SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 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, TN 37363
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 238-4171 x238
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 November 30, 1998 was 46,647,687.
<PAGE>
MILLER INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION Page Number
-----------
Item 1. Financial Statements (Unaudited)
--------------------------------
Condensed Consolidated Balance Sheets -
October 31, 1998 and April 30, 1998 3
Condensed Consolidated Statements of Income
for the Three Months and Six Months Ended
October 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended October 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 9
-----------------------------------
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
- -----------------
Item 4. Submission of Matters to a Vote
--------------------------------
of Security Holders 14
--------------------
Item 6. Exhibits and Reports on Form 8-K 14
--------------------------------
SIGNATURES 17
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
1998 1998
RESTATED
(NOTE 2)
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments $ 8,329 $ 7,367
Accounts receivable, net 76,256 67,008
Inventories 87,738 71,839
Deferred income taxes 4,077 4,217
Prepaid expenses and other 4,456 5,362
--------- ---------
Total current assets 180,856 155,793
PROPERTY, PLANT AND EQUIPMENT, NET 95,873 85,849
GOODWILL, NET 91,138 81,605
OTHER ASSETS, NET 9,028 6,483
--------- ---------
$ 376,895 $ 329,730
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,434 $ 4,900
Accounts payable 32,822 27,883
Accrued liabilities and other 13,082 18,236
--------- ---------
Total current liabilities 48,338 51,019
--------- ---------
LONG-TERM DEBT, LESS CURRENT PORTION 134,189 95,778
--------- ---------
DEFERRED INCOME TAXES 2,724 2,697
--------- ---------
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; 46,630,952 and
45,941,814 shares issued and outstanding at October 31, 1998 and April
30, 1998, respectively
466 459
Additional paid-in capital 145,089 139,480
Retained earnings 46,624 40,862
Accumulated other comprehensive income (535) (565)
--------- ---------
Total shareholders' equity 191,644 180,236
--------- ---------
$ 376,895 $ 329,730
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31, OCTOBER 31,
--------------------- -------------------
1998 1997 1998 1997
Restated Restated
(Note 2) (Note 2)
-------- ------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $134,055 $94,727 $251,809 $180,080
-------- ------- -------- --------
COSTS AND EXPENSES:
Costs of operations 108,970 76,221 203,010 143,450
Selling, general, and administrative expenses 17,820 10,269 34,850 20,469
Restructuring costs -- 4,100 -- 4,100
Interest expense, net 2,228 429 4,268 700
-------- ------- -------- --------
Total costs and expenses 129,018 91,019 242,128 168,719
-------- ------- -------- --------
INCOME BEFORE INCOME TAXES 5,037 3,708 9,681 11,361
INCOME TAXES 1,958 1,410 3,918 4,265
-------- ------- -------- --------
NET INCOME $ 3,079 $ 2,298 $ 5,763 $ 7,096
======== ======= ======== ========
NET INCOME PER COMMON SHARE
BASIC: $ 0.07 $ 0.05 $ 0.12 $ 0.16
======== ======= ======== ========
DILUTED: $ 0.07 $ 0.05 $ 0.12 $ 0.15
======== ======= ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC: 46,518 44,072 46,291 44,001
====== ====== ====== ======
DILUTED: 47,323 45,868 47,283 45,988
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED statements of cash flows
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED OCTOBER 31,
----------------------------
1998 1997
RESTATED
(NOTE 2)
--------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,763 $ 7,096
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 6,445 3,724
Deferred income tax provision 212 715
Gain on sales of property, plant, and equipment (589) (662)
Changes in operating assets and liabilities:
Accounts receivable (6,891) 1,190
Inventories (15,018) (459)
Prepaid expenses and other 1,022 (1,477)
Accrued liabilities and other (6,805) (3,133)
Accounts payable 4,652 (14,615)
Other assets (2,160) (2,543)
-------- --------
Net cash used in operating activities (13,369) (10,164)
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (9,504) (9,705)
Proceeds from sales of property, plant, and equipment 1,341 1,058
Acquisition of businesses, net of cash acquired (9,611) (5,320)
Proceeds from sale of finance receivables -- 3,861
Funding of finance receivables -- (1,067)
Other (21) 384
-------- --------
Net cash used in investing activities (17,795) (10,789)
-------- --------
FINANCING ACTIVITIES:
Net borrowings under line of credit 37,500 24,722
Payments of long-term obligations (4,699) (10,775)
Proceeds from exercise of stock options 77 785
Repurchase of common stock (857) --
-------- --------
Net cash provided by financing activities 32,021 14,732
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND TEMPORARY INVESTMENTS 105 --
-------- --------
NET INCREASE IN CASH AND TEMPORARY INVESTMENTS 962 (6,221)
CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD 7,367 8,508
-------- --------
CASH AND TEMPORARY INVESTMENTS, END OF PERIOD $ 8,329 $ 2,287
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest $ 4,584 $ 861
======== ========
Cash payments for income taxes $ 4,491 $ 5,598
======== ========
</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,
1998.
2. Restatement
In connection with its annual physical inventory counts which were
taken as of April 30, 1999, the Company identified certain adjustments
that it deemed necessary to more accurately state the previously filed
fiscal 1999 quarterly financial statements. During the interim periods,
the Company records inventory using estimated margins. While this
method has proven to be reliable in the past, this year's physical
inventory counts revealed aggregate adjustments which the Company
believes to be attributable to material, production, and other
inventory costs being higher, and the related utilization being less
efficient than estimated during the year.
The Company's financial statements for the three and six months ended
October 31, 1998 have been restated to reflect these adjustments. A
summary of the effect of the adjustments for the three and six months
ended October 31, 1998 on certain previously reported amounts is as
follows (in thousands, except per share data):
6
<PAGE>
Three Months Six Months
Previously Restated Previously Restated
Reported Reported
-------- -------- -------- --------
Costs of operations $107,153 $108,970 $199,465 $203,010
Total costs and expenses 127,201 129,018 238,583 242,128
Income before income
taxes 6,854 5,037 13,226 9,681
Income taxes 2,812 1,958 5,488 3,918
Net income 4,042 3,079 7,738 5,763
Earnings per share:
Basic $ 0.09 $ 0.07 $ 0.17 $ 0.12
Diluted 0.09 0.07 0.17 0.12
October 31, 1999
----------------
Inventories $ 90,153 $ 87,738
Property, plant and equipment, net 95,957 95,873
Accrued liabilities and other 13,604 13,082
Retained earnings 48,601 46,624
3. 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 .8 million and 1.8 million
potential dilutive common shares for the three months ended October 31,
1998 and 1997, and 1.0 million and 2.0 million potential dilutive
common shares for the six months ended October 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.
4. 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, 1998 and April 30,
1998 consisted of the following (in thousands):
7
<PAGE>
October 31, April 30,
1998 1998
------- -------
Chassis $22,685 $14,211
Raw Materials 21,813 22,027
Work in process 11,940 11,470
Finished goods 31,300 24,131
------- -------
$87,738 $71,839
======= =======
5. Business Combinations
Throughout the six months ended October 31, 1998, the Company purchased
24 towing service companies for an aggregate purchase price of
$15,361,000, which consisted of $10,088,000 in cash and $5,273,000
(848,253 shares) of common stock. These acquisitions were accounted for
using the purchase method of accounting. The accompanying consolidated
financial statements reflect the preliminary allocation of purchase
price as the purchase price has not been finalized for all
transactions. The excess of the aggregate purchase price over the
estimated fair value of net assets acquired was approximately
$9,180,000.
6. 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 Investigation
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 in the process of producing information and
documents to assist the Division in its investigation. It is unknown at
this time what the eventual outcome of this 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
8
<PAGE>
Company filed a motion to dismiss in the consolidated case which was
granted in part and denied in part. The plaintiffs have filed a motion
for class certification which the Company will oppose. The Company
filed a motion to dismiss in the Tennessee case which was granted in
its entirety, however, the plaintiffs in that case have, with
permission from the Court, amended and refiled their complaint. The
Company has filed a motion to dismiss the amended complaint which is
pending and will be argued before the Court in January. In both these
actions, the Company denied 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.
7. Stock Repurchase Plan
The Company's board of directors approved a share repurchase plan
during fiscal 1998 under which the Company may repurchase up to
2,000,000 shares of common stock from time to time until March 31,
1999. It is expected that such repurchased shares would be issued as
consideration in business acquisitions currently being negotiated
pursuant to the Company's ongoing acquisition strategy. All shares
purchased under the plan during fiscal 1999 and 1998 (200,000 shares at
a cost of $.9 million for the six months ended October 31, 1998 and
547,900 shares at a cost of $4.2 million in fiscal 1998) were reissued
as consideration for towing services companies acquired prior to
October 31, 1998.
8. 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 (expense) in the
form of cumulative translation adjustments which resulted in total
comprehensive income (expense) of approximately $(121,000) and
$(15,000) for the three months ended October 31, 1998 and 1997, and
$(30,000) and $(8,000) for the six months ended October 31, 1998 and
1997, respectively.
9
<PAGE>
9. Subsequent Events
Subsequent to the end of the quarter, the Company has closed four
additional acquisitions of towing services companies with aggregate
annual historical revenues of approximately $3.7 million. The
consideration for these transactions consists of approximately 16,000
shares of Company common stock and $4.1 million in cash as well as the
assumption of certain indebtedness.
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, during the six months ended October 31, 1998, the Company
acquired a total of 24 towing service companies.
Subsequent to the end of the quarter and as more fully discussed in
Note 9 to condensed consolidated financial statements, the Company has
closed four additional acquisitions of towing service.
RESULTS OF OPERATIONS--THREE MONTHS ENDED OCTOBER 31, 1998 COMPARED
THREE MONTHS ENDED OCTOBER 31, 1997
Net sales for the three months ended October 31, 1998, increased 41.5%
to $134.1 million from $94.7 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 segment, including higher sales of
chassis and sales from Chevron, the towing and recovery equipment
manufacturer acquired in December 1997, and the inclusion for the
quarter ended October 31, 1998 of sales of towing services companies
acquired since October 31, 1997.
Costs of operations for the three months ended October 31, 1998,
increased 43.0% to $109.0 million from $76.2 million for the comparable
period in 1997. Costs of operations as a percentage of net sales
increased to 81.3% from 80.5%. The increase was primarily a result of
the impact of a relative increase in the costs of operations as a
percentage of net sales incurred in the expansion of the business of
the towing services segment over the comparable prior year period.
10
<PAGE>
Selling, general and administrative expenses for the three months ended
October 31, 1998, increased 72.8% to $17.8 million from $10.3 million
for the comparable period in 1997. As a percentage of sales, selling,
general and administrative expenses increased from 10.8% to 13.3%. The
increase was primarily a result of the Company's towing services
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.
During the second quarter of fiscal 1998, the Company recorded a
one-time pretax charge of $4.1 million for the Olive Branch,
Mississippi facility closure and consolidation of manufacturing
operations.
Net interest expense increased $1.8 million to $2.2 million for three
months ended October 31, 1998 from $0.4 million for the comparable
period in 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.
RESULTS OF OPERATIONS--SIX MONTHS ENDED OCTOBER 31, 1998 COMPARED TO
SIX MONTHS ENDED OCTOBER 31, 1997
Net sales for the six months ended October 31, 1998 increased 39.8% to
$251.8 million from $180.1 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 segment, including higher sales of
truck chassis and sales from Chevron, the towing and recovery equipment
manufacturer acquired in December 1997, and inclusion for the six
months ended October 31, 1998 of sales from the towing services
companies acquired since October 31, 1997.
Costs of operations increased 41.5% to $203.0 million for the six
months ended October 31, 1998 from $143.5 million for the comparable
period in 1997. Costs of operations as a percentage of net sales
increased from 79.7% to 80.6%. The increase was primarily a result of
the impact of a relative increase in the costs of operations as a
percentage of net sales incurred in the expansion of the business of
the towing services segment over the comparable prior year period.
Selling, general and administrative expenses increased 70.3% to $34.9
million for the six months ended October 31, 1998 from $20.5 million
for the comparable period of 1997. As a percentage of net sales,
selling, general and administrative expenses increased from 11.4% to
13.8%. The increase related primarily to the Company's towing services
segment, which generally has a higher level of selling, general and
administrative costs as a percentage of net sales than the towing and
recovery equipment segment .
11
<PAGE>
During the second quarter of fiscal 1998, the Company recorded a
one-time pretax charge of $4.1 million for the Olive Branch,
Mississippi facility closure and consolidation of manufacturing
operations.
Net interest expense increased $3.6 million to $4.3 million for the six
months ended October 31, 1998 from $0.7 million for the six months
ended October 31, 1997 primarily due to increased borrowings under the
Company's line of credit to fund working capital needs and additional
acquisitions of distributors and towing service companies.
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 offerings completed
in January 1996 and November 1996.
Cash flows used in operating activities were $13.4 million for the six
months ended October 31, 1998 as compared to $10.2 million used in
operations for the comparable period of 1997. The increase in cash
flows used in operating activities was primarily to fund working
capital needed to support the growth of the businesses.
Cash used in investing activities was $17.8 million for the six months
ended October 31, 1998 compared to $10.8 million for the comparable
period in 1997. The cash used in investing activities was primarily for
capital expenditures for equipment, building expansion and acquisitions
of businesses.
Cash provided by financing activities was $32.0 million for the six
months ended October 31, 1998 as compared to $14.7 million provided by
financing activities for the comparable period in the prior year. The
cash was provided primarily by borrowings under the Company's line of
credit to fund working capital and acquisitions.
The Company has an unsecured revolving credit facility of $175,000,000
(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
0.75% to 2.00% based on a specified ratio of funded indebtedness to
earnings or the prime rate, as elected by the Company. At October 31,
1998, $122.5 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.
12
<PAGE>
On May 1, 1998, the Company entered into an interest rate 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 $2.6 million.
As described in Note 5 to condensed consolidated financial statements,
the Company has expended approximately $10.1 million for the purchase
of companies for the six months ended October 31, 1998. 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 available credit funding 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 PRONOUNCEMENTS
The Company has adopted the provisions of Statement of Financial
Accounting (SFAS) 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.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities",
effective for fiscal years beginning after June 15, 1999. The Statement
establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either
an asset or liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the
income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive
hedge accounting.
13
<PAGE>
The Company has not yet quantified the impact of adopting SFAS No. 133
on its financial statements and has not determined the timing of or
method of adoption of SFAS No. 133. However, the Statement could
increase volatility in earnings and other comprehensive income.
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 has been actively planning its systems for year 2000
compliance in its design, purchase, and installation processes. The
impact of non-compliant systems of a significant number of suppliers,
customers and its own internal applications could be material to the
Company's operations.
The Company is in the process of implementing a new financial and
manufacturing software system that has been certified as year 2000
compliant. Completion of this implementation at most of its domestic
manufacturing facilities and towing service locations is expected to be
complete by April 1999. The Company's distribution facilities are in
the process of implementing year 2000 compliant financial software at
all locations, with anticipated completion by the end of fiscal 1999.
Neither implementation has been accelerated due to year 2000 issues,
nor has any information technology project been deferred as a result of
personnel or financial resource allocations to year 2000 issues.
Additionally, a project team has been formed to actively review and
evaluate the Company's systems for year 2000 compliance. Included in
this assessment is the review of both the hardware and software
infrastructure that support the Company's major business functions. To
date, the project team has completed approximately 15% of its review,
and anticipates the majority of the review and remediation to be
completed by April 30, 1999. Through October 31, 1998, remediation
costs incurred have not been significant.
Besides impacting in-house systems, year 2000 issues could affect the
Company's suppliers and customers. Certain suppliers have been surveyed
for year 2000 compliance and state of readiness, with plans to contact
additional suppliers over the next several months. The Company is not
reliant on a single supplier for its raw material and purchased
component needs. In the event that a significant number of the
Company's suppliers or customers do not successfully and timely achieve
their Year 2000 compliance, the Company's business or operations could
be adversely affected.
The Company has and is addressing its year 2000 exposures. However, the
Company has not yet formalized its contingency plans should an
unforeseeable year 2000 issue arise that poses a significant threat to
the Company's business. The Year 2000 project team will address these
issues as part of the overall compliance review and recommend interim
solutions until permanent ones are available. Management will continue
to monitor the progress of the project team and make additional
contingency plans as deemed necessary.
14
<PAGE>
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 there are, have been or may be violations of
the federal antitrust statutes in the tow truck industry. Under this
CID, the Company is in the process of producing 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 plaintiffs have filed a motion
for class certification which the Company will oppose. The Company
filed a motion to dismiss in the Tennessee case which was granted in
its entirety, however the plaintiffs in that case have, with permission
from the Court, amended and refiled their complaint. The Company has
filed a motion to dismiss the amended complaint which is pending and
will be argued before the court in January. In both these actions, the
Company denied liability and continues to vigorously defend itself.
15
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on Friday, September 11,
1998 in Norcross, Georgia, at which the following matters were
submitted to a vote of the shareholders:
(a) Votes cast for or withheld regarding the election of six (6) Directors
for a term of one (1) year were as follows:
FOR WITHHELD
--- --------
Jeffrey I. Badgley 37,063,712 166,625
A. Russell Chandler III 37,075,784 154,553
Paul E. Drack 37,073,234 157,103
Stephen A. Furbacher 37,071,252 159,085
William G. Miller 37,063,629 166,708
Richard H. Roberts 36,975,134 255,203
(b) Votes cast for or against and the number of abstentions regarding the
other matter voted upon at the meeting were as follows:
DESCRIPTION OF MATTER FOR AGAINST ABSTAINED
Ratification of the appointment
of Arthur Andersen LLP as
independent auditors of the
Company to serve for the 1999
fiscal year 37,032,645 144,741 52,951
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1 - Employment Agreement between Miller Industries,
Inc. and Jeffrey I. Badgley, dated Septemer 11, 1998*
Exhibit 10.2 - Employment Agreement between Miller Industries,
Inc. and Adam L. Dunayer, dated September 11,1998*
Exhibit 10.3 - Employment Agreement between Miller Industries,
Inc. and Frank Madonia, dated September 11, 1998*
Exhibit 10.4 - Agreement between Miller Industries, Inc. and
Jeffrey I. Badgley dated September 11, 1998*
Exhibit 10.5 - Agreement between Miller Industries, Inc. and
Adam L. Dunayer, dated September 11, 1998*
Exhibit 10.6 - Agreement between Miller Industries, Inc. and
Frank Madonia, dated September 11, 1998*
16
<PAGE>
Exhibit 27 - Restated Financial Data Schedule (For SEC use only)
______________________________
* Previously filed.
(b) Reports on Form 8-K - The Registrant filed a report on Form
8-K on September 30, 1998 under Item 5.
<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/ J. Vincent Mish
J. Vincent Mish
Vice President and
Chief Financial Officer
Date: August 12, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000924822
<NAME> MILLER INDUSTRIES/TN
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 8,329
<SECURITIES> 0
<RECEIVABLES> 76,256
<ALLOWANCES> 0
<INVENTORY> 87,738
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<PP&E> 129,057
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<CURRENT-LIABILITIES> 48,338
<BONDS> 134,189
0
0
<COMMON> 466
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<TOTAL-LIABILITY-AND-EQUITY> 376,895
<SALES> 251,809
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<INTEREST-EXPENSE> 4,268
<INCOME-PRETAX> 9,861
<INCOME-TAX> 3,918
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