UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.  20549
 
 FORM
10-K
  (Mark
One)
  x
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
fiscal year ended    December 31,
2007
  OR
  o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from __________________________________ to
__________________________________
  Commission
File No. 0-24298
  MILLER
INDUSTRIES, INC.
 
 (Exact
name of registrant as specified in its charter)
  Tennessee
              
              62-1566286(State
      or other jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification No.)8503
      Hilltop Drive, Ooltewah, Tennessee
              
              37363(Address
      of principal executive offices)
              
              (Zip
      Code)
 (423)
238-4171
 
 (Registrant’s
telephone number, including area code)
  Securities
registered pursuant to Section 12(b) of the Act:
  Title of Each
      Class
              
              Name of Each Exchange
      on Which RegisteredCommon
      Stock, par value $.01 per share
              
              New
      York Stock Exchange
  Securities
registered pursuant to Section 12(g) of the Act:
  None
 
 (Title of
Class)
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
  o   Yes   x   No
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
  o   Yes   x   No
  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.
  x   Yes   o   No
  
  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 10-K. x
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act
(Check one):
  Large
      Accelerated Filer  o
              Accelerated
      Filer   xNon-accelerated
      Filer   o
              Smaller
      Reporting Company   o
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
  o   Yes   x   No
  The
aggregate market value of the voting stock held by non-affiliates of the
registrant (which for purposes hereof are all holders other than executive
officers and directors) as of June 30, 2007 (the last business day of the
registrant’s most recently completed second fiscal quarter) was $251,365,155
(based on 10,014,548 shares held by non-affiliates at $25.10 per share, the last
sale price reported on the New York Stock Exchange on June 30,
2007).
  At March
10, 2008 there were 11,593,588 shares of the registrant’s common stock, par
value $0.01 per share, outstanding.
  DOCUMENTS
INCORPORATED BY REFERENCE
  The
information called for by Part III (Items 10, 11, 12, 13 and 14) is incorporated
herein by reference to the Registrant’s definitive proxy statement for its 2008
Annual Meeting of Shareholders which is to be filed pursuant to Regulation
14A.
  
  
  TABLE
OF CONTENTS
  PART
      IITEM
      1.
              BUSINESS
              1ITEM
      1A.
              RISK
      FACTORS
              7ITEM
      1B.
              UNRESOLVED
      STAFF COMMENTS
              10ITEM
      2.
              PROPERTIES
              10ITEM
      3.
              LEGAL
      PROCEEDINGS
              11ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              11PART
      IIITEM
      5.
              MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
              12ITEM
      6.
              SELECTED
      FINANCIAL DATA
              14ITEM
      7.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
              16ITEM
      7A.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
              23ITEM
      8.
              FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
              23ITEM
      9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
              23ITEM
      9A.
              CONTROLS
      AND PROCEDURES
              23ITEM
      9B.
              OTHER
      INFORMATION
              26PART
      IIIITEM
      10.
              DIRECTORS,
      EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
    GOVERNANCE
              27ITEM
      11.
              EXECUTIVE
      COMPENSATION
              27ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
              27ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
              27ITEM
      14.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
              27PART
      IVITEM
      15.
              EXHIBITS,
      FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
              28FINANCIAL
      STATEMENTS
              F-1FINANCIAL
      STATEMENT SCHEDULE
              S-1
 
  CERTAIN
FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
  Certain
statements in this Annual Report, including but not limited to Item
7–“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.  Forward-looking
statements can be identified by the use of words such as “may,” “will,”
“should,” “could,” “continue,” “future,” “potential,” “believe,” “project,”
“plan,” “intend,” “seek,” “estimate,” “predict”, “expect”, “anticipate” and
similar expressions, or the negative of such terms, or other comparable
terminology.  Forward-looking statements also include the assumptions
underlying or relating to any of the foregoing statements.  Such
forward-looking statements are made pursuant to the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995 based on our management’s
beliefs as well as assumptions made by, and information currently available to,
our management.  Our actual results may differ materially from the
results anticipated in these forward-looking statements due to, among other
things, the risks related to the cyclical nature of our industry, the general
economic health of our customers, our dependence on outside suppliers of raw
materials, increases in the cost of aluminum, steel and related raw materials,
increases in fuel and other transportation costs, and those factors set forth
below under the caption “Risk Factors” and those otherwise described from time
to time in our Securities and Exchange Commission reports filed after this
Annual Report.  Such factors are not exclusive.  We do not
undertake to update any forward-looking statement that may be made from time to
time by, or on behalf of, our company.
  i
  PART
I
  ITEM 1.
              BUSINESS
  General
  Miller
Industries is the world’s largest manufacturer of vehicle towing and recovery
equipment, with executive offices in Ooltewah, Tennessee, domestic manufacturing
operations in Tennessee and Pennsylvania, and foreign manufacturing operations
in France and the United Kingdom.
  Since
1990, we have developed or acquired several of the most well-recognized brands
in the towing and recovery equipment manufacturing industry.  Our
strategy has been to diversify our line of products and increase our presence in
the industry by combining internal growth and development with acquisitions of
complementary products.
  In this
Annual Report on Form 10-K, the words “Miller Industries,” “the Company,” “we,”
“our,” “ours,” and “us” refer to Miller Industries, Inc., and its subsidiaries
or any of them.
  Towing
and Recovery Equipment
  We offer
a broad range of towing and recovery equipment products that meet most customer
design, capacity and cost requirements.  We manufacture the bodies of
wreckers and car carriers, which are installed on truck chassis manufactured by
third parties.  We frequently purchase the truck chassis for resale to
our customers.  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 75-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.  We also manufacture a line of transport
trailers.
  Our
products primarily are sold through independent distributors that serve all 50
states, Canada and Mexico, and other foreign markets including Europe, the
Pacific Rim, the Middle East, South America and Africa.  Additionally,
as a result of our ownership of Jige in France and Boniface in the United
Kingdom, we have substantial distribution capabilities in
Europe.  While most of our distributor agreements do not contain
exclusivity provisions, management believes that approximately 65% of our
independent distributors sell our products on an exclusive basis.  In
addition to selling our products to towing operators, our independent
distributors provide parts and service.  We also utilize sales
representatives to exclusively market our products and provide expertise and
sales assistance to our independent distributors.  Management believes
the strength of our distribution network and the breadth of our product
offerings are two key advantages over our competitors.
  Product
Lines
  We
manufacture a broad line of wrecker, car carrier and trailer bodies to meet a
full range of customer design, capacity and cost requirements.
  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
75-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 automatic wheellift
hookup devices that allow operators to engage a disabled or unattended vehicle
without leaving the cab of the wrecker.
  Our
wreckers range in capacity from 8 to 75 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 large vehicles.
  1
  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. Many professional towing
operators have added car carriers to their fleets to complement their towing
capabilities.
  Transport
Trailers.  Our multi-vehicle transport trailers are specialized
auto transport trailers with upper and lower decks and hydraulic ramps for
loading vehicles.  These trailers are used for moving multiple
vehicles for auto auctions, car dealerships, leasing companies and other similar
applications.  These 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 transport quickly with ratchet and chain tie-downs
that are mounted throughout the frame of the transport.  Many
professional towing operators have added auto transport trailers to their fleets
to add to their towing capabilities.  Also, we design, engineer and
manufacture special-use transport and trailer products to be used primarily in
military applications.
  Brand
Names
  We
manufacture and market our wreckers, car carriers and trailers under ten
separate brand names.  Although certain brands overlap in terms of
features, prices and distributors, each brand has its own distinctive image and
customer base.
  Century®.  The
Century brand is our “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 8-ton light duty to
75-ton heavy duty models, and car carriers in lengths from 20 to 30
feet.  Management believes that the Century brand has a reputation as
the industry’s leading product innovator.
  Vulcan®.Our Vulcan
product line includes a range of premium light and heavy duty wreckers, ranging
from 8-ton light duty to 50-ton heavy duty models, and car
carriers.  The Vulcan line is sold through its own independent
distribution network.
  Challenger®.  Our Challenger
products compete with the Century and Vulcan products and constitute a third
premium product line.  Challenger products consist of heavy duty
wreckers with capacities ranging from 8 to 75 tons.  The Challenger
line was started in 1975 and is known for high performance heavy duty wreckers
and aesthetic design.
  Holmes®.  Our
Holmes product line includes mid-priced wreckers with 8 to 16 ton capacities, a
16-ton rotator and a detachable towing unit (DTU).  The Holmes wrecker
was first produced in 1916.  Historically, the Holmes name has been
the most well-recognized and leading industry brand both domestically and
internationally.
  Champion®.  The
Champion brand, which was introduced in 1991, includes car carriers which range
in length from 19 to 21 feet.  The Champion product line, which is
generally lower-priced, allows us to offer a full line of car carriers at
various competitive price points.
  ChevronTM.  Our
Chevron product line is comprised primarily of premium car
carriers.  Chevron produces a range of premium single-car, multi-car
and industrial carriers, as well as wreckers ranging from 8-ton to 16-ton
models.  The Chevron line is operated autonomously with its own
independent distribution network.
  Eagle®.  Our
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 was originally developed for the repossession market.  Since
acquiring Eagle, we have upgraded the quality and features of the Eagle product
line and expanded its recovery capability.
  2
  Titan®.  Our
Titan product line is comprised of premium multi-vehicle transport trailers
which can transport up to 8 vehicles depending on configuration.
  JigeTM.  Our Jige product
line is comprised of a broad line of premium 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, as well as
large wreckers.
  BonifaceTM.  Our Boniface
product line is comprised primarily of premium heavy duty wreckers marketed
primarily in Europe.  Boniface produces heavy duty wreckers
specializing in the long underlift technology required to tow modern European
tour buses.
  Product
Development and Manufacturing
  Our
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.  Our 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, we focus on developing or licensing
new technology for our products.
  We
manufacture wreckers, car carriers and trailers at six manufacturing facilities
located in the United States, France and the United Kingdom.  The
manufacturing process for our 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 us 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 us 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
us 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, we contract with independent
paint shops for such services.
  We
purchase raw materials and component parts from a number of
sources.  Although we have no long-term supply contracts, management
believes we have good relationships with our primary suppliers.  In
recent years prices have fluctuated significantly, but we have experienced no
significant problems in obtaining adequate supplies of raw materials and
component parts to meet the requirements of our production
schedules.  Management believes that the materials used in the
production of our 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 our business.
  Sales,
Distribution and Marketing of Towing and Recovery Equipment
  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 includes 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.
  Our sales
force, which services our network of independent distributors, consists of sales
representatives whose responsibilities include providing administrative and
sales support to the entire base of independent distributors.  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 our products and to maintain customer relationships.
  3
  We have
developed a diverse network of independent distributors, consisting of
approximately 120 distributors in North America, who serve all 50 states, Canada
and Mexico, and approximately 50 distributors that serve other foreign
markets.  In 2007, no single distributor accounted for more than 10%
of our sales.  Management believes our broad and diverse network of
distributors provides us with the flexibility to adapt to market changes,
lessens our dependence on particular distributors and reduces the impact of
regional economic factors.
  To
support sales and marketing efforts, we produce demonstrator models that are
used by our sales representatives and independent distributors.  To
increase exposure to our products, we also serve as the official recovery team
for many automobile racing events, including NASCAR races at Daytona, Talladega,
Richmond, Chicago, Kansas, California, Michigan and Darlington, the Rolex
Daytona 24 Hour Race, the Brickyard, and the Indy 500 races, among
others.
  We
routinely respond to requests for proposals or bid invitations in consultation
with our local distributors.  Our products have been selected by the
United States General Services Administration as an approved source for certain
federal and defense agencies and we intend to continue to pursue government
contracting opportunities.
  The
towing and recovery equipment industry places heavy marketing emphasis on
product exhibitions at national, regional and international trade
shows.  In order to focus our marketing efforts and to control
marketing costs, we concentrate our efforts on the major trade shows each year,
and we work with our network of independent distributors to concentrate on
various regional shows.
  Disposition
of Company-Owned Distributors
  During
2002, our board of directors and management made the decision to sell our
distribution group, and by the end of 2005, we had sold all of our towing and
recovery distributor locations.  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.
  Product
Warranties and Insurance
  We offer
a 12-month limited manufacturer’s product and service warranty on our wrecker
and car carrier products.  Our warranty generally provides for repair
or replacement of failed parts or components.  Warranty service is
usually performed by us or an authorized distributor.  Management
believes that we maintain adequate general liability and product liability
insurance.
  Backlog
  We
produce virtually all of our products to order.  Our backlog is based
upon customer purchase orders that we believe are firm.  The level of
backlog at any particular time, however, is not an appropriate indicator of our
future operating performance.  Certain purchase orders are subject to
cancellation by the customer upon notification.  Given our production
and delivery schedules management believes that the current average backlog
represents less than three months of production.
  Competition
  The
towing and recovery equipment manufacturing industry is highly competitive for
sales to distributors and towing operators.  Management believes that
competition in this industry focuses on product quality and innovation,
reputation, technology, customer service, product availability and
price.  We compete 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, we have invested substantial resources and
management time in building and maintaining strong relationships with
distributors.  Management also believes that our products are regarded
as high quality within their particular price points.  Our 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 our products.
  4
  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.  Certain
of our competitors may have greater financial and other resources and may
provide more attractive dealer and retail customer financing alternatives than
we do.
  Towing
Services – RoadOne
  In 1997
we formed RoadOne, Inc. to build a national towing services
network.  However, in 2002 we made the decision to sell our towing
services operations.  As of December 31, 2003, all of the towing
services operations had either been sold or closed, and as of December 31, 2006,
there were no assets remaining from previous towing services market
sales.
  In
October 2005, RoadOne, Inc. filed for liquidation under Chapter 7 of the federal
bankruptcy laws in the Bankruptcy Court of the Eastern District of Tennessee and
a trustee was appointed.  In December 2006, the trustee’s final report
was approved by the United States trustee, and the final decree was entered on
June 19, 2007.  As a result of the bankruptcy proceedings, RoadOne,
Inc. was deconsolidated from our financial statements as of December 31,
2006.  The deconsolidation resulted in a pre-tax, non-cash gain of
$126,000.
  Employees
  We
employed approximately 900 people as of December 31, 2007.  None of
our employees are covered by a collective bargaining agreement, though our
employees in France and the United Kingdom have certain similar rights provided
by their respective government’s employment regulations.  We consider
our employee relations to be good.
  Intellectual
Property Rights
  Our
development of the underlift parallel linkage and L-arms is considered one of
the most innovative developments in the wrecker industry.  This
technology is significant primarily because it allows the damage-free towing of
newer aerodynamic vehicles made of lighter weight materials.  This
technology, particularly the L-arms, is used in a majority of commercial
wreckers today.  We hold a number of utility and design patents
covering other of our products, including the Vulcan “scoop” wheel-retainer and
the car carrier anti-tilt device.  We have also obtained the rights to
use and develop certain technologies owned or patented by
others.  Management believes that, until the patents on our technology
expire, utilization of our patented technology without a license is an
infringement of such patents.  We have successfully litigated
infringement lawsuits in which the validity of our patents on our technology was
upheld, and successfully settled other lawsuits.  Pursuant to the
terms of a consent judgment entered into in 2000 with the Antitrust Division of
the U.S. Department of Justice, we are required to offer non-exclusive
royalty-bearing licenses to certain of our key patents to all tow truck and car
carrier manufacturers.
  Our
trademarks “Century,” “Holmes,” “Champion,” “Challenger,” “Formula I,” “Eagle
Claw Self-Loading Wheellift,” “Pro Star,” “Street Runner,” “Vulcan,” “Right
Approach” and “Extreme Angle,” among others, are registered with the United
States Patent and Trademark Office.  Management believes that our
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
  Our
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 we are 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 our financial condition or results of operations in the past
and is not expected to have a material adverse impact in the
future.
  5
  We are
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 our 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 our
operations.
  Executive
Officers of the Registrant
  Information
relating to our executive officers as of the end of the period covered by this
Annual Report is set forth below.  There are no family relationships
among the executive officers, directors or nominees for director, nor are there
any arrangements or understandings between any of the executive officers and any
other persons pursuant to which they were selected as executive
officers.
  Name
              
              Age
              
              PositionWilliam
      G. Miller
              
              61
              
              Chairman
      of the Board and Co-Chief Executive OfficerJeffrey
      I. Badgley
              
              55
              
              President
      and Co-Chief Executive OfficerFrank
      Madonia
              
              59
              
              Executive
      Vice President, Secretary and General CounselJ.
      Vincent Mish
              
              57
              
              Executive
      Vice President, Chief Financial Officer and
  Treasurer
  William G.
Miller has served as Chairman of the Board since April 1994 and our
Co-Chief Executive Officer since October 2003.  Mr. Miller served as
our Chief Executive Officer from April 1994 until June 1997.  In June
1997, he was named Co-Chief Executive Officer, a title he shared with Jeffrey I.
Badgley until November 1997.  Mr. Miller also served as our President
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 our Co-Chief Executive Officer with Mr. Miller since October 2003, as
our President since June 1996 and as a director since January
1996.  Mr. Badgley served as our Chief Executive Officer from November
1997 to October 2003.  In June 1997, he was named our Co-Chief
Executive Officer, a title he shared with Mr. Miller until November
1997.  Mr. Badgley served as our Vice President from 1994 to 1996, and
as our Chief Operating Officer 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 from 1982 until joining Miller Industries Towing Equipment
Inc.
  Frank
Madoniahas
served as our Executive Vice President, Secretary and General Counsel since
September 1998.  From April 1994 to September 1998 Mr. Madonia served
as our Vice President, General Counsel and Secretary.  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. and The Signal
Companies, Inc.
  J. Vincent
Mishis a
certified public accountant and has served as our Chief Financial Officer and
Treasurer since June 1999, a position he also held from April 1994 through
September 1996.  In December 2002, Mr. Mish was appointed as our
Executive Vice President.  He also has served as President of the
Financial Services Group since September 1996 and as a Vice President of Miller
Industries 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.
  6
  Available
Information
  Our
Internet website address is www.millerind.com.  We make available free
of charge through our website our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports,
as soon as reasonably practicable after we file them with, or furnish them to,
the Securities and Exchange Commission.  Our Corporate Governance
Guidelines and Code of Business Conduct and Ethics are also available on our
website and are available in print to any shareholder who mails a request
to:  Corporate Secretary, Miller Industries, Inc., 8503 Hilltop Drive,
Ooltewah, Tennessee  37363.  Other corporate
governance-related documents can be found at our website as well.
  ITEM
      1A.
              RISK
      FACTORS
  There
are many factors that affect our business and the results of our operations,
some of which are beyond our control.  The following is a description
of some of the important factors that may cause the actual results of our
operations in future periods to differ materially from those currently expected
or desired.  We encourage you to read this section
carefully.
  Our
business is subject to the cyclical nature of our industry, consumer confidence,
fluctuations in interest rates and changes in economic conditions in
general.  Adverse changes with respect to these factors may lead to a
downturn in our business.
  The
towing and recovery industry is cyclical in nature and historically the industry
has been affected by consumer confidence, fluctuations in interest rates and
changes in economic conditions in general.  Downturns in the economy,
declines in consumer confidence and fluctuations in interest rates, or a
combination of these factors, have in the past, and could in the future, have a
material adverse effect on our operations.
  Overall
demand from our customers may be affected by increases in their fuel and
insurance costs, the reduced availability of credit and changes in weather
conditions.
  In recent
years, our customers have experienced substantial increases in fuel and other
transportation costs, and in the cost of insurance, and there can be no
assurance that these costs will not continue to increase for our customers in
the future.  Additionally, our customers also have, from time to time,
experienced reduced availability of credit and have been subject to
unpredictable and varying weather conditions.  Reduced availability of
credit and unpredictable weather conditions negatively affect the ability of our
customers to purchase, and their capacity for purchasing, towing and related
equipment.  Cost increases, reductions in the availability of credit,
and unpredictable weather conditions have had, and may continue to have, a
negative effect on our customers, and, consequently, a material effect upon our
business and operating results.
  Our
dependence upon outside suppliers for our raw materials, including aluminum,
steel, petroleum-related products  and other purchased component
parts, leaves us subject to price increases and delays in receiving supplies of
such materials or parts.
  We are
dependent upon outside suppliers for our raw material needs and other purchased
component parts, and although we believe that these suppliers will continue to
meet our requirements and specifications, and that alternative sources of supply
are available, events beyond our control could have an adverse effect on the
cost or availability of raw materials and component parts.  Shipment
delays, unexpected price increases or changes in payment terms from our
suppliers of raw materials or component parts could impact our ability to secure
necessary raw materials or component parts, or to secure such materials and
parts at favorable prices.  For example, recent increases in demand
for aluminum, steel and petroleum-related products, as well as disruptions in
the supply of raw materials, have resulted in substantially higher prices for
raw materials.  Partially to offset these increases, we have, from
time to time, implemented general price increases and cost
surcharges.  While we have attempted to pass these increased costs on
to our customers, there can be no assurance that we will be able to continue to
do so.  Additionally, demand for our products could be negatively
affected by the unavailability of truck chassis, which are manufactured by third
parties and are frequently supplied by us, or are purchased separately by our
distributors or by towing operators.  Although we believe that sources
of our raw materials and component parts will continue to be adequate to meet
our requirements and that alternative sources are available, shortages, price
increases or delays in shipments of our raw materials and component parts could
have a material adverse effect on our financial performance, competitive
position and reputation.
  7
  Our
competitors could impede our ability to attract new customers, or attract
current customers away from us.
  The
towing and recovery equipment manufacturing industry is highly
competitive.  Competition for sales exists domestically and
internationally at the manufacturer, 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 our products are affected by the market for used towing and recovery
equipment.  Certain of our competitors may have substantially greater
financial and other resources and may provide more attractive dealer and retail
customer financing alternatives than us.
  Our future success depends upon our
ability to develop proprietary products and technology.
  Historically,
we have been able to develop or acquire patented and other proprietary product
innovations which have allowed us to produce what management believes to be
technologically advanced products relative to most of our
competition.  Certain of our patents have expired, and others will
expire in the next few years, and as a result, we 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, we are required to
offer non-exclusive royalty-bearing licenses to certain of our key patents to
all wrecker and car carrier manufacturers.  Our historical market
position has been a result, in part, of our continuous efforts to develop new
products.  Our future success and ability to maintain market share
will depend, to an extent, on new product development.
  Our
international operations are subject to various political, economic and other
uncertainties that could adversely affect our business results, including by
restrictive taxation or other government regulation and by foreign currency
fluctuation.
  A
significant portion of our net sales and production in 2007 were outside the
United States, primarily in Europe.  As a result, our operations are
subject to various political, economic and other uncertainties, including risks
of restrictive taxation policies, changing political conditions and governmental
regulations.  Also, a substantial portion of our net sales derived
outside the United States, as well as salaries of employees located outside the
United States and certain other expenses, are denominated in foreign currencies,
including British pounds and the Euro.  We are subject to risk of
financial loss resulting from fluctuations in exchange rates of these currencies
against the U.S. dollar.
  Projects
to modernize and expand our manufacturing facilities could adversely affect
production at those facilities.
  We
recently completed a project to modernize and expand our Hermitage, Pennsylvania
manufacturing facility, and expect to complete a similar project at our
Ooltewah, Tennessee manufacturing facility during the first half of
2008.  In addition, from time to time we evaluate the need for similar
projects at our other existing manufacturing facilities depending, in part, on
anticipated demand for our products.  Although we have implemented a
plan to minimize the impact of these existing modernization activities on our
current production, construction delays and related problems could arise as a
result of our expansion efforts.  Construction or other related
problems at any one of our facilities could result in manufacturing delays, and
could otherwise adversely affect our ability to operate these facilities at full
manufacturing capacity.
  8
  The
requirements and restrictions imposed by our senior credit facility restrict our
ability to operate our business, and failure to comply with these requirements
and restrictions could adversely affect our business.
  The terms
of our senior credit facility restrict our ability and our subsidiaries’ ability
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 our
or their assets.  Our senior credit facility also requires us to meet
certain financial tests, and to comply with certain other reporting, affirmative
and negative covenants.
  If we
fail to comply with the requirements of our senior credit facility, such
non-compliance would result in an event of default.  If not waived by
the lending group, such event of default would result in the acceleration of the
amount due under the senior credit facility, and may permit our lenders to
foreclose on our assets that secure the senior credit facility.
  Our
ability to service our credit arrangements may be affected by fluctuations in
interest rates.
  Interest
on our obligations outstanding under our senior credit facility and other credit
arrangements is connected to the LIBOR rate or prime rate.  Therefore,
an increase in the LIBOR rate or the prime rate would increase interest expense
and could have an effect on our ability to satisfy our obligations under those
arrangements outstanding at any particular time.  Our liquidity and
access to capital resources could be affected by increasing interest
rates.
  We
depend upon skilled labor to manufacture our products, and if we experience
problems hiring and retaining skilled labor, our business may be negatively
affected.
  The
timely manufacture and delivery of our products requires an adequate supply of
skilled labor, and the operating costs of our manufacturing facilities can be
adversely affected by high turnover in skilled
positions.  Accordingly, our ability to increase sales, productivity
and net earnings will be limited to a degree by our ability to employ the
skilled laborers necessary to meet our requirements.  There can be no
assurance that we will be able to maintain an adequate skilled labor force
necessary to efficiently operate our facilities.  In addition, in
connection with a representation petition filed by the United Auto Workers Union
with the National Labor Relations Board, a vote was held on union representation
for employees at our Ooltewah, Tennessee manufacturing plant in
2002.  These employees voted against joining the United Auto Workers
Union, but the vote was subsequently overturned by the National Labor Relations
Board.  Thereafter, a new vote was scheduled for February 2005, but
this vote was cancelled at the request of the United Auto Workers
Union.  While our employees are not currently members of a union,
there can be no assurance that the employees at our Ooltewah manufacturing
plant, or any other of our employees, may not choose to become unionized in the
future.
  We
are subject to certain retained liabilities related to the wind down of our
towing services operations.
  We sold
or closed all remaining towing services businesses during 2003.  As a
result, almost all of our former towing services businesses now operate under
new ownership, and in general the customary operating liabilities of these
businesses were assumed by the new owners.  Our subsidiaries that sold
these businesses may be subject to some continuing liabilities with respect to
their pre-sale operations, including, for example, liabilities related to
litigation.  Miller Industries, Inc. may be subject to some of such
continuing liabilities by virtue of certain direct contractual parent
guarantees.
  In
October 2005, our subsidiary, RoadOne, Inc., filed for liquidation under Chapter
7 of the federal bankruptcy laws in the Bankruptcy Court of the Eastern District
of Tennessee and a trustee was appointed.  In December 2006, the
trustee’s final report was approved by the United States trustee, and the final
decree was entered on June 19, 2007.
  9
  Any
loss of the services of our key executives could have a material adverse impact
on our operations.
  Our
success is highly dependent on the continued services of our management
team.  The loss of services of one or more key members of our senior
management team could have a material adverse effect on us.
  A
product liability claim in excess of our insurance coverage, or an inability to
acquire or maintain insurance at commercially reasonable rates, could have a
material adverse effect upon our business.
  We are
subject to various claims, including product liability claims arising in the
ordinary course of business, and may at times be a party to various legal
proceedings incidental to our business.  We maintain reserves and
liability insurance coverage at levels based upon commercial norms and our
historical claims experience.  A successful product liability or other
claim brought against us in excess of our insurance coverage, or the inability
of us to acquire or maintain insurance at commercially reasonable rates, could
have a material adverse effect upon our business, operating results and
financial condition.
  Our
stock price may fluctuate greatly as a result of the general volatility of the
stock market.
  From time
to time, there may be significant volatility in the market price for our common
stock.  Our quarterly operating results, changes in earnings estimated
by analysts, if any, changes in general conditions in our industry or the
economy or the financial markets or other developments affecting us 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.
  Our
Chairman and Co-Chief Executive Officer owns a substantial interest in our
common stock.  He may vote his shares in ways with which you
disagree.
  William
G. Miller, our chairman and Co-Chief Executive Officer, beneficially owns
approximately 12% of the outstanding shares of our common
stock.  Accordingly, Mr. Miller has the ability to exert significant
influence over our business affairs, including the ability to influence the
election of directors and the result of voting on all matters requiring
shareholder approval.
  Our
charter and bylaws contain anti-takeover provisions that may make it more
difficult or expensive to acquire us in the future or may negatively affect our
stock price.
  Our
charter and bylaws contain restrictions that may discourage other persons from
attempting to acquire control of us, including, without limitation, prohibitions
on shareholder action by written consent and advance notice requirements
regarding amendments to certain provisions of our charter and
bylaws.  In addition, our 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.
  ITEM 1B.
              UNRESOLVED
      STAFF COMMENTS
  None.
  ITEM
      2.
              PROPERTIES
  We
operate four manufacturing facilities in the United States.  The
facilities are located in Ooltewah, Tennessee; Hermitage, Pennsylvania; Mercer,
Pennsylvania; and Greeneville, Tennessee.  The Ooltewah plant,
containing approximately 302,000 square feet, produces light and heavy duty
wreckers and trailers; the Hermitage plant, containing approximately 118,000
square feet, produces car carriers; the Mercer plant, containing approximately
110,000 square feet, produces car carriers and light duty wreckers; and the
Greeneville plant, containing approximately 112,000 square feet, produces car
carriers, heavy duty wreckers and trailers.
  10
  We also
have manufacturing operations at two facilities located in the Lorraine region
of France, which have, in the aggregate, approximately 180,000 square feet, and
manufacturing operations in Norfolk, England, with approximately 48,000 square
feet.
  We
recently completed a project to modernize and expand our manufacturing facility
in Hermitage, Pennsylvania, and expect to complete a similar project at our
Ooltewah, Tennessee manufacturing facility during 2008.
  ITEM 3.
              LEGAL
      PROCEEDINGS
  We are,
from time to time, a party to litigation arising in the normal course of our
business.  Litigation is subject to various inherent uncertainties,
and it is possible that some of these matters could be resolved unfavorably to
us, which could result in substantial damages against us.  We have
established accruals for matters that are probable and reasonably estimable and
maintain 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 our
consolidated financial position or results of operations.
  ITEM 4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
  No
matters were submitted to a vote of our security holders during the last three
months of the period covered by this Annual Report.
  11
  PART
II
  ITEM 5.
              MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
  Market
Price of and Dividends on the Registrant’s Common Equity and Related Stockholder
Matters
  Our
common stock is traded on the New York Stock Exchange under the symbol
“MLR.”  The following table sets forth the quarterly range of high and
low sales prices for the common stock for the periods indicated.
  Price
      Range of Common StockPeriod
              
              High
              
              
              LowYear
      Ended December 31, 2006First
      Quarter
              
              $
              26.13
              
              
              $
              19.72Second
      Quarter
              
              
              29.31
              
              
              
              17.60Third
      Quarter
              
              
              21.50
              
              
              
              16.61Fourth
      Quarter
              
              
              24.71
              
              
              
              17.95Year
      Ended December 31, 2007First
      Quarter
              
              $
              24.18
              
              
              $
              20.34Second
      Quarter
              
              
              26.08
              
              
              
              21.78Third
      Quarter
              
              
              26.45
              
              
              
              15.23Fourth
      Quarter
              
              
              18.04
              
              
              
              11.72Year
      Ending December 31, 2008First
      Quarter (through March 10, 2008)
              
              $
              14.15
              
              
              $
              11.06
  The
approximate number of holders of record and beneficial owners of common stock as
of December 31, 2007 was 510 and 4,800, respectively.
  We have
never declared cash dividends on our common stock.  We intend to
retain our earnings and do 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,
our financial condition, restrictions in financing agreements and other factors
deemed relevant by our board of directors.  The payment of dividends
by us is restricted by our revolving credit facility.
  Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
  There
were no share repurchases during the fourth quarter of 2007.
  Sales
of Unregistered Securities
  We did
not sell any unregistered securities during the year ended December 31,
2007.
  Performance
Graph
  The
following line graph compares the percentage change in the cumulative
shareholder return of our common stock with The New York Stock Exchange
Composite Index and the Standard & Poor’s Construction Index over the period
of time from December 31, 2002 through December 31, 2007.  The
respective returns assume reinvestment of dividends paid.
  12
  
  12/31/02
              
              
              12/31/03
              
              
              12/31/04
              
              
              12/30/05
              
              
              12/29/06
              
              
              12/31/07Miller
      Industries, Inc.
              
              100
              
              
              124
              
              
              350
              
              
              629
              
              
              744
              
              
              424NYSE
      Composite Index(1)
              
              100
              
              
              129
              
              
              145
              
              
              155
              
              
              183
              
              
              195S&P
      Construction Index(2)
              
              100
              
              
              170
              
              
              206
              
              
              237
              
              
              254
              
              
              345
 
 (1)
              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.(2)
              For
      the year ended December 31, 2002, Standard & Poors transferred the
      Heavy Duty Trucks and Parts index, the index previously used by the
      Company, to the S&P 500 – Construction and Farm Machinery and Heavy
      Trucks Index.  As a result, the Company has elected to use the
      S&P 500 – Construction and Farm Machinery and Heavy Trucks index in
      the above comparison.
 
 13
   ITEM
      6.
              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 from our audited consolidated financial
statements and related notes.  You should read this data together with
Item 7–“Management’s Discussion and Analysis of Financial Condition and Results
of Operation” and our consolidated financial statements and related notes that
are a part of this Annual Report on Form 10-K.
  Years
      Ended December 31,2007
              
              
              2006
              
              
              2005
              
              
              2004
              
              
              2003(In
      thousands except per share data)Statement
      of Operations Data (1):Net
      Sales:Towing
      and recovery equipment
              
              $
              400,032
              
              
              $
              409,421
              
              
              $
              351,884
              
              
              $
              236,308
              
              
              $
              192,043Towing
      services
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              13,953400,032
              
              
              
              409,421
              
              
              
              351,884
              
              
              
              236,308
              
              
              
              205,996Costs
      and expenses:Costs
      of operations:Towing
      and recovery equipment
              
              
              343,885
              
              
              
              349,639
              
              
              
              301,943
              
              
              
              205,021
              
              
              
              168,390Towing
      services
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              10,618343,885
              
              
              
              349,639
              
              
              
              301,943
              
              
              
              205,021
              
              
              
              179,008Selling,
      general, and administrative expenses
              
              
              27,105
              
              
              
              26,837
              
              
              
              24,293
              
              
              
              18,904
              
              
              
              17,411Special
      charges (2)
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              682Interest
      expense
              
              
              3,392
              
              
              
              3,518
              
              
              
              4,012
              
              
              
              4,657
              
              
              
              5,609Total
      costs and expenses
              
              
              374,382
              
              
              
              379,994
              
              
              
              330,248
              
              
              
              228,582
              
              
              
              202,710Income
      from continuing operations before income taxes
              
              
              25,650
              
              
              
              29,427
              
              
              
              21,636
              
              
              
              7,726
              
              
              
              3,286Income
      tax provision
              
              
              9,319
              
              
              
              2,454
              
              
              
              2,936
              
              
              
              740
              
              
              
              1,216Income
      from continuing operations
              
              
              16,331
              
              
              
              26,973
              
              
              
              18,700
              
              
              
              6,986
              
              
              
              2,070Discontinued
      operations:Gain
      (loss) from discontinued operations, net of taxes
              
              
              –
              
              
              
              126
              
              
              
              (114
              )
              
              
              (1,511
              )
              
              
              (16,223
              )Tax
      benefit of advances to and investment in certain discontinued
      operations
              
              
              –
              
              
              
              (18,244
              )
              
              
              –
              
              
              
              –
              
              
              
              –Gain
      (loss) from discontinued operations
              
              
              –
              
              
              
              18,370
              
              
              
              (114
              )
              
              
              (1,511
              )
              
              
              (16,223
              )Net
      income (loss)
              
              $
              16,331
              
              
              $
              45,343
              
              
              $
              18,586
              
              
              $
              5,475
              
              
              $
              (14,153
              )Basic
      net income (loss) per common share:Income
      from continuing operations
              
              $
              1.41
              
              
              $
              2.37
              
              
              $
              1.67
              
              
              $
              0.64
              
              
              $
              0.22Gain
      (loss) from discontinued operations
              
              
              –
              
              
              
              1.62
              
              
              
              (0.01
              )
              
              
              (0.14
              )
              
              
              (1.74
              )Basic
      income (loss)
              
              $
              1.41
              
              
              $
              3.99
              
              
              $
              1.66
              
              
              $
              0.50
              
              
              $
              (1.52
              )Diluted
      net income (loss) per common share:Income
      from continuing operations
              
              $
              1.40
              
              
              $
              2.33
              
              
              $
              1.63
              
              
              $
              0.64
              
              
              $
              0.22Gain
      (loss) from discontinued operations
              
              
              –
              
              
              
              1.58
              
              
              
              (0.01
              )
              
              
              (0.14
              )
              
              
              (1.74
              )Diluted
      income (loss)
              
              $
              1.40
              
              
              $
              3.91
              
              
              $
              1.62
              
              
              $
              0.50
              
              
              $
              (1.52
              )Weighted
      average shares outstanding:Basic
              
              
              11,556
              
              
              
              11,360
              
              
              
              11,226
              
              
              
              10,860
              
              
              
              9,342Diluted
              
              
              11,655
              
              
              
              11,596
              
              
              
              11,474
              
              
              
              10,982
              
              
              
              9,342
  14
 
 December
      31,2007
              
              
              2006
              
              
              2005
              
              
              2004
              
              
              2003Balance
      Sheet Data:Working
      capital
              
              $
              82,092
              
              
              $
              76,266
              
              
              $
              50,406
              
              
              $
              39,978
              
              
              $
              31,136Total
      assets
              
              
              189,042
              
              
              
              197,432
              
              
              
              144,570
              
              
              
              127,822
              
              
              
              131,818Long-term
      obligations, less current portion
              
              
              4,203
              
              
              
              10,537
              
              
              
              16,803
              
              
              
              24,345
              
              
              
              29,927Common
      shareholders' equity
              
              
              132,488
              
              
              
              113,383
              
              
              
              64,755
              
              
              
              46,785
              
              
              
              27,997
 
 (1)
              The
      results of operations and loss on disposal associated with certain towing
      services operations, which were sold in June 2003, have been reclassified
      from discontinued to continuing operations for all periods presented
      because of our significant continuing involvement in the operations of the
      disposal components through a consulting agreement and our ongoing
      interest in the cash flows of the operations of the disposal components
      through a long-term licensing agreement.(2)
              Special
      charges and other net operating expenses include a loss on the sale of
      operations of $682 for the year ended December 31, 2003 for continuing
      operations.
 
 15
  ITEM
      7.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
  The
following discussion of our results of operations and financial condition should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto.
  Executive
Overview
  Miller
Industries is the world’s largest manufacturer of vehicle towing and recovery
equipment, with domestic manufacturing subsidiaries in Tennessee and
Pennsylvania, and foreign manufacturing subsidiaries in France and the United
Kingdom.  We offer a broad range of equipment to meet our customers’
design, capacity and cost requirements under our Century®,
Vulcan®,
Challenger®,
Holmes®,
Champion®,
ChevronTM, Eagle®,
Titan®, JigeTM
and BonifaceTM brand names.
  Overall,
management focuses on a variety of key indicators to monitor our operating and
financial performance.  These indicators include measurements of
revenue, operating income, gross margin, income from continuing operations,
earnings per share, capital expenditures and cash flow.
  We derive
revenues primarily from product sales made through our network of domestic and
foreign independent distributors.  Our revenues are sensitive to a
variety of factors, such as demand for, and price of, our products, our
technological competitiveness, our reputation for providing quality products and
reliable service, competition within our industry, the cost of raw materials
(including aluminum, steel and petroleum-related products) and general economic
conditions.
  Our
industry is cyclical in nature and increasingly over the course of 2007 the
overall demand for our products and our resulting revenues were negatively
affected by lower levels of consumer confidence, fluctuating interest rates,
higher fuel and insurance costs, and economic conditions in
general.  We continue to be concerned about general economic
conditions and the effect they could have on the towing and recovery
industry.  Accordingly, we continue to take steps to reduce our
production levels and lower our costs in response to these
uncertainties.  We will continue to monitor our cost structure to
ensure that it remains in line with business conditions.
  In the
first half of 2007, we completed orders under several municipal and military
contracts, but with only a small number of subsequent additional orders on those
contracts, our overall order intake has moderated.  We continue to
work to secure additional follow-on orders under these contracts, but we cannot
predict the success or timing of any such orders.
  In
addition, we have been and will continue to be affected by increases in the
prices that we pay for raw materials, particularly aluminum, steel,
petroleum-related products and other raw materials.  Raw material
costs represent a substantial part of our total costs of operations, and
management expects aluminum and steel prices to remain at historically high
levels for the foreseeable future.  In the past, as we have determined
necessary, we have implemented price increases to offset these higher
costs.  We also began to develop alternatives to the components used
in our production process that incorporate these raw materials.  We
have shared several of these alternatives with our major component part
suppliers, and some of our suppliers have begun to implement them in the
production of our component parts.  We continue to monitor raw
material prices and availability in order to more favorably position the company
in this dynamic market.
  In July
2007, we amended our Senior Credit Agreement with Wachovia to, among other
things, reduce the non default rate of interest under the revolving and term
portions of our senior credit facility, increase the ratio of leverage permitted
under the Consolidated Leverage Ratio covenant, extend the maturity date of the
revolver, and modify certain of the negative covenants and events of
default.  Total senior debt at December 31, 2007 was $3.5 million,
which represents a significant decrease in our overall indebtedness from prior
periods.
  In May
2007, we repaid the remaining $5.0 million principal balance under our junior
credit facility and with such payment, all loans under our junior credit
facility were paid in full.  In July 2007, in connection with the
amendments to our Senior Credit Agreement, the junior credit facility was
terminated.
  16
  In 2007,
we completed our modernization and expansion projects at our manufacturing
facility in Hermitage, Pennsylvania, and we expect to complete a similar project
at our Ooltewah, Tennessee manufacturing facility in the first half of
2008.  We believe these modernization and expansion efforts will
position us to more effectively face the challenges of the global marketplace in
the future.
  Discontinued
Operations
  During
2002, management and the board of directors made the decision to divest our
towing services segment, as well as the operations of the distribution group of
our towing and recovery equipment segment.  In accordance with SFAS
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the
assets of the towing services segment and the distribution group were considered
a “disposal group” and were no longer depreciated.  All assets and
liabilities and results of operations associated with these assets were
separately presented in the accompanying financial statements.  The
analyses contained herein are of continuing operations unless otherwise
noted.  In 2006, a gain from discontinued operations was recognized on
the deconsolidation of RoadOne, Inc.
  In
October 2005, RoadOne, Inc. filed for liquidation under Chapter 7 of the federal
bankruptcy laws in the Bankruptcy Court of the Eastern District of Tennessee and
a trustee was appointed.  In December 2006, the trustee’s final report
was approved by the United States trustee, and the final decree was entered on
June 19, 2007.
  Critical
Accounting Policies
  Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which require us
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
  We extend
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 we 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.  We believe that these estimates are reasonable; however,
changes in any of these factors could affect these evaluations.  Based
on these estimations, we believe that our long-lived assets are appropriately
valued.
  Warranty
reserves
  We
estimate expense for product warranty claims at the time products are
sold.  These estimates are established using historical information
about the nature, frequency and average cost of warranty claims.  We
review trends of warranty claims and take actions to improve product quality and
minimize warranty claims.  We believe the warranty reserve is
adequate; however, actual claims incurred could differ from the original
estimates, requiring adjustments to the accrual.
  17
  Income
taxes
  We
recognize deferred tax assets and liabilities based on differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities.  Differences between the effective tax rate and the
expected tax rate are due to changes in deferred tax assets.  We
consider the need to record a valuation allowance to reduce deferred tax assets
to the amount that is more likely than not to be realized.  We
consider tax loss carryforwards, reversal of deferred tax liabilities, tax
planning and estimates of future taxable income in assessing the need for a
valuation allowance.  If unrecognized tax positions exist, we record
interest and penalties related to the unrecognized tax positions as income tax
expense in our consolidated statement of operations.
  Revenues
  Under our
accounting policies, revenue is recorded when the risk of ownership for products
has transferred to independent distributors or other customers, which is
generally upon shipment.  While we manufacture only the bodies of
wreckers, which are installed on truck chassis manufactured by third parties, we
frequently purchase the truck chassis for resale to our
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.
  Foreign
Currency Translation
  The
functional currency for our foreign operations is the applicable local
currency.  The translation from the applicable foreign currencies to
U.S. dollars is performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date, historical rates for equity and the
weighted average exchange rate during the period for revenue and expense
accounts.  The gains or losses resulting from such translations are
included in shareholders’ equity.  For intercompany debt denominated
in a currency other than the functional currency, the remeasurement into the
functional currency is also included in shareholders’ equity as the amounts are
considered to be of a long-term investment nature.
  Results
of Operations
  The
following table sets forth, for the years indicated, the components of the
consolidated statements of operations expressed as a percentage of net
sales.
  2007
              
              
              2006
              
              
              2005Continuing
      Operations:Net
      Sales
              
              
              100.0
              %
              
              
              100.0
              %
              
              
              100.0
              %Costs
      and expenses:Costs
      of operations
              
              
              86.0
              %
              
              
              85.4
              %
              
              
              85.8
              %Selling,
      general and administrative
              
              
              6.8
              %
              
              
              6.6
              %
              
              
              6.9
              %Interest
      expense
              
              
              0.9
              %
              
              
              0.8
              %
              
              
              1.1
              %Total
      costs and expenses
              
              
              93.7
              %
              
              
              92.8
              %
              
              
              93.8
              %Income
      before income taxes
              
              
              6.3
              %
              
              
              7.2
              %
              
              
              6.2
              %Discontinued
      Operations:Net
      Sales
              
              
              –
              
              
              
              100.0
              %
              
              
              100.0
              %Costs
      and expenses:Costs
      of operations
              
              
              –
              
              
              
              93.0
              %
              
              
              90.3
              %Selling,
      general and administrative
              
              
              –
              
              
              
              8.6
              %
              
              
              10.9
              %Gain
      on deconsolidation
              
              
              –
              
              
              
              (32.7
              )%
              
              
              0.0
              %Interest
      expense
              
              
              –
              
              
              
              0.0
              %
              
              
              0.0
              %Total
      costs and expenses
              
              
              –
              
              
              
              68.9
              %
              
              
              101.2
              %Income
      (loss) before income taxes
              
              
              –
              
              
              
              31.1
              %
              
              
              (1.2
              )%
  18
  Year
Ended December 31, 2007 Compared to Year Ended December 31, 2006
  Continuing
Operations
  Net sales
were $400.0 million for the year ended December 31, 2007, compared to $409.4
million for the year ended December 31, 2006, a decrease of
2.3%.  This decrease was attributable to lower production levels in
response to moderating demand and the absence of significant follow-on orders
under certain municipal and military contracts for which orders were completed
in 2006 and during the first half of 2007.
  Cost of
operations decreased to $343.9 million for the year ended December 31, 2007 from
$349.6 million for the year ended December 31, 2006, which was attributable to
lower overall production levels in 2007 compared to 2006 as described
above.  As a percentage of sales, cost of operations increased
slightly from 85.4% for the year ended December 31, 2006 to 86.0% for the year
ended December 31, 2007.
  Selling,
general and administrative expenses for the year ended December 31, 2007
increased slightly to $27.1 million from $26.8 million for the year ended
December 31, 2006 due generally to increases in personnel-related expenses and
other expenses.
  Interest
expense decreased to $3.4 million for the year ended December 31, 2007 from $3.5
million for the year ended December 31, 2006.  Decreases in interest
expense were primarily due to decreases in overall levels of debt (including
bank debt) offset by increases in interest on chassis purchases together with
interest expense on distributor floor plan financing.
  The
provision for income taxes for the years ended December 31, 2007 and 2006
reflects a combined federal, state and foreign tax rate of 36.3% and 8.3%,
respectively.  During 2006, we concluded that the valuation allowance
on the deferred tax assets established in prior years was no longer necessary
given our sustained income and growth through the year and the favorable
projected earnings outlook.  In 2006, we reversed the deferred tax
valuation allowance.
  Year
Ended December 31, 2006 Compared to Year Ended December 31, 2005
  Continuing
Operations
  Net sales
were $409.4 million for the year ended December 31, 2006, compared to $351.9
million for the year ended December 31, 2005, an increase of
16.3%.  This increase was attributable to continuing overall
improvements in market conditions with increases in demand leading to increases
in production levels.
  Cost of
operations increased to $349.6 million for the year ended December 31, 2006 from
$301.9 million for the year ended December 31, 2005.  As a percentage
of sales, cost of operations decreased slightly from 85.8% for the year ended
December 31, 2005 to 85.4% for the year ended December 31, 2006 due to increases
in productivity as demand for our products increased, offset by product
mix.
  Selling,
general and administrative expenses for the year ended December 31, 2006
increased to $26.8 million from $24.3 million for the year ended December 31,
2005.  Approximately 12.0% of the increase is attributable to
increased expenses related to our stock-based compensation, with the remainder
being attributable to other personnel-related expense and other expenses
associated with higher sales volume.  As a percentage of sales,
selling, general and administrative expenses decreased to 6.6% for the year
ended December 31, 2006 from 6.9% for the year ended December 31,
2005.
  During
2006, we concluded that the valuation allowance on the deferred tax assets
established in prior years was no longer necessary given our sustained income
and growth through the year and the favorable projected earnings
outlook.  In 2006, we reversed the deferred tax valuation
allowance.  The provision for income taxes for the years ended
December 31, 2006 and 2005 reflects a combined federal, state and foreign tax
rate of 8.3% and 13.6%, respectively.
  19
  Discontinued
Operations
  Net sales
for the distribution group of the discontinued operations decreased to $385,000
for the year ended December 31, 2006 from $11.5 million for the year ended
December 31, 2005.  We sold all the remaining distributor locations in
December 2005.
  Cost of
operations as a percentage of net sales for the distribution group were 93.0%
for the year ended December 31, 2006 compared to 90.3% for the year ended
December 31, 2005.
  Selling,
general and administrative expenses as a percentage of sales for the
distribution group were 8.6% for the year ended December 31, 2006 compared to
10.9% for the year ended December 31, 2005.
  The
results of operation for the discontinued operations includes the recognition of
a pre-tax, non-cash gain on deconsolidation of discontinued operations upon the
RoadOne, Inc. liquidation from bankruptcy and the recognition of an $18.2
million deferred tax asset related to deductible losses from excess tax basis of
advances to and investments in certain discontinued operations.
  Interest
Expense
  Our total
interest expense for continuing operations decreased to $3.5 million for the
year ended December 31, 2006 from $4.0 million for the year ended December 31,
2005.  Decreases in interest expense were primarily due to decreases
in overall debt levels.  No interest expense was incurred for
discontinued operations for 2006 or 2005.
  Liquidity
And Capital Resources
  Cash
provided by operating activities was $28.6 million for the year ended December
31, 2007, compared to $18.1 million for the year ended December 31, 2006, and
$13.4 million for the year ended December 31, 2005.  The cash provided
by operating activities for 2007 reflects decreases in accounts receivable and
inventory and the utilization of our deferred tax assets, partially offset by
decreases in accounts payable primarily related to the timing and terms of
vendor payments.
  Cash used
in investing activities was $8.1 million for the year ended December 31, 2007,
compared to $11.8 million used in investing activities for the year ended
December 31, 2006, and $0.2 million provided by investing activities for the
year ended December 31, 2005.  The cash used in investing activities
for 2007 was primarily for the purchase of property, plant and
equipment.
  Cash used
in financing activities was $6.2 million for the year ended December 31, 2007,
compared to $5.0 million for the year ended December 31, 2006, and $10.2 million
for the year ended December 31, 2005.  The cash used in financing
activities in 2007 was used to make payments on our term loan under our senior
credit facility, to repay our remaining subordinated debt, and to repay other
outstanding long-term debt and capital lease obligations.
  Over the
past year, we generally have used available cash flow to reduce the outstanding
balance on our credit facilities, to pay down other long-term debt obligations,
and to pay for capital expenditures related to our plant
modernization.  In addition, our working capital requirements have
been and will continue to be significant in connection with shifts in product
mix to meet changes in customer demand.
  We have
modernized and expanded our manufacturing facility in Hermitage, Pennsylvania
and will complete a similar project at our manufacturing facility in Ooltewah,
Tennessee during the first half of 2008.  The total cost of these
projects is anticipated to be approximately $14.0 million.  At
December 31, 2007, we had remaining commitments of approximately $2.8 million
for these projects.  We expect to fund these remaining commitments
from cash flows from operations and unused availability under our senior credit
facility.
  In May
2006, we repaid $5.0 million of subordinated debt under our junior credit
facility using additional borrowings under the revolving portion of our senior
credit facility, and in May 2007, we repaid the remaining $5.0 million principal
balance of our junior credit facility.
  20
  As of
December 31, 2007, we had cash and cash equivalents of $23.3 million, exclusive
of unused availability under our senior credit facility.  In addition
to our modernization and expansion, our primary cash requirements include
working capital, other capital expenditures and interest and principal payments
on indebtedness under our senior credit facility.  We expect our
primary sources of cash to be cash flow from operations, cash and cash
equivalents on hand at December 31, 2007 and borrowings from unused availability
under our senior credit facility.  We expect these sources to be
sufficient to satisfy our cash needs during 2008 and for the next several
years.  However, our ability to satisfy our cash needs will
substantially depend upon our future operating performance, and financial,
business and other factors, some of which are beyond our control.
  Contractual
Obligations
  The
following is a summary of our contractual obligations as of December 31,
2007.
  Payment
      Due By Period (in thousands)Contractual
      Obligations(1)
              
              Total
              
              
              Less
      than
                  1
      year
              
              
              1-3
      years
              
              
              3-5
      years
              
              
              More
      than
                  5
      yearsOutstanding
      Borrowings Under Senior Credit Facility
              
              $
              3,500
              
              
              $
              1,400
              
              
              $
              2,100
              
              
              $
              
              
              
              $Outstanding
      Borrowings Under Junior Credit Facility
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              –
              
              
              
              –Mortgage
      Notes Payable
              
              
              1,786
              
              
              
              85
              
              
              
              1,701
              
              
              
              –
              
              
              
              –Equipment
      Notes Payable (Capital Lease Obligations)
              
              
              719
              
              
              
              317
              
              
              
              394
              
              
              
              8
              
              
              
              –Operating
      Lease Obligations
              
              
              2,239
              
              
              
              667
              
              
              
              895
              
              
              
              262
              
              
              
              415Purchase
      Obligations (2)
              
              
              23,294
              
              
              
              23,294
              
              
              
              –
              
              
              
              –
              
              
              
              –Commitments
      for construction and acquisition of plant and equipment
              
              
              2,796
              
              
              
              2,796
              
              
              
              –
              
              
              
              –Total
              
              $
              34,334
              
              
              $
              28,559
              
              
              $
              5,090
              
              
              $
              270
              
              
              $
              415
   
 (1)
              Amounts
      do not include potential contingent obligations of $33.4 million under
      repurchase commitments with third-party lenders in the event of customer
      default.(2)
              Purchase
      obligations represent open purchase orders for raw materials and other
      components issued in the normal course of
  business.
  Credit
Facilities and Other Obligations
  Senior
Credit Facility
  We are
party to a Credit Agreement with Wachovia Bank National Association for a $27.0
million senior secured credit facility.  The senior credit facility
consists of a $20.0 million revolving credit facility, and a $7.0 million term
loan.  The senior credit facility is secured by substantially all of
our assets, and contains customary representations and warranties, events of
default and affirmative and negative covenants for secured facilities of this
type.  On July 11, 2007, we agreed with Wachovia to make certain
amendments to the Credit Agreement which are described below.
  Formerly,
in the absence of a default, all borrowings under the revolving credit facility
bore interest at the LIBOR Market Index Rate (as defined in the Credit
Agreement) plus a margin of between 1.75% to 2.50% per annum that was subject to
adjustment from time to time based upon the Consolidated Leverage Ratio (as
defined in the Credit Agreement), and the term loan bore interest at a 30-day
adjusted LIBOR rate plus a margin of between 1.75% to 2.50% per annum that was
subject to adjustment from time to time based upon the Consolidated Leverage
Ratio.  The revolving credit facility was scheduled to expire on June
15, 2008, and the term loan was scheduled to mature on June 15,
2010.
  Under the
amended Credit Agreement, the non-default rate of interest under the revolving
credit facility and term loan was reduced to be the LIBOR Market Index Rate plus
a margin of between 0.75% to 1.50% per annum that is subject to adjustment from
time to time based upon the Consolidated Leverage Ratio, and the maturity date
of the revolving credit facility was extended to June 17, 2010.  The
amendments also increased the ratio of leverage permitted under the Consolidated
Leverage Ratio covenant, and extended and modified certain of the negative
covenants and events of default set forth in the Credit Agreement.
  21
  At
December 31, 2007 and 2006, the Company had no outstanding borrowings under
the revolving credit facility.
  Termination
of Junior Credit Facility
  In May
2006, we repaid $5.0 million of the subordinated debt under our junior facility
with William G. Miller, and in May 2007, we repaid the remaining $5.0 million
principal balance under the junior credit facility.  With such
payments, all loans under our junior credit facility were paid in
full.  In July 2007, in connection with the amendments to the senior
credit facility, the junior facility was terminated.
  Interest
Rate Sensitivity
  Because
of the amount of obligations outstanding under the senior credit facility and
the connection of the interest rate under such facility (including the default
rates) to the LIBOR rate, an increase in the LIBOR rate could have an effect on
our ability to satisfy our obligations under this facility and increase our
interest expense.  Similarly, certain of our other obligations are
tied to the prime rate.  Therefore, our liquidity and access to
capital resources could be further affected by increasing interest
rates.
  Outstanding
Borrowings
  Outstanding
borrowings under the senior credit facility as of December 31, 2007 and the
senior and junior credit facilities as of December 31, 2006 were as follows (in
thousands):
  2007
              
              
              2006Senior
      Credit FacilityRevolving
      Credit Facility
              
              $
              –
              
              
              $
              –Term
      Loan
              
              
              3,500
              
              
              
              4,900Total
              
              
              3,500
              
              
              
              4,900Junior
      Credit Facility
              
              
              –
              
              
              
              5,000Total
      Outstanding Borrowings
              
              $
              3,500
              
              
              $
              9,900
  Other
Long-Term Obligations
  In
addition to the borrowings under the senior credit facility described above, we
had approximately $2.5 million of mortgage notes payable, equipment notes
payable and other long-term obligations at December 31, 2007.  We also
had approximately $2.2 million in non-cancellable operating lease
obligations.
  Recent
Accounting Pronouncements
  Recently
Adopted Standards
  In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”
(“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income
taxes by prescribing a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return.  The interpretation also gives
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, and disclosure.  FIN 48 was effective January 1, 2007
and did not have a material impact on the Company’s financial statements when
adopted on January 1, 2007.
  22
  Recently
Issued Standards
  In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
No. 157”).  SFAS No. 157 provides a framework for measuring fair value
in accordance with generally accepted accounting principles, and expands
disclosures regarding fair value measurements and the effect on
earnings.  SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years.  We are in the process of evaluating the impact
SFAS No. 157 will have on the Company’s financial statements; however, we do not
expect it to have a material impact.
  In
February 2007, the FASB issued a SFAS No. 159, “The Fair Value Option for
Financial Assets & Financial Liabilities – Including an Amendment of SFAS
No. 115” (“SFAS No. 159”).  SFAS No. 159 will create a fair value
option under which an entity may irrevocably elect fair value as the initial and
subsequent measurement attribute for certain financial assets and liabilities on
a contract by contract basis, with changes in fair values recognized in earnings
as these changes occur.  SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007.  We are in the process of
evaluating the impact SFAS No. 159 will have on the Company’s financial
statements; however, we do not expect it to have a material impact.
  In
December, 2007, the FASB issued SFAS No. 141(R),  “Business
Combinations”(“SFAS No. 141(R)”), which applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
 An entity may not apply it before that date. SFAS No. 141(R)
establishes principles and requirements for how the acquirer:
(i) recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed and any noncontrolling interest in the
acquiree; (ii) recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase; and
(iii) determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. The Company does not expect the adoption of SFAS No.
141 (R) to have an effect on its results of operations and its financial
condition unless it enters into a business combination after January 1,
2009.
 ITEM
      7A.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
  We
believe that our exposures to market risks are immaterial.  We hold no
market risk sensitive instruments for trading purposes.  At present,
we do not employ any derivative financial instruments, other financial
instruments, or derivative commodity instruments to hedge any market risk, and
we have no plans to do so in the future.  To the extent we have
borrowings outstanding under our credit facilities, we are exposed to interest
rate risk because of the variable interest rate under the facility.
  ITEM
      8.
              FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
  The
response to this item is included in Part IV, Item 15 of this
Report.
  ITEM 9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
  None.
  ITEM
      9A.
              CONTROLS
      AND PROCEDURES
  Disclosure
Controls and Procedures
  We
carried out an evaluation, under the supervision and with the participation of
our management, including our chief executive and chief financial officers, of
the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of the end of the period covered by this
report.  Based upon this evaluation, our Co-Chief Executive Officers
and our Chief Financial Officer have concluded that the disclosure controls and
procedures were effective as of the end of the period covered by this Annual
Report to ensure that information required to be disclosed in our reports that
we file or submit under the Exchange Act are recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
  23
  Management’s
Report On Internal Control Over Financial Reporting
  Management
of Miller Industries, Inc. is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act).  Our internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may be
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  Management,
including our principal executive officers and principal financial officer,
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2007.  In making this
assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in “Internal
Control—Integrated Framework.”  Based on our assessment under those
criteria, we concluded that, as of December 31, 2007, we maintained effective
internal control over financial reporting.
  Joseph
Decosimo and Company, PLLC, the independent registered public accounting firm
who audited the Company’s consolidated financial statements included in this
report, has issued an audit report on the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2007, which appears
herein.
  March 13,
2008
  24
  Report
of Independent Registered Public Accounting Firm
  Board of
Directors and Shareholders
 Miller
Industries, Inc.
 Ooltewah,
Tennessee
  We have
audited Miller Industries, Inc.’s internal control overfinancial reporting as
of December 31, 2007, based on criteria established inInternal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria).  Miller
Industries, Inc.’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying
Management Report on Internal Control Over Financial Reporting.  Our
responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.  Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances.  We
believe that our audit provides a reasonable basis for our opinion.
  A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.  A company’s internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  In our
opinion, Miller Industries, Inc. maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2007, based on the
COSO criteria.
  We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Miller
Industries, Inc. and subsidiaries as of December 31, 2007 and 2006, and the
related consolidated statements of operations, shareholders’ equity, and cash
flows for each of the three years in the period ended December 31, 2007, and our
report dated March 13, 2008, expressedan unqualified opinion
on those consolidated financial statements.
  /s/
Joseph Decosimo and Company, PLLC
 Chattanooga,
Tennessee
 March 13,
2008
  25
  Changes
in Internal Control Over Financial Reporting
  There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
  ITEM
      9B.
              OTHER
      INFORMATION
  None.
  26
  PART
III
  ITEM 10.
              DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
  The Proxy Statement for our Annual Meeting of Shareholders, to be
filed with the Securities and Exchange Commission, will contain information
relating to our directors and audit committee, compliance with Section 16(a) of
the Exchange Act, and our code of ethics applicable to our chief executive,
financial and accounting officers, which information is incorporated by
reference herein.  Information relating to our executive officers is
included in Item 1 of this report.
  ITEM
      11.
              EXECUTIVE
      COMPENSATION
  The Proxy
Statement for our Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission, will contain information relating to
director and executive officer compensation, which information is incorporated
by reference herein.
  ITEM 12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
  The Proxy
Statement for our Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission, will contain information relating to
security ownership of certain beneficial owners and management, which
information is incorporated by reference herein.
  The Proxy
Statement will also contain information relating to our equity compensation
plans, which information is incorporated by reference herein.
  ITEM 13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
  The Proxy
Statement for our Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission, will contain information relating to certain
relationships and related transactions between us and certain of our directors
and executive officers, which information is incorporated by reference
herein.
  ITEM
      14.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
  The Proxy
Statement for our Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission, will contain information relating to the
fees charged and services provided by Joseph Decosimo and Company, PLLC, our
principal accountants during the last three fiscal years, and our pre-approval
policy and procedures for audit and non-audit services, which information is
incorporated by reference into this report.
  27
  PART
IV
  ITEM 15.
              EXHIBITS,
      FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM
  8-K
  (a)
              The
      following documents are filed as part of this Report:1.
              Financial
      Statements
  Description
              
              Page
      Number
                  in
      ReportReport
      of Independent Registered Public Accounting Firm
              
              F-2Consolidated
      Balance Sheets as of December 31, 2007 and 2006
              
              F-3Consolidated
      Statements of Operations for the years ended December 31, 2007, 2006 and
      2005
              
              F-4Consolidated
      Statements of Shareholders’ Equity for the years ended December 31, 2007,
      2006 and 2005
              
              F-5Consolidated
      Statements of Cash Flows for the years ended December 31, 2007, 2006 and
      2005
              
              F-6Notes
      to Consolidated Financial Statements
              
              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
      ReportSchedule
      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.
  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
                  Report3.1
              
              Charter,
      as amended, of the Registrant
              
              –
              
              
              Form
      10-K
              
              December
      31, 2001
              
              3.13.2
              
              Amended
      and Restated Bylaws of the Registrant
              
              –
              
              
              Form
      10-Q
              
              November
      8, 2007
              
              3.210.1
              
              Form
      of Noncompetition Agreement between the Registrant and certain officers of
      the Registrant
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.2810.2
              
              Form
      of Nonexclusive Distributor Agreement
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.3110.3
              
              Miller
      Industries, Inc. Stock Option and Incentive Plan**
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.1
  28
  Description
                
                Incorporated
      by Reference to Registration File Number
                
                
                Form
      or
                    Report
                
                Date
      of Report
                
                Exhibit
                    Numberin
                    Report
 10.4
              
              Form
      of Incentive Stock Option Agreement under Miller Industries, Inc. Stock
      Option and Incentive Plan**
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.210.5
              
              Miller
      Industries, Inc. Non-Employee Director Stock Option Plan**
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.410.6
              
              Form
      of Director Stock Option Agreement**
              
              33-79430
              
              
              S-1
              
              August
      1994
              
              10.510.7
              
              First
      Amendment to Miller Industries, Inc. Non-Employee Director Stock Option
      Plan**
              
              –
              
              
              Form
      10-K
              
              April
      30, 1995
              
              10.3810.8
              
              Second
      Amendment to Miller Industries, Inc. Non-Employee Director Stock Option
      Plan**
              
              –
              
              
              Form
      10-K
              
              April
      30, 1996
              
              10.3910.9
              
              Second
      Amendment to Miller Industries, Inc. Stock Option and Incentive
      Plan**
              
              –
              
              
              Form
      10-K
              
              April
      30, 1996
              
              10.4010.10
              
              Employment
      Agreement dated July 8, 1997 between the Registrant and William G.
      Miller**
              
              –
              
              
              Form
      10-Q/A
              
              July
      31, 1997
              
              1010.11
              
              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
              
              1010.12
              
              Employment
      Agreement between the Registrant and Jeffrey I. Badgley, dated September
      11, 1998**
              –
              
              
              Form
      10-Q
              
              December
      15, 1998
              
              10.110.13
              
              Employment
      Agreement between the Registrant and Frank Madonia, dated September 11,
      1998**
              –
              
              
              Form
      10-Q
              
              December
      15, 1998
              
              10.310.14
              
              Agreement
      between the Registrant and Jeffrey I. Badgley, dated September 11,
      1998**
              
              –
              
              
              Form
      10-Q
              
              December
      15, 1998
              
              10.410.15
              
              Agreement
      between the Registrant and Frank Madonia, dated September 11,
      1998**
              
              –
              
              
              Form
      10-Q
              
              December
      15, 1998
              
              10.610.16
              
              Non-Employee
      Director Stock Plan**
              
              –
              
              
              Schedule
      14A
              
              January
      23, 2004
              
              Annex
      A10.17
              
              Miller
      Industries, Inc. 2005 Equity Incentive Plan**
              
              –
              
              
              Schedule
      14A
              
              May
      2, 2005
              
              Annex
      B10.18
              
              Credit
      Agreement, dated June 17, 2005, among Wachovia Bank, NA and the
      Registrant
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.110.19
              
              Term
      Note, dated June 17, 2005, among Wachovia Bank, NA and the
      Registrant
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.210.20
              
              Revolving
      Note, dated June 17, 2005, among Wachovia Bank, NA and the
      Registrant
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.310.21
              
              Intercreditor
      Agreement, dated June 17, 2005, among Wachovia Bank, NA, and William G.
      Miller
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.4
  29
 Description
                
                Incorporated
      by Reference to Registration File Number
                
                
                Form
      or
                    Report
                
                Date
      of Report
                
                Exhibit
                    Number in
                    Report
 10.22
              
              Security
      Agreement, dated June 17, 2005, among Wachovia Bank, NA, and the
      Registrant
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.510.23
              
              Subsidiary
      Security Agreement, dated June 17, 2005, among Wachovia Bank, NA, and the
      subsidiaries of the Registrant named therein
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.610.24
              
              Pledge
      Agreement, dated June 17, 2005, among Wachovia Bank, NA, and the
      Registrant
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.710.25
              
              Amendment
      No. 5 to Amended and Restated Credit Agreement, dated June 17, 2005, among
      the Registrant, Miller Industries Towing Equipment, Inc. and William G.
      Miller
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.810.26
              
              Promissory
      Note, dated June 17, 2005, among the Registrant, Miller Industries Towing
      Equipment, Inc. and William G. Miller
              
              –
              
              
              Form
      8-K
              
              June
      17, 2005
              
              10.910.27
              
              First
      Amendment to Credit Agreement, dated July 11, 2007, among Wachovia Bank,
      NA and Registrant
              
              –
              
              
              Form
      8-K
              
              July
      16, 2007
              
              10.121
              
              Subsidiaries
      of the Registrant*23.1
              
              Consent
      of Joseph Decosimo and Company, PLLC*24
              
              Power
      of Attorney (see signature page)*31.1
              
              Certification
      Pursuant to Rules 13a-14(a)/15d-14(a) by Co-Chief Executive
      Officer*31.2
              
              Certification
      Pursuant to Rules 13a-14(a)/15d-14(a) by Co-Chief Executive
      Officer*31.3
              
              Certification
      Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial
      Officer*32.1
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Co-Chief Executive Officer*32.2
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Co-Chief Executive Officer*32.3
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Chief Financial Officer*
 _________________*
              Filed
      herewith.**
              Management
      contract or compensatory plan or arrangement.(b)
              The
      Registrant hereby files as exhibits to this Report the exhibits set forth
      in Item 15(a)3 hereof.(c)
              The
      Registrant hereby files as financial statement schedules to this Report
      the financial statement schedules set forth in Item 15(a)2 hereof.
  30
 
  INDEX
TO FINANCIAL STATEMENTS
  REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  F-2CONSOLIDATED
      BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006
                  F-3CONSOLIDATED
      STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007,
      2006 AND 2005
                  F-4CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE YEARSENDED DECEMBER 31,
      2007, 2006 AND 2005
                  F-5CONSOLIDATED
      STATEMENTS OF CASH FLOWS FOR THE YEARS ENDEDDECEMBER 31, 2006,
      2005 AND 2004
                  F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                  F-7SCHEDULE
      II – VALUATION AND QUALIFYING ACCOUNTS
                  S-1
 
 
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Board of
Directors and Shareholders
 Miller
Industries, Inc.
 Ooltewah,
Tennessee
  We have
audited the accompanying consolidated balance sheets of Miller Industries, Inc.
and subsidiaries as of December 31, 2007 and 2006, and the related consolidated
statements of operations, shareholders’ equity and cash flows for each of the
three years in the period ended December 31, 2007.  Our audits also
included the financial statement schedule listed in the Index at Item
15.  These consolidated financial statements and financial statement
schedule are the responsibility of the company’s management.  Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Miller Industries, Inc. and
subsidiaries as of December 31, 2007 and 2006, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2007, in conformity with accounting principles generally accepted
in the United States of America.  Also, in our opinion, the financial
statement schedule when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
  We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company’s internal control over financial
reporting as of December 31, 2007, based on criteria established inInternal Control—Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) and our report dated March 13, 2008 expressed an
unqualified opinion on the effectiveness on the Company’s internal control over
financial reporting.
  /s/
Joseph Decosimo and Company, PLLC
  Chattanooga,
Tennessee
 March 13,
2008
  
 
 MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
BALANCE SHEETS
 DECEMBER
31, 2007 AND 2006
  (In
thousands, except share data)
  2007
                  
                  
                  2006ASSETSCURRENT
      ASSETS:Cash
      and temporary investments
                  
                  $
                  23,282
                  
                  
                  $
                  8,204Accounts
      receivable, net of allowance for doubtful accounts of $1,640 and $2,488,
      at December 31, 2007 and 2006, respectively
                  
                  
                  67,035
                  
                  
                  
                  84,186Inventories
                  
                  
                  39,313
                  
                  
                  
                  43,155Prepaid
      expenses and other
                  
                  
                  1,775
                  
                  
                  
                  2,079Current
      deferred income taxes
                  
                  
                  3,038
                  
                  
                  
                  12,154Total
      current assets
                  
                  
                  134,443
                  
                  
                  
                  149,778PROPERTY, PLANT, AND EQUIPMENT,net
                  
                  
                  33,807
                  
                  
                  
                  27,527GOODWILL
                  
                  
                  11,619
                  
                  
                  
                  11,619DEFERRED
      INCOME TAXES
                  
                  
                  8,615
                  
                  
                  
                  7,586OTHER
      ASSETS
                  
                  
                  558
                  
                  
                  
                  922$
                  189,042
                  
                  
                  $
                  197,432LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIES:Current
      portion of long-term obligations
                  
                  $
                  1,802
                  
                  
                  $
                  1,623Accounts
      payable
                  
                  
                  39,926
                  
                  
                  
                  58,620Accrued
      liabilities and other
                  
                  
                  10,623
                  
                  
                  
                  13,269Total
      current liabilities
                  
                  
                  52,351
                  
                  
                  
                  73,512LONG-TERM OBLIGATIONS,
      less current portion
                  
                  
                  4,203
                  
                  
                  
                  10,537COMMITMENTS AND CONTINGENCIES(Notes 3 and 6)SHAREHOLDERS’
      EQUITY:Preferred
      stock, $.01 par value; 5,000,000 shares authorized, none issued or
      outstanding
                  
                  
                  0
                  
                  
                  
                  0Common
      stock, $.01 par value; 100,000,000 shares authorized, 11,588,179 and
      11,509,964, outstanding at December 31, 2007 and 2006,
      respectively
                  
                  
                  116
                  
                  
                  
                  115Additional
      paid-in capital
                  
                  
                  160,700
                  
                  
                  
                  159,702Accumulated
      deficit
                  
                  
                  (32,208
                  )
                  
                  
                  (48,539
                  )Accumulated
      other comprehensive income
                  
                  
                  3,880
                  
                  
                  
                  2,105Total
      shareholders’ equity
                  
                  
                  132,488
                  
                  
                  
                  113,383$
                  189,042
                  
                  
                  $
                  197,432
  The
accompanying notes are an integral part of these consolidated
statements.
 F-3
  MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
  (In
thousands, except per share data)
  2007
                  
                  
                  2006
                  
                  
                  2005NET
      SALES
                  
                  $
                  400,032
                  
                  
                  $
                  409,421
                  
                  
                  $
                  351,884COSTS
      AND EXPENSESCosts
      of operations
                  
                  
                  343,885
                  
                  
                  
                  349,639
                  
                  
                  
                  301,943Selling,
      general, and administrative expenses
                  
                  
                  27,105
                  
                  
                  
                  26,837
                  
                  
                  
                  24,293Interest
      expense, net
                  
                  
                  3,392
                  
                  
                  
                  3,518
                  
                  
                  
                  4,012Total
      costs and expenses
                  
                  
                  374,382
                  
                  
                  
                  379,994
                  
                  
                  
                  330,248INCOME
      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                  
                  
                  25,650
                  
                  
                  
                  29,427
                  
                  
                  
                  21,636INCOME
      TAX PROVISION
                  
                  
                  9,319
                  
                  
                  
                  2,454
                  
                  
                  
                  2,936INCOME
      FROM CONTINUING OPERATIONS
                  
                  
                  16,331
                  
                  
                  
                  26,973
                  
                  
                  
                  18,700DISCONTINUED
      OPERATIONSGain
      (loss) from discontinued operations, net of taxes
                  
                  
                  –
                  
                  
                  
                  126
                  
                  
                  
                  (114
                  )Tax
      benefit of advances to and investment in certain discontinued
      operations
                  
                  
                  –
                  
                  
                  
                  (18,244
                  )
                  
                  
                  –Gain
      (loss) from discontinued operations
                  
                  
                  –
                  
                  
                  
                  18,370
                  
                  
                  
                  (114
                  )NET
      INCOME
                  
                  $
                  16,331
                  
                  
                  $
                  45,343
                  
                  
                  $
                  18,586BASIC
      INCOME PER COMMON SHARE:Income
      from continuing operations
                  
                  $
                  1.41
                  
                  
                  $
                  2.37
                  
                  
                  $
                  1.67Gain
      (loss) from discontinued operations
                  
                  
                  –
                  
                  
                  
                  1.62
                  
                  
                  
                  (0.01
                  )Basic
      income
                  
                  $
                  1.41
                  
                  
                  $
                  3.99
                  
                  
                  $
                  1.66DILUTED
      INCOME PER COMMON SHARE:Income
      from continuing operations
                  
                  $
                  1.40
                  
                  
                  $
                  2.33
                  
                  
                  $
                  1.63Gain
      (loss) from discontinued operations
                  
                  
                  –
                  
                  
                  
                  1.58
                  
                  
                  
                  (0.01
                  )Diluted
      income
                  
                  $
                  1.40
                  
                  
                  $
                  3.91
                  
                  
                  $
                  1.62WEIGHTED
      AVERAGE SHARES OUTSTANDING:Basic
                  
                  
                  11,556
                  
                  
                  
                  11,360
                  
                  
                  
                  11,226Diluted
                  
                  
                  11,655
                  
                  
                  
                  11,596
                  
                  
                  
                  11,474
  The
accompanying notes are an integral part of these consolidated
statements.
 F-4
  MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
  (In
thousands, except share data)
  Common
      Stock
                  
                  
                  Additional
      Paid-
                      In
      Capital
                  
                  
                  Accumulated
                      Deficit
                  
                  
                  Accumulated
                      Other
                      Comprehensive
      Income
                  
                  
                  TotalBALANCE,
      December 31, 2004
                  
                  $
                  112
                  
                  
                  $
                  157,202
                  
                  
                  $
                  (112,468
                  )
                  
                  $
                  1,939
                  
                  
                  $
                  46,785Components
      of comprehensive income:Net
      income
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  18,586
                  
                  
                  
                  –
                  
                  
                  
                  18,586Foreign
      currency translation adjustments
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (1,468
                  )
                  
                  
                  (1,468
                  )Unrealized
      gain on financial instruments
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  57
                  
                  
                  
                  57Total
      comprehensive income (loss)
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  18,586
                  
                  
                  
                  (1,411
                  )
                  
                  
                  17,175Issuance
      of common stock to non-employee directors (6,672)
                  
                  
                  –
                  
                  
                  
                  75
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  75Exercise
      of stock options (108,296)
                  
                  
                  1
                  
                  
                  
                  719
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  720BALANCE,
      December 31, 2005
                  
                  
                  113
                  
                  
                  
                  157,996
                  
                  
                  
                  (93,882
                  )
                  
                  
                  528
                  
                  
                  
                  64,755Components
      of comprehensive income:Net
      income
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  45,343
                  
                  
                  
                  –
                  
                  
                  
                  45,343Foreign
      currency translation adjustments
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  1,577
                  
                  
                  
                  1,577Total
      comprehensive income
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  45,343
                  
                  
                  
                  1,577
                  
                  
                  
                  46,920Issuance
      of common stock to non-employee directors (3,768)
                  
                  
                  –
                  
                  
                  
                  75
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  75Exercise
      of stock options (208,722)
                  
                  
                  2
                  
                  
                  
                  1,323
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  1,325Stock-based
      compensation expense
                  
                  
                  –
                  
                  
                  
                  308
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  308BALANCE,
      December 31, 2006
                  
                  
                  115
                  
                  
                  
                  159,702
                  
                  
                  
                  (48,539
                  )
                  
                  
                  2,105
                  
                  
                  
                  113,383Components
      of comprehensive income:Net
      income
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  16,331
                  
                  
                  
                  –
                  
                  
                  
                  16,331Foreign
      currency translation adjustments
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  1,775
                  
                  
                  
                  1,775Total
      comprehensive income
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  16,331
                  
                  
                  
                  1,775
                  
                  
                  
                  18,106Issuance
      of common stock to non-employee directors (3,150)
                  
                  
                  –
                  
                  
                  
                  75
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  75Exercise
      of stock options (75,065)
                  
                  
                  1
                  
                  
                  
                  615
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  616Stock-based
      compensation expense
                  
                  
                  –
                  
                  
                  
                  308
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  308BALANCE,
      December 31, 2007
                  
                  $
                  116
                  
                  
                  $
                  160,700
                  
                  
                  $
                  (32,208
                  )
                  
                  $
                  3,880
                  
                  
                  $
                  132,488
  The
accompanying notes are an integral part of these consolidated
statements.
 F-5
  MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
  (In
thousands)
  2007
                  
                  
                  2006
                  
                  
                  2005OPERATING
      ACTIVITIES:Net
      income
                  
                  $
                  16,331
                  
                  
                  $
                  45,343
                  
                  
                  $
                  18,586Adjustments
      to reconcile net income to net cash provided by (used in) operating
      activities:(Gain)
      loss from discontinued operations
                  
                  
                  –
                  
                  
                  
                  (126
                  )
                  
                  
                  114Tax
      benefit of advances to and investments in discontinued
      operations
                  
                  
                  –
                  
                  
                  
                  (18,244
                  )
                  
                  
                  -Depreciation
      and amortization
                  
                  
                  3,134
                  
                  
                  
                  2,721
                  
                  
                  
                  2,900Deferred
      tax provision (benefit)
                  
                  
                  7,716
                  
                  
                  
                  (1,331
                  )
                  
                  
                  -Amortization
      of deferred financing costs
                  
                  
                  123
                  
                  
                  
                  123
                  
                  
                  
                  340Provision
      for doubtful accounts
                  
                  
                  312
                  
                  
                  
                  1,065
                  
                  
                  
                  827Stock-based
      compensation
                  
                  
                  308
                  
                  
                  
                  308
                  
                  
                  
                  -Issuance
      of non-employee director shares
                  
                  
                  75
                  
                  
                  
                  75
                  
                  
                  
                  75Gain
      on disposals of equipment
                  
                  
                  (109
                  )
                  
                  
                  –
                  
                  
                  
                  –Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  17,305
                  
                  
                  
                  (18,898
                  )
                  
                  
                  (17,667
                  )Inventories
                  
                  
                  5,156
                  
                  
                  
                  (3,496
                  )
                  
                  
                  (4,579
                  )Prepaid
      expenses and other
                  
                  
                  343
                  
                  
                  
                  (1,390
                  )
                  
                  
                  839Other
      assets
                  
                  
                  46
                  
                  
                  
                  (16
                  )
                  
                  
                  (12
                  )Accounts
      payable
                  
                  
                  (19,673
                  )
                  
                  
                  12,090
                  
                  
                  
                  9,952Accrued
      liabilities and other
                  
                  
                  (2,497
                  )
                  
                  
                  (343
                  )
                  
                  
                  4,210Net
      cash flows from operating activities from continuing
      operations
                  
                  
                  28,570
                  
                  
                  
                  17,881
                  
                  
                  
                  15,585Net
      cash flows from operating activities from discontinued
      operations
                  
                  
                  –
                  
                  
                  
                  247
                  
                  
                  
                  (2,225
                  )Net
      cash flows from operating activities
                  
                  
                  28,570
                  
                  
                  
                  18,128
                  
                  
                  
                  13,360INVESTING
      ACTIVITIES:Purchases
      of property, plant, and equipment
                  
                  
                  (8,718
                  )
                  
                  
                  (12,564
                  )
                  
                  
                  (1,425
                  )Proceeds
      from sale of equipment
                  
                  
                  148
                  
                  
                  
                  98
                  
                  
                  
                  –Payments
      received on notes receivables
                  
                  
                  482
                  
                  
                  
                  604
                  
                  
                  
                  227Net
      cash flows from investing activities from continuing
      operations
                  
                  
                  (8,088
                  )
                  
                  
                  (11,862
                  )
                  
                  
                  (1,198
                  )Net
      cash flows from investing activities from discontinued
      operations
                  
                  
                  –
                  
                  
                  
                  25
                  
                  
                  
                  1,421Net
      cash flows from investing activities
                  
                  
                  (8,088
                  )
                  
                  
                  (11,837
                  )
                  
                  
                  223FINANCING
      ACTIVITIES:Net
      borrowings under senior credit facility
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  6,300(Payments)
      borrowings under junior credit facility
                  
                  
                  (5,000
                  )
                  
                  
                  (5,000
                  )
                  
                  
                  5,707Payments
      on long-term obligations
                  
                  
                  (1,803
                  )
                  
                  
                  (1,603
                  )
                  
                  
                  (1,223
                  )Net
      payments under former credit facility
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (18,903
                  )Borrowings
      under long-term obligations
                  
                  
                  –
                  
                  
                  
                  329
                  
                  
                  
                  –Additions
      to deferred financing costs
                  
                  
                  (42
                  )
                  
                  
                  (5
                  )
                  
                  
                  (389
                  )Termination
      of interest rate swap
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  57Proceeds
      from exercise of stock options
                  
                  
                  616
                  
                  
                  
                  1,325
                  
                  
                  
                  720Net
      cash flows from financing activities from continuing
      operations
                  
                  
                  (6,229
                  )
                  
                  
                  (4,954
                  )
                  
                  
                  (7,731
                  )Net
      cash flows from financing activities from discontinued
      operations
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (2,511
                  )Net
      cash flows from financing activities
                  
                  
                  (6,229
                  )
                  
                  
                  (4,954
                  )
                  
                  
                  (10,242
                  )EFFECT
      OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS
                  
                  
                  825
                  
                  
                  
                  697
                  
                  
                  
                  (557
                  )NET
      CHANGE IN CASH AND TEMPORARY INVESTMENTS
                  
                  
                  15,078
                  
                  
                  
                  2,034
                  
                  
                  
                  2,784CASH
      AND TEMPORARY INVESTMENTS, beginning of year
                  
                  
                  8,204
                  
                  
                  
                  6,147
                  
                  
                  
                  2,812CASH
      AND TEMPORARY INVESTMENTS-DISCONTINUED OPERATIONS, beginning of
      year
                  
                  
                  –
                  
                  
                  
                  23
                  
                  
                  
                  574CASH
      AND TEMPORARY INVESTMENTS-DISCONTINUED OPERATIONS, end of
    year
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  23CASH
      AND TEMPORARY INVESTMENTS, end of year
                  
                  $
                  23,282
                  
                  
                  $
                  8,204
                  
                  
                  $
                  6,147SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      payments for interest
                  
                  $
                  4,117
                  
                  
                  $
                  3,897
                  
                  
                  $
                  3,875Cash
      payments for income taxes
                  
                  $
                  2,302
                  
                  
                  $
                  3,477
                  
                  
                  $
                  865NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Capital
      leases
                  
                  $
                  549
                  
                  
                  $
                  –
                  
                  
                  $
                  –
  The
accompanying notes are an integral part of these consolidated
statements.
 F-6
  MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
                  ORGANIZATION
      AND NATURE OF OPERATIONS
  Miller
Industries, Inc. and subsidiaries (“the Company”) is the world’s largest
manufacturer of vehicle towing and recovery equipment.  The principal
markets for the Company’s towing and recovery equipment are approximately 120
independent distributors and users of towing and recovery equipment located
primarily throughout North America, and other customers throughout the
world.  The Company’s products are marketed under the brand names of
Century, Challenger, Holmes, Champion, Eagle, Titan, Jige, Boniface, Vulcan, and
Chevron.  Unless otherwise specifically stated, all disclosures in the
following notes relate only to the Company’s continuing operations.
  2.
                  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.
  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 at December 31, 2007 and 2006 consisted of the following (in
thousands):
  2007
                  
                  
                  2006Chassis
                  
                  $
                  4,866
                  
                  
                  $
                  3,596Raw
      materials
                  
                  
                  16,555
                  
                  
                  
                  18,767Work
      in process
                  
                  
                  12,145
                  
                  
                  
                  12,566Finished
      goods
                  
                  
                  5,747
                  
                  
                  
                  8,226$
                  39,313
                  
                  
                  $
                  43,155
  F-7
  Property,
Plant, and Equipment
  Property,
plant and equipment, which include amounts recorded under capital leases, 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. Internal labor is used in certain capital
projects.
  Property,
plant and equipment at December 31, 2007 and 2006 consisted of the following (in
thousands):
  2007
                  
                  
                  2006Land
      and improvements
                  
                  $
                  4,641
                  
                  
                  $
                  3,247Buildings
      and improvements
                  
                  
                  27,271
                  
                  
                  
                  24,389Machinery
      and equipment
                  
                  
                  18,841
                  
                  
                  
                  15,476Furniture
      and fixtures
                  
                  
                  6,542
                  
                  
                  
                  5,393Software
      costs
                  
                  
                  6,802
                  
                  
                  
                  6,695Construction
      in progress
                  
                  
                  2,914
                  
                  
                  
                  2,22867,011
                  
                  
                  
                  57,428Less
      accumulated depreciation
                  
                  
                  (33,204
                  )
                  
                  
                  (29,901
                  )$
                  33,807
                  
                  
                  $
                  27,527
  The
Company recognized $3,134,000, $2,608,000 and $2,760,000, in depreciation
expense in 2007, 2006 and 2005, respectively.  In 2007 and 2006,
$247,000 and $200,000, respectively, of interest costs were capitalized for
construction period interest.
  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.
  Basic
and Diluted Income Per Common Share
  Basic
income per common share is computed by dividing net income by the weighted
average number of common shares outstanding.  Diluted income per
common share is calculated by dividing net income by the weighted average number
of common and potential dilutive common shares outstanding.  Diluted
net income per common share takes into consideration the assumed exercise of
outstanding stock options resulting in approximately 99,000, 236,000 and 248,000
potential dilutive common shares in 2007, 2006 and 2005,
respectively.  Options to purchase approximately 76,000, 55,000 and
151,000 shares of common stock were outstanding during 2007, 2006 and 2005,
respectively, but were not included in the computation of diluted earnings per
share because the effect would have been anti-dilutive.
  Goodwill
and Long-Lived Assets
  The
Company accounts for goodwill in accordance with SFAS No. 141 “Business
Combinations” and SFAS No. 142 “Goodwill and Other Intangible Assets,” and as
such has ceased amortizing goodwill.  In lieu of amortization the
Company performs an annual impairment review of goodwill.
  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.  Under SFAS No. 144, 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.
  F-8
  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
$1,547,000 at December 31, 2007 and 2006.  Amortization expense in
2006 and 2005 was $113,000 and $140,000, respectively.  At December
31, 2007, all intangible assets subject to amortization were fully
amortized.  As acquisitions and dispositions of intangible assets
occur in the future, the amortization amounts may vary.
  Deferred
Financing Costs
  All
deferred financing costs are included in other assets and are amortized using
the straight-line method over the terms of the respective
obligations.  Total accumulated amortization of deferred financing
costs at December 31, 2007 and 2006 was $321,000 and $197,000,
respectively.  Amortization expense in 2007, 2006 and 2005, was
$123,000, $123,000 and $340,000, respectively, and is included in interest
expense in the accompanying consolidated statements of
operations.  Based on the current amount of deferred financing costs
subject to amortization, the estimated amortization expense in future years is
not significant.
  Accrued
Liabilities and Other
  Accrued
liabilities and other consisted of the following at December 31, 2007 and 2006
(in thousands):
  2007
                  
                  
                  2006Accrued
      wages, commissions, bonuses and benefits
                  
                  $
                  4,422
                  
                  
                  $
                  4,414Accrued
      income taxes
                  
                  
                  553
                  
                  
                  
                  1,560Other
                  
                  
                  5,648
                  
                  
                  
                  7,295$
                  10,623
                  
                  
                  $
                  13,269
  Income
Taxes
  The
Company recognizes deferred income tax assets and liabilities for the future tax
consequences of the differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases.  If
unrecognized tax positions exist, interest and penalties related to unrecognized
tax positions are recorded as income tax expense in the consolidated statement
of operations.
  Stock-Based
Compensation
  Effective
January 1, 2006, the Company adopted Statement of Financial Accounting Standards
(“SFAS”) No. 123R, “Share-Based Payment” using the modified prospective
transition method.  This statement requires the determination of the
fair-value of stock-based compensation at the grant date and the recognition of
the related expense over the period in which the stock-based compensation
vests.  During 2007 and 2006, the Company recorded $308,000 in
compensation expense related to its stock-based compensation.  The
stock-based compensation expense is included in selling, general and
administrative expenses in the accompanying consolidated statements of
operations.
  F-9
  Prior to
the adoption of SFAS No. 123R, the Company accounted for stock-based
compensation in accordance with Accounting Principles Bulletin (APB) No. 25,
“Accounting for Stock Issued to Employees.”  Under the provisions of
APB No. 25, no compensation expense is recorded when the terms of the grant are
fixed and the option exercise prices are equal to the market value of the common
stock on the date of the grant.  Disclosure-only provisions of SFAS
No. 123 “Accounting for Stock-Based Compensation” were adopted. 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 2004:  expected dividend
yield of 0%; expected volatility of 43%; risk-free interest rate of 2.94%; and
expected life of 5.5 years.  Using these assumptions, the fair value
of options granted in 2004 is approximately $1,242,000, which would be amortized
as compensation expense over the vesting period of the options.  No
options were granted during 2007 or 2006.   Had compensation
costs been accounted for based on the fair value at the grant dates consistent
with SFAS No. 123, the Company’s prior year net income and net income per share
would have been adjusted to the pro forma amounts indicated below:
  2005(in
      thousands, except
                    per
      share data)Net
      income available to common stockholders, as reported
                  
                  $
                  18,586Deduct:  Total
      stock-based employee compensation expensedetermined
      under fair value based method for all awards, net of related tax
      effects
                  
                  
                  (347
                  )Net
      income available to common stockholders, pro forma
                  
                  $
                  18,239Income
      per common share:Basic,
      as reported
                  
                  $
                  1.66Basic,
      pro forma
                  
                  $
                  1.62Diluted,
      as reported
                  
                  $
                  1.62Diluted,
      pro forma
                  
                  $
                  1.59
  At
December 31, 2007, the Company had $77,000 of unrecognized compensation expense
related to stock options, to be expensed in 2008.  The Company issued
approximately 75,000 shares of common stock during 2007 from the exercise of
stock options.
  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 in 2007, 2006 and
2005, was $1,881,000, $1,716,000 and $1,744,000, respectively.
  The table
below provides a summary of the warranty liability for December 31, 2007 and
2006 (in thousands):
  2007
                  
                  
                  2006Accrual
      at beginning of the year
                  
                  $
                  839
                  
                  
                  $
                  801Provision
                  
                  
                  1,881
                  
                  
                  
                  1,716Settlement
                  
                  
                  (1,856
                  )
                  
                  
                  (1,678
                  )Accrual
      at end of year
                  
                  $
                  864
                  
                  
                  $
                  839
  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.  The
Company monitors its exposure for credit losses and maintains allowances for
anticipated losses.  The Company maintains security agreements on
substantially all of its trade receivables.
  F-10
  Revenue
Recognition
  Revenue
is recorded by the Company when the risk of ownership for products has
transferred to the independent distributors or other customers, which is
generally upon shipment.
  Shipping
and Handling Fees and Cost
  The
Company records revenues earned for shipping and handling as revenue, while the
cost of shipping and handling is classified as cost of operations.
  Foreign
Currency Translation
  The
functional currency for the Company’s foreign operations is the applicable local
currency.  The translation from the applicable foreign currencies to
U.S. dollars is performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date, historical rates for equity and the
weighted average exchange rate during the period for revenue and expense
accounts.  The gains or losses resulting from such translations are
included in shareholders’ equity.  For intercompany debt denominated
in a currency other than the functional currency, the remeasurement into the
functional currency is also included in shareholders’ equity as the amounts are
considered to be of a long-term investment nature.
  Recent
Accounting Pronouncements
  Recently
Adopted Standards
  In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
48”).  FIN 48 clarifies the accounting for uncertainty in income taxes
by prescribing a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return.  The interpretation also gives
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, and disclosure.  FIN 48 was effective January 1, 2007
and did not have a material impact on the Company’s financial statements when
adopted on January 1, 2007.
  Recently
Issued Standards
  In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
No. 157”).  SFAS No. 157 provides a framework for measuring fair value
in accordance with generally accepted accounting principles, and expands
disclosures regarding fair value measurements and the effect on
earnings.  SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years.  The Company is evaluating the impact SFAS No. 157
will have on the consolidated financial statements; however, the impact is not
expected to be material.
  In
February 2007, the FASB issued a SFAS No. 159, “The Fair Value Option for
Financial Assets & Financial Liabilities – Including an Amendment of SFAS
No. 115” (“SFAS No. 159”).  SFAS No. 159 will create a fair value
option under which an entity may irrevocably elect fair value as the initial and
subsequent measurement attribute for certain financial assets and liabilities on
a contract by contract basis, with changes in fair values recognized in earnings
as these changes occur.  SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007.  The Company is evaluating the
impact SFAS No. 159 will have on the consolidated financial statements; however,
the impact is not expected to be material.
  In
December, 2007, the FASB issued SFAS No.
141(R), “Business
Combinations”(“SFAS No.
141(R)”), which applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008.  An entity may
not apply it before that date. SFAS No. 141(R) establishes principles and
requirements for how the acquirer: (i) recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed
and any noncontrolling interest in the acquiree; (ii) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase; and (iii) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The Company does not expect the adoption of
SFAS No. 141 (R) to have an effect on its results of operations and its
financial condition unless it enters into a business combination after
January 1, 2009.
  F-11
 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.
  3.
                  LONG-TERM
      OBLIGATIONS
  Long-Term
Obligations
  Long-term
obligations consisted of the following at December 31, 2007 and 2006 (in
thousands):
  2007
                  
                  
                  2006Outstanding
      borrowings under Senior Credit Facility
                  
                  $
                  3,500
                  
                  
                  $
                  4,900Outstanding
      borrowings under Junior Credit Facility
                  
                  
                  –
                  
                  
                  
                  5,000Mortgage
      notes payable, weighted average interest rate of 7.25%, payable in monthly
      installments, maturing in 2009
                  
                  
                  1,786
                  
                  
                  
                  1,844Equipment
      notes and capital leases payable, weighted average interest rate of 7.1%,
      payable in monthly installments, maturing 2008 to 2011
                  
                  
                  719
                  
                  
                  
                  4166,005
                  
                  
                  
                  12,160Less
      current portion
                  
                  
                  (1,802
                  )
                  
                  
                  (1,623
                  )$
                  4,203
                  
                  
                  $
                  10,537
  Certain
equipment and manufacturing facilities are pledged as collateral under the
mortgage and equipment notes payable.
  Credit
Facilities
  Senior Credit
Facility.  The Company is a party to a Credit Agreement (the
“Senior Credit Agreement”) with Wachovia Bank, National Association, for a $27.0
million senior secured credit facility (the “Senior Credit
Facility”).  The Senior Credit Facility consists of a $20.0 million
revolving credit facility (the “Revolver”), and a $7.0 million term loan (the
“Term Loan”).  The Senior Credit Facility is secured by substantially
all of the Company’s assets, and contains customary representations and
warranties, events of default and affirmative and negative covenants for secured
facilities of this type.  On July 11, 2007, the Company and Wachovia
agreed to certain amendments to the Senior Credit Facility which are described
below.
  Formerly,
in the absence of a default, all borrowings under the Revolver bore interest at
the LIBOR Market Index Rate (as defined in the Senior Credit Agreement) plus a
margin of between 1.75% to 2.50% per annum that is subject to adjustment from
time to time based upon the Consolidated Leverage Ratio (as defined in the
Senior Credit Agreement), and the Term Loan bore interest at a 30-day adjusted
LIBOR rate plus a margin of between 1.75% to 2.50% per annum that was subject to
adjustment from time to time based upon the Consolidated Leverage
Ratio.  The Revolver was scheduled to expire on June 15, 2008, and the
Term Loan was scheduled to mature on June 15, 2010.
  Under the
amended Senior Credit Agreement, the non-default rate of interest under the
Revolver and Term Loan was reduced to the LIBOR Market Index Rate plus a margin
of between 0.75% to 1.50% per annum that is subject to adjustment from time to
time based upon the Consolidated Leverage Ratio, and the maturity date of the
Revolver was extended to June 17, 2010.  The amendments also increased
the ratio of leverage permitted under the Consolidated Leverage Ratio covenant,
and extended and modified certain of the negative covenants and events of
default set forth in the Senior Credit Agreement.
  F-12
  At
December 31, 2007 and 2006, the Company had no outstanding borrowings under
the Revolver.
  Termination of Junior Credit
Facility.  William G. Miller was the sole lender under the
Company’s former junior credit facility (the “Junior Credit
Facility”).  In May 2006, the Company repaid $5.0 million of the
subordinated debt under the Junior Credit Facility, and in May 2007, the Company
repaid the remaining $5.0 million principal balance under the Junior Credit
Facility.  With such payments, all loans from Mr. Miller to the
Company were paid in full.  In July 2007, in connection with the
amendments to the Company’s Senior Credit Facility, the Junior Credit Facility
was terminated.
  Interest Rate
Sensitivity.  Because of the amount of obligations outstanding
under the Senior Credit Facility and the connection of the interest rate under
the Senior Credit Facility (including the default rates) to the LIBOR rate, an
increase in the LIBOR rate could have an effect on the Company’s ability to
satisfy its obligations under the Senior Credit Facility and increase its
interest expense.  Similarly, certain of the Company’s other
obligations are tied to the prime rate.  Therefore, the Company’s
liquidity and access to capital resources could be further affected by
increasing interest rates.
  Future
maturities of long-term obligations (including capital lease obligations) at
December 31, 2007 are as follows (in thousands):
  2008
                  
                  $
                  1,8022009
                  
                  
                  3,3842010
                  
                  
                  8112011
                  
                  
                  8$
                  6,005
   4.
                  RELATED
      PARTY TRANSACTIONS
  Termination
of Credit Facilities
  Mr.
Miller was the sole lender under the Junior Credit Facility.  The
Company paid Mr. Miller approximately $228,000, $684,000 and $415,000 in
interest expense on the Junior Credit Facility for 2007, 2006 and 2005,
respectively.  Approximately $77,000 is included in accrued
liabilities for unpaid interest on the Junior Credit Facility at December 31,
2006.
  In May
2007, the Company repaid the remaining $5.0 million of subordinated debt under
the Junior Credit Facility.  This payment was approved by the Audit
Committee of the Company’s Board of Directors and by the full Board of Directors
with Mr. Miller abstaining due to his personal interest in the
transaction.  In July 2007, the Junior Credit Facility was
terminated.
  DataPath,
Inc.
  Total
revenues from DataPath, Inc., a related party through common ownership and
common board of director membership until June 30, 2006, were $5,649,000 and
$23,727,000 for the six months ended June 30, 2006 and the year ended December
31, 2005, respectively.
  F-13
  5.
                  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, 2007, 2006 and 2005 were approximately 1.2
million, 1.1 million and 0.9 million, respectively.
  A summary
of the activity of stock options for the years ended December 31, 2007, 2006 and
2005, is presented below (shares in thousands):
  2007
                  
                  
                  2006
                  
                  
                  2005Shares
      Under
                      Option
                  
                  
                  Weighted
                      Average
                      Exercise
      Price
                  
                  
                  Shares
      Under
                      Option
                  
                  
                  Weighted
                      Average
                      Exercise
      Price
                  
                  
                  Shares
      Under
                      Option
                  
                  
                  Weighted
                      Average
                      Exercise
      PriceOutstanding
      at Beginning of Period
                  
                  
                  304
                  
                  
                  $
                  17.39
                  
                  
                  
                  574
                  
                  
                  $
                  15.92
                  
                  
                  
                  805
                  
                  
                  $
                  15.46Granted
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –Exercised
                  
                  
                  (75
                  )
                  
                  
                  8.21
                  
                  
                  
                  (216
                  )
                  
                  
                  6.90
                  
                  
                  
                  (108
                  )
                  
                  
                  6.67Forfeited
      and cancelled
                  
                  
                  (24
                  )
                  
                  
                  64.74
                  
                  
                  
                  (54
                  )
                  
                  
                  43.60
                  
                  
                  
                  (123
                  )
                  
                  
                  20.96Outstanding
      at End of Period
                  
                  
                  205
                  
                  
                  $
                  15.24
                  
                  
                  
                  304
                  
                  
                  $
                  17.39
                  
                  
                  
                  574
                  
                  
                  $
                  15.92Options
      exercisable at year end
                  
                  
                  123
                  
                  
                  $
                  19.90
                  
                  
                  
                  138
                  
                  
                  $
                  28.39
                  
                  
                  
                  321
                  
                  
                  $
                  21.90Weighted
      average fair value of options granted
                  
                  
                  
                  
                  
                  $
                  –
                  
                  
                  
                  
                  
                  
                  $
                  –
                  
                  
                  
                  
                  
                  
                  $
                  –
  A summary
of options outstanding under the Company’s stock-based compensation plans at
December 31, 2007 is presented below (shares in thousands):
  Exercise
      Price Range
                  
                  
                  Shares
                      Under
                      Option
                  
                  
                  Weighted
      Average Exercise Price of
                      Options
      Outstanding
                  
                  
                  Weighted
                      Average
                      Remaining
      Life
                  
                  
                  Options
                      Exercisable
                  
                  
                  Weighted
      Average Exercise Price of
                      Shares
      Exercisable$
                  3.05
                  -
                  
                  $
                  3.37
                  
                  
                  
                  5
                  
                  
                  $
                  3.05
                  
                  
                  
                  3.9
                  
                  
                  
                  5
                  
                  
                  $
                  3.058.31
                  
                  
                  
                  10.94
                  
                  
                  
                  125
                  
                  
                  
                  8.44
                  
                  
                  
                  6.0
                  
                  
                  
                  42
                  
                  
                  
                  8.6920.63
                  
                  
                  
                  22.50
                  
                  
                  
                  42
                  
                  
                  
                  20.63
                  
                  
                  
                  0.7
                  
                  
                  
                  42
                  
                  
                  
                  20.6332.50
                  
                  
                  
                  35.31
                  
                  
                  
                  33
                  
                  
                  
                  35.29
                  
                  
                  
                  0.5
                  
                  
                  
                  34
                  
                  
                  
                  35.29Total
                  
                  
                  
                  205
                  
                  
                  $
                  15.24
                  
                  
                  
                  4.0
                  
                  
                  
                  123
                  
                  
                  
                  19.90
  6.
                  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 $1,687,000, $1,572,000 and $1,308,000 in 2007, 2006 and 2005,
respectively.  Rental expense under these leases for discontinued
operations was $2,000 and $221,000 in 2006 and 2005, respectively.
  At
December 31, 2007 future minimum lease payments under non-cancelable operating
leases for the next five years and in the aggregate are as follows (in
thousands):
  2008
                  
                  $
                  6672009
                  
                  
                  4802010
                  
                  
                  4152011
                  
                  
                  1592012
                  
                  
                  103Thereafter
                  
                  
                  415$
                  2,239
  F-14
  The
Company has also entered into arrangements with third-party lenders where it has
agreed, in the event of a default by the customer, to repurchase from the
third-party lender Company products repossessed from the
customer.  These arrangements are typically subject to a maximum
repurchase amount.  The Company’s risk under these arrangements is
mitigated by the value of the products repurchased as part of the
transaction.  The maximum amount of collateral the Company could be
required to purchase was approximately $33.4 million and $27.5 million at
December 31, 2007 and 2006, respectively.  No repurchases of products
were required during 2007 or 2006.
  At
December 31, 2007, the Company had commitments of $2.8 million for the
construction and acquisition of property and equipment related to the
modernization of the domestic manufacturing facilities.
  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.
  7.
                  INCOME
      TAXES
  Deferred
tax assets and liabilities are determined based on the differences between the
financial and tax basis 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
provision for income taxes on income consisted of the following in 2007, 2006
and 2005, (in thousands):
  2007
                  
                  
                  2006
                  
                  
                  2005Current:Federal
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  423State
                  
                  
                  501
                  
                  
                  
                  1,426
                  
                  
                  
                  1,647Foreign
                  
                  
                  1,102
                  
                  
                  
                  2,359
                  
                  
                  
                  8661,603
                  
                  
                  
                  3,785
                  
                  
                  
                  2,936Deferred:Federal
                  
                  
                  7,572
                  
                  
                  
                  6,003
                  
                  
                  
                  –State
                  
                  
                  –
                  
                  
                  
                  1,479
                  
                  
                  
                  –Foreign
                  
                  
                  144
                  
                  
                  
                  –
                  
                  
                  
                  –Change
      in valuation allowance
                  
                  
                  –
                  
                  
                  
                  (8,813
                  )
                  
                  
                  –7,716
                  
                  
                  
                  (1,331
                  )
                  
                  
                  –$
                  9,319
                  
                  
                  $
                  2,454
                  
                  
                  $
                  2,936
  The
principal differences between the federal statutory tax rate and the income tax
expense in 2007, 2006 and 2005:
  2007
                  
                  
                  2006
                  
                  
                  2005Federal
      statutory tax rate
                  
                  
                  34.0
                  %
                  
                  
                  35.0
                  %
                  
                  
                  34.0
                  %State
      taxes, net of federal tax benefit
                  
                  
                  1.4
                  %
                  
                  
                  3.2
                  %
                  
                  
                  7.6
                  %Change
      in deferred tax asset valuation allowance
                  
                  
                  –
                  
                  
                  
                  (29.9
                  )%
                  
                  
                  (30.6
                  %)Excess
      of foreign tax over US tax on foreign income
                  
                  
                  0.4
                  %
                  
                  
                  1.3
                  %
                  
                  
                  0.6
                  %Other
                  
                  
                  0.5
                  %
                  
                  
                  (1.3
                  )%
                  
                  
                  2.0
                  %Effective
      tax rate
                  
                  
                  36.3
                  %
                  
                  
                  8.3
                  %
                  
                  
                  13.6
                  %
  F-15
  Deferred
income tax assets and liabilities 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, 2007 and 2006 are as
follows (in thousands):
  2007
                  
                  
                  2006Deferred
      tax assets:Allowance
      for doubtful accounts
                  
                  $
                  55
                  
                  
                  $
                  80Accruals
      and reserves
                  
                  
                  2,276
                  
                  
                  
                  3,162Net
      operating loss carryforward
                  
                  
                  9,248
                  
                  
                  
                  16,697Deductible
      goodwill and impairment charges
                  
                  
                  55
                  
                  
                  
                  52Other
                  
                  
                  531
                  
                  
                  
                  362Net
      deferred tax assets
                  
                  
                  12,165
                  
                  
                  
                  20,353Deferred
      tax liabilities:Property,
      plant, and equipment
                  
                  
                  512
                  
                  
                  
                  613Total
      deferred tax liabilities
                  
                  
                  512
                  
                  
                  
                  613Net
      deferred tax asset
                  
                  $
                  11,653
                  
                  
                  $
                  19,740
  As of
December 31, 2007, the Company had federal net operating loss carryforwards of
approximately $24.0 million which will expire between 2012 and
2026.  The federal net operating loss carryforwards are comprised
primarily of losses from advances to and investments in certain discontinued
operations resulting from the RoadOne liquidation; see Note 11 for further
discussion.  In addition, the Company had an AMT credit carryforward
of approximately $0.5 million, that may be carried forward
indefinitely.
  In 2005,
the Company maintained a valuation allowance reflecting the Company’s
recognition that cumulative losses in recent years indicated that it was unclear
whether certain future tax benefits would be realized as a result of future
taxable income.  At December 31, 2005, the valuation allowance against
net deferred tax asset from continuing and discontinuing operations totaled
approximately $8.8 million.  During 2006, the Company concluded that
the valuation allowance on the deferred tax asset was no longer necessary given
the Company’s sustained income and growth throughout the year and the favorable
projected earnings outlook.  A tax benefit of $8.8 million was
recognized in 2006 as a result of the reversal of the valuation
allowance.
  As of
December 31, 2007, the Company has state net operating loss carryforwards of
approximately $24.1 million.
  The
Company adopted the provisions of Financial Accounting Standards Board
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB No.109” (“FIN 48”) on January 1, 2007.  Upon
adoption of FIN 48 and as of December 31, 2007, the Company had no unrecognized
tax benefits recorded.  The Company does not expect its unrecognized
tax benefits to change significantly in the next twelve months.  If
unrecognized tax benefits existed, the interest and penalties related to the
unrecognized tax positions would be recorded as income tax expense in the
consolidated statement of operations.
  The
Company is subject to United States federal income taxes, as well as income
taxes in various states and foreign jurisdictions.  The Company’s tax
years 2004 through 2007 remain open to examination for U.S. Federal income
taxes.  With few exceptions, the Company is no longer subject to state
or non-U.S. income tax examinations prior to 2004.
  8.
                  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.
  F-16
  9.
                  EMPLOYEE
      BENEFIT PLANS
  The
Company maintains a contributory retirement plan for all full-time employees
with at least 90 days of service.  The plan is 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.
  The plan
provides that each participant may contribute the maximum allowable under
Internal Revenue Service regulations.  For 2006, the Company matched
50% of the first 4% of participant contributions and for 2007 matched 50% of the
first 5% of participant contributions.  Matching contributions vest
over the first five years of employment.  Company contributions to the
plan were $535,000, $376,000 and $145,000 in 2007, 2006 and 2005,
respectively.
  10.
                  GEOGRAPHIC
      AND CUSTOMER INFORMATION
  Net sales
and long-lived assets (property, plant and equipment and goodwill and intangible
assets) by region was as follows (revenue is attributed to regions based on the
locations of customers) (in thousands):
  2007
                  
                  
                  2006
                  
                  
                  2005Net
      Sales
                  
                  
                  Long-Lived
                      Assets
                  
                  
                  Net
      Sales
                  
                  
                  Long-Lived
                      Assets
                  
                  
                  Net
      Sales
                  
                  
                  Long-Lived
                      AssetsNorth
      America
                  
                  $
                  319,195
                  
                  
                  $
                  42,430
                  
                  
                  $
                  333,300
                  
                  
                  $
                  36,455
                  
                  
                  $
                  283,226
                  
                  
                  $
                  26,665Foreign
                  
                  
                  80,837
                  
                  
                  
                  2,996
                  
                  
                  
                  76,121
                  
                  
                  
                  2,691
                  
                  
                  
                  68,658
                  
                  
                  
                  2,509$
                  400,032
                  
                  
                  $
                  45,426
                  
                  
                  $
                  409,421
                  
                  
                  $
                  39,146
                  
                  
                  $
                  351,884
                  
                  
                  $
                  29,174
  No single
customer accounted for 10% or more of consolidated net sales in 2007, 2006 or
2005.
  11.
                  DISCONTINUED
      OPERATIONS
  In 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.  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 were considered a “disposal group” and were no longer being
depreciated.  All results of operations associated with these assets
were separately presented in the Company’s financial statements at December 31,
2006, and 2005 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.
  In
October 2005, the Company’s subsidiary, RoadOne, Inc., filed for liquidation
under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the
Eastern District of Tennessee and a trustee was appointed.  In
December 2006, the trustee’s final report was approved by the United States
trustee, and the final decree was entered on June 19, 2007.  In 2006,
the Company recognized a gain from discontinued operations net of tax of
$126,000 on the deconsolidation of RoadOne, Inc.  In addition, a tax
benefit of $18,244,000 was recognized in 2006 related to deductible losses from
excess tax basis of advances to and investments in certain discontinued
operations.
  F-17
  The
operating results for the discontinued operations of the towing services segment
and the distributor group for the years ended December 31, 2006 and 2005 were as
follows (in thousands):
  2006
                  
                  
                  2005Dist.
                  
                  
                  Towing
                  
                  
                  Total
                  
                  
                  Dist.
                  
                  
                  Towing
                  
                  
                  TotalNet
      Sales
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  11,460
                  
                  
                  $
                  –
                  
                  
                  $
                  11,460Operating
      income (loss)
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (134
                  )
                  
                  
                  16
                  
                  
                  
                  (118
                  )Income
      (loss) before taxes
                  
                  
                  –
                  
                  
                  
                  126
                  
                  
                  
                  126
                  
                  
                  
                  (114
                  )
                  
                  
                  –
                  
                  
                  
                  (114
                  )Net
      income (loss) from discontinued operations
                  
                  $
                  –
                  
                  
                  $
                  18,370
                  
                  
                  $
                  18,370
                  
                  
                  $
                  (114
                  )
                  
                  $
                  –
                  
                  
                  $
                  (114
                  )
  Upon
deconsolidation of RoadOne, Inc., the Company had no discontinued assets or
liabilities on the balance sheet at December 31, 2006.
  12.
                  QUARTERLY
      FINANCIAL INFORMATION (UNAUDITED)
  The
following is a summary of the unaudited quarterly financial information for the
years ended December 31, 2007 and 2006 (in thousands, except per share
data):
  Net
      Sales
                  
                  
                  Operating
                      Income
                  
                  
                  Net
      Income
                      From
                      Discontinued
      Operations
                  
                  
                  Net
                      Income(1)
                  
                  
                  Basic
      Income
                      Per
      Share
                  
                  
                  Diluted
                      Income
      Per
                      Share2007First
      Quarter
                  
                  $
                  114,003
                  
                  
                  $
                  9,089
                  
                  
                  $
                  -
                  
                  
                  $
                  5,395
                  
                  
                  $
                  0.47
                  
                  
                  $
                  0.46Second
      Quarter
                  
                  
                  108,825
                  
                  
                  
                  8,701
                  
                  
                  
                  -
                  
                  
                  
                  4,873
                  
                  
                  
                  0.42
                  
                  
                  
                  0.42Third
      Quarter
                  
                  
                  92,692
                  
                  
                  
                  6,574
                  
                  
                  
                  -
                  
                  
                  
                  3,598
                  
                  
                  
                  0.31
                  
                  
                  
                  0.31Fourth
      Quarter
                  
                  
                  84,512
                  
                  
                  
                  4,678
                  
                  
                  
                  -
                  
                  
                  
                  2,465
                  
                  
                  
                  0.21
                  
                  
                  
                  0.21Total
                  
                  $
                  400,032
                  
                  
                  $
                  29,042
                  
                  
                  $
                  -
                  
                  
                  $
                  16,331
                  
                  
                  $
                  1.41
                  
                  
                  $
                  1.402006First
      Quarter
                  
                  $
                  93,436
                  
                  
                  $
                  7,561
                  
                  
                  $
                  -
                  
                  
                  $
                  5,883
                  
                  
                  $
                  0.52
                  
                  
                  $
                  0.51Second
      Quarter
                  
                  
                  91,923
                  
                  
                  
                  7,461
                  
                  
                  
                  -
                  
                  
                  
                  5,542
                  
                  
                  
                  0.49
                  
                  
                  
                  0.48Third
      Quarter
                  
                  
                  107,364
                  
                  
                  
                  8,504
                  
                  
                  
                  -
                  
                  
                  
                  6,686
                  
                  
                  
                  0.59
                  
                  
                  
                  0.58Fourth
      Quarter
                  
                  
                  116,699
                  
                  
                  
                  9,420
                  
                  
                  
                  18,370
                  
                  
                  
                  27,232
                  
                  
                  
                  2.39
                  
                  
                  
                  2.34Total
                  
                  $
                  409,421
                  
                  
                  $
                  32,945
                  
                  
                  $
                  18,370
                  
                  
                  $
                  45,343
                  
                  
                  $
                  3.99
                  
                  
                  $
                  3.91
  (1)
                  Net
      income for the fourth quarter of 2006 was affected by the recognition of a
      deferred tax asset as described in Note
7.
 
 F-18
  MILLER
INDUSTRIES, INC. AND SUBSIDIARIES
  SCHEDULE
II –VALUATION AND QUALIFYING ACCOUNTS
  Balance
      at
                      Beginning
      of
                      Period
                  
                  
                  Charged
      to
                      Expense
                  
                  
                  Accounts
                      Written
      Off
                  
                  
                  Balance
      at
                      End
      of
                      Period(In
      Thousands)Year
      ended December 31, 2005Deduction
      from asset accounts:Allowance
      for doubtful accounts
                  
                  $
                  1,116
                  
                  
                  
                  827
                  
                  
                  
                  (109
                  )
                  
                  $
                  1,834Year
      ended December 31, 2006Deduction
      from asset accounts:Allowance
      for doubtful accounts
                  
                  $
                  1,834
                  
                  
                  
                  1,065
                  
                  
                  
                  (411
                  )
                  
                  $
                  2,488Year
      ended December 31, 2007Deduction
      from asset accounts:Allowance
      for doubtful accounts
                  
                  $
                  2,488
                  
                  
                  
                  312
                  
                  
                  
                  (1,160
                  )
                  
                  $
                  1,640
 
 
 Balance
      at
                      Beginning
      of
                      Period
                  
                  
                  Charged
      to
                      Expense
                  
                  
                  Claims
                  
                  
                  Balance
      at
                      End
      of Period(In
      Thousands)Year
      ended December 31, 2005Product
      Warranty Reserve:
                  
                  $
                  665
                  
                  
                  
                  1,744
                  
                  
                  
                  (1,608
                  )
                  
                  $
                  801Year
      ended December 31, 2006Product
      Warranty Reserve:
                  
                  $
                  801
                  
                  
                  
                  1,716
                  
                  
                  
                  (1,678
                  )
                  
                  $
                  839Year
      ended December 31, 2007Product
      Warranty Reserve:
                  
                  $
                  839
                  
                  
                  
                  1,881
                  
                  
                  
                  (1,856
                  )
                  
                  $
                  864
  
 
 
 Balance
      at
                      Beginning
      of
                      Period
                  
                  
                  Additions
      (Reductions)
                  
                  
                  Balance
      at
                      End
      of
                      Period(In
      Thousands)Year
      ended December 31, 2005Deferred
      Tax Valuation Allowance:
                  
                  $
                  16,188
                  
                  
                  
                  (7,375
                  )
                  
                  $
                  8,813Year
      ended December 31, 2006Deferred
      Tax Valuation Allowance:
                  
                  $
                  8,813
                  
                  
                  
                  (8,813
                  )
                  
                  $
                  0Year
      ended December 31, 2007Deferred
      Tax Valuation Allowance:
                  
                  $
                  0
                  
                  
                  
                  0
                  
                  
                  $
                  0
  
 Note:
                  The
      Allowance for Doubtful Accounts and Product Warranty Reserve tables above
      reflect activity for continuing operations for the years ended December
      31, 2007, 2006 and 2005.  The Deferred Tax Valuation Allowance
      table reflects consolidated operations for all periods
      presented.
 S-2
 
  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 13th day of March,
2008.
  MILLER
      INDUSTRIES, INC.By:
              /s/ Jeffrey I. BadgleyJeffrey
      I. BadgleyPresident,
      Co-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 13th day of March, 2008.
  Signature
              
              Title/s/ William G. Miller
              
              
              Chairman
      of the Board of Directors and Co-ChiefWilliam
      G. Miller
              
              
              Executive
      Officer/s/ Jeffrey I. Badgley
              
              
              President,
      Co-Chief Executive Officer and DirectorJeffrey
      I. Badgley/s/ J. Vincent Mish
              
              
              Executive
      Vice President, Treasurer and Chief FinancialJ.
      Vincent Mish
              
              
              Officer
      (Principal Financial and Accounting Officer)/s/ A. Russell Chandler,
III
              
              
              DirectorA.
      Russell Chandler, III/s/ Paul E. Drack
              
              
              DirectorPaul
      E. Drack/s/ Richard H. Roberts
              
              
              DirectorRichard
      H. Roberts
  
 
 EXHIBIT
INDEX
  Exhibit
      Number
              
              Description21
              
              Subsidiaries
      of the Registrant23.1
              
              Consent
      of Joseph Decosimo and Company, PLLC24
              
              Power
      of Attorney (see signature page)31.1
              
              Certification
      Pursuant to Rules 13a-14(a)/15d-14(a) by Co-Chief Executive
      Officer31.2
              
              Certification
      Pursuant to Rules 13a-14(a)/15d-14(a) by Co-Chief Executive
      Officer31.3
              
              Certification
      Pursuant to Rules 13a-14(a)/15d-14(a) by Chief Financial
      Officer32.1
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Co-Chief Executive Officer32.2
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Co-Chief Executive Officer32.3
              
              Certification
      Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
      by Chief Financial
Officer