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SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended January 31, 2010
 
Commission File No. 1-5926

MILLER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its
Charter)

Florida
 
59-0996356
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)

16295 N.W. 13th Avenue, Miami,  Florida  33169
(Address of Principal Executive Offices

(305) 621-0501
(Registrant's telephone number, including area code

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 ¨  No þ
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer. or a “smaller reporting issuer.”  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨  No þ
 
The number of shares outstanding of each of the issuer's classes of common stock, par value $.05 per share, as of January 31, 2010 is 2,982,662 shares.

 
 

 

MILLER INDUSTRIES, INC.
FORM 10-Q
January 31, 2010
 
INDEX
 
   
Page No.
     
PART I:
FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
 
     
 
Balance Sheets dated as of January 31, 2010 and April 30, 2009
1
     
 
Statement of Operations - Nine Months ended January 31, 2010 and 2009
3
     
 
Statement of Operations - Three Months ended, January 31, 2010 and 2009
4
     
 
Statement of Cash Flows - Nine Months ended, dated as of January 31, 2010 and 2009
5
     
 
Notes to Financial Statements
6
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
8
     
Item 3.
Quantitative and Qualitative Disclosure about Market Risk
10
     
Item 4.
Controls and Procedures
10
     
PART II: OTHER INFORMATION
 
     
Items 1 to 6
11
   
Signatures
11

 
i

 

MILLER INDUSTRIES, INC.
BALANCE SHEET
JANUARY 31, 2010
(UNAUDITED)

ASSETS
Investment Property:
           
Land
  $ 161,443        
Building and Improvements
    1,049,908        
Machinery and Equipment
    11,106        
Furniture and Fixtures
    10,251        
Total Cost
          $ 1,232,708  
Less:  Accumulated Depreciation
            871,188  
Net Book Value
          $ 361,520  
                 
Other Assets:
               
Cash and Cash Equivalents
  $ 1,473,695          
Accounts Receivable (less Allowance for Doubtful Accounts of $ 3,000)
    2,840          
Deferred Tax Asset
    13,000          
Prepaid Expenses and Other Assets
    30,003          
Deferred Lease Incentive (Net of Accumulated Amortization - $ 57,598 )
    -          
Loan Costs, Less Accumulated Amortization of $ 268
    10,467          
Total Other Assets
            1,530,005  
TOTAL ASSETS
          $ 1,891,525  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Liabilities:
               
Mortgages and Notes Payable
  $ 1,357,652          
Accounts Payable and Accrued Expenses
    379,722          
Tenant Security Deposits
    49,450          
Total Liabilities
          $ 1,786,824  
                 
Shareholders’ Equity:
               
Common Stock, $.05 par, 5,000,000 shares authorized, 2,982,662 shares issued and outstanding
  $ 149,133          
Paid-in Capital
    1,191,929          
Deficit
    (1,236,361 )        
Total Shareholders’ Equity
            104,701  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
          $ 1,891,525  

See accompanying notes to financial statements.

 
1

 

MILLER INDUSTRIES, INC.
BALANCE SHEET
APRIL 30, 2009
 
ASSETS
 
Investment Property:
     
Land
  $ 161,443  
Building and Improvements
    1,049,908  
Machinery and Equipment
    11,106  
Furniture and Fixtures
    10,251  
Total Cost
  $ 1,232,708  
Less: Accumulated Depreciation
    860,467  
Net Book Value
  $ 372,241  
         
Other Assets:
       
Cash
  $ 1,477,521  
Accounts Receivable (Less Allowance for Doubtful Accounts of $ 15,000)
    10,561  
Prepaid Expenses and Other Assets
    2,095  
Deferred Lease Incentive (Net of Accumulated Amortization - $53,403)
    4,195  
Loan Costs, Less Accumulated Amortization of $ 25,030
    1,318  
Deferred Tax Assets
    11,000  
Deferred Rent Receivable
    -  
Total Other Assets
  $ 1,506,690  
TOTAL ASSETS
  $ 1,878,931  
         
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
 
Liabilities:
       
Mortgage and Notes Payable
  $ 1,394,343  
Accounts Payable and Accrued Expenses
    428,301  
Tenants’ and Customers’ Deposits
    72,640  
         
Total Liabilities
  $ 1,895,284  
         
Shareholders’ Deficiency:
       
Common Stock, $.05 par, 5,000,000 shares authorized, 2,982,662 shares issued and outstanding
  $ 149,133  
Paid-in Capital
    1,191,929  
Deficit
    (1,357,415 )
Total Shareholders’ Deficiency
  $ (16,353 )
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
  $ 1,878,931  

See accompanying notes to financial statements.

 
2

 

MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 31, 2010 AND 2009
(UNAUDITED)

   
Nine Months Ended
 
   
01/31/10
   
01/31/09
 
             
Revenues:
           
Rental Income
  $ 316,065     $ 390,432  
Hardware Sales (Net)
    223       400  
Other Income
    5,116       19,783  
Total Revenue
  $ 321,404     $ 410,615  
Expenses:
               
Rental Expense (Except Interest)
  $ 126,194     $ 178,564  
Cost of Hardware Sales
    -       -  
Administrative
    41,742       37,034  
Interest
    34,414       61,626  
Total Expenses
  $ 202,350     $ 277,224  
Income (Loss) Before Tax Provision
  $ 119,054     $ 133,391  
Provision for Income Tax:
               
Federal Income Tax
  $ 31,395     $ 37,500  
State Income Tax
    6,342       7,125  
Tax Benefits of Net Operating Loss Carryover and
               
Change in Valuation Allowance
    (39,737 )     -  
                 
Total Provision (Credit) for Income Tax (Net of Tax Benefits and Change in Valuation Allowance)
  $ (2,000 )   $ 44,625  
                 
Net Income
  $ 121,054     $ 88,766  
                 
Income per Common Share
  $ .04     $ .03  
                 
Average Shares of Common Stock Outstanding
    2,982,662       2,982,662  

See accompanying notes to financial statements.

 
3

 

MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 2010 AND 2009
(UNAUDITED)

   
Three Months Ended
 
   
01/31/09
   
01/31/09
 
             
Revenues:
           
Rental Income
  $ 129,798     $ 132,567  
Hardware Sales (Net)
    43       -  
Other Income
    1,630       4,514  
                 
Total Revenue
  $ 131,471     $ 137,081  
Expenses:
               
Rental Expense (Except Interest)
  $ 48,620     $ 52,680  
Cost of Hardware Sales
    -       -  
Administrative
    18,017       15,336  
Interest
    9,425       14,212  
Total Expenses
  $ 76,062     $ 82,228  
Income (Loss) Before Tax Provision
  $ 55,409     $ 54,853  
                 
Provision (Credit) for Income Tax:
               
Federal Income Tax
  $ 16,395     $ 17,900  
State Income Tax
    2,343       2,725  
Tax Benefits of Net Operating Loss Carryover and Change in Valuation Allowance
    (12,737 )     -  
                 
Total Provision for Income Tax (Net of Tax Benefits and Change in Valuation Allowance)
  $ 6,000     $ 20,625  
                 
Net Income
  $ 49,409     $ 34,228  
                 
Income per Common Share
  $ .02     $ .01  
                 
Average Shares of Common Stock Outstanding
    2,982,662       2,982,662  

See accompanying notes to financial statements.

 
4

 

MILLER INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 2010 AND 2009
(UNAUDITED)

   
Nine Months Ended
 
   
01/31/10
   
01/31/09
 
             
Cash Flows From Operating Activities:
           
             
Net Income
  $ 121,054     $ 88,766  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
               
Provision for Bad Debts
    (12,000 )     15,027  
Deferred Rent Receivable Adjustment
    -       16,192  
Depreciation
    12,038       13,026  
Amortization
    4,464       11,598  
Deferred Tax Asset Valuation Adjustment
    (2,000 )     44,625  
Changes in Operating Assets and Liabilities
    (79,956 )     (66,577 )
Net Cash Provided by Operating Activities
  $ 43,600     $ 122,657  
                 
Cash Flows From Investing Activities:
               
Acquisition of Property and Equipment
  $ -     $ -  
Net Cash (Used in) Investing Activities
  $ -     $ -  
                 
Cash Flows From Financing Activities:
               
Principal Payments Under Borrowings
  $ (67,695 )   $ (39,440 )
Addition to Debt
    20,269       -  
Net Cash Provided by (Used in) Financing Activities
  $ (47,426 )   $ (39,440 )
                 
Net Increase (Decrease) in Cash
  $ (3,826 )   $ 83,217  
                 
Cash at the Beginning of Period
    1,477,521       1,318,950  
Cash at the End of Period
  $ 1,473,695     $ 1,402,167  
                 
Additional Cash Flow Information:
               
Cash Paid for Interest
  $ 34,414     $ 61,626  
Cash Paid for Income Tax
  $ -     $ -  

See accompanying notes to financial statements.

 
5

 

MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2010
(UNAUDITED)

NOTE A - BASIS OF PRESENTATION:

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine month and the three month periods ending January 31, 2010 are not necessarily indicative of results that may be expected for the year ended April 30, 2010.

For further information, refer to the financial statements and footnotes thereto of the Company as of April 30, 2009 and for the year ended April 30, 2009.

NOTE B - INCOME PER SHARE:

Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year.  Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants.  The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period.  Loss per share is unchanged on a diluted basis since the Company has no potentially dilutive securities outstanding, as under the treasury stock method, options and warrants are dilutive only when the average market price of common stock during the period is greater than the exercise price of the options and warrants.

NOTE C - OTHER MATTERS:

On June 30, 2005, the Company issued stock options to Angelo Napolitano in exchange for the benefits he has provided to the Company through his personal guarantee of the Company’s bank loan, and the services rendered by Mr. Napolitano in his capacity as the Company’s sole officer and director.  The options vest 100% at the grant date and expire in 10 years from the grant date.  The Company granted options to Mr. Napolitano to purchase up to 2,017,338 shares of the Company’s common stock during the term of the options at a price equal to $0.18 per share (Exercise Price).

 
6

 

MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2010
(UNAUDITED)

The average fair values of the options granted during fiscal 2006 were estimated at $0.0324, using the Black-Scholes options-pricing model, which included the following assumptions:

Stock Price
  $ 0.05  
Strike Price
    0.18  
Expected Life
 
9.17 Years
 
Risk-Free Interest Rate
    3.80 %
Volatility
    79.23 %

Approximately $65,400 was recorded as compensation expense for fiscal 2006 related to this grant.

The following summarized information concerning currently outstanding and exercisable options at January 31, 2009.

     
Options Outstanding/Exercisable
 
               
Exercise Price
   
Number Outstanding at 01/31/10
   
Average Remaining Life
 
               
$ 0.18       2,017,338       5.42  

NOTE D – MODIFICATION OF NOTE AND MORTGAGE PAYABLE:

On October 27, 2009, an agreement was executed between the Company (Borrower), City National Bank of Florida (Lender) and Angelo Napolitano(Guarantor) to extend the maturity date of the Note to November 13, 2019.  The Guarantor has guaranteed up to the top 50% of all sums due under the Note.  Commencing November 13, 2009, the interest rate shall be equal to ½ of 1% (.50%) per annum under the Base Rate of the Lender adjusted annually.  In the event the aggregate balance in Borrower’s depository relationship with the Lender should fall below the sum of $ 2,000,000 for 30 consecutive days, the interest note rate shall never be lower than 4 ½ @ per annum.  Depository Relationship is defined as deposits held by Guarantor, or any direct family members and entities under his control or entities on which he has a membership interest.  Commencing December 13, 2009 and the 13th day of each and every month to maturity, monthly principal payments of $ 3,715 plus accrued interest shall be due and payable.

 
7

 

ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Results of Operations (First Three Quarters of 2009 Fiscal Year compared to First Three Quarters of 2010 Fiscal Year)
 
Rental Income.  The Company's results of operations are primarily dependant upon the rental income which it receives from leasing space in its building.  Rental income is a function of the percentage of the building which is occupied, and the level of rental rates.  Rental income during the first three quarters of the 2009 fiscal year was $390,000, compared with $316,000 in the first three quarters of 2010.  The decrease in rental income was due to the loss of a tenant.
 
Hardware Sales.  The Company receives revenue from the sale of replacement parts for the sliding glass doors and windows formerly manufactured by the Company.  The Company utilizes its existing inventory of these parts to support these sales.  These sales were immaterial in 2010 and 2009.
 
Other Income.  The Company generated other income of $20,000 in the first three quarters of 2009 and $5,000 in 2010.  Other income in 2010 and 2009 consisted of interest income and miscellaneous income.  Interest income decreased due to lower interest rates.
 
Rental Expense (Excluding Interest).  The Company incurs rental expense in connection with the leasing of its building.  These expenses consist of management fees, insurance, real estate taxes, depreciation and amortization, insurance, maintenance and repairs, utility costs and outside services.  Rental expenses were $179,000 in the first three quarters of 2009 compared to $126,000 in the first three quarters of 2010.  The decrease was due to lower taxes, depreciation and bad debt expense.
 
Cost of Hardware Sales.  The Company records the cost of its hardware sales in connection with the sale of replacement parts to customers of its former window and sliding glass door business.  These costs are tied to the level of hardware sales.  These costs were not material in the first three quarters of 2009 or 2010.
 
Administrative Expenses.  The Company's administrative expenses were $42,000 in 2010, compared to $37,000 in 2009.  They primarily consist of accounting and legal fees and shareholders expenses.
 
Interest Expense.  The Company pays interest on the mortgage loan on its building.  Interest expense on the loan was $62,000 in 2009 compared to $34,000 in 2010.  The decrease in the amount of interest was attributable to a decrease in the interest rate of the Company’s loan.
 
Provision for Income Taxes.  The Company had a tax provision of $45,000 in 2009.  In 2010, the Company had a tax credit of $2,000.  The tax credit arose due to the utilization of the Company’s net operating loss carryforward and change in valuation allowance.
 
Net Income.  As a result of the foregoing factors, the Company had net income of $89,000 in the first three quarters of 2009, compared to $121,000 in the first three quarters of 2010.

 
8

 
 
Results of Operations (Third Quarter of 2009 Fiscal Year v. Third Quarter of 2010 Fiscal Year)
 
Rental Income.  Rental income during the third quarter of the 2009 fiscal year was $132,000, compared with $130,000 in the third quarter of 2010.
 
Hardware Sales.  Hardware sales were less than not material in the third quarter of 2009 and 2010.
 
Other Income.  The Company generated other income of $5,000 in the third quarter of 2009 and $2,000 in 2010.  Other income in 2009 and 2010 consisted of interest income and miscellaneous income.  The decrease was due to the lower interest rates on the Company’s deposits.
 
Rental Expense (Excluding Interest).  Rental expense was $53,000 in the third quarter of 2009 and $49,000 in the third quarter of 2010.  The principal components were management fees, taxes, depreciation and amortization and insurance.  There were no material changes to these items during the quarter.
 
Administrative Expenses.  The Company's administrative expenses were $15,000 in 2009 and $9,000 in 2010.  They primarily consist of accounting and legal fees and shareholders expenses.
 
Interest Expense.  The Company pays interest on the mortgage loan on its building.  Interest expense on the loan was $14,000 in 2009 compared to $9,000 in 2010.  The decrease in the amount of interest was attributable to a decrease in the interest rate on the Company’s loan.
 
Provision for Income Taxes  The Company recorded a provision for income tax of $21,000 in 2009 and $6,000 in 2010.  The decrease was due to the utilization of the Company’s net operating loss carryforward and change in valuation allowance.
 
Net Income.  As a result of the foregoing factors, the Company had net income of $34,000 in the third quarter of 2009, compared to $49,000 in the third quarter of 2010.
 
Liquidity and Capital Resources
 
The Company's cash increased by $83,000 during the first nine months of the 2009 fiscal year compared with a decrease of $4,000 during the first nine months of fiscal year 2010.  The decrease in cash in 2010 was due to a lower level of cash flow from operations and a higher level of principal payments on the Company’s bank loan.  As of January 31, 2010, the Company's cash position was approximately $1,474,000.
 
Current Operations
 
The Company operates as a real estate investment and management company.  The Company is currently seeking to obtain additional commercial tenants for its existing building.

 
9

 
 
The Company's principal operating expenses consist of management and professional fees associated with the administration of the Company, interest expense on the Company's new mortgage loan, real estate taxes and insurance.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
We are a smaller reporting issuer as defined in Item 10 of Regulation S-K and are not required to report the quantitative and qualitative measures of market risk specified in Item 305 of Regulation S-K.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
In connection with the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures as of January 31, 2010.  The Company's Chief Executive Officer and Chief Executive Financial Officer concluded that the Company's disclosure controls and procedures were effective as of January 31, 2010.
 
There were no changes in the Company's internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the fiscal quarter ended January 31, 2010.

 
10

 

PART II.  OTHER INFORMATION
 
ITEM6.
EXHIBITS AND REPORTS ON FORM 8-K
 
(a)
Exhibits
 
Exhibit No.
 
Description
     
  (31.1)
 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
     
  (31.2)
 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
     
  (32.1)
  
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
(b)
Reports on Form 8-K.
 
Not applicable.
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
MILLER INDUSTRIES, INC.
 
             (Registrant)
   
Dated:  January 10, 2011
By:
/s/  Angelo Napolitano
   
Angelo Napolitano
Chairman of the Board of Directors
Chief Executive Officer
Principal Financial Officer

 
11