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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES
EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2002

Commission File No. 0-24298

MILLER INDUSTRIES, INC.(Exact name of Registrant as specified in
its charter)

Tennessee(State or other jurisdiction of incorporation or
organization)

62-1566286(I.R.S. Employer Identification
No.)

8503 Hilltop Drive, Ooltewah, Tennessee  37363(Address of
principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code:  (423) 238-4171

Securities registered pursuant to Section 12(b) of the Act:  Common Stock,
Par Value $0.01 Per Share.

Name of each exchange on which registered:  New York Stock Exchange.

Securities registered pursuant to Section 12(g) of the Act:  None.

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  
YesþNo ̈.

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein and will
not be contained, to the best of Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10K. ̈

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes ̈Noþ.

The aggregate market value of the voting stock for
non-affiliates (which for purposes hereof are all holders other than executive
officers and directors) of the Registrant as of June 28, 2002 is $28,482,597
(based on 7,636,085 shares held by non-affiliates at $3.73 per share, the last
sale price on the NYSE on June 28, 2002).

At March 14, 2003 there were 9,341,436 shares of Common Stock, par value $0.01
per share, outstanding.



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TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT

PART I

ITEM 1.BUSINESS
1ITEM 2.PROPERTIES
14ITEM 3.LEGAL PROCEEDINGS
14ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
15PART IIITEM 5.MARKET FOR THE REGISTRANT’S COMMON EQUITY AND
15RELATED STOCKHOLDER MATTERSITEM 6.SELECTED FINANCIAL DATA
15ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
17CONDITION AND RESULTS OF OPERATIONSITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
30ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
30ACCOUNTING AND FINANCIAL DISCLOSUREPART IIIITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
30ITEM 11.EXECUTIVE COMPENSATION
32


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ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

36AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
38ITEM 14.CONTROLS AND PROCEDURES
38PART IVITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
39ON FORM 8-KFINANCIAL STATEMENTS
F-1FINANCIAL STATEMENT SCHEDULE
S-1SIGNATURES


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PART I

# ITEM 1.               BUSINESS

GENERAL

Miller
Industries, Inc. (the “Company”) is the world’s leading
integrated provider of vehicle towing and recovery equipment, with executive
offices in Ooltewah, Tennessee and Atlanta, Georgia and manufacturing operations
in Tennessee, Pennsylvania, France and England.

Since
1990 the Company has developed or acquired several of the most well-recognized
brands in the towing and recovery equipment manufacturing industry.  The
Company’s strategy has been to diversify its line of products and increase
its market share in the industry through a combination of internal growth and
development and acquisitions of complementary businesses.

In
February 1997, the Company formed its towing services division, RoadOne.
RoadOne offered a broad range of towing and transportation services.  During the
fourth quarter of fiscal 2000, the Company announced plans to accelerate its
efforts to aggressively reduce expenses in the towing services segment at the
corporate level, as well as in the field.  The Company subsequently disposed of
assets and operations in a number of underperforming markets.  In October 2002,
the Company made the decision to sell all remaining towing services operations.
In addition, the Company has made the decision to sell its distribution group.
As a result of these decisions, both the towing services segment and the
distribution group have been classified as discontinued operations.

As
of March 31, 2003, the Company had sold or closed 100 Road One terminals and one
distributor location.  Fourteen terminals and eight distributors remain to be
sold.

INCLUSION OF FORWARD-LOOKING STATEMENTS

Certain
statements in this Annual Report, including but not limited to
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” may be deemed to be forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.  Such
forward-looking statements are made based on management’s belief as well
as assumptions made by, and information currently available to, management
pursuant to “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995.  The Company’s actual results may differ
materially from the results anticipated in these forward-looking statements due
to, among other things, factors set forth below under the heading “Risk
Factors,” and in particular, the risks associated with the wind down of
the towing services segment and the risks associated with the terms of the
Company’s substantial indebtedness.  The Company cautions that such
factors are not exclusive.  The Company does not undertake to update any
forward-looking statement that may be made from time to time by, or on behalf
of, the Company.

RISK FACTORS

Short
Term Status of Junior Credit Facility.The Company’s credit
facilities include a subordinated secured facility (the “Junior Credit
Facility”) with an aggregate principal amount outstanding of $13.7 million
as of March 31, 2003.  The Junior Credit Facility matures on July 23, 2003 and
all outstanding principal and accrued interest under such facility becomes due
and payable on that date.  The Company does not expect cash flow from operations
to be sufficient to allow it to pay the principal and accrued interest on the July 23, 2003 due date and intends to seek
to extend the maturity date of and/or refinance the amount outstanding under the
Junior Credit Facility.  The Company has engaged in  preliminary discussions
with its senior and junior lenders regarding such extension and/or refinancing.
However, there can be no assurance that the Company will be able to extend the
maturity date or obtain such financing on terms favorable to the Company, if at
all.

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If
the Company is unable to refinance the outstanding portion of the Junior Credit
Facility, the failure to pay such amounts when due would constitute an event of
default under both the Junior Credit Facility and the senior secured credit facility
(“Senior Credit Facility”) and have a material adverse impact on the
operations of the Company.  In the event of such a cross-default, the senior
lender agent would be entitled to prevent the junior lender agent from taking
any enforcement action against the Company, its subsidiaries or their respective
assets until the earlier of: (i) the date which is 120 days (subject to an
extension by the senior lender agent to 270 days) after the date upon which the
junior lender agent gives notice of enforcement to the senior lender agent; (ii)
the acceleration of the maturity of the obligations of the Company under the
Senior Credit Facility; and (iii) the commencement of any bankruptcy,
insolvency or similar proceeding against the Company or certain of its
subsidiaries.  The resulting event of default under the senior facility could
also result in the acceleration of the amount due under the Senior Credit Facility as
well as other remedies if not waived by the senior lenders.  If the Company is
not successful in its efforts to refinance or extend the maturity date of the
Junior Credit Facility, the Company might be required to seek bankruptcy court
or other protection from its creditors upon the expiration of any applicable
blockage period.

Risks
Associated with Substantial Indebtedness.  As of March 31, 2003 the
Company’s bank debt totaled approximately $55.7 million, including $42.0
under the Senior Credit Facility and $13.7 under the Junior Credit Facility.  As
a consequence of its level of indebtedness, a substantial portion of the
Company’s cash flow from operations as well as from asset sales must be
dedicated to debt service requirements.  The terms of the Company’s
outstanding indebtedness restrict the ability of the Company and its
subsidiaries to, among other things, incur additional indebtedness, pay
dividends or make certain other restricted payments or investments in certain
situations, consummate certain asset sales, enter into certain transactions with
affiliates, incur liens, or merge or consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of their assets.  They also require the Company to meet certain financial tests
and comply with certain other reporting, affirmative and negative covenants.
The Company has experienced difficulties meeting these financial tests in the
past and may continue to do so in the future.  In
addition, the substantial indebtedness of the Company may make it more
vulnerable to general adverse economic and industry conditions.  The
Company’s credit facilities are collateralized by liens on all of the
Company’s assets.  The liens give the lenders the right to foreclose on
the assets of the Company under certain defined events of default and such
foreclosure could allow the lenders to gain control of the operations of the
Company.

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The Company is currently in default under both the Senior and Junior Credit Facilities as a result of the “going concern” explanatory paragraph as well as the failure to file this Annual Report prior to April 30, 2003.  Additionally, the Company is in default of the EBITDA covenant under the Junior Credit Facility only for the first quarter of calendar 2003.  The Company is currently not pursuing a waiver of these defaults or an amendment to the Credit Facilities to cure these defaults.  The Company has had informal discussions with its creditors and believes based on these discussions that the creditors will not take action against the Company as a result of these defaults.  However, there can be no assurance that the creditors will not pursue action in the future as a result of these defaults or any other default under the Credit Facilities.

In addition, the Senior Credit Facility requires that the RoadOne revolving commitment ($7.6 as of March 31, 2003) be repaid in full by March 31, 2004.  Management believes that the repayment schedule can be met by expected sales of the remaining RoadOne
operations over the course of 2003. However, there can be no assurance that such
sales will be closed or that they will generate sufficient proceeds to repay
such debt.

If the Company was to fail to comply with the requirements under
the Credit Facilities, such non-compliance would result in an event of default,
which if not waived by the lending groups would result in the acceleration of
the amounts due under the respective Credit Facility, as well as other remedies. Under these
circumstances the Company could be required to find alternative funding sources,
or to sell assets. There is no assurance that the Company would be able to
obtain any such refinancing or that it would be able to sell assets on terms
that are acceptable to the Company or at all. If the Company were to be
unsuccessful in its efforts to refinance the Credit Facility, the Company might
be required to seek bankruptcy court or other protection from its creditors. For
more information regarding the impact of the Companys substantial indebtedness
on the Companys liquidity, see Managements Discussion and Analysis of
Financial Conditions and Results of Operations - Liquidity and Capital
Resources, and Notes 2 and 8 to the Companys Consolidated Financial Statements
for the year ended December 31, 2002.

Risks
Involved with Wind Down of Towing Services Division.  The Company is in the
process of selling all of its remaining towing services businesses in a
relatively short period of time.  The Company had substantially completed this
process by December 31, 2002 and intends to fully complete this process during
fiscal 2003, although there can be no assurance that this timetable can be met.
The Company expects net cash proceeds from these sales to RoadOne exceed the
RoadOne revolving commitment under the Senior  Credit Facility associated with the sold operations (approximately $7.6 at March 31, 2003),
as well as other associated liabilities.  In addition, almost all of these
businesses will continue to operate under new ownership and in general their
customary operating liabilities will be assumed by the new owners.  The Company
nevertheless will be subject to some continuing liabilities with respect to the
pre-sale operations of these businesses, including, for example, liabilities
related to litigation, certain trade payables, parent guarantees, workers
compensation and other insurance, surety bonds, and real estate.  It is possible
that the sale proceeds and the remaining assets of the towing services segment
will not be sufficient to satisfy such liabilities.  The Company may also be
subject to inefficiencies, management distractions, additional expenses and
uncertainties resulting from the rapid wind down of the infrastructure that was
developed to provide administrative support to over 100 towing service
locations.  Administrative services such as insurance and surety bond coverage
must be maintained for all remaining Company operations, but such services could
become more expensive and difficult to maintain as the size of the remaining
operations decreases. Although the Company believes that it can manage
the wind down effectively, there can be no assurance that such will be the case.  Even if the Company is able to manage the wind down
effectively, it may nevertheless have an adverse impact on the Company’s
operating results.

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In
addition, the Company has experienced difficulty in maintaining its insurance
and surety bond coverage primarily as a result of disruption in these markets
resulting from the events of September 11, 2001, general economic conditions and
the Company’s operating results.  Prospective purchasers of towing
services businesses have also experienced these difficulties, which could have
an adverse impact on the ability of such purchasers to effect business
acquisitions at prices satisfactory to the Company.

Risks
Of Entering New Lines Of Business.  Historically, the Company’s
expertise has been in the manufacture of towing and recovery equipment and the
Company had no prior operating experience in other lines of business.  Commencing during fiscal 1997, the Company entered three new lines of
business through the acquisition of towing and recovery equipment distributors
and towing services companies, and the establishment of the Company’s
Financial Services Group.  The Company’s operation of these businesses has
been subject to all of the risks inherent in the establishment of a new business
enterprise.  Such acquisitions present the additional risk that newly-acquired
businesses could be viewed as being in competition with other customers of the
Company.  Although the new businesses are closely related to the Company’s
towing and recovery equipment manufacturing business, the Company has
experienced difficulties and unexpected expenses establishing and operating
these new businesses, and may continue to experience such difficulties and
expenses as it winds down the towing services segment and the distribution
group.

Cyclical
Nature Of Industry, General Economic Conditions And Weather.  The towing and
recovery industry is cyclical in nature and has been affected historically by
high interest rates, insurance costs, and economic conditions in general.
Accordingly, a downturn in the economy could have a material adverse effect on
the Company’s operations, as has been the case during the current general
economic downturn.  The industry is also influenced by consumer confidence and
general credit availability, and by weather conditions, none of which is within
the control of the Company.

Fluctuations
In Price And Supply Of Materials And Component Parts.  The Company is
dependent upon outside suppliers for its raw material needs and other purchased
component parts and, therefore, is subject to price increases and delays in
receiving supplies of such materials and component parts.  There can be no
assurance that the Company will be able to pass any price increase on to its
customers.  Although the Company believes that sources of its materials and
component parts will continue to be adequate to meet its requirements and that
alternative sources are available, events beyond the Company’s control
could have an adverse effect on the cost or availability of such materials and
component parts.  Additionally, demand for the Company’s products could be
negatively affected by the unavailability of truck chassis, which are
manufactured by third parties and are typically purchased separately by the
Company’s distributors or by towing operators and are sometimes supplied
by the Company.

Competition.
The towing and recovery equipment manufacturing industry is highly competitive.
Competition for sales exists at both the distributor and towing-operator levels
and is based primarily on product quality and innovation, reputation,
technology, customer service, product availability and price.  In addition,
sales of the Company’s products are affected by the market for used towing
and recovery equipment.  Certain of the Company’s competitors may have
substantially greater financial and other resources and may provide more
attractive dealer and retail customer financing alternatives than the Company.
The Company may also face significant competition from large competitors as it
enters other new lines of business, including  financial services.

Dependence
On Proprietary Technology. Historically, the Company has been able to
develop or acquire patented and other proprietary product innovations which have
allowed it to produce what management believes to be technologically advanced
products relative to most of its competition. Certain of the Companys patents
expire in 2004 at which time the Company may not have a continuing competitive
advantage through proprietary products and technology. In addition, pursuant to
the terms of a consent judgment entered into in 2000 with the Antitrust Division
of the U.S. Department of Justice, the Company is required to offer
non-exclusive royalty-bearing licenses to certain of the Companys key patents
to all wrecker and car carrier manufacturers.  The Company’s
historical market position has been a result, in part, of its continuous efforts
to develop new products.  The Company’s future success and ability to
maintain market share will depend, to an extent, on new product development.

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Labor
Availability and Union Activity.  The timely production of the
Company’s wreckers and car carriers requires an adequate supply of skilled
labor.  In addition, the operating costs of each manufacturing and towing
services facility can be adversely affected by high turnover in skilled
positions.  Accordingly, the Company’s ability to increase sales,
productivity and net earnings will be limited to a degree by its ability to
employ the skilled laborers necessary to meet the Company’s requirements.
There can be no assurance that the Company will be able to maintain an adequate
skilled labor force necessary to efficiently operate its facilities.  The United
Auto Workers Union filed a representation petition with the National Labor
Relations Board for the employees at the Company’s Ooltewah, Tennessee
manufacturing plant.  A vote was held on such union representation on April 11,
2002.  The employees of the Ooltewah manufacturing plant voted against joining
the United Auto Workers Union.  There can be no assurance that the employees at
the Ooltewah manufacturing plant or other Company employees may not choose to
become unionized in the future.

The
Company’s Common Stock May be Delisted from The New York Stock Exchange if
the Company Does Not Maintain Certain Listing Standards.
To remain listed
on the New York Stock Exchange, the average closing price of the Company’s
stock must not drop below $1.00 per share for 30 days or more.  The
Company’s common stock price was below $1.00 per share for an extended
period during 2001 and the common stock was in danger of being delisted.  A
one-for-five reverse stock split was effected on October 1, 2001, and the price
of the common stock has not been below $2.10 since that time.  In addition, the
New York Stock Exchange requires a listed company to maintain shareholders
equity of at least $50.0 million (or a market capitalization of at least $50.0
million, which the Company has not achieved in  over a year).  The Company’s shareholders equity as of
December 31, 2002 is $39.6 million.  As a result, the Company expects to receive
notice from the New York Stock Exchange that the Company is out of compliance
with the New York Stock Exchange’s continued listing standards.  The
Company will attempt to formulate a plan to regain compliance in accordance with
the New York Stock Exchange’s rules, but there can be no assurance that
the Company will be able to formulate a plan acceptable to the New York Stock
Exchange or comply with any such plan that may be formulated.

If
the Company’s common stock were to be delisted from the New York Stock
Exchange, it is likely that the trading market for its common stock would be
substantially less active, and the ability of shareholders to buy and sell
shares of the Company’s common stock would be materially impaired. In
addition, the delisting of the Company’s stock could adversely affect the
Company’s ability to enter into future equity financing transactions.  In
the event that the Company’s stock is delisted from the New York Stock
Exchange, the Company would pursue listing on an alternative national securities
exchange or association.

Dependence
On Key Management.  The success of the Company is highly dependent on the
continued services of the Company’s management team.  The loss of services
of one or more key members of the Company’s senior management team could have a material
adverse effect on the Company.

Automobile
And Product Liability Insurance.  The Company is subject to various claims,
including automobile and product liability claims arising in the ordinary course
of business, and may at times be a party to various legal proceedings incidental
to the Company’s business.  The Company maintains reserves and liability
insurance coverage at levels based upon commercial norms and the Company’s
historical claims experience.  A successful product liability or other claim
brought against the Company in excess of its insurance coverage or the inability
of the Company to acquire insurance at commercially reasonable rates could have
a material adverse effect upon the Company’s business, operating results
and financial condition.

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Increased
Insurance and Fuel Costs.  As a result of the events of September 11, 2001
and other general economic factors, the Company has experienced a substantial
increase in its insurance costs and has experienced fluctuations in fuel and
other transportation costs.  Its customers have also experienced reduced
availability of credit for purchasing equipment.  There can be no assurance that
these costs will not continue to increase for the Company.  Such increases have
had, and may continue to have, a material effect upon the Company’s
business and operating results.

Volatility
Of Market Price.  From time to time, there may be significant volatility in
the market price for the Common Stock.  Quarterly operating results of the
Company, changes in earnings estimated by analysts, changes in general
conditions in the Company’s industry or the economy or the financial
markets or other developments affecting the Company could cause the market price
of the Common Stock to fluctuate substantially.  In addition, in recent years
the stock market has experienced significant price and volume fluctuations.
This volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating
performance.

Control
By Principal Shareholder.  William G. Miller, the Chairman of the Company,
beneficially owns approximately 17.4% of the outstanding shares of Common Stock.
Accordingly, Mr. Miller has the ability to exert significant influence over the
business affairs of the Company, including the ability to influence the election
of directors and the result of voting on all matters requiring shareholder
approval.

Anti-Takeover
Provisions Of Charter And Bylaws; Preferred Stock.  The Company’s
Charter and Bylaws contain restrictions that may discourage other persons from
attempting to acquire control of the Company, including, without limitation,
prohibitions on shareholder action by written consent and advance notice
requirements respecting amendments to certain provisions of the Company’s
Charter and Bylaws. In addition, the Company’s Charter authorizes the
issuance of up to 5,000,000 shares of preferred stock. The rights and
preferences for any series of preferred stock may be set by the Board of
Directors, in its sole discretion and without shareholder approval, and the
rights and preferences of any such preferred stock may be superior to those of
Common Stock and thus may adversely affect the rights of holders of Common
Stock.

TOWING AND RECOVERY EQUIPMENT

The
Company offers a broad range of towing and recovery equipment products that meet
most customer design, capacity and cost requirements.  The Company manufactures
the bodies of wreckers and car carriers, which are installed on truck chassis
manufactured by third parties.  Wreckers generally are used to recover and tow
disabled vehicles and other equipment and range in type from the conventional
tow truck to large recovery vehicles with rotating hydraulic booms and 70-ton
lifting capacities.  Car carriers are specialized flat bed vehicles with
hydraulic tilt mechanisms that enable a towing operator to drive or winch a
vehicle onto the bed for transport.  Car carriers transport new or disabled
vehicles and other equipment and are particularly effective over longer
distances.

The
Company’s products are sold primarily through independent distributors
that serve all 50 states, Canada and Mexico, and other foreign markets including
Europe, the Pacific Rim and the Middle East.  As a result of its ownership of
Jige in France and Boniface in the United Kingdom, the Company has substantial
distribution capabilities in Europe.  While most of the Company’s
distributor agreements do not contain exclusivity provisions, management
believes that approximately 65% of the Company’s independent distributors
sell the Company’s products on an exclusive basis.  In addition to selling
the Company’s products to towing operators, the distributors provide parts
and service.  The Company also has independent sales representatives that
exclusively market the Company’s products and provide expertise and sales
assistance to distributors.  Management believes the strength of the
Company’s distribution network and the breadth of its product offerings
are two key advantages over its competitors.

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Product
Line

The
Company manufactures a broad line of wrecker, car carrier and trailer bodies to
meet a full range of customer design, capacity and cost requirements. The
products are marketed under the Century, Vulcan, Challenger, Holmes, Champion,
Chevron, Eagle, Titan, Jige, and Boniface brand names.

Wreckers.Wreckers are generally used to recover and tow disabled vehicles and other
equipment and range in type from the conventional tow truck to large recovery
vehicles with 70-ton lifting capacities.  Wreckers are available with
specialized features, including underlifts, L-arms and scoops, which lift
disabled vehicles by the tires or front axle to minimize front end damage to the
towed vehicles.  Certain heavy duty wrecker models offer rotating booms, which
allow heavy duty wreckers to recover vehicles from any angle, and proprietary
remote control devices for operating wreckers.  In addition, certain light duty
wreckers are equipped with the patented “Express” automatic
wheellift hookup device that allow operators to engage a disabled or unattended
vehicle without leaving the cab of the wrecker.

The
Company’s wreckers range in capacity from 8 to 70 tons, and are
characterized as light duty and heavy duty, with wreckers of 16-ton or greater
capacity being classified as heavy duty.  Light duty wreckers are used to remove
vehicles from accident scenes and vehicles illegally parked, abandoned or
disabled, and for general recovery.  Heavy duty wreckers are used in commercial
towing and recovery applications including overturned tractor trailers, buses,
motor homes and other vehicles.

Car
Carriers.Car carriers are specialized flat-bed vehicles with hydraulic
tilt mechanisms that enable a towing operator to drive or winch a vehicle onto
the bed for transport.  Car carriers are used to transport new or disabled
vehicles and other equipment and are particularly effective for transporting
vehicles or other equipment over longer distances.  In addition to transporting
vehicles, car carriers may also be used for other purposes, including
transportation of industrial equipment. In recent years, professional towing
operators have added car carriers to their fleets to complement their towing
capabilities.

Multi-Vehicle
Transport Trailers.Multi-vehicle transport trailers are specialized auto
transport trailers with upper and lower decks and hydraulic ramps for loading
vehicles. The trailers are used for moving multiple vehicles for auto auctions,
car dealerships, leasing companies, and other similar applications. The trailers
are easy to load with 6 to 7 vehicles, and with the optional cab rack, can haul
up to 8 vehicles.  The vehicles can be secured to the transport quickly
with ratchet and chain tie-downs that are mounted throughout the frame of the
transport. In recent years, professional towing operators have added auto
transport trailers to their fleets to add to their towing capabilities.

Brand
Names

The
Company manufactures and markets its wreckers, car carriers and trailers under
ten separate brand names.  Although certain of the brands overlap in terms of
features, prices and distributors, each brand has its own distinctive image and
customer base.

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Century®.
The Century brand is the Company’s
‘‘top-of-the-line’’ brand and represents what management
believes to be the broadest product line in the industry.  The Century line was
started in 1974 and produces wreckers ranging from the 8-ton light duty to the
70-ton heavy duty models and car carriers in lengths from 171⁄2 to 26 feet.
Management believes that the Century brand has a reputation as the
industry’s leading product innovator.

Vulcan®.The Company’s Vulcan product line includes a range of premium light
and heavy duty wreckers, car carriers and other towing and recovery equipment.
The Vulcan line is operated autonomously with its own independent distribution
network.

Challenger®.The Company’s Challenger products compete with the Century and Vulcan
products and constitute a third premium product line.  Challenger products
consist of light to heavy duty wreckers with capacities ranging from 8 to 70
tons, and car carriers with lengths ranging from 171⁄2 to 26 feet.  The
Challenger line was started in 1975 and is known for high performance heavy duty
wreckers and aesthetic design.

Holmes®.
The Company’s Holmes product line includes mid-priced wreckers with 8 to
16 ton capacities and car carriers in 171⁄2 to 21 foot lengths.  The Holmes
wrecker was first produced in 1916. The Holmes name has been the most
well-recognized and leading industry brand both domestically and internationally
through most of this century.

Champion®.
The Champion brand, which was introduced in 1991, includes car carriers which
range in length from 171⁄2 to 21 feet.  The Champion product line, which is
generally lower-priced, allows the Company to offer a full line of car carriers
at various competitive price points. In 1993, the Champion line was expanded to
include a line of economy tow trucks with integrated boom and underlift.

ChevronTM.
The Company’s Chevron product line is comprised primarily of premium car
carriers.  Chevron produces a range of premium single-car, multi-car and
industrial carriers, light duty wreckers and other towing and recovery
equipment.  The Chevron line is operated autonomously with its own independent
distribution network that focuses on the salvage industry.

Eagle®.
The Company’s Eagle products consist of light duty wreckers with the
‘‘Eagle Claw’’ hook-up system that allows towing
operators to engage a disabled or unattended vehicle without leaving the cab of
the tow truck.  The ‘‘Eagle Claw’’ hook-up system, which
was patented in 1984, was originally developed for the repossession market.
Since acquiring Eagle, the Company has upgraded the quality and features of the
Eagle product line and expanded its recovery capability.

TitanTM.
The Companys Titan product line is comprised of premium multi-vehicle transport
trailers which can transport up to 8 vehicles depending on configuration.

JigeTM.The Company’s Jige product line is comprised of a broad line of light
and heavy duty wreckers and car carriers marketed primarily in Europe.  Jige is
a market leader best known for its innovative designs of car carriers and light
wreckers necessary to operate within the narrow confines of European cities.

BonifaceTM.
The Company’s Boniface product line is comprised primarily of heavy duty
wreckers marketed primarily in Europe.  Boniface produces a wide range of heavy
duty wreckers specializing in the long underlift technology required to tow
modern European tour buses.

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The
Company’s Holmes and Century brand names are associated with four of the
major innovations in the industry: the rapid reverse winch, the tow sling, the
hydraulic lifting mechanism, and the underlift with parallel linkage and L-arms.
The Company’s engineering staff, in consultation with manufacturing
personnel, uses computer-aided design and stress analysis systems to test new
product designs and to integrate various product improvements. In addition to
offering product innovations, the Company focuses on developing or licensing new
technology for its products.

Manufacturing
Process

The
Company manufactures wreckers, car carriers and trailers at six manufacturing
facilities located in the United States, France and England.  The manufacturing
process for the Company’s products consists primarily of cutting and
bending sheet steel or aluminum into parts that are welded together to form the
wrecker, car carrier body or trailer.  Components such as hydraulic cylinders,
winches, valves and pumps, which are purchased by the Company from third-party
suppliers, are then attached to the frame to form the completed wrecker or car
carrier body.  The completed body is either installed by the Company or shipped
by common carrier to a distributor where it is then installed on a truck
chassis.  Generally, the wrecker or car carrier bodies are painted by the
Company with a primer coat only, so that towing operators can select customized
colors to coordinate with chassis colors or fleet colors.  To the extent final
painting is required before delivery, the Company contracts with independent
paint shops for such services.

The
Company purchases raw materials and component parts from a number of sources.
Although the Company has no long-term supply contracts, management believes the
Company has good relationships with its primary suppliers.  The Company has
experienced no significant problems in obtaining adequate supplies of raw
materials and component parts to meet the requirements of its production
schedules.  Management believes that the materials used in the production of the
Company’s products are available at competitive prices from an adequate
number of alternative suppliers.  Accordingly, management does not believe that
the loss of a single supplier would have a material adverse effect on the
Company’s business.

Towing
and Recovery Equipment Sales and Distribution

Company-owned
Distributors

During
2002, the Company’s board of directors and management made the decision to
sell the distributors owned by the Company.  The Company’s distribution
group as of March 31, 2003 owned 8 towing and recovery equipment distributors located in California, Colorado,
Florida, Illinois, Indiana and British Columbia and Ontario, Canada and has sold
one distributor.  The Company intends to sell all of its distributors by
December 2003.  There can be no assurance that this timetable can be met.  All
assets, liabilities and results of operations of the distribution group are now
presented separately as discontinued operations and all prior period financial
information is presented to conform to this treatment.

Independent
Distributors and Sales

Management
categorizes the towing and recovery market into three general product types:
light duty wreckers, heavy duty wreckers and car carriers.  The light duty
wrecker market consists primarily of professional wrecker operators,
repossession towing services, municipal and federal governmental agencies, and
repair shop or salvage company owners.  The heavy duty market is dominated by
professional wrecker operators serving the needs of commercial vehicle
operators.  The car carrier market, historically dominated by automobile salvage
companies, has expanded to include equipment rental companies that offer
delivery service and professional towing operators who desire to complement
their existing towing capabilities.  Management estimates that there are
approximately 30,000 professional towing operators and 80,000 service station,
repair shop and salvage operators comprising the overall towing and recovery
market.

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The
Company’s sales force, which services the Company’s distribution
network, consists of sales representatives whose responsibilities include
providing administrative and sales support to the entire distributor base.
Sales representatives receive commissions on direct sales based on product type
and brand and generally are assigned specific territories in which to promote
sales of the Company’s products and to maintain customer relationships.

The
Company has developed a diverse customer base consisting of approximately 175
distributors in North America, who serve all 50 states, Canada and Mexico, and
approximately 50 distributors that serve other foreign markets. During the year
ended December 31, 2002, no single distributor accounted for more than 5% of the
Company’s sales.  Management believes the Company’s broad and
diverse customer base provides it with the flexibility to adapt to market
changes, lessens its dependence on particular distributors and reduces the
impact of regional economic factors.

To
support sales and marketing efforts, the Company produces demonstrator models
that are used by the Company’s sales representatives and distributors. To
increase exposure to its products, the Company also has served as the official
recovery team for many automobile racing events, including the Daytona,
Talladega, Atlanta and Darlington NASCAR races, the Grand Prix in Miami, the
Suzuka in Japan, the IMSA ‘‘24 Hours at Daytona,’’
Molson Indy, the Brickyard, and the Indy 500 races, among others.

The
Company routinely responds to requests for proposals or bid invitations in
consultation with its local distributors.  The Company’s products have
been selected by the United States General Services Administration as an
approved source for certain federal and defense agencies.  The Company intends
to continue to pursue government contracting opportunities.

The
towing and recovery equipment industry places heavy marketing emphasis on
product exhibitions at national and regional trade shows. In order to focus its
marketing efforts and to control marketing costs, the Company has reduced its
participation in regional trade shows and now concentrates its efforts on five of the major trade shows each year.  The Company works with
its distributor network to concentrate on various regional shows.

Product
Warranties and Insurance

The
Company offers a 12-month limited manufacturer’s product and service
warranty on its wrecker and car carrier products.  The Company’s warranty
generally provides for repair or replacement of failed parts or components.
Warranty service is usually performed by the Company or an authorized
distributor.  Management believes that the Company maintains adequate general
liability and product liability insurance.

Backlog

The
Company produces virtually all of its products to order.  The Company’s
backlog is based upon customer purchase orders that the Company believes are
firm.  The level of backlog at any particular time, however, is not an
appropriate indicator of the future operating performance of the Company.
Certain purchase orders are subject to cancellation by the customer upon
notification.  Given the Company’s production and delivery schedules
management believes that the current backlog represents less than three months
of production.

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Competition

The
towing and recovery equipment manufacturing industry is highly competitive for
sales to distributors and towing operators.  Management believes that
competition in the towing and recovery equipment industry is a function of
product quality and innovation, reputation, technology, customer service,
product availability and price.  The Company competes on the basis of each of
these criteria, with an emphasis on product quality and innovation and customer
service.  Management also believes that a manufacturer’s relationship with
distributors is a key component of success in the industry.  Accordingly, the
Company has invested substantial resources and management time in building and
maintaining strong relationships with distributors.  Management also believes
that the Company’s products are regarded as high quality within their
particular price points.  The Company’s marketing strategy is to continue
to compete primarily on the basis of quality and reputation rather than solely
on the basis of price, and to continue to target the growing group of
professional towing operators who as end-users recognize the quality of the
Company’s products.

Traditionally,
the capital requirements for entry into the towing and recovery manufacturing
industry have been relatively low.  Management believes a manufacturer’s
capital resources and access to technological improvements have become a more
integral component of success in recent years.  Accordingly, management believes
that the Company’s ownership of patents on certain of the industry’s
leading technologies has given it a competitive advantage.  Certain of the
Company’s competitors may have greater financial and other resources and
may provide more attractive dealer and retail customer financing alternatives
than the Company.

Employees

At
December 31, 2002, the Company employed approximately 1000 people in its towing
and recovery equipment manufacturing and distribution operations.  None of the
Company’s employees is covered by a collective bargaining agreement,
though its employees in France and England have certain similar rights provided by their respective government’s employment
regulations.  The United Auto Workers Union filed a representation petition with
the National Labor Relations Board for the employees at the Company’s
Ooltewah, Tennessee plant.  A vote on such representation took place on April
11, 2002.  The Ooltewah manufacturing plant employees voted against joining the
United Auto Workers Union.  The Company considers its employee relations to be
good.

TOWING SERVICES - ROADONE

In
February 1997, the Company formed its towing services division, RoadOne, to
build a national towing services network.  During April 2000, the Company
announced plans to accelerate its efforts to aggressively reduce expenses in the
towing services segment at the corporate level, as well as in the field.  During
the quarter ended June 30, 2002 the Company’s management and board of
directors approved a plan to dispose of certain identified assets, which
primarily consisted of underperforming markets of the towing services segment.
In October 2002, the Company made the decision to sell all remaining towing
services operations.  The Company substantially completed this process by
December 31, 2002 and intends to fully complete this process during fiscal 2003,
although there can be no assurance that this timetable can be met.

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In
accordance with SFAS No. 144, the Company began reporting the entire towing
services segment as discontinued operations as of the beginning of the fourth
quarter of 2002.  Accordingly, the depreciation of fixed assets ceased on
October 1, 2002.  As of such date, all assets, liabilities, and results of
operations are separately presented as discontinued operations and all prior
period financial information is presented to conform with this treatment.

As
of March 31, 2003, the Company had sold or closed 100 RoadOne terminals and had
14 terminals remaining to be sold.  The Company expects to complete the sale of
the remaining 14 terminals during 2003.

Employees

At
December 31, 2002, the Company employed approximately 600 people at RoadOne.  As
of March 31, 2003 the Company employed approximately 450 people at RoadOne.  The
Company expects that the number of people employed at RoadOne will continue to
decline as the towing services business is wound down.  None of the
Company’s RoadOne employees are covered by a collective bargaining
agreement.  The Company considers its employee relations to be good.

PATENTS AND TRADEMARKS

The
development of the underlift parallel linkage and L-arms in 1982 is considered
one of the most innovative developments in the wrecker industry in the last 25
years.  This technology is significant primarily because it allows the
damage-free towing of newer aerodynamic vehicles made of lighter weight
materials.  Patents for this technology were granted to an operating subsidiary
of the Company in 1987 and 1989.  These patents expire in mid-year 2004.  This
technology, particularly the L-arms, is used in a majority of the commercial
wreckers today.  Management believes that utilization of such devices without a
license is an infringement of the Company’s patents.  The Company has
successfully litigated infringement lawsuits in which the validity of the
Company’s patents on this technology was upheld, and successfully settled
other lawsuits.  The Company also holds a number of other utility and design
patents covering other products, the Vulcan ‘‘scoop’’
wheel-retainer and the car carrier anti-tilt device.  Company has also obtained
the rights to use and develop certain technologies owned or patented by others.
Pursuant to the terms of a consent judgment entered into in 2000 with the
Antitrust Division of the U.S. Department of Justice, the Company is required to
offer non-exclusive royalty-bearing licenses to certain of the Company’s
key patents to all tow truck and car carrier manufacturers.

The
Company’s trademarks ‘‘Century,’’
‘‘Holmes,’’ ‘‘Champion,’’
“Challenger,” ‘‘Formula I,’’
‘‘Eagle Claw Self-Loading Wheellift,’’ ‘‘Pro
Star,’’ ‘‘Street Runner,’’
‘‘Vulcan,’’ and ‘‘RoadOne,’’
among others, are registered with the United States Patent and Trademark Office.
Management believes that the Company’s trademarks are well-recognized by
dealers, distributors and end-users in their respective markets and are
associated with a high level of quality and value.

GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS

The
Company’s operations are subject to federal, state and local laws and
regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment.  Management
believes that the Company is in substantial compliance with all applicable
federal, state and local provisions relating to the protection of the
environment.  The costs of complying with environmental protection laws and
regulations has not had a material adverse impact on the Company’s
financial condition or results of operations in the past and is not expected to
have a material adverse impact in the future.

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The
Company is also subject to the Magnuson-Moss Warranty Federal Trade Commission
Improvement Act which regulates the description of warranties on products.  The
description and substance of the Company’s warranties are also subject to
a variety of federal and state laws and regulations applicable to the
manufacturing of vehicle components.  Management believes that continued
compliance with various government regulations will not materially affect the
operations of the Company.

The
Financial Services Group is subject to regulation under various federal, state
and local laws which limit the interest rates, fees and other charges that may
be charged by it or prescribe certain other terms of the financing documents
that it enters into with its customers.  Management believes that the additional
administrative costs of complying with these regulations will not materially
affect the operations of the Company.

EXECUTIVE OFFICERS OF THE REGISTRANT

|Name               | Age | Position with the Company                                                                              
|------------------ | --- | -------------------------------------------------------------------------------------------------------
|William G. Miller  | 56  | Chairman of the Board                                                                                  
|Jeffrey I. Badgley | 50  | President, Chief Executive Officer and Director                                                        
|Frank Madonia      | 54  | Executive Vice President, Secretary and General Counsel                                                
|J. Vincent Mish    | 52  | Executive Vice President, Chief Financial Officer and
            President of Financial
Services Group

William
G. Millerhas served as Chairman of the Board since April 1994.  From
January 2002 to August 2002, Mr. Miller served as the Chief Executive Officer of
Team Sports Entertainment, Inc., an OTC Bulletin Board company engaged in the
business of sports and entertainment marketing and management, as well as Team
Sports Entertainment’s subsidiary, Team Racing Auto Circuit.  Mr. Miller
served as Chief Executive Officer of the Company from April 1994 to June 1997,
as Co-Chief Executive Officer of the Company from June 1997 to November 1997,
and as President of the Company from April 1994 to June 1996.  He served as
Chairman of Miller Group, Inc., from August 1990 through May 1994, as its
President from August 1990 to March 1993, and as its Chief Executive Officer
from March 1993 until May 1994.  Prior to 1987, Mr. Miller served in various
management positions for Bendix Corporation, Neptune International Corporation,
Wheelabrator-Frye Inc. and The Signal Companies, Inc.

Jeffrey
I. Badgleyhas served as Chief Executive Officer of the Company since
November 1997, as President since June 1996, and as a director since January
1996.  Mr. Badgley served as Co-Chief Executive Officer of the Company from June
1997 to November 1997, as Chief Operating Officer of the Company from June 1996
to June 1997 and as Vice-President of the Company from April 1994 to June 1996.
In addition, Mr. Badgley serves as President of Miller Industries Towing
Equipment Inc.  Mr. Badgley served as Vice President - Sales of Miller
Industries Towing Equipment Inc. from 1988 to 1996.  Mr. Badgley served as Vice
President - Sales and Marketing of Challenger Wrecker Mfg., Inc., from 1982
until joining Miller Industries Towing Equipment Inc.

Frank
Madoniahas served as Executive Vice President, General Counsel and
Secretary of the Company since September 1998.  From April 1994 to September
1998 Mr. Madonia served as Vice President, General Counsel and Secretary of the
Company.  Mr. Madonia served as Secretary and General Counsel to Miller
Industries Towing Equipment Inc. since its acquisition by Miller Group in 1990.
From July 1987 through April 1994, Mr. Madonia served as Vice President, General
Counsel and Secretary of Flow Measurement.  Prior to 1987, Mr. Madonia served in
various legal and management positions for United States Steel Corporation,
Neptune International Corporation, Wheelabrator-Frye Inc., The Signal Companies,
Inc. and Allied-Signal Inc.  In addition, Mr. Madonia is registered to practice
before the United States Patent and Trademark Office.

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J.
Vincent Mishis a certified public accountant and has served as Chief
Financial Officer and Treasurer of the Company since June 1999, a position he
also held from April 1994 through September 1996.  In December 2002, Mr. Mish was
appointed an Executive Vice President of the Company.  He also has served as
President of the Financial Services Group since September 1996 and as a Vice
President of the Company since April 1994.  Mr. Mish served as Vice President
and Treasurer of  Miller Industries Towing Equipment Inc. since its acquisition
by Miller Group in 1990.  From February 1987 through April 1994, Mr. Mish served
as Vice President and Treasurer of Flow Measurement.  Mr. Mish worked with Touche Ross & Company (now Deloitte and Touche) for over ten years before
serving as Treasurer and Chief Financial Officer of DNE Corporation from 1982 to
1987.  Mr. Mish is a member of the American Institute of Certified Public
Accountants and the Tennessee and Michigan Certified Public Accountant
societies.

ITEM2.PROPERTIES

The
Company operates four manufacturing facilities in the United States.  The
facilities are located in (i) Ooltewah, Tennessee, (ii) Hermitage, Pennsylvania,
(iii) Mercer, Pennsylvania, and (iv) Greeneville, Tennessee.  The
Ooltewah plant, containing approximately 242,000 square feet, produces light and
heavy duty wreckers; the Hermitage plant, containing approximately 95,000 square
feet, produces car carriers; the Mercer plant, which was acquired in December
1997, contains approximately 110,000 square feet, produces car carriers and
light duty wreckers; and the Greeneville plant, containing approximately 112,000
square feet, primarily produces car carriers and trailers.

The
Company operates two foreign manufacturing facilities located in the Lorraine
region of France, which contain, in the aggregate, approximately 180,000 square
feet, and one in Norfolk, England, which contains approximately 30,000 square
feet.

Management
believes that its existing manufacturing facilities will allow the Company to
meet anticipated demand for its products.

In
connection with its towing service companies, the Company owns property or has
entered into leases for property for 14 towing services companies in four
states.  The Company has sold or is in the process of selling substantially all
of these facilities. These facilities are utilized as offices for administrative
and dispatch operations, garages for repair and upkeep of towing vehicles, and
lots for storage and impounding of towed cars.  RoadOne’s corporate
offices are housed in the manufacturing plant in Ooltewah, Tennessee.

ITEM3.LEGAL
PROCEEDINGS

The
Company is, from time to time, a party to litigation arising in the normal
course of its business.  Litigation is subject to various inherent
uncertainties, and it is possible that some of these matters could be resolved
unfavorably to the Company, which could result in substantial damages against
the Company.  The Company has established accruals for matters that are probable
and reasonably estimable and maintains product liability and other insurance
that management believes to be adequate.  Management believes that any liability
that may ultimately result from the resolution of these matters in excess of
available insurance coverage and accruals will not have a material adverse
effect on the consolidated financial position or results of operations of the
Company.

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ITEM4.SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

No
matters were submitted to a vote of security holders of the Registrant during
the last three months of the period covered by this Annual
Report.

PART II

ITEM5.MARKET
FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The
Registrant’s Common Stock is traded on the New York Stock Exchange
(“NYSE”) under the symbol “MLR.”  The following table
sets forth the quarterly range of high and low sales prices for the Common Stock
for the period from May 1, 2000 through December 31, 2002, adjusted for the
one-for-five reverse stock split that was effected October 1, 2001.

High
LowFiscal Year Ended April 30, 2001First Quarter
$ 19.38
$ 6.25Second Quarter
$ 10.00
$ 4.38Third Quarter
$  8.75
$ 2.19Fourth Quarter
$  7.50
$ 3.50Eight Months Ended December 31, 2001May 1, 2001 to July 31, 2001
$  5.60
$ 3.10August 1, 2001 to October 31, 2001
$  7.05
$ 2.45November 1, 2001 to December 31, 2001
$  3.35
$ 2.10Fiscal Year Ended December 31, 2002First Quarter
$  4.20
$ 2.30Second Quarter
$  3.95
$ 3.02Third Quarter
$  4.18
$ 2.31Fourth Quarter
$  3.65
$ 2.60


The
approximate number of holders of record and beneficial owners of Common Stock as
of March 15, 2003 was 1,851and 10,000, respectively.

The
Company has never declared cash dividends on the Common Stock.  The Company
intends to retain its earnings and does not anticipate paying cash dividends in
the foreseeable future.  Any future determination as to the payment of cash
dividends will depend upon such factors as earnings, capital requirements, the
Company’s financial condition, restrictions in financing agreements and
other factors deemed relevant by the Board of Directors.  The payment of
dividends by the Company is restricted by its revolving credit facility.

ITEM6.SELECTED
FINANCIAL DATA

The
following table presents selected statement of operations data and selected
balance sheet data on a consolidated basis.  We derived the selected historical
consolidated financial data presented below from our audited consolidated
financial statements and related notes.  You should read this data together with
our audited consolidated financial statements and related notes.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA(In thousands except per share data)

Year Ended
Eight Months
Ended
Years Ended April 30,December 31, 2002
December 31,
2001
2001
2000
1999
1998Net sales
$   203,059
$    142,445
$  212,885
$  261,907
$  231,691
$  192,705Costs and expenses:Costs of operations
174,516
122,753
181,517
220,602
193,855
156,250Selling, general, andadministrative expenses
17,434
12,547
20,663
22,791
22,463
13,039Special charges (1)
--
1,794
--
2,770
--
4,100Interest expense, net
4,368
1,055
2,137
6,036
4,579
2,834Total costs and expenses
196,318
138,149
204,317
252,199
220,897
176,223Income (loss) from continuing operations
     before income
taxes
6,741
4,296
8,568
9,708
10,794
16,482Income tax (benefit) provision
3,217
2,419
2,533
6,505
4,318
6,593Income (loss) from continuing operations
3,524
1,877
6,035
3,203
6,476
9,889Discontinued operations:Income (Loss) from discontinued operations
(26,146)
(24,041)
(18,176)
(96,159)
(6,361)
4,177operations, before income taxesIncome tax (benefit) provision
1,260
(577)
(5,707)
(19,813)
(2,092)
1,400Loss from discontinued operations
          net of taxes
(27,406)
(23,464)
(12,469)
(76,346)
(4,269)
2,777Net income (loss) before cumulative effect of
(23,882)
(21,587)
(6,434)
(73,143)
2,207
12,666change in accounting principleCumulative effect of change in accounting
           principle
(21,812)
-
-
-
-
-Net income (loss)
$   (45,694)
$   (21,587)
$  (6,434)
$  (73,143)
$  2,207
$  12,666Basic net income (loss) per common share(2):Income from continuing operations
$   0.38
$    0.20
$  0.65
$ 0.34
$  0.70
$  1.11Income (loss) from discontinued operations
(2.93)
(2.51)
(1.34)
( 8.17)
(0.46)
0.31Cumulative effect of change in accounting principle
(2.34)
-
-
-
-
-Basic net income (loss) per common share
$ (4.89)
$   (2.31)
$  (0.69)
$  (7.83)
$  0.24
$  1.42Diluted net income (loss) per common share(2):Income from continuing operations
$   0.38
$    0.20
$   0.65
$   0.34
$  0.68
$  1.07Income (loss) from discontinued operations
(2.93)
(2.51)
(1.34)
(8.17)
(0.45)
0.30Cumulative effect of change in accounting
          principle
(2.34)
-
-
-
-
-Diluted net income (loss) per common share
$ (4.89)
$    (2.31)
$  (0.69)
$  (7.83)
$  0.23
$  1.37Weighted average shares outstanding:Basic
9,341
9,341
9,341
9,339
9,267
8,912Diluted
9,348
9,345
9,350
9,426
9,457
9,240Balance Sheet Data (at period end):Working capital
($  10,174)
$   87,601
$  91,314
$  103,801
$  121,449
$  104,774Total assets
162,177
252,963
281,287
323,694
392,480
329,730Long-term obligations, less current portion
1,214
91,562
99,121
119,319
133,850
95,778Common shareholders’ equity (deficit)
39,697
84,843
106,533
113,821
187,303
180,236


(1)Special
charges and other net operating expenses include asset impairment charges for
continuing operation of $1,794 for the eight months ended December 31, 2001,
$2,770 for the year ended April 30, 2000, and special charges of $4,100 in
fiscal 1998 for the closure of a facility and consolidation of manufacturing


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operations
in the towing and recovery equipment segment.  The Company recorded asset
impairments and special charges for discontinued operations of $11,828 for the
year ended December 31, 2002, $15,568 for the eight months ended December 31,
2001, and $74,085 of special charges and $6,041 for the cost of the
rationalization of the towing services segment for the year ended April 30,
2000.  Special charges and asset impairments related to discontinued operations
are included in Loss from Discontinued Operations in the statement of
operations.(2)Basic
and diluted net income per common share and the weighted average number of
common and potential dilutive common shares outstanding are computed after
giving retroactive effect to the 2-for-1 stock split effected on September 30,
1996, the 3-for-2 stock split effected on December 30, 1996, and the 1-for-5
reverse stock split effected on October 1, 2001.


ITEM 7.               MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS

The
following discussion of the results of operations and financial condition of the
Company should be read in conjunction with the Consolidated Financial Statements
and Notes thereto.

GENERAL

Going
Concern. The
Company’s financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.  As more fully
described under 2003 Amendment to Credit Facility, subsequent to December 31, 2002, the Company was
in default of certain covenants under its Senior and Junior Credit Facility
Agreements, and its Junior Credit Facility matures on July 23, 2003.  The Senior
and Junior Credit Facility Agreements contain certain cross-default provisions
and provide for acceleration of amounts due as well as other remedies in the
event of default.  These circumstances raise substantial doubt about the
Company’s ability to continue as a going concern.

Discontinued Operations.   During
the year ended December 31, 2002, the Company’s management and its board
of directors made the decision to divest of its remaining towing services
segment, as well as the operations of the distribution group of the towing and
recovery equipment segment. In accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", the assets for the towing services
segment and the distribution group are considered a "disposal group" and the
assets are no longer being depreciated. All assets and liabilities and results
of operations associated with these assets have been separately presented in the
accompanying financial statements. The statements of operations and related
financial statement disclosures for all prior years have been restated to
present the towing services segment and the distribution group as discontinued
operations separate from continuing operations. The analyses contained herein
are of continuing operations, as restated, unless otherwise noted.

The
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which require the
Company to make estimates.  Certain accounting policies are deemed
“critical,” as they require management’s highest degree of
judgment, estimates and assumptions.  A discussion of critical accounting
policies, the judgments and uncertainties affecting their application and the
likelihood that materially different amounts would be reported under different
conditions or using different assumptions follows:

Accounts
receivable.The Company extends credit to customers in the normal course of
business.  Collections from customers are continuously monitored and an
allowance for doubtful accounts is maintained based on historical experience and
any specific customer collection issues.  While such bad debt expenses have
historically been within expectations and the allowance established, there can
be no assurance that the Company will continue to experience the same credit
loss rates as in the past.

Valuation
of long-lived assets and goodwill.Long-lived assets and goodwill are
reviewed for impairment whenever events or circumstances indicate that the
carrying amount of these assets may not be fully recoverable.  When a
determination has been made that the carrying amount of long-lived assets and
goodwill may not be fully recovered, the amount of impairment is measured by
comparing an asset’s estimated fair value to its carrying value.  The
determination of fair value is based on projected future cash flows discounted
at a rate determined by management, or if available independent appraisals or
sales price negotiations.  The estimation of fair value includes significant
judgment regarding assumptions of revenue, operating costs, interest rates,
property and equipment additions; and industry competition and general economic
and business conditions among other factors.

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Upon
adoption of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assetson January 1, 2002, the Company ceased to amortize
goodwill.  In lieu of amortization, the Company is required to perform an
initial impairment review of goodwill in 2002 and an annual impairment review
thereafter.  For further detail of the Company’s impairment review and
related write downs, See Note 7 to the Consolidated Financial Statements.

Income
taxes.The Company recognizes deferred tax assets and liabilities based on
differences between the financial statement carrying amounts and the tax bases
of assets and liabilities.  The Company considers the need to record a valuation
allowance to reduce deferred tax assets to the amount that is more likely than
not to be realized.  The Company considers tax loss carrybacks, reversal of
deferred tax liabilities, tax planning and estimates of future taxable income in
assessing the need for a valuation allowance.  The Company established a
deferred tax valuation allowance of $18.0 million as of December 31, 2002.  The
allowance reflects the Company’s recognition that continuing losses from
operations and certain liquidity matters associated with the Company’s
credit facility indicate that it is more likely than not that certain future tax
benefits will not be realized through future taxable income.  At December 31,
2002, the Company recorded a full valuation allowance against its net deferred
tax assets from continuing and discontinuing operations totaling approximately
$18.0 million.

Revenues.
Under the Company’s accounting policies, sales are recorded when equipment
is shipped to independent distributors or other customers.  While the Company
manufactures only the bodies of wreckers, which are installed on truck chassis
manufactured by third parties, the Company sometimes purchases the truck chassis
for resale to its customers.  Sales of Company-purchased truck chassis are
included in net sales.  Margins are substantially lower on completed recovery
vehicles containing Company-purchased chassis because the markup over the cost
of the chassis is nominal.  Revenue from Company owned distributors is recorded
at the time equipment is shipped to customers or services are rendered.  The
towing services division recognizes revenue at the time services are performed.

Seasonality.
The Company’s towing and recovery equipment segment has experienced some
seasonality in net sales due in part to decisions by purchasers of light duty
wreckers to defer wrecker purchases near the end of the chassis model year.  The
segment’s net sales have historically been seasonally impacted due in part
to sales made at the largest towing and recovery equipment trade show which is
held in the spring.

Change
in Fiscal Year. On September 25, 2001, the Company announced that its Board
of Directors had approved a change in the Company’s fiscal year, from
April 30 to December 31, effective December 31, 2001.  The change to a December
31 fiscal year will enable the Company to report results on a conventional
calendar basis.  As a result of the change in fiscal year, the Company filed a
transition report for the eight-month period ended December 31, 2001, and the
comparative data below compares the financial results for that period against
the results for the fiscal year ended April  30, 2001.  The periods
are not directly comparable, in that they relate to periods of materially
different lengths, and also that the transition period does not include results
from the three months ended April 30, a fiscal quarter in which the
Company’s sales have traditionally been seasonally higher than other
quarters.

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RESULTS OF OPERATIONS

The
following table sets forth, for the periods indicated, the components of the
consolidated statements of operations expressed as a percentage of net
sales.

|                                                    | Year Ended   |  | Eight Months
Ended |  |                      
|--------------------------------------------------- | ------------ |  | ------------------ |  | ---------------------
|                                                    | December 31, |  | December 31,       |  | Years Ended April 30,
|                                                    | 2002         |  | 2001               |  | 2001                 
|Continuing Operations:                              |              |  |                    |  |                      
|Net Sales                                           | 100.0%       |  | 100.0%             |  | 100.0%               
|Costs and expenses:                                 |              |  |                    |  |                      
|Costs of operations                                 | 85.9%        |  | 86.2%              |  | 85.3%                
|Selling, general and administrative                 | 8.6%         |  | 8.8%               |  | 9.7%                 
|Special charges and other operating
expenses, net   | 0.0%         |  | 1.3%               |  | 0.0%                 
|Interest expense, net                               | 2.2%         |  | 0.7%               |  | 1.0%                 
|Total costs and expenses                            | 96.7%        |  | 97.0%              |  | 96.0%                
|Income before income taxes                          | 3.3%         |  | 3.0%               |  | 4.0%                 
|                                                    |              |  |                    |  |                      
|Discontinued Operations:                            |              |  |                    |  |                      
|Net Sales                                           | 100.0%       |  | 100.00%            |  | 100.0%               
|Costs and expenses:                                 |              |  |                    |  |                      
|Costs of operations                                 | 87.2%        |  | 86.4%              |  | 85.4%                
|Selling, general and administrative                 | 20.8%        |  | 15.4%              |  | 15.8%                
|Special charges and other operating expense,
   net | 0.8%         |  | 9.2%               |  | 0.0%                 
|Interest Expense, net                               | 3.1%         |  | 3.9%               |  | 5.2%                 
|Total costs and expenses                            | 111.9%       |  | 114.9%             |  | 106.4%               
|Loss before income taxes                            | (11.9)%      |  | (14.9)%            |  | (6.4)%               

Twelve Months Ended December 31, 2002 Compared to Eight Months Ended December
31, 2001

Continuing
Operations

Net
sales from continuing operations of the towing and recovery equipment segment
were $203.1 million for the twelve months ended December 31, 2002 compared to
$142.4 million for the eight months ended December 31, 2001. Net sales at
December 31, 2001 include only eight months of activity, accounting for a
substantial portion of the increase from period to period. Demand for the
Company’s towing and recovery equipment continues to be negatively
impacted by cost pressures facing its customers and tightness in the current
credit markets.

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Costs
of operations of the Company as a percentage of net sales decreased slightly to
85.9% for the year ended December 31, 2002 from 86.2% for the eight months ended
December 31, 2001. Selling, general, and administrative expenses decreased 0.2%
as a percentage of net sales from 8.8% for the eight months ended December 31,
2001 to 8.6% for the twelve months ended December 31, 2002. The slight decrease
in costs of sales and selling, general, and administrative expenses as a
percentage of sales is the result of the Company’s continued focus on
controlling costs of its continuing operations while disposing of its towing
services segment and distribution group.

In
January 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets". Upon adoption of SFAS No. 142, the Company ceased to amortize goodwill.
In lieu of amortization, the Company was required to perform an initial
impairment review, which resulted in the write-off of $1.7 million of goodwill
attributable to continuing operations and $20.1 million of goodwill attributable
to discontinued operations.

The
Company periodically reviews the carrying value of goodwill and long-lived
assets to determine if those assets may be recoverable based upon future
operating cash flows expected to be generated by those assets. During the eight
months ended December 31, 2001, evaluations of these assets indicated that
projected future cash flows from certain towing and recovery equipment
operations were not sufficient to fully recover the carrying value of its
goodwill and certain other long-lived assets. Accordingly, a non-cash impairment
charge of $1.7 million was recorded.

Interest
expense for continuing operations for the year ended December 31, 2002 was $4.3
million compared to $1.1 million for the eight months ended December 31, 2001 as
a result of the acceleration of amortization of deferred financing costs.

The
effective rate for the provision for income taxes for continuing operations was
47.7% for the year ended December 31, 2002 compared to 56.3% for the eight
months ended December 31, 2001.  The decrease in the effective rate is due to a
deferred tax valuation allowance recorded as of December 31, 2001 and permanent
differences.  The allowance reflected the Company’s recognition that
continuing losses from operations and certain liquidity matters associated with
the Company’s credit facility indicate that it is more likely than not
that certain future tax benefits will not be realized through future taxable
income.

Discontinued
Operations

Net
sales of discontinued operations increased to $206.9 million for the year ended
December 31, 2002 from $ 161.5 million for the eight months ended December 31,
2001. The increase is primarily due to the fact that net sales at December 31,
2001 include only eight months of activity. Net sales of the distribution group
were $85.4 million for the year ended December 31, 2002 compared to $60.6
million for the eight months ended December 31, 2001. Net sales of the towing
services segment were $121.6 million for the year ended December 31, 2002
compared to $101.0 million for the eight months ended December 31, 2001.
Revenues of the towing services segment were negatively affected by the
Company’s ongoing efforts to sell or close under performing and other
markets.

Cost
of sales as a percentage of net sales for the distribution group was 92.1 % for
the year ended December 31, 2002 compared to 91.7% for the eight months ended
December 31, 2001. Cost of sales of the towing services segment increased 0.4%
from 83.3% for the eight months ended December 31, 2001 to 83.7% for the year
ended December 31, 2002.

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Selling,
general, and administrative expenses as a percentage of sales was 8.8% for the
distribution group and 29.2% for the towing services segment for the year ended
December 31, 2002 compared to 9.5% and 18.9%, respectively for the eight months
ended December 31, 2001.  The decrease for the distribution group was the result of
the Company’s continued cost reduction efforts as the Company began
implementation of its plans for disposition of these operations.  The increase
in the towing services segment was the result of expenses not decreasing as
rapidly as revenues as markets were sold throughout the year as well as various
expenses incurred in connection with such dispositions.

Net
interest expense was $6.5 million for the year ended December 31, 2002 compared
to $6.3 million for the eight months ended December 31, 2001, respectively.

The
effective rate for the provision for income taxes for discontinued operations
was 12.8% for the year ended December 31, 2002 compared to 2.4% for the eight
months ended December 31, 2001.

Eight
Months Ended December 31, 2001 Compared to Year Ended April 30, 2001

Continuing
Operations

Net
sales for the eight months ended December 31, 2001 were $142.4 compared to
$212.9 for the twelve months ended April 30, 2001.  Net sales at December 31,
2001 include only eight months activity, accounting for a substantial portion of
the decrease.  The Company experienced generally stable order rates for towing
and recovery equipment in the face of continued challenging business conditions
during the eight months ended December 31, 2001.  Demand for the Company’s
towing and recovery equipment continued to be negatively impacted by cost
pressures facing its customers.

Cost
of operations for the Company as a percentage of net sales increased to 86.2%
for the eight months ended December 31, 2001 compared to 85.3% for the year
ended April 30, 2001.  The increase as a percentage of net sales was primarily
due to declines in overall sales volume as discussed above.

Selling,
general, and administrative expenses decreased 0.9% as a percentage of net sales
from 9.7% for the year ended April 30, 2001 to 8.8% for the eight months ended
December 31, 2001.  The slight decrease in selling, general, as a percentage of
sales, is a result of the Company’s continued focus on cost reduction
efforts implemented in prior fiscal years.

The
Company periodically reviews the carrying value of goodwill and long-lived
assets in both to determine if those assets may be recoverable based upon the
future operating cash flows expected to be generated by those assets.  During
the eight months ended December 31, 2001 evaluations indicated that projected
cash flows from certain towing services markets were not sufficient to fully
recover the carrying value of its goodwill and other long-lived assets.
Accordingly, the Company recorded non-cash impairment charges of $1.7 million
for continuing operations and $14.9 million for discontinued operations.

Interest
expense for the eight months ended December 31, 2001 and the year ended April
30, 2001 was $1.1 million and $2.1 million, respectively.  During the eight
months ended December 31, 2001, the Company incurred lower interest expense as a
result of refinancing its line of credit at more favorable rates in July 2001, a
decrease in debt levels and four months less interest expense in the transition
period.

The
effective rate of the provision for income taxes for continuing operations for
the eight months ended December 31, 2001 was 56.3% compared to 29.7% for the
year ended April 30, 2001.  The increase in the effective rate is due to a
deferred tax valuation allowance recorded as of December 31, 2001.  The
allowance reflects the Company’s recognition that continuing losses from
operations and certain liquidity matters associated with the Company’s
credit facility indicate that it is more likely than not that certain future tax
benefits will not be realized through future taxable income.

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Discontinued
Operations

Net
sales of discontinued operations decreased from $282.6 million for the year
ended April 30, 2001 to $ 161.5 million for the eight months ended December 31,
2002. The decrease is primarily due to the fact that net sales at December 31,
2001 include only eight months of activity. Net sales of the distribution group
were $60.6 million for the eight months ended December 31, 2001 compared to
$100.3 million for the year ended April 30, 2001. Net sales of the towing
services segment was $101.0 million for the eight months ended December 31, 2001
compared to $182.3 million for the year ended April 30, 2001. Revenues in the
distribution group were negatively impacted by cost pressures facing its
customers. Revenues in the towing services segment were negatively impacted
during the eight months ended December 31, 2001 due to unseasonably mild
temperatures, the impact on the overall transportation industry following the
events of September 11th, and the sale of several towing services
markets as part of the Company’s continued efforts to eliminate
underperforming terminals.

Cost
of sales as a percentage of net sales for the distribution group was 91.7% for
the eight months ended December 31, 2001 compared to 91.3% for the year ended
April 30, 2001. Cost of sales of the towing services increased 1.1% from 82.2%
for the year ended April 30, 2001 to 83.3% for the eight months ended December
31, 2001 primarily due to declines in revenues of underperforming markets

Selling,
general, and administrative expenses as a percentage of sales was 9.5% for the
distribution group and 18.9% for the towing services segment for the eight
months ended December 31, 2001 compared to 8.4% and 19.9%, respectively for the
year ended April 30, 2001. The increase for the distribution group was primarily
due to declines in sales volume as described above. The decrease for the towing
services segment was the result of the Company’s continued cost reduction
efforts.

Net
interest expense of discontinued operations decreased $8.3 million from $14.6
million for the year ended April 31, 2001 to $6.3 million for the eight months
ended December 31, 2001. During the eight months ended December 31, 2001, the
Company experienced overall lower interest expense as a result of refinancing
its line of credit at more favorable rates in July 2001, a decrease in debt
levels, and four months less interest expense in the transition period.

The
effective rate for the provision for income taxes for discontinued operations
was 2.4% for the eight months ended December 31, 2001 compared to 31.4% for the
year ended April 30, 2001.

Year
Ended April 30, 2001 Compared to Year Ended April 30, 2000

Continuing
Operations

Net
sales for the year ended April 30, 2001 decreased 18.7% to $212.9 million from
$261.9 million for the comparable period in 2000.  Net sales were adversely
impacted as demand for the Company’s towing and recovery equipment
continued to be negatively impacted by the cost pressures facing its customers
during the year ended April 30, 2001.

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Costs
of operations for the Company as a percentage of net sales increased to 85.3%
for the year ended April 30, 2001 compared to 84.2% for the comparable prior
year.  The increase as a percentage of net sales was primarily the result of
declines in sales volume as discussed above.

Selling,
general, and administrative costs decreased 9.3% to $20.7 million from $22.8
million for the comparable period of fiscal 2000.  As a percentage of sales
these costs increased slightly from 8.7% in fiscal 2000 to 9.7% in fiscal
2001.

The
Company periodically reviews the carrying amount of the long-lived assets and
goodwill in both its towing services and towing and recovery equipment
businesses to determine if those assets may be recoverable based upon the future
operating cash flows expected to be generated by those assets.  As a result of
such review during the fourth quarter of fiscal 2000, the Company concluded that
projected cash flows from certain Company towing services markets and certain
equipment distributors were not fully recoverable.  Accordingly, the Company
recorded non-cash impairment charges of $69.1 million and $7.7 million in its
towing services and towing and recovery equipment segments, respectively.

Net
interest expense decreased $3.9 million to $2.1 from $6.0 million for fiscal
2000 primarily due to higher interest rates on the Company’s line of
credit facility.

The
effective rate for the provision for income taxes for continuing operations was
29.7% for the year ended April 30, 2001 compared to 67.0% for the year ended
April 30, 2000.  The difference is due primarily to the impact of lower earnings
and impairment charges related to non-deductible goodwill.

Discontinued
Operations

Net
sales of discontinued operations decreased $37.6 million from $320.2 million for
the year ended April 30, 2000 to $ 282.6 million for the year ended April 30,
2001. Net sales of the distribution group were $100.3 million for the year ended
April 30, 2001 compared to $112.3 million for the year ended April 30, 2000. Net
sales of the towing services segment were $182.3 million for the year ended
April 30, 2001 compared to $207.9 million for the year ended April 30, 2000. Net
sales of the distribution group were negatively impacted by cost pressures
facing its customers. Revenues in the towing services segment decreased
primarily due to the disposition of eleven underperforming markets during 2001,
as well as declines in revenues of certain other underperforming markets.

Cost
of sales as a percentage of net sales for the distribution group was 91.3% for
the year ended April 30, 2001 compared to 91.1% for the year ended April 30,
2000. Cost of sales of the towing services increased 1.8% from 80.4% for the
year ended April 30, 2000 to 82.2% for the year ended April 30, 2001. The
increase as a percentage of sales was due to declines in revenue explained
above, coupled with increased labor and fuel costs. The increase was partially
offset by a reduction in insurance costs due to favorable claims and a return on
premium.

Selling,
general, and administrative expenses as a percentage of sales was 8.4% for the
distribution group and 19.9% for the towing services segment for the year ended
April 30, 2001 compared to 9.3% and 26.2%, respectively for the ended April 30,
2000. The decrease as a percentage of sales was primarily the result of
company-wide cost reduction efforts implemented in late fiscal 2000 and the
first quarter of 2001.

During
the second quarter of 2000, the Company recorded special charges of $6.0 million
for the further rationalization of its towing services operations. These charges
included the cost of early termination of certain employment contracts and
facility leases, as well as losses on the disposal of certain excess equipment
and other property-related charges.

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Net
interest expense of discontinued operations increased $6.6 million from $8.0
million for the year ended April 31, 2000 to $14.6 million for the eight months
ended December 31, 2001 primarily due to higher interest rates on the
Company’s line of credit.

The
effective rate for the provision for income taxes for discontinued operations
was 31.4% for the year ended April 30, 2001 compared to 20.6% for the year ended
April 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

The
Company’s primary capital requirements are for working capital, debt
service, and capital expenditures.  Since 1996, the Company has financed its
operations and growth from internally generated funds and debt financing.

Cash
provided by operating activities was $19.6 million for the year ended December
31, 2002 compared to $9.8 million for the eight months ended December 31, 2001,
$21.9 million for the year ended April 30, 2001 and $8.5 million for the year
ended April 30, 2000.  Cash provided by operations for the year ended December
31, 2002 included approximately $9.0 million of tax refunds received during the
year.  The cash provided by operating activities also reflects decreases in
inventory levels and accrued liabilities, partially offset by increases in
accounts receivable.

Cash
provided by investing activities was $18.3 million for the year ended December
31, 2002 compared to $0.2 million used in investing activities for the eight
months ended December 31, 2001, $8.3 million provided by investing activities
for the year ended April 30, 2001 and $7.6 million used in investing activities
for the year ended April 30, 2000.  The cash provided by investing activities
for the year ended December 31, 2002 was primarily the result of proceeds from
the sale of towing services operations.

Cash
used in financing activities was $44.4 million for the year ended December 31,
2002 compared to $6.3 million for the eight months ended December 31, 2001,
$29.1 million for the year ended April 30, 2001 and $4.0 million for the year
ended April 30, 2000.  The cash was used  almost entirely to reduce borrowings
under the Company’s credit facilities and other outstanding long-term debt
and capital lease obligations.

2001 Credit Facility

In July 2001, the Company entered into a 
four year senior secured credit facility (the Senior Credit Facility) with a
syndicate of lenders to replace the existing credit facility.    As a part of this agreement, the
previous credit facility was reduced with proceeds from the Senior Credit
Facility and amended to provide for a $14.0 million subordinated secured
facility (the Junior Credit Facility).  The Senior Credit Facility originally consisted of an aggregate
$102.0 million revolving credit facility and an $8.0 million term loan.  On July
25, 2001, the Company borrowed $85.0 million under the new Senior Credit
Facility ($77.0 million under the revolving credit facility and $8.0 million
under the term loan).  Availability under the revolving Senior Credit Facility
is based on a formula of eligible accounts receivable, inventory and fleet
vehicles as separately calculated for the towing and recovery equipment segment
and the RoadOne segment, respectively.  Borrowings under the term loan are
collateralized by the Company’s property, plant, and equipment.  The
Company is required to make monthly amortization payments on the term loan of
$167,000.  The Senior Credit Facility bore interest at the option of the Company
at either the rate of LIBOR plus 2.75% or prime rate (as defined) plus 0.75% on
the revolving portion and LIBOR plus 3.00% or prime rate (as defined) plus 1.00%
on the term portion.

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The
Senior Credit Facility matures in July, 2005 and is collateralized by
substantially all the assets of the Company.  The Senior Credit Facility
contains requirements related to maintaining minimum excess availability at all
times and minimum quarterly levels of earnings before income taxes, depreciation
and amortization (as defined) and a minimum quarterly fixed charge coverage
ratio (as defined).  In addition, the Senior Credit Facility contains
restrictions on capital expenditures, incurrence of indebtedness, mergers and
acquisitions, distributions and transfers and sales of assets.  The Senior
Credit Facility also contains requirements related to weekly and monthly
collateral reporting.

The
$14.0 million Junior Credit Facility is by its terms expressly subordinated only
to the Senior Credit Facility.  The Junior Credit Facility, under which $14.4
million was outstanding at December 31, 2002, matures on July 23, 2003 and bears
interest at 6.0% over the prime rate. There can be no
assurance that the Company will be able to repay or refinance the outstanding
principal and interest under the Junior Credit Facility on the maturity date
thereof.  If the Company fails to repay all outstanding principal, interest and
any other amounts due and owing under the Junior Credit Facility on the maturity
date, such failure will constitute an event of default under the Junior Credit
Facility and will also trigger an event of default under the Senior Credit
Facility cross-default provisions.  A total of $42.4 million (continuing and
discontinued operations) was outstanding under the Senior Credit Facility at
December 31, 2002.  In such case, the junior lender agent would be prevented
from taking any enforcement action against the Company, its subsidiaries or
their respective assets in respect of such event of default until the earlier
of: (i) the date which is 120 days (subject to extension to 270 days by notice
from senior lender agent to junior lender agent) after the date upon which the
junior lender agent gives notice of enforcement to the senior lender agent
pursuant to the terms of the Intercreditor Agreement; (ii) the acceleration of
the maturity of the obligations of the Company under the Senior Credit Facility
by the senior lender agent, and (ii) the commencement of any bankruptcy,
insolvency or similar proceeding against the Company or certain of its
subsidiaries.  The resulting event of default under the Senior Credit Facility
if the Company does not repay all of the obligations under the Junior Credit
Facility could result in the acceleration of the amounts due under the Senior
Credit Facility as well as other remedies if not waived by the senior lenders.
There is no assurance that the Company will be able to obtain such a waiver from
the senior lenders or a waiver from the junior lenders of any event of default
that would occur as a result of the failure by the Company to repay or refinance
the outstanding principal and interest under the Junior Credit Facility on the
maturity date.

The
Junior Credit Facility is secured by certain specified assets of the Company and
by a second priority lien and security interest in substantially all other
assets of the Company.  The Junior Credit Facility contains requirements for
certain fees to be paid at six month intervals beginning in January, 2002 based
on the outstanding balance of the facility at the time.  The Junior Credit
Facility also contains provisions for the issuance of warrants for up to 0.5% of
the outstanding shares of the Company’s common stock in July, 2002 and up
to an additional 1.5% on July 23, 2003 with an exercise price equal to the then
fair market value of the Company’s common stock.  The number of warrants
which may be issued would be reduced pro rata as the balance of the Junior
Credit Facility is reduced.  On July 23, 2002, the Company issued 47,417
warrants for the purchase of common stock in conjunction with these related
provisions.

The
Junior Credit Facility contains requirements for the maintenance of certain
financial covenants and imposes restrictions on capital expenditures, incurrence
of indebtedness, mergers and acquisitions, distributions and transfers and sales
of assets.

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Outstanding
borrowings under the Senior and Junior Credit Facilities as of March 31, 2003
and as of December 31, 2001 were as follows (in thousands):

March 31, 2003

December 31, 2001Senior Credit FacilityManufacturing
$
31,897

$
40,219Road One
$
7,617

$
38,079Term Loan
$
2,520

$
7,165Total
$
42,034

$
85,463Junior Credit Facility
$
13,707

$
14,000Total Outstanding Borrowings
$
55,741

$
99,463


These
substantial reductions in the Company’s overall indebtedness were due to
improved operating cost flow resulting from cost reductions and
expense controls.  Dispositions of RoadOne
assets and operations improved liquidity and reduced expenses, and tax refunds of approximately $4.2 million during
the quarter ended June 30, 2002 and  $4.6 million during the quarter ended September 30, 2002,  were
used to  reduce debt.

2002
Amendments to the Credit Facility

On
February 28, 2002 the Company entered into a Forbearance Agreement and First
Amendment to the Senior Credit Facility with the lenders under the Senior Credit
Facility, as amended by that certain Amendment to Forbearance Agreement dated as
of March 18, 2002 and that certain Second Amendment to the Forbearance Agreement
dated as of March 29, 2002 (as so amended, the “Forbearance
Agreement”).  As a result of a revised asset appraisal conducted by the
senior lenders, the senior lenders determined that the amounts outstanding under
the Senior Credit Facility should be lowered below the amount then outstanding
under the Senior Credit Facility, causing the Company to be over-advanced on its
line of credit which resulted in the occurrence of an event of default under the
Senior Credit Facility and a corresponding event of default under the Junior
Credit Facility.  The Forbearance Agreement and subsequent amendments waived the
Company’s overadvance under the Senior Credit Facility and amended the
terms of the credit agreement to, among other things, (i) permanently reduce the
commitment levels to $42.0 million for the towing and recovery equipment segment
and $36.0 million for the RoadOne segment portion of the revolving credit
facility and $6,611,000 for the term loan facility, (ii) eliminate the
Company’s ability to borrow funds at a LIBOR rate of interest, and (iii)
increase the interest rate to a floating rate of interest equal to the prime
rate plus 2.75%.

On
April 15, 2002 the Company entered into the Second Amendment to the Senior
Credit Facility, pursuant to which, among other things: (i) the senior lenders
waived the overadvance event of default and other events of default, (ii)
interest on advances will be charged at the prime rate (as defined) plus 2.75%
on the revolving portion and the term portion, subject to substantial upward
adjustments in the interest rate on and after certain specified dates based on
the amounts outstanding under the revolving loan commitment relating to RoadOne
(escalating at generally quarterly intervals from prime plus 4.50% as of October
1, 2002 to prime plus 14.00% as of April 1, 2005) and (iii) the revolving loan
commitment amount relating to RoadOne is subject to mandatory reductions over
time commencing August 12, 2002, which reductions will require a mandatory
repayment of portions of outstanding loans at specified dates and the failure to
timely make such repayments shall result in an event of default under the bank
credit agreements.  The RoadOne revolving commitment amount, which was set at
$36.0 million through the April 15, 2002 amendment was scheduled to be reduced
as follows:  August 12, 2002 - to $34.0 million; October 2, 2002 - to $30.0
million; March 31, 2003 - to $27.0 million; thereafter - quarterly reductions of
$3.0 million through June 30, 2005.  At the same time, the Company also amended
the Junior Credit Facility, pursuant to which, among other things, (i) the
junior lenders waived the events of default, and (ii) extended the time for
payment of certain scheduled amortization payments.  On April 15, 2002, the
junior lender agent, the senior lender agent and the Company entered into an
Amended and Restated  Intercreditor and Subordination Agreement (the
“Intercreditor Agreement”), pursuant to which, among other things,
subject to certain terms and conditions, the junior lenders have agreed to defer
the required payment of amortization payments under the Junior Credit Facility
until November 20, 2002, April 5, 2003 and May 20, 2003.

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On
September 13, 2002, the Company entered into the Third Amendment to Credit
Agreement in connection with its Senior Credit Facility.  Pursuant to the Third
Amendment, the amount of the mandatory periodic reductions in the RoadOne
revolving loan commitment amount, as established in the April 15, 2002 Second
Amendment to Senior Credit Agreement, were increased by amounts calculated based
on updated asset appraisals completed in September 2002.  Consequently, the
Company will need to repay outstanding loans and permanently reduce the RoadOne
loan commitment under its senior credit facility over the life of the loan and
prior to the maturity date.  Pursuant to the terms of the Second and Third
Amendments, the failure by the Company to repay outstanding loans and to reduce
the RoadOne revolving loan commitment by the amounts and the times required
pursuant to these amendments will result in increased interest rates on the
senior loans and/or the occurrence of an event of default under the senior
credit agreement.

In
addition, pursuant to the Third Amendment, the amount of availability that can
be generated for used inventory considered as eligible inventory for collateral
purposes was limited to $4.3 million (subject to downward adjustments upon
certain sales of assets and stock by the Company and certain of its
subsidiaries) through February 28, 2003 and reduced to $0 thereafter.
The Sixth Amendment(discussed below under 2003 Amendments) lowered the $4.3 million
limit and eliminated the further requirement for reduction to
$0 after February 28, 2003.

On
November 14, 2002, the Company entered into the Fourth Amendment to the Senior
Credit Facility, which granted waivers from the senior lenders of violations of
certain financial covenants for the quarter ended September 2002.  There were no
violations under the Junior Credit facility.  The Amendment also reduced the
level of certain financial covenants for future periods, basing them strictly on
the results of the towing and recovery equipment segment for those periods.  In
addition, the amendment revised the RoadOne revolving commitment amount based on
the plan to sell all remaining towing service operations, reducing the
commitment amount to $15.0 million at November 30, 2002, $12.0 million at
December 31, 2002, $9.0 million at January 31, 2003, $6.0 million at February
28, 2003 and reducing to zero as of March 31, 2003.

2003
Amendments to CreditFacility

On
February 28, 2003, the Company entered into the Fifth Amendment to the Senior
Credit Facility.  Pursuant to the Fifth Amendment, the date upon which the
amount of certain used inventory taken in trade for collateral purposes is
reduced to $-0- was extended from February 28, 2003 to March 31, 2003.  In
addition, the Fifth Amendment revised the RoadOne revolving commitment, reducing
the amount to $9.0 million at February 28, 2003 and $-0- as of March 31,
2003.

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On
April 1, 2003, the Company entered into the Sixth Amendment to the Senior
Credit Facility.  The Sixth Amendment, among other things,
revised the RoadOne revolving
commitment, extending by one year the time for the reduction thereof to $-0-
from March 31, 2003 to March 31, 2004.  The amount of
availability that can be generated for used inventory
considered as eligible inventory for collateral purposes was reduced to $2.7
million with no further required reductions.  The Sixth Amendment also extended
the time for required delivery of the Company’s
annual financial reports for fiscal
year ended December 31, 2002 and certain related items from March 31, 2003 to April 30,
2003.

Meeting
the new repayment schedule for the RoadOne revolving commitments as described
above under Amendments to the Credit Facilities, will require that the Company
sell its towing services businesses according to its contemplated schedule on
acceptable terms.  While the Company believes its timetable for sales is
achievable there can be no assurance that the schedule can be met.

In
addition to the borrowings under the Senior and Junior Credit Facilities
described above, the Company had approximately $5.2 million of mortgage notes
payable, equipment notes payable and other long-term obligations at December 31,
2002.  The Company also had approximately $18.2 million in noncancellable
operating lease obligations, approximately, $17.6 million of which relates to
truck and building leases of discontinued operations.

The
Company is currently in default under both the Senior and Junior Credit Facility
as a result of the “going concern” explanatory paragraph included in
the auditors’ report as well as the failure to file this Annual Report
prior to April 30, 2003.  Additionally, the Company is in default of the EBITDA
covenant under the Junior Credit Facility only for the first quarter of calendar
2003.  The Company is currently not pursuing a waiver of the default or an
amendment to the Credit Facilities to cure the default.  The Company has had
informal discussions with its creditors indicating that the creditors will not
take action against the Company as a result of the default.  However, there can
be no assurance that the creditors will not pursue action in the future as a
result of this default or any other default under the Credit Facilities.

Failure
to achieve the Company’s revenue and income projections, or to sell towing
services operations for the prices and on the timetable contemplated, could
result in failure to comply with the amended debt service requirements.  Such
non-compliance would result in an event of default, which if not waived by the
lending groups, would result in the acceleration of the amounts due under the
Senior Credit Facility as well as other remedies.  Under these circumstances the
Company could be required to find alternative funding sources, such as sale of
assets or other financing sources.  If the Company were unable to refinance the
Senior Credit Facility on acceptable terms or find an alternative source of
repayment for the Senior Credit Facility, the Company’s business and
financial condition would be materially and adversely affected.  There is no
assurance that the Company would be able to obtain any such refinancing or that
it would be able to sell assets on terms that are accepted to the Company or at
all.  If the Company is not successful in its efforts to refinance or extend the
maturity date of the Junior Credit Facility, the Company would likely be
required to seek bankruptcy court or other protection from its creditors.

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Financial
Instruments

SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, is effective for fiscal years beginning after June 15, 2000.  SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value.  SFAS
No. 133 requires that changes in the derivatives fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivatives gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting.

In October 2001, the Company obtained interest rate swaps
as required by terms in its Senior Credit Facility to hedge exposure to market
fluctuations. The interest rate swaps cover $40.0 million in notional amounts of
variable rate debt and with fixed rates ranging from 2.55% to 3.920%. The swaps
expire annually from October 2002 to October 2004. The hedges were deemed to be
fully effective resulting in a pretax loss of $12,000 recorded in Other
Comprehensive Loss at December 31, 2001. Upon expiration of these hedges, the
amount recorded in Other Comprehensive Loss will be reclassified into earnings
as interest. Subsequent to year end, the borrowing base was converted from LIBOR
to prime, which rendered the swap ineffective as a hedge. Accordingly,
concurrent with the conversion the Company prematurely terminated the swap in
February 2002 at a cost of $341,000. The resulting loss will be recorded in
Other Comprehensive Loss in February 2002 and reclassified to earnings as
interest expense over the term of the Senior Credit Facility.

The
Junior Credit Facility contains provisions for the issuance of warrants of up to
0.5% of the outstanding shares of the Company’s common stock on July 2002
and up to an additional 1.5% in July 2003.  The warrants were valued as of July
2001 based on the relative fair value using the Black Scholes model with the
following assumptions:  risk-free rate of 4.9% estimated life of 7 years, 72%
volatility and no dividend yield.  Accordingly, the Company has recorded a
liability and makes periodic mark to market adjustments, which are reflected in
the accompanying consolidated statement of operations in accordance with EITF
Issue 00-19, “Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company’s Own Stock.  At December 31, 2002,
the related liability was $362,638 and is included in accrued liabilities in the
accompanying consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of April 2002.”  This Statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”.  This Statement also rescinds SFAS No. 44, “Accounting for Intangible Assets of Motor Carriers”.  This Statement amends SFAS No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications for sale-leaseback transaction and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions.  SFAS No. 145 will be effective for fiscal 2003, which begins January 1, 2002.  Management does not expect the adoption of this statement to have a material impact on the Company’s results of operations of financial position.

FASB has issued SFAS No. 146, “Accounting for Exit or Disposal Activities”. SFAS No. 146 addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS No. 146 supersedes Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” and requires liabilities associated with exit and disposal activities to be expensed as incurred. SFAS No. 146 will be effective for exit or disposal activities of the Company that are initiated after December 31, 2002.

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ITEM8.FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

The
response to this item is included in Part IV, Item 14 of this Report.

ITEM9.CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                             ACCOUNTING AND FINANCIAL
DISCLOSURE

PART III

ITEM10.DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant
to Instruction 3 to Paragraph (b) of Item 401 of Regulation S-K, information
relating to the executive officers of the Registrant is included in Item 1 of
this Report.

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Below
is a list of the Company’s current Board of Directors, as well as
background information about each director.

Name of Director
Background InformationJeffrey I. Badgley
Mr. Badgley, 51, has served as Chief Executive Officer of the Company since
November 1997, as President of the Company since June 1996 and as a director
since January 1996.  In June 1997, he was named Co-Chief Executive Officer of
the Company, a title he shared with Mr. Miller until November 1997.  Mr. Badgley
served as Vice President of the Company from 1994 to 1996, and as Chief
Operating Officer of the Company from June 1996 to June 1997.  In addition, Mr.
Badgley has served as President of Miller Industries Towing Equipment Inc. since
1996.  Mr. Badgley served as Vice President-Sales of Miller Industries Towing
Equipment Inc. from 1988 to 1996.  He previously served as Vice President-Sales
and Marketing of Challenger Wrecker Corporation (“Challenger
Wrecker”), from 1982 until joining Miller Industries Towing Equipment
Inc.A. Russell Chandler, III
Mr. Chandler, 58, has served as a director of the Company since
April 1994. He is founder and Chairman of Whitehall Group Ltd., a
private investment firm based in Atlanta, Georgia.  Mr. Chandler served as the
Mayor of the Olympic Village for the Atlanta Committee for the Olympic Games
from 1990 through August 1996.  From 1987 to 1993, he served as Chairman of
United Plastic Films, Inc., a manufacturer and distributor of plastic bags.  He
founded Qualicare, Inc., a hospital management company, in 1972 and served as
President and Chief Executive Officer until its sale in 1983.Paul E. Drack
Mr. Drack, 74, has served as a director of the Company since April 1994.  Mr.
Drack is also a director of Euramax International PLC.  Mr. Drack retired in
December 1993 as President and Chief Operating Officer of AMAX Inc., positions
he held since August 1991.  From 1985 to 1991, Mr. Drack served in various
capacities for operating subsidiaries of AMAX Inc. including Chairman, President
and Chief Executive Officer of Alumax Inc. and President of Kawneer Company.  He
was a director of AMAX Inc. from 1988 to 1993.  Prior to its acquisition by
Cyprus  Minerals in November 1993, AMAX Inc. was a producer of aluminum and
manufactured aluminum products with interests in domestic energy and gold
production.William G. Miller
Mr. Miller, 56, has served as Chairman of the Board since April 1994.  From
January 2002 to August 2002, Mr. Miller served as the Chief Executive Officer of
Team Sports Entertainment, Inc., as well as Team Sports Entertainment’s
subsidiary, Team Racing Auto Circuit.  Mr. Miller served as Chief Executive
Officer of the Company from April 1994 until June 1997.  In June 1997, he was
named Co-Chief Executive Officer, a title he shared with the Company’s
President, Jeffrey I. Badgley until November 1997.  Mr. Miller also served as
President of the Company from April 1994 to June 1996.  He served as Chairman of
Miller Group, Inc., from August 1990 through May 1994, as its President from
August 1990 to March 1993, and as its Chief Executive Officer from March 1993
until May 1994.  Prior to 1987, Mr. Miller served in various management
positions for Bendix Corporation, Neptune International Corporation,
Wheelabrator-Frye Inc. and The Signal Companies, Inc.Richard H. Roberts
Mr. Roberts, 49,
has served as a director of the Company since April 1994.  Mr. Roberts currently
serves as Senior Vice President, Landair Transport, Inc., a position he has held
since August 1994.  From August 1994 until July 2002, Mr. Roberts served as
General Counsel and Secretary of Forward Air Corporation and Landair
Corporation.  From May 1995 until May 2002 Mr. Roberts served as s director of
Forward Air Corporation.  Mr. Roberts also a held similar position with Landair
Corporation from September 1998 until February 2003.  Mr. Roberts was partner in
the law firm of Baker, Worthington, Crossley & Stansberry, counsel to the
Company, from January 1991 to August 1994 and prior thereto was an associate of
the firm.


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Compliance With Section 16(a) of the Securities Exchange Act of 1934

ITEM 11.             EXECUTIVE
COMPENSATION

Summary Compensation Table

The
following table sets forth certain information for the fiscal year ended
December 31, 2002, the eight month transition period ended December 31, 2001
(noted as “Trans. Per.”) and each of the last three fiscal years
ended April 30, 2001, 2000 and 1999 of the Company concerning compensation paid
by the Company and its subsidiaries to the Company’s Chief Executive
Officer and to each of the Company’s other most highly compensated
executive officers as of December 31, 2002 who earned in excess of $100,000 in
salary and bonus during the fiscal 2002 (collectively, the “Named
Executive Officers”).

Annual
Compensation(1)

Long Term
Compensation
AwardsName and Principal Position

Year

Salary ($)

Bonus ($)

SecuritiesunderlyingOptions
(#)

All OtherCompensation
($)William G. Miller

2002

$180,000

-

-

-Chairman

Trans. Per.

120,000

-

-

-2001



180,000


-


-


-2000

180,000

-

-

-1999

180,000

-

-

-Jeffrey I. Badgley

2002

276,210

45,000(2)

-

$ 1,496(3)President
and Chief Executive

Trans.Per.

184,133

-

8,000

1,726(3)Officer

2001

266,667

-

-

8,928(5)2000

245,833

-

16,000

1,424(3)1999

191,667

60,000(2)

120,000(4)

1,653(3)Frank Madonia

2002

196,207

22,000(2)

-

1,717(3)Executive
Vice President, Secretary

Trans. Per.

130,800

-

5,000

1,308(3)and
General Counsel

2001

191,667

-

-

6,628(3)(6)2000

178,333

-

12,000

1,762(3)1999

145,625

48,333(2)

90,000(4)

1,592(3)J. Vincent Mish

2002

176,206

22,000(2)

-

1,628(3)Executive Vice
President, Chief

Trans. Per.

117,467

-

5,000

1,067(3)Financial
Officer and President of

2001

163,333

30,000(2)

-

6,222(3)(7)the
Financial Services Group

2000

153,333

-

12,000

1,312(3)_________________

1999

120,000

48,333(2)

7,500

1,205(3)


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|(1) | Excludes perquisites and other personal benefits aggregating less
    than $50,000 or 10% of the named executive officers annual salary and
    bonus.                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Bonus awards consist entirely of amounts earned in previous
      fiscal years which are paid incrementally to the executive officer in the
      year noted in accordance with the Companys bonus plan.                                                                                                          
|(3) | Consists of a matching contribution made to the executives
        account in the Companys 401(k) Plan.                                                                                                                                                                                                          
|(4) | Issued in connection with employment agreements entered into in
          September 1998, as further described under the heading Employment
          Contracts, Termination of Employment, Severance and Change-in-Control
          Arrangements below.                                                        
|(5) | Mr. Badgleys other compensation includes $6,250 received from
            the sale of 125,000 out of the money options to the Company at a
            purchase price of $0.05 per option and a $2,678 matching
            contribution to Mr. Badgleys account in the Companys 401(k) Plan.                   
|(6) | Mr. Madonias other compensation includes $4,700 received from
              the sale of 94,000 out of the money options to the Company at a
              purchase price of $0.05 per option and a $1,928 matching
              contribution to Mr. Madonias account in the Companys 401(k)
              Plan.
|(7) | Mr. Mishs other compensation includes $4,700 received from the
                sale of 94,000 out of the money options to the Company at a
                purchase price of $0.05 per option and a $1,522 matching
                contribution to Mr. Mishs account in the Companys 401(k) Plan.              

No options were granted to or exercised by the Named Executive Officers during
2002.

Option Values as of December 31, 2002

The following table summarizes certain information regarding option values of
the Named Executive Officers as of the end of December 31, 2002.

Name

No. of Securities UnderlyingUnexercised
Options atFiscal Year End

Value of UnexercisedIn-the-Money
OptionsAt Fiscal Year End(1)Exercisable

Unexercisable

Exercisable

UnexercisableWilliam G. Miller

-

-

-

-Jeffrey I. Badgley

69,786

6,800

$ 720

$ 2,160Frank Madonia

57,936

4,350

450

1,350J. Vincent Mish

41,436

4,350

450

1,350


_____________________

(1)
    As
required by the rules of the Securities and Exchange Commission, the value of
unexercised in-the-money options for the Common Stock is calculated based on the
closing sale price on the New York Stock Exchange as of December 31, 2002, which
was $3.41 per share.


Compensation Committee Report on Executive Compensation

Overview.The Company’s general compensation policies on executive officer
compensation are administered by the Compensation Committee (the
“Committee”) of the Board of Directors; however, the Committee
submits its determinations to the full Board for its comments and concurrence.
All members of the Committee are non-employee directors.  It is the
responsibility of the Committee to determine whether the executive compensation
policies are reasonable and appropriate, meet their stated objectives and
effectively serve the best interests of the Company and its shareholders.

The
three components of executive officer compensation are base salary, annual cash
bonus awards and stock option grants.  In addition to the Committee’s
determinations on base salary and bonus award, the Committee administers the
Company’s 1994 stock option plan (“1994 Plan”) and recommends
to the Board of Directors the options to be granted to executive officers.  In
fiscal 2002, none of the Named Executive Officers were granted stock options.

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The
Company believes that its executive compensation policy should be reviewed
annually and should be reviewed in light of the Company’s financial
performance, its annual budget, its position within its industry sectors and the
compensation policies of similar companies in its business sectors.  The
Committee believes that in addition to corporate performance, it is appropriate
to consider in setting and reviewing executive compensation the level of
experience and the responsibilities of each executive as well as the personal
contributions a particular individual may make to the success of the corporate
enterprise.  Such qualitative factors as leadership skills, analytical skills,
organization development, public affairs and civic involvement are deemed to be
important qualitative factors to take into account in considering levels of
compensation.  No relative weight is assigned to these qualitative factors,
which are applied subjectively by the Committee.

Option
Grants.The Company uses grants of options to better align the interests of
the Company’s officers and employees with the long-term interests of the
Company and its shareholders.  All options for the purchase of 500 or more
shares generally vest in four equal annual installments, and all options for the
purchase of fewer than 500 shares vest in two equal annual installments.  All
options are exercisable until the tenth anniversary of the grant date unless
otherwise earlier terminated pursuant to the terms of the individual option
agreement.  The Committee strongly believes it is important for the
non-executive officer employees of the Company to have a long-term equity
interest in the Company.  During 2002, the Company did not grant options to
employees and executive officers under the 1994 Plan

Salaries.During 2002, the Committee reviewed the salaries of all executive officers and
the established levels of participation of those officers in the Company’s
Cash Bonus Plan and the 1994 Plan.  In its review, the Committee discussed the
performance of the executive officers with the Chief Executive Officer and
further considered the compensation packages, employment agreements (as
applicable) and existing stock options (as applicable) of each officer and of
the Chief Executive Officer.  The Committee’s review of executive officer
compensation included consideration of individual performance and contribution
to the Company, a comparison to compensation paid to executive officers in
companies of similar size in related industries, the financial performance of
the Company, and other factors the Committee believed were relevant in making
its determination.

Employment
Agreements.  As a result of an executive compensation study conducted during
fiscal 1999 by the Compensation Committee with the assistance of an independent
consulting firm specializing in these matters, the Company began the incremental
process of increasing the compensation of its executive officers by entering
into the employment agreements described under “Employment Contracts,
Termination of Employment, Severance and Change in Control Arrangements”,
providing for the salary increases and the option grants reflected in such
agreements.  Each of Messrs. Badgley, Miller, Madonia and Mish is a party to an
employment agreement with the Company or a subsidiary of the Company, which is
described under “Employment Contracts, Termination of Employment,
Severance and Change-in-Control Arrangements.”

Federal
Income Tax Deductibility Limitation on Executive Compensation.Section
162(m) of the Internal Revenue Code was enacted as part of the 1993 Omnibus
Budget Reconciliation Act (“OBRA”) and generally disallows a
corporate deduction for compensation over $1,000,000 paid to the Company’s
Chief Executive Officer or any other of the four highest compensated officers.
The Committee continues to analyze the potential impact of this limitation.
Under the regulations and the transition rules, executive compensation pursuant
to the 1994 Plan should be qualifying “performance based”
compensation and therefore be excluded from the $1,000,000 limit.  Other forms
of compensation provided by the Company, however, including base salary and
amounts awarded under the Cash Bonus Plan, are not excluded from the limit.  The
Committee currently anticipates that substantially all compensation to be paid
in future years will be deductible under Section 162(m) because of the spread
between present levels of executive officer compensation and the limit under the
regulation.  In any event, the Committee believes that performance based
compensation is desirable and can be structured in a manner to constitute
qualifying as performance based compensation under Section 162(m).

| | Paul E. DrackA. Russell Chandler, IIIRichard H. Roberts
| | -------------------------------------------------------

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Performance Graph





|  |                         | 4-30-96 | 4-30-97 | 4-30-98 | 4-30-99 | 4-28-00 | 4-30-01 | 12-31-01 | 12-31-02
|- | ----------------------- | ------- | ------- | ------- | ------- | ------- | ------- | -------- | --------
|  | Miller Industries, Inc. | 100     | 128     | 85      | 54      | 37      | 8       | 7        | 7       
|A | NYSE Composite Index    | 100     | 119     | 164     | 181     | 184     | 181     | 168      | 135     
|B | S & P Composite Index   | 100     | 124     | 194     | 221     | 169     | 160     | 206      | 174     



|A | The New York Stock Exchange
    revised the NYSE Composite Index as of December 31, 2002. The change
    recalibrated the base year as December 31, 2002.                           
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B | For the year ended December 31,
    2002, the S&P 500 Composite transferred the Heavy Duty Trucks & Parts
    indices to the S&P 500 - Construction & Farm Machinery & Heavy Trucks.

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ITEM12.SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

For
purposes of determining the aggregate market value of the Registrant’s
voting stock held by nonaffiliates, shares held by all current directors and
executive officers of the Registrant have been excluded.  The exclusion of such
shares is not intended to, and shall not, constitute a determination as to which
persons or entities may be “affiliates” of the Registrant as defined
by the Securities and Exchange Commission.

Security Ownership of Certain Beneficial Owners and Management

The
following table sets forth, as of March 14, 2003, certain information with
respect to (a) all shareholders known to be “beneficial owners” (as
that term is defined in the rules of the Securities and Exchange Commission)  of
more than five percent of the Common Stock; and (b) the Common Stock
“beneficially owned” (i) by each director or nominee for director,
(ii) by the executive officers named in the Summary Compensation Table and (iii)
by all executive officers and directors of the Company as a group.  Except as
otherwise indicated, the shareholders listed in the table have sole voting and
investment powers with respect to the Common Stock owned by
them.

Name and Address of Beneficial Owner

Amount and Natureof
BeneficialOwnership1

Percent of Class1William G. Miller2

1,622,6463

17.4%Account Management, LLC

823,5304

8.8%Peter S. Lynch

682,6005

7.3%Avocet Capital Management , L.P.
Blackpool Enterprises, LLC
Raymond S. Ingelby
Avocet Investment Partners, L.P.6
}

539,9756

5.8%Jeffrey I. Badgley

93,1017

*Frank Madonia

81,5518

*J. Vincent Mish

57,0519

*A. Russell Chandler, III

45,40810

*Richard H. Roberts

30,04811

*Paul E. Drack

28,84812

*All Executive Officers and Directors as a Group
(7 persons)

1,958,65313

20.4%


____________________________

|*  | Less
than one percent                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The
Percent of Class column represents the percentage that the named person or group
would beneficially own if such person or group, and only such person or group,
exercised all currently exercisable options and rights to acquire shares of
Common Stock held by such person or group.

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|2.  | Mr.
Miller’s business address is Miller Industries, Inc., 3295 River Exchange
Parkway, Suite 220, Norcross, Georgia 30092.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.  | Includes
109,288 shares held by the Miller Family Foundation, Inc., a Georgia non-profit
corporation of which Mr. Miller is the sole director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.  | As
reported in a Schedule 13G filed with the SEC on February 14, 2003, Account
Management, LLC, a registered investment advisor, (Account Management) has sole dispositive power over 823,530 of the shares reported.  Account Management does
not have voting power with respect to any of the shares reported.  Account
Management’s address is 2 Newbury Street, Boston, Massachusetts 02116.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5.  | As
reported in an amended Schedule 13G filed with the SEC on February 14, 2003, Mr.
Lynch has sole voting and dispositive power over 242,600 of the shares reported
and shared voting and dispositive power over 440,000 of the shares reported.
The shares reported include shares beneficially owned by Mr. Lynch’s wife,
shares beneficially owned in two charitable lead trusts and a charitable
remainder trust, shares beneficially owned in trust for members of Mr.
Lynch’s family and shares beneficially owned by a charitable foundation of
which Mr. Lynch is a trustee.  Mr. Lynch’s address is 82 Devonshire
Street, S8A, Boston, Massachusetts 02109.                                                                                                                                                                           
|6.  | As
reported in a Schedule 13G filed with the SEC on March 2, 2003, Avocet Capital
Management, L.P., a registered investment advisor, (ACM), Blackpool Enterprises,
LLC (Blackpool) and Raymond Ingelby (Ingelby) are members of a group who have
shared voting and dispositive power over 539,975 of the shares reported.  Avocet
Investment Partners, L.P. (AIP) has shared voting and dispositive power over
466,925 of the shares reported.  AIP disclaims membership in a group.  ACM,
Blackpool and Ingelby expressly disclaim beneficial ownership in the reported
shares, except to the extent of their respective pecuniary interests.  AIP
expressly disclaims beneficial ownership of any of the shares reported on the
Schedule 13G.  The address for ACM, Blackpool, Ingelby and AIP is 5508 Highway
290 West, Austin, Texas 78735.
|7.  | Includes
69,786 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.  | Includes
57,936 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|9.  | Includes
41,436 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10. | Includes
28,048 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|11. | Includes
28,048 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|12. | Includes
28,048 shares which are issuable pursuant to options which are exercisable
within sixty days of the date set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|13. | Includes 253,302 shares which are
issuable pursuant to options which are exercisable within sixty days of the date
set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

37

Table of
Contents

Equity Compensation Plan Information

Plan Category

(a)
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights

(b)
Weighted-average
exercise price of
outstanding options,
warrants and rights

(c)
Number of securities
remaining available for
future issuance under
equity
 compensation plans
(excluding securities
reflected in column (a))Equity compensation plans
approved by stockholders

663,183

$24.10

486,197(1)Equity compensation plans not
approved by stockholders

145,661(2)

$4.70

n/aTotal

808,844

$22.22

486,197


|(1) | Available
for grant under the Company’s Stock Option and Incentive Plan and the
Company’s Non-Employee Director Stock Option Plan as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Options issued pursuant to a resolution of the Board of Directors dated September 11,
1998 providing for the automatic annual grant to each non-employee director,
serving immediately after each Annual Meeting of Shareholders, of options to
purchase a number of shares of the Companys  common stock equal to $32,500 divided by the Black Scholes value (as calculated by the Companys independent public accountants) of
an option to purchase one such share as of the date of the Annual Meeting.

ITEM13.CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM
14.             CONTROLS
AND PROCEDURES

Within
90 days prior to the filing date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the
Company’s management, including the Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), of the effectiveness of the design and operation
of its disclosure controls and procedures as defined in Rules 13a-14(c) under
the Securities Exchange Act of 1934.  Based upon this evaluation, the
Company’s CEO and CFO have concluded that the disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act are
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

There
were no significant changes in the Company’s internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of this evaluation.







38

Table of
Contents

PART IV

ITEM
15.              EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)The
following documents are filed as part of this Report:

1.               Financial
Statements

|Description                                                                                                                                                                      | Page Number in
Report
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------
|                                                                                                                                                                                 |                      
|Report of Independent Accountants                                                                                                                                                | F-2                  
|Consolidated Balance Sheets as of December 31, 2002, and 2001 and April 30,
2001                                                                                                 | F-4                  
|Consolidated Statements of Operations for the year ended December 31, 2002, the
     eight months  ended December 31, 2001 and the years ended April 30, 2001 and
2000           | F-5                  
|Consolidated Statements of Shareholders’ Equity for the year ended
December 31,
     2002, the eight  months ended December 31, 2001 and the years ended
April 30, 2001 and 2000 | F-6                  
|Consolidated Statements of Cash Flows for the year ended December 31, 2002,  the
     eight months  ended December 31, 2001 and the years ended April 30, 2001 and
2000          | F-7                  
|                                                                                                                                                                                 |                      



2.               Financial
Statement Schedules

The
following Financial Statement Schedule for the Registrant is filed as part of
this Report and should be read in conjunction with the Consolidated Financial
Statements:

|Description                                     | Page Number in
Report
|----------------------------------------------- | ---------------------
|                                                |                      
|Schedule II - Valuation and Qualifying Accounts | S-1                  



All schedules, except those set forth above, have been omitted since the
information required is included in the financial statements or notes or have
been omitted as not applicable or not required.







39

Table of
Contents

3.               Exhibits

The
following exhibits are required to be filed with this Report by Item 601 of
Regulation S-K:

|      | Description                                                                                                                                                                                            | Incorporated by Reference to Registration File
Number | Form or Report | Date of Report    | Exhibit Number in Report
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------- | -------------- | ----------------- | ------------------------
|
|3.1   | Charter, as amended, of the Registrant                                                                                                                                                                 |                                                       | 10-K           | December 31, 2001 | 3.1                     
|3.2   | Bylaws of the Registrant                                                                                                                                                                               | 33-79430                                              | S-1            | August 1994       | 3.2                     
|10.1  | Settlement Letter dated April 27, 1994 between Miller Group, Inc. and the
Management Group                                                                                                             | 33-79430                                              | S-1            | August 1994       | 10.7                    
|10.5  | Participants Agreement dated as of April 30, 1994 between the Registrant,
Century Holdings, Inc., Century Wrecker Corporation, William G. Miller and
certain former shareholders of Miller Group, Inc. | 33-79430                                              | S-1            | August 1994       | 10.11                   
|10.20 | Technology Transfer Agreement dated March 21, 1991 between Miller Group, Inc.,
Verducci, Inc. and Jack Verducci                                                                                        | 33-79430                                              | S-1            | August 1994       | 10.26                   
|10.21 | Form of Noncompetition Agreement between the Registrant and certain officers of
the Registrant                                                                                                         | 33-79430                                              | S-1            | August 1994       | 10.28                   
|10.22 | Form of Nonexclusive Distributor Agreement                                                                                                                                                             | 33-79430                                              | S-1            | August 1994       | 10.31                   
|10.23 | Miller Industries, Inc. Stock Option and Incentive Plan**                                                                                                                                              | 33-79430                                              | S-1            | August 1994       | 10.1                    
|10.24 | Form of Incentive Stock Option Agreement**                                                                                                                                                             | 33-79430                                              | S-1            | August 1994       | 10.2                    
|10.25 | Miller Industries, Inc. Cash Bonus Plan**                                                                                                                                                              | 33-79430                                              | S-1            | August 1994       | 10.3                    
|10.26 | Miller Industries, Inc. Non-Employee Director Stock Option Plan**                                                                                                                                      | 33-79430                                              | S-1            | August 1994       | 10.4                    
|10.27 | Form of Director Stock Option Agreement**                                                                                                                                                              | 33-79430                                              | S-1            | August 1994       | 10.5                    

40

Table of
Contents



Description
Incorporated by Reference to Registration File
Number
Form or Report
Date of Report
Exhibit Number in Report10.28
Employment Agreement dated October 14, 1993 between Century Wrecker Corporation
and Jeffrey I. Badgley**
33-79430
S-1
August 1994
10.2910.29
First Amendment to Employment Agreement between Century Wrecker Corporation and
Jeffrey I. Badgley**


33-79430
S-1
August 1994
10.3310.30
Form of Employment Agreement between Registrant and each of Messrs. Madonia and
Mish**
-
Form 10-K
April 30, 1995
10.3710.31
First Amendment to Miller Industries, Inc. Non-Employee Director Stock Option
Plan**
-
Form 10-K
April 30, 1995
10.3810.32
Second Amendment to Miller Industries, Inc. Non-Employee Director Stock Option
Plan**
-
Form 10-K


April 30, 1996
10.3910.33
Second Amendment to Miller Industries, Inc. Stock Option and Incentive
Plan**
-
Form 10-K
April 30, 1996
10.4010.34
Employment Agreement dated July 8, 1997 between the Registrant and William G.
Miller**
-
Form 10-Q/A
July 31, 1997
1010.35
Guaranty Agreement Among NationsBank of Tennessee, N.A. and certain subsidiaries
of Registrant dated January 30, 1998.
-
Form 10-K
April 30, 1998
10.3710.36
Stock Pledge Agreement Between NationsBank of Tennessee, N.A. and the Registrant
dated January 30, 1998.
-
Form 10-K
April 30, 1998
10.3810.37
Stock Pledge Agreement Between NationsBank of Tennessee, N.A. and the certain
subsidiaries of the Registrant dated January 30, 1998.
-
Form 10-K
April 30, 1998
10.39


41

Table of
Contents



|Description | Incorporated by Reference to Registration File
Number                                                                                                                                                                                                   | Form or Report | Date of Report | Exhibit Number in Report
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------- | ------------------------
|10.40       | Form of Indemnification Agreement dated June 8, 1998 by and between the
Registrant and each of William G. Miller, Jeffrey I. Badgley, A. Russell
Chandler, Paul E. Drack, Frank Madonia, J. Vincent Mish, Richard H. Roberts, and
Daniel N. Sebastian** | -              | Form 10-Q      | September 14, 1998      
|10.41       | Employment Agreement between the Registrant and Jeffrey I. Badgley, dated
September 11, 1998**                                                                                                                                                          | -              | Form 10-Q      | December 15, 1998       
|10.42       | Employment Agreement between the Registrant and Frank Madonia, dated September
11, 1998**                                                                                                                                                               | -              | Form 10-Q      | December 15, 1998       
|10.50       | Agreement between the Registrant and Jeffrey I. Badgley, dated September 11,
1998**                                                                                                                                                                     | -              | Form 10-Q      | December 15, 1998       
|10.51       | Agreement between the Registrant and Frank Madonia, dated September 11,
1998**                                                                                                                                                                          | -              | Form 10-Q      | December 15, 1998       
|10.60       | Credit Agreement among Bank of America, N.A., The CIT Group/Business Credit,
Inc. and Registrant and its subsidiaries dated July 23, 2001                                                                                                               | -              | Form 10-K      | April 30, 2001          
|10.61       | Security Agreement among the Registrant and its subsidiaries, The CIT
Group/Business Credit, Inc. and Bank of America, N.A. dated July 23, 2001                                                                                                         | -              | Form 10-K      | April 30, 2001          
|10.62       | Stock Pledge Agreement between Registrant and The CIT Group/Business Credit,
Inc. dated July 23, 2001                                                                                                                                                   | -              | Form 10-K      | April 30, 2001          
|10.70       | Amended and Restated Credit Agreement among the Registrant, its subsidiary and
Bank of America, N.A. dated July 23, 2001                                                                                                                                | -              | Form 10-K      | April 30, 2001          

42

Table of
Contents

|Description | Incorporated by Reference to Registration File
Number                                                                                                                                                     | Form or Report | Date of Report | Exhibit Number in Report
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------- | ------------------------
|10.71       | Promissory Note among Registrant, its subsidiary and SunTrust Bank dated July
23, 2001                                                                                                                    | -              | Form 10-K      | April 30, 2001          
|10.72       | Promissory Note among Registrant, its subsidiary and AmSouth Bank dated July 23,
2001                                                                                                                     | -              | Form 10-K      | April 30, 2001          
|10.73       | Promissory Note among Registrant, its subsidiary and Wachovia Bank, N.A. dated
July 23, 2001                                                                                                              | -              | Form 10-K      | April 30, 2001          
|10.74       | Promissory Note among Registrant, its subsidiary and Bank of America, N.A. dated
July 23, 2001                                                                                                            | -              | Form 10-K      | April 30, 2001          
|10.75       | Warrant Agreement dated July 23, 2001                                                                                                                                                                     | -              | Form 10-K      | April 30, 2001          
|10.80       | Forbearance Agreement and First Amendment to the Credit Agreement by and among
the Company and its subsidiaries and The CIT Group/Business Credit, Inc. and
Bank of America, N.A. dated February 28, 2002 | -              | Form 10-K      | December 31, 2001       
|10.81       | Second Amendment to the Credit Agreement by and among the Company and its
subsidiaries and The CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated February 28, 2002                          | --             | Form 10-K      | December 31, 2001       
|10.82       | First Amendment to the Amended and Restated Credit Agreement among the
Registrant, its subsidiary and Bank of America, N.A. dated July 23, 2001                                                           | --             | Form 10-K      | December 31, 2001       
|10.83       | Amended and Restated Intercreditor and Subordination Agreement by and among The
CIT Group/Business Credit, Inc. and Bank of America, N.A.                                                                 | --             | Form 10-K      | December 31, 2001       



43

Table of
Contents

|Description | Incorporated by Reference to Registration File
Number                                                                                                                              | Form or Report | Date of Report | Exhibit Number in Report
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------- | ------------------------
|            |                                                                                                                                                                                    |                |                |                         
|10.84       | Third Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated September 13, 2002.* | --             | --             | --                      
|10.85       | Fourth Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated November 14, 2002.  | --             | 10-Q/A         | September 30, 2002      
|10.86       | Fifth Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated February 28, 2003.*  | --             | --             | --                      
|10.87       | Sixth Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated April 1, 2003.*      | --             | --             | --                      
|21          | Subsidiaries of the Registrant*                                                                                                                                                    |                |                |                         
|23          | Consent of PricewaterhouseCoopers LLP*                                                                                                                                             |                |                |                         
|24          | Power of Attorney (see signature page)*                                                                                                                                            |                |                |                         
|99.1        | Certification of Jeffrey I. Badgley pursuant to18 U.S.C. Section 1350*                                                                                                             |                |                |                         
|99.2        | Certification of J. Vincent Mish pursuant to18 U.S.C. Section 1350*                                                                                                                |                |                |                         

*               Filed
herewith.
**             Management
contract or compensatory plan or arrangement.

(b)               Reports
on Form 8-K.   There were no reports filed on Form 8-K for the last
quarter of 2002.

(c)               The
Registrant hereby files as exhibits to this Report the exhibits set forth in
Item 14(a)3 hereof.

(d)               The
Registrant hereby files as financial statement schedules to this Report the
financial statement schedules set forth in Item 14(a)2 hereof.

44

Table of
Contents



INDEX TO FINANCIAL STATEMENTS



REPORT OF INDEPENDENT ACCOUNTANTS
      F-2CONSOLIDATED BALANCE SHEETS  DECEMBER 31, 2002 AND 2001, AND APRIL 30,
        2001
        F-3CONSOLIDATED STATEMENTS OF OPERATIONS  FOR THE YEAR ENDED
          DECEMBER 31, 2002,
EIGHT MONTHS ENDED DECEMBER 31, 2001 AND YEARS
          ENDED APRIL 30, 2001 AND
2000
          F-4CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY  FOR THE YEAR
            ENDED
DECEMBER 31, 2002, EIGHT MONTHS ENDED DECEMBER 31, 2001 AND
            YEARS ENDED APRIL
30, 2001 AND 2000
            F-5CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE YEAR ENDED
              DECEMBER 31, 2002,
EIGHT MONTHS ENDED DECEMBER 31, 2001 AND
              YEARS ENDED APRIL 30, 2001 AND
2002
              F-7NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31,
2002
                F-9SCHEDULE II -VALUATION AND QUALIFYING
ACCOUNTS
                  S-1


F-1

Table of
Contents

REPORT
OF INDEPENDENT ACCOUNTANTS



To the Shareholders and the 
Board of Directors of Miller Industries, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Miller
Industries, Inc. and its subsidiaries at December 31, 2002 and 2001 and April
30, 2001, and the results of their operations and their cash flows for the year
ended December 31, 2002, the eight month period ended December 31, 2001 and the
years ended April 30, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedule listed in the accompanying index, presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidatedfinancial statements. These
financial statements and financial statement schedule are the responsibility of
the Company’s management; our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Notes 2 and 8 to the
consolidated financial statements, subsequent to December 31, 2002, the Company
was in default of certain covenants under its senior and subordinated credit
facility agreements, and its subordinated credit facility matures on July 23,
2003.  The senior and subordinated credit facility agreements contain certain
cross-default provisions and provide for the acceleration of amounts due as well
as other remedies in the event of default.  These circumstances raise
substantial doubt about the Company’s ability to continue as a going
concern.  Management’s actions and plans in regard to these matters are
also described in Note 2.  The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 7 to the financial statements, the Company changed its
method of assessing impairment of intangible assets in 2002.



/s/ PricewaterhouseCoopers LLP



Atlanta, Georgia
April 11, 2003, except as to Notes 2 and 8 for which the date is May 1,
2003

F-2

Table of
Contents

MILLER INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED
BALANCE
SHEETS
DECEMBER 31,
2002 AND 2001, AND APRIL 30, 2001(In thousands, except share data)

December
31,2002

December
31,2001

April 30, 2001ASSETSCURRENT ASSETS:Cash and temporary
investments

$2,097

$9,863

$6,627Accounts receivable,
net of allowance for doubtful accounts of $805,
          $3,023 and $2,853 at           December
31, 2002, and 2001 and April 30, 2001, respectively

46,616

66,555

75,104Inventories,
net

27,815

60,114

67,835Deferred income
taxes

0

12,421

5,371Prepaid expenses and
other

748

12,178

12,010Current assets of
discontinued operations held for sale

32,366

0

0Total current
assets

109,642

161,131

166,947PROPERTY, PLANT, AND EQUIPMENT,net

23,121

53,122

58,564GOODWILL,net

11,619

33,435

46,736PATENTS, TRADEMARKS, AND OTHER PURCHASED PRODUCTRIGHTS,net

537

1,101

834OTHER ASSETS

1,841

4,174

8,206NONCURRENT ASSETS OF DISCONTINUED OPERATIONSHELD
    FOR
SALE

15,417

0

0$162,177

$252,963

$281,287LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:Current portion of
long-term obligations

$35,244

$12,405

$7,213Accounts
payable

25,213

36,366

43,064Accrued liabilities and
other

6,147

24,759

25,356Current liabilities of
discontinued operations held for sale

53,212

0

0Total current
liabilities

119,816

73,530

75,633LONG-TERM OBLIGATIONS, less current portion

1,214

91,562

99,121DEFERRED INCOME TAXES

0

3,028

0NONCURRENT LIABILITIES OF DISCONTINUEDOPERATIONS
HELD FOR SALE

1,450

0

0COMMITMENTS AND CONTINGENCIES(Notes 8, 9 and
11)SHAREHOLDERS’ EQUITY:Preferred stock, $.01
par value; 5,000,000 shares authorized,
            none issued
or outstanding

0

0

0Common stock, $.01 par
value; 100,000,000 shares
authorized,           9,341,436,
and 9,341,753 shares issued and outstanding
at          December 31, 2002 and
2001, and April 30, 2001, respectively

93

93

93Additional paid-in
capital

145,088

145,088

145,088Accumulated
deficit

(103,790)

(58,096)

(36,509)Accumulated other
comprehensive loss

(1,694)

(2,242)

(2,139)Total
shareholders’ equity

39,697

84,843

106,533$162,177

$252,963

$281,287


The accompanying notes are an integral part of these consolidated
balance sheets.
F-3

Table of
Contents

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2002, EIGHT
MONTHS ENDED DECEMBER 31,2001 AND YEARS ENDED APRIL 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)

December
31,2002

December 31,2001

April 30,2001

April 30,2000NET SALES
$203,059

$142,445

$212,885

$261,907COSTS AND EXPENSES:Costs of operations
174,516

122,753

181,517

220,602Selling, general and
administrative expenses
17,434

12,547

20,663

22,791Special
Charges
--

1,794

--

2,770Interest expense,
net
4,368

1,055

2,137

6,036Total costs and
expenses
196,318

138,149

204,317

252,199INCOME FROM CONTINUING OPERATIONS
       BEFORE INCOME TAXES
6,741

4,296

8,568

9,708INCOME TAX PROVISION (BENEFIT)
3,217

2,419

2,533

6,505INCOME (LOSS) FROM CONTINUING
       OPERATIONS
3,524

1,877

6,035

3,203DISCONTINUED OPERATIONS:(Loss) from
discontinued operations, before taxes
(26,146)

(24,041)

(18,176)

(96,159)Income tax provision
(benefit)
1,260

(577)

(5,707)

(19,813)(Loss) from
discontinued operations
(27,406)

(23,464)

(12,469)

(76,346)NET LOSS BEFORE CUMULATIVE EFFECT OF
       CHANGE IN ACCOUNTING
METHOD
(23,882)

(21,587)

(6,434)

(73,143)Cumulative effect of change in accounting
              principle
(21,812)

--

--

--NET LOSS
$
(45,694)

$
(21,587)

$
(6,434)

$
(73,143)BASIC INCOME (LOSS) PER COMMON SHARE:Income from continuing operations
$
0.38

$
0.20

$
0.65

$
0.34Loss from discontinued operations
(2.93)

(2.51)

(1.34)

(8.17)Cumulative effect of change in accounting principle
(2.34)

--

--

--Basic income (loss) per common share
$
(4.89)

$
2.31

$
(0.69)

$
(7.83)DILUTED INCOME (LOSS) PER COMMON
       SHARE:Income from continuing operations
$
0.38

$
0.20

$
0.65

$
0.34Loss from discontinued operations
(2.93)

(2.51)

(1.34)

(8.17)Cumulative effect of change in accounting principle
(2.34)

--

--

--Diluted income (loss) per common share
$
(4.89)

$
(2.31)

$
(0.69)

$
(7.83)WEIGHTED AVERAGE SHARES
       OUTSTANDING:Basic
9,341

9,341

9,341

9,339Diluted
9,348

9,345

9,350

9,426


The accompanying notes are an integral part of these consolidated
statements.

F-4

Table of
Contents

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31,
2002, EIGHT MONTHS ENDED DECEMBER 31,2001 AND YEARS ENDED APRIL 30, 2001 AND
2000
(In thousands, except share data)

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Less

TotalBALANCE, April 30, 1999
$
93

$
144,981

$
43,068

$
(839)

$
187,303Comprehensive
loss:Net loss
0

0

(73,143)

0

(73,143)Other comprehensive,
net of tax:Foreign currency
translationAdjustments
0

0

0

(439)

(439)Comprehensive
loss
0

0

(73,143)

(439)

(73,582)Exercise of stock
options
0

100

0

0

100BALANCE, April 30, 2000
93

145,081

(30,075)

(1,278)

113,821Comprehensive
loss:Net loss
0

0

(6,434)

0

(6,434)Other comprehensive,
net of tax:Foreign currency
translationAdjustments
0

0

0

(861)

(861)Comprehensive
loss
0

0

(6,434)

(861)

(7,295)Exercise of stock
options
0

7

0

0

7BALANCE, April 30, 2001
93

145,088

(36,509)

(2,139)

106,533Net loss
0

0

(21,587)

0

(21,587)Other comprehensive,
net of tax:Foreign currency
translationAdjustments
0

0

0

(91)

(91)Unrealized loss on
financial               
instruments
0

0

0

(12)

(12)Comprehensive
loss
0

0

(21,587)

(103)

(21,690)BALANCE, December 31, 2001
93

145,088

(58,096)

(2,242)

84,843Net loss
0

0

(45,694)

0

(45,694)Other comprehensive,
net of tax:Foreign currency translationAdjustments
0

0

0

788

788Unrealized loss on financial instruments
0

0

0

(240)

(240)Comprehensive loss
0

0

(45,694)

548

(45,146)BALANCE, December 31, 2002
$

93

$

145,088

$
(103,790)

$
(1,694)

$
39,697


The accompanying notes are an integral part of these consolidated
statements

F-5

Table of
Contents

MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002, EIGHT MONTHS ENDED DECEMBER 31,2001
AND YEARS ENDED APRIL 30, 2001 AND 2002
(In thousands)

December
31,2002

December 31,2001

April 30,2001

April 30,2000OPERATING ACTIVITIES:Net loss

$(45,694)

$(21,587)

$(6,434)

$(73,143)Adjustments to reconcile net loss to net cash provided by
operating activities:Loss from discontinued
operations

27,406

23,464

12,469

76,346Depreciation and
amortization

6,554

4,192

6,585

4,563Provision for doubtful
accounts

563

168

25

105Cumulative effect of
change in accounting principle

21,812

0

0

0Special charges and
other operating expenses, net

0

1,794

0

2,770(Gain) Loss on
disposals of property, plant, and equipment

(4)

(19)

(5)

(3)Deferred income tax
(benefit) provision

3,726

3,476

(1,202)

(12,730)Paid in kind
interest

574

0

0

0Proceeds from tax
refunds

9,046

0

0

0Changes in operating
assets and liabilities:Accounts
receivable

(1,742)

3,467

10,422

(8,329)Inventories

5,286

6,825

9,189

147Prepaid expenses and
other

(102)

1,429

(1,052)

629Other assets

(33)

158

(1,716)

(374)Accounts
payable

637

(5,014)

572

6,090Accrued liabilities and
other

(2,446)

(6,067)

(2,335)

10,677Net cash provided by
operating activities from
              continuing operations

25,583

12,286

26,518

6,748Net cash (used in)
provided by operating activities
              from discontinued operations

(5,993)

(2,480)

(4,647)

1,772Net cash provided
operating activities

19,590

9,806

21,871

8,520INVESTING ACTIVITIES:Purchases of property, plant, and equipment

(1,090)

(532)

(1,501)

(3,828)Proceeds from sale of property, plant, and equipment

52

24

91

16Payments received on notes receivables

142

151

314

--Net cash used in investing activities from continuing
            operations

(896)

(357)

(1,096)

(3,812)Net cash provided by (used in) investing activities
            from
discontinued operations

19,134

192

9,377

(3,799)Net cash provided by (used in) investing activities

18,238

(165)

8,281

(7,611)FINANCING ACTIVITIES:Net (payments) borrowings under senior credit facility

(1,310)

25,885

0

0Borrowings under subordinated credit facility

--

14,000

0

0Net (payments) borrowings under former credit facility

--

(23,543)

(15,298)

(1,679)Payments on long-term obligations

(4,948)

(2,122)

(701)

(1,063)Borrowings under long-term obligations

78

0

0

43Additions to deferred financing costs

(1,699)

(3,348)

0

0Termination of interest rate swap

(239)

0

0

0Proceeds from exercise of stock options

0

0

7

100Net cash (used in) provided by financing activities from
          continuing operations

(8,118)

10,872

(15,992)

(2,599)Net cash used in financing activities from discontinued
          operations

(36,232)

(17,132)

(13,169)

(1,452)Net cash used in financing activities

(44,350)

(6,260)

(29,161)

(4,051)EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY
INVESTMENTS

508

(145)

(354)

(199)NET CHANGE IN CASH AND TEMPORARY INVESTMENTS

(6,014)

3,236

637

(3,341)CASH AND TEMPORARY INVESTMENTS, beginning of
period

9,863

6,627

5,990

9,331CASH AND TEMPORARY INVESTMENTS-DISCONTINUED      OPERATIONS, end of
period

1,752

0

0

0CASH AND TEMPORARY INVESTMENTS, end of period

$2,097

$ 9,863

$ 6,627

$ 5,990SUPPLEMENTAL DISCLOSURE OF CASH FLOW

INFORMATION:Cash payments for interest

$7,392

$ 5,693

$13,981

$13,254Cash payments for income taxes

$   581

$   383

$    690

$    2,094The accompanying notes are an integral part of these consolidated
statements.


F-6

Table of
Contents

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

1.          ORGANIZATION AND NATURE OF OPERATIONS

Miller Industries, Inc. and subsidiaries ("the Company") has historically been
an integrated provider of vehicle towing and recovery equipment. As further
described in Note 3, during the year ended December 31, 2002, the
Company’s management and board of directors made the decision to divest of
the remainder of its towing services segment, as well as the operations of the
distribution group of the towing and recovery equipment segment.  The principal
markets for the Company’s towing and recovery equipment are approximately
150 independent distributors and users of towing and recovery equipment located
primarily throughout the United States and other customers throughout the world.
The Company’s products are marketed under the brand names of Century,
Challenger, Holmes, Champion, Eagle, Jige, Boniface, Vulcan, and Chevron.

The Company markets its towing and recovery services in the United States
through its wholly-owned subsidiary RoadOne, Inc.

2.          GOING CONCERN

The towing and recovery equipment manufacturing and towing services industries
are highly competitive. Certain competitors may have substantially greater
financial and other resources than the Company. These industries are also
subject to a number of external influences, such as general economic conditions,
interest rate levels, consumer confidence, and general credit availability.
Demand for the Company’s equipment has been negatively impacted by cost
pressures facing its customers.  Continuation of these pressures could impact
the Company’s ability to service its debt.

The Company’s financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.  As more fully
described below, subsequent to December 31, 2002, the Company was in default of
certain covenants under its senior (“Senior Credit Facility”) and
subordinated (“Junior Credit Facility”) credit facility agreements,
and its subordinated credit facility matures on July 23, 2003.  The senior and

subordinated credit facility agreements contain certain cross-default provisions
and provide for acceleration of amounts due as well as other remedies in the
event of default.  These circumstances raise substantial doubt about the
Company’s ability to continue as a going concern.

The Junior Credit Facility, under which $14.4 million
was outstanding December 31, 2002  matures on July 23, 2003.  There is no assurance that the Company will
be able to repay or refinance the outstanding principal and interest under the
Junior Credit Facility on the maturity date thereof.  If the Company fails to
repay all outstanding principal, interest and any other amounts due and owing
under the Junior Credit Facility on the maturity date, such failure will
constitute an event of default under the Junior Credit Facility and will also
trigger an event of default under the Senior Credit Facility cross-default
provisions.  A total of $42.4 million (continuing and discontinuing operations)
was outstanding under the Senior Credit Facility at December 31, 2002.  In such
case, the junior lender agent would be prevented from taking any enforcement
action against the Company, its subsidiaries or their respective assets in
respect of such event of default until the earlier of: (i) the date which is 120
days (subject to extension to 270 days by notice from senior lender agent to
junior lender agent) after the date upon which the junior lender agent gives
notice of enforcement to the senior lender agent pursuant to the terms of the
Intercreditor Agreement; (ii) the acceleration of the maturity of the
obligations of the Company under the

F-7

Table of
Contents

Senior Credit Facility by the senior lender agent, and (iii) the commencement of
any bankruptcy, insolvency or similar proceeding against the Company or certain
of its subsidiaries.  The resulting event of default under the Senior Credit
Facility if the Company does not repay all of the obligations under the Junior
Credit Facility could result in the acceleration of the amounts due under the
Senior Credit Facility as well as other remedies if not waived by the senior
lenders.  There is no assurance that the Company will be able to obtain such a
waiver from the senior lenders or a waiver from the junior lenders of any event
of default that would occur as a result of the failure by the Company to repay
or refinance the outstanding principal and interest under the Junior Credit
Facility on the maturity date.

Subsequent to December 31, 2002, the Company was in default under certain
covenants under its Senior and Junior Credit Facility agreements.  While the
Company has on several occasions negotiated amendments to its credit facilities
that waived certain defaults and brought the Company back into compliance,
waivers typically require payment of substantial additional fees, and there can
be no assurance that the lenders will agree to any future waivers or amendments.
The Company’s bank facilities are collateralized by liens on all of the
Company’s assets. The liens give the lenders the right to foreclose on the
assets of the Company under certain defined events of default and such
foreclosure could allow the lenders to gain control of the operations of the
Company.

On September 13, 2002, the Company entered into the Third Amendment to Credit
Agreement in connection with its Senior Credit Facility. Pursuant to the Third
Amendment, the amount of the mandatory periodic reductions in the RoadOne
revolving loan commitment amount, as established in the April 15, 2002 Second
Amendment to Senior Credit Agreement, were increased by amounts calculated based
on updated asset appraisals completed in September 2002. Consequently, the
Company will need to repay outstanding loans and permanently reduce the RoadOne
loan commitment under its Senior Credit Facility over the life of the loan and
prior to the maturity date. Pursuant to the terms of the Second and Third
Amendments, the failure by the Company to repay outstanding loans and to reduce
the RoadOne revolving loan commitment by the amounts and the times required
pursuant to these amendments will result in increased interest rates on the
senior loans and/or the occurrence of an event of default under the Senior
Credit Facility.

In addition, pursuant to the Third Amendment, the amount of availability that
can be generated for used inventory considered as eligible inventory for
collateral purposes was limited to $4.3 million (subject to downward adjustments
upon certain sales of sales of assets and stock by the Company and certain of
its subsidiaries) through February 28, 2003 and reduced to $0 thereafter. The
Sixth Amendment (discussed below 2003 Amendments) lowered the $4.3 million limit
and eliminated the further requirement for reduction to $0 after February 28,
2003.

On November 14, 2002, the Company entered into the Fourth Amendment to the
Senior Credit Facility, which granted waivers from the senior lenders of
violations of certain financial covenants for the quarter ended September 2002.
There were no violations under the Junior Credit Facility. The Amendment also
reduced the level of certain financial covenants for future periods, basing them
strictly on the results of the towing and recovery equipment segment for those
periods. In addition, the amendment revised the Road One revolving commitment
amount based on the plan to sell all remaining towing service operations,
reducing the commitment amount to $15.0 million at November 30, 2002, $12.0
million at December 31, 2002, $9.0 million at January 31, 2003, $6.0 million at
February 28, 2003 and reducing to zero as of March 31, 2003.

On February 28, 2003, the Company entered into the Fifth Amendment to the Senior
Credit Facility. Pursuant to the Fifth Amendment, the date upon which the amount
of certain used inventory taken in trade for collateral purposes is reduced to
$-0- was extended from February 28, 2003 to March 31, 2003.

F-8

Table of
Contents

In addition, the Fifth Amendment revised the RoadOne revolving commitment
reducing the amount to $9.0 million at February 28, 2003 and $-0- as of March
31, 2003.

On April 1, 2003, the Company entered into the Sixth Amendment to the Senior
Credit Facility.  The Sixth Amendment among other things, revised the RoadOne
revolving commitment, extending the time by one year for the reduction thereof to $9.0
million from March 31, 2003 to March 31, 2004 and extending the time for
reduction to $-0- from March 31, 2003 to March 31, 2004.  The amount of
availability that can be generated for used inventory considered as eligible
inventory for collateral purposes was reduced to $2.7 million with no further
required reductions.

Meeting the new repayment schedule will require that the Company sell its
remaining towing services businesses according to its contemplated schedule on
acceptable terms. While the Company believes its timetable for sales is
achievable, there can be no assurance that the schedule can be met. Failure to
achieve the Company’s timetable for such sales or cash flow projections
could result in failure to comply with the amended debt service requirements.
Such non-compliance would result in additional events of default, which if not waived by
the lending groups, would result in the acceleration of the amounts due under
the credit facility as well as other remedies. In such case, the Company would
seek to refinance the remaining balances, but there is no assurance that the
Company would be able to obtain any such refinancing. If the Company were unable
to refinance the credit facility on acceptable terms or find an alternative
source of repayment for the credit facility, the Company’s business and
financial condition would be materially and adversely affected.

Prior to making the determination to sell all of its remaining towing services
operations, the Company had focused on cost reduction and expense control, as
well as other opportunities for improving operating cash flows to improve
liquidity. The Company had also disposed of certain underperforming RoadOne

assets and operations in order to improve liquidity and to reduce expenses and
debt. As described in Note 3, in October 2002, the Company decided to sell all
remaining towing services operations.  During 2002, the Company sold 29 towing
services markets for proceeds of $23.5 million, which have been used to reduce
the RoadOne revolver.  The Company also made the decision in the fourth quarter
of 2002 to divest of the operations of the distribution group of the towing and
recovery equipment segment.  The Company may also be subject to inefficiencies,
management distractions, additional expenses and uncertainties resulting from
the rapid wind down of the infrastructure that was developed to provide support
to the over 100 towing services locations and nine distribution locations.
Administrative services such as insurance and surety bond coverage must be
maintained for all remaining Company operations, but such services could become
more expensive to maintain as the size of the remaining operations decrease.
Although the Company believes that it can manage the wind down effectively,
there can be no assurance that such will be the case.  Even if the Company is
able to manage the wind down effectively, it may nevertheless have an adverse
impact on the Company’s results of operations.

In addition, the Company has experienced difficulty in maintaining its insurance
and surety bond coverage primarily as a result of disruption in these markets
resulting from the events of September 11th, 2001, general economic
conditions and the Company’s operating results.  Prospective purchasers of
towing services and distribution businesses have also experienced these
difficulties, which could have an adverse impact on the ability of such
purchasers to affect business acquisitions at prices satisfactory to the
Company.

The Company received a tax refund of approximately $4.2 million during the
quarter ended June 30, 2002, which was used to reduce the RoadOne revolver and
cured the over-advance position that existed at that time.  An additional tax
refund of $4.6 million was received during the quarter ended September 30, 2002,
with proceeds used to further reduce the borrowings under the RoadOne revolver.

F-9

Table of
Contents

All of these efforts have resulted in approximately $28.1 million in reductions
to the RoadOne revolver since December 31, 2001. Additionally, the towing and
recovery equipment revolver and the term loan have been reduced $10.9 million
and $4.1 million, respectively, during the current fiscal year.

The consolidated financial statements do not include any adjustments that might
result from the resolution of these matters.

3.          DISCONTINUED OPERATIONS

During the fourth quarter of the year ended December 31, 2002, the
Company’s management and board of directors made the decision to divest of
its remaining towing services segment, as well as the operations of the
distribution group of the towing and recovery equipment segment.

During the year ended December 31, 2002, the Company disposed of assets in 29
underperforming towing service markets, as well as assets in other markets of
its towing services segment.  Total proceeds from the sales were $23.5 million
which included $22.7 million in cash and $0.8 million in notes receivable.
Losses on the sales of discontinued operations were $5.1 million.  Subsequent to
year end, the Company entered into agreements for the sale of four towing
service markets and certain other assets with proceeds of approximately $1.6
million.

At December 31, 2002, the Company had entered into agreements for the
disposition of three of the nine locations of the distribution group.
Subsequent to year end, the Company sold one distributor location with total
proceeds of approximately $1.9 million in cash and $0.8 million subordinated
notes receivable.

In accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, the assets for the towing services segment
and the distribution group are considered a “disposal group” and are
no longer being depreciated.  All assets and liabilities and results of
operations associated with these assets have been separately presented in the
accompanying financial statements at December 31, 2002.  The statements of
operations and related financial statement disclosures for all prior years have
been restated to present the towing services segment and the distribution group
as discontinued operations separate from continuing operations.  Results of
operations for the towing services segment and the distribution group reflect
interest expense for debt directly attributing to these businesses, as well as
an allocation of corporate debt based on intercompany balances.

The operating results for the discontinued operations of the towing services
segment and the distributor group for the year ended December 31, 2002, the
eight months ended December 31, 2001, and the years ended April 30, 2001 and
2000 were as follows (in thousands):

Year Ended December 31, 2002

Eight Months EndedDecember 31,
2001

Year Ended April 30, 2001

Year Ended April 30, 2000Dist.
Towing
Total

Dist.
Towing
Total

Dist.
Towing
Total

Dist.
Towing
TotalNet Sales
$
85,353
$
121,569
$
206,922

$
60,555
$
100,953
$
161,508

$
100,322
$
182,255
$
282,577

$
112,280
$
207,942
$
320,222Operating income (loss)
(982)
(1,930)
(2,912)

(2,171)
(15,600)
(17,771)

366
(3,944)
(3,578)

(5,439)
(82,727)
(88,166)Net loss before taxes
(6,619)
(19,527)
(26,146)

(5,036)
(19,005)
(24,041)

(6,749)
(11,427)
(18,176)

(7,223)
(88,936)
(96,159)Loss from discontinued
      operations
(7,179)
(20,227)
(27,406)

(5,074)
(18,390)
(23,464)

(6,749)
(5,720)
(12,469)

(7,223)
(69,123)
(76,346)


F-10

Table of
Contents

The following assets and liabilities are reclassified as held for sale at
December 31, 2002 (in thousands):

Year Ended December 31, 2002Dist.

Towing

TotalCash and temporary investments
$
1,443

$
309

$
1,752Accounts receivable, net
2,604

4,894

7,498Inventories
19,559

--

19,559Prepaid expenses and other
current assets
170

3,387

3,557Current assets of discontinued
operations held for sale
23,776

8,590

32,366Property, plant and equipment
--

13,368

13,368Other long-term assets
--

2,049

2,049Noncurrent assets of
discontinued operations held
for sale
--

15,417

15,417Current portion of long-term debt
12,632

11,484

24,116Accounts payable
5,710

7,841

13,551Accrued liabilities and other
4,169

11,376

15,545Current liabilities of
discontinued operations held
for sale
22,511

30,701

53,212Long-term debt
0

1,450

1,450Noncurrent liabilities of
discontinued operations held
for sale
$
0

$
1,450

$
1,450


F-11

Table of
Contents

4.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Consolidation

The accompanying consolidated financial statements include the accounts of
Miller Industries, Inc. and its subsidiaries. All significant intercompany
transactions and balances have been eliminated.

Cash and Temporary Investments

Cash and temporary investments include all cash and cash equivalent investments
with original maturities of three months or less, primarily consisting of
overnight repurchase agreements.

Fair Value of Financial Instruments

The carrying values of cash and temporary investments, accounts receivable,
accounts payable, and accrued liabilities are reasonable estimates of their fair
values because of the short maturity of these financial instruments. The
carrying values of long-term obligations are reasonable estimates of their fair
values based on the rates available for obligations with similar terms and
maturities.

Inventories

Inventory costs include materials, labor, and factory overhead. Inventories are
stated at the lower of cost or market, determined on a first-in, first-out
basis. Inventories for continuing operations at December 31, 2002 and
consolidated operations at December 31, 2001, and April 30, 2001 consisted of
the following (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001Chassis
$
1,316

$
8,157

$
8,650Raw materials
10,993

12,187

14,133Work in process
7,746

9,614

10,544Finished goods
7,760

30,156

34,508$
27,815

$
60,114

$
67,835


Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation for financial
reporting purposes is provided using the straight-line method over the estimated
useful lives of the assets. Accelerated depreciation methods are used for income
tax reporting purposes. Estimated useful lives range from 20 to 30 years for
buildings and improvements and 5 to 10 years for machinery and equipment,
furniture and fixtures, and software costs. Expenditures for routine maintenance
and repairs are charged to expense as incurred. Expenditures related to major
overhauls and refurbishments of towing services equipment that extend the
related useful lives are capitalized. Internal labor is used in certain capital
projects.

F-12

Table of
Contents

Property, plant, and equipment for continuing operations at December 31, 2002
and consolidated operations at December 31, 2001, and April 30, 2001 consisted
of the following (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001Land
$
1,734

$
3,858

$
4,052Buildings and improvements
18,696

19,672

22,444Machinery and equipment
11,046

58,633

58,256Furniture and fixtures
5,416

9,336

9,724Software costs
5,598

5,041

4,70742,490

96,540

99,183Less accumulated depreciation
(19,369)

(43,418)

(40,619)$
23,121

$
53,122

$
58,564


The Company recognized $3,566,000, $2,496,000, $3,864,000 and $3,209,000 in
depreciation expense for continuing operations for the year ended December 31,
2002, the eight months ended December 31, 2001 and the fiscal years ended April
30, 2001, and 2000, respectively.  Depreciation expense for discontinued
operations was $2,822,000, $3,530,000, $5,820,000 and $10,689,000 for the year
ended December 31, 2002, the eight months ended December 31, 2001, and the
fiscal years ended April 30, 2001 and 2000, and is included in the loss from
discontinued operations in the consolidated statement of operations.

The Company capitalizes costs related to software development in accordance with
established criteria, and amortizes those costs to expense on a straight-line
basis over five years. System development costs not meeting proper criteria for
capitalization are expensed as incurred.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding. Diluted net income
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common and potential dilutive common shares outstanding.
Diluted net income per share takes into consideration the assumed exercise of
outstanding stock options resulting in approximately 7,000, 4,000, 9,000 and
87,000 potential dilutive common shares for the year ended December 31, 2002,
the eight months ended December 31, 2001, and the years ended April 30, 2001 and
2000, respectively.

On October 1, 2001, the Company effected a one-for-five reverse common stock
split. All historical and per share amounts have been retroactively restated to
reflect the reverse common stock split.

Goodwill and Long-Lived Assets

Goodwill is accounted for in accordance with SFAS No. 141 "Business
Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets". Upon
adoption of these standards in January 2002, the Company ceased to amortize
goodwill (see Note 7 for further discussion).

In accordance with SFAS No. 144, “Accounting for the Impairment of
Long-Lived Assets”, management evaluates the carrying value of long-lived
assets when significant adverse changes in economic value of these assets
requires an analysis, including property and equipment and other intangible
assets.  With the adoption of SFAS No. 144, in January 2002, a long-lived asset
is considered impaired when its fair value is less than its carrying value.  In
that event, a loss is calculated based on the amount the carrying value exceeds
the fair value which is estimated based on future cash flows.  Prior to adopting
SFAS No. 144, a long-lived asset was considered impaired when undiscounted
cash flows or fair value, whichever was more readily determinable, to be
realized from such asset was less than the carrying value.

F-13

Table of
Contents

Accumulated amortization of goodwill was $2,140,000, for continuing operations
at December 31, 2002 and $4,373,000 and $4,550,000 for consolidated operations
at December 31, 2001 and April 30, 2001, respectively.  Amortization expense for
continuing operations for the eight months ended December 31, 2001 and the
fiscal years ended April 30, 2001, and 2000, was $272,000, $410,000, and
$398,000, respectively.  Amortization expense for discontinued operations was
$751,000, $1,146,000, and $2,393,000 for the eight months ended December 31,
2001, and the fiscal years ended April 30, 2001 and 2000, and is included in the
loss from discontinued operations in the consolidated statement of operations.

Patents, Trademarks, and Other Purchased Product Rights

The cost of acquired patents, trademarks, and other purchased product rights is
capitalized and amortized using the straight-line method over various periods
not exceeding 20 years. Total accumulated amortization of these assets was
$1,219,000 for continuing operations at December 31, 2002 and $1,080,000 and
$961,000 for consolidated operations at December 31, 2001 and April 30, 2001.
Amortization expense for continuing operations for the year ended December 31,
2002, the eight months ended December 31, 2001 and the fiscal years ended April
30, 2001, and 2000 was $162,000, $112,000, $168,000, and $134,000, respectively.
Amortization expense for discontinued operations was $149,000, $7,000, and
$5,000 for the year ended December 31, 2002, the eight months ended December 31,
2001, and the fiscal year ended April 30, 2001, and is included in the loss from
discontinued operations in the consolidated statement of operations.  Based on
the current amount of intangible assets subject to amortization, the estimated
amortization expense for the succeeding five years are as follows:  2003 -
$144,000; 2004 - $141,000; 2005 - $140,000; 2006 - $113,000; and 2007 - $-0-.
As acquisitions and dispositions of intangible assets occur in the future, these
amounts may vary.

Deferred Financing Costs

All deferred financing costs are included in other assets of continuing
operations and are amortized over the terms of the respective obligations. Total
accumulated amortization of deferred financing costs at December 31, 2002, and
2001, and April 30, 2001 was $3,227,000, $349,000, and $2,968,000, respectively.
Amortization expense for the year ended December 31, 2002, the eight months
ended December 31, 2001 and the fiscal years ended April 30, 2001, and 2000 was
$2,878,000, $1,272,000, $2,127,000, and $961,000, respectively, and is included
in interest expense in the accompanying consolidated statements of
operations.

Accrued Liabilities and Other

Accrued liabilities and other consisted of the following for continuing
operations at December 31, 2002 and for consolidated operations at December 31,
2001, and April 30, 2001 (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001Accrued wages, commissions, bonuses, and benefits
$
3,447

$
10,713

$
12,665Accrued income taxes
590

676

635Accrued special charge
--

1,089

2,023Accrued Insurance
10

3,712

3,469Other
2,100

8,569

6,564$
6,147

$
24,759

$
25,356


F-14

Table of
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Stock-Based Compensation

The Company accounts for its stock-based compensation plans under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". The
Company has adopted the disclosure option of SFAS No. 123, "Accounting for
Stock-Based Compensation". Accordingly, no compensation cost has been recognized
for stock option grants since the options have exercise prices equal to the
market value of the common stock at the date of grant.

For SFAS No. 123 purposes, the fair value of each option grant has been
estimated as of the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions for grants in the year ended
December 31, 2002, the eight months ended December 31, 2001 and the fiscal years
ended April 30, 2001, 2000, and 1999, respectively: expected dividend yield of
0%; expected volatility of 84%, 72%, 71%, and 59%; risk-free interest rate of
3.84%, 4.28%, 6.10%, and 6.13%; and expected lives of 3.0 years for the year
ended December 31, 2002, 5.0 years for the eight months ended December 31, 2001
and 5.5 years for the fiscal years ended April 30, 2001, and 2000. Using these
assumptions, the fair value of options granted in the year ended December 31,
2002, the eight months ended December 31, 2001, and the fiscal years ended April
30, 2001 and 2000 is approximately $53,000, $355,000, $300,000, and $1,259,000,
respectively, which would be amortized as compensation expense over the vesting
period of the options.

Had compensation cost for stock option grants in the fiscal year ended December
31, 2002, the eight months ended December 31, 2001 and the fiscal years ended
April 30, 2001 and 2000, been determined based on the fair value at the grant
dates consistent with the method prescribed by SFAS No. 123, the Company’s
net loss and net loss per share would have been adjusted to the pro forma
amounts indicated below:

December 31, 2002

December 31, 2001

April 30, 2001

April 30, 2000Net loss available to common
stockholders, as reported
$
(45,694)

$
(21,587)

$
(6,434)

$
(73,143)Add:  Stock-based employee
         compensation expense included in
         reported net loss,
net of related tax
        effects
--

--

--

--Deduct:  Total stock-based employee
        compensation expense determined
        under fair
value based method for
        all awards, net of related tax effects
(400)

226

(1,783)

(2,596)Net loss available to common
     stockholders, pro forma
$
(46,094)

$
(21,361)

$
(8,217)

$
(75,739)Loss per common share:     Basic and diluted, as reported
$
(4.89)

$
(2.31)

$
(0.69)

$
(7.83)Basic and diluted, pro forma
$
(4.93)

$
(2.29)

$
(0.88)

$
(8.11)


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Table of
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Product Warranty

The Company provides a one-year limited product and service warranty on certain
of its products.  The Company provides for the estimated cost of this warranty
at the time of sale. Warranty expense for continuing operations for the year
ended December 31, 2002, the eight months ended December 31, 2001 and the fiscal
years ended April 30, 2001, and 2000 was $1,489,000, $1,271,000, $2,126,000, and
$2,079,000, respectively.

Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and trade
accounts receivable. The Company places its cash investments with high-quality
financial institutions and limits the amount of credit exposure to any one
institution. The Company’s trade receivables are primarily from
independent distributors of towing and recovery equipment and towing service
customers. Such receivables are generally not collateralized for towing service
customers. The Company monitors its exposure for credit losses and maintains
allowances for anticipated losses.

Revenue Recognition

Revenue is recorded by the Company when equipment is shipped to independent
distributors or other customers. Revenue from towing services (discontinued
operations) is recognized when services are performed.

Financial Instruments

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities",
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. Changes in the derivative’s fair value are
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative’s gains
and losses to offset related results on the hedged item in the income statement,
and requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. The adoption of
SFAS No. 133 did not have a material effect on the Company’s financial
statements. See Note 9 for additional discussions.

Recent Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, “Rescission of SFAS Nos. 4,
44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of April
2002.”  This Statement rescinds SFAS No. 4, “Reporting Gains and
Losses from Extinguishment of Debt”, and an amendment of that Statement,
SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements.”  This Statement also rescinds SFAS No. 44,
“Accounting for Intangible Assets of Motor Carriers.”  This
Statement amends SFAS No. 13, “Accounting for Leases”, to eliminate
an inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions.  SFAS No. 145 will be
effective for fiscal 2003, which begins January 1, 2003.  Management does not
expect the adoption of this statement to have a material impact on the
Company’s results of operations or financial position.

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Table of
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FASB has issued SFAS No. 146, “Accounting for Exit or Disposal
Activities”.  SFAS No. 146 addresses the recognition, measurement, and
reporting of costs that are associated with exit and disposal activities,
including costs related to terminating a contract that is not a capital lease
and termination benefits that employees who are involuntarily terminated receive
under the terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract.  SFAS No. 146
supersedes Emerging Issues Task Force Issue No. 94-3, “Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)” and
requires liabilities associated with exit and disposal activities to be expensed
as incurred.  SFAS No. 146 will be effective for exit or disposal activities of
the Company that are initiated after December 31, 2002.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year
presentation, with no impact on previously reported shareholders’ equity
or net income (loss).

5.          FISCAL YEAR CHANGE

Effective December 31, 2001, the Company changed its fiscal year end from April
30 to December 31. The table below summarizes selected financial data for the
eight months ended December 31, 2001 and December 31, 2000.

Eight months endedDecember 31,
2001

Eight months endedDecember 31,
2000(unaudited)(in thousands)Net Sales
$142,445

$136,551Depreciation and amortization
2,880

2,941Special charges and other operating expenses, net
1,794

-0-Operating income (loss)
5,351

5,495Interest expense, net
1,055

5,546Income from continuing operations
1,877

4,296


6.          SPECIAL CHARGES

During the year ended December 31, 2002, the eight months ended December 31,
2001, and the fiscal year ended April 30, 2000, the Company recorded special
charges and other net operating expenses for asset impairments and the
rationalization of certain operations, as follows (in thousands):

December 31,2002

December 31,2001

April 30,2000Towing Services (included in discontinued operations)Impairment of goodwill
$
--

$
10,778

$
50,542Impairment of long-lived assets
1,533

2,644

18,576Special charges and  rationalization
         of operations
8,658

--

6,041$
10,191

13,422

75,159Towing and Recovery Equipment:Impairment of goodwillContinuing Operations
--

564

--Discontinued Operations
--

916

4,9671,480

4,967Impairment of long-lived assetsContinuing Operations
--



1,230

2,770Discontinued Operations
1,637

540

--1,637

1,770

2,770$
11,828

$
16,672

$
82,896


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During the twelve months ended April 30, 2000, the Company recorded pretax,
special charges of $6,041,000 for costs related to the rationalization of its
towing services operations. These charges include approximately $4,589,000 for
the cost of early termination of certain employment contracts, approximately
$857,000 for the cost of early termination of facility leases and $595,000 for
losses on the disposal of certain excess equipment and other property-related
charges. At December 31, 2002, approximately $5,638,000 had been charged against
the related reserves. The remaining reserve will be utilized as payments are
made under the terms of employment termination agreements and facility
leases.

The Company periodically reviews the carrying amount of long-lived assets and
goodwill in both its towing services and towing equipment segments to determine
if those assets may be recoverable based upon the future operating cash flows
expected to be generated by those assets. As a result of such review during the
eight months ended December 31, 2001 and the fiscal year ended April 30, 2000,
the Company concluded that the carrying value of such assets in certain towing
services markets and certain assets within the Company’s towing and
recovery equipment segment were not fully recoverable.

Impairment charges of $10,778,000 and $50,542,000 were recorded for the eight
months ended December 31, 2001 and the fiscal year ended April 30, 2000,
respectively, to write-down the goodwill in certain towing services markets to
their estimated fair value. Additionally, charges of $10,191,000, $2,644,000 and
$18,576,000 were recorded for the year ended December 31, 2002, the eight months
ended December 31, 2001 and the fiscal year ended April 30, 2000 to write-down
the carrying value of certain long-lived assets (primarily property and
equipment) and other special changes in related markets to estimated fair value.
The Company determined fair value for these assets on a market by market basis
taking into consideration various factors affecting the valuation in each
market.

The Company also reviewed the carrying values of the goodwill associated with
certain investments within its towing and recovery equipment segment. This
evaluation indicated that the recorded amounts of goodwill for certain of these
investments were not fully recoverable. Impairment charges of $1,480,000 and
$4,967,000 were recorded to reduce the carrying amounts of the goodwill to
estimated fair value at December 31, 2001 and April 30, 2000, respectively. The
Company recorded $1,637,000, $1,770,000 and $2,770,000 of additional costs
related to the write-down of the carrying value of other long-lived assets of
its towing and recovery equipment segment for the year ended December 31, 2002
the eight months ended December 31, 2001 and the twelve months ended April 30,
2000.

In accordance with SFAS No. 121 and APB No. 17, the Company wrote-off goodwill
and long-lived assets of $3,250,000 and $7,737,000 associated with the towing
and recovery equipment segment as of December 31, 2001 and April 30, 2000,
respectively. Additionally, during the eight months ended December 31, 2001 and
the fiscal year ended April 30, 2000, the Company wrote-off goodwill and
long-lived assets associated with the towing services segment of $13,422,000 and
$69,118,000, respectively. Management believes its long-lived assets are
appropriately valued following the impairment charges.

F-18

Table of
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7.          GOODWILL AND OTHER LONG-LIVED ASSETS

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No.
142, "Goodwill and Other Intangible Assets" (collectively the "Standards"). The
Standards were effective for fiscal years beginning after December 15, 2001.
Companies with fiscal years beginning after March 15, 2001 could early adopt,
but only as of the beginning of that fiscal year and only if all existing
goodwill was evaluated for impairment by the end of that fiscal year. SFAS No.
141 requires companies to recognize acquired identifiable intangible assets
separately from goodwill if control over the future economic benefits of the
asset results from contractual or other legal rights or the intangible asset is
capable of being separated or divided and sold, transferred, licensed, rented, or exchanged. The Standards
require the value of a separately identifiable intangible asset meeting any of
the criteria to be measured at its fair value. SFAS No. 142 requires that
goodwill not be amortized and that amounts recorded as goodwill be tested for
impairment. Annual impairment tests have to be performed at the lowest level of
an entity that is a business and that can be distinguished, physically and
operationally and for internal reporting purposes, from the other activities,
operations, and assets of the entity.

Upon adoption of SFAS No. 142 in January 2002, the Company ceased to amortize
goodwill. In lieu of amortization, the Company is required to perform an initial
impairment review of goodwill in 2002 and an annual impairment review
thereafter. As a result of impairment reviews, the Company wrote-off goodwill of
$2,886,000 in the towing equipment segment and $18,926,000 in the towing
services segment during the year ended December 31, 2002. The write-off has been
accounted for as a cumulative effect of change in accounting principle to
reflect application of the new accounting standards.

Had the Company applied the non-amortization of goodwill provisions of SFAS No.
142 in the eight months ended December 31, 2001, and the years ended April 30,
2001 and 2000 reported net loss and basic and diluted loss per share would have
been as follows (in thousands):

December 31,2001

April 30,2001

April 30,2000Net loss:As reported

$
(21,587)

$
(6,434)

$
(73,143)Goodwill amortizationContinuing operations

272

410

398Discontinued
operations

751

1,146

2,393Pro forma loss

$
(20,564)

$
(4,878)

$
(70,352)Basic loss per shareAs reported

$
(2.31)

$
(0.69)

$
(7.83)Goodwill
amortizationContinuing
operations

0.03

0.04

0.04Discontinued
operations

0.08

0.12

0.26Pro forma basic loss per share

$
(2.20)

$
(0.53)

$
(7.53)Diluted loss per shareAs reported

$
(2.31)

$
(0.69)

$
(7.83)Goodwill
amortizationContinuing
operations

0.03

0.04

0.04Discontinued
operations

0.08

0.12

0.25Pro forma diluted loss per share

$
(2.20)

$
(0.53)

$
(7.54)


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8.          LONG-TERM OBLIGATIONS AND LINE OF CREDIT

Long-Term Obligations

Long-term obligations consisted of the following for continuing operations at
December 31, 2002 and for consolidated operations at December 31, 2001, and
April 30, 2001 and 2000 (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001Outstanding borrowings under Senior Credit Facility
$19,740

$85,463

$100,000Outstanding borrowings under Junior Credit Secured     Facility
14,431

14,000

0Mortgage notes payable, weighted average interest rate of
     4.37%, payable in
monthly installments, maturing 2003 to     2011
1,500

1,674

2,568Equipment notes payable, weighted average interest rate of 
     12.51%, payable
in monthly installments, maturing 2003 to     2005
601

822

926Other notes payable, weighted average interest rate of 6.06%,
     payable in
monthly installments, maturing 2003 to 2006
186

2,008

2,84036,458

103,967

106,334Less current portion
(35,244)

(12,405)

(7,213)$1,214

$91,562

$99,121


The December 31, 2002 figures do not include $22.7 million
outstanding under the Senior Credit Facility relating to discontinued
operations.  Certain equipment and manufacturing facilities are pledged as collateral under
the mortgage and equipment notes payable.

2001 Credit Facility

In July 2001, the Company entered into a new four year senior credit facility
(the "Senior Credit Facility") with a syndicate of lenders to replace the
existing credit facility. As part of this agreement, the previous credit
facility was reduced with proceeds from the Senior Credit Facility and amended
to provide for a $14.0 million subordinated secured facility. The Senior Credit

Facility originally consisted of an aggregate $102.0 million revolving credit
facility and an $8.0 million term loan. The revolving credit facility provides
for separate and distinct loan commitment levels for the Company’s towing
and recovery equipment segment and RoadOne segment, respectively. At December
31, 2002, $29.4 million and $10.0 million, respectively were outstanding under
the towing and recovery equipment segment and RoadOne portions of the revolving
credit facility. In addition, $3.0 million was outstanding under the senior term
loan, and $14.4 million was outstanding under the subordinated secured
facility.

Availability under the revolving Senior Credit Facility is based on a formula of
eligible accounts receivable, inventory and fleet vehicles as separately
calculated for the towing and recovery equipment segment and the RoadOne
segment, respectively.  Borrowings under the term loan are collateralized by the
Company’s property, plant, and equipment.  The Company is required to make
monthly amortization payments on the term loan of $167,000.  The Senior Credit
Facility bears interest at the option of the Company at either the rate of LIBOR
plus 2.75% or prime rate (as defined) plus 0.75% on the revolving portion and
LIBOR plus 3.0% or prime rate (as defined) plus 1.0% on the term portion.

The Senior Credit Facility matures in July 2005 and is collateralized by
substantially all the assets of the Company. The Senior Credit Facility contains
requirements relating to maintaining minimum excess availability at all times
and minimum quarterly levels of earnings before income taxes, depreciation and
amortization (as defined) and a minimum quarterly fixed charge coverage ratio
(as defined). In addition, the Senior Credit Facility contains restrictions on
capital expenditures, incurrence of indebtedness, mergers and acquisitions,
distributions and transfers and sales of assets. The Senior Credit Facility also
contains requirements related to weekly and monthly collateral reporting.

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Table of
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The subordinated credit facility (“Junior Credit Facility”) is by
its terms expressly subordinated only to the Senior Credit Facility. The
subordinated secured facility matures on July 23, 2003 and bears interest at
6.0% over the prime rate. The Company is required to make quarterly amortization
payments on the Junior Credit Facility of $875,000 beginning not later than May 2002 provided
that certain conditions are met, including satisfying a fixed charge coverage
ratio test and a minimum availability limit. The Junior Credit Facility is
collateralized by certain specified assets of the Company and by a second
priority lien and security interest in substantially all other assets of the
Company. The Junior Credit Facility contains requirements for certain fees to be
paid at six month intervals beginning in January 2002 based on the outstanding
balance of the subordinated secured facility at the time. The Junior Credit
Facility also contains provisions for the issuance of warrants for up to 0.5% of
the outstanding shares of the Company’s common stock in July 2002 and up
to an additional 1.5% in July, 2003. The number of warrants which may be issued
would be reduced pro rata as the balance of the Junior Credit Facility is
reduced.  On July 23, 2002, the Company issued 47,417 warrants for the purchase
of common stock in conjunction with these related provisions.

The Junior Credit Facility contains, among other restrictions, requirements for
the maintenance of certain financial covenants and imposes restrictions on
capital expenditures, incurrence of indebtedness, mergers and acquisitions,
distributions and transfers and sales of assets.

There is no assurance that the Company will be able to
repay or refinance the outstanding principal and interest under the Junior
Credit Facility on the maturity date thereof.  If the Company fails to repay all
outstanding principal, interest and any other amounts due and owing under the
Junior Credit Facility on the maturity date, such failure will constitute an
event of default under the Junior Credit Facility and will also trigger an event
of default under the Senior Credit Facility cross-default provisions.  In such
case, the junior lender agent would be prevented from taking any enforcement
action against the Company, its subsidiaries or their respective assets in
respect of such event of default until the earlier of: (i) the date which is 120
days (subject to extension to 270 days by notice from senior lender agent to
junior lender agent) after the date upon which the junior lender agent gives
notice of enforcement to the senior lender agent pursuant to the terms of the
Intercreditor Agreement; (ii) the acceleration of the maturity of the
obligations of the Company under the Senior Credit Facility by the senior lender
agent, and (ii) the commencement of any bankruptcy, insolvency or similar
proceeding against the Company or certain of its subsidiaries.  The resulting
event of default under the Senior Credit Facility if the Company does not repay
all of the obligations under the Junior Credit Facility could result in the
acceleration of the amounts due under the Senior Credit Facility as well as
other remedies if not waived by the senior lenders.  There is no assurance that
the Company will be able to obtain such a waiver from the senior lenders or a
waiver from the junior lenders of any event of default that would occur as a
result of the failure by the Company to repay or refinance the outstanding
principal and interest under the Junior Credit Facility on the maturity date.

2002 Amendments

The Company was in an over-advance position under its credit facility during the
first quarter of 2002. On February 28, 2002 the Company entered into a
Forbearance Agreement and First Amendment to its Senior Credit Agreement with
the lenders under the Senior Credit Facility, as amended by that certain
Amendment to Forbearance Agreement dated as of March 18, 2002 and that certain
Second Amendment to the Forbearance Agreement dated as of March 29, 2002 (as so
amended, the "Forbearance Agreement"). As a result of a revised asset appraisal
conducted by the senior lenders, the senior lenders determined that the amounts
outstanding under the Senior Credit Facility should be lowered below the amount
then outstanding under the Senior Credit Facility, causing the Company to be
over-advanced on its line of credit which resulted in the occurrence of an event
of default under the Senior Credit Facility and a corresponding event of default
under the Junior Credit Facility. The Forbearance Agreement and subsequent
amendments waived the Company’s overadvance under the Senior Credit
Facility and amended the terms of the credit agreement to, among other things,
(i) permanently reduce the commitment levels to $42.0 million for the towing and
recovery equipment segment and $36.0 million for the RoadOne segment portion of the revolving credit facility and $6,611,000 for
the term loan facility, (ii) eliminate the Company’s ability to borrow
funds at a LIBOR rate of interest, and (iii) increase the interest rate to a
floating rate of interest equal to the prime rate plus 2.75%.

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Table of
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On April 15, 2002 the Company amended the Senior Credit Facility, pursuant to
which, among other things: (i) the senior lenders waived the overadvance event
of default and other events of default, (ii) interest on advances will be
charged at the prime rate (as defined) plus 2.75% on the revolving portion and
the term portion, subject to substantial upward adjustments in the interest rate
on and after certain specified dates based on the amounts outstanding under the
revolving loan commitment relating to RoadOne (escalating at generally quarterly
intervals from prime plus 4.50% as of October 1, 2002 to prime plus 14.00% as of
April 1, 2005) and (iii) the revolving loan commitment amount relating to
RoadOne is subject to mandatory reductions over time commencing August 12, 2002,
which reductions will require a mandatory repayment of portions of outstanding
loans at specified dates and the failure to timely make such repayments shall
result in an event of default under the bank credit agreements. The RoadOne
revolving commitment amount, which was set at $36.0 million through the April
15, 2002 amendment, is scheduled to be reduced as follows: August 12, 2002- to
$34.0 million; October 2, 2002 - to $30.0 million; March 31, 2003 - to $27.0
million; thereafter- quarterly reductions of $3.0 million through June 30, 2005.
On April 15, 2002 the Company also amended the Junior Credit Facility, pursuant
to which, among other things, (i) the junior lenders waived the events of
default, and (ii) extended the time for payment of certain scheduled
amortization payments. On April 15, 2002, the junior lender agent, the senior
lender agent and the Company entered into an Amended and Restated Intercreditor
and Subordination Agreement, pursuant to which, among other things, subject to
certain terms and conditions, the junior lenders have agreed to defer the
required payment of amortization payments under the Junior Credit Facility until
November 20, 2002, April 5, 2003 and May 20, 2003.

On September 13, 2002, the Company entered into the Third Amendment to the
Senior Credit Facility.  Pursuant to the Third Amendment, the amount of the
mandatory periodic reductions in the RoadOne revolving loan commitment amount,
as established in the April 15, 2002 Second Amendment to Senior Credit
Agreement, were increased by amounts calculated based on updated asset
appraisals completed in September 2002.  Consequently, the Company will need to
repay outstanding loans and permanently reduce the RoadOne loan commitment under
its Senior Credit Facility over the life of the loan and prior to the maturity
date.  Pursuant to the terms of the Second and Third Amendments, the failure by
the Company to repay outstanding loans and to reduce the RoadOne revolving loan
commitment by the amounts and the times required pursuant to these amendments
will result in increased interest rates on the senior loans and/or the
occurrence of an event of default under the Senior Credit Facility.

In addition, pursuant to the Third Amendment, the amount of availability that
can be generated for used inventory considered as eligible inventory for
collateral purposes was limited to $4.3 million (subject to downward adjustments
upon certain sales of sales of assets and stock by the Company and certain of
its subsidiaries) through February 28, 2003 and reduced to $0 thereafter.  The
Sixth Amendment (discussed below 2003 Amendments) lowered the $4.3 million limit
and eliminated the further requirement for reduction to $0 after February 28,
2003.

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On November 14, 2002, the Company entered into the Fourth Amendment to the
Senior Credit Facility, which granted waivers from the Senior Lenders of
violations of certain financial covenants for the quarter ended September 2002.
There were no violations under the Junior Credit Facility. The Amendment also
reduced the level of certain financial covenants for future periods, basing them
strictly on the results of the towing and recovery equipment segment for those
periods. In addition, the amendment revised the Road One revolving commitment
amount based on the plan to sell all remaining towing service operations,
reducing the commitment amount to $15.0 million at November 30, 2002, $12.0 million at December 31, 2002, $9.0 million at January 31, 2003,
$6.0 million at February 28, 2003 and reducing to zero as of March 31, 2003.

2003 Amendments

On February 28, 2003, the Company entered into the Fifth Amendment to the Senior
Credit Facility.  Pursuant to the Fifth Amendment, the date upon which the
amount of certain used inventory taken in trade for collateral purposes is
reduced to $-0- was extended from February 28, 2003 to March 31, 2003.  In
addition, the Fifth Amendment revised the RoadOne revolving commitment reducing
the amount to $9.0 million at February 28, 2003 and $-0- as of March 31, 2003.

On April 1, 2003, the Company
entered into the Sixth Amendment to
Senior Credit Facility.  The Sixth Amendment, among other things,
revised the RoadOne revolving
commitment, extending the time by one year for the reduction thereof to $-0-
from March 31, 2003 to March 31, 2004.  The amount of
availability that can be generated for used inventory
considered as eligible inventory for collateral purposes was reduced to $2.7
million with no further required reductions.

Meeting the new repayment schedule for the RoadOne revolving commitments as
described above under 2002 Amendments to Senior Credit Facility and 2003
Amendments to Senior Credit Facility will require that the Company sell its
towing services businesses according to its contemplated schedule on acceptable
terms. While the Company believes its timetable for sales is achievable, there
can be no assurance that the schedule can be met.

Subsequent to April 1, 2003, the Company was in default under certain covenants
under its Senior and Junior Credit Facility agreements.  Accordingly, amounts
outstanding under these Facilities are presented as current liabilities in the
accompanying December 31, 2002 consolidated balance sheet.  Waivers of such
covenants typically require payment of substantial additional fees, and there
can be no assurance that the lenders will agree to any future waivers or
amendments. The Company’s bank facilities are collateralized by liens on
all of the Company’s assets. The liens give the lenders the right to
foreclose on the assets of the Company under certain defined events of default
and such foreclosure could allow the lenders to gain control of the operations
of the Company.

The Company could be required to find alternative funding sources, such as sale
of assets or other financing sources. If the Company were unable to refinance
the credit facility on acceptable terms or find an alternative source of
repayment for the credit facility, the Company’s business and financial
condition would be materially and adversely affected. There is no assurance that
the Company would be able to obtain any such refinancing or that it would be
able to sell assets on terms that are acceptable to the Company or at all.

Prior to making the determination to sell all of its remaining towing services
operations, the Company had focused on cost reduction and expense control, as
well as other opportunities for improving operating cash flows, to improve
liquidity. The Company has also disposed of certain underperforming RoadOne
assets and operations in order to improve liquidity and to reduce expenses and
debt. As described in Note 3, in October 2002, the Company decided to sell all
remaining towing services operations. The Company received a tax refund of
approximately $4.2 million during the quarter ended June 30, 2002, which also
reduced the RoadOne revolver and cured the overadvance position that existed at
that time. An additional tax refund of approximately $4.6 million was received
during the quarter ended September 30, 2002, with proceeds used to further
reduce the borrowings under the RoadOne revolver. All of these efforts have
resulted in $28.1 million in reductions to the RoadOne revolver since December
31, 2001. Additionally, the towing and recovery equipment revolver and the term loan have been reduced
$10.9 million and $4.1 million, respectively, during the current fiscal year.

F-23

Table of
Contents

Future maturities of long-term obligations after giving effect to the
aforementioned events of default at December 31, 2002 are as follows (in
thousands):

Continuing Operations
Discontinued Operations
Total2003

$  35,244


$  24,116


$  59,3602004
407

739

1,1462005
211

454

6652006
118

257

3752007
107

-

107Thereafter

371


-


371$  36,458




$  25,566


$  62,024


9.          FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities",
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivatives embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives fair value be
recognized currently in earnings unless specific hedge criteria are met. Special
accounting for qualifying hedges allows a derivative’s gains and losses to
offset related results on the hedged item on the income statement, and requires
that the Company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting.

In October 2001, the Company obtained interest rate swaps as required by terms
in its Senior Credit Facility to hedge exposure to market fluctuations. The
interest rate swaps cover $40.0 million in notional amounts of variable rate
debt and with fixed rates ranging from 2.535% to 3.920%. The swaps expire
annually from October 2002 to October 2004. Because the Company hedges only with
derivatives that have high correlation with the underlying transaction pricing,
changes in derivatives fair values and the underlying pricing largely offset.
The hedges were deemed to be fully effective resulting in a pretax loss of
$12,000 recorded in Other Comprehensive Loss at December 31, 2001. Upon
expiration of these hedges, the amount recorded in Other Comprehensive Loss will
be reclassified into earnings as interest.  Subsequent to year end December 31,
2001, the borrowing base was converted from LIBOR to prime, which rendered the
swap ineffective as a hedge. Accordingly, concurrent with the conversion, the
Company prematurely terminated the swap in February 2002 at a cost of $341,000.
The resulting loss will be recorded in Other Comprehensive Loss in February 2002
and reclassified to earning as interest expense over the term of the Senior
Credit Facility.

As described in Note 8, the Junior Credit Facility contains provisions for the
issuance of warrants of up to 0.5% of the outstanding shares of the
Company’s common stock on July 2002 and up to an additional 1.5% in July
2003.  The warrants were valued as of July 2001 based on the estimated relative
fair value using the Black Scholes model with the following assumptions:
risk-free rate of 4.9% estimated life of 7 years, 72% volatility and no dividend
yield.  Accordingly, the Company has recorded a liability and makes periodic
mark to market adjustments, which are reflected in the accompanying consolidated
statement of operations in accordance with EITF Issue 00-19, “Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock”.  At December 31, 2002, the related
liability was $362,000 and is included in accrued liabilities in the
accompanying consolidated financial statements.

F-24

Table of
Contents

10.          STOCK-BASED COMPENSATION PLANS

In accordance with the Company’s stock-based compensation plans, the
Company may grant incentive stock options as well as non-qualified and other
stock-related incentives to officers, employees, and non-employee directors of
the Company. Options vest ratably over a two to four-year period beginning on
the grant date and expire ten years from the date of grant. Shares available for
granting options at December 31, 2002 and 2001, and April 30, 2001 were
approximately 0.5 million, 0.4 million, and 0.5 million, respectively.

A summary of the activity of stock options for the year ended December 31, 2002,
the eight months ended December 31, 2001 and the years ended April 30, 2001, and
2000, is presented below (shares in thousands):

December 31, 2002

December 31, 2001

April 30, 2001

April 30, 2000Shares
Under
Option
WeightedAverageExercise
Price

SharesUnderOption
WeightedAverageExercise
 Price

SharesUnderOption
WeightedAverageExercisePrice

SharesUnderOption
WeightedAverageExercisePriceOutstanding at Beginning
   of Period
948
$19.49

789
$23.36

1,010
$32.61

1,033
$37.13Granted
28
3.37

175
3.38

100
6.11

160
14.56Exercised
--
--

---
----

(1)
11.67

(8)
12.73Forfeited and cancelled
(215)
16.91

(16)
34.43

(320)
47.20

(175)
43.56Outstanding at End of Period
761
$19.58

948
$19.49

789
$23.36

1,010
$32.61Options exercisable at year
     end
648
$22.22

646
$25.18

588
$25.76

665
$32.73Weighted average fair value
     of options granted

$1.88


$1.92


$3.60


$9.50


A summary of options outstanding under the Company’s stock-based
compensation plans at December 31, 2002 is presented below (shares in
thousands):

Exercise
Price Range

Shares
Under
Option

Weighted AverageExercise Price ofOptions
Outstanding

WeightedAverageRemaining
Life

OptionsExercisable

Weighted AverageExercise Price of shares Exercisable$  3.05
-
$17.50

428


$      8.15


5.2


315


$     9.4818.89
-
27.41

158

19.45


3.4


158


19.4528.75
-
38.44

87

34.78


4.1


87


34.7843.96
-
64.38

61

54.73


3.0


61


54.7367.50
-
84.06

27


73.49



3.7



27



73.49Total

761


$     19.58



4.5



648



$     22.22


F-25

Table of
Contents

11.          COMMITMENTS AND CONTINGENCIES

Commitments

The Company has entered into various operating leases for buildings, office
equipment, and trucks. Rental expense under these leases for continuing
operations was $487,000, $489,000, $642,000, and $624,000, for the year ended
December 31, 2002, the eight months ended December 31, 2001 and the fiscal years ended April 30, 2001, and 2000, respectively. Rental expense under
these leases for discontinued operations was $10,395,000, $7,934,000,
$13,111,000, and $13,988,000, for the year ended December 31, 2002, the eight
months ended December 31, 2001, and the fiscal years ended April 30, 2001 and
2002, respectively.  The lease and rental expense from discontinued operations
includes approximately $640,000 annually in payments to former owners of
businesses that the Company has acquired and covers properties used in the
acquired business’ operations.

At December 31, 2002, future minimum lease payments under non-cancelable
operating leases for the next five fiscal years are as follows (in
thousands):

Continuing Operations
Discontinued Operations
Total2003
$347

$6,995

$7,3422004
253

5,173


5,4262005
130

3,218

3,3482006
63

1,681

1,7442007
45

579

624


Contingencies

The Company is, from time to time, a party to litigation arising in the normal
course of its business.  Litigation is subject to various inherent
uncertainties, and it is possible that some of these matters could be resolved
unfavorably to the Company, which could result in substantial damages against
the Company. The Company has established accruals for matters that are probable
and reasonably estimable and maintains product liability and other insurance
that management believes to be adequate. Management believes that any liability
that may ultimately result from the resolution of these matters in excess of
available insurance coverage and accruals will not have a material adverse
effect on the consolidated financial position or results of operations of the
Company.

12.          INCOME TAXES

Deferred tax assets and liabilities are determined based on the differences
between the financial and tax bases of existing assets and liabilities using the
currently enacted tax rates in effect for the year in which the differences are
expected to reverse.

The (benefit) provision for income taxes on income from continuing operations
consisted of the following for the year ended December 31, 2002, the eight
months ended December 31, 2001 and the years ended April 30, 2001, and 2000 (in
thousands):





F-26

Table of
Contents



December 31, 2002

December 31, 2001

April 30, 2001

April 30, 2000Current:Federal
$
(4,247)

$
--

$
2,476

$
4,847State
297

319

--

1,400Foreign
533

388

190

594(3,417)

707

2,666

6,841Deferred:Federal
6,620

1,863

(179)

(168)State
(177)

206

(21)

(20)Foreign
191

(357)

67

(148)6,634

1,712

(133)

(336)$
3,217

$
2,419

$
2,533

$
6,505


The principal differences between the federal statutory tax rate and the income
expense (benefit) from continuing operations for the year ended December 31,
2002, the eight months ended December 31, 2001, and the years ended April 30,
2001 and 2000 were as follows (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001

April 30, 2000Federal statutory tax rate
34.0%

34.0%

34.0%

34.0%State taxes, net of federal tax
     benefit
1.2%

9.7%

(0.3)%

9.3%Non-deductible goodwill
     amortization and impairment
     charges
0.2%

5.7%

2.0%

21.5%Excess of foreign tax over US
     tax on foreign income
7.6%

0.2%

2.5%

1.0%Other
4.7%

6.7%

(8.6)%

1.2%Effective tax rate
47.7%

56.3%

29.6%

67.0%


Deferred income tax assets and liabilities at December 31, 2002 and 2001 and
April 30, 2001 reflect the impact of temporary differences between the amounts
of assets and liabilities for financial reporting and income tax reporting
purposes. Temporary differences and carry forwards which give rise to deferred
tax assets and liabilities at December 31, 2002 and 2001 and April 30, 2001 are
as follows (in thousands):

December 31, 2002

December 31, 2001

April 30, 2001Deferred tax assets:Allowance for
doubtful accounts
$
305

$
1,149

$
724Accruals and
reserves
1,326

5,892

4,526Federal net operating loss carryforward
17,542

15,776

12,482Deductible goodwill and impairment charges
(33)

4,758

948Other
272

1,545

1,667Total deferred tax
assets
19,412

29,120

20,347Less valuation
allowance
(13,601)

(7,111)

-Net deferred tax
asset
5,811

22,009

20,347Deferred tax liabilities:Property, plant, and
equipment
5,811

7,454

7,433Other
--

5,162

2,386Total deferred tax
liabilities
5,811

12,616

9,819Net deferred tax asset
$
--

$
9,393

$
10,528


F-27

Table of
Contents

Included in the Company’s noncurrent assets of discontinued operations at
December 31, 2002, is a net noncurrent deferred tax asset of $7.2 million
relating primarily to tax deductible goodwill and reserves that are not
deductible for tax purposes until paid.  In addition, the Company’s noncurrent liabilities of discontinued operations at December 31, 2002, include
noncurrent deferred tax liability of $2.7 million related primarily to
differences in the book and tax bases of fixed assets.  The net deferred tax
asset of $4.4 million has a full valuation allowance.

As of December 31, 2002, the Company had federal net operating loss
carryforwards of approximately $50.4 million which will expire between 2004 and
2022.  While the majority of these loss carryforwards are associated with the
Company’s discontinued operations, the Company has classified the related
deferred tax asset and valuation allowance as a component of continuing
operations since it believes it will be able to retain these tax attributes.  In
addition, the Company had charitable contributions and capital loss
carryforwards of $1.4 million that may be carried forward through 2006 and an AMT
credit carryforward of $0.2 million, which may be carried forward
indefinitely.

A consolidated valuation allowance of $7.1 million related to rationalization of
net operating loss carryforwards generated by the Company’s discontinued
operations was established as of December 31, 2001. The allowance reflects the
Company’s recognition that continuing losses from operations and certain
liquidity matters discussed in Note 2 indicate that it is more likely than
not that certain future tax benefits will not be realized as a result of future
taxable income.  At December 31, 2002, the Company recorded a full valuation
allowance against its net deferred tax asset from continuing and discontinuing
operations totalling approximately $18.0 million.

As of December 31, 2002, the Company has state net operating loss carryforwards
of approximately $97.0 million.  As the Company believes that realization of the
benefit of these state losses is remote, it has not recorded deferred tax assets
associated with these losses.

The Company received a tax refund of approximately $4.2 million during the
quarter ended June 30, 2002, which was used to reduce the RoadOne revolver and
cured the over-advance position that existed at that time.  An additional tax
refund of $4.6 million was received during the quarter ended September 30, 2002,
with proceeds used to further reduce the borrowings under the RoadOne revolver.

13.          PREFERRED STOCK

The Company has authorized 5,000,000 shares of undesignated preferred stock
which can be issued in one or more series. The terms, price, and conditions of
the preferred shares will be set by the board of directors. No shares have been
issued.

14.          EMPLOYEE BENEFIT PLANS

During 1996, the Company established a contributory retirement plan for all
full-time employees with at least 90 days of service. Effective January 1, 1999,
the Company split the plan into two identical plans by operating segment. As a
result of the Company’s decision to dispose of its towing services
operations the two separate plans will be combined to form a consolidated plan
effective January 1, 2003. These plans are designed to provide tax-deferred
income to the Company’s employees in accordance with the provisions of
Section 401 (k) of the Internal Revenue Code.

These plans provide that each participant may contribute up to 15% of his or her
salary. The Company matches 33.33% of the first 3% of participant contributions.
Matching contributions vest over a period of five years. Company contributions
to the plans were not significant in 2001, 2000, and 1999.

F-28

Table of
Contents

15.          QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the unaudited quarterly financial information for
the twelve months ended December 31, 2002 and 2001 (in thousands, except per
share data):

NetSales

Operating
Income(Loss)

Loss
FromDiscontinuedOperations

NetIncome(Loss)(a)

BasicNetLoss
PerShare

DilutedNetLoss
PerShareYear ended December 31, 2002:First
quarter
$  47,805

$  2,688

$(1,213)

$(22,047)

$(2.36)

$(2.36)Second
quarter
54,159

2,740

(2,016)

(342)

(0.04)

(0.04)Third
quarter
47,771

1,491

(586)

(962)

(0.10)

(0.10)Fourth
quarter
53,324

4,190

(23,591)

(22,343)
(b)
(2.39)

(2.39)Total
$203,059

$11,109

$(27,406)

$(45,694)

$(4.89)

$(4.89)Year ended December 31, 2001:First
quarter
$  49,490

$   1,827

$(1,459)

$    (1,949)

$(0.20)

$(0.20)Second
quarter
62,613

4,319

(7,915)

29

(0.00)

(0.00)Third
quarter
53,017

2,179

(697)

(719)

(0.08)

(0.08)Fourth
quarter
53,859

2,236

(15,869)

(17,725)(b)

(1.90)

(1.90)Total
$218,979

$10,561


$(25,940)

$(20,364)

$(2.18)

$(2.18)




|(a) | The income tax provision (benefit) has been
allocated by quarter based on the effective rate for the twelve months ended
December 31, 2002 and 2001.                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The results for the three months ended December
31, 2002 and December 31, 2001 reflect asset impairments and other special
charges of $11,828,000 and $16,672,000 as discussed in Note 6.













F-29

Table of
Contents

MILLER
INDUSTRIES, INC. AND SUBSIDIARIESSCHEDULE II -VALUATION AND QUALIFYING ACCOUNTS

Balance at Beginning of Period
Charged to Expenses
Charged to Other
Accounts Written Off
Balance at End of Period(In Thousands)Year ended April 30, 2000:
     Deduction from asset accounts:
          allowance for
doubtful accounts
$3,702
4,956
59(a)
(2,208)
$6,509Year ended April 30, 2001:

     Deduction from asset accounts:
          Allowance for
doubtful accounts
$6,509
3,845
(265)(b)
(7,236)
$2,853Eight months ended December 31, 2001:
Deduction from asset accounts:
          Allowance for
doubtful accounts
$2,853
1,262
--
(1,092)
$3,023Year ended December 31, 2002
     Deduction from asset accounts:
          Allowance for
doubtful accounts
$576
564
--
(335)
$805


(a)
      The other addition to the allowance for
doubtful accounts results from the acquisitions in fiscal 2000 which were
accounted for under the purchase method of accounting.(b)
        The other reduction to the allowance for
doubtful accounts results from the dispositions of towing services markets in
fiscal 2001.




Balance
atBeginningof
Period
Charged toExpense
Claims
Balance atEnd of Period(In Thousands)Year Ended April 30, 2000:Product Warranty
Reserve:
$507
2,079
(1,668)
$918Year Ended April 30, 2001:Product Warranty
Reserve:
$918
2,126
(2,156)
$888Eight Months Ended December 31, 2001:Product Warranty
Reserve:
$888
1,271
(1,233)
$926Year Ended December 31, 2002:Product Warranty
Reserve:
$926
1,489
(1,861)
$554




S-1

Table of
Contents



Balance
atBeginningof
Period
Current Year Additions
Balance atEnd of Period(In Thousands)Eight Months Ended December 31, 2001:Deferred Tax Valuation Allowance:
$
--
7,111
$
7,111Year Ended December 31, 2002:Deferred Tax Valuation Allowance:
$
7,111
10,921
$
18,032




Note:     The tables above reflect activity for
continuing operations for the year ended December 31, 2002 and for consolidated
operations for the eight months ended December 31, 2001 and the fiscal years
ended April 30, 2001 and 2000.















S-2

Table of
Contents



SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) 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, on the 22nd day of May, 2003.



| | MILLER INDUSTRIES, INC.By:/s/ Jeffrey I.
Badgley
Jeffrey I. Badgley, President, 
           Chief Executive Officer and Director
| | --------------------------------------------------------------------------------------------------------------------------------

Know
all men by these presents, that each person whose signature appears below
constitutes and appoints Jeffrey I. Badgley as attorney-in-fact, with power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact may do or cause
to be done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed below by the following persons
on behalf of the Registrant in the capacities indicated on the 22nd day of May, 2003.

Signature
Title/s/ William G. Miller
William G. Miller
Chairman of the Board of Directors/s/ Jeffrey I. Badgley
Jeffrey I. Badgley
President, Chief Executive Officer and Director/s/ J. Vincent Mish
J. Vincent Mish
Executive Vice President, Treasurer and Chief Financial Officer (Principal
Financial and Accounting Officer)/s/ A. Russell Chandler, III
A. Russell Chandler, III
Director/s/ Paul E. Drack
Paul E. Drack
Director/s/ Richard H. Roberts
Richard H. Roberts
Director




---

Table of
Contents

CERTIFICATIONS



I, Jeffrey I. Badgley, certify that:

1.           I have reviewed this
annual report on Form 10-K of Miller Industries, Inc.;

2.          Based on my knowledge, this
annual 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 annual report;

3.          Based on my knowledge, the
financial statements, and other financial information included in this annual
report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods
presented in this annual report;

4.          The registrants other
certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:

> a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     annual report is being prepared;
>     b) evaluated the effectiveness of
>     the registrants disclosure controls and procedures as of a date within 90
>     days prior to the filing date of this annual report (the Evaluation Date);
>     and
>     c) presented in this annual report
>     our conclusions about the effectiveness of the disclosure controls and
>     procedures based on our evaluation as of the Evaluation Date;

5.          The registrants other
certifying officers and I have disclosed, based on our most recent evaluation,
to the registrants auditors and the audit committee of registrants board of
directors (or persons performing the equivalent function):

> a) all significant deficiencies in
>     the design or operation of internal controls which could adversely affect
>     the registrants ability to record, process, summarize and report financial
>     data and have identified for the registrants auditors any material
>     weaknesses in internal controls; and
>     b) any fraud, whether or not
>     material, that involves management or other employees who have a significant
>     role in the registrants internal controls; and

6.           The registrants other
certifying officers and I have indicated in this annual report whether or not
there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material  weaknesses.



Date: May 22, 2003



/s/ Jeffrey I. Badgley                                       Jeffrey I. Badgley
                                       President and Chief Executive Officer

---

Table of Contents

CERTIFICATIONS



I, J. Vincent Mish, certify that:

1.           I have reviewed this
annual report on Form 10-K of Miller Industries, Inc.;

2.          Based on my knowledge, this
annual 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 annual report;

3.          Based on my knowledge, the
financial statements, and other financial information included in this annual
report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods
presented in this annual report;

4.          The registrants other
certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:

> a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     annual report is being prepared;
>     b) evaluated the effectiveness of
>     the registrants disclosure controls and procedures as of a date within 90
>     days prior to the filing date of this annual report (the Evaluation Date);
>     and
>     c) presented in this annual report
>     our conclusions about the effectiveness of the disclosure controls and
>     procedures based on our evaluation as of the Evaluation Date;



5.         The registrants other
certifying officers and I have disclosed, based on our most recent evaluation,
to the registrants auditors and the audit committee of registrants board of
directors (or persons performing the equivalent function):

> a) all significant deficiencies in
>     the design or operation of internal controls which could adversely affect
>     the registrants ability to record, process, summarize and report financial
>     data and have identified for the registrants auditors any material
>     weaknesses in internal controls; and
>     b) any fraud, whether or not
>     material, that involves management or other employees who have a significant
>     role in the registrants internal controls; and

6.          The registrants other
certifying officers and I have indicated in this annual report whether or not
there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material  weaknesses.



Date: May 22, 2003



/s/ J. Vincent Mish                                       J. Vincent Mish
                                       Executive Vice President and Chief
Financial Officer

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Table of Contents

EXHIBIT INDEX



|10.84 | Third Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated September 13, 2002.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.86 | Fifth Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated February 28, 2003. 
|10.87 | Sixth Amendment to the Credit Agreement by and among the Company and its
Subsidiaries and the CIT Group/Business Credit, Inc. and Bank of America, N.A.
dated April 1, 2003.     
|21    | Subsidiaries of the Registrant*                                                                                                                                                  
|23.1  | Consent of PricewaterhouseCoopers LLP                                                                                                                                            
|99.1  | Certification of Jeffrey I. Badgley pursuant to18 U.S.C. Section 1350*                                                                                                           
|99.2  | Certification of J. Vincent Mish pursuant to18 U.S.C. Section 1350*