ("Boniface"), an English manufacturer of towing and
recovery equipment, at a total purchase price of $1,691,000. The purchase
price consisted of $1,076,000 in cash and $615,000 (53,668 shares) of newly
issued common stock
The acquisitions of Jige Lohr and Boniface have been accounted for under the
purchase method of accounting. Accordingly, the operating results of Jige
Lohr and Boniface have been included in the Company's consolidated results
of operations from the date of acquisition. The excess of the aggregate
purchase price over the fair value of net assets acquired of $1,641,000 has
been recognized as a component of goodwill in the accompanying consolidated
balance sheet at April 30, 1996. The impact of the acquisitions on
consolidated pro forma net income and earnings per share, as if the
acquisitions had taken place at the beginning of fiscal 1995, was not
significant for 1995 and 1996.
In July 1996, Miller issued 198,388 shares of its common stock in exchange
for all of the outstanding common stock of B&B and Mid America, distributors
of towing and recovery equipment.
The mergers with B&B and Mid America were accounted for under the
pooling-of-interests method of accounting and, accordingly, the accompanying
consolidated financial statements have been restated as if Miller Industries
and the Pooled Entities had operated as one entity since inception.
Results of operations of Miller Industries and the Pooled Entities for 1994,
1995 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Year Ended April 30,
Ended --------------------------
April 30, 1994 1995 1996
--------------- ------------ ------------
Net sales:
<S> <C> <C> <C>
Miller Industries $ 45,873 $ 94,722 $125,706
Pooled Entities 8,930 14,121 18,533
Adjustment-elimination
of intercompany sales (794) (1,244) (2,779)
--------------- ------------ ------------
Combined 54,009 107,599 141,460
--------------- ------------ ------------
Net income before
extraordinary gain and
cumulative effect of
accounting change:
Miller Industries 2,022 5,406 7,793
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pooled Entities 291 170 169
--------------- ------------ ------------
Combined 2,313 5,576 7,962
--------------- ------------ ------------
Net income
Miller Industries 2,401 5,694 7,793
Pooled Entities 291 170 169
--------------- ------------ ------------
Combined $ 2,692 $ 5,864 $ 7,962
=============== ============ ============
</TABLE>
4. DEBT RETIREMENT AND PREFERRED STOCK REDEMPTION
Upon consummation of the initial public offering, the Company retired
certain debt obligations, including previously restructured long-term debt,
which resulted in a gain of $288,000. Such amount is reflected as an
extraordinary gain in the accompanying consolidated statement of income for
1995.
Additionally, upon consummation of the initial public offering, the Company
redeemed its cumulative redeemable preferred stock for $3,400,000 resulting
in a gain of $694,000 which is reflected as a credit to additional paid-in
capital in 1995.
5. LONG-TERM OBLIGATIONS AND LINES OF CREDIT
Long-term obligations consisted of the following at April 30, 1995 and 1996
(in thousands):
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Mortgage notes payable, interest at rates
from 3.0% to 6.88%, payable in monthly
installments, maturing 2003 to 2011 $ -- $2,510
Notes payable to banks, interest at rates
from 7.23% to 9.75%, payable in monthly
installments, maturing 1997 to 2005 -- 841
Mortgage note payable, interest at LIBOR
plus 2.5%, payable in monthly installments
through 2002 -- 139
Other notes payable 856 1,188
-------- --------
856 4,678
Less current portion (710) (751)
-------- --------
$146 $3,927
======== ========
</TABLE>
<PAGE>
The aggregate future maturities of long-term obligations (excluding future
cash outflows for interest) outstanding at April 30, 1996 are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ending
April 30,
-------------
<S> <C>
1997 $ 751
1998 632
1999 486
2000 486
2001 447
Thereafter 1,876
----------
$4,678
==========
</TABLE>
Certain equipment and manufacturing facilities are pledged as collateral
under the mortgage notes payable. Notes payable to banks are secured by life
insurance policies on a member of management.
Lines of Credit
At April 30, 1996 the Company had an unsecured revolving credit facility of
$25,000,000 and secured credit facilities totaling $748,000 (the
"Revolvers") for working capital and other general corporate purposes.
Borrowings under the Revolvers bear interest at rates ranging from LIBOR
plus 1.5%, (6.22% at April 30, 1996) to the prime rate plus 1.0% (9.25% at
April 30, 1996) and include a commitment fee on the daily unused balance.
The weighted average interest rate for borrowings outstanding under the
Revolvers during 1996 was approximately 8.4%. Interest is payable monthly
and the Revolvers are renewable on an annual basis. Total borrowings
outstanding under the Revolvers were $341,000 at April 30, 1996.
The terms of the Revolvers require the Company, among other things, to
maintain minimum amounts of working capital, net worth, ratio of net worth
to liabilities, debt coverage and quarterly profits, to limit the amount of
capital expenditures, and to limit the payment of any dividends in the event
of noncompliance with the terms of the Revolvers.
6. STOCK OPTIONS
The Company maintains a stock option plan under which incentive stock
options, as well as nonqualified options and other stock-based awards may be
granted to officers, employees, and directors. A total of 6,000,000 common
shares have been reserved for issuance under the plan subject to certain
limitations, as defined. No options may be exercisable for a year from the
date of grant, and the Compensation Committee of the Board of Directors may
determine when and in what amounts options thereafter become exercisable.
The Company also adopted a stock option plan providing for the granting of
options to purchase shares of common stock to each non-employee director. A
total of 600,000 common shares have been reserved for issuance under the
plan. Stock options issued under the plans provide for the purchase of
<PAGE>
common stock at the fair market value of the stock at the date of grant. The
following summarizes the stock option transactions under the stock option
plans for 1995 and 1996:
<TABLE>
<CAPTION>
Option Price Per
Shares Share
------------ ----------------
<S> <C> <C>
Options outstanding,
April 30, 1994 -- $ --
Granted 1,255,748 3.50
Canceled (8,774) 3.50
------------ ----------------
Options outstanding,
April 30, 1995 1,246,974 3.50
Granted 628,608 4.84 - 11.46
Exercised (11,736) 3.50
Canceled (13,026) 3.50 - 5.67
------------ ----------------
Options outstanding,
April 30, 1996 1,850,820 $3.50-$11.46
============ ================
</TABLE>
The stock options outstanding at April 30, 1996 vest in annual increments
through April 2000.
7. LEASE COMMITMENTS
The Company has entered into various operating leases for buildings and
office equipment. Rental expense under these leases was $294,000, $498,000,
and $437,000 for 1994, 1995, and 1996, respectively.
At April 30, 1996, future minimum lease payments under noncancelable
operating leases were not significant.
8. LITIGATION
The Company is party to certain legal proceedings incidental to its
business. The ultimate disposition of such matters presently cannot be
determined but will not, in the opinion of management, based in part on the
advice of legal counsel, have a material adverse effect on the Company's
financial position or results of operations.
In January 1996, the Company was awarded a judgment in a patent infringement
suit in the United States District Court for the Northern District of Iowa
at Sioux City, Iowa in which the jury found the defendant manufacturer and
distributor of towing equipment willfully infringed both the Company's
underlift parallel linkage and L-arm patents and that the common owner of
the manufacturer and distributor induced the infringement. The judgment was
paid to the Company in August 1996 in the amount of approximately $1.8
million, which included enhanced damages for willfulness and pre- and
post-judgment interest and a broad permanent injunction against future
infringement by the defendants. Defendants were not granted a license to use
the Company's L-arm technology. With this payment, both the Company and the
defendants withdrew their appeals and the
<PAGE>
judgment, therefore, became a final judgment.
9. INCOME TAXES
Effective August 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") using the cumulative catch-up method. SFAS 109 requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
and tax bases using currently enacted tax rates in effect for the year in
which the differences are expected to reverse. The cumulative effect of
adopting SFAS 109 resulted in a net credit to income of $379,000 in 1994.
Prior to the Reorganization, Century Holdings had filed a consolidated
federal tax return with MGI and, as agreed, current and deferred federal
income taxes were allocated to Century Holdings as if Century Holdings were
filing a separate tax return. Since the acquisition of Century Holdings by
MGI, no current taxes have been paid to MGI by Century Holdings. In
connection with the Reorganization, Century Holdings issued the $1,736,000
Tax Note payable to MGI which represented the cumulative amount of Century
Holdings' allocated current federal income taxes which would have been
payable on a separate company basis. The Tax Note payable to MGI was repaid
in 1995 with a portion of the proceeds from the initial public offering.
The provision for income taxes consisted of the following for 1994, 1995,
and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
Current:
<S> <C> <C> <C>
Federal $1,177 $2,818 $3,509
State 197 533 514
Foreign 0 0 124
---------- ---------- ----------
1,374 3,351 4,147
---------- ---------- ----------
Deferred:
Federal (112) (58) 483
Foreign 0 0 (4)
---------- ---------- ----------
(112) (58) 479
---------- ---------- ----------
$1,262 $3,293 $4,626
========== ========== ==========
</TABLE>
<PAGE>
The principal differences between the federal statutory tax rate and the
consolidated effective tax rate for 1994, 1995, and 1996 were as follows:
<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Federal statutory tax rate 34.0% 34.0% 34.0%
State taxes, net of federal tax
benefit 4.0 4.0 4.0
Other (2.7) (0.9) (1.3)
-------- -------- --------
Effective tax rate 35.3% 37.1% 36.7%
======== ======== ========
</TABLE>
Deferred income taxes and liabilities for 1995 and 1996 reflect the impact
of temporary differences between the amounts of assets and liabilities for
financial reporting and income tax reporting purposes. Temporary differences
and carryforwards which give rise to deferred tax assets and liabilities at
April 30, 1995 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------- ----------
Deferred tax assets:
<S> <C> <C>
Reserves-receivables and inventory $ 316 $ 210
Accruals and reserves 641 956
Inventory 338 20
Other 0 32
---------- ----------
Gross deferred tax assets 1,295 1,218
---------- ----------
Deferred tax liabilities:
Property, plant, and equipment 369 701
Other 0 7
---------- ----------
Gross deferred tax liabilities 369 708
---------- ----------
Net deferred tax asset $ 926 $ 510
========== ==========
</TABLE>
In management's opinion, the net deferred tax asset will be realized through
the recognition of taxable income in future periods.
10. PREFERRED STOCK
The Company has authorized 5,000,000 shares of undesignated preferred stock
which can be issued in one or more series. The terms, price, and conditions
of the preferred shares will be set by the Board of Directors. No shares
have been issued.
11. 401(K) PLAN
During 1996, the Company established a contributory retirement plan (the
"401(k) Plan") for all full-time employees with at least one year of
service. The 401(k) Plan is designed to provide tax-deferred income to the
Company's employees in accordance with the provisions of Section 401(k) of
the Internal Revenue Code.
<PAGE>
The 401(k) Plan provides that each participant may contribute up to 15% of
his or her salary. The Company matches 25% of the first 4% of participant
contributions. Matching contributions vest over a period of five years. All
funds contributed by the participants are immediately vested. Under the
terms of the 401(k) Plan, the Company may also make discretionary profit
sharing contributions. Profit sharing contributions are allocated among
participants based on their annual compensation. Each participant has the
right to direct the investment of his or her funds among certain named
investment options.
Upon death, disability, retirement, or the termination of employment,
participants may elect to receive periodic or lump-sum payments.
Additionally, amounts may be withdrawn in cases of demonstrated hardship.
Company contributions to the 401(k) Plan were not significant in 1996.
12. SUBSEQUENT EVENTS
In August and September 1996, the Company purchased two distributors of
towing and recovery equipment by issuing a total of 177,580 shares of its
common stock in exchange for all of the outstanding common stock of these
distributors. These acquisitions have been accounted for using the purchase
method of accounting and, on a combined basis, resulted in approximately
$1,687,000 of goodwill which will be amortized on a straight-line basis over
40 years.
The pro forma impact of the distributor acquisitions on consolidated
financial position at April 30, 1996 and the pro forma impact on
consolidated net income and earnings per share, as if the acquisitions had
taken place at the beginning of fiscal 1996, was not significant.
In September 1996, the Company issued 507,462 shares of its common stock in
exchange for all of the outstanding common stock of Vulcan International,
Inc., a Mississippi manufacturer of towing and recovery equipment, a note
payable to a former common shareholder of Vulcan and interests in a related
company that owned the land and a manufacturing facility where Vulcan's
operations are located. The acquisition has been accounted for under the
pooling-of-interests method Accordingly, the historical financial statements
of the Company will be restated to reflect the acquisition of Vulcan as if
the two entities had operated as one entity since inception upon the
issuance by the Company of post-merger operations.
The net sales, net income, and earnings per share for the Company and Vulcan
as if they had operated as one entity for 1994, 1995, and 1996 are as
follows:
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
Net sales:
<S> <C> <C> <C>
The Company $ 54,009 $107,599 $141,460
Vulcan 11,709 18,300 22,350
---------- ---------- ----------
Combined 65,718 125,899 163,810
---------- ---------- ----------
Net income:
The Company 2,692 5,864 7,962
Vulcan 2,092 649 93
---------- ---------- ----------
Combined 4,784 6,513 8,055
---------- ---------- ----------
Earnings per share:
The Company 0.21 0.32 0.38
Vulcan 0.15 0.03 (0.01)
---------- ---------- ----------
Combined $ 0.36 $ 0.35 $ 0.37
========== ========== ==========
</TABLE>
<PAGE>
13. SEGMENT INFORMATION
The Company's operations involve a single industry segment - the design,
manufacture, and sale of towing and recovery equipment. Substantially all
revenues result from the sale of towing and recovery equipment, either with
or without a chassis, and the related parts and accessories. All significant
intercompany revenues and expenses are eliminated in computing net sales and
operating income. Prior to fiscal 1996, the Company operated exclusively in
the United States. A summary of the Company's operations by geographic area
for fiscal 1996 is presented below (in thousands):
<TABLE>
<CAPTION>
United States Europe Consolidated
--------------- ---------- ------------
<S> <C> <C> <C>
Net sales $137,045 $ 4,415 $141,460
Income from operations 12,002 476 12,478
Identifiable assets 88,789 12,775 101,564
</TABLE>
No single customer accounted for more than 10% of net sales during 1994,
1995, and 1996.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statements of Financial Accounting Standards Nos. 107 and 119 require
disclosure about fair value of all financial instruments. The carrying
values of cash and temporary investments, accounts receivable, accounts
payable, and accrued liabilities are reasonable estimates of their fair
values because of the short maturity of these financial instruments. The
carrying value of long-term obligations is a reasonable estimate of its fair
value based on the rates available for obligations with similar terms and
maturities.
<PAGE>
15. QUARTERLY FINANCIAL INFORMATION (unaudited)
The following is a summary of the unaudited quarterly financial information
for the years ended April 30, 1995 and 1996 (in thousands, except per share
data):
<TABLE>
<CAPTION>
Income Per
Common Net
Share Income
Income Before Before Per
Net Gross Extraordinary Extraordinary Net Common
Sales Profit Items Items(1) Income Share(1)
---------- ---------- ------------- ------------- ---------- ----------
Year Ended
April 30, 1995:
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 21,928 $ 3,786 $ 899 $ 0.07 $ 899 $ 0.07
Second Quarter 25,551 4,414 1,229 0.06 1,517 0.08
Third Quarter 28,388 5,020 1,651 0.08 1,651 0.08
Fourth Quarter 31,732 5,167 1,797 0.09 1,797 0.09
---------- ---------- ------------- ------------- ---------- ----------
Total $ 107,599 $ 18,387 $ 5,576 $ 0.31 $ 5,864 $ 0.32
========== ========== ============= ============= ========== ==========
Year Ended
April 30, 1996
First Quarter $ 31,457 $ 4,777 $ 1,384 $ 0.07 $ 1,384 $ 0.07
Second Quarter 33,768 5,393 1,856 0.09 1,856 0.09
Third Quarter 35,917 6,020 2,110 0.10 2,110 0.10
Fourth Quarter 40,318 7,200 2,612 0.11 2,612 0.11
---------- ---------- ------------- ------------- ---------- ----------
Total $ 141,460 $ 23,390 $ 7,962 $ 0.38 $ 7,962 $ 0.38
========== ========== ============= ============= ========== ==========
</TABLE>
(1) The sum of quarterly per share amounts may differ from annual earnings per
share.
16. RECLASSIFICATIONS
Certain reclassifications have been made to prior years' financial
information to conform with the 1996 presentation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MILLER
INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> APR-30-1994 APR-30-1995 APR-30-1996
<PERIOD-START> AUG-01-1993 MAY-01-1994 MAY-01-1995
<PERIOD-END> APR-30-1994 APR-30-1995 APR-30-1996
<CASH> 0 2,630 24,499
<SECURITIES> 0 0 0
<RECEIVABLES> 0 19,192 28,855
<ALLOWANCES> 0 (518) (966)
<INVENTORY> 0 18,587 27,088
<CURRENT-ASSETS> 0 41,506 81,641
<PP&E> 0 7,123 15,976
<DEPRECIATION> 0 (1,545) (2,254)
<TOTAL-ASSETS> 0 51,628 101,564
<CURRENT-LIABILITIES> 0 24,061 31,160
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 67 233
<OTHER-SE> 0 26,985 65,543
<TOTAL-LIABILITY-AND-EQUITY> 0 51,628 101,564
<SALES> 54,009 107,599 141,460
<TOTAL-REVENUES> 54,009 107,599 141,460
<CGS> 43,802 89,212 118,070
<TOTAL-COSTS> 6,567 9,439 10,912
<OTHER-EXPENSES> 0 0 133
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 116 119 0
<INCOME-PRETAX> 3,575 8,869 12,588
<INCOME-TAX> 1,262 3,293 4,626
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 288 0
<CHANGES> 379 0 0
<NET-INCOME> 2,692 5,864 7,962
<EPS-PRIMARY> 0.21 0.32 0.38
<EPS-DILUTED> 0 0 0
</TABLE>
