<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
Commission File No. 0-24298
MILLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1566286
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
900 Circle 75 Parkway
Atlanta, Georgia 30339
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 988-0797
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of the registrant's Common
Stock, $.01 par value, as of December 4, 1996 was 25,374,939.<PAGE>
MILLER INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets -
October 31, 1996 and April 30, 1996 3
Condensed Consolidated Statements of Income
for the Three Months and Six Months Ended
October 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended October 31,
1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
2<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
October 31, April 30,
1996 1996
---------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 12,535 $ 24,592
Accounts receivable, net 39,002 31,750
Inventories 44,238 32,428
Deferred income taxes 1,371 1,338
Prepaid expenses and other 1,216 1,095
----------- ---------
Total current assets 98,362 91,203
----------- ---------
PROPERTY, PLANT AND EQUIPMENT, net 19,004 16,555
GOODWILL, net 6,835 5,071
----------- ---------
PATENTS, TRADEMARKS AND OTHER PURCHASED
PRODUCT RIGHTS, net 1,447 926
OTHER ASSETS 3,178 250
----------- ---------
Total assets $ 128,826 $ 114,005
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,422 $ 1,101
Line of credit 819 1,143
Accounts payable 27,373 27,427
Accrued liabilities 10,857 9,636
----------- ---------
Total current liabilities 44,471 39,307
----------- ---------
LONG-TERM DEBT, less current portion 7,165 5,865
----------- ---------
DEFERRED INCOME TAXES 960 870
----------- ---------
STOCKHOLDERS' EQUITY (Note 2):
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; 24,051,621 and
23,848,522 shares issued and outstanding,
respectively 241 238
Additional paid-in capital 57,287 54,859
Retained earnings 18,702 12,866
----------- ---------
Total common stockholders' equity 76,230 67,963
----------- ---------
Total liabilities and stockholders' equity $ 128,826 $ 114,005
=========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 62,308 $ 39,363 $ 111,647 $ 75,857
COST OF SALES 52,053 32,736 93,158 63,504
---------- -------- --------- ---------
GROSS PROFIT 10,255 6,627 18,489 12,353
OPERATING EXPENSES:
Selling 3,021 1,898 5,533 3,706
General and administrative 2,176 1,538 3,887 2,937
---------- -------- --------- ---------
INCOME FROM OPERATIONS 5,058 3,191 9,069 5,710
INTEREST INCOME (EXPENSE), net 122 (91) 271 (208)
---------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 5,180 3,100 9,340 5,502
PROVISION FOR INCOME TAXES 1,973 1,066 3,504 1,994
---------- -------- --------- ---------
NET INCOME $ 3,207 $ 2,034 $ 5,836 $ 3,508
========== ======== ========= ========
NET INCOME PER COMMON SHARE $ 0.13 $ 0.10 $ 0.23 $ 0.17
---------- -------- --------- --------
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING 25,562 20,701 25,365 20,697
========== ======== ========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED OCTOBER 31,
----------------------------
1996 1995
------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,836 $ 3,508
-------- --------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 733 390
Changes in operating assets and liabilities:
Accounts receivable (5,610) (1,514)
Inventories (6,116) (1,884)
Prepaid expenses and other 24 (78)
Accrued liabilities 853 486
Accounts payable (3,129) 168
Other assets (2,893) 120
--------- --------
Total adjustments (16,138) (2,312)
--------- --------
Net cash provided by (used in) operating
activities
(10,302) 1,196
--------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (339) (1,997)
Other, including cash acquired in acquisitions 201 0
--------- --------
Net cash used in investing activities (138) (1,997)
--------- --------
FINANCING ACTIVITIES:
Payments under line of credit (300) (959)
(Payment) proceeds of long-term debt (1,429) 604
Proceeds from exercise of stock options 112 9
--------- --------
Net cash used in financing activities (1,617) (346)
--------- --------
NET DECREASE IN CASH (12,057) (1,147)
CASH, beginning of period 24,592 2,972
--------- --------
CASH, end of period $ 12,535 $ 1,825
========= ========
SUPPLEMENTAL NONCASH INVESTING ACTIVITIES:
Capital stock issued for acquisitions accounted for using the
purchase method of accounting $ (2,300)
Fair value of assets acquired 11,772
Liabilities assumed $ (9,472)
==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of Miller
Industries, Inc. and subsidiaries (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 consolidated 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 consolidated
financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended
April 30, 1996.
2. Common Stock
All share numbers, share prices, and per share amounts have
been restated to reflect the 3-for-2 stock split which
occurred on April 12, 1996 and the 2-for-1 stock split which
occurred on September 30, 1996.
3. 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 October 31, 1996 and April 30, 1996 consisted
of the following (in thousands):
October 31, April 30,
1996 1996
----------- ----------
Chassis $ 14,388 $ 7,188
Raw Materials 11,145 11,505
Work in process 7,336 7,155
Finished goods 11,369 6,580
--------- ---------
$ 44,238 $ 32,428
========= =========
6<PAGE>
4. Net Income Per Common Share
Net income per common share is computed by dividing net
income by the weighted average number of common and common
equivalent shares outstanding.
5. Business Combinations
In July 1996 the Company issued approximately 198,000 shares
of its common stock in exchange for all of the outstanding
common stock of two towing equipment distributors with
historical revenues of approximately $17 million annually.
In September 1996 the Company issued approximately 507,000
shares of its common stock in exchange for all of the
outstanding common stock of Vulcan International, Inc.
("Vulcan"). Vulcan is a manufacturer of towing and recovery
equipment with historical revenues of $22 million annually.
These three entities are collectively referred to as the
"Pooled Entities". These mergers have been accounted for as
poolings of interests and, accordingly, the Company's
financial statements have been restated to include the
accounts and operations of the Pooled Entities for the
periods presented herein. Expenses related to these mergers
are included in general and administrative operating
expenses.
Results of operations of the Company and the Pooled Entities
for the periods presented herein are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales:
Company $ 46,571 $ 29,611 $ 84,369 $ 57,847
Pooled Entities 18,710 10,394 31,899 19,238
Adjustment-Elimination of
intercompany sales (2,973) (642) (4,621) (1,228)
--------- --------- --------- ---------
Combined 62,308 39,363 111,647 75,857
========= ========= ========= ========
Net Income:
Company 2,702 1,706 5,035 3,205
Pooled Entities 505 328 801 303
--------- --------- --------- ---------
Combined $ 3,207 $ 2,034 $ 5,836 $ 3,508
========= ========= ========= =========
</TABLE>
In August and September 1996 the Company issued
approximately 178,000 shares of its common stock in exchange
for all the outstanding common stock of two additional
towing equipment distributors with historical revenues of
approximately $23 million annually. These two acquisitions
were accounted for using the purchase method of accounting.
The proforma impact of these acquisitions on net income and
earnings per share was not significant for the periods
presented herein.
7<PAGE>
6. Legal Matters
In January 1996, the Company was awarded a judgment in a
patent infringement suit in which the jury found that the
defendant manufacturer and distributor of towing equipment
willfully infringed both the Company's underlift parallel
linkage and L-arm patents. A final 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. The impact of this payment net of
expenses associated with this lawsuit and related patent
infringement litigation was not significant to net income
for the six months ended October 31, 1996.
Subsequent to the end of the quarter, in November 1996 the
Company received a verdict in its patent infringement suit
against Chevron, Inc., a manufacturer of towing and recovery
equipment. The jury awarded damages in the amount of
$310,000. The Company will be filing motions for
prejudgment interest, as well as an appeal for a new trial
on damages.
The Company is, from time to time, a party to litigation
arising in the normal course of its business. Management
believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the
financial position or results of operations of the Company.
7. Subsequent Events
On November 6, 1996 the Company completed a public offering
of 1,295,352 shares of previously unissued common stock at
$24.25 per share. The net proceeds will be used to fund
capital expenditures including expansion of manufacturing
capacity, fund the Company's financial services group,
finance future acquisitions and for general corporate
purposes including working capital.
On December 11, 1996 the Company announced a three-for-two
stock split to be distributed on December 30, 1996 to
shareholders of record on December 20, 1996. The financial
statements herein have not been restated for the split.
8<PAGE>
8. Reclassifications
Certain amounts in the prior period financial information
have been reclassified to conform to the current
presentation.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
As more fully discussed in Note 5 to condensed consolidated
financial statements, in July 1996 the Company acquired two
towing equipment distributors. These transactions have been
accounted for as poolings of interests and, accordingly, the
Company's consolidated financial statements have been restated to
include the accounts and operations of Distributors for the
periods presented herein.
Also, as more fully discussed in Note 5 to condensed
consolidated financial statements, in August and September 1996
the Company acquired two additional towing equipment
distributors. Additionally, in September 1996 the Company
acquired Vulcan International, Inc., a manufacturer of towing and
recovery equipment.
All five of these transactions were accomplished using
common stock of the Company.
As more fully discussed in Note 7 to condensed consolidated
financial statements, in November 1996 the Company completed a
public offering of 1,295,352 shares of previously unissued common
stock.
RESULTS OF OPERATIONS--THREE MONTHS ENDED OCTOBER 31, 1996
COMPARED TO THREE MONTHS ENDED OCTOBER 31, 1995
Net sales for the three months ended October 31, 1996,
increased 58.3% to $62.3 million from $39.4 million for the
comparable period in 1995. The increase in net sales was
primarily the result of higher unit sales volume, an increase in
units sold with the truck chassis included, and sales from the
two European manufacturing operations acquired in January and
April 1996 and the two towing equipment distributors acquired in
August and September 1996, collectively the "1996 Acquisitions".
The growth in unit sales volume was a result of continued market
growth, market share gains, and the 1996 Acquisitions.
Gross profit for the three months ended October 31, 1996,
increased 54.8% to $10.3 million from $6.6 million for the
comparable period in 1995. Gross profit as a percentage of net
sales decreased to 16.5% from 16.8%. This net decrease in gross
profit margin resulted primarily from a significant increase in
chassis sales which carry a nominal profit margin partially
offset by the positive impact of production efficiencies
associated with the higher sales level and the price increase
implemented in the third quarter of last year.
Selling expenses for the three months ended October 31,
1996, increased 59.2% to $3.0 million from $1.9 million for the
comparable period of 1995. The increase in selling expenses was
due primarily to higher commission expenses resulting from
increased sales and from the impact of the 1996 Acquisitions.
General and administrative expenses for the three months ended
October 31, 1996 increased 41.5% to $2.2 million from $1.5
million for 1995 primarily due to merger expenses related to the
pooling transactions and the impact of the 1996 Acquisitions.
10<PAGE>
Overall, operating expenses as a percentage of net sales
decreased to 8.3% in the 1996 period from 8.7% in the 1995
period.
RESULTS OF OPERATIONS--SIX MONTHS ENDED OCTOBER 31, 1996 COMPARED
TO SIX MONTHS ENDED OCTOBER 31, 1995
Net sales for the six months ended October 31, 1996
increased 47.2% to $111.6 million from $75.9 million for the
comparable period in 1995. The increase in net sales was
primarily due to higher unit sales volume and an increase in
units sold together with truck chassis. The growth in unit sales
volume was a result of continued market growth, market share
gains and the 1996 Acquisitions.
Gross profit increased 49.7% to $18.5 million for the six
months ended October 31, 1996 from $12.4 million for the
comparable period in 1995. Gross profit as a percentage of net
sales increased to 16.6% from 16.3%. This net increase in gross
profit margin resulted primarily from production efficiencies
associated with the higher volume level and the positive impact
of the price increase implemented in the third quarter of last
year partially offset by an increase in chassis sales which carry
a nominal profit margin.
Selling expenses increased 49.3% to $5.5 million for the six
months ended October 31, 1996 from $3.7 million for the
comparable period of 1995. The increase in selling expenses was
due primarily to higher commission expenses resulting from
increased sales and the impact of the 1996 Acquisitions. General
and administrative expenses for the six months ended October 31,
1996 increased 32.4% to $3.9 million from $2.9 million for 1995
primarily due to merger expenses related to the pooling
transactions and the impact of the 1996 Acquisitions. Overall,
operating expenses as a percentage of net sales decreased to 8.4%
in the 1996 period from 8.8% in the 1995 period.
Interest income (expense), net improved from a net interest
expense of $0.2 million for the six months ended October 31, 1996
to a net interest income of $0.3 million for the comparable
period of 1995 as a result of debt repayment and investment of
the proceeds of the public offering in January 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working
capital, debt service and capital expenditures. The Company has
financed its operations and growth from internally generated
funds and debt financing and, since August 1994, in part from the
proceeds from its initial public offering and its subsequent
public offering completed in January, 1996.
11<PAGE>
Cash flows used in operating activities were $10.3 million
for the six month period ended October 31, 1996 as compared to
$1.2 million provided by operations for the comparable period of
1995. The decrease in cash flows from operations was primarily
the result of timing of disbursements to trade creditors and
increases in accounts receivable and inventory levels resulting
from the continuing growth in sales.
Cash used in investing activities was $0.1 million for the
six month period ended October 31, 1996 compared to $2.0 million
for the comparable period in 1995. The cash used in investing
activities was primarily for capital expenditures and equipment
purchases in both periods.
Cash used in financing activities was $1.6 million for the
six month period ended October 31, 1996 and $0.3 million for the
comparable period in the prior year. The cash was used to repay
long-term debt and to pay down amounts outstanding under the
acquired companies' credit arrangements.
The Company has a $25 million unsecured revolving credit
facility with NationsBank of Tennessee, N.A. (the "Credit
Facility"). Borrowings under the Credit Facility bear interest
at a rate equal to the 30-day LIBOR plus 1.0%. At October 31,
1996, no amounts were outstanding under the Credit Facility. The
Credit Facility imposes restrictions on the Company with respect
to the maintenance of certain financial ratios and specified
tangible net worth, the sale of assets, mergers, and the payment
of dividends.
The Company has recently expanded its Hermitage,
Pennsylvania facility and is currently increasing the capacity of
its plants in Ooltewah, Tennessee and Olive Branch, Mississippi.
Capital expenditures remaining for these expansions and
additional equipment are expected to be approximately $2.5
million. The Company intends to purchase or construct a car
carrier manufacturing facility. Excluding the capital
commitments set forth above, the Company has no other pending
material commitments. The Company believes that cash on hand,
cash flows from operations and unused borrowing capacity under
the Credit Facility will be sufficient to fund its operating
needs, capital expenditures and debt service requirements for the
next fiscal year. Management continually evaluates potential
strategic acquisitions. Although the Company believes that its
financial resources will enable it to consider potential
acquisitions, additional debt or equity financing may be
necessary. No assurance in this regard can be given, however,
since future cash flows and the availability of financing will
depend on a number of factors, including prevailing economic
conditions and financial, business and other factors beyond the
Company's control.
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibit 27 - Financial Data Schedule
(For SEC use only)
(b) Reports on Form 8-K - Current report on Form 8-K
filed on November 1, 1996.
12<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Miller Industries, Inc. has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MILLER INDUSTRIES, INC.
By: /s/ Adam L. Dunayer
Adam L. Dunayer
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: December 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000924822
<NAME> MILLER INDUSTRIES INC./TN
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 12,535
<SECURITIES> 0
<RECEIVABLES> 39,002
<ALLOWANCES> 0
<INVENTORY> 44,238
<CURRENT-ASSETS> 98,362
<PP&E> 23,231
<DEPRECIATION> 4,227
<TOTAL-ASSETS> 128,826
<CURRENT-LIABILITIES> 44,471
<BONDS> 7,165
0
0
<COMMON> 241
<OTHER-SE> 75,989
<TOTAL-LIABILITY-AND-EQUITY> 128,826
<SALES> 111,647
<TOTAL-REVENUES> 111,647
<CGS> 93,158
<TOTAL-COSTS> 102,578
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (271)
<INCOME-PRETAX> 9,340
<INCOME-TAX> 3,504
<INCOME-CONTINUING> 5,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,836
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
