-----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, DoOlcyqtxW1FPBw7Di/UowVKNaAX3q8p6lro6CSkBgciH49Sp25Eloty2uKB7z1m G+Kqu+Cg0whJGDPPoFANJA== 0000950109-96-006712.txt : 19961016 0000950109-96-006712.hdr.sgml : 19961016 ACCESSION NUMBER: 0000950109-96-006712 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961015 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961015 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14124 FILM NUMBER: 96643335 BUSINESS ADDRESS: STREET 1: 900 CIRCLE 75 PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7709880797 MAIL ADDRESS: STREET 1: 900 CIRCLE 75 PARKWAY STREET 2: SUITE 1250 CITY: ATLANTA STATE: GA ZIP: 30339 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 8-K/A No.1 ---------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 15, 1996 --------------------- MILLER INDUSTRIES, INC. ---------------------------------------------------------- (Exact name of Registrant as Specified in its Charter) Tennessee 0-24298 62-1566286 ---------------------------------------------------------------------- (State or other Jurisdiction (Commission File (IRS Employer of Incorporation or Organization) Number) Identification No.) 900 Circle 75 Parkway Atlanta, Georgia 30339 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (770) 988-0797 Not Applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) This Amendment No 1 to Form 8-K amends the Form 8-K filed by the Registrant on September 17, 1996 to report its acquisition of Vulcan International, Inc. on September 3, 1996, and includes the financial statements required to be filed pursuant to each Form 8-K as well as certain other financial statements. ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS A. Financial Statements of Businesses Acquired - Vulcan International Inc. and ------------------------------------------- Affiliates Report of Independent Certified Public Accountants Combined Balance Sheet as of April 30, 1996 Combined Statement of Income for the year ended April 30, 1996 Combined Statement of Stockholders' equity for the year ended April 30, 1996 Combined Statement of Cash Flows for the year ended April 30, 1996 Notes to the Consolidated Financial Statements Condensed Combined Balance Sheet as of July 31, 1996 (unaudited) Condensed Combined Statements of Income for the three months ended July 31, 1995 and 1996 (unaudited) Condensed Combined Statements of Cash Flow for the three months ended July 31, 1995 and 1996 (unaudited) Notes to Condensed Combined Financial Statements (unaudited) B. ProForma Financial Information ------------------------------ The following Supplemental Consolidated Financial Statements together with Report of Independent Certified Public Accountants are incorporated by reference from the Registrant's Registration Statement on Form S-3 filed with the Commission on October 15, 1996. Report of Independent Certified Public Accountants Supplemental Consolidated Balance Sheets as of April 30, 1995 and 1996, and July 31, 1996 (unaudited) Supplemental Consolidated Statements of Income for the Nine Months Ended April 30, 1994, the Years Ended April 30, 1995 and 1996, and the Three Months Ended July 31, 1995 and 1996 (Unaudited) Supplemental Consolidated Statements of Shareholders' Equity (Deficit) for the Nine Months Ended April 30, 1994, the Years Ended April 30, 1995 and 1996, and the Three Months Ended July 31, 1996 (Unaudited) Supplemental Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 1994, the Years Ended April 30, 1995 and 1996, and the Three Months Ended July 31, 1995 and 1996 (Unaudited) Notes to Supplemental Consolidated Financial Statements C. Exhibits -------- Exhibit 99 - Restated Consolidated Financial Statements of Miller Industries, Inc. and Subsidiaries Exhibit 27 - Article 5 Financial Data Schedules SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 15, 1996 MILLER INDUSTRIES, INC. By: /s/ FRANK MADONIA ----------------------------- Frank Madonia Vice President VULCAN INTERNATIONAL, INC. AND AFFILIATES COMBINED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS YEAR ENDED APRIL 30, 1996 CONTENTS
DESCRIPTION PAGE - ----------- ---- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS: Combined Balance Sheet 2 Combined Statement of Income 3 Combined Statement of Stockholders' Equity 4 Combined Statement of Cash Flows 5 Summary of Accounting Policies 6 Notes to Combined Financial Statements 8
[LETTERHEAD OF HADDOX REID BURKES & CALHOUN PLLC APPEARS HERE] REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS -------------------------------------------------- To the Board of Directors Vulcan International, Inc. and Affiliates Olive Branch, Mississippi We have audited the combined balance sheet of Vulcan International, Inc. and Affiliates as of April 30, 1996, and the related combined statements of income, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Vulcan International, Inc. and Affiliates as of April 30, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Haddox Reid Burkes & Calhoun PLLC ------------------------------------- Haddox Reid Burkes & Calhoun PLLC September 23, 1996 VULCAN INTERNATIONAL, INC. AND AFFILIATES COMBINED BALANCE SHEET APRIL 30, 1996
ASSETS ---------- CURRENT ASSETS: Cash and cash equivalents $ 93,182 Accounts receivable, less allowance of $91,796 for possible losses - Notes 4 and 8 3,861,494 Inventories - Notes 1, 4 and 5 5,339,802 Prepaid expenses 91,287 Deferred income taxes - Note 6 176,230 ---------- Total current assets 9,561,995 PROPERTY AND EQUIPMENT, less accumulated depreciation - Notes 2 and 3 2,833,085 OTHER ASSETS 45,955 ----------
$12,441,035 ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------
CURRENT LIABILITIES: Note payable - bank - Note 4 $ 801,552 Current maturities of long-term debt - Note 3 349,854 Floor plan notes - chassis - Note 5 2,394,618 Accounts payable - trade 3,338,704 Accrued expenses 1,165,009 ----------- Total current liabilities 8,049,737 LONG-TERM DEBT, less current maturities - Note 3 2,938,460 DEFERRED INCOME TAXES - Note 6 169,000 ----------- Total liabilities 11,157,197 ----------- COMMITMENTS AND CONTINGENCIES - Notes 10 and 12 MINORITY INTEREST 96,863 ----------- STOCKHOLDERS' EQUITY: Common stock, $1 par - shares authorized 150,000; 3,750 shares issued and outstanding 3,750 Retained earnings 1,183,225 ----------- Total stockholders' equity 1,186,975 ----------- $12,441,035 ===========
The accompanying summary of accounting policies and notes are an integral part of this combined financial statement. -2- VULCAN INTERNATIONAL, INC. AND AFFILIATES COMBINED STATEMENT OF INCOME YEAR ENDED APRIL 30, 1996
NET SALES - Note 8 $22,349,884 COST OF SALES 18,296,504 ----------- GROSS PROFIT ON SALES - Note 8 4,053,380 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES - Note 8 3,646,336 ----------- OPERATING INCOME 407,044 ----------- OTHER INCOME (EXPENSE) Interest (274,386) Other 25,769 ----------- TOTAL OTHER INCOME (EXPENSE) (248,617) ----------- INCOME BEFORE TAXES ON INCOME 158,427 TAXES ON INCOME - Note 6 66,139 ----------- NET INCOME $ 92,288 ===========
The accompanying summary of accounting policies and notes are an integral part of this combined financial statement. -3- VULCAN INTERNATIONAL, INC. AND AFFILIATES COMBINED STATEMENT OF STOCKHOLDERS' EQUITY YEAR ENDED APRIL 30, 1996
Common Stock ----------------- Retained Shares Amount Earnings Total ------- -------- ---------- ----------- BALANCE, April 30, 1995 5,000 $ 5,000 2,089,687 2,094,687 Stock redeemed - Note 7 (1,250) (1,250) (998,750) (1,000,000) Net income - - 92,288 92,288 ------ ------- --------- ---------- BALANCE, April 30, 1996 3,750 $ 3,750 1,183,225 1,186,975 ====== ======= ========= ==========
The accompanying summary of accounting policies and notes are an integral part of this combined financial statement. -4- VULCAN INTERNATIONAL, INC. AND AFFILIATES COMBINED STATEMENT OF CASH FLOWS APRIL 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 92,288 Accounts receivable - litigation settlement 600,000 Deferred income taxes (106,230) Depreciation and amortization 324,174 Changes in operating assets and liabilities: Increase in accounts receivable (1,853,029) Increase in inventories (2,526,431) Increase in prepaid expenses (22,196) Increase in accounts payable and floor plan notes 3,401,342 Decrease in accrued expenses (310,234) ----------- Net cash used by operating activities (400,316) ----------- CASH FLOWS USED BY INVESTING ACTIVITIES: Additions to property and equipment (1,666,386) --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under line of credit agreements 801,552 Proceeds from long-term debt 1,350,000 Repayment of long-term debt (333,376) ----------- Net cash provided by investing activities 1,818,176 ----------- DECREASE IN CASH AND CASH EQUIVALENTS - Note 7 (248,526) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 341,708 ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 93,182 =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 171,847 =========== Income Taxes $ 165,234 ===========
The accompanying summary of accounting policies and notes are an integral part of this combined financial statement. -5- VULCAN INTERNATIONAL, INC. AND AFFILIATES SUMMARY OF ACCOUNTING POLICIES APRIL 30, 1996 CONSOLIDATION - ------------- The accompanying combined financial statements include the accounts of Vulcan International, Inc. (the "Company"), its majority-owned subsidiaries and Vulcan Properties, LLC. Vulcan Properties, LLC is a limited liability company controlled by the stockholders of Vulcan International, Inc. All significant intercompany balances and transactions have been eliminated in the combined financial statements. ACCOUNTS RECEIVABLE - ------------------- The Company provides an allowance for losses on receivables (the reserve method). Receivables are charged to the allowance account when they are deemed to be uncollectible. INVENTORIES - ----------- Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method. PROPERTY, EQUIPMENT AND DEPRECIATION - ------------------------------------ Property and equipment are stated at cost. Depreciation is computed using the straight-line method for financial reporting purposes over the following estimated useful lives:
Years ----------------- Building 39 Machinery and equipment 10 Tooling 10 Leasehold improvements Term of the lease Furniture and fixtures 10 Computer equipment 5 Automobiles 5
For income tax purposes, depreciation is calculated using accelerated methods. PATENTS AND TRADEMARKS - ---------------------- The cost of acquired patents and trademarks are capitalized and amortized using the straight-line method over 20 years. REVENUE RECOGNITION - ------------------- Sales are recorded by the Company net of discounts and cost of chassis sold. -6- VULCAN INTERNATIONAL, INC. AND AFFILIATES SUMMARY OF ACCOUNTING POLICIES - CONTINUED: APRIL 30, 1996 PRODUCT WARRANTY - ---------------- The Company provides a one-year limited product and service warranty on its products. The Company provides for the estimated cost of this warranty at the time of sale. TAXES ON INCOME - --------------- Taxes on income are calculated using the liability method specified by Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). CASH EQUIVALENTS - ---------------- For purposes of the statements of cash flows, the Company classifies cash on hand, demand deposits and all time deposits with an original maturity of three months or less as cash equivalents. ESTIMATES - --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -7- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS APRIL 30, 1996 NOTE 1 - INVENTORIES Inventories consist of the following:
Finished products $ 394,000 Truck chassis 1,962,728 Work-in-process 1,383,268 Materials and parts 1,711,223 Units mounted on demos 105,237 Towing consignment 17,600 ---------- 5,574,056 LIFO reserve (234,254) ---------- Total inventories $5,339,802 ==========
NOTE 2 - PROPERTY AND EQUIPMENT Major classes of property and equipment consist of the following:
Land $ 200,000 Building 1,145,660 Machinery and equipment 2,240,256 Tooling 293,824 Leasehold improvements 283,275 Furniture and fixtures 127,071 Computer equipment 184,362 Automobiles 27,180 ----------- 4,501,628 Accumulated depreciation (1,668,543) ----------- Net property and equipment $ 2,833,085 ===========
NOTE 3 - LONG-TERM DEBT Long-term debt consists of: Note payable to First American Bank, payable in monthly installments of $13,548, including interest at 8.82% collateralized by real property and guaranteed by the Company and its stockholders (Note was paid in full October 1, 1996) $ 1,346,374 -8- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED: APRIL 30, 1996 NOTE 3 - LONG-TERM DEBT - CONTINUED:
Note payable to former stockholder, interest due annually at 12%, principle due on September 1, 2005, collateralized by company stock $ 1,000,000 (Note was paid in full September, 1996) Term notes, payable in monthly principal installments of approximately $10,000, plus interest at 8%, collateralized by certain equipment 389,945 Note payable to Internal Revenue Service, payable in monthly principal installments of $6,656, plus interest at 7% 218,246 Note payable to the Mississippi State Tax Commission, payable in monthly installments of $707, including interest at 8% 26,892 Obligations under capital leases (Note 10) 199,487 Notes payable to former share- holders, payable in 1997, unsecured (net of unamortized discount) 28,000 Installment notes payable to various former suppliers, ranging from 8% to 12% with various maturities through 1999, unsecured (net of unamortized discount) 79,370 --------- 3,288,314 Current maturities (349,854) --------- Long-term debt $ 2,938,460 =========
-9- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED: APRIL 30, 1996 NOTE 3 - LONG-TERM DEBT - CONTINUED: A schedule of the long-term debt maturities is as follows:
1997 $ 349,854 1998 325,988 1999 327,239 2000 147,597 2001 65,457 Thereafter 2,072,179 ---------- $3,288,314 ==========
Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities, the carrying amount of the note payable approximates its fair value. NOTE 4 - NOTE PAYABLE - BANK The Company has a revolving line of credit with First American Bank of $1,000,000 at April 30, 1996. This line of credit, which expires August 31, 1996, is secured by accounts receivable and inventories, is personally guaranteed by a shareholder up to $250,000, and has an interest rate equal to the bank's index rate plus 1%. At April 30, 1996, $801,552 was advanced against this line of credit. The note was paid in full in September 1996. NOTE 5 - FLOOR PLAN NOTES The Company had floor plan notes of $2,394,618 collateralized by truck chassis inventory at April 30, 1996. Truck chassis securing floor plan notes of approximately $510,000 had been sold prior to April 30, 1996. These notes were paid subsequent to April 30, 1996. NOTE 6 - TAXES ON INCOME Taxes on income are calculated using the liability method specified by Statement of Financial Accounting Standards, No. 109 "Accounting for Income Taxes" ("FAS 109"). Under FAS 109, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. -10- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS - COMBINED: APRIL 30, 1996 NOTE 6 - TAXES ON INCOME - CONTINUED: The components of taxes on income are as follows:
Current - Federal & state $ 172,369 Deferred: Federal (94,930) State (11,300) ------- Taxes on income $ 66,139 ======= Deferred tax assets (liabilities) are comprised of the following: Deferred tax assets: Tax credit carryforwards: Alternative minimum $ 88,800 Mississippi jobs 39,100 Warranty accrual 26,150 Accrued vacation and bonuses 69,000 Allowance for possible losses 34,650 Uniform capitalization 4,600 Other 41,930 --------- Total deferred tax assets 304,230 Deferred tax liabilities: Depreciation (297,000) --------- Net deferred tax asset $ 7,230 ========= Current deferred tax assets $ 176,230 =========
Noncurrent deferred tax liabilities - (net of tax credit carryforwards) $(169,000) ========= At April 30, 1996, the Company has carryforwards of state tax credits for Mississippi jobs which expire over time with expiration dates extending to 2001. The following reconciles taxes at the maximum federal statutory rate with the effective rate: Taxes on income at maximum federal rate 34.0% State income taxes, net of federal benefit 3.3 Other 4.9 ---- Taxes on income at effective rate 42.2% ==== -11- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED: APRIL 30, 1996 NOTE 7 - NONCASH INVESTING AND FINANCING ACTIVITIES On September 1, 1995, the Company issued a promissory note payable of $1,000,000 to a former stockholder in exchange for 1,250 shares of common stock. NOTE 8 - RELATED PARTY TRANSACTIONS At April 30, 1996, the Company had receivables from related entities of $15,350 and payables to related entities of $103,517. In fiscal 1996, net sales includes approximately $805,000 to a related party. In addition, cost of sales and selling and administrative expenses include approximately $70,000 and $32,000, respectively, to a related party. NOTE 9 - CREDIT RISK The Company is primarily a manufacturer of automobile and commercial vehicle towing equipment. The Company's products are sold worldwide, with its primary customers being distributors throughout the United States. The Company evaluates its need for reserves for potential losses from credit sales to these customers, and such losses have been within management's expectations. NOTE 10 - LEASES The Company leases certain manufacturing equipment and computer equipment under capital leases which expire at various times through May 2000. Certain data processing software and equipment are also under an operating lease which expires in February 2001. As of April 30, 1996, future net minimum lease payments under the capital leases and future minimum rental payments required under operating leases were as follows: -12- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED: APRIL 30, 1996
NOTE 10 - LEASES - CONTINUED: Capital Operating leases leases -------- ------- 1997 $ 61,554 25,331 1998 61,554 25,331 1999 61,554 25,331 2000 57,299 25,331 2001 587 21,110 -------- ------- 242,548 122,434 Less amount representing interest (43,061) - -------- ------- Present value of net minimum lease payments $199,487 122,434 ======== =======
Rental expense for all operating leases for the years ended April 30, 1996, was $197,472. NOTE 11 - RETIREMENT PLAN The Company has a qualified defined contribution retirement plan which covers substantially all full-time employees and meets the requirements of Section 401(k) of the Internal Revenue Code. Participants may contribute up to 10 percent of their total compensation. Employer contributions to the plan are determined on an annual basis at the discretion of the Company's board of directors. Each participant is fully vested at all times in the amount of their respective contributions and the amount contributed by the Company. The Company's contributions under the plan were $12,257 for the year ended April 30, 1996. NOTE 12 - LITIGATION The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of such matters presently cannot be determined but will not, in the opinion of management, based in part on the advice of legal counsel, have a material adverse effect on the Company's financial position or results of operations. -13- VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED: APRIL 30, 1996 NOTE 13 - SUBSEQUENT EVENT In September 1996, Miller Industries, Inc. issued 507,462 shares of its common stock to the current stockholders and former stockholder in exchange for 100% of the outstanding common stock of the Company and the note payable to former stockholder. -14 VULCAN INTERNATIONAL, INC. AND AFFILIATES CONDENSED COMBINED BALANCE SHEET (Dollars in thousands) (unaudited) ASSETS July 31, 1996 --------------- CURRENT ASSETS: Cash and temporary investments $ 83 Accounts receivable, net 3,914 Inventories 5,890 Deferred income tax benefit 117 Prepaid expenses and other 22 --------------- Total current assets 10,026 PROPERTY, PLANT, AND EQUIPMENT, net 2,762 OTHER ASSETS 44 --------------- $12,832 =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Lines of credit $ 802 Accounts payable 6,020 Accrued liabilities and other 1,127 --------------- Total current liabilities 7,949 LONG-TERM OBLIGATIONS 3,368 DEFERRED INCOME TAXES 169 STOCKHOLDERS' EQUITY 1,346 --------------- Total Liabilities & Stockholders' Equity $12,832 =============== VULCAN INTERNATIONAL, INC. AND AFFILIATES CONDENSED COMBINED STATEMENTS OF INCOME (Dollars in thousands) (Unaudited)
Three Months Ended July 31, --------------------------------- 1995 1996 ----------------- --------------- NET SALES $4,196 $6,733 COST OF SALES 3,298 5,607 ----------------- --------------- GROSS PROFIT 898 1,126 OPERATING EXPENSES: Selling 417 522 General and administrative 323 395 ----------------- --------------- INCOME FROM OPERATIONS 158 209 INTEREST EXPENSE, net (69) 0 OTHER INCOME, net 20 0 ----------------- --------------- INCOME BEFORE INCOME TAXES 109 209 PROVISION FOR INCOME TAXES 41 79 ----------------- --------------- NET INCOME $ 68 $ 130 ================= ===============
VULCAN INTERNATIONAL, INC. AND AFFILIATES CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended July 31, --------------------------- 1995 1996 ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES $ (387) $ (80) ----------- ----------- INVESTING ACTIVITIES: Purchase of property, plant, and equipment (80) (10) Other 153 0 ----------- ----------- Net cash provided by (used in) investing activities 73 (10) ----------- ----------- Payments on long-term debt (268) 0 Proceeds from long-term debt 0 80 Net payments under line of credit 309 0 ----------- ----------- Net cash provided by financing activities 41 80 ----------- ----------- NET DECREASE IN CASH (273) (10) CASH, beginning of period 342 93 ----------- ----------- CASH, end of period $ 69 $ 83 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash payments for interest $ 35 $ 43 =========== =========== VULCAN INTERNATIONAL, INC. AND AFFILIATES NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The condensed combined financial statements of Vulcan International, Inc. and Affiliates (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 combined 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 combined financial statements should be read in conjunction with the Company's audited financial statements included elsewhere in this Form 8-K/A. 2. 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, 1996 consisted of the following (in thousands): July 31, 1996 ------------- Chassis $ 2,547 Raw materials 1,521 Work in process 1,468 Finished goods 354 ------- $ 5,890 ======= 3. Litigation The company is party to certain legal proceedings incidental to its business. The ultimate disposition of such matters presently cannot be determined but will not, in the opinion of management, based in part on the advice of legal counsel, have a material adverse effect on the Company's financial position. EX-99 2 RESTATED FINANCIAL STATEMENTS EXHIBIT 99 - ---------- Miller Industries, Inc. and Subsidiaries RESTATED CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Certified Public Accountants Consolidated Balance Sheets as of April 30, 1995 and 1996 (Restated) Consolidated Statements of Income for the Nine Months Ended April 30, 1994 and Years Ended April 30, 1995 and 1996 (Restated) Consolidated Statements of Shareholders' Equity (Deficit) for the Nine Months Ended April 30, 1994 and Years Ended April 30, 1995 and 1996 (Restated) Consolidated Statement of Cash Flows for the Nine Months Ended April 30, 1994 and Years Ended April 30, 1995 and 1996 (Restated) Notes to Consolidated Financial Statements (Restated) REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Miller Industries, Inc.: We have audited the accompanying consolidated balance sheets of Miller Industries, Inc. (a Tennessee corporation) and subsidiaries as of April 30, 1995 and 1996, and the related consolidated statements of income, shareholders' equity and cash flows (restated) for the nine months ended April 30, 1994, and the years ended April 30, 1995 and 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Miller Industries, Inc. and subsidiaries as of April 30, 1995 and 1996, and the results of their operations and their cash flows for the nine months ended April 30, 1994, and the years ended April 30, 1995 and 1996 in conformity with generally accepted accounting principles. As discussed in Note 9 to the consolidated financial statements, effective August 1, 1993 the Company changed its method of accounting for income taxes. ARTHUR ANDERSEN LLP Chattanooga, Tennessee October 12, 1996 MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (RESTATED) (Dollars in thousands, except per share data)
ASSETS April 30, April 30, 1995 1996 --------- --------- CURRENT ASSETS: Cash and temporary investments $ 2,630 $ 24,499 Accounts receivable, net of allowance for doubtful accounts of $518 and $966 in 1995 and 1996, respectively 18,674 27,889 Inventories 18,587 27,088 Deferred income tax benefit 1,295 1,162 Prepaid expenses and other 320 1,003 ------- -------- Total current assets 41,506 81,641 PROPERTY, PLANT, AND EQUIPMENT, net 5,578 13,722 GOODWILL, net 3,536 5,071 PATENTS, TRADEMARKS, AND OTHER PURCHASED PRODUCT RIGHTS, net 984 926 OTHER ASSETS 24 204 ------- -------- $51,628 $101,564 ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term obligations $ 710 $ 751 Lines of credit 1,564 341 Accounts payable 17,319 21,693 Accrued liabilities and other 4,468 8,375 ------- -------- Total current liabilities 24,061 31,160 ------- -------- LONG-TERM OBLIGATIONS, less current portion 146 3,927 ------- -------- DEFERRED INCOME TAXES 369 701 ------- -------- COMMITMENTS AND CONTINGENCIES (Notes 7 and 8) 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; 19,670,264 and 23,341,060 shares issued and outstanding in 1995 and 1996, respectively 67 233 Additional paid-in capital 23,993 54,705 Retained earnings 2,992 10,855 Cumulative translation adjustment 0 (17) ------- -------- Total shareholders' equity 27,052 65,776 ------- -------- $51,628 $101,564 ======= ========
The accompanying notes are an integral part of these consolidated balance sheets. MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (RESTATED) (Amounts in thousands, except per share data)
Nine Months Ended Year Ended April 30, April 30, -------------------- 1994 1995 1996 ----------- -------- -------- NET SALES $54,009 $107,599 $141,460 COST OF SALES 43,802 89,212 118,070 ------- ------- ------- GROSS PROFIT 10,207 18,387 23,390 OPERATING EXPENSES: Selling 3,334 5,358 6,170 General and administrative 3,233 4,081 4,742 ------- ------- ------- INCOME FROM OPERATIONS 3,640 8,948 12,478 INTEREST INCOME (EXPENSE), net (116) (119) 243 OTHER INCOME (EXPENSE), net 51 40 (133) ------- ------- ------- INCOME BEFORE INCOME TAXES, EXTRAORDINARY GAIN AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 3,575 8,869 12,588 PROVISION FOR INCOME TAXES (1,262) (3,293) (4,626) ------- ------- ------- INCOME BEFORE EXTRAORDINARY GAIN AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 2,313 5,576 7,962 EXTRAORDINARY GAIN ON DEBT RETIREMENT (LESS APPLICABLE INCOME TAXES OF $175) -- 288 -- CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES 379 -- -- ------- ------- ------- NET INCOME 2,692 5,864 7,962 PREFERRED STOCK DIVIDENDS (38) -- -- ------- ------- ------- NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ 2,654 $ 5,864 $ 7,962 ======= ======= ======= NET INCOME PER COMMON SHARE: Before extraordinary gain and cumulative effect of accounting change $ 0.18 $ 0.31 $ 0.38 Extraordinary gain on debt retirement -- 0.01 -- Cumulative effect of change in accounting for income taxes 0.03 -- -- ------- ------- ------- $ 0.21 $ 0.32 $ 0.38 ======= ======= ======= WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 12,513 18,085 21,200 ======= ======= =======
The accompanying notes are an integral part of these consolidated statements. MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (RESTATED) (Dollars in thousands)
Retained Additional Earnings Cumulative Common Paid-In (Accumulated (Translation Stock Capital Deficit) Adjustment) Total ------ ---------- ------------ ------------ --------- BALANCE, July 31, 1993, as previously reported $100 $ 480 $(2,046) $ - $ (1,466) Adjustments for Pooled Entities 2 - 69 - 71 ---- ------- ------- ------ -------- BALANCE, July 31, 1993, as restated 102 480 (1,977) - (1,395) Issuance of management shares by MGI - 574 - - 574 Effect of the Reorganization (Note 1): Exchange of common stock (59) 59 - - - Issuance of Reorganization Note - - (3,600) - (3,600) Accrued dividends on preferred stock, net - - (38) - (38) Contributions of capital from Pooled Entities - - 234 - 234 Net income - - 2,692 - 2,692 ---- ------- ------- ------ -------- BALANCE, April 30, 1994 43 1,113 (2,689) - (1,533) Issuance of 7,156,876 common shares through a public offering 24 22,186 - - 22,210 Unamortized restructuring credit from redemption of preferred stock - 694 - - 694 Distributions to former shareholders of Pooled Entities - - (183) - (183) Net income - - 5,864 - 5,864 ---- ------- ------- ------ -------- BALANCE, April 30, 1995 67 23,993 2,992 - 27,052 Issuance of 3,600,000 common shares through a public offering 12 30,166 - - 30,178 Issuance of 53,668 shares in purchase of Boniface Engineering - 615 - - 615 Exercise of stock options - 37 - - 37 Other stock issuance - 48 - - 48 Three-for-two stock split 38 (38) - - - Distributions to former shareholders of Pooled Entities - - (99) - (99) Two-for-one stock split 116 (116) - - - Net income - - 7,962 - 7,962 Net translation adjustments - - - (17) (17) ---- ------- ------- ------ -------- BALANCE, April 30, 1996 $233 $54,705 $10,855 $ (17) $ 65,776 ==== ======= ======= ====== ========
The accompanying notes are an integral part of these consolidated statements. MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED) (Dollars in thousands)
Nine Months Ended Year Ended April 30, April 30, -------------------- 1994 1995 1996 ----------- --------- -------- OPERATING ACTIVITIES: Net income $ 2,692 $ 5,864 $ 7,962 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 305 453 902 Gain on sales and disposals of property, plant, and equipment - - (29) Extraordinary gain - (288) - Cumulative effect of accounting change (379) - - Deferred income taxes (112) (58) 479 Changes in operating assets and liabilities: Accounts receivable (4,096) (8,907) (7,727) Inventories (2,849) (8,810) (4,293) Prepaid expenses and other (64) (123) (370) Accounts payable 4,104 8,614 2,467 Accrued liabilities 709 1,217 798 Other assets 5 (14) 17 Income taxes payable to MGI (Note 9) 1,115 (1,736) - ------- -------- ------- Total adjustments (1,262) (9,652) (7,756) ------- -------- ------- Net cash provided by (used in) operating activities 1,430 (3,788) 206 ------- -------- ------- INVESTING ACTIVITIES: Purchases of property, plant, and equipment (480) (1,930) (5,603) Proceeds from sales of property, plant, and equipment - - 111 Proceeds from notes receivable 35 39 - Purchases of subsidiaries, net of cash acquired - - (3,567) Other (22) (165) (91) ------- -------- ------- Net cash used in investing activities (467) (2,056) (9,150) ------- -------- ------- FINANCING ACTIVITIES: Proceeds from issuance of common stock - 22,210 30,178 Proceeds from exercise of options - - 37 Contributions of capital by Pooled Entities 234 - - Net (payments) borrowing under lines of credit - 1,564 (1,324) Proceeds from long-term obligations 80 - 2,545 Payments on long-term obligations (841) (12,034) (558) Redemption of preferred stock - (3,400) - Distributions to former shareholders of Pooled Entities - (183) (99) Settlement of obligation to affiliate - (236) - Other - - 36 ------- -------- ------- Net cash provided by (used in) financing activities (527) 7,921 30,815 ------- -------- ------- NET INCREASE IN CASH 436 2,077 21,871 EFFECT OF EXCHANGE RATE CHANGES ON CASH - - (2) CASH, beginning of period 117 553 2,630 ------- -------- ------- CASH, end of period $ 553 $ 2,630 $24,499 ======= ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash payments for interest $ 288 $ 137 $ 80 ======= ======== ======= Cash payments for income taxes $ 45 $ 2,817 $ 4,383 ======= ======== ======= New equipment under capital lease financing $ - $ - $ 51 ======= ======== =======
The accompanying notes are an integral part of these consolidated statements. MILLER INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED) 1. ORGANIZATION AND NATURE OF OPERATIONS Miller Industries, Inc. ("Miller Industries") was formed on April 28, 1994 in connection with a reorganization effective April 30, 1994 (the "Reorganization"). In the Reorganization all 100 shares of the no par value common stock of Century Holdings, Inc. ("Century Holdings"), a manufacturer of towing and recovery equipment, were transferred to Miller Industries by Miller Group, Inc. ("MGI") in exchange for 12,315,000 shares of Miller Industries' $.01 par value common stock and a $3,600,000 promissory note (the "Reorganization Note"). The assets received by MGI in the Reorganization were distributed as follows: (1) 12,000,000 shares of common stock to an officer, (2) 315,000 shares of common stock to certain members of management, and (3) the Reorganization Note to certain former minority stockholders of MGI. The Reorganization required the complete liquidation and dissolution of MGI. The issuance of the Reorganization Note to the former minority stockholders of MGI was in exchange for their 17.5% common stock ownership interest in MGI. The issuance of the Reorganization Note resulted in a $3,600,000 charge to accumulated deficit. As a result of the Reorganization, Century Holdings became a wholly-owned subsidiary of Miller Industries. The Reorganization was accounted for in a manner similar to a pooling of interests. The accompanying consolidated financial statements include the financial position and results of operations of B&B Associated Industries, Inc. ("B&B") and Mid-America Wrecker and Equipment Sales, Inc. of Colorado ("Mid- America"), (collectively, the "Pooled Entities"), with which Miller Industries merged in July 1996. These transactions were accounted for under the pooling-of-interests method of accounting and, accordingly, Miller Industries' consolidated financial statements have been restated as if Miller Industries, B&B, and Mid-America (collectively, the "Company") had operated as one entity since inception. See Note 3, Business Combinations, for further discussion of these transactions. Nature of Operations The Company is a manufacturer and distributor of vehicle towing and recovery equipment which is installed on truck chassis. The principal markets for the towing and recovery equipment are independent distributors of towing and recovery equipment located primarily throughout the United States, Canada, Europe, Japan, Taiwan, Hong Kong, China, and the Middle East. The Company's products are marketed under the brand names of Century, Challenger, Holmes, Champion, Eagle, Jige, and Boniface. The truck chassis are either purchased by the Company or provided by customers. Sales of Company-purchased chassis represent approximately 16%, 24%, and 31% of net sales in 1994, 1995, and 1996, respectively. Public Offerings of Common Stock On August 9, 1994, the Company completed an initial public offering of 7,156,876 shares of its common stock at $3.50 per share (the "Offering"). The net proceeds of the Offering were used to repay long-term debt, redeem the cumulative preferred stock of a wholly-owned subsidiary, increase working capital, provide funds for capital additions, and for other general corporate purposes (Notes 4 and 9). On January 31, 1996, the Company completed a public offering of 3,600,000 shares of previously unissued common stock at $9.17 per share. The net proceeds were used to repay debt, including the debt incurred in the acquisition of S.A. Jige Lohr Wreckers (Note 3), increase working capital, provide funds for capital additions, and for other general corporate purposes. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year-End In connection with the Reorganization, the Company adopted an April 30 year-end. The nine months ended April 30, 1994 will be referred to herein as "1994". Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Consolidation The accompanying consolidated financial statements include the accounts of Miller Industries, Inc. and its wholly-owned subsidiaries including the Pooled Entities. All significant intercompany transactions and balances have been eliminated in consolidation. Cash and Temporary Investments Cash and temporary investments include all cash and cash equivalent investments with original maturities of three months or less, primarily consisting of repurchase agreements. 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 April 30, 1995 and 1996 consisted of the following categories (in thousands):
1995 1996 --------- --------- Chassis $ 5,466 $ 5,225
Raw materials 5,427 10,028 Work in process 3,290 5,772 Finished goods 4,404 6,063 --------- --------- $18,587 $27,088 ========= =========
Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods are used for income tax purposes. Estimated useful lives range from 20 to 30 years for buildings and improvements and 5 to 10 years for machinery and equipment, and furniture, fixtures, and vehicles. Expenditures for maintenance and repairs are charged to expense as incurred. The property, plant, and equipment balances at April 30, 1995 and 1996 consisted of the following (in thousands):
1995 1996 --------- --------- Land $ 307 $ 1,156 Buildings and improvements 3,735 9,388 Machinery and equipment 1,691 3,166 Furniture, fixtures, and vehicles 603 1,485 Construction in progress 787 781 --------- --------- 7,123 15,976 Less accumulated depreciation (1,545) (2,254) --------- --------- Property, plant, and equipment, net $ 5,578 $13,722 ========= =========
In March 1995, the Financial Accounting Standards Board issued Statement No. 121 ("SFAS 121") on accounting for the impairment of long-lived assets, identifiable intangibles, and goodwill related to assets to be held and used. SFAS 121 also establishes accounting standards for the disposal of long-lived assets and certain identifiable intangibles. The Company adopted SFAS 121 effective May 1, 1996. The adoption of SFAS 121 did not have a significant impact on the Company's consolidated financial position and results of operations. Net Income Per Common Share Net income per common share is calculated using the weighted average number of common and common equivalent shares outstanding. Net income per common share for 1994 gives retroactive effect to the 12,315,000 shares issued in connection with the Reorganization. In April 1996, the Company effected a three-for-two common stock split in the form of a stock dividend. In September 1996, the Company effected a two- for-one common stock split in the form of a dividend. The Company's par value of $.01 per share remained unchanged. As a result, $38,000 and $116,000 respectively, was transferred from additional paid-in capital to common stock. All historical share and per share amounts have been retroactively restated to reflect the common stock splits. Goodwill Goodwill is being amortized on a straight-line basis over 40 years. The Company continually evaluates whether later events and circumstances have occurred which would indicate that the goodwill is not recoverable. Accumulated amortization of goodwill was $477,000 and $578,000 at April 30, 1995 and 1996, respectively. Amortization expense for 1994, 1995, and 1996 was $75,000, $100,000, and $101,000, respectively. Patents, Trademarks, and Other Purchased Product Rights The cost of acquired patents, trademarks, and other purchased product rights are capitalized and amortized using the straight-line method over 20 years. Total accumulated amortization of these assets at April 30, 1995 and 1996 was $151,000 and $208,000, respectively. Amortization expense for 1994, 1995, and 1996 was $40,000, $50,000, and $57,000, respectively. Accrued Liabilities and Other Accrued liabilities and other consisted of the following at April 30, 1995 and 1996 (in thousands):
1995 1996 -------- -------- Accrued wages, commissions, bonuses, and benefits $ 982 $1,883 Accrued income taxes 2,010 1,995 Other 1,476 4,497 -------- -------- $4,468 $8,375 ======== ========
Product Warranty The Company provides a one-year limited product and service warranty on its products. The Company provides for the estimated cost of this warranty at the time of sale. Warranty expense for 1994, 1995, and 1996 was $363,000, $486,000, and $551,000, respectively. Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and trade accounts receivable. The Company places its cash investments with high quality financial institutions and limits the amount of credit exposure to any one institution. The Company's trade receivables are primarily from independent distributors of towing and recovery equipment and such receivables are generally not collateralized. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Revenue Recognition Sales are recorded by the Company when equipment is shipped to independent distributors or other customers. 3. BUSINESS COMBINATIONS In January 1996, the Company purchased all of the outstanding capital stock of S.A. Jige Lohr Wreckers ("Jige Lohr"), a French manufacturer of towing and recovery equipment, at a total cash purchase price of approximately $2,950,000. In April 1996, the Company purchased all of the outstanding capital stock of Boniface Engineering ("Boniface"), an English manufacturer of towing and recovery equipment, at a total purchase price of $1,691,000. The purchase price consisted of $1,076,000 in cash and $615,000 (53,668 shares) of newly issued common stock The acquisitions of Jige Lohr and Boniface have been accounted for under the purchase method of accounting. Accordingly, the operating results of Jige Lohr and Boniface have been included in the Company's consolidated results of operations from the date of acquisition. The excess of the aggregate purchase price over the fair value of net assets acquired of $1,641,000 has been recognized as a component of goodwill in the accompanying consolidated balance sheet at April 30, 1996. The impact of the acquisitions on consolidated pro forma net income and earnings per share, as if the acquisitions had taken place at the beginning of fiscal 1995, was not significant for 1995 and 1996. In July 1996, Miller issued 198,388 shares of its common stock in exchange for all of the outstanding common stock of B&B and Mid America, distributors of towing and recovery equipment. The mergers with B&B and Mid America were accounted for under the pooling-of-interests method of accounting and, accordingly, the accompanying consolidated financial statements have been restated as if Miller Industries and the Pooled Entities had operated as one entity since inception. Results of operations of Miller Industries and the Pooled Entities for 1994, 1995 and 1996 are as follows (in thousands):
Nine Months Year Ended April 30, Ended -------------------------- April 30, 1994 1995 1996 --------------- ------------ ------------ Net sales: Miller Industries $ 45,873 $ 94,722 $125,706 Pooled Entities 8,930 14,121 18,533 Adjustment-elimination of intercompany sales (794) (1,244) (2,779) --------------- ------------ ------------ Combined 54,009 107,599 141,460 --------------- ------------ ------------ Net income before extraordinary gain and cumulative effect of accounting change: Miller Industries 2,022 5,406 7,793
Pooled Entities 291 170 169 --------------- ------------ ------------ Combined 2,313 5,576 7,962 --------------- ------------ ------------ Net income Miller Industries 2,401 5,694 7,793 Pooled Entities 291 170 169 --------------- ------------ ------------ Combined $ 2,692 $ 5,864 $ 7,962 =============== ============ ============
4. DEBT RETIREMENT AND PREFERRED STOCK REDEMPTION Upon consummation of the initial public offering, the Company retired certain debt obligations, including previously restructured long-term debt, which resulted in a gain of $288,000. Such amount is reflected as an extraordinary gain in the accompanying consolidated statement of income for 1995. Additionally, upon consummation of the initial public offering, the Company redeemed its cumulative redeemable preferred stock for $3,400,000 resulting in a gain of $694,000 which is reflected as a credit to additional paid-in capital in 1995. 5. LONG-TERM OBLIGATIONS AND LINES OF CREDIT Long-term obligations consisted of the following at April 30, 1995 and 1996 (in thousands):
1995 1996 -------- -------- Mortgage notes payable, interest at rates from 3.0% to 6.88%, payable in monthly installments, maturing 2003 to 2011 $ -- $2,510 Notes payable to banks, interest at rates from 7.23% to 9.75%, payable in monthly installments, maturing 1997 to 2005 -- 841 Mortgage note payable, interest at LIBOR plus 2.5%, payable in monthly installments through 2002 -- 139 Other notes payable 856 1,188 -------- -------- 856 4,678 Less current portion (710) (751) -------- -------- $146 $3,927 ======== ========
The aggregate future maturities of long-term obligations (excluding future cash outflows for interest) outstanding at April 30, 1996 are as follows (in thousands):
Year Ending April 30, ------------- 1997 $ 751 1998 632 1999 486 2000 486 2001 447 Thereafter 1,876 ---------- $4,678 ==========
Certain equipment and manufacturing facilities are pledged as collateral under the mortgage notes payable. Notes payable to banks are secured by life insurance policies on a member of management. Lines of Credit At April 30, 1996 the Company had an unsecured revolving credit facility of $25,000,000 and secured credit facilities totaling $748,000 (the "Revolvers") for working capital and other general corporate purposes. Borrowings under the Revolvers bear interest at rates ranging from LIBOR plus 1.5%, (6.22% at April 30, 1996) to the prime rate plus 1.0% (9.25% at April 30, 1996) and include a commitment fee on the daily unused balance. The weighted average interest rate for borrowings outstanding under the Revolvers during 1996 was approximately 8.4%. Interest is payable monthly and the Revolvers are renewable on an annual basis. Total borrowings outstanding under the Revolvers were $341,000 at April 30, 1996. The terms of the Revolvers require the Company, among other things, to maintain minimum amounts of working capital, net worth, ratio of net worth to liabilities, debt coverage and quarterly profits, to limit the amount of capital expenditures, and to limit the payment of any dividends in the event of noncompliance with the terms of the Revolvers. 6. STOCK OPTIONS The Company maintains a stock option plan under which incentive stock options, as well as nonqualified options and other stock-based awards may be granted to officers, employees, and directors. A total of 6,000,000 common shares have been reserved for issuance under the plan subject to certain limitations, as defined. No options may be exercisable for a year from the date of grant, and the Compensation Committee of the Board of Directors may determine when and in what amounts options thereafter become exercisable. The Company also adopted a stock option plan providing for the granting of options to purchase shares of common stock to each non-employee director. A total of 600,000 common shares have been reserved for issuance under the plan. Stock options issued under the plans provide for the purchase of common stock at the fair market value of the stock at the date of grant. The following summarizes the stock option transactions under the stock option plans for 1995 and 1996:
Option Price Per Shares Share ------------ ---------------- Options outstanding, April 30, 1994 -- $ -- Granted 1,255,748 3.50 Canceled (8,774) 3.50 ------------ ---------------- Options outstanding, April 30, 1995 1,246,974 3.50 Granted 628,608 4.84 - 11.46 Exercised (11,736) 3.50 Canceled (13,026) 3.50 - 5.67 ------------ ---------------- Options outstanding, April 30, 1996 1,850,820 $3.50-$11.46 ============ ================
The stock options outstanding at April 30, 1996 vest in annual increments through April 2000. 7. LEASE COMMITMENTS The Company has entered into various operating leases for buildings and office equipment. Rental expense under these leases was $294,000, $498,000, and $437,000 for 1994, 1995, and 1996, respectively. At April 30, 1996, future minimum lease payments under noncancelable operating leases were not significant. 8. LITIGATION The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of such matters presently cannot be determined but will not, in the opinion of management, based in part on the advice of legal counsel, have a material adverse effect on the Company's financial position or results of operations. In January 1996, the Company was awarded a judgment in a patent infringement suit in the United States District Court for the Northern District of Iowa at Sioux City, Iowa in which the jury found the defendant manufacturer and distributor of towing equipment willfully infringed both the Company's underlift parallel linkage and L-arm patents and that the common owner of the manufacturer and distributor induced the infringement. The judgment was paid to the Company in August 1996 in the amount of approximately $1.8 million, which included enhanced damages for willfulness and pre- and post-judgment interest and a broad permanent injunction against future infringement by the defendants. Defendants were not granted a license to use the Company's L-arm technology. With this payment, both the Company and the defendants withdrew their appeals and the judgment, therefore, became a final judgment. 9. INCOME TAXES Effective August 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") using the cumulative catch-up method. SFAS 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial and tax bases using currently enacted tax rates in effect for the year in which the differences are expected to reverse. The cumulative effect of adopting SFAS 109 resulted in a net credit to income of $379,000 in 1994. Prior to the Reorganization, Century Holdings had filed a consolidated federal tax return with MGI and, as agreed, current and deferred federal income taxes were allocated to Century Holdings as if Century Holdings were filing a separate tax return. Since the acquisition of Century Holdings by MGI, no current taxes have been paid to MGI by Century Holdings. In connection with the Reorganization, Century Holdings issued the $1,736,000 Tax Note payable to MGI which represented the cumulative amount of Century Holdings' allocated current federal income taxes which would have been payable on a separate company basis. The Tax Note payable to MGI was repaid in 1995 with a portion of the proceeds from the initial public offering. The provision for income taxes consisted of the following for 1994, 1995, and 1996 (in thousands):
1994 1995 1996 ---------- ---------- ---------- Current: Federal $1,177 $2,818 $3,509 State 197 533 514 Foreign 0 0 124 ---------- ---------- ---------- 1,374 3,351 4,147 ---------- ---------- ---------- Deferred: Federal (112) (58) 483 Foreign 0 0 (4) ---------- ---------- ---------- (112) (58) 479 ---------- ---------- ---------- $1,262 $3,293 $4,626 ========== ========== ==========
The principal differences between the federal statutory tax rate and the consolidated effective tax rate for 1994, 1995, and 1996 were as follows:
1994 1995 1996 -------- -------- -------- Federal statutory tax rate 34.0% 34.0% 34.0% State taxes, net of federal tax benefit 4.0 4.0 4.0 Other (2.7) (0.9) (1.3) -------- -------- -------- Effective tax rate 35.3% 37.1% 36.7% ======== ======== ========
Deferred income taxes and liabilities for 1995 and 1996 reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting and income tax reporting purposes. Temporary differences and carryforwards which give rise to deferred tax assets and liabilities at April 30, 1995 and 1996 are as follows (in thousands):
1995 1996 ---------- ---------- Deferred tax assets: Reserves-receivables and inventory $ 316 $ 210 Accruals and reserves 641 956 Inventory 338 20 Other 0 32 ---------- ---------- Gross deferred tax assets 1,295 1,218 ---------- ---------- Deferred tax liabilities: Property, plant, and equipment 369 701 Other 0 7 ---------- ---------- Gross deferred tax liabilities 369 708 ---------- ---------- Net deferred tax asset $ 926 $ 510 ========== ==========
In management's opinion, the net deferred tax asset will be realized through the recognition of taxable income in future periods. 10. PREFERRED STOCK The Company has authorized 5,000,000 shares of undesignated preferred stock which can be issued in one or more series. The terms, price, and conditions of the preferred shares will be set by the Board of Directors. No shares have been issued. 11. 401(K) PLAN During 1996, the Company established a contributory retirement plan (the "401(k) Plan") for all full-time employees with at least one year of service. The 401(k) Plan is designed to provide tax-deferred income to the Company's employees in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The 401(k) Plan provides that each participant may contribute up to 15% of his or her salary. The Company matches 25% of the first 4% of participant contributions. Matching contributions vest over a period of five years. All funds contributed by the participants are immediately vested. Under the terms of the 401(k) Plan, the Company may also make discretionary profit sharing contributions. Profit sharing contributions are allocated among participants based on their annual compensation. Each participant has the right to direct the investment of his or her funds among certain named investment options. Upon death, disability, retirement, or the termination of employment, participants may elect to receive periodic or lump-sum payments. Additionally, amounts may be withdrawn in cases of demonstrated hardship. Company contributions to the 401(k) Plan were not significant in 1996. 12. SUBSEQUENT EVENTS In August and September 1996, the Company purchased two distributors of towing and recovery equipment by issuing a total of 177,580 shares of its common stock in exchange for all of the outstanding common stock of these distributors. These acquisitions have been accounted for using the purchase method of accounting and, on a combined basis, resulted in approximately $1,687,000 of goodwill which will be amortized on a straight-line basis over 40 years. The pro forma impact of the distributor acquisitions on consolidated financial position at April 30, 1996 and the pro forma impact on consolidated net income and earnings per share, as if the acquisitions had taken place at the beginning of fiscal 1996, was not significant. In September 1996, the Company issued 507,462 shares of its common stock in exchange for all of the outstanding common stock of Vulcan International, Inc., a Mississippi manufacturer of towing and recovery equipment, a note payable to a former common shareholder of Vulcan and interests in a related company that owned the land and a manufacturing facility where Vulcan's operations are located. The acquisition has been accounted for under the pooling-of-interests method Accordingly, the historical financial statements of the Company will be restated to reflect the acquisition of Vulcan as if the two entities had operated as one entity since inception upon the issuance by the Company of post-merger operations. The net sales, net income, and earnings per share for the Company and Vulcan as if they had operated as one entity for 1994, 1995, and 1996 are as follows:
1994 1995 1996 ---------- ---------- ---------- Net sales: The Company $ 54,009 $107,599 $141,460 Vulcan 11,709 18,300 22,350 ---------- ---------- ---------- Combined 65,718 125,899 163,810 ---------- ---------- ---------- Net income: The Company 2,692 5,864 7,962 Vulcan 2,092 649 93 ---------- ---------- ---------- Combined 4,784 6,513 8,055 ---------- ---------- ---------- Earnings per share: The Company 0.21 0.32 0.38 Vulcan 0.15 0.03 (0.01) ---------- ---------- ---------- Combined $ 0.36 $ 0.35 $ 0.37 ========== ========== ==========
13. SEGMENT INFORMATION The Company's operations involve a single industry segment - the design, manufacture, and sale of towing and recovery equipment. Substantially all revenues result from the sale of towing and recovery equipment, either with or without a chassis, and the related parts and accessories. All significant intercompany revenues and expenses are eliminated in computing net sales and operating income. Prior to fiscal 1996, the Company operated exclusively in the United States. A summary of the Company's operations by geographic area for fiscal 1996 is presented below (in thousands):
United States Europe Consolidated --------------- ---------- ------------ Net sales $137,045 $ 4,415 $141,460 Income from operations 12,002 476 12,478 Identifiable assets 88,789 12,775 101,564
No single customer accounted for more than 10% of net sales during 1994, 1995, and 1996. 14. FAIR VALUE OF FINANCIAL INSTRUMENTS Statements of Financial Accounting Standards Nos. 107 and 119 require disclosure about fair value of all financial instruments. The carrying values of cash and temporary investments, accounts receivable, accounts payable, and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. The carrying value of long-term obligations is a reasonable estimate of its fair value based on the rates available for obligations with similar terms and maturities. 15. QUARTERLY FINANCIAL INFORMATION (unaudited) The following is a summary of the unaudited quarterly financial information for the years ended April 30, 1995 and 1996 (in thousands, except per share data):
Income Per Common Net Share Income Income Before Before Per Net Gross Extraordinary Extraordinary Net Common Sales Profit Items Items(1) Income Share(1) ---------- ---------- ------------- ------------- ---------- ---------- Year Ended April 30, 1995: First Quarter $ 21,928 $ 3,786 $ 899 $ 0.07 $ 899 $ 0.07 Second Quarter 25,551 4,414 1,229 0.06 1,517 0.08 Third Quarter 28,388 5,020 1,651 0.08 1,651 0.08 Fourth Quarter 31,732 5,167 1,797 0.09 1,797 0.09 ---------- ---------- ------------- ------------- ---------- ---------- Total $ 107,599 $ 18,387 $ 5,576 $ 0.31 $ 5,864 $ 0.32 ========== ========== ============= ============= ========== ========== Year Ended April 30, 1996 First Quarter $ 31,457 $ 4,777 $ 1,384 $ 0.07 $ 1,384 $ 0.07 Second Quarter 33,768 5,393 1,856 0.09 1,856 0.09 Third Quarter 35,917 6,020 2,110 0.10 2,110 0.10 Fourth Quarter 40,318 7,200 2,612 0.11 2,612 0.11 ---------- ---------- ------------- ------------- ---------- ---------- Total $ 141,460 $ 23,390 $ 7,962 $ 0.38 $ 7,962 $ 0.38 ========== ========== ============= ============= ========== ==========
(1) The sum of quarterly per share amounts may differ from annual earnings per share. 16. RECLASSIFICATIONS Certain reclassifications have been made to prior years' financial information to conform with the 1996 presentation. EX-27.1 3 ARTICLE 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MILLER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR YEAR YEAR APR-30-1994 APR-30-1995 APR-30-1996 AUG-01-1993 MAY-01-1994 MAY-01-1995 APR-30-1994 APR-30-1995 APR-30-1996 0 2,630 24,499 0 0 0 0 19,192 28,855 0 (518) (966) 0 18,587 27,088 0 41,506 81,641 0 7,123 15,976 0 (1,545) (2,254) 0 51,628 101,564 0 24,061 31,160 0 0 0 0 0 0 0 0 0 0 67 233 0 26,985 65,543 0 51,628 101,564 54,009 107,599 141,460 54,009 107,599 141,460 43,802 89,212 118,070 6,567 9,439 10,912 0 0 133 0 0 0 116 119 0 3,575 8,869 12,588 1,262 3,293 4,626 0 0 0 0 0 0 0 288 0 379 0 0 2,692 5,864 7,962 0.21 0.32 0.38 0 0 0
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