MILLER INDUSTRIES INC - FORM 10-Q - January 24, 2011

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
FORM 10-Q
 
þ           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended October 31, 2009 or
 
¨           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to ___________
 
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
 
Not Applicable
(Former Name, Former Address and Former Fiscal
Year, if Changed Since Last Report)

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 of such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing required 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 October 31, 2009 is 2,982,662 shares.
 
 
 
 
 
MILLER INDUSTRIES, INC.
FORM 10-Q
October 31, 2009
 
INDEX
 
   
Page No.
     
PART I:
FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements
  
     
 
Balance Sheets dated as of October 31, 2009 and April 30, 2009
1
     
 
Statement of Operations – Three Months Ended October 31, 2009 and 2008
3
     
 
Statement of Operations –Six Months Ended October 31, 2009 and 2008
4
     
 
Statement of Cash Flows - Six Months Ended October 31, 2009 and 2008
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 Disclosures about Market Risk
11
     
Item 4.
Controls and Procedures
12
     
PART II: OTHER INFORMATION
  
   
Items 1 to 6
13
   
Signatures
13
 
 
i
 
 
MILLER INDUSTRIES, INC.
BALANCE SHEET
OCTOBER 31, 2009
(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
             867,614  
Net Book Value
           $ 365,094  
                 
Other Assets:
                
Cash and Cash Equivalents
   $ 1,496,200          
Accounts Receivable (less Allowance for Doubtful Accounts of $6,000)
     5,570          
Deferred Tax Asset
     19,000          
Prepaid Expenses and Other Assets
     49,839          
Deferred Lease Incentive (Net of Accumulated Amortization - $57,598)
     -          
Loan Costs, Less Accumulated Amortization of $26,347
     -          
Total Other Assets
             1,570,609  
TOTAL ASSETS
           $ 1,935,703  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Liabilities:
                
Mortgages and Notes Payable
   $ 1,379,480          
Accounts Payable and Accrued Expenses
     451,481          
Tenant Security Deposits
     49,450          
Total Liabilities
           $ 1,880,441  
                 
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
     (1,285,770 )        
Total Shareholders’ Equity
             55,292  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
           $ 1,935,703  

See Accompanying Notes to Financial Statements.
 
 
-1-
 
 
MILLER INDUSTRIES, INC.
BALANCE SHEET
APRIL 30, 2009
 
ASSETS
      
Investment Property:
      
Land
   $ 161,443  
Building and Improvements
     1,049,908  
Machinery and Equipment
     11,106  
Furniture and Fixtures
     10,251  
Total Cost
   $ 1,232,708  
Less: Accumulated Depreciation
     860,467  
Net Book Value
   $ 372,241  
         
Other Assets:
        
Cash
   $ 1,477,521  
Accounts Receivable (Less Allowance for Doubtful Accounts of $15,000)
     10,561  
Prepaid Expenses and Other Assets
     2,095  
Deferred Lease Incentive (Net of Accumulated Amortization - $53,403)
     4,195  
Loan Costs, Less Accumulated Amortization of $25,030 in 2008
     1,318  
Deferred Tax Assets
     11,000  
Deferred Rent Receivable
  
-
  
Total Other Assets
   $ 1,506,690  
TOTAL ASSETS
   $ 1,878,931  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY
        
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’ Equity
   $ (16,353 )
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,878,931  

See Accompanying Notes to Financial Statements.

 
-2-
 
 
MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008
(UNAUDITED)

   
Three Months Ended
  
   
10/31/09
    
10/31/08
  
             
Revenues:
            
Rental Income
   $ 93,649     $ 134,062  
Hardware Sales (Net)
     97       353  
Other Income
     1,740       9,778  
                 
Total Revenue
   $ 95,486     $ 144,193  
                 
Expenses:
                
Rental Expense (Except Interest)
     30,055       82,842  
Administrative
     12,499       10,803  
Interest
     13,725       25,999  
                 
Total Expenses
   $ 56,279     $ 119,644  
Income Before Tax Provisions
   $ 39,207     $ 24,549  
                 
Provision for Income Tax:
                
Federal Income Tax
   $ 10,000     $ 3,600  
State Income Tax
     2,500       1,400  
Tax Benefits of Net Operating Loss Carry Forward and Change in Valuation Allowance
   $ (13,500 )  
-
  
                 
Total Provision (Credit) for Income Tax (Net of Tax Benefits and Change in Valuation Allowance)
  $ (1,000 )   $ 5,000  
                 
Net Income
   $ 40,207       19,549  
                 
Income per Common Share
   $ .01     $ .01  
                 
Average Shares of Common Stock Outstanding
     2,982,662       2,982,662  

See Accompanying Notes to Financial Statements.
 
 
-3-
 

MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
(UNAUDITED)

   
Six Months Ended
  
   
10/31/09
    
10/31/08
  
             
Revenues:
            
Rental Income
   $ 186,267     $ 257,865  
Hardware Sales (Net)
     180       400  
Other Income
     3,486       15,269  
                 
Total Revenue
   $ 189,933     $ 273,534  
                 
Expenses:
                
Rental Expense (Except Interest)
     77,574       125,884  
Administrative
     23,725       21,698  
Interest
     24,989       47,414  
                 
Total Expenses
   $ 126,288     $ 196,996  
Income Before Tax Provisions
   $ 63,645     $ 78,538  
                 
Provision for Income Tax:
                
Federal Income Tax
   $ 15,000     $ 19,600  
State Income Tax
     4,000       4,400  
Tax Benefits of Net Operating Loss Carry Forward and Change in Valuation Allowance
   $ (27,000 )  
-
  
                  
Total Provision (Credit) for Income Tax (Net of Tax Benefits and Change in Valuation Allowance)
   $ (8,000 )   $ 24,000  
                 
Net Income
   $ 71,645       54,538  
                 
Income per Common Share
   $ .02     $ .02  
                 
Average Shares of Common Stock Outstanding
     2,982,662       2,982,662  

See Accompanying Notes to Financial Statements.

 
-4-
 

MILLER INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
(UNAUDITED)

   
Six Months Ended
  
   
10/31/09
    
10/31/08
  
             
Cash Flows From Operating Activities:
            
             
Net Income
   $ 71,645     $ 54,538  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
                
Provision for Bad Debts
     (9,000 )     15,027  
Depreciation
     7,146       8,793  
Amortization
     5,513       7,623  
Deferred Tax Asset Valuation Adjustment
     (8,000 )     24,000  
Changes in Operating Assets and Liabilities
     (33,762 )     20,157  
Net Cash Provided by Operating Activities
   $ 33,542     $ 130,138  
                 
Cash Flows From Investing Activities:
                
Acquisition of Property and Equipment
   $ -       -  
Net Cash (Used in) Investment Activities
   $ -       -  
                 
Cash Flows From Financing Activities:
                
Principal Payments Under Borrowing
   $ (35,132 )   $ (23,439 )
Addition to Debt
     20,269    
-
  
                 
Net Cash Provided by (Used in) Financing Activities
   $ (14,863 )   $ (23,439 )
                 
Net Increase in Cash and Cash Equivalents
   $ 18,679     $ 106,699  
                 
Cash at the Beginning of Year
     1,477,521       1,318,950  
Cash at the End of Year
   $ 1,496,200     $ 1,142,649  
                 
Additional Cash Flow Information:
                
Cash Paid for Interest
   $ 27,614     $ 47,414  
Cash Paid for Income Tax
   $ -     $ -  

See Accompanying Notes to Financial Statements.
 
 
-5-
 

MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
(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 six month and the three month period ending October 31, 2009 are not necessarily indicative of results that may be expected for the year ended April 30, 2010.

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

NOTE B - INCOME PER SHARE:

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

NOTE C - OTHER MATTERS:

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

 
-6-
 
 
MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
 
(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 October 31, 2009.
 
     
Options Outstanding/Exercisable
  
               
Exercise Price
    
Number Outstanding at 10/31/09
    
Average Remaining Life
  
               
$ 0.18       2,017,338       5.7  
 
 
-7-
 
 
ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Results of Operations (Second Quarter of 2010 Fiscal Year Compared to Second Quarter of 2009 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 second quarter of the 2010 fiscal year was $94,000, compared with $134,000 in the second quarter of 2009. Rental income decreased 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. The Company generally expects demand for the replacement parts to decline over time due to the eventual replacement of the Company's doors and windows by current owners.
 
Other Income
 
The Company generated other income of $2,000 in the second quarter of 2010 and $9,000 in 2009. Other income consists of interest income and miscellaneous income. The decrease was due to lower interest rates on deposits.
 
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 $30,000 in the second quarter of 2010 compared to $83,000 in the second quarter of 2009. Rental expenses decreased due to lower taxes, depreciation, and provision for bad debts.
 
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 immaterial in the second quarter of 2010 and 2009.
 
Administrative Expenses
 
The Company's administrative expenses were $12,000 in 2010 and $11,000 in 2009. They primarily consist of accounting and legal fees, and shareholders expenses.
 
 
-8-
 
 
Interest Expense
 
The Company pays interest on the mortgage loan on its building. Interest expense on the loan was $14,000 in 2010 compared to $26,000 in 2009. The decrease in the amount of interest was attributable to a decrease in the interest rate on the loan.
 
Provision for Income Taxes
 
The Company recorded $13,000 in federal and state income tax expense in 2010, which was more than offset by the Company’s net operating loss carryforward and change in valuation allowance. This compares to $5,000 in tax expense recorded in 2009.
 
Net Income
 
As a result of the foregoing factors, the Company had net income of $40,000 in the second quarter of 2010, compared to net income of $20,000 in the second quarter of 2009.
 
Results of Operations (First Half of 2010 Fiscal Year Compared to First Half of 2009 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 half of the 2010 fiscal year was $186,000, compared with $258,000 in the first half of 2009. Rental income decreased 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, net of cost of goods sold, were immaterial in the first half of 2009 and 2010. The Company generally expects demand for the replacement parts to decline over time due to the eventual replacement of the Company's doors and windows by current owners.
 
Other Income
 
The Company generated other income of $3,500 in the first half of 2010 and $15,000 in the first half of 2009. Other income consists of interest income and miscellaneous income. The decrease was due to lower interest rates on the Company’s deposits.
 
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 $78,000 in the first half of 2010 and $126,000 in the first half of 2009. The decrease in 2010 was due to the lower taxes, depreciation and provision for bad debts.
 
 
-9-
 
 
Administrative Expenses
 
The Company's administrative expenses were $24,000 in the first half of 2010, compared to $22,000 in 2019. The increase was primarily due to higher accounting and legal fees.
 
Interest Expense
 
The Company pays interest on the mortgage loan on its building. Interest expense on the loan was $25,000 in the first half of 2010 compared to $47,000 in 2009. The decrease in the amount of interest was attributable to a decrease in the interest rate on the loan.
 
Provision for Income Taxes
 
The Company recorded federal and state income tax expense of $19,000 in the first half of 2010 which was more than offset by the Company’s net operating loss carryforward and change in valuation allowance. The Company had a provision of $24,000 in 2009.
 
Net Income
 
As a result of the foregoing factors, the Company had net income of $72,000 in the first half of 2010, compared to net income of $55,000 in the first half of 2009.
 
Liquidity and Capital Resources
 
The Company's cash increased by $19,000 during the first six months of the 2010 fiscal year compared with an increase of $107,000 during the first six months of fiscal year 2009. The increase in cash in 2009 was due to cash flow from operations. As of October 31, 2009, the Company's cash position was approximately $1,496,000.
 
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.
 
 
-10-
 
 
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.
 
 
-11-
 
 
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 October 31, 2009. The Company's Chief Executive Officer and Chief Executive Financial Officer concluded that the Company's disclosure controls and procedures were effective as of October 31, 2009.
 
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 October 31, 2009.
 
 
-12-
 

PART II. OTHER INFORMATION
 
ITEM 6. 
REPORTS ON FORM 8-K
 
(a) 
Exhibits
 
Exhibit No.
  
Description
     
(31.1)
  
Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
     
(31.2)
  
Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
     
(32.1)
  
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
(b)
Reports on Form 8-K.
 
Not applicable.
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   
MILLER INDUSTRIES, INC.
   
(Registrant)
     
Dated: January 10, 2011
  
By: 
/s/ Angelo Napolitano
     
Angelo Napolitano
     
Chairman of the Board of Directors
     
Chief Executive Officer
     
Principal Financial Officer
 
 
-13-
 

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