-----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, V+aInMr9vDnVyU0rEX+v74wnTMAY+RgK9yUUgwBwrGbp3gRb6399UaHPIBHI/mA3 60pJgTbp6VvcngszouTslA== 0000910195-99-000478.txt : 19990816 0000910195-99-000478.hdr.sgml : 19990816 ACCESSION NUMBER: 0000910195-99-000478 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 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: 99686693 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 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. 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 MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) ASSETS
OCTOBER 31, APRIL 30, 1998 1998 RESTATED (NOTE 2) --------- --------- 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 ========= =========
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 SIX MONTHS ENDED OCTOBER 31, OCTOBER 31, --------------------- ------------------- 1998 1997 1998 1997 Restated Restated (Note 2) (Note 2) -------- ------- -------- -------- 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 ====== ====== ====== ======
See accompanying notes to condensed consolidated financial statements 4 MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED statements of cash flows (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED OCTOBER 31, ---------------------------- 1998 1997 RESTATED (NOTE 2) --------- -------- 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 ======== ========
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. 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 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 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 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 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 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 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 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 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 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 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 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. 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 RESTATED FINANCIAL DATA SCHEDULE
5 0000924822 MILLER INDUSTRIES/TN 1,000 6-MOS APR-30-1999 MAY-01-1998 OCT-31-1998 8,329 0 76,256 0 87,738 180,856 129,057 33,184 376,895 48,338 134,189 0 0 466 191,178 376,895 251,809 251,809 203,010 237,860 0 0 4,268 9,861 3,918 5,763 0 0 0 5,763 0.12 0.12
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