SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended April 30, 2004
Commission File No. 1-5926
MILLER INDUSTRIES,
INC.
(Name of Small Business Issuer in its Charter)
|
Florida
|
59-0996356
|
|---|---|
|
(State or Other Jurisdiction of
(Incorporation or Organization) |
(I.R.S. Employer
Identification No.) |
16295 N.W. 13th Ave., Miami, Florida 33169
(Address of Principal Executive Offices)
(305) 621-0501
(Issuer’s
Telephone Number, Including Area Code)
Securities registered
under Section 12(b)
of the Exchange
Act: None
Securities registered
under Section 12(g) of the Exchange Act:
Common Stock, $.05 Par Value
(Title of Class)
Check whether the issuer: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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 past 90 days.
Yes ___ No
X
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. |_|
State issuer's revenues for its most recent fiscal year: $294,000.
As of April 30, 2004, the registrant had 2,982,662 outstanding shares of common stock, $.05 par value.
The aggregate market value of the common stock of the registrant held by non-affiliates (based on the average of the closing bid and asked prices of the common stock in the over-the-counter market as of September 22, 2004) was approximately $156,520.
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This Form 10-KSB contains “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements represent the Company’s expectations and beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition, growth or strategies. For this purpose, any statements contained in this Form 10-KSB that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward looking statements. The statements by their nature involve substantial risks and uncertainties, certain of which are beyond the Company’s control, and actual results may differ materially depending on a variety of important factors, including but not limited to the potential impact of changes in interest rates, competition, credit risks and collateral, changes in local or regional economic conditions, the ability of the Company to continue its growth strategy, dependence on management and key personnel, and regulatory supervision.
General
Miller Industries, Inc. (the “Company”) was incorporated under the laws of the State of Florida on January 21, 1963. The administrative offices of the Company are located at 16295 N.W. 13th Avenue, Miami, Florida 33169, and its telephone number is (305) 621-0501.
The Company’s principal business is the ownership and management of a 98,000 square feet warehouse located in Miami, Florida. The Company’s plan is to acquire other income-generating properties. The Company’s president, Angelo Napolitano, has extensive experience in the real estate industry, and believes that he can provide the Company with the expertise to locate, acquire and manage attractive properties. The Company hopes to finance the acquisition of properties through a combination of debt from third parties (including outside lenders and seller financing) and issuance of equity securities.
Employees
The Company had no employees during the 2004 and 2003 fiscal years.
The Company’s president provides services to the Company as an independent contractor. The Company also utilizes an independent contractor to perform administrative and bookkeeping services.
Description of Warehouse
The Company owns a one-story concrete block building located at 16295 N.W. 13th Avenue, Miami, Florida. This facility consists of 97,813 square feet, 7,000 of which is air-conditioned. The building is zoned for use as a warehouse or light manufacturing facility. The building has a relatively low ceiling, which has adversely affected leasing efforts.
Financing
At April 30, 2004, the building was subject to an outstanding first mortgage in favor of a commercial bank with a principal balance of approximately $1,637,000. The loan accrues interest at prime less 1/2% and is payable in monthly installments of $9,332, with a balloon payment of $1,305,000 due October 2009. The loan is secured by the Company’s land and building and a partial guarantee of the Company’s president.
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Leasing Activities
The Company continues to seek long term commercial tenants for its building. The building is located in an industrial park which contains many similar facilities. Current rents for such facilities range from approximately $3.75 per square foot to approximately $5.50 per square foot and the occupancy rate in the area is approximately 80%.
The following table sets forth a summary of leases at the Company’s building in effect on April 30, 2004:
|
Termination Date
|
Square Feet
|
Annual Rent
|
Rent Per
Square Foot |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| February 2007 | 38,489 | $ | 192,445 | $ | 5 | .00 | |||||
| March 2005 | 17,600 | $ | 96,800 | $ | 5 | .50 | |||||
| August 2004 | 5,000 | $ | 22,500 | $ | 4 | .50 | |||||
| August 2004 | 16,020 | $ | 88,110 | $ | 5 | .50 | |||||
At the beginning of the 2004 fiscal year (i.e., April 30, 2003), approximately 56% of the building was leased. During the 2004 fiscal year, the Company entered into a one-year lease (commencing September 1, 2003) for 16,020 square feet for an annual rent of $88,110. On March 1, 2004, the Company also renewed the existing lease for 38,489 square feet, for an additional three-year term (ending February 28, 2007). The rent will be $192,445 for the first year and will be subject to adjustment in the second and third year.
After the end of the 2004 fiscal year, two of the Company’s leases (accounting for 21,020 square feet) terminated. As a result, approximately 58% of the building is currently leased. The Company is continuing to seek new tenants for its unoccupied space.
Insurance, Depreciation and Taxes
The Company believes that the building is adequately insured. Depreciation is determined using the straight-line method over five to 31.5 years for tax purposes and 5 to 30 years for accounting purposes. Real estate taxes paid for calendar year 2004 were approximately $37,000.
Business Plan
The Company’s current business plan is to make strategic investments in commercial real estate. At the present time, the Company has not developed any specific investment policy with regard to its proposed real estate activities. Accordingly, the Company has not established any limitations in the percentage of assets which may be invested in any one investment or type of investments. The Company generally intends to seek real estate assets for income-generation purposes rather than capital gains. The Company has not developed any particular criteria for the types of real estate in which it may invest. Accordingly, the Company may invest in office and apartment buildings, shopping centers, industrial and commercial properties, special purpose buildings and undeveloped acreage. The Company believes that any such acquisitions will occur in South Florida. The Company hopes to finance the acquisition of properties through a combination of financing from third parties, financing from the seller and issuance of equity securities of the Company. The Company may also invest in real estate through partnerships or other similar vehicles. There can be no assurance that any of these plans will be realized.
Seaboard Chemical Corporation
In late 1991, the Company was identified by the North Carolina Department of Environment, Health, and Natural Resources (“DEHNR”) as a member of a large group of companies who had shipped hazardous waste to a disposal site owner and operated by Seaboard Chemical Corporation (“Seaboard”). Accordingly, DEHNR issued a Notice of Responsibility to advise the Company of its liability as a potentially responsible party (“PRP”) with respect to the site.
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Seaboard had operated the site in Jamestown, North Carolina for the storage, treatment and disposal of hazardous waste materials for the period from 1976 to 1989. Operations at the site ceased in 1989 when Seaboard declared bankruptcy. Beginning in 1990, the bankruptcy trustee for Seaboard attempted to close the site in accordance with the terms of the Resource Conservation and Recovery Act (“RCRA”). However, insufficient funds were available to allow the trustee to complete this work. As a result, the Federal Environmental Protection Agency (the “EPA”) and the DEHNR advised the trustee that if the clean up work were not completed, either one or both of the agencies would complete the work and would sue the responsible parties to recover the costs involved. To avoid the possibility of this lawsuit, in October 1991, the Company entered into an agreement with other responsible parties to form a group to complete the site clean up work. Over the next two years, the necessary steps were taken to complete the clean up of the surface contamination of the site. In 1994, the Company joined a group to complete the groundwater clean up (“Phase II”). Phase II was to begin as soon as a satisfactory plan was approved by the concerned authorities. To date, the Company has been required to expend only $1,200 on this matter. Therefore, no accrual has been made for further costs to this point. No determination of the estimated additional expenditures has been furnished to the group members.
Gold Coast Oil
In 1981, the Company was named by the U.S. Environmental Protection Agency (“EPA”) as one of many potential PRPs with respect to chemical pollution discovered at a site known as “Gold Coast Oil.”
In 1988, a settlement was negotiated between the EPA and certain PRPs including the Company, which resulted in a settlement of the EPA claim. The PRPs subsequently negotiated a settlement among themselves in which the Company agreed to pay $50,000 of the anticipated clean up costs. The Company’s insurance carrier at the time of the alleged violations agreed to pay $45,000 of this amount in return for a release from any future additional claims.
In January 1993, it was determined that additional funds would be required to complete the clean up of the Gold Coast Oil site. The Company received an assessment of $10,000 for this obligation and has included such amount in accrued expenses in the accompanying balance sheets.
Not applicable.
The Company’s common stock is currently traded on the over-the-counter market under the symbol “MLLS”.
The range of the high and low bid quotations for each quarter of the past two (2) fiscal years is as follows:
| FYE |
CLOSING BID
|
CLOSING ASK
|
||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2004
|
HIGH
|
LOW
|
HIGH
|
LOW
|
||||||||||||||||
| May 2, 2003 to August 1, 2003 | $ | .02 | $ | .02 | .16 | $ | .12 | |||||||||||||
| Aug. 4, 2003 to Oct. 31, 2003 | .02 | .02 | .14 | .14 | ||||||||||||||||
| Nov. 8, 2004 to Jan. 30, 2004 | .05 | .02 | .14 | .12 | ||||||||||||||||
| Feb. 2, 2004 to April 30, 2004 | .07 | .05 | .12 | .12 | ||||||||||||||||
| FYE |
CLOSING BID
|
CLOSING ASK
|
||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2003
|
HIGH
|
LOW
|
HIGH
|
LOW
|
||||||||||||||||
| May 3, 2002 to July 26, 2002 | $ | .05 | $ | .04 | .08 | $ | .07 | |||||||||||||
| Aug. 2, 2002 to Oct. 31, 2002 | .10 | .02 | .25 | .12 | ||||||||||||||||
| Nov. 8, 2002 to Jan. 31, 2003 | .02 | .02 | .16 | .16 | ||||||||||||||||
| Feb. 7, 2003 to April 30, 2003 | .02 | .02 | .16 | .16 | ||||||||||||||||
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As of August 31, 2004, there were 467 holders of record of the Company’s common stock.
The Company has not paid any cash dividends during the last three fiscal years.
The Company does not have any equity based compensation plans.
Results of Operations (2004 compared to 2003)
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 2003 was $363,000, compared with $269,000 in 2004. The decline in rental income was due to a decrease in the level of occupancy at the building.
Hardware Sales
The Company receives revenue from the sale of replacement parts for the sliding glass doors and windows formerly manufactured by the Company. These sales were $19,000 in both 2003 and in 2004.
Other Income
The Company generated other income of $9,000 in 2003, compared to $8,000 in 2004. Other income in 2004 and 2003 principally consisted of interest income.
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 $120,000 in 2003 and $142,000 in 2004. The principal components were management fees ($36,000 in both 2003 and in 2004), taxes ($33,000 in both 2003 and 2004), depreciation and amortization ($20,000 in both 2003 and 2004) and insurance ($18,000 in 2003 and $21,000 in 2004).
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 $10,000 in 2003 and $5,000 in 2004.
Administrative Expenses
The Company’s administrative expenses were $44,000 in 2003, compared to $55,000 in 2004. Administrative expenses increased due to higher accounting and legal fees ($24,000 in 2003 compared to $33,000 in 2004), and higher shareholders expenses ($13,000 in 2003 and $13,000 in 2004).
Interest Expense
The Company pays interest on the mortgage loan on its building. Interest expense on the loan was $79,000 in 2003 compared to $64,000 in 2004. The decease was attributable to a decrease in the prime rate, which reduced the interest on the Company’s mortgage loan.
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Provision for Income Taxes
The Company recorded a provision for income tax of $42,000 in 2003, compared to $5,000 in 2004, based upon the Company’s income during these years. The level of these taxes was directly attributable to the level of net income before taxes. These amounts were completely offset by the carryforward of the Company’s net operating losses.
Net Income
As a result of the foregoing factors, the Company had net income of $139,000 in 2003, compared to $71,000 in 2004.
Liquidity and Capital Resources
The Company’s cash increased by $51,000 during fiscal year 2003 compared with an increase of approximately $7,000 during fiscal year 2004. The increase in 2003 in cash was primarily due to positive cash flow from operations. The Company expended approximately $1,800 for improvements to its building. As of April 30, 2004, the Company’s cash position was approximately $767,000.
At April 30, 2004, the Company’s principal financing consisted of a loan with a principal balance of $1,637,000 from a third party lender, secured by a lien on the Company’s building. The loan bears interest at prime less 2%. It is payable $9,332 per month, with a balloon payment October 2009 in the approximate amount of $1,305,000. The note is collateralized by the Company’s land and building , along with the personal guaranty of the Company’s Chairman of the Board in the amount of 50% of the mortgage balance.
The Company believes that its working capital needs over the next twelve months will principally consist of funding routine maintenance of its building and alterations to the interior of the building to accommodate new tenants. The Company believes that its existing cash reserves will allow the Company to continue operations at their current level for at least 12 more months. However, the Company’s long term prospects ultimately depend on the Company’s ability to lease the space in its building at attractive rates.
The Company’s obligations to make payments under existing, material contracts consists of the following:
| o | The Company is obligated to make payments under its existing mortgage loan. At April 30, 2004, the outstanding balance of the loan was $1,637,000. The loan bears interest at prime less 2%. The loan is repayable in monthly installments of approximately $9,332, with a balloon payment of approximately $1,305,000 due in October 2009. |
| o | The Company has agreed to pay Harnap Corp., a corporation controlled by the Company’s president and principal shareholder, $3,000 per month for management fees. No fees have been paid to Harnap since March 2000. Accrued fees as of April 30, 2004 were $245,000, all of which are payable upon the demand of Harnap. |
Leasing Activities
During the 2003 fiscal year, two of the Company’s leases terminated. During the 2004 fiscal year, the Company added a new tenant which leased approximately 16,000 square feet, and an existing tenant renewed its lease for 38,489 square feet. Since the end of the 2004 fiscal year, two leases have terminated, which reduced occupancy by 21,020 square feet. As a result, occupancy is currently at 58%. The Company is actively seeking new tenants for the building.
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Current Plans
The Company operates as a real estate investment and management company. The Company currently has two tenants for its existing building and is seeking to obtain additional commercial tenants.
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 mortgage loan, real estate taxes and insurance.
The Company’s business plan also contemplates the acquisition of additional income-producing properties. The Company hopes to acquire such properties through a combination of financing from third parties, seller financing and issuance of the Company’s equity securities.
The Company’s business plan is subject to uncertainty. There can be no assurance that the Company will be able to maintain a sufficient number of tenants to meet its debt service requirements and operating expenses on an ongoing basis. Furthermore, there can be no assurance that the Company will be able to locate or acquire suitable properties in order to expand its holdings of real property.
Critical Accounting Policies
The Securities and Exchange Commission (“SEC”) has issued disclosure guidance for “Critical Accounting Policies.” The SEC defines critical accounting policies as those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
The discussion and analysis of the Company’s financial condition and results of operations are based upon its financial statements, the preparation of which takes into account estimates based on judgments and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from these estimates. The accounting policies and estimates used and outlined in Note 1 to the Company’s financial statements, which are presented elsewhere in this Form 10-KSB, have been applied consistently as at April 30, 2004 and 2003, and for the years ended April 30, 2004 and 2003. The Company’s representatives who are involved in the preparation of its financial statements and this report believe that the following accounting policies represent the Company’s critical accounting policies:
Valuation of Long-Lived Assets : The Company periodically assesses the carrying value of long-lived assets whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When the Company determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flows method. While the Company believes that this method is reasonable, different assumptions regarding such cash flows may significantly affect the measurement of impairment.
Revenue Recognition : Rental income is recognized when it becomes receivable under the terms of each lease. Hardware sales are recognized upon receipt of payment from customers.
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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
The Company is not a party to any material off-balance sheet arrangements.
The following is a summary of the Company’s contractual obligations, including certain on-balance sheet obligations, at April 30, 2004:
|
Contractual Obligations
|
Payments Due by Period
|
||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Total
|
Less Than 1
Year |
1-3
Years |
3-5
Years |
More Than 5
Years |
|||||||||||||||||||||||||
| Long Term Debt | $ | 1,648,650 | $ | 67,532 | $ | 117,183 | $ | 125,667 | $ | 1,338,268 | |||||||||||||||||||
| Capital Lease Obligations | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
| Operating Leases | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
| Purchase Obligations | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
| Other Long Term Debt | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
| TOTAL | $ | 1,648,650 | $ | 67,532 | $ | 117,183 | $ | 125,667 | $ | 1,338,268 | |||||||||||||||||||
The Company’s financial statements and supplementary financial schedules are attached as an exhibit to this report. See Items 14(a) and 14(b).
None.
The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. Based upon his evaluation of those controls and procedures as of April 30, 2004, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the Company’s disclosure controls and procedures were adequate.
-8-
The directors and executive officers of the Company are as follows:
|
Name
|
Position
|
Officer
Since |
Director
Since |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Angelo Napolitano | President, Chief Executive Officer, | 1992 | 1988 | ||||||||
| and Chairman of the Board of Directors | |||||||||||
Each director is elected for a period of one (1) year, or until his successor is duly elected by the shareholders. Officers serve at the will of the Board of Directors.
Angelo Napolitano, age 68, has been President and Chief Executive Officer of the Company since 1992. He has been a Director of the Company since 1988 and Chairman since July 1989. Mr. Napolitano is the Chairman and Chief Executive Officer of Harnap Corp., a commercial real estate management company which he founded in 1971. Since 1975, Mr. Napolitano has served as a director and President of Sunshine State Industrial Park Authority, the property owners’ association for the industrial park in which the Company’s building is located.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, all of the Company’s directors have filed reports on a timely basis.
Audit Committee Financial Expert
The Company has determined that it does not have an audit committee financial expert. The Company has not been able to identify an individual willing to serve as an audit committee financial expert for the Company.
Code of Ethics
The Company has adopted a code of ethics that applies to the Company’s officers and persons performing similar functions.
The following table sets forth information regarding the compensation paid by the Company to the Company’s chief executive officer. None of the Company’s officers in fiscal 2004 received compensation in excess of $100,000.
|
Name and Position
|
Fiscal Year
|
Salary (1)
|
Stock Options
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Angelo Napolitano, Chief Executive Officer | 2004 | $ | 36,000 | - | |||||||
| 2003 | $ | 36,000 | - | ||||||||
| 2002 | $ | 36,000 | - | ||||||||
(1) Includes management fees paid to Harnap Corp., a company controlled by Mr. Napolitano, and director fees paid to Mr. Napolitano.
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Management Agreement
In October 1992, the Company agreed to pay Harnap Corp. a monthly management fee of $3,000. Harnap Corp. is owned and controlled by Angelo Napolitano, the Company’s Chief Executive Officer and Chairman of the Board. As of April 30, 2004, accrued management fees totaled $245,000.
Compensation of Directors
No amounts were paid to directors during the 2004 fiscal year for services as directors.
To the knowledge of management, as of August 31, 2004, the following persons beneficially owned 5% or more of the common stock of the Company:
|
Name and Address of
Beneficial Owner |
Amount
Beneficial Owner |
Percent
Of Class |
||||||
|---|---|---|---|---|---|---|---|---|
| Angelo Napolitano | 1,131,256 | 37.9 | ||||||
| 1521 N.W. 165th Street | ||||||||
| Miami, FL33169 | ||||||||
| Elizabeth Schuldiner Revocable Trust | 182,967 | 6.1 | ||||||
| u/a 3/20/90 (2) | ||||||||
| 80 West 12th Street | ||||||||
| New York, NY10011 | ||||||||
| Walter P. Carucci (3) | 236,417 | 7.9 | ||||||
| Carucci Family Partners (3) | ||||||||
| Carr Securities Corp. (3) | ||||||||
| One Penn Plaza | ||||||||
| New York, NY10119 | ||||||||
(1) Mr. Napolitano has sole voting and investment power with respect to 1,121,256 shares which he holds of record. Mr. Napolitano has shared voting and investment power with respect to 10,000 shares which he owns jointly with his wife, Mrs. Helen Napolitano.
(2) Based on information disclosed, as of September 8, 2000, in a Schedule 13G filed with the Securities and Exchange Commission (“SEC”). Elizabeth Schuldiner Revocable Trust has sole voting and investment power with respect to the shares.
(3) Based on information disclosed, as of August 31, 2000, in a Schedule 13G filed with the SEC. Walter P. Carucci, Carucci Family Partners and Carr Securities Corp. have identified themselves as a “group” as that term is used in the Securities Exchange Act of 1934, as amended. Walter P. Carucci has sole voting and investment power with respect to 76,000 shares. Carucci Family Partners has sole and investment power with respect to 147,450 shares. Carr Securities Corp. has sole and investment power with respect to 12,967 shares. There is no shared voting and investment power among Walter P. Carucci, Carucci Family Partners and Carr Securities Corp. with respect to the shares.
-10-
The shares of common stock beneficially owned by the Company’s sole director and executive officer as of August 31, 2004 were as follows:
|
Name and Address of
Beneficial Owner |
Amount
Beneficial Owner (1) |
Percent
Of Class |
||||||
|---|---|---|---|---|---|---|---|---|
| Angelo Napolitano | 1,131,256 | (2) | 37 | .9%(2) | ||||
| 1521 N.W. 165th Street | ||||||||
| Miami, FL 33169 | ||||||||
(1) Except as otherwise indicated, each person has sole voting and investment power as to the listed shares.
(2) With respect to Mr. Napolitano’s shares, see Note (1) to the preceding table.
The Company has entered into a brokerage agreement with Napolitano Realty Corporation (“NRC”) with respect to the lease of the Company’s building. The President of NRC is the son of Mr. Angelo Napolitano, the Company’s President and Chairman of the Board. The agreement provides for a 6% commission to be paid to NRC on sales or lease proceeds received by the Company. Commissions of $5,300 were paid under this agreement for the 2004 fiscal year.
| (a) | Financial Statements |
| Report of Independent Certified Public Accountants |
| Balance Sheets As of April 30, 2004 and 2003 |
| Statements of Operations and (Deficit) for Years ended April 30, 2004 and 2003 |
| Statements of Changes in Shareholders (Deficiency) for Years ended April 30, 2004 and 2003 |
| Statements of Cash Flows for Years ended April 30, 2004 and 2003 |
| Notes to Financial Statements |
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| (b) | All schedules have been omitted because they are inapplicable, not required or the information is included elsewhere in the financial statements or notes thereto. |
| (c) | Exhibits |
| 3.1 | Articles of Incorporation (Note 1) |
| 3.2 | Articles of Amendment (Note 2) |
| 3.3 | By-laws (Note 1) |
| 3.4 | Amendment to By-laws -- Indemnification (Note 1) |
| 3.5 | Amendment to By-laws --Control Share Acquisitions (Note 3) |
| 10.1 | Indemnification Agreement with Directors (Note 4) |
| 10.2 |
Amended,
Restated and Consolidated Promissory Note dated
(Note
5)
October 13, 1999 made by Miller Industries, Inc. in favor of City National Bank of Florida |
| 99.P* | Code of Ethics |
| 31.1* | Certification of Chief Executive Officer and 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 by Section 906 of Sarbanes-Oxley Act of 2002 |
| Note 1 | Incorporated by reference from the Form 10-K filed with the Commission for the year ended April 30, 1981. |
| Note 2 | Incorporated by reference from Form 10-K filed with the Commission for the year ended April 30, 1985. |
| Note 3 | Incorporated by reference from the Form 10-K filed with the Commission for the year ended April 30, 1993. |
| Note 4 | Incorporated by reference from the Form 10-K filed with the Commission for the year ended April 30, 1990. |
| Note 5 | Incorporated by reference from the Form 10-K filed with the Commission for the fiscal year ended April 30, 1999. |
(*) Filed as part of this report
| (d) | Reports on Form 8-K |
There were no reports on Form 8-K for the three months ended April 30, 2004.
-12-
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized on the 8 th day of November, 2004.
|
MILLER INDUSTRIES, INC.
BY: /S/ Angelo Napolitano —————————————— Angelo Napolitano President And Chief Executive Officer |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 8 th day of November, 2004.
|
BY: /S/ Angelo Napolitano —————————————— Angelo Napolitano President, Chief Executive Officer, and Director (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) |
-13-
Shareholders and Board of
Directors
Miller Industries, Inc.
Miami, Florida
I have audited the accompanying balance sheet of Miller Industries, Inc. as of April 30, 2004 and 2003, and the related statements of operations, shareholders’ deficiency, and cash flows for each of the two years in the period ended April 30, 2004. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Industries, Inc. as of April 30, 2004 and 2003 and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2004, in conformity with accounting principles generally accepted in the United States of America.
|
Miami, Florida
July 19, 2004 |
BY: /S/ LARRY WOLFE —————————————— LARRY WOLFE Certified Public Accountant |
F-1
MILLER INDUSTRIES, INC.
BALANCE SHEET
APRIL 30, 2004 AND
2003
ASSETS
|
Investment Property:
|
2004
|
2003
|
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|---|---|---|---|---|---|---|---|---|
| Land | $ | 161,443 | $ | 161,443 | ||||
| Building and Improvements | 1,026,502 | 1,024,702 | ||||||
| Machinery and Equipment | 11,106 | 11,106 | ||||||
| Furniture and Fixtures | 10,251 | 10,251 | ||||||
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| Total Cost | $ | 1,209,302 | $ | 1,207,502 | ||||
| Less: Accumulated Depreciation | 786,293 | 774,232 | ||||||
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| Net Book Value | $ | 423,009 | $ | 433,270 | ||||
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| Other Assets: | ||||||||
| Cash | $ | 766,720 | $ | 759,526 | ||||
| Prepaid Expenses and Other Assets | 18,997 | 16,125 | ||||||
| Deferred Lease Incentive (Net of Accumulated | 2,740 | 8,217 | ||||||
| Amortization of $24,652 in 2004 and $19,175 in 2003) | ||||||||
| Loan Costs, Less Accumulated Amortization of $9,221 and | 14,491 | 17,127 | ||||||
| $9,221 in 2004 and 2003, respectively | ||||||||
| Deferred Tax Assets | 44,000 | -- | ||||||
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| Total Other Assets | $ | 846,948 | $ | 800,995 | ||||
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| TOTAL ASSETS | $ | 1,269,957 | $ | 1,234,265 | ||||
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| LIABILITIES AND SHAREHOLDERS' DEFICIENCY | ||||||||
| Liabilities: | ||||||||
| Mortgages and Notes Payable | $ | 1,648,650 | $ | 1,699,987 | ||||
| Accounts Payable and Accrued Expenses | 310,564 | 312,301 | ||||||
| Tenant Security Deposits and Other | 44,774 | 27,472 | ||||||
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| Total Liabilities | $ | 2,003,988 | $ | 2,039,760 | ||||
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| Shareholders' Deficiency: | ||||||||
| Common Stock, $.05 par, 5,000,000 shares authorized, | $ | 149,133 | $ | 149,133 | ||||
| 2,982,662 shares issued and outstanding | ||||||||
| Paid-in capital | 1,126,507 | 1,126,507 | ||||||
| Deficit | (2,009,671 | ) | (2,081,135 | ) | ||||
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|||||||
| Total Shareholders' Deficiency | $ | (734,031 | ) | $ | (805,495 | ) | ||
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|||||||
| Total Liabilities and Shareholders' Deficiency | $ | 1,269,957 | $ | 1,234,265 | ||||
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See Accompanying Notes to Financial Statements
F-2
MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
YEARS ENDED APRIL
30, 2004 AND 2003
|
Years Ended
April 30, 2004 |
Years Ended
April 30, 2003 |
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|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Rental Income | $ | 268,633 | $ | 363,250 | ||||
| Hardware Sales (Net) | 19,044 | 19,220 | ||||||
| Other Income | 6,680 | 9,035 | ||||||
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| Total Revenue | $ | 294,357 | $ | 391,505 | ||||
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| Expenses: | ||||||||
| Rental Expense (Except Interest) | $ | 142,258 | $ | 120,236 | ||||
| Cost of Hardware Sales | 5,477 | 9,952 | ||||||
| Administrative | 54,680 | 43,674 | ||||||
| Interest | 64,478 | 78,881 | ||||||
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|
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| Total Expenses | $ | 266,893 | $ | 252,743 | ||||
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| Income Before Tax Provision | $ | 27,464 | $ | 138,762 | ||||
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| Provision (Benefit) for Income Tax: | ||||||||
| Federal Income Tax | $ | 3,934 | $ | 34,498 | ||||
| State Income Tax | 1,235 | 7,357 | ||||||
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|
|
|||||||
| Provision for Income Tax Before Realization of Prior | $ | 5,169 | $ | 41,855 | ||||
| Years' Tax Benefit | ||||||||
| Tax Benefits on Net Operating Loss Carryforward | (49,169 | ) | (41,855 | ) | ||||
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|
|||||||
| - Change in Valuation Allowance | ||||||||
| Total Provision for Income Tax (Net of Tax Benefits) | $ | (44,000 | ) | $ | -- | |||
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| Net Income | $ | 71,464 | $ | 138,762 | ||||
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| Income per Common Share | $ | .02 | $ | .05 | ||||
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| Average Shares of Common Stock Outstanding | 2,982,662 | 2,982,662 | ||||||
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See Accompanying Notes to Financial Statements.
F-3
MILLER INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
YEARS ENDED APRIL 30,
2004 AND 2003
|
Years Ended
April 31, 2004 |
Years Ended
April 31, 2003 |
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|---|---|---|---|---|---|---|---|---|
| Cash Flows From Operating Activities: | ||||||||
| Net Income | $ | 71,464 | $ | 138,762 | ||||
| Adjustments to Reconcile Net Income to Net Cash | ||||||||
| Provided by (used for) Operating Activities: | ||||||||
| Depreciation | 12,061 | 11,840 | ||||||
| Amortization | 8,113 | 8,113 | ||||||
| Deferred Tax Asset Valuation Adjustment | (44,000 | ) | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| (Increase) Decrease in Prepaid Expenses and Other | (2,872 | ) | (3,345 | ) | ||||
| Increase (Decrease) in Accounts Payable and Accruals | (1,737 | ) | (9,196 | ) | ||||
| Increase (Decrease) in Tenant Security Deposits | 17,302 | (50,170 | ) | |||||
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| Net Cash Provided by Operating Activities | $ | 60,331 | $ | 96,004 | ||||
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| Cash Flows From Investing Activities: | ||||||||
| Acquisition of Property and Equipment | $ | (1,800 | ) | $ | (2,240 | ) | ||
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| Net Cash (used by) Investing Activities | $ | (1,800 | ) | $ | (2,240 | ) | ||
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| Cash Flows From Financing Activities: | ||||||||
| Principal Payments Under Borrowings | $ | (68,231 | ) | $ | (59,611 | ) | ||
| Proceeds from Borrowings | 16,894 | 16,842 | ||||||
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| Net Cash Provided by (used by) Financing Activities | $ | (51,337 | ) | $ | (42,769 | ) | ||
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| Net Increase in Cash and Cash Equivalents | $ | 7,194 | $ | 50,995 | ||||
| Cash and Cash Equivalents at the Beginning of Year | 759,526 | 708,531 | ||||||
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| Cash and Cash Equivalents at the End of Year | $ | 766,720 | $ | 759,526 | ||||
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| Additional Cash Flow Information: | ||||||||
| Cash Payments during the Year | ||||||||
| Interest | $ | 65,200 | $ | 79,580 | ||||
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| Income Taxes | $ | -- | $ | -- | ||||
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See Accompanying Notes to Financial Statements.
F-4
MILLER INDUSTRIES, INC.
STATEMENT OF
SHAREHOLDERS’ DEFICIENCY
YEARS ENDED APRIL 30,
2004 AND 2003
|
Common Stock
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Shares Issued
|
Amount
|
Additional
Paid-In Capital |
(Deficit)
|
||||||||||||||
| Balance at April 30, 2002 | 2,982,662 | $ | 149,133 | $ | 1,126,507 | $ | (2,219,897 | ) | |||||||||
| Net Income - 2003 | -- | -- | -- | 138,762 | |||||||||||||
|
|
|
|
|
||||||||||||||
| Balance at April 30, 2003 | 2,982,662 | $ | 149,133 | $ | 1,126,507 | $ | (2,081,135 | ) | |||||||||
| Net Income - 2004 | -- | -- | -- | 71,464 | |||||||||||||
|
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|
|
|
||||||||||||||
| Balance at April 30, 2004 | 2,982,662 | $ | 149,133 | $ | 1,126,507 | $ | (2,009,671 | ) | |||||||||
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|
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See Accompanying Notes to Financial Statements.
F-5
| Miller Industries, Inc., a Florida corporation, currently and since August 1991, has been engaged in the ownership and management of 98,000 square feet of offices and warehouse located in Miami, Florida. During August 1991, the Company discontinued its operations of manufacturing of aluminum windows and doors pursuant to a plan of reorganization. |
| Inventories are valued at the lower of cost or market, with cost generally determined on a first-in, first-out basis and market based upon the lower of replacement cost or realizable value. Inventories consisted of the following amounts: |
|
2004
|
2003
|
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|---|---|---|---|---|---|---|---|---|
| Finished Hardware | $ | 0 | $ | 0 | ||||
|
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|
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| Investment property is carried at cost. The Company calculates depreciation under the straight-line method at annual rates based upon the estimated service lives of each type of asset. These service lives are generally as follows: |
| Building and Improvements | 10 to 30 years | ||||
| Machinery and Equipment | 7 years | ||||
| Furniture and Fixtures | 7 years | ||||
| Real property and equipment, with an original cost of approximately $720,000, have been fully depreciated at April 30, 2004. |
| Deferred lease incentive and loan costs are carried at cost. The Company amortizes these assets on a straight line basis up to 10 years. |
F-6
| The Company adopted Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. Under SFAS 109, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. |
| Income (loss) per share is computed based upon the weighted average number of common shares outstanding, during each year. |
| The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. |
| The carrying amounts of cash and cash equivalents, other assets, accounts payable, and debt approximate fair value. |
| The Company is subject to credit risk arising from the concentration of its temporary cash investments. Most of the Company’s temporary cash investments are concentrated with a single financial institution. |
| The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. At April 30, 2004, the Company’s uninsured cash balances approximated $667,000. |
| The Company recognizes rental income as it becomes receivable in accordance with the provisions of the underlying lease. The Company recognizes hardware sales upon shipment of goods to customers. |
| The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernable. The Company determines its liability on a site-by-site basis and records a liability at the time when it is probable and can be reasonably estimated. |
| The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates included in the preparation of the financial statements are related to income taxes, asset lives, accruals and valuation allowances. |
F-7
| In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 “Reporting Comprehensive Income”, which is effective for fiscal years beginning after December 15, 1997. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements which requires the Company to (i) classify items of other comprehensive income by their nature in a financial statement and (ii) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of the balance sheet. The adoption of this standard does not have an effect on the Company’s reported net earnings for fiscal 2004 and 2003 as there is no additional comprehensive income under the statement. |
| In August 2001, the Financial Accounting Standards Board (“FASB”) approved SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 replaces SFAS No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of”. The Company adopted SFAS No. 144 on May 1, 2002 as required, and the statement is not expected to have a material impact on the Company’s results of operations or financial position. Under SFAS No. 144, the Company must consider whether indicators of impairment of long-lived assets are present, determine whether the sum of the estimated undiscounted future cash flows attributable to the assets in question is less than their carrying amounts, and to recognize an impairment loss based on the excess of the carrying amounts of the assets over their respective fair values. The respective fair values of the Company’s long-lived assets exceed their carrying amounts at April 30, 2004 based on a quoted market price. |
| The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information (“SFAS 131”). SFAS 131 superseded SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. SFAS 131 also establishes standards for related disclosures about products and services, geographic areas, and major customers. The adoption of SFAS 131 did not affect results of operations or financial position. |
| In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use (“SOP 98-1”). SOP 98-1 provides authoritative guidance on when internal-use software costs should be capitalized and when these costs should be expenses as incurred. |
| Effective May 1, 2000, the Company adopted SOP 98-1, however, the Company has not incurred costs to date which would require evaluation in accordance with the SOP. |
| Start up and organization costs are accounted for under the provisions of the American Institute of Certified Public Accountants’ Statement of Position (SOP) 98-5, “Reporting on the Costs of Start up Activities”. Adopted by the Company at its inception, SOP 98-5 provides guidance on the financial reporting of start up and organization costs and requires such costs to be expensed as incurred. The Company’s adoption of SOP 98-5 will not have a significant effect on its financial position or results of operation. |
F-8
| In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), which is required to be adopted in years beginning after June 15, 2000. SFAS 133 will require the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. The Company has determined that the adoption of SFAS 133 is not expected to have a significant effect on its financial position or results of operations. |
| In April 2003, the FASB issued Statement 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. SFAS No. 149 improves financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. |
| In December 2002, the FASB issued Statement 148, Accounting for Stock-Based Compensation — Transition and Disclosure an amendment of FAS 123. This statement provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation, a description of the transition method utilized and the effect of the method used on reported results. The Company adopted SFAS 148 on May 1, 2003. The adoption of SFAS 148 did not have a material impact on the financial statements of the Company. |
| Effective January 3, 2001, the Company adopted the provisions of SFAS No. 132, Employers’ Disclosures about Pensions and other Post-Retirement Benefits (“SFAS 132”). SFAS 132 supersedes the disclosure requirements in SFAS No. 87, Employers’ Accounting for Pensions, and SFAS No. 106, Employers’ Accounting for Post-Retirement Benefits Other Than Pensions. The overall objective of SFAS 132 is to improve and standardize disclosures about pensions and other post-retirement benefits and to make the required information more understandable. The adoption of SFAS 132 did not affect results of operations or financial position. |
The Company has not initiated benefit plans to date which would require disclosure under the statement.
| Advertising costs generally will be charged to operations in the year incurred. The Company has not incurred any advertising costs for fiscal 2004 and 2003. |
| Rental income of the Company’s office and warehouse building is subject to the economic conditions of the industrial real estate market place. Changes in this industry may significantly affect management’s estimates and the Company’s performance. (See Note D.) |
F-9
| In May 2002, the FASB issued Statement of Financial Accounting Standards No. 145 “Reporting Gains and Losses from Extinguishment of Debt”, which rescinded SFAS No. 4, No. 44 and No. 64 and amended SFAS No. 13. The new standard addresses the income statement classification of gains or losses from the extinguishment of debt and criteria for classification as extraordinary items. The new standard became effective for fiscal years beginning after May 15, 2002. The Company adopted this pronouncement on May 1, 2003. The adoption of this pronouncement is not expected to have a material impact on the Company’s results of operations or financial position. |
| In November 2002 the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”. FIN 45 requires certain guarantees to be recorded at fair value, instead of recording a liability only when a loss is probable and reasonably estimable, as those terms are defined in FASB Statement No. 5 Accounting for Contingencies. FIN 45 also requires a guarantor to make significant new disclosures, even when the likelihood of making any payments under the guarantee is remote. The disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company adopted the disclosure provisions of FIN 45 effective December 31, 2002 and its adoption is not expected to have a material impact on the Company’s results of operations or financial position. |
| In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities”. FIN 46 clarifies the application of existing accounting pronouncements to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of FIN 46 will be immediately effective for all variable interests in variable interest entities created after January 31, 2003, and the Company will need to apply its provisions to any existing variable interests in variable interest entities by no later than December 31, 2004. The Company does not believe that FIN 46 will have a significant impact on the Company’s financial statements. |
| In July 2002, the FASR issued Statement 146, Accounting for the Costs Associated with Exit or Disposal Activities. This statement addresses financial accounting and reporting for costs associated with exit or disposal activities. It addresses when to recognize a liability for a cost associated with an exit or disposal activity including, but not limited to, termination benefits provided to current employees that are involuntarily terminated, costs to terminate a contract that is not a capital lease and costs to consolidate facilities or relocate employees. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred and not at the date of an entity’s commitment to a plan. The Company adopted the provisions of SFAS No. 146 effective December 31, 2002 and its adoption did not have a material impact on the Company. |
| In May 2003, the FASB issued Statement 150 Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes principles for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The adoption of SFAS 150 is not expected to have a material impact on the financial statements of the Company. |
F-10
Principal balances outstanding and details of notes payable are summarized as follows:
| 3 1/2% (prime less 1/2%) note payable, collateralized by | $ | 1,636,709 | $ | 1,688,079 | ||||
| mortgage on land and building, improvements, personal property, | ||||||||
| collateral assignment of all rents and leases, along with the | ||||||||
| personal guaranty of the Company's Chairman of the Board to 50% | ||||||||
| of all sums due under the loan. In addition, the guarantor | ||||||||
| shall indemnify lendor from any and all liability which may | ||||||||
| result from the environmental condition of the property. The | ||||||||
| note is payable in monthly installments of $9,332 (including | ||||||||
| interest) with a final payment of approximately $1,305,000 due | ||||||||
| October 2009 | ||||||||
installments of $1,751 (including interest) through November 2004
| Total Notes Payable | $ | 1,648,650 | $ | 1,699,987 | ||||
|
|
|
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Payments of principal required on the foregoing debt are as follows:
|
Ending
|
|||||
|---|---|---|---|---|---|
| 2005 | $ | 67,532 | |||
| 2006 | 57,568 | ||||
| 2007 | 59,615 | ||||
| 2008 | 61,736 | ||||
| 2009 | 63,931 | ||||
| Thereafter | 1,338,268 | ||||
| Total | $ | 1,648,650 | |||
| Land, buildings and improvements, and insurance policies with an approximate cost of $1,215,000 and an approximate net book value of $440,000 are pledged as collateral for these obligations. |
F-11
The provision (benefit) for income taxes consists of the following:
| Current | $ | 4,693 | $ | 41,893 | ||||
| Deferred | 476 | (38 | ) | |||||
| Tax Benefit of Net Operating Loss Carryforward | (49,169 | ) | (41,855 | ) | ||||
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| Total | $ | (44,000 | ) | $ | -- | |||
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Deferred income taxes arise primarily due to temporary differences in recognizing certain revenues and expenses for tax purposes, the required use of extended lives for calculation of depreciation for tax purposes, and the expected use of tax loss carryforwards in future periods. The components of the net deferred tax asset at April 30, 2004 and 2003 are as follows:
| Properties and Equipment principally due to | $ | 54,988 | $ | 55,899 | ||||
| depreciation | ||||||||
| Net operating loss carryforwards | 800,884 | 810,299 | ||||||
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| Total gross deferred tax assets | $ | 855,872 | $ | 866,198 | ||||
| Less: Valuation allowance | 811,872 | (866,198 | ) | |||||
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| Net Deferred Tax Asset | $ | (44,000 | ) | $ | -- | |||
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A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The net deferred assets reflect management’s assessment of the amount which will be realized from future taxable earnings or alternative tax strategies. The valuation allowance was decreased by approximately $54,000 for 2004.
At April 30, 2004, the Company had approximately $2,130,000 of Federal and State net operating loss carryforwards available to offset future taxable income. The State loss carryforwards are available indefinitely. The Federal net operating loss carryforwards will expire as follows:
| 2007 | 1,083,000 | ||||
| 2008 | 205,000 | ||||
| 2009 | 132,000 | ||||
| 2011 | 100,000 | ||||
| 2012 | 68,000 | ||||
| 2013 | 105,800 | ||||
| 2019 | 200 | ||||
| Total | $ 2,130,000 | ||||
At April 30, 2004, the Company had alternative minimum tax credit carryforwards of approximately $3,500 which my be carried forward indefinitely.
F-12
Total Federal tax expense for years ended April 30, 2004 and 2003 differed from the amount computed by applying the U.S. federal income tax rate of 34% to income (loss) from continuing operations before income tax for the following reasons:
|
2004
|
2003
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Amount
|
Per cent
of Pre-Tax Income |
Amount
|
Per cent
of Pre-Tax Income |
|||||||||||||||||
| Income before provision for | $ | 27,464 | 100 | % | $ | 138,762 | 100 | % | ||||||||||||
| income taxes | ||||||||||||||||||||
| Computed expected tax expense | 9,338 | 34 | % | $ | 47,179 | 34 | % | |||||||||||||
| Federal tax (benefit) of State Income Tax | (420 | ) | (2 | ) | (2,501 | ) | (2 | ) | ||||||||||||
| Surtax Exemption | (4,984 | ) | [18 | ] | (10,180 | ) | (7 | ) | ||||||||||||
| Federal Tax Before Tax Benefits | $ | 3,934 | 14 | % | $ | 34,498 | 25 | % | ||||||||||||
| Tax Benefits of Net Operating | (41,510 | ) | (151 | ) | $ | (34,498 | ) | (25 | )% | |||||||||||
| Loss Carryforwards Change in | ||||||||||||||||||||
| Valuation Allowance | ||||||||||||||||||||
| Actual Federal Tax (Benefits) | $ | (37,576 | ) | (137 | )% | $ | -- | $ | -- | |||||||||||
The Company leased offices and warehouse space for distribution during fiscal 2004 to three unrelated third parties under leases that expire in fiscal 2005 and 2007. Rental income approximated $269,000 and $363,000 for fiscal 2004 and 2003, respectively. Rental income from the three Company’s tenants amounted to 100% and 98% of total rental income in 2004 and 2003, respectively.
On August 9, 2002, one of the Company’s tenants ceased operations when the tenant’s secured lender seized the tenant’s assets. Rental income that was terminated as of August 9, 2002 approximated $7,500 per month, or $90,000 per year.
On January 31, 2003, the lease of one of the Company’s tenants expired and the tenant vacated the premises. Rental income that was terminated as of January 31, 2003 approximated $15,000 per month, or $180,000 per year.
Future minimum rental income under non-cancelable leases, excluding cost of living adjustments are as follows:
| 2005 | $ | 310,000 | |||
| 2006 | $ | 192,000 | |||
| 2007 | $ | 160,000 | |||
F-13
|
Rental expenses consisted of:
|
2004
|
2003
|
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|---|---|---|---|---|---|---|---|---|
| Depreciation and Amortization | $ | 20,173 | $ | 19,953 | ||||
| Insurance | 21,337 | 17,931 | ||||||
| Leasing Expenses | 3,524 | -- | ||||||
| Management Fees | 36,000 | 36,000 | ||||||
| Outside Services | 1,500 | 1,831 | ||||||
| Repairs and Maintenance | 16,917 | 5,579 | ||||||
| Utilities | 8,808 | 6,122 | ||||||
| Taxes | 33,999 | 32,820 | ||||||
| Totals | $ | 142,258 | $ | 120,236 | ||||
| NOTE F - Administrative Expenses | ||||||||
| Administrative expenses consisted of: | 2004 | 2003 | ||||||
| Accounting and Legal | $ | 33,120 | $ | 23,994 | ||||
| Contract Labor | -- | 117 | ||||||
| Office Supplies/Postage/Other | 5,093 | 2,787 | ||||||
| Stockholders' Expenses | 12,558 | 12,684 | ||||||
| Telephone | 3,909 | 4,092 | ||||||
| Totals | $ | 54 680 | $ | 43 674 | ||||
Management fees in the amount of $36,000 per year were incurred by the Company for 2004 and 2003 to Harnap Corp., which is controlled by the Chairman of the Board of Miller Industries, Inc. Included in accounts payable is approximately $245,000 for 2004 and 2003, owed to Harnap Corp. Harnap Corp. received repair expense reimbursements of approximately $2,000 during fiscal 2004. Napolitano Commercial Properties, a related party, received leasing commissions of $5,287 during fiscal 2004.
F-14
Environmental Matters –
| The Company’s past operations include activities which are subject to Federal and State environmental regulations. |
| The Company has been identified as a potentially responsible party (“PRP”), along with many others, in remedial activities related to the Seaboard Chemical Company site located in Jamestown, North Carolina. |
| Although environmental laws technically impose joint and several liability upon each PRP at each site, the extent of the Company’s required financial contribution to the clean up of these sites is expected to be limited based upon the number and financial strength of the other named PRPs and the volume and types of waste involved which might be attributable to the Company. |
| The Company joined a settlement group with other responsible parties to avoid extensive litigation and remedial costs. |
| The Seaboard Chemical site settlement group at November 1, 2001 was composed of 393 PRPs which produced 13,884,126 estimated gallons of waste, of which 6,990 gallons of waste (.05%) is attributable to Miller Industries, Inc. The settlement group at this site has allocated the costs of remedial activities among the PRPs using the volumetric method. That is, based upon the ratio that the number of gallons of waste estimated to have been contributed to the site by the Company bears to the total number of gallons of waste estimated to have been disposed at this site by all of the PRPs. To date, the Company has incurred approximately $1,200 in costs with respect to this site. However, the Company is unable to determine what its total costs might be, and no accruals have been made for future clean-up liability at this site. |
F-15
I, Angelo Napolitano, certify that:
| 1. | I have reviewed this Annual Report on Form 10-KSB of Miller Industries, Inc. (the “Issuer”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Issuer and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Issuer is made known to me by others within the Issuer, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Issuer’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Issuer’s internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Issuer’s auditors and the audit committee of the Issuer’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have significant role in the Issuer’s internal control over financial reporting. |
|
Date: November 8, 2004
BY: /S/ Angelo Napolitano —————————————— Angelo Napolitano Chief Executive Officer and Chief Financial Officer |
Exhibit 32.1
Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002
The undersigned hereby certifies that, to the best of his knowledge, based upon his review of the Annual Report on Form 10-KSB for the year ended April 30, 2004, of Miller Industries, Inc. (the “Report”), that:
| (i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
| (ii) | the information contained in the Report fairly presents in all material respects the financial condition and results of operations of the Registrant as of and for the periods presented in the Report. |
| Date: November 8, 2004 |
BY: /S/ Angelo Napolitano —————————————— Angelo Napolitano Chief Executive Officer And Chief Financial Officer |
EXHIBIT 99.1
Miller Industries, Inc. (the “Company”) is adopting this Code of Ethics (this “Code”) to formalize the Company’s continuing expectations regarding ethical conduct. This Code applies to the directors, officers and employees of the Company and each of its subsidiaries. The Company also expects all of the Company’s consultants will abide by this Code.
This Code is intended to satisfy the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 regarding the adoption of a code of ethics for senior officers.
The Company is committed to conducting its business in accordance with the highest ethical principles. This Code is designed to accomplish this goal by setting forth the ethical standards which will govern the conduct of our directors, officers, and employees.
Directors, officers and employees should strive to identify and raise potential issues before they lead to problems, and should ask about the application of this Code whenever in doubt. Any director, officer or employee who becomes aware of any existing or potential violation of this Code should promptly notify, in the case of employees, the Company’s President and, in the case of directors and the President, the Chairman of the Audit Committee (we refer to such contacts as the “Appropriate Ethics Contacts”). The Company will take appropriate action to address any existing or potential violation of this Code brought to its attention, as described in this Code.
Directors, officers and employees have a duty to act in the best interests of the Company and its shareholders at all times. As part of this duty, directors, officers and employees are prohibited from engaging in any transaction which involves an improper conflict of interest.
A “conflict of interest” exists when a person’s private interests interfere in any way with the interests of the Company. A conflict situation can arise when a director, officer or employee takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when a director, officer or employee, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.
It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf.
Conflicts of interest are prohibited as a matter of Company policy, unless they have been approved by the Company. Wherever a conflict of interest arises, the person involved must promptly disclose the circumstances of the conflict to the Appropriate Ethics Contact.
Directors, officers and employees owe a duty to the Company to advance our legitimate business interests when the opportunity to do so arises. Directors, officers and employees are prohibited from taking for themselves (or directing to a third party) a business opportunity that is discovered through the use of corporate property, information or position, unless the Company has already been offered the opportunity and turned it down. More generally, directors, officers and employees are prohibited from using corporate property, information or position for personal gain or competing with the Company.
Sometimes the line between personal and Company benefits is difficult to draw, and sometimes both personal and Company benefits may be derived from certain activities. The only prudent course of conduct for our directors, officers and employees is to make sure that any use of Company property or services that is not solely for the benefit of the Company is approved beforehand by their Appropriate Ethics Contact.
The Company seeks competitive advantages through superior performance and not through illegal or unethical business practices. Directors, officers and employees should deal fairly with our customers, service providers, suppliers, competitors and employees. No director, officer or employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
In carrying out the Company’s business, directors, officers and employees often learn confidential or proprietary information about the Company, its customers, prospective customers or other third parties. Directors, officers and employees must maintain the confidentiality of all information so entrusted to them, except when disclosure is authorized or legally mandated. Confidential or proprietary information includes, among other things, any non-public information concerning the Company, including its businesses, financial performance, results or prospects, and any non-public information provided by a third party with the expectation that the information will be kept confidential and used solely for the business purpose for which it was conveyed. The obligation to preserve confidential information continues even after employment ends.
Our directors, officers and employees must respect and follow all laws and regulations which apply to the Company and its operations. Therefore, our directors, officers or employees may not:
| In | communicating with the Company or any of its customers, counterparties or regulators, make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made accurate and complete. |
| Engage | in any act, practice or course of business which operates or could operate as a fraud or deceit upon the Company, any or its customers, or regulators, or any other person. |
Cause the Company to violate any laws, rules and regulations applicable to the Company.
The Company requires that the information in its public communications, including SEC filings, be full, fair, accurate, timely and understandable. All directors, officers and employees who are involved in the Company’s disclosure process, including the senior financial officers, are responsible for acting in furtherance of this policy. In particular, these individuals are required to maintain familiarity with the disclosure requirements applicable to the Company and are prohibited from knowingly misrepresenting, omitting, or causing others to misrepresent or omit, material facts about the Company to others, whether within or outside the Company, including the Company’s independent auditors. In addition, any director, officer or employee who has a supervisory role in the Company’s disclosure process has an obligation to discharge his or her responsibilities diligently.
The Company’s senior financial officers are required to establish and manage the Company’s reporting systems and procedures to ensure that:
| 1. | Business transactions are properly authorized and accurately recorded on the Company’s books and records and in accordance with GAAP. |
| 2. | The Company’s records are maintained in accordance with applicable legal and regulatory requirements and Company policy. |
| 3. | Periodic reporting and communications with the public are communicated in a manner that offers the highest degree of clarity and meaning so that readers will be able to determine the significance and potential consequences. |
| 4. | Personnel dealing with the finances of the Company are informed as to rules and regulations that affect the financial operation of the Company. |
| 5. | The financial operation of the Company is monitored as to compliance with any applicable rules and regulations. |
| 6. | Any identified error is corrected in a timely manner. |
The Company strictly prohibits retaliation against any person reporting possible violations of law, ethics or this Code which are made in good faith.
The Company has adopted the following procedure for enforcing this Code:
| 1. | The Company will investigate all alleged violations of this Code. This investigation will be undertaken by the Appropriate Ethics Contact or another person designated by the Board of Directors. |
| 2. | In the event that the Company determines that a violation of this Code has occurred, the Company will take appropriate action against the violator, which may include termination of employment, reduction of authority or reduction in compensation. |
The Company may waive provisions of this Code in appropriate circumstances. If a director, officer or employee believes that a waiver is appropriate, he or she should discuss the matter with the Appropriate Ethics Contact.
Waivers for directors or executive officers (including senior financial officers) may be made only by the Board of Directors. The Company will publicly report all waivers which apply to the Company’s directors and executive officers as required by applicable laws and regulations.