-----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, NOwuB5QzVxw172QHOkbjrtSo+RjlKZ9gnaDM+U211nJywf/1ZaxLoDUMn4sRpq5Q QlR2muAktHvMFvtbRQXz9g== 0000910195-99-000477.txt : 19990816 0000910195-99-000477.hdr.sgml : 19990816 ACCESSION NUMBER: 0000910195-99-000477 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19990813 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/A SEC ACT: SEC FILE NUMBER: 001-14124 FILM NUMBER: 99686692 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/A 1 FORM 10-Q AMENDMENT FOR MILLER INDUSTRIES, INC. 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 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 9 ----------------------------------- PART II. OTHER INFORMATION Item 1 Legal Proceedings 11 ----------------- Item 6. Exhibits and Reports on Form 8-K 12 -------------------------------- SIGNATURES 12 MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
ASSETS July 31, April 30, 1998 1998 Restated (Note 2) --------- --------- CURRENT ASSETS: Cash and temporary investments $ 12,039 $ 7,367 Accounts receivable, net 68,766 67,008 Inventories 78,335 71,839 Deferred income taxes 4,222 4,217 Prepaid expenses and other 4,294 5,362 --------- --------- Total current assets 167,656 155,793 PROPERTY, PLANT AND EQUIPMENT, net 94,372 85,849 GOODWILL, net 88,392 81,605 OTHER ASSETS 8,909 6,483 --------- --------- $ 359,329 $ 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 17,350 18,236 --------- --------- Total current liabilities 47,880 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 43,545 40,862 Accumulated other comprehensive income (656) (565) --------- --------- Total shareholders' equity 188,589 180,236 --------- --------- $ 359,329 $ 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 Restated (Note 2) --------- ------- NET SALES $117,754 $85,353 COSTS AND EXPENSES: Costs of operations 94,040 67,229 Selling, general, and administrative expenses 17,030 10,200 Interest expense, net 2,040 271 -------- ------- Total costs and expenses 113,110 77,700 -------- ------- INCOME BEFORE INCOME TAXES 4,644 7,653 INCOME TAXES 1,960 2,855 -------- ------- NET INCOME $ 2,684 $ 4,798 ======== ======= NET INCOME PER COMMON SHARE: BASIC $ 0.06 0.11 ======== ==== DILUTED $ 0.06 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 Restated (Note2) -------- -------- OPERATING ACTIVITIES: Net income $ 2,684 $ 4,798 Adjustments to reconcile net income to net cash 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 (6,435) (2,523) Prepaid expenses and other 968 (376) Accrued liabilities (1,444) 1,302 Accounts payable (939) (6,854) Other assets 547 161 -------- -------- Net cash used in operating activities (2,429) (6,576) -------- -------- INVESTING ACTIVITIES: Purchases of property, plant, and equipment (4,256) (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 (14,029) (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 ======== ========
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. 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 months ended July 31, 1998 have been restated to reflect these adjustments. A summary of the effect of the adjustments for the three months ended July 31, 1998 on certain previously reported amounts is as follows (in thousands, except per share data): 6 Three Months Previously Restated Reported --------- -------- Costs of operations $ 92,312 $ 94,040 Total costs and expenses 111,382 113,110 Income before income taxes 6,372 4,644 Income taxes 2,676 1,960 Net income 3,696 2,684 Earnings per share: Basic $ 0.08 $ 0.06 Diluted 0.08 0.06 July 31, 1998 ------------- Inventories $ 79,683 $ 78,335 Property, plant and equipment, net 94,414 94,372 Accrued liabilities and other 17,727 17,350 Retained Earnings 44,558 43,545 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 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. 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 July 31, 1998 and April 30, 1998 consisted of the following (in thousands): July 31, April 30, 1998 1998 -------- --------- Chassis $18,217 $14,211 Raw Materials 23,631 22,027 Work in process 10,217 11,470 Finished goods 26,270 24,131 ------- ------- $78,335 $71,839 ======= ======= 5. 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 7 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. 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 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 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 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. 7. 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 $(91,000) and $(7,000) for the quarters ended July 31, 1998 and 1997, respectively. 8 8. 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 5 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 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 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 39.9% to $94.0 million from $67.2 million for the comparable period in 1997. Costs of operations as a percentage of net sales increased to 79.9% from 78.8%. 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 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. 9 LIQUIDITY AND CAPITAL RESOURCES Cash flows used in operating activities were $2.4 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 $14.0 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. The Company has an unsecured revolving credit facility of $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 5 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 PRONOUNCEMENTS 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. 10 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 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. 11 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. Vicent Mish, Richard H. Roberts, and Daniel N. Sebastian.* Exhibit 27 - Restated Financial Data Schedule (For SEC use only) _____________________ *Previously filed. (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. 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 EX-27 2 FINANCIAL DATA SCHEDULE - RESTATED
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 78,335 167,656 125,451 31,079 359,329 47,880 120,136 0 0 465 188,124 359,329 117,754 117,754 94,040 111,070 0 0 2,040 4,644 1,960 2,684 0 0 0 2,684 0.06 0.06
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