-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WYnOyAbCKNo84ASTeZS/q/UZgX6gHRl+QCI7t/RKm2ADLZu+RaKzvAAqRmbvTiPU +ASs5rww3VTxHBFKeH0xPg== 0000910195-98-000483.txt : 19980915 0000910195-98-000483.hdr.sgml : 19980915 ACCESSION NUMBER: 0000910195-98-000483 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980914 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILLER INDUSTRIES INC /TN/ CENTRAL INDEX KEY: 0000924822 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK & BUS BODIES [3713] IRS NUMBER: 621566286 STATE OF INCORPORATION: TN FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14124 FILM NUMBER: 98709069 BUSINESS ADDRESS: STREET 1: 8503 HILLTOP DR STREET 2: STE 100 CITY: OOLTEWAH STATE: TN ZIP: 37363 BUSINESS PHONE: 4232384171 MAIL ADDRESS: STREET 1: 900 CIRCLE 75 PARKWAY STREET 2: SUITE 1250 CITY: ATLANTA STATE: GA ZIP: 30339 10-Q 1 MILLER INDUSTRIES, INC./TN 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. 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
MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) ASSETS July 31, April 30, 1998 1998 ------------ ---------- 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 ========= =========
See accompanying notes to condensed consolidated financial statements. 3
MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended July 31, ---------------------------- 1998 1997 ---------------------------- 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 ========== ===========
See accompanying notes to condensed consolidated financial statements. 4
MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) Three Months Ended July 31, --------------------------- 1998 1997 ---------- -------- 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 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 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 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 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 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 $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 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 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 EX-10 2 FORM OF INDEMNIFICATION AGREEMENT 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: 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- 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- 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- (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- 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- 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: ___________________________ EX-27 3 FINANCIAL DATA SCHEDULE
5 0000924822 MILLER INDUSTRIES, INC. /TN 1,000 3-MOS APR-30-1999 MAY-01-1998 JUL-31-1998 12,039 0 68,766 0 79,683 169,004 125,493 31,079 360,719 48,257 120,136 0 0 465 189,137 360,719 117,754 117,754 92,312 109,342 0 0 2,040 6,372 2,676 3,696 0 0 0 3,696 0.08 0.08
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