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 |
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.
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.
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.
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.
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.
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).
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.
| 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.
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.
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.
PART II. OTHER INFORMATION
| ITEM6. | EXHIBITS AND REPORTS ON FORM 8-K |
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. |
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 |
