SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 July 31, 1998
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)
8503 Hilltop Drive
Ooltewah, Tennessee 37363
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423)238-4171
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 August 31, 1998 was 46,525,455.
<PAGE>
MILLER INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1. Financial Statements (Unaudited)
--------------------------------
Condensed Consolidated Balance Sheets -
July 31, 1998 and April 30, 1998 3
Condensed Consolidated Statements of Income
for the Three Months Ended July 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended July 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations 8
-----------------------------------
PART II. OTHER INFORMATION
Item 2 Legal Proceedings 10
-----------------
Item 6. Exhibits and Reports on Form 8-K 11
--------------------------------
SIGNATURES 12
2<PAGE>
<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
July 31, April 30,
1998 1998
------------ ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments $ 12,039 $ 7,367
Accounts receivable, net 68,766 67,008
Inventories 79,683 71,839
Deferred income taxes 4,222 4,217
Prepaid expenses and other 4,294 5,362
--------- ---------
Total current assets 169,004 155,793
PROPERTY, PLANT AND EQUIPMENT, net 94,414 85,849
GOODWILL, net 88,392 81,605
OTHER ASSETS 8,909 6,483
--------- ---------
$ 360,719 $ 329,730
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,468 $ 4,900
Accounts payable 27,062 27,883
Accrued liabilities and other 17,727 18,236
--------- ---------
Total current liabilities 48,257 51,019
--------- ---------
LONG-TERM DEBT, less current portion 120,136 95,778
--------- ---------
DEFERRED INCOME TAXES 2,724 2,697
--------- ---------
SHAREHOLDERS' 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; 46,495,863 and 45,941,814 shares issued
and outstanding at July 31, 1998 and April 30, 1998,
respectively 465 459
Additional paid-in capital 145,235 139,480
Retained earnings 44,558 40,862
Accumulated other comprehensive income (656) (565)
--------- ---------
Total shareholders' equity 189,602 180,236
--------- ---------
$ 360,719 $ 329,730
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
July 31,
----------------------------
1998 1997
----------------------------
<C> <C> <C>
NET SALES $ 117,754 $ 85,353
COSTS AND EXPENSES:
Costs of operations 92,312 67,229
Selling, general, and administrative expenses 17,030 10,200
Interest expense, net 2,040 271
---------- -----------
Total costs and expenses 111,382 77,700
---------- -----------
INCOME BEFORE INCOME TAXES 6,372 7,653
INCOME TAXES 2,676 2,855
---------- -----------
NET INCOME $ 3,696 $ 4,798
========== ===========
NET INCOME PER COMMON SHARE:
BASIC $ 0.08 0.11
========== ===========
DILUTED $ 0.08 0.11
========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 46,064 43,037
========== ===========
DILUTED 47,195 45,214
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended July 31,
---------------------------
1998 1997
---------- --------
<C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,696 $ 4,798
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 2,964 1,686
Deferred income tax provision 214 108
Gain on disposals of property, plant, and equipment (351) --
Changes in operating assets and liabilities:
Accounts receivable (637) (4,878)
Inventories (7,783) (2,523)
Prepaid expenses and other 968 (376)
Accrued liabilities (1,066) 1,302
Accounts payable (939) (6,854)
Other assets 547 161
-------- --------
Net cash used in operating activities (2,387) (6,576)
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (4,298) (5,893)
Proceeds from sales of property, plant, and equipment 705 290
Acquisition of businesses, net of cash acquired (10,445) (2,929)
Funding of finance receivables -- (1,067)
Other (33) --
-------- --------
Net cash used in investing activities (14,071) (9,599)
-------- --------
FINANCING ACTIVITIES:
Net borrowings under line of credit 24,000 16,530
Repayment of long-term debt (2,899) (7,481)
Proceeds from exercise of stock options 15 379
-------- --------
Net cash provided by financing activities 21,116 9,428
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
TEMPORARY INVESTMENTS 14 (23)
-------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
INVESTMENTS 4,672 (6,770)
CASH AND TEMPORARY INVESTMENTS, beginning of
period 7,367 8,508
-------- --------
CASH AND TEMPORARY INVESTMENTS, end of period $ 12,039 $ 1,738
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash payments for interest $ 1,976 $ 184
======== ========
Cash payments for income taxes $ 1,668 $ 1,608
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5<PAGE>
<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, 1998.
2. Net Income Per Share
Basic net income per share is computed by dividing net
income by the weighted average number of common shares
outstanding. Diluted net income per share takes into
consideration the assumed conversion of outstanding stock
options resulting in 1.1 million and 2.2 million potential
dilutive common shares for the three months ended July 31,
1998 and 1997, respectively. Diluted net income per share
is calculated by dividing net income by the weighted average
number of common and potential dilutive common shares
outstanding. Per share amounts do not include the assumed
conversion of stock options with exercise prices greater
than the average share price because to do so would have
been antidilutive for the periods presented.
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 July 31, 1998 and April 30, 1998 consisted of
the following (in thousands):
6
<PAGE>
July 31, April 30,
1998 1998
----------- ------------
Chassis $ 18,217 $ 14,211
Raw Materials 23,890 22,027
Work in process 10,302 11,470
Finished goods 27,274 24,131
---------- ----------
$ 79,683 $ 71,839
========== ==========
4. Business Combinations
During the quarter ended July 31, 1998, the Company
purchased all the outstanding common stock of 9 towing
service companies and substantially all of the assets
of 8 towing service companies through the issuance of
approximately 539,300 shares of common stock and cash
payments of approximately $8.0 million. These acquisitions
were accounted for using the purchase method of accounting.
The pro forma impact of these acquisitions on net income and
earnings per share was not significant for the periods
presented herein.
5. Legal Matters
In January 1998, the Company received a letter from the
Antitrust Division of the Department of Justice (the
"Division") stating that it was conducting a civil
investigation covering "competition in the tow truck
industry". The letter asked that the Company preserve its
records related to the tow truck industry, particularly
documents related to sales and prices of products and parts,
acquisition of other companies in the industry, distributor
relations, patent matters, competition in the industry
generally, and activities of other companies in the
industry. In March 1998, the Company received a Civil
Investigative Demand ("CID") issued by the Division as part
of its continuing investigation of whether there are, have
been or may be violations of the federal antitrust statutes
in the tow truck industry. Under this CID, the Company is
required to produce information and documents to assist the
Division in its investigation. It is unknown at this time
The Company is continuing to cooperate with the government
in its investigation.
During September, October and November 1997, five lawsuits
were filed by certain persons who seek to represent a class
of shareholders who purchased shares of the Company's common
stock during the period from either October 15 or November 6,
1996 to September 11, 1997. Four of the suits were filed
7<PAGE>
in the United States District Court for the Northern
District of Georgia. The remaining suit was filed in
the Chancery Court of Hamilton County, Tennessee. In
general, the individual plaintiffs in all of the cases
allege that they were induced to purchase the Company's
common stock on the basis of allegedly actionable
misrepresentations or omissions about the Company and its
business and, as a result, were thereby damaged. Four of the
complaints assert claims under Sections 10(b) and 20 of the
Securities Act of 1934. The complaints name as the
defendants the Company and various of its present and
former directors and officers. The plaintiffs in the four
actions which involved claims in Federal Court under the
Securities Exchange Act of 1934 have consolidated those
actions. The Company filed a motion to dismiss in the
consolidated case which was granted in part and denied in
part. The Company filed a motion to dismiss in the
Tennessee case which was granted in its entirety, however,
the plaintiffs in that case have been granted permission
by the Court to amend and refile their complaint. In both
these actions, the Company denies liability and continues to
vigorously defend itself.
In addition to the shareholder litigation described above,
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.
6. Comprehensive Income
Effective May 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which requires additional disclosure
of amounts comprising comprehensive income. The Company has
other comprehensive income in the form of cumulative
translation adjustments which resulted in total
comprehensive income of approximately $3,605,000 and
$5,291,000 for the quarters ended July 31, 1998 and 1997,
respectively.
7. Reclassifications
Certain amounts in the prior period financial information
have been reclassified to conform to the current
presentation.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
- -----------------------------------
RECENT DEVELOPMENTS
As more fully discussed in Note 4 to condensed consolidated
financial statements, during the quarter ended July 31, 1998, the
Company acquired a total of 17 towing service companies.
RESULTS OF OPERATIONS--THREE MONTHS ENDED JULY 31, 1998 COMPARED
TO THREE MONTHS ENDED JULY 31, 1997
Net sales for the three months ended July 31, 1998, increased
38.0% to $117.8 million from $85.4 million for the comparable
period in 1997. The increase in net sales was primarily the
result of higher sales from the towing and recovery equipment
8<PAGE>
segment, including higher sales of truck chassis and sales from
Chevron, the towing and recovery equipment manufacturer acquired
in December 1997, and the inclusion for the quarter ended July 31,
1998 of sales of towing service companies acquired since July 31,
1997.
Costs of operations for the three months ended July 31, 1998,
increased 37.3% to $92.3 million from $67.2 million for the
comparable period in 1997. Costs of operations as a percentage
of net sales decreased to 78.4% from 78.8%. This reduction was
primarily a result of the Company's towing service segment,
which generally has a lower level of operating costs than the
towing and recovery equipment segment, accounting for a higher
proportion of revenues in the quarter ended July 31, 1998.
Selling, general and administrative expenses for the three months
ended July 31, 1998, increased 67.0% to $17.0 million from $10.2
million for the comparable period of 1997. As a percentage of
sales, selling, general and administrative expenses increased
from 12.0% for the three months ended July 31, 1997 to 14.5% for
the three months ended July 31, 1998. This increase was
primarily a result of the Company's towing service segment,
which generally has a higher level of selling, general and
administrative costs as a percentage of sales than the
towing and recovery equipment segment.
Net interest expense increased $1.7 million to $2.0 million for
the three months ended July 31, 1998 from $.3 million for the
three months ended July 31, 1997 primarily due to increased
borrowings under the Company's line of credit to fund working
capital needs and additional acquisitions of towing service
companies.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operating activities were $5.4 million for the
three month period ended July 31, 1998 as compared to $6.6
million for the comparable period of 1997. The cash flows used
in operating activities were used primarily to fund working
capital needed to support the growth of the businesses.
Cash used in investing activities was $11.1 million for the three
month period ended July 31, 1998 compared to $9.6 million used in
investing activities for the comparable period in 1997. The cash
used in investing activities was primarily for capital
expenditures and acquisition of businesses.
Cash provided by financing activities was $21.1 million for the
three month period ended July 31, 1998 and $9.4 million for the
comparable period in the prior year. The cash was provided
primarily by borrowing under the Company's lines of credit.
9<PAGE>
$150,000,000 ( the "Credit Facility") for working capital and
other general corporate purposes. Borrowings under the Credit
Facility bear interest at a rate equal to the London Interbank
Offered Rate plus a margin ranging from 0.625% to 1.5% based on a
specified ratio of funded indebtedness to earnings or the prime
rate, as elected by the Company. At July 31, 1998, $109 million
was outstanding under the Credit Facility. The Credit Facility
imposes restrictions on the Company with respect to the
maintenance of certain financial ratios, the incurrence of
indebtedness, the sale of assets, capital expenditures and
mergers and acquisitions.
On May 1, 1998, the Company entered into an interest swap
agreement covering the notional amount of $50 million of variable
rate debt to fix the interest rate at 5.68% plus the applicable
margin. The agreement expires at the end of three years unless
cancelled by the bank at the end of two years.
The Company is currently increasing the capacity of its plant in
Ooltewah, Tennessee. Capital expenditures remaining for this
expansion and additional equipment are expected to be
approximately $2.9 million. As described in Note 4 to condensed
consolidated financial statements, the Company has expended
approximately $8.0 million for the purchase of towing service
companies during the quarter ended July 31, 1998. Excluding the
capital commitments set forth above, the Company has no other
material capital 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.
RECENT ACCOUNTING PRONOUCEMENTS
The Company has adopted the provisions of Statement of Financial
Accounting No. 131, "Disclosures About Segments of an Enterprise and
Related Information". The adoption will not have a significant impact
on the condensed consolidated financial statements.
YEAR 2000
The Company utilizes software and related technologies throughout
its businesses that will be affected by the date change in the year
2000. The Company is currently reviewing its systems for year 2000
compliance in its design, purchase and installation processes.
Anticipated costs of systems modifications for compliance are not
expected to have material impact on the Company's consolidated results
of operations.
The Company does not currently have any information concerning the year
2000 compliance status of its suppliers and customers. In the event that
any of the Company's significant suppliers or customers does not successfully
and timely achieve year 2000 compliance, the Company's business or operations
could be adversely affected.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In January 1998, the Company received a letter from the Antitrust
Division of the Department of Justice (the "Division") stating
that it was conducting a civil investigation covering
"competition in the tow truck industry." The letter asked that
the Company preserve its records related to the tow truck
industry, particularly documents related to sales and prices of
products and parts, acquisition of other companies in the
industry, distributor relations, patent matters, competition in
the industry generally, and activities of other companies in the
industry. In March 1998, the Company received a Civil
Investigative Demand ("CID") issued by the Division as part of
its continuing investigation of whether
10<PAGE>
there are, have been or may be violations of the federal
antitrust statutes in the tow truck industry. Under this CID,
the Company is required to produce information and documents to
assist the Division in its investigation. It is unknown at this
time what the eventual outcome of the investigation will be. The
Company is continuing to cooperate with the government in its
investigation.
During September, October and November 1997, five lawsuits were
filed by certain persons who seek to represent a class of
shareholders who purchased shares of the Company's common stock
during the period from either October 15 or November 6, 1996 to
September 11, 1997. Four of the suits were filed in the United
States District Court for the Northern District of Georgia. The
remaining suit was filed in the Chancery Court of Hamilton
County, Tennessee. In general, the individual plaintiffs in all
of the cases allege that they were induced to purchase the
Company's common stock on the basis of allegedly actionable
misrepresentations or omissions about the Company and its
business and, as a result, were thereby damaged. Four of the
complaints assert claims under Sections 10(b) and 20 of the
Securities Act of 1934. The complaints name as the defendants
the Company and various of its present and former directors and
officers. The plaintiffs in the four actions which involved
claims in Federal Court under the Securities Exchange Act of 1934
have consolidated those actions. The Company filed a motion to
dismiss in the consolidated case which was granted in part and
denied in part. The Company filed a motion to dismiss in the
Tennessee case which was granted in its entirety, however, the
plaintiffs in that case have been granted permission by the Court
to amend and refile their complaint. In both these actions, the
Company denies liability and continues to vigorously defend itself.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10 - Form of Indemnification Agreement dated June 8,
1998 by and between Miller Industries, Inc. and
each of William G. Miller, Jeffrey I. Badgley, A.
Russell Chandler, Paul E. Drack, Adam L. Dunayer,
Stephen Furbacher, Frank Madonia, J. Vincent
Mish, Richard H. Roberts, and Daniel N. Sebastian
Exhibit 27 - Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K - No reports on Form 8-K were
filed by the Company during the first quarter of the
fiscal year.
11<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
Date: September 14, 1998
12
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 8th day
of June, 1998, by and between MILLER INDUSTRIES, INC., a
Tennessee corporation (the "Corporation"), and _____________________
("Indemnified Party").
W I T N E S S E T H:
WHEREAS, Indemnified Party currently serves as a director or
officer, or both, of the Corporation, and in such capacity is
performing a valuable service; and
WHEREAS, the Corporation's Charter (the "Charter") permits
the Corporation to indemnify its directors and officers; and
WHEREAS, Section 48-18-509 of the Tennessee General
Corporation Act, as amended to date (the "State Statute"),
provides the statutory basis for an indemnification agreement
with directors and officers of a Tennessee corporation; and
WHEREAS, the Corporation's Bylaws (the "Bylaws") require the
Corporation to indemnify its directors and officers to the
fullest extent permitted by law; and
WHEREAS, the State Statute specifically provides that it is
not exclusive and that agreements may be entered into between the
Corporation and other persons with respect to the indemnification
of such persons; and
WHEREAS, in accordance with the authorization provided by
the State Statute, the Corporation may purchase a policy, or
policies, of directors and officers liability insurance ("D&O
Insurance"), covering certain liabilities which may be incurred
by its directors, officers and other persons in the performance
of their services for the Corporation; and
WHEREAS, in order to induce Indemnified Party to continue to
serve as a director or officer, or both, the Board of Directors
of the Corporation has determined that it is in the best
interests of the Corporation to indemnify its directors and
officers to the fullest extent possible and to provide specific
contractual assurance that the rights to indemnification
currently provided to them will remain available to them;
NOW, THEREFORE, in consideration of Indemnified Party's
continued service on behalf of the Corporation after the date
hereof, the parties hereto agree as follows:
<PAGE>
1. AGREEMENT TO SERVE. The Indemnified Party agrees to
serve, at the will of the Corporation or its shareholders as a director
and/or officer, faithfully and to the best of his ability so long
as he is duly elected and qualified and/or appointed or until
such time as he resigns in accordance with the Corporation's
bylaws.
2. INDEMNITY. The Corporation hereby agrees to hold
harmless and indemnify Indemnified Party to the fullest extent
authorized or permitted by the provisions of the State Statute, or
by any amendment thereof or other statutory provision authorizing or
permitting such indemnification which is adopted after the date
hereof.
3. MAINTENANCE OF INSURANCE AND SELF INSURANCE.
Subject only to the provisions of Section 3(b) hereof, the
Corporation hereby agrees that, for so long as Indemnified Party
shall continue to serve on behalf of the Corporation (or shall
continue at the request of the Corporation to serve as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and
thereafter so long as Indemnified Party shall be subject to any
possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by
reason of the fact that Indemnified Party served on behalf of the
Corporation (or served in any of said other capacities), the
Corporation will purchase and maintain in effect for the benefit
of Indemnified Party one or more valid, binding and enforceable
policies of D&O Insurance. In all policies of D&O Insurance, the
Indemnified Party shall be named as an insured in such a manner
as to provide the Indemnified Party the same rights and benefits
as are accorded to the Corporation's directors and officers most
favorably insured by such policy.
The Corporation shall not be required to maintain any said
policy of D&O Insurance in effect if such insurance is not
reasonably available or if, in the reasonable business judgment
of the Board of Directors, either (i) the premium cost for such
insurance is substantially disproportionate to the amount of
coverage, or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit to
Indemnified Party from such insurance.
4. ADDITIONAL INDEMNITY. Subject only to the exclusions
set forth in Section 5 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Indemnified Party against any and
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually incurred by Indemnified Party
in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the
Corporation) to which Indemnified Party is, was or at any time
becomes a party, or is threatened to be made a party, by reason
of the fact that Indemnified Party is, was or at any time becomes
a director, officer, employee or agent of the Corporation, or is
or was serving or at any time serves at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise.
-2-<PAGE>
5. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity
pursuant to Section 2 or 4 hereof shall be paid by the Corporation:
(a) In respect of expenses, judgments, fines and
settlement amounts to the extent attributable to remuneration
paid or other financial benefit provided to Indemnified Party by
the Corporation if it shall be determined by a final judgment or
other final adjudication that such remuneration or financial
benefit was paid or provided in violation of Indemnified Party's
duties and obligations to the Corporation;
(b) On account of any suit in which judgment is
rendered against Indemnified Party for an accounting of profits,
made from the purchase or sale by Indemnified Party of securities
of the Corporation, pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar
provisions of any state statutory law, or on account of any
payment by Indemnified Party to the Corporation in respect of any
claim for such accounting;
(c) On account of Indemnified Party's conduct if it
shall be determined by a final judgment or other final
adjudication to have been knowingly fraudulent, deliberately
dishonest, or to have constituted willful misconduct;
(d) If a final decision by a court having jurisdiction
in the matter shall determine that such indemnification is not
lawful; or
(e) If the Indemnified Party has been indemnified by
the Corporation for any loss or expense pursuant to the
Corporation's bylaws or state statutes.
6. CONTRIBUTION.
If the indemnification provided in Sections 2 and 4 is
unavailable and may not be paid to Indemnified Party for any
reason other than those set forth in paragraphs (a), (b), (c) and
(e) of Section 5, then, in respect of any threatened, pending or
completed action, suit or proceeding in which the Corporation is
jointly liable with Indemnified Party (or would be if joined in
such action, suit or proceeding), the Corporation shall
contribute to the amount of expenses, judgments, fines and
settlements paid or payable by Indemnified Party in such
proportion as is appropriate to reflect (i) the relative benefits
received by the Corporation on the one hand and Indemnified Party
on the other hand from the transaction from which such action,
suit or proceeding arose, and (ii) the relative fault of the
Corporation on the one hand and of Indemnified Party on the other
in connection with the events which resulted in such expenses,
judgments, fines or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of the
Corporation on the one hand and of Indemnified Party on the other
shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in
such expenses, judgments, fines or settlement amounts. The
Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro
rata allocation or any other method of allocation which does not
take account of the foregoing equitable considerations.
-3-<PAGE>
The determination as to the amount of the contribution, if any,
shall be made by:
(i) a court of competent jurisdiction upon the
application of both Indemnified Party and the Corporation (if an
action or suit had been brought in, and final determination had
been rendered by, such court);
(ii) the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such
action, suit or proceeding; or
(iii) regular outside counsel of the Corporation,
if a quorum is not obtainable for purposes of clause (ii) above,
or, even if obtainable, a quorum of disinterested directors so
directs.
7. CONTINUATION OF OBLIGATIONS. All agreements and
obligations of the Corporation contained herein shall continue during
the period Indemnified Party is a director, officer, employee or
agent of the Corporation (or is serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise), and shall continue thereafter for so long as
Indemnified Party shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding,
whether civil, criminal or investigative, by reason of the fact
that Indemnified Party was serving in any such capacity on behalf
of the Corporation.
8. ADVANCEMENT OF EXPENSES. Expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually incurred by Indemnified Party with respect to any action,
suit or proceeding referred to in Sections 2 or 4 hereof shall be
advanced by the Corporation prior to the time of the disposition
of such action, suit or proceeding promptly upon the receipt of a
(a) written affirmation from Indemnified Party of his good faith
belief that he is entitled to be indemnified by the Corporation
for such expenses, judgments, fines or amounts paid in settlement
under the provisions of the State Statute, the Charter, the
Bylaws, this Agreement or otherwise, and (b) written undertaking
to promptly return any amounts advanced hereunder if it shall be
ultimately determined that Indemnified Party is not entitled to
be indemnified by the Corporation for such amounts under the
provisions of this Agreement.
9. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after
receipt by Indemnified Party of notice of the commencement or the
threat of commencement of any action, suit or proceeding,
Indemnified Party will, if a claim in respect thereof is to be
made against the Corporation under this Agreement, notify the
Corporation of the commencement thereof, but the omission so to
notify the Corporation will not relieve it from any liability
which it may have to Indemnified Party otherwise than under this
Agreement. With respect to any such action, suit or proceeding
as to which Indemnified Party so notifies the Corporation:
-4-<PAGE>
(a) The Corporation shall give prompt notice of such
action, suit or proceeding to the insurers of its D&O Insurance
in accordance with the procedures set forth in the policy and
shall thereafter take all necessary or desirable actions to cause
such insurers to pay on behalf of the Indemnified Party all
expenses and losses in accordance with the terms of the policy;
(b) The Corporation will be entitled to participate in
the defense of any such action, suit or proceeding at its own
expense;
(c) Except as otherwise provided below, the
Corporation may assume the defense thereof, with counsel
satisfactory to Indemnified Party upon written notice of its
election to do so. After delivery of notice from the Corporation
to Indemnified Party of its election so to assume such defense,
the Corporation will not be liable to Indemnified Party under
this Agreement for any legal or other expenses subsequently
incurred by Indemnified Party in connection with the defenses
thereof, other than reasonable costs of investigation or as
otherwise provided below. Indemnified Party shall have the right
to employ its counsel in such action, suit or proceeding, but the
fees and expenses of such counsel incurred after delivery of
notice from the Corporation of its assumption of the defense
thereof shall be at the expense of Indemnified Party unless (i)
the employment of counsel by Indemnified Party has been
authorized by the Corporation, (ii) Indemnified Party shall have
reasonably concluded that there may be a conflict of interest
between the Corporation and Indemnified Party in the conduct of
the defense of such action, suit or proceeding, or (iii) the
Corporation shall not in fact have employed counsel to assume the
defense of such action, suit or proceeding in each of which cases
the fees and expenses of counsel shall be at the expense of the
Corporation; and
(d) The Corporation shall not be liable to indemnify
Indemnified Party under this Agreement for any amounts paid in
settlement of any action or claim effected without its written
consent. The Corporation shall not settle any action or claim in
any manner which would impose any penalty, obligation or
limitation on Indemnified Party without Indemnified Party's
written consent. Neither the Corporation nor Indemnified Party
will unreasonably withhold their consent to any proposed
settlement.
10. REPAYMENT OF EXPENSES. Indemnified Party agrees to
reimburse the Corporation for all reasonable expenses, judgments,
fines and amounts paid in settlement paid by the Corporation in
defending any civil or criminal action, suit or proceeding
against Indemnified Party or advanced by the Corporation to
Indemnified Party in the event, and only to the extent, that it
shall be ultimately determined that Indemnified Party is not
entitled to be indemnified by the Corporation for such expenses,
judgments, fines or amounts paid in settlement under the
provisions of this Agreement.
-5-<PAGE>
11. ENFORCEMENT.
The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed
on it hereby in order to induce Indemnified Party to continue to
serve on behalf of the Corporation, and acknowledges that
Indemnified Party is relying upon this Agreement in continuing to
serve in such capacity.
In the event Indemnified Party is required to bring any
action to enforce rights or to collect moneys due under this
Agreement and is successful in such action, the Corporation shall
reimburse Indemnified Party for all of Indemnified Party's fees
and expenses in bringing and pursuing such action.
12. SEPARABILITY. Each of the provisions of this Agreement
is a separate and distinct agreement and independent of the
others, so that if any provision hereof shall be held to be
invalid or unenforceable in whole or in part for any reason, such
invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
13. RIGHTS NOT EXCLUSIVE. The rights provided hereunder
shall not be deemed to be exclusive of any other rights to which
the Indemnified Party may be entitled under the Corporation's
charter, bylaws, the state statute or otherwise.
14. GOVERNING LAW; SUCCESSORS; AMENDMENT AND TERMINATION.
This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Tennessee.
This Agreement shall be binding upon Indemnified Party and
the Corporation, its successors and assigns, and shall inure to
the benefit of Indemnified Party, his heirs, personal
representatives and assigns and to the benefit of the
Corporation, its successors and assigns.
-6-<PAGE>
No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
CORPORATION:
MILLER INDUSTRIES, INC.
By: /s/ Frank Madonia
Vice President
INDEMNIFIED PARTY:
___________________________
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000924822
<NAME> MILLER INDUSTRIES, INC. /TN
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 12,039
<SECURITIES> 0
<RECEIVABLES> 68,766
<ALLOWANCES> 0
<INVENTORY> 79,683
<CURRENT-ASSETS> 169,004
<PP&E> 125,493
<DEPRECIATION> 31,079
<TOTAL-ASSETS> 360,719
<CURRENT-LIABILITIES> 48,257
<BONDS> 120,136
0
0
<COMMON> 465
<OTHER-SE> 189,137
<TOTAL-LIABILITY-AND-EQUITY> 360,719
<SALES> 117,754
<TOTAL-REVENUES> 117,754
<CGS> 92,312
<TOTAL-COSTS> 109,342
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,040
<INCOME-PRETAX> 6,372
<INCOME-TAX> 2,676
<INCOME-CONTINUING> 3,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,696
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
