**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, 2006




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 Registered**Common
                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 YesxNo




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.




oYes   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.




xYes   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    oFiler Accelerated
      Filer    x    Non-accelerated
      Filer    o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




oYes   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, 2006 (the last business day of the
      registrant’s most recently completed second fiscal quarter) was $198,050,148
      (based on 9,567,640 shares held by non-affiliates at $20.70 per share, the
      last
      sale price reported on the New York Stock Exchange on June 30,
      2006).




At
      March
      9, 2007 there were 11,516,014  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 2007
      Annual Meeting of Shareholders which is to be filed pursuant to Regulation
      14A.













**TABLE
      OF CONTENTS**




**PART
      I**




ITEM
                    1.
                
                BUSINESS
                
                1ITEM
                    1A.
                
                RISK
                    FACTORS
                
                7ITEM
                    1B.
                
                UNRESOLVED
                    STAFF COMMENTS
                
                10ITEM
                    2.
                
                PROPERTIES
                
                11ITEM
                    3.
                
                LEGAL
                    PROCEEDINGS
                
                11ITEM
                    4.
                
                SUBMISSION
                    OF MATTERS TO A VOTE OF SECURITY
                    HOLDERS
                
                11**PART
                    II**ITEM
                    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 FINANCIALCONDITION
                    AND RESULTS OF OPERATIONS
                
                16ITEM
                    7A.
                
                QUANTITATIVE
                    AND QUALITATIVE DISCLOSURES ABOUT MARKET
                    RISK
                
                24ITEM
                    8.
                
                FINANCIAL
                    STATEMENTS AND SUPPLEMENTARY
                    DATA
                
                25ITEM
                    9.
                
                CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING
                    AND FINANCIAL DISCLOSURE
                
                25ITEM
                    9A.
                
                CONTROLS
                    AND PROCEDURES
                
                25ITEM
                    9B.
                
                OTHER
                    INFORMATION
                
                27**PART
                    III**ITEM
                    10.
                
                DIRECTORS
                    AND EXECUTIVE OFFICERS OF THE
                    REGISTRANT
                
                28ITEM
                    11.
                
                EXECUTIVE
                    COMPENSATION
                
                28ITEM
                    12.
                
                SECURITY
                    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                    MANAGEMENT AND RELATED STOCKHOLDER MATTERS
                
                28ITEM
                    13.
                
                CERTAIN
                    RELATIONSHIPS AND RELATED
                    TRANSACTIONS
                
                28ITEM
                    14.
                
                PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                
                28**PART
                    IV**ITEM
                    15.
                
                EXHIBITS
                    AND FINANCIAL STATEMENT
                    SCHEDULES
                
                29FINANCIAL
                    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 belief 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 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
      businesses.




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.




**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.




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 and the Middle East. 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
      the “Express” automatic wheellift hookup device 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.
      In
      recent years, 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. In
      recent years, professional towing operators have added auto transport trailers
      to their fleets to add to their towing capabilities. Also, we have begun to
      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 171⁄2 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,
      car carriers and other towing and recovery equipment. 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 light to heavy
      duty
      wreckers with capacities ranging from 8 to 70 tons, and car carriers with
      lengths ranging from 171⁄2 to 21 feet. 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
      and
      car carriers in 171⁄2 to 21 foot lengths. 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 171⁄2 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. In 1993, the Champion line was expanded to include
      a
      line of economy tow trucks with integrated boom and underlift.




*Chevron* TM.
      Our
      Chevron product line is comprised primarily of premium car carriers. Chevron
      produces a range of premium single-car, multi-car and industrial carriers,
      light
      duty wreckers and other towing and recovery equipment. The Chevron line is
      operated autonomously with its own independent distribution
      network.




*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.




*Jige* TM *.* Our Jige
      product line is comprised of a broad line of light and heavy duty wreckers
      and
      car carriers marketed primarily in Europe. Jige is a market leader best known
      for its innovative designs of car carriers and light wreckers necessary to
      operate within the narrow confines of European cities, as well as large
      wreckers.




*Boniface* TM *.* Our
      Boniface product line is comprised primarily of heavy duty wreckers marketed
      primarily in Europe. Boniface produces a wide range of heavy duty wreckers
      specializing in the long underlift technology required to tow modern European
      tour buses.




***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. 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 2006, 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 have served as the official recovery team
      for
      many automobile racing events, including Daytona, Talladega, Richmond, Chicago,
      Kansas, California, Michigan and Darlington NASCAR races, 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. We intend to continue to pursue government contracting
      opportunities.




The
      towing and recovery equipment industry places heavy marketing emphasis on
      product exhibitions at national and regional trade shows. In order to focus
      our
      marketing efforts and to control marketing costs, we concentrate our efforts
      on
      five of the major trade shows each year. 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 we are awaiting receipt of the final
      decree from the court. 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 1,000 people as of December 31, 2006. 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 the 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**
            
            **Position**William
                G. Miller
            
            60
            
            Chairman
                of the Board and Co-Chief Executive OfficerJeffrey
                I. Badgley
            
            54
            
            President
                and Co-Chief Executive OfficerFrank
                Madonia
            
            58
            
            Executive
                Vice President, Secretary and General CounselJ.
                Vincent Mish
            
            56
            
            Executive
                Vice President, Chief Financial Officer and President of Financial
                Services Group




***William
      G. Miller*** has
      served as Chairman of the Board since April 1994 and our Co-Chief Executive
      Officer since October 2003. From January 2002 to August 2002, Mr. Miller served
      as the Chief Executive Officer of Team Sports Entertainment, Inc. 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. Badgley*** ** has
      served as our Co-Chief Executive Officer with William G. 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
      Madonia*** ** has
      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.




6


***J.
      Vincent Mish*** ** is
      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.




**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, general economic
      conditions and weather. Adverse changes with respect to any of these factors
      may
      lead to a downturn in our business.***




The
      towing and recovery industry is cyclical in nature and has been affected
      historically by high interest rates, fuel costs, insurance costs, and economic
      conditions in general. Accordingly, an increase in interest rates, fuel costs
      or
      insurance costs, or a downturn in the economy, could have a material adverse
      effect on our operations. The industry also is influenced by consumer confidence
      and general credit availability, and by weather conditions, none of which is
      within our control.




***Our
      dependence upon outside suppliers for our raw materials, including aluminum
      and
      steel, 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 and steel, as
      well
      as disruptions in the supply of raw materials, has resulted in substantially
      higher prices for aluminum, steel and related 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 at both the distributor and towing-operator levels
      and is based primarily on product quality and innovation, reputation,
      technology, customer service, product availability and price. In addition,
      sales
      of 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.




***Continued
      increases in our customers’ fuel costs, and the reduced availability of credit
      for our customers, will have a material effect upon our
      business.***




In
      recent
      years, our customers have experienced substantial increases in fuel and other
      transportation costs. There can be no assurance that fuel and transportation
      costs will not continue to increase for our customers in the future.
      Additionally, our customers have, from time to time, experienced reduced
      availability of credit, which negatively affects their ability to, and capacity
      for, purchasing equipment. These increases in fuel and transportation costs,
      and
      these reductions in the availability of credit, have had, and may continue
      to
      have, a negative effect on our customers, and a material effect upon our
      business and operating results.




***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 2006 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, such as the ongoing
      projects at our Ooltewah, Tennessee and Hermitage, Pennsylvania manufacturing
      facilities, could adversely affect production at those
      facilities.***




In
      2006
      we began projects to modernize and expand our Ooltewah, Tennessee and Hermitage,
      Pennsylvania manufacturing facilities. In addition, we continue to evaluate
      the
      need for similar projects at our other existing manufacturing facilities to
      allow us to better meet anticipated demand for our products. Although we have
      implemented a plan to minimize the impact of these 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
      need to service our indebtedness may affect the growth and profitability of
      our
      business.***




As
      of
      January 31, 2007, our debt included approximately $4.6 million under our senior
      credit facility and $5.0 million under our junior credit facility. A portion
      of
      our cash flow from operations has been and will continue to be dedicated to
      service our debt. Using cash in this manner may affect our ability to grow
      our
      business and to take advantage of opportunities for growth. In addition,
      indebtedness may make us more vulnerable to general adverse economic and
      industry conditions.




***The
      requirements and restrictions imposed by our credit facilities 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 and our junior 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 credit facilities also
      require 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 either of our credit facilities, such
      non-compliance would result in an event of default. If not waived by the lending
      groups, such event of default would result in the acceleration of the amounts
      due under the respective credit facility, and may permit our lenders to
      foreclose on our assets that secure the credit facilities.




***Our
      ability to service our credit facilities may be affected by fluctuations in
      interest rates.***




Because
      of the amount of obligations outstanding under our credit facilities 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 the credit facilities and increase
      our interest expense. Therefore, our liquidity and access to capital resources
      could be further affected by increasing interest rates.




***We
      depend upon skilled labor to manufacture our products. 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 are subject to some continuing liabilities with respect to their
      pre-sale operations, including, for example, liabilities related to litigation,
      certain trade payables, workers compensation and other insurance, surety bonds,
      and real estate, and Miller Industries, Inc. is subject to some of such
      continuing liabilities by virtue of certain direct parent
      guarantees.




9


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 we are awaiting receipt
      of
      the final decree from the court.




***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, beneficially owns approximately 12.1% 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.




10


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.




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.




In
      2006
      we began projects to modernize and expand our Ooltewah, Tennessee and Hermitage,
      Pennsylvania manufacturing facilities as a result of increases in demand for
      our
      products. The cost of these projects is anticipated to be approximately $14.0
      million. In addition, we are considering modernization and expansion projects
      at
      our other manufacturing facilities as necessary to allow us to continue to
      meet
      anticipated demand for our products.




**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 Stock****Period**
            
            **High**
            
            **Low****Year
                Ended December 31, 2005**First
                Quarter
            
            $
            13.80
            
            $
            11.14Second
                Quarter
            
            
            13.02
            
            
            9.90Third
                Quarter
            
            
            22.59
            
            
            12.30Fourth
                Quarter
            
            
            21.50
            
            
            16.35**Year
                Ended December 31, 2006**First
                Quarter
            
            $
            26.13
            
            $
            19.72Second
                Quarter
            
            
            29.31
            
            
            17.60Third
                Quarter
            
            
            21.50
            
            
            16.61Fourth
                Quarter
            
            
            24.71
            
            
            17.95**Year
                Ending December 31, 2007**First
                Quarter (through March 9, 2007)
            
            $
            24.18
            
            $
            21.60




The
      approximate number of holders of record and beneficial owners of common stock
      as
      of December 31, 2006 was 1,646 and 10,000, 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**




During
      2006, holders of options to purchase our common stock delivered 7,133 shares
      to
      exercise stock options. There were no other share repurchases during 2006,
      and
      there were no share repurchases during 2005.




**Sales
      of Unregistered Securities**




We
      did
      not sell any unregistered securities during the year ended December 31,
      2006.




**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 Composite Index over the period of
      time from December 31, 2001 through December 31, 2006. The respective returns
      assume reinvestment of dividends paid.




12







12/31/01
            
            12/31/02
            
            12/31/03
            
            12/31/04
            
            12/30/05
            
            12/29/06Miller
                Industries, Inc.
            
            
            100
            
            
            102
            
            
            126
            
            
            356
            
            
            640
            
            
            757NYSE
                Composite Index(1)
            
            
            100
            
            
            80
            
            
            104
            
            
            116
            
            
            124
            
            
            147S&P
                Construction Index(2)
            
            
            100
            
            
            84
            
            
            144
            
            
            174
            
            
            200
            
            
            215







(1)
            The
                New York Stock Exchange revised the NYSE Composite Index as of December
                31, 2002. The change recalibrated the base yearas
                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 for the years ended December 31, 2006, 2005, 2004,
      2003 and 2002 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,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****(In
                thousands except per share data)****Statements
                of Income Data (1):**Net
                Sales:Towing
                and recovery equipment
            
            $
            409,421
            
            $
            351,884
            
            $
            236,308
            
            $
            192,043
            
            $
            203,059Towing
                services
            
            
            —
            
            
            —
            
            
            —
            
            
            13,953
            
            
            28,444409,421
            
            
            351,884
            
            
            236,308
            
            
            205,996
            
            
            231,503Costs
                and expenses:Costs
                of operations:Towing
                and recovery equipment
            
            
            349,639
            
            
            301,943
            
            
            205,021
            
            
            168,390
            
            
            174,516Towing
                services
            
            
            —
            
            
            —
            
            
            —
            
            
            10,618
            
            
            22,539349,639
            
            
            301,943
            
            
            205,021
            
            
            179,008
            
            
            197,055Selling,
                general, and administrative expenses
            
            
            26,837
            
            
            24,293
            
            
            18,904
            
            
            17,411
            
            
            19,540Special
                charges (2)
            
            
            —
            
            
            —
            
            
            —
            
            
            682
            
            
            —Interest
                expense
            
            
            3,518
            
            
            4,012
            
            
            4,657
            
            
            5,609
            
            
            4,617Total
                costs and expenses
            
            
            379,994
            
            
            330,248
            
            
            228,582
            
            
            202,710
            
            
            221,212Income
                from continuing operations before income taxes
            
            
            29,427
            
            
            21,636
            
            
            7,726
            
            
            3,286
            
            
            10,291Income
                tax provision
            
            
            2,454
            
            
            2,936
            
            
            740
            
            
            1,216
            
            
            7,208Income
                from continuing operations
            
            
            26,973
            
            
            18,700
            
            
            6,986
            
            
            2,070
            
            
            3,083Discontinued
                operations:Gain
                (loss) from discontinued operations, net of taxes
            
            
            126
            
            
            (114
            )
            
            (1,511
            )
            
            (16,223
            )
            
            (26,965
            )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
            )
            
            (26,965
            )Net
                income (loss) before cumulative effect of change in accounting
                principle
            
            
            45,343
            
            
            18,586
            
            
            5,475
            
            
            (14,153
            )
            
            (23,882
            )Cumulative
                effect of change in accounting principle
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (21,812
            )Net
                income (loss)
            
            $
            45,343
            
            $
            18,586
            
            $
            5,475
            
            $
            (14,153
            )
            $
            (45,694
            )Basic
                net income (loss) per common share:Income
                from continuing operations
            
            $
            2.37
            
            $
            1.67
            
            $
            0.64
            
            $
            0.22
            
            $
            0.34Gain
                (loss) from discontinued operations
            
            
            1.62
            
            
            (0.01
            )
            
            (0.14
            )
            
            (1.74
            )
            
            (2.89
            )Cumulative
                effect of change in accounting principle
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2.34
            )Basic
                income (loss)
            
            $
            3.99
            
            $
            1.66
            
            $
            0.50
            
            $
            (1.52
            )
            $
            (4.89
            )Diluted
                net income (loss) per common share:Income
                from continuing operations
            
            $
            2.33
            
            $
            1.63
            
            $
            0.64
            
            $
            0.22
            
            $
            0.34Gain
                (loss) from discontinued operations
            
            
            1.58
            
            
            (0.01
            )
            
            (0.14
            )
            
            (1.74
            )
            
            (2.89
            )Cumulative
                effect of change in accounting principle
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2.34
            )Diluted
                income (loss)
            
            $
            3.91
            
            $
            1.62
            
            $
            0.50
            
            $
            (1.52
            )
            $
            (4.89
            )Weighted
                average shares outstanding:Basic
            
            
            11,360
            
            
            11,226
            
            
            10,860
            
            
            9,342
            
            
            9,341Diluted
            
            
            11,596
            
            
            11,474
            
            
            10,982
            
            
            9,342
            
            
            9,341




14





**December
                31,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****(In
                thousands except per share data)****Balance
                Sheet Data (at period end):**Working
                capital (deficit)
            
            $
            76,266
            
            $
            50,406
            
            $
            39,978
            
            $
            31,136
            
            $
            (10,174
            )Total
                assets
            
            
            197,432
            
            
            144,570
            
            
            127,822
            
            
            131,818
            
            
            162,177Long-term
                obligations, less current portion
            
            
            10,537
            
            
            16,803
            
            
            24,345
            
            
            29,927
            
            
            1,214Common
                shareholders’
                equity
            
            
            113,383
            
            
            64,755
            
            
            46,785
            
            
            27,997
            
            
            39,697







(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. We recorded asset impairments and special charges for
                discontinued operations of $4,905 and $11,828 for the years ended
                December
                31, 2003 and 2002. Special charges and asset impairments related
                to
                discontinued operations are included in Loss from Discontinued
                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.




During
      2006, our revenues continued to be positively affected by strong overall demand
      for our products resulting from general economic improvements. In addition,
      we
      continued the manufacture of heavy-duty towing and recovery units for several
      military and governmental orders. While we continue to increase production
      of
      our commercial lines, the timing and receipt of additional military orders
      as
      well as the timing of deliveries of chassis and other wrecker components could
      have short-term effects on the timing of production and revenue in
      2007.




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. As we determined
      necessary, we 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, some of whom 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
      June
      2005, we entered into a new $27.0 million senior credit facility with Wachovia
      Bank, National Association, and we amended our junior credit facility with
      William G. Miller, our Chairman and Co-Chief Executive Officer, by, among other
      things, adding an additional loan. During 2006, we repaid $5 million of
      subordinated debt under our junior credit facility using additional borrowings
      under the revolving portion of our senior credit facility. Total senior and
      junior debt at December 31, 2006 was $9.9 million, which represents a
      significant decrease in our overall indebtedness from prior
      periods.




During
      2006, we reversed our deferred tax valuation allowance. As a result of our
      positive earnings, the favorable projected earnings outlook as well as the
      improvements in overall financial position, we determined that it is more likely
      than not that the deferred tax asset will be realized. Additionally, we
      recognized a tax benefit related to losses from advances to and investments
      in
      certain discontinued operations.




We
      are
      currently modernizing and expanding our manufacturing facilities in Ooltewah,
      Tennessee and Hermitage, Pennsylvania and expect these projects to continue
      through 2007. In addition, we are considering modernization and expansion
      projects at our other manufacturing facilities as necessary to allow us to
      continue to meet anticipated demand for our products. We believe these
      modernization and expansion efforts will position us to more effectively face
      the challenges of the global marketplace in the future.




16


**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. All assets and liabilities and
      results of operations associated with these assets have been separately
      presented in the accompanying financial statements as discontinued operations
      separate from continuing operations. The analyses contained herein are of
      continuing operations unless otherwise noted.




In
      general, the customary operating liabilities of these disposed businesses were
      assumed by the new owners. Our subsidiaries that sold these businesses may
      nevertheless be subject to some continuing liabilities with respect to their
      pre-sale operations, including, for example, liabilities related to litigation,
      certain trade payables, workers compensation and other insurance, surety bonds,
      and real estate. Except in the case of direct guarantees, these are not
      obligations of Miller Industries, Inc., and Miller Industries, Inc. would expect
      to take whatever steps it deems appropriate to protect itself from any such
      liabilities.




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 we are awaiting receipt of the final
      decree from the court. As a result of the bankruptcy proceedings, RoadOne,
      Inc.
      was deconsolidated from our consolidated financial statements as of December
      31,
      2006. The deconsolidation resulted in a pre-tax, non-cash gain of
      $126,000.




**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.




17


***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.




***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 primarily to losses from advances to and investments in certain
      discontinued operations and changes in deferred tax asset valuation allowances.
      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. The balance of our valuation allowance was $8.8 million at December
      31, 2005.




In
      2006,
      we reversed our deferred tax valuation allowance. As a result of our positive
      earnings, our favorable projected earnings outlook as well as the improvements
      in our overall financial position, we determined that it is more likely than
      not
      that the deferred tax asset will be realized. The Company recognized a net
      deferred tax asset of $19.7 million as of December 31, 2006, which
      includes the $8.8 million recognized as a result of the reversal of the
      valuation allowance.




***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.




***Seasonality***




We
      have
      experienced some seasonality in net sales due in part to decisions by purchasers
      of towing and recovery equipment to defer purchases near the end of the chassis
      model year. Our net sales have historically been seasonally impacted due in
      part
      to weather conditions.




***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.




18





**2006**
            
            **2005**
            
            **2004**Continuing
                Operations:Net
                Sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Costs
                and expenses:Costs
                of operations
            
            
            85.4
            %
            
            85.8
            %
            
            86.8
            %Selling,
                general and administrative
            
            
            6.6
            %
            
            6.9
            %
            
            8.0
            %Interest
                expense
            
            
            0.8
            %
            
            1.1
            %
            
            2.0
            %Total
                costs and expenses
            
            
            92.8
            %
            
            93.8
            %
            
            96.8
            %Income
                before income taxes
            
            
            7.2
            %
            
            6.2
            %
            
            3.2
            %Discontinued
                Operations:Net
                Sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Costs
                and expenses:Costs
                of operations
            
            
            93.0
            %
            
            90.3
            %
            
            92.5
            %Selling,
                general and administrative
            
            
            8.6
            %
            
            10.9
            %
            
            9.5
            %Gain
                on deconsolidation
            
            
            (32.7
            )%
            
            0.0
            %
            
            0.0
            %Interest
                expense
            
            
            0.0
            %
            
            0.0
            %
            
            1.6
            %Total
                costs and expenses
            
            
            68.9
            %
            
            101.2
            %
            
            103.6
            %Income
                (loss) before income taxes
            
            
            31.1
            %
            
            (1.2
            )%
            
            (3.6
            )%




***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 expense 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
      expense 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.




*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.




19


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 a 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.




***Year
      Ended December 31, 2005 Compared to Year Ended December 31,
      2004***




*Continuing
      Operations*




Net
      sales
      were $351.9 million for the year ended December 31, 2005 compared to $236.3
      million for the year ended December 31, 2004. The increase is primarily the
      result of overall improvements in market conditions, with increases in demand
      leading to increases in production levels, production and delivery of units
      under contract with the Australian military and production of mobile
      communication trailers for DataPath. To a lesser extent, this increase is also
      attributable to price increases that we implemented throughout 2004 and
      2005.




Costs
      of
      operations as a percentage of net sales decreased to 85.8% for the year ended
      December 31, 2005 from 86.8% for the year ended December 31, 2004 due to
      increases in productivity as demand for our products increased.




Selling,
      general, and administrative expenses decreased as a percentage of net sales
      from
      8.0% for the year ended December 31, 2004 to 6.9% for the year ended December
      31, 2005, due to the fixed nature of certain of these expenses spread over
      the
      higher sales volume.




The
      effective rate for the provision for income taxes was 13.6% for the year ended
      December 31, 2005 compared to 9.6% for the year ended December 31, 2004. The
      increase in the effective tax rate primarily reflects additional taxes on
      foreign income for the period.




*Discontinued
      Operations*




Net
      sales
      from the distribution group decreased to $11.5 million for the year ended
      December 31, 2005 compared to $37.8 million for the year ended December 31,
      2004. Revenues were negatively impacted by the disposal of all distributor
      locations by the end of 2005. The towing services segment had no net sales
      during the years ended December 31, 2005 and 2004, because all towing services
      operations were sold during 2003.




Cost
      of
      sales as a percentage of net sales for the distribution group was 90.3% for
      the
      year ended December 31, 2005 compared to 92.5% for the year ended December
      31,
      2004. There were no costs of sales for the towing services segment during the
      years ended December 31, 2005 and 2004. As explained above, we sold all our
      remaining towing services markets by the end of calendar 2003.




Selling,
      general, and administrative expenses as a percentage of sales was 10.9% for
      the
      distribution group and 0.0% for the towing services segment for the year ended
      December 31, 2005 compared to 9.3% and 0.0%, respectively for the year ended
      December 31, 2004. Increases in the percentage of sales for the distribution
      group were primarily the result of lower administrative expenses spread over
      a
      smaller revenue base, as we continued to sell the remaining distribution
      location.




The
      effective rate for the provision for income taxes for discontinued operations
      was 0.0% for the year ended December 31, 2005, compared to 10.2% for the year
      ended December 31, 2004.




20


*Interest
      Expense*




Our
      total
      interest expense for continuing and discontinued operations decreased to $4.0
      million for the year ended December 31, 2005 from $5.3 million for the
      comparable year-ago period. Interest expense was $4.0 million for continuing
      operations and $0.0 million for discontinued operations for the year ended
      December 31, 2005, compared to $4.7 million for continuing operations and $0.6
      million for discontinued operations for the year ended December 31, 2004.
      Decreases in interest expense were due to overall decreases in debt levels,
      as
      well as lower interest rates on our new senior credit facility.




**Liquidity
      And Capital Resources**




Cash
      provided by operating activities was $18.1 million for the year ended December
      31, 2006, compared to $13.4 million for the year ended December 31, 2005, and
      $5.7 million used in operating activities for the year ended December 31, 2004.
      The cash provided by operating activities for 2006 reflects increases in
      profitability partially offset by increases in accounts receivable and inventory
      directly related to our revenue increases and increases in accounts payable
      to
      support increased productivity.




Cash
      used
      in investing activities was $11.8 million for the year ended December 31, 2006,
      compared to $0.2 million provided by investing activities for the year ended
      December 31, 2005, and $3.9 million for the year ended December 31, 2004. The
      cash used in investing activities for 2006 was primarily for the purchase of
      property, plant and equipment.




Cash
      used
      in financing activities was $5.0 million for the year ended December 31, 2006,
      compared to $10.2 million for the year ended December 31, 2005, and $2.5 million
      for the year ended December 31, 2004. The cash used in financing activities
      in
      2006 paid down our credit facilities and repaid 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 the increase in our manufacturing output to meet recent
      increases in demand for our products.




We
      are
      currently expanding our existing manufacturing facilities in Ooltewah, Tennessee
      and Hermitage, Pennsylvania as a result of recent increases in demand for our
      products. The cost of these projects is anticipated to be approximately $14.0
      million. At December 31, 2006, we had commitments of approximately $2.8 million
      for construction and acquisition of property and equipment. We expect to fund
      these projects from cash flows and unused availability under our senior credit
      facility.




Additionally,
      in 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.




As
      of
      December 31, 2006, we had cash and cash equivalents of $8.2 million, exclusive
      of unused availability under our credit facilities. Our primary cash
      requirements include working capital, capital expenditures and interest and
      principal payments on indebtedness under our credit facilities. We expect our
      primary sources of cash to be cash flow from operations, cash and cash
      equivalents on hand at December 31, 2006 and borrowings from unused availability
      under our credit facilities. We expect these sources to be sufficient to satisfy
      our cash needs during 2007.




21


***Contractual
      Obligations***




The
      following is a summary of our contractual obligations as of December 31,
      2006.




**Payment
                Due By Period (in thousands)****Contractual
                Obligations(1)**
            
            **Total**
            
            **Less
                than**
              **1
                year**
            
            **1-3
                years**
            
            **3-5
                years**
            
            **More
                than**
              **5
                years**Outstanding
                Borrowings Under Senior Credit Facility
            
            $
            4,900
            
            $
            1,400
            
            $
            2,800
            
            $
            700
            
            $
            —Outstanding
                Borrowings Under Junior Credit Facility
            
            
            5,000
            
            
            —
            
            
            5,000
            
            
            —
            
            
            —Mortgage
                Notes Payable
            
            
            1,844
            
            
            60
            
            
            1,784
            
            
            —
            
            
            —Equipment
                Notes Payable (Capital Lease Obligations)
            
            
            416
            
            
            162
            
            
            231
            
            
            23
            
            
            —Operating
                Lease Obligations
            
            
            2,984
            
            
            1,011
            
            
            1,069
            
            
            520
            
            
            384Purchase
                Obligations (2)
            
            
            36,406
            
            
            36,406
            
            
            —
            
            
            —
            
            
            —Commitments
                for construction and acquisition of plant and equipment
            
            
            2,810
            
            
            2,810
            
            
            —
            
            
            —
            
            
            —Total
            
            $
            54,360
            
            $
            41,849
            
            $
            10,884
            
            $
            1,243
            
            $
            384





(1)
            Amounts
                do not include potential contingent obligations of $27.5 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*




On
      June
      17, 2005, we entered into a Credit Agreement with Wachovia Bank, National
      Association, for a $27.0 million senior secured credit facility. Proceeds from
      this senior credit facility were used to repay The CIT Group/Business Credit,
      Inc. and William
      G. Miller, our Chairman of the Board and Co-Chief Executive Officer, under
      our former senior credit facility. As a result, effective June 17, 2005, our
      former senior credit facility was satisfied and terminated, and Mr. Miller
      no
      longer holds any of our senior debt.




The
      senior credit facility consists of a $20.0 million revolving credit facility,
      and a $7.0 million term loan. In the absence of a default, all new borrowings
      under the revolving credit facility bear 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 is subject to adjustment from time to time based upon the
      Consolidated Leverage Ratio (as defined in the Credit Agreement), and the term
      loan bears interest at a 30-day adjusted LIBOR rate plus a margin of between
      1.75% to 2.50% per annum that is subject to adjustment based upon the
      Consolidated Leverage Ratio. The revolving credit facility expires on June
      15,
      2008, and the term loan matures on June 15, 2010. 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.




*Junior
      Credit Facility*




On
      May
      31, 2005, Harbourside Investments, LLLP, a limited liability limited partnership
      of which several of our executive officers and directors were partners, and
      which was the lender under our junior credit facility, was dissolved, and in
      connection therewith, Mr. Miller, as successor lender agent to Harbourside,
      became the sole lender under our junior credit facility. Our junior credit
      facility is, by its terms, expressly subordinated only to our senior credit
      facility, and is secured by a second priority lien and security interest in
      substantially all of our other assets. Our junior credit facility contains
      requirements for the maintenance of certain financial covenants, and also
      imposes restrictions on capital expenditures, incurrence of indebtedness,
      mergers and acquisitions, distributions and transfers and sales of
      assets.




22




The
      junior credit facility matures on September 17, 2008, and contains certain
      representations and warranties, and covenants and events of default consistent
      with the representations and warranties, covenants and events of default in
      the
      Credit Agreement for our senior credit facility. In the absence of a default,
      all of the term loans outstanding under the junior credit facility bear interest
      at a rate of 9.0% per annum.




*Former
      Senior Credit Facility*




Our
      former senior credit facility with CIT and Mr. Miller, which was terminated
      in
      June 2005, consisted of an aggregate $32.0 million credit facility, including
      a
      $15.0 million revolving loan, a $5.0 million term loan and a $12.0 million
      term
      loan. Borrowings under the term loans were collateralized by substantially
      all
      of our domestic property, plants, and equipment. The former senior credit
      facility bore interest at the prime rate (as defined) plus 2.75%.




*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. Therefore, our liquidity and access to capital resources
      could
      be further affected by increasing interest rates.




*Outstanding
      Borrowings*




Outstanding
      borrowings under the senior and junior credit facilities as of December 31,
      2006
      and 2005 were as follows (in thousands):




**2006**
            
            **2005**Senior
                Credit FacilityRevolving
                Credit Facility
            
            $
            —
            
            $
            —Term
                Loan
            
            
            4,900
            
            
            6,300Total
            
            
            4,900
            
            
            6,300Junior
                Credit Facility
            
            
            5,000
            
            
            10,000Total
                Outstanding Borrowings
            
            $
            9,900
            
            $
            16,300




The
      substantial reductions in our overall indebtedness reflected above were
      primarily due to our improved operating cash flow resulting from increased
      sales
      levels and overall profitability.




*Other
      Long-Term Obligations*




In
      addition to the borrowings under the senior and junior credit facilities
      described above, we had approximately $2.3 million of mortgage notes payable,
      equipment notes payable and other long-term obligations at December 31, 2006.
      We
      also had approximately $2.9 million in non-cancellable operating lease
      obligations.




**Recent
      Accounting Pronouncements**




In
      November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      151 “Inventory Costs-an amendment of ARB No. 43, Chapter 4”. This statement
      clarifies the accounting for abnormal amounts of idle facility expense, freight,
      handling costs and spoilage. This statement also requires the allocation of
      fixed production overhead costs be based on normal production capacity. The
      provisions of SFAS No. 151 are effective for inventory costs beginning in
      January 2006. The adoption of this statement did not have a material impact
      on
      our results of operations or financial position.




23


In
      December 2004, the FASB issued FASB Staff Position No. 109-1, “Application of
      FASB Statement No. 109 (SFAS No. 109), Accounting for Income Taxes, to the
      Tax
      Deduction on Qualified Production Activities Provided by the American Jobs
      Creation Act of 2004” (FSP 109-1). FSP 109-1 clarifies that the manufacturer’s
      deduction provided for under the American Jobs Creation Act of 2004 (AJCA)
      should be accounted for as a special deduction in accordance with SFAS No.
      109
      and not as a tax rate reduction. As we are currently utilizing net operating
      loss carryover to reduce taxable income, no benefit for the domestic
      manufacturing deduction has been provided in our financial
      statements.




Effective
      July 1, 2005, we adopted SFAS No. 153, “Exchanges of Nonmonetary Assets-an
      amendment of APB Opinion No. 29”. SFAS No. 153 addresses the measurement of
      exchanges of nonmonetary assets. It eliminates the exception from fair value
      measurement for nonmonetary exchanges of similar productive assets in paragraph
      21(b) of APB Opinion No. 29 “Accounting for Nonmonetary Transactions” and
      replaces it with an exception for exchanges that do not have commercial
      substance. A nonmonetary exchange has commercial substance if the future cash
      flows of the entity are expected to change significantly as a result of the
      exchange. The adoption of SFAS No. 153 did not have a material impact on our
      financial statements.




In
      May
      2005, the FASB issued SFAS No. 154. “Accounting Changes and Error Corrections”
(“SFAS No. 154”), which replaces Accounting Principles Board (“APB”) No. 20
“Accounting Changes”, and SFAS No. 3. “Reporting Accounting Changes in Interim
      Financial Statements”. SFAS No. 154 changes the requirements for the accounting
      for and reporting of a change in accounting principle. The statement applies
      to
      all voluntary changes in accounting principle as well as changes required by
      an
      accounting pronouncement. SFAS No. 154 requires retrospective application to
      prior periods’ financial statements of a voluntary change in accounting
      principle unless it is impracticable to determine the period-specific effects
      or
      the cumulative effect of the change. The statement was effective for accounting
      changes and correction of errors made after January 1, 2006, and did not have
      a
      material impact on our financial statements.




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 is effective for fiscal years beginning after December 31,
      2006. We are in the process of evaluating the impact that FIN 48 will have
      on
      the Company’s financial statements.




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.




In
      September 2006, the U.S. Securities and Exchange Commission (“SEC”) released
      Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements,” (“SAB No. 108”), which provides interpretive guidance on the SEC’s
      views regarding the process of quantifying the materiality of financial
      statement misstatements. SAB No. 108 is effective for years ending after
      November 15, 2006. The application of SAB No. 108 did not have a
      material effect on the Company’s results of operations or financial
      position.




**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.




24


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.




**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, 2006. 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, 2006, we maintained effective internal control over financial
      reporting.




Joseph
      Decosimo and Company, PLLC, the independent registered public accounting firm
      who also audited our consolidated financial statements included in this report,
      has issued an attestation report on management’s assessment of internal control
      over financial reporting, which attestation report appears herein.




March
      12,
      2007




25


**Attestation
      Report of Registered Public Accounting Firm**




**Report
      of Independent Registered Public Accounting Firm**




Board
      of
      Directors and Shareholders


Miller
      Industries, Inc.


Ooltewah,
      Tennessee




We
      have
      audited management’s assessment, included in the accompanying “Management’s
      Report on Internal Control Over Financial Reporting,” that Miller Industries,
      Inc. and subsidiaries (Company) maintained effective internal control
      over ** financial
      reporting as of December 31, 2006, based on criteria established in *Internal Control—Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (the
      COSO criteria) *.* The ** Company’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. Our responsibility is to express an opinion
      on
      management’s assessment and an opinion on the effectiveness of 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, evaluating management’s assessment, testing and evaluating
      the design and operating effectiveness of internal control, 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, management’s assessment that Miller Industries, Inc. and subsidiaries
      maintained effective internal control over financial reporting as of December
      31, 2006, is fairly stated, in all material respects, based on the COSO
      criteria. Also in our opinion, Miller Industries, Inc. and subsidiaries
      maintained, in all material respects, effective internal control over financial
      reporting as of December 31, 2006, 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 as of December
      31, 2006 and 2005, and the related consolidated statements of operations,
      shareholders’ equity, and cash flows for each of the three years in the period
      ended December 31, 2006, of Miller Industries, Inc. and subsidiaries and our
      report dated March
      12,
      2007 ,
      expressed ** an
      unqualified opinion on those consolidated financial statements.




/s/
      Joseph Decosimo and Company, PLLC


Chattanooga,
      Tennessee


March
      12,
      2007




26


**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.




27


**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**




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.




28


**PART
      IV**




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




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




**1.**
            **Financial
                Statements**




**Description**
            
            **Page
                Number**
              **in
                Report**Report
                of Independent Registered Public Accounting Firm
            
            F-2Consolidated
                Balance Sheets as of December 31, 2006 and 2005
            
            F-3Consolidated
                Statements of Operations for the years ended December 31, 2006, 2005
                and
                2004
            
            F-4Consolidated
                Statements of Shareholders’ Equity for the years ended December 31, 2006,
                2005 and 2004
            
            F-5Consolidated
                Statements of Cash Flows for the years ended December 31, 2006, 2005
                and
                2004
            
            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****Report**Schedule
                II - Valuation and Qualifying Accounts
            
            S-1




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




**3.**
            **Exhibits**




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




**Description**
            
            **Incorporated
                by**
              **Reference
                to**
              **Registration
                File**
              **Number**
            
            **Form
                or**
              **Report**
            
            **Date
                of**
              **Report**
            
            **Exhibit**
              **Number
                in**
              **Report**3.1
            Charter,
                as amended, of the Registrant
            
            —
            
            10-K
            
            December
                31, 2001
            
            3.13.2
            Bylaws
                of the Registrant
            
            33-79430
            
            S-1
            
            August
                1994
            
            3.210.1
            Settlement
                Letter dated April 27, 1994 between Miller Group, Inc. and the Management
                Group
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.710.2
            Participants
                Agreement dated as of April 30, 1994 between the Registrant, Century
                Holdings, Inc., Century Wrecker Corporation, William G. Miller and
                certain
                former shareholders of Miller Group, Inc.
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.11




29




**Description**
            
            **Incorporated
                by**
              **Reference
                to**
              **Registration
                File**
              **Number**
            
            **Form
                or**
              **Report**
            
            **Date
                of**
              **Report**
            
            **Exhibit**
              **Number
                in**
              **Report**10.3
            Form
                of Noncompetition Agreement between the Registrant and certain officers
                of
                the Registrant
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.2810.4
            Form
                of Nonexclusive Distributor Agreement
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.3110.5
            Miller
                Industries, Inc. Stock Option and Incentive Plan**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.110.6
            Form
                of Incentive Stock Option Agreement under Miller Industries, Inc.
                Stock
                Option and Incentive Plan**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.210.7
            Miller
                Industries, Inc. Non-Employee Director Stock Option Plan**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.410.8
            Form
                of Director Stock Option Agreement**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.510.9
            Employment
                Agreement dated October 14, 1993 between Century Wrecker Corporation
                and
                Jeffrey I. Badgley**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.2910.10
            First
                Amendment to Employment Agreement between Century Wrecker Corporation
                and
                Jeffrey I. Badgley**
            
            33-79430
            
            S-1
            
            August
                1994
            
            10.3310.11
            Form
                of Employment Agreement between Registrant and each of Messrs. Madonia
                and
                Mish**
            
            —
            
            Form
                10-K
            
            April
                30, 1995
            
            10.3710.12
            First
                Amendment to Miller Industries, Inc. Non-Employee Director Stock
                Option
                Plan**
            
            —
            
            Form
                10-K
            
            April
                30, 1995
            
            10.3810.13
            Second
                Amendment to Miller Industries, Inc. Non-Employee Director Stock
                Option
                Plan**
            
            —
            
            Form
                10-K
            
            April
                30, 1996
            
            10.3910.14
            Second
                Amendment to Miller Industries, Inc. Stock Option and Incentive
                Plan**
            
            —
            
            Form
                10-K
            
            April
                30, 1996
            
            10.4010.15
            Employment
                Agreement dated July 8, 1997 between the Registrant and William G.
                Miller**
            
            —
            
            Form
                10-Q/A
            
            July
                31, 1997
            
            1010.16
            Guaranty
                Agreement Among NationsBank of Tennessee, N.A. and certain subsidiaries
                of
                Registrant dated January 30, 1998
            
            —
            
            Form
                10-K
            
            April
                30, 1998
            
            10.3710.17
            Stock
                Pledge Agreement Between NationsBank of Tennessee, N.A. and the Registrant
                dated January 30, 1998
            
            —
            
            Form
                10-K
            
            April
                30, 1998
            
            10.3810.18
            Stock
                Pledge Agreement Between NationsBank of Tennessee, N.A. and the certain
                subsidiaries of the Registrant dated January 30, 1998
            
            —
            
            Form
                10-K
            
            April
                30, 1998
            
            10.39




30




**Description**
            
            **Incorporated
                by**
              **Reference
                to**
              **Registration
                File**
              **Number**
            
            **Form
                or**
              **Report**
            
            **Date
                of**
              **Report**
            
            **Exhibit**
              **Number****in**
              **Report**10.19
            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
            
            1010.20
            Employment
                Agreement between the Registrant and Jeffrey I. Badgley, dated September
                11, 1998**
            
            —
            
            Form
                10-Q
            
            December
                15, 1998
            
            10.110.21
            Employment
                Agreement between the Registrant and Frank Madonia, dated September
                11,
                1998**
            
            —
            
            Form
                10-Q
            
            December
                15, 1998
            
            10.310.22
            Agreement
                between the Registrant and Jeffrey I. Badgley, dated September 11,
                1998**
            
            —
            
            Form
                10-Q
            
            December
                15, 1998
            
            10.410.23
            Agreement
                between the Registrant and Frank Madonia, dated September 11,
                1998**
            
            —
            
            Form
                10-Q
            
            December
                15, 1998
            
            10.610.24
            Amended
                and Restated Credit Agreement among the Registrant, its subsidiary
                and
                Bank of America, N.A. dated July 23, 2001
            
            —
            
            Form
                10-K
            
            April
                30, 2001
            
            10.710.25
            First
                Amendment to the Amended and Restated Credit Agreement among the
                Registrant, its subsidiary and Bank of America, N.A. dated July 23,
                2001
            
            —
            
            Form
                10-K
            
            December
                31, 2001
            
            10.8210.26
            Amended
                and Restated Intercreditor and Subordination Agreement by and among
                The
                CIT Group/Business Credit, Inc. and Bank of America, N.A.
            
            —
            
            Form
                10-K
            
            December
                31, 2001
            
            10.8310.27
            Participation
                Agreement by and among the Company and its Subsidiaries, CIT
                Group/Business Credit and Bank of America, N.A. and William G. Miller
                dated October 31, 2003
            
            —
            
            Form
                10-Q
            
            September
                30, 2003
            
            10.310.28
            Modification
                of First Amendment to the Amended and Restated Intercreditor and
                Subordination Agreement by and among CIT Group, Inc., Bank of America,
                N.A., and Contrarian Funds, LLC dated December 24, 2003
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.310.29
            Second
                Amendment to the Amended and Restated Intercreditor and Subordination
                Agreement by and between CIT Group, Inc. and Contrarian Funds, LLC,
                dated
                December 24, 2003
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.410.30
            Amended
                and Restated Participation Agreement by and among the Registrant,
                CIT and
                William G. Miller, dated December 24, 2003
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.510.31
            Amendment
                No. 3 to Amended and Restated Credit Agreement by and among the
                Registrant, Contrarian Funds, LLC and Harbourside Investments, LLLP,
                dated
                as of January 14, 2004
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.610.32
            Exchange
                Agreement by and between the Registrant and Contrarian Funds, LLC,
                dated
                as of January 14, 2004
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.7




31




**Description**
            
            **Incorporated
                by**
              **Reference
                to**
              **Registration
                File**
              **Number**
            
            **Form
                or**
              **Report**
            
            **Date
                of**
              **Report**
            
            **Exhibit**
              **Number
                in**
              **Report**10.33
            Exchange
                Agreement by and between the Registrant and Harbourside Investments,
                LLLP,
                dated as of January 14, 2004
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.810.34
            Registration
                Rights Agreement by and among the Registrant, Harbourside Investments,
                LLLP and Contrarian Funds, LLC, dated January 20, 2004
            
            —
            
            Form
                8-K
            
            January
                20, 2004
            
            10.910.35
            Consent
                and Tenth Amendment to Credit Agreement by and between the Registrant
                and
                The CIT Group/Business Credit, Inc., dated November 22,
                2004
            
            —
            
            Form
                10-K
            
            December
                31, 2004
            
            10.10010.36
            Amendment
                No. 4 to Amended and Restated Credit Agreement by and among the
                Registrant, Miller Industries Towing Equipment, Inc., Harbourside
                Investments, LLLP and certain guarantors set forth on the signature
                pages
                thereto, dated November 5, 2004
            
            —
            
            Form
                10-K
            
            December
                31, 2004
            
            10.10110.37
            Non-Employee
                Director Stock Plan**
            
            —
            
            Schedule
                14A
            
            January
                23, 2004
            
            Annex
                A10.38
            Miller
                Industries, Inc. 2005 Equity Incentive Plan**
            
            —
            
            Schedule
                14A
            
            May
                2, 2005
            
            Annex
                B10.39
            Credit
                Agreement, dated June 17, 2005, among Wachovia Bank, NA and the
                Registrant
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.110.40
            Term
                Note, dated June 17, 2005, among Wachovia Bank, NA and the
                Registrant
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.210.41
            Revolving
                Note, dated June 17, 2005, among Wachovia Bank, NA and the
                Registrant
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.310.42
            Intercreditor
                Agreement, dated June 17, 2005, among Wachovia Bank, NA, and William
                G.
                Miller
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.410.43
            Security
                Agreement, dated June 17, 2005, among Wachovia Bank, NA, and the
                Registrant
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.510.44
            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
            
            10.610.45
            Pledge
                Agreement, dated June 17, 2005, among Wachovia Bank, NA, and the
                Registrant
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.710.46
            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
            
            10.810.47
            Promissory
                Note, dated June 17, 2005, among the Registrant, Miller Industries
                Towing
                Equipment, Inc. and William G. Miller
            
            —
            
            Form
                8-K
            
            June
                17, 2005
            
            10.9




32




**Description**
            
            **Incorporated
                by**
              **Reference
                to**
              **Registration
                File**
              **Number**
            
            **Form
                or**
              **Report**
            
            **Date
                ofReport**
            
            **Exhibit**
              **Number
                in**
              **Report**21
            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.




33









**INDEX
      TO FINANCIAL STATEMENTS**




REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
                  FIRM
              
              F-2CONSOLIDATED
                  BALANCE SHEETS AS OF DECEMBER 31, 2006 AND
                  2005
              
              F-3CONSOLIDATED
                  STATEMENTS OF OPERATIONS FOR THE YEARS
                  ENDEDDECEMBER
                  31, 2006, 2005 AND 2004
              
              F-4CONSOLIDATED
                  STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE
                  YEARSENDED
                  DECEMBER 31, 2006, 2005 AND 2004
              
              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, 2006 and 2005, and the related consolidated
      statements of operations, shareholders’ equity and cash flows for each of the
      three years in the period ended December 31, 2006. 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, 2006 and 2005, and the results of their
      operations and their cash flows for each of the three years in the period ended
      December 31, 2006, 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 effectiveness of Miller
      Industries, Inc. and subsidiaries’ internal
      control over financial reporting as of December 31, 2006, based on criteria
      established in *Internal Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
      and
      our report dated March 12, 2007 expressed an unqualified opinion on management’s
      assessment of the effectiveness of Miller
      Industries, Inc. and subsidiaries’ internal
      control over financial reporting and an unqualified opinion on the effectiveness
      of Miller
      Industries, Inc. and subsidiaries’ internal
      control over financial reporting.




/s/
      Joseph Decosimo and Company, PLLC




Chattanooga,
      Tennessee


March
      12,
      2007








**MILLER
      INDUSTRIES, INC. AND SUBSIDIARIES**




**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2006 AND 200** **5**




**(In
      thousands, except share data)**




**2006**
            
            **2005****ASSETS****CURRENT
                ASSETS:**Cash
                and temporary investments
            
            **$**
            **8,204**
            
            $
            6,147Accounts
                receivable, net of allowance for doubtful accounts of $2,488 and
                $1,834,
                at December 31, 2006 and 2005, respectively
            
            
            **84,186**
            
            
            65,792Inventories
            
            
            **43,155**
            
            
            38,318Prepaid
                expenses and other
            
            
            **2,079**
            
            
            739Current
                deferred income taxes
            
            
            **12,154**
            
            
            —Current
                assets of discontinued operations held for sale
            
            
            **—**
            
            
            2,422Total
                current assets
            
            
            **149,778**
            
            
            113,418**PROPERTY,
                PLANT, AND EQUIPMENT,**net
            
            
            **27,527**
            
            
            17,443**GOODWILL**
            
            
            **11,619**
            
            
            11,619**DEFERRED
                INCOME TAXES**
            
            
            **7,586**
            
            
            —**OTHER
                ASSETS**
            
            
            **922**
            
            
            1,443**NONCURRENT
                ASSETS OF DISCONTINUED OPERATIONS****HELD
                FOR SALE**
            
            
            **—**
            
            
            647**$**
            **197,432**
            
            $
            144,570**LIABILITIES
                AND SHAREHOLDERS’ EQUITY****CURRENT
                LIABILITIES:**Current
                portion of long-term obligations
            
            **$**
            **1,623**
            
            $
            1,595Accounts
                payable
            
            
            **58,620**
            
            
            45,352Accrued
                liabilities and other
            
            
            **13,269**
            
            
            9,821Current
                liabilities of discontinued operations held for sale
            
            
            **—**
            
            
            6,244Total
                current liabilities
            
            
            **73,512**
            
            
            63,012**LONG-TERM
                OBLIGATIONS**,
                less current portion
            
            
            **10,537**
            
            
            16,803**COMMITMENTS
                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, 11,509,964
                and
                11,297,474, outstanding at December 31, 2006 and 2005,
                respectively
            
            
            **115**
            
            
            113Additional
                paid-in capital
            
            
            **159,702**
            
            
            157,996Accumulated
                deficit
            
            
            **(48,539**
            **)**
            
            (93,882
            )Accumulated
                other comprehensive income
            
            
            **2,105**
            
            
            528Total
                shareholders’ equity
            
            
            **113,383**
            
            
            64,755**$**
            **197,432**
            
            $
            144,570




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, 2006, 2005 AND 200** **4**




**(In
      thousands, except per share data)**




**2006**
            
            **2005**
            
            **2004****NET
                SALES**
            
            **$**
            **409,421**
            
            $
            351,884
            
            $
            236,308**COSTS
                AND EXPENSES**Costs
                of operations
            
            
            **349,639**
            
            
            301,943
            
            
            205,021Selling,
                general, and administrative expenses
            
            
            **26,837**
            
            
            24,293
            
            
            18,904Interest
                expense, net
            
            
            **3,518**
            
            
            4,012
            
            
            4,657Total
                costs and expenses
            
            
            **379,994**
            
            
            330,248
            
            
            228,582**INCOME
                FROM CONTINUING OPERATIONS BEFORE INCOME TAXES**
            
            
            **29,427**
            
            
            21,636
            
            
            7,726**INCOME
                TAX PROVISION**
            
            
            **2,454**
            
            
            2,936
            
            
            740**INCOME
                FROM CONTINUING OPERATIONS**
            
            
            **26,973**
            
            
            18,700
            
            
            6,986**DISCONTINUED
                OPERATIONS**Gain
                (loss) from discontinued operations, net of taxes
            
            
            **126**
            
            
            (114
            )
            
            (1,511
            )Tax
                benefit of advances to and investment in certain discontinued
                operations
            
            
            **(18,244**
            **)**
            
            —
            
            
            —Gain
                (loss) from discontinued operations
            
            
            **18,370**
            
            
            (114
            )
            
            (1,511
            )**NET
                INCOME**
            
            **$**
            **45,343**
            
            $
            18,586
            
            $
            5,475**BASIC
                INCOME (LOSS) PER COMMON SHARE:**Income
                from continuing operations
            
            **$**
            **2.37**
            
            $
            1.67
            
            $
            0.64Gain
                (loss) from discontinued operations
            
            
            **1.62**
            
            
            (0.01
            )
            
            (0.14
            )Basic
                income
            
            **$**
            **3.99**
            
            $
            1.66
            
            $
            0.50**DILUTED
                INCOME (LOSS) PER COMMON SHARE:**Income
                from continuing operations
            
            **$**
            **2.33**
            
            $
            1.63
            
            $
            0.64Gain
                (loss) from discontinued operations
            
            
            **1.58**
            
            
            (0.01
            )
            
            (0.14
            )Diluted
                income
            
            **$**
            **3.91**
            
            $
            1.62
            
            $
            0.50**WEIGHTED
                AVERAGE SHARES OUTSTANDING:**Basic
            
            
            **11,360**
            
            
            11,226
            
            
            10,860Diluted
            
            
            **11,596**
            
            
            11,474
            
            
            10,982




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, 2006, 2005 AND 200** **4**




**(In
      thousands, except share data)**




**Common
                Stock**
            
            **Additional
                Paid-In Capital**
            
            **Accumulated**
              **Deficit**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Income**
            
            **Total****BALANCE,
                December 31, 2003**
            
            $
            93
            
            $
            145,090
            
            $
            (117,943
            )
            $
            757
            
            $
            27,997Net
                income
            
            
            **—**
            
            
            **—**
            
            
            5,475
            
            
            **—**
            
            
            5,475Other
                comprehensive, net of tax:Foreign
                currency translation adjustments
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            1,085
            
            
            1,085Unrealized
                gain on financial instruments
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            97
            
            
            97Comprehensive
                income
            
            
            **—**
            
            
            **—**
            
            
            5,475
            
            
            1,182
            
            
            6,657Issuance
                of common stock for conversion and exchange of subordinated debt
                and
                warrants (1,317,700)
            
            
            13
            
            
            7,527
            
            
            **—**
            
            
            **—**
            
            
            7,540Issuance
                of common stock to unaffiliated private investors
                (480,000)
            
            
            5
            
            
            4,230
            
            
            **—**
            
            
            **—**
            
            
            4,235Issuance
                of common stock to non-employee directors (33,966)
            
            
            1
            
            
            328
            
            
            **—**
            
            
            **—**
            
            
            329Exercise
                of stock options (8,782)
            
            
            **—**
            
            
            27
            
            
            **—**
            
            
            **—**
            
            
            27**BALANCE,
                December 31, 2004**
            
            
            112
            
            
            157,202
            
            
            (112,468
            )
            
            1,939
            
            
            46,785Net
                income
            
            
            **—**
            
            
            **—**
            
            
            18,586
            
            
            **—**
            
            
            18,586Other
                comprehensive, net of tax:Foreign
                currency translation adjustments
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            (1,468
            )
            
            (1,468
            )Unrealized
                gain on financial instruments
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            57
            
            
            57Comprehensive
                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
            
            
            **—**
            
            
            **—**
            
            
            720**BALANCE,
                December 31, 2005**
            
            
            113
            
            
            157,996
            
            
            (93,882
            )
            
            528
            
            
            64,755Net
                income
            
            
            **—**
            
            
            **—**
            
            
            45,343
            
            
            **—**
            
            
            45,343Other
                comprehensive, net of tax:Foreign
                currency translation adjustments
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            1,577
            
            
            1,577Comprehensive
                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
            
            
            **—**
            
            
            **—**
            
            
            308**BALANCE,
                December 31, 2006**
            
            $
            115
            
            $
            159,702
            
            $
            (48,539
            )
            $
            2,105
            
            $
            113,383




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, 2006, 2005 AND 200** **4**




**(In
      thousands)**




**2006**
            
            **2005**
            
            **2004****OPERATING
                ACTIVITIES:**Net
                income
            
            **$**
            **45,343**
            
            $
            18,586
            
            $
            5,475Adjustments
                to reconcile net income to net cash provided by (used in) operating
                activities:(Gain)
                loss from discontinued operations
            
            
            **(126**
            **)**
            
            114
            
            
            1,511Tax
                benefit of advances to and investments in discontinued
                operations
            
            
            **(18,244**
            **)**
            
            —
            
            
            —Depreciation
                and amortization
            
            
            **2,721**
            
            
            2,900
            
            
            3,232Deferred
                tax benefit
            
            
            **(1,331**
            **)**
            
            —
            
            
            —Amortization
                of deferred financing costs
            
            
            **123**
            
            
            340
            
            
            798Provision
                for doubtful accounts
            
            
            **1,065**
            
            
            827
            
            
            567Stock-based
                compensation
            
            
            **308**
            
            
            —
            
            
            —Issuance
                of non-employee director shares
            
            
            **75**
            
            
            75
            
            
            329Loss
                on disposals of property, plant, and equipment
            
            
            **—**
            
            
            —
            
            
            10Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            **(18,898**
            **)**
            
            (17,667
            )
            
            (11,199
            )Inventories
            
            
            **(3,496**
            **)**
            
            (4,579
            )
            
            (7,288
            )Prepaid
                expenses and other
            
            
            **(1,390**
            **)**
            
            839
            
            
            285Other
                assets
            
            
            **(16**
            **)**
            
            (12
            )
            
            (864
            )Accounts
                payable
            
            
            **12,090**
            
            
            9,952
            
            
            1,271Accrued
                liabilities and other
            
            
            **(343**
            **)**
            
            4,210
            
            
            1,501Net
                cash provided by (used in) operating activities from continuing
                operations
            
            
            **17,881**
            
            
            15,585
            
            
            (4,372
            )Net
                cash provided by (used in) operating activities from discontinued
                operations
            
            
            **247**
            
            
            (2,225
            )
            
            (1,341
            )Net
                cash provided by (used in) operating activities
            
            
            **18,128**
            
            
            13,360
            
            
            (5,713
            )**INVESTING
                ACTIVITIES:**Purchases
                of property, plant, and equipment
            
            
            **(12,564**
            **)**
            
            (1,425
            )
            
            (695
            )Proceeds
                from sale of property, plant, and equipment
            
            
            **98**
            
            
            —
            
            
            15Payments
                received on notes receivables
            
            
            **604**
            
            
            227
            
            
            122Net
                cash used in investing activities from continuing
                operations
            
            
            **(11,862**
            **)**
            
            (1,198
            )
            
            (558
            )Net
                cash provided by investing activities from discontinued
                operations
            
            
            **25**
            
            
            1,421
            
            
            4,454Net
                cash (used in) provided by investing activities
            
            
            **(11,837**
            **)**
            
            223
            
            
            3,896**FINANCING
                ACTIVITIES:**Net
                borrowings under senior credit facility
            
            
            **—**
            
            
            6,300
            
            
            —(Payments)
                borrowings under junior credit facility
            
            
            **(5,000**
            **)**
            
            5,707
            
            
            —Payments
                on long-term obligations
            
            
            **(1,603**
            **)**
            
            (1,223
            )
            
            (3,542
            )Net
                (payments) borrowings under former credit facility
            
            
            **—**
            
            
            (18,903
            )
            
            3,093Borrowings
                under long-term obligations
            
            
            **329**
            
            
            —
            
            
            2,039Additions
                to deferred financing costs
            
            
            **(5**
            **)**
            
            (389
            )
            
            (522
            )Termination
                of interest rate swap
            
            
            **—**
            
            
            57
            
            
            96Proceeds
                from issuance of common stock
            
            
            **—**
            
            
            —
            
            
            4,235Proceeds
                from exercise of stock options
            
            
            **1,325**
            
            
            720
            
            
            27Net
                cash (used in) provided by financing activities from continuing
                operations
            
            
            **(4,954**
            **)**
            
            (7,731
            )
            
            5,426Net
                cash used in financing activities from discontinued
                operations
            
            
            **—**
            
            
            (2,511
            )
            
            (7,910
            )Net
                cash used in financing activities
            
            
            **(4,954**
            **)**
            
            (10,242
            )
            
            (2,484
            )**EFFECT
                OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY
                INVESTMENTS**
            
            
            **697**
            
            
            (557
            )
            
            293**NET
                CHANGE IN CASH AND TEMPORARY INVESTMENTS**
            
            
            **2,034**
            
            
            2,784
            
            
            (4,008
            )**CASH
                AND TEMPORARY INVESTMENTS, beginning of year**
            
            
            **6,147**
            
            
            2,812
            
            
            5,240**CASH
                AND TEMPORARY INVESTMENTS-DISCONTINUED OPERATIONS, beginning of
                year**
            
            
            **23**
            
            
            574
            
            
            2,154**CASH
                AND TEMPORARY INVESTMENTS-DISCONTINUED OPERATIONS, end of
                year**
            
            
            **—**
            
            
            23
            
            
            574**CASH
                AND TEMPORARY INVESTMENTS, end of year**
            
            **$**
            **8,204**
            
            $
            6,147
            
            $
            2,812**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:**Debt
                conversion
            
            **$**
            **—**
            
            $
            —
            
            $
            7,540Cash
                payments for interest
            
            **$**
            **3,897**
            
            $
            3,875
            
            $
            4,173Cash
                payments for income taxes
            
            **$**
            **3,477**
            
            $
            865
            
            $
            815




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




F-6


**MILLERINDUSTRIES,
      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, Jige, Boniface, Vulcan, and Chevron. As further described
      in
      Note 11, in 2002, the Company’s management and board of directors made the
      decision to divest the remainder of its towing services segment, as well as
      the
      operations of the distribution group of the towing and recovery equipment
      segment. At December 31, 2006, the Company had completed this process. 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, 2006 and 2005 consisted of the following (in
      thousands):




**2006**
            
            **2005**Chassis
            
            **$**
            **3,596**
            
            $
            2,346Raw
                materials
            
            
            **18,767**
            
            
            16,654Work
                in process
            
            
            **12,566**
            
            
            10,989Finished
                goods
            
            
            **8,226**
            
            
            8,329**$**
            **43,155**
            
            $
            38,318




F-7


**Property,
      Plant, and Equipment**




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




Property,
      plant, and equipment at December 31, 2006 and 2005 consisted of the following
      (in thousands):




**2006**
            
            **2005**Land
                and improvements
            
            **$**
            **3,247**
            
            $
            1,768Buildings
                and improvements
            
            
            **24,389**
            
            
            19,298Machinery
                and equipment
            
            
            **15,476**
            
            
            12,427Furniture
                and fixtures
            
            
            **5,393**
            
            
            5,157Software
                costs
            
            
            **6,695**
            
            
            6,420Construction
                in progress
            
            
            **2,228**
            
            
            —**57,428**
            
            
            45,070Less
                accumulated depreciation
            
            
            **(29,901**
            **)**
            
            (27,627
            )**$**
            **27,527**
            
            $
            17,443




The
      Company recognized $2,608,000, $2,760,000 and $3,092,000, in depreciation
      expense in 2006, 2005 and 2004, respectively. In 2006, $200,000 of interest
      costs were capitalized for construction period interest. No interest was
      capitalized in 2005.




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 236,000, 248,000 and 122,000, potential dilutive
      common shares in 2006, 2005 and 2004, respectively. Options to purchase
      approximately 55,000, 151,000 and 310,000 shares of common stock were
      outstanding during 2006, 2005 and 2004, 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
      and $1,434,000
      at December 31, 2006 and 2005, respectively. Amortization expense in 2006,
      2005
      and 2004 was $ 113,000, $140,000
      and $140,000, respectively. At
      December 31, 2006 ,
      all
      intangible assets subject to amortization are 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, 2006 and
      2005 was $ 197,000
      and $75,000,
      respectively. Amortization expense in 2006, 2005 and 2004, was $ 123,000, $340,000
      and $798,000,  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 as
      follows: 2007 – $123,000;
      2008 – $68,000; 2009 – $13,000; thereafter – $0.




**Accrued
      Liabilities and Other**




Accrued
      liabilities and other consisted of the following at December 31, 2006 and 2005
      (in thousands):




**2006**
            
            **2005**Accrued
                wages, commissions, bonuses, and benefits
            
            **$**
            **4,414**
            
            $
            4,153Accrued
                income taxes
            
            
            **1,560**
            
            
            1,407Other
            
            
            **7,295**
            
            
            4,261**$**
            **13,269**
            
            $
            9,821




**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
      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.




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 2006 or
        2005.
        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:




F-9




**2005**
            
            **2004**(in
                thousands, except per share data)Net
                income available to common stockholders, as reported
            
            **$**
            **18,586**
            
            $
            5,475Deduct:
                Total stock-based employee compensation expense determined under
                fair
                value based method for all awards, net of related tax
                effects
            
            
            **(347**
            **)**
            
            (262
            )Net
                income available to common stockholders, pro forma
            
            **$**
            **18,239**
            
            $
            5,213Income
                per common share:Basic,
                as reported
            
            **$**
            **1.66**
            
            $
            0.50Basic,
                pro forma
            
            **$**
            **1.62**
            
            $
            0.48Diluted,
                as reported
            
            **$**
            **1.62**
            
            $
            0.50Diluted,
                pro forma
            
            **$**
            **1.59**
            
            $
            0.48




At
      December 31, 2006, the Company had $385,000 of unrecognized compensation expense
      related to stock options, with $308,000 and $77,000 to be expensed in 2007
      and
      2008, respectively. The Company issued approximately 209,000 shares of common
      stock during 2006 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 2006, 2005 and 2004, was $ 1,716,000, $1,744,000 and $1,520,000, respectively.




The
      table
      below provides a summary of the warranty liability for December 31, 2006 and
      2005 (in thousands):




**2006**
            
            **2005**Accrual
                at beginning of the year
            
            **$**
            **801**
            
            $
            665Provision
            
            
            **1,716**
            
            
            1,744Settlement
            
            
            **(1,678**
            **)**
            
            (1,608
            )Accrual
                at end of year
            
            **$**
            **839**
            
            $
            801




**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.




**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 operation.




F-10


**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**




In
      November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      151 “Inventory Costs - an amendment of ARB No. 43, Chapter 4”. This statement
      clarifies the accounting for abnormal amounts of idle facility expense, freight,
      handling costs and spoilage. This statement also requires the allocation of
      fixed production overhead costs be based on normal production capacity. The
      provisions of SFAS No. 151 are effective for inventory costs beginning in
      January 2006. The adoption of this statement did not have a material impact
      on
      the Company’s results of operations or financial position.




In
      December 2004, the FASB issued FASB Staff Position No. 109-1, “Application of
      FASB Statement No. 109 (SFAS No. 109), Accounting for Income Taxes, to the
      Tax
      Deduction on Qualified Production Activities Provided by the American Jobs
      Creation Act of 2004” (FSP 109-1). FSP 109-1 clarifies that the manufacturer’s
      deduction provided for under the American Jobs Creation Act of 2004 (AJCA)
      should be accounted for as a special deduction in accordance with SFAS No.
      109
      and not as a tax rate reduction. As the Company is currently utilizing net
      operating loss carryover to reduce taxable income, no benefit for the domestic
      manufacturing deduction has been provided in the financial
      statements.




Effective
      July 1, 2005, the Company adopted SFAS No. 153, “Exchanges of Nonmonetary
      Assets-an amendment of APB Opinion No. 29”. SFAS No. 153 addresses the
      measurement of exchanges of nonmonetary assets. It eliminates the exception
      from
      fair value measurement for nonmonetary exchanges of similar productive assets
      in
      paragraph 21(b) of APB Opinion No. 29 “Accounting for Nonmonetary Transactions”
and replaces it with an exception for exchanges that do not have commercial
      substance. A nonmonetary exchange has commercial substance if the future cash
      flows of the entity are expected to change significantly as a result of the
      exchange. The adoption of SFAS No. 153 did not have a material impact on the
      Company’s financial statements.




In
      May
      2005, the FASB issued SFAS No. 154. “Accounting Changes and Error Corrections”
(“SFAS No. 154”), which replaces Accounting Principles Board (“APB”) No. 20
“Accounting Changes”, and SFAS No. 3. “Reporting Accounting Changes in Interim
      Financial Statements”. SFAS No. 154 changes the requirements for the accounting
      for and reporting of a change in accounting principle. The statement applies
      to
      all voluntary changes in accounting principle as well as changes required by
      an
      accounting pronouncement. SFAS No. 154 requires retrospective application to
      prior periods’ financial statements of a voluntary change in accounting
      principle unless it is impracticable to determine the period-specific effects
      or
      the cumulative effect of the change. The statement was effective for accounting
      changes and correction of errors made after January 1, 2006, and did not have
      a
      material impact on the Company’s financial statements.




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 is effective for fiscal years beginning after December 31,
      2006. We are in the process of evaluating the impact that FIN 48 will have
      on
      the Company’s financial statements.




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.




F-11


In
      September 2006, the U.S. Securities and Exchange Commission (“SEC”) released
      Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements,” (“SAB No. 108”), which provides interpretive guidance on the SEC’s
      views regarding the process of quantifying the materiality of financial
      statement misstatements. SAB No. 108 is effective for years ending after
      November 15, 2006. The application of SAB No. 108 did not have a
      material effect on the Company’s results of operations or financial
      position.




**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, 2006 and 2005 (in
      thousands):




**2006**
            
            **2005**Outstanding
                borrowings under Senior Credit Facility
            
            **$**
            **4,900**
            
            $
            6,300Outstanding
                borrowings under Junior Credit Facility
            
            
            **5,000**
            
            
            10,000Mortgage
                notes payable, weighted average interest rate of 8.25%, payable in
                monthly
                installments, maturing in 2009
            
            
            **1,844**
            
            
            1,901Equipment
                notes payable, weighted average interest rate of 8.49%, payable in
                monthly
                installments, maturing 2007 to 2011
            
            
            **416**
            
            
            187Other
                notes payable, maturing in 2006
            
            
            **—**
            
            
            10**12,160**
            
            
            18,398Less
                current portion
            
            
            **(1,623**
            **)**
            
            (1,595
            )**$**
            **10,537**
            
            $
            16,803




Certain
      equipment and manufacturing facilities are pledged as collateral under the
      mortgage and equipment notes payable.




**Credit
      Facilities**




*Senior
      Credit Facility* .
      On June
      17, 2005, the Company entered into 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”). Proceeds from the Senior
      Credit Facility were used to repay The CIT Group/Business Credit, Inc. (“CIT”)
      and William G. Miller, the Company’s Chairman of the Board and Co-Chief
      Executive Officer, under the Company’s former senior credit facility. As a
      result, effective June 17, 2005, the Company’s former senior credit facility was
      satisfied and terminated, and Mr. Miller no longer holds any of the Company’s
      senior debt.




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”). At December
      31, 2006 and 2005, the Company had no borrowing outstanding under the revolving
      credit facility. In the absence of a default, all borrowings under the Revolver
      bear 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 bears interest at
      a
      30-day adjusted LIBOR rate 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. The Revolver expires on June 15, 2008, and the Term Loan matures
      on June 15, 2010. 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.




F-12


*Junior
      Credit Facility* .
      William
      G. Miller is the sole lender under the Company’s Junior Credit Facility. The
      Company’s Junior Credit Facility is, by its terms, expressly subordinated only
      to the Senior Credit Facility, and is secured by a second priority lien and
      security interest in substantially all of the Company’s other assets. The Junior
      Credit Facility matures on September 17, 2008, and contains certain
      representations and warranties, and covenants and events of default consistent
      with the representations and warranties, covenants and events of default in
      the
      Senior Credit Agreement. In the absence of a default, all of the term loans
      outstanding under the Junior Credit Facility bear interest at a rate of 9.0%
      per
      annum.




In
      May
      2006, the Company repaid $5.0 million of the subordinated debt under the Junior
      Credit Facility using additional borrowings under the Senior Credit Facility
      Revolver.




*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. Therefore, the
      Company’s liquidity and access to capital resources could be further affected by
      increasing interest rates.




Future
      maturities of long-term obligations at December 31, 2006 are as follows (in
      thousands):




2007
            
            $
            1,6232008
            
            
            6,5932009
            
            
            3,2222010
            
            
            7152011
            
            
            7$
            12,160




**4.**
            **RELATED
                PARTY TRANSACTIONS**




**Credit
      Facilities**




*Former
      Senior Credit Facility* .
      Under
      the Company’s former senior credit facility, which was structured as a $15.0
      million revolving facility and $12.0 million and $5.0 million term loans, CIT
      and William G. Miller constituted the senior lenders to the Company, with CIT
      holding 62.5% of such loan and Mr. Miller participating in 37.5% of the loan.
      Mr. Miller’s portion of the loan was subordinated to that of CIT. The Company
      paid Mr. Miller approximately $664,000 and $949,000 in interest expense related
      to his portion of the former senior credit facility during 2005 and 2004,
      respectively.




*Senior
      Credit Facility* .
      On June
      17, 2005, the Company entered into the Senior Credit Agreement with Wachovia
      Bank, National Association, for the Senior Credit Facility (as described in
      Note
      3). Proceeds from the Senior Credit Facility were used to repay CIT and Mr.
      Miller under the Company’s former senior credit facility, with CIT receiving
      $14.1 million and Mr. Miller receiving $12.0 million. As a result, effective
      June 17, 2005, the Company’s former senior credit facility was satisfied and
      terminated, and Mr. Miller no longer holds any of the Company’s senior debt.
      This transaction was approved by the Audit Committee of the Company’s Board of
      Directors, as well as the full Board of Directors with Mr. Miller abstaining
      due
      to his personal interest in the transaction.




*Amendments
      to Junior Credit Facility* .
      On May
      31, 2005, Harbourside Investments, LLLP, a limited liability limited partnership
      of which several of the Company’s executive officers and directors were
      partners, and which was the former lender under the Company’s Junior Credit
      Facility, was dissolved, and in connection therewith, Mr. Miller, as successor
      lender agent to Harbourside, became the sole lender under the Junior Credit
      Facility. On June 17, 2005, the Company and Mr. Miller amended the Junior Credit
      Facility to provide for a new term loan, made by Mr. Miller as sole lender
      and
      successor lender agent, in the principal amount of approximately $5.7 million.
      As a result, on June 17, 2005, the total outstanding principal amount of term
      loans under the Junior Credit Facility was $10.0 million. This transaction
      was
      approved by the Audit Committee of the Company’s Board of Directors, as well as
      the full Board of Directors with Mr. Miller abstaining due to his personal
      interest in the transaction. In 2005, the Company paid Harbourside $211,000
      in
      interest on the Junior Credit Facility prior to its dissolution and $274,000
      in
      2004. Additionally, Mr. Miller received approximately $684,000 and $415,000
      in
      interest expense on the Junior Credit Facility for 2006 and 2005, respectively.
      Approximately $39,000 and $77,000 is included in accrued liabilities for unpaid
      interest on the Junior Credit Facility at December 31, 2006 and 2005,
      respectively.




F-13




In
      May
      2006, the Company repaid $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.




**DataPath,
      Inc.**




In
      October 2004, the Company began a project with DataPath, Inc (“DataPath”), a
      provider of satellite communications, to assist in the design and engineering
      of
      mobile communication trailers for military applications. DataPath is a company
      in which Mr. Miller and one of the Company’s directors held a minority interest
      and on whose board they also served. In May 2005, the Company entered into
      a new
      agreement with DataPath calling for the Company to manufacture and sell to
      them
      all of their requirements for this type of equipment during the five-year term
      of the agreement. As of June 30, 2006, Mr. Miller and the Company’s other
      director resigned from DataPath’s board, and had reduced their collective
      interest in DataPath to less than 4% of its total shares outstanding. Total
      revenue to the Company from these related party transactions for the six months
      ended June 30, 2006 was $5,649,000, and $23,727,000 and $861,000 for the years
      ended December 31, 2005 and 2004, respectively. At December 31, 2005,
      approximately $2,311,000 was included in accounts receivable for amounts due
      from DataPath. The Company continues to conduct business with DataPath as part
      of its normal course of operations.




**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, 2006, 2005 and 2004 were approximately 1.1 million,
      0.9
      million and 0.6 million, respectively.




A
      summary
      of the activity of stock options for the years ended December 31, 2006, 2005
      and
      2004, is presented below (shares in thousands):




**2006**
            
            **2005**
            
            **2004****Shares
                Under**
              **Option**
            
            **Weighted**
              **Average**
              **Exercise
                Price**
            
            **Shares
                Under**
              **Option**
            
            **Weighted**
              **Average**
              **Exercise
                Price**
            
            **Shares
                Under**
              **Option**
            
            **Weighted**
              **Average**
              **Exercise
                Price**Outstanding
                at Beginning of Period
            
            
            **574**
            
            **$**
            **15.92**
            
            
            805
            
            $
            15.46
            
            
            745
            
            $
            19.90Granted
            
            
            **—**
            
            
            **—**
            
            
            —
            
            
            **—**
            
            
            340
            
            
            8.31Exercised
            
            
            **(216**
            **)**
            
            **6.90**
            
            
            (108
            )
            
            6.67
            
            
            (9
            )
            
            3.15Forfeited
                and cancelled
            
            
            **(54**
            **)**
            
            **43.60**
            
            
            (123
            )
            
            20.96
            
            
            (271
            )
            
            17.99Outstanding
                at End of Period
            
            
            **304**
            
            **$**
            **17.39**
            
            
            574
            
            $
            15.92
            
            
            805
            
            $
            15.46Options
                exercisable at year end
            
            
            **138**
            
            **$**
            **28.39**
            
            
            321
            
            $
            21.90
            
            
            455
            
            $
            21.12Weighted
                average fair value of options granted
            
            
            
            
            **$**
            **—**
            
            
            
            
            $
            —
            
            
            
            
            $
            3.65




F-14


A
      summary
      of options outstanding under the Company’s stock-based compensation plans at
      December 31, 2006 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
            
            
            6
            
            $
            3.05
            
            
            4.9
            
            
            6
            
            $
            3.058.31
            
            
            10.94
            
            
            199
            
            
            8.40
            
            
            7.1
            
            
            33
            
            
            8.8720.63
            
            
            22.50
            
            
            42
            
            
            20.63
            
            
            1.7
            
            
            42
            
            
            20.6332.50
            
            
            35.31
            
            
            35
            
            
            35.29
            
            
            1.5
            
            
            35
            
            
            35.2949.06
            
            
            73.13
            
            
            20
            
            
            69.27
            
            
            0.4
            
            
            20
            
            
            69.2775.63
            
            
            78.75
            
            
            2
            
            
            77.19
            
            
            0.4
            
            
            2
            
            
            77.19Total
            
            304
            
            $
            17.39
            
            
            5.2
            
            
            138
            
            $
            28.39




**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 $1,572,000, $1,308,000 and $850,000 in 2006, 2005 and 2004,
      respectively. Rental expense under these leases for discontinued operations
      was
      $2,000, $221,000 and $551,000 in 2006, 2005 and 2004, respectively.




At
      December 31, 2006 future minimum lease payments under non-cancelable operating
      leases for the next five years and in the aggregate are as follows (in
      thousands):




2007
            
            $
            1,0112008
            
            
            6552009
            
            
            4142010
            
            
            3522011
            
            
            168Thereafter
            
            
            384$
            2,984




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 $27.5 million and $18.4
      million at December 31, 2006 and 2005, respectively.




At
      December 31, 2006, 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.




F-15




**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 2006, 2005
      and 2004, (in thousands):




**2006**
            
            **2005**
            
            **2004**Current:Federal
            
            **$**
            **—**
            
            $
            423
            
            $
            —State
            
            
            **1,426**
            
            
            1,647
            
            
            317Foreign
            
            
            **2,359**
            
            
            866
            
            
            423**3,785**
            
            
            2,936
            
            
            740Deferred:Federal
            
            
            **6,003**
            
            
            —
            
            
            —State
            
            
            **1,479**
            
            
            —
            
            
            —Change
                in valuation allowance
            
            
            **(8,813**
            **)**
            
            —
            
            
            —**(1,331**
            **)**
            
            —
            
            
            —**$**
            **2,454**
            
            $
            2,936
            
            $
            740




The
      principal differences between the federal statutory tax rate and the income
      tax
      expense in 2006, 2005 and 2004:




**2006**
            
            **2005**
            
            **2004**Federal
                statutory tax rate
            
            
            **35.0**
            **%**
            
            34.0
            %
            
            34.0
            %State
                taxes, net of federal tax benefit
            
            
            **3.2**
            **%**
            
            7.6
            %
            
            4.0
            %Change
                in deferred tax asset valuation allowance
            
            
            **(29.9**
            **)%**
            
            (30.6
            %)
            
            (34.0
            %)Excess
                of foreign tax over US tax on foreign income
            
            
            **1.3**
            **%**
            
            0.6
            %
            
            4.9
            %Other
            
            
            **(1.3**
            **)%**
            
            2.0
            %
            
            0.7
            %Effective
                tax rate
            
            
            **8.3**
            **%**
            
            13.6
            %
            
            9.6
            %




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, 2006 and 2005 are
        as
        follows (in thousands):




F-16







**2006**
            
            **2005**Deferred
                tax assets:Allowance
                for doubtful accounts
            
            **$**
            **80**
            
            $
            51Accruals
                and reserves
            
            
            **3,162**
            
            
            2,160Net
                operating loss carryforward
            
            
            **16,697**
            
            
            5,484Deductible
                goodwill and impairment charges
            
            
            **52**
            
            
            58Other
            
            
            **362**
            
            
            628Total
                deferred tax assets
            
            
            **20,353**
            
            
            8,381Less
                valuation allowance
            
            
            **—**
            
            
            (7,638
            )Net
                deferred tax asset
            
            
            **20,353**
            
            
            743Deferred
                tax liabilities:Property,
                plant, and equipment
            
            
            **613**
            
            
            743Total
                deferred tax liabilities
            
            
            **613**
            
            
            743Net
                deferred tax asset
            
            **$**
            **19,740**
            
            $
            —




Included
      in the Company’s noncurrent assets of discontinued operations at December 31,
      2005 is a net noncurrent deferred tax asset of $1.2 million relating primarily
      to tax deductible goodwill and reserves that are not deductible for tax purposes
      until paid. The discontinued operations of the Company had no noncurrent
      deferred tax liabilities at December 31, 2005. The net deferred tax assets
      of
      the discontinued operations of $1.2 million had a full valuation allowance
      reflected against them.




As
      of
      December 31, 2006, the Company had federal net operating loss carryforwards
      of
      approximately $44.6 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
      charitable contributions of $0.3 million that may be carried forward, and an
      AMT
      credit carryforward of approximately $0.2 million, that may be carried forward
      indefinitely.




In
      2005
      and 2004, the Company had 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 and 2004, the Company
      recorded a full valuation allowance against its net deferred tax asset from
      continuing and discontinuing operations totaling approximately $8.8 million
      and
      $16.2 million, respectively. 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, 2006, the Company has state net operating loss carryforwards of
      approximately $24.1 million.




**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.




**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.




F-17


The
      plan
      provides that each participant may contribute up to 15% of his or her salary.
      For 2005, the Company matched 33.33% of the first 3% of participant
      contributions and for 2006 matched 50.00% of the first 4% of participant
      contributions. Matching contributions vest over the first five years of
      employment. Company contributions to the plans were not significant in 2006,
      2005 and 2004.




**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):




**2006**
            
            **2005**
            
            **2004****Net
                Sales**
            
            **Long-Lived**
              **Assets**
            
            **Net
                Sales**
            
            **Long-Lived**
              **Assets**
            
            **Net
                Sales**
            
            **Long-Lived**
              **Assets**North
                America
            
            **$**
            **333,300**
            
            **$**
            **36,455**
            
            $
            283,226
            
            $
            26,665
            
            $
            196,902
            
            $
            28,026Foreign
            
            
            **76,121**
            
            
            **2,691**
            
            
            68,658
            
            
            2,509
            
            
            39,406
            
            
            2,607**$**
            **409,421**
            
            **$**
            **39,146**
            
            $
            351,884
            
            $
            29,174
            
            $
            236,308
            
            $
            30,633




No
      single
      customer accounted for 10% or more of consolidated net sales in 2006, 2005
      or
      2004.




**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
      assets and liabilities and results of operations associated with these assets
      were separately presented in the Company’s financial statements at December 31,
      2005, and 2004 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
      parties are awaiting receipt of the final decree from the court. Upon RoadOne,
      Inc.’s liquidation from bankruptcy, we recognized a pre-tax, non-cash gain on
      deconsolidation of RoadOne, Inc. in the amount of $126,000. 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.




The
      operating results for the discontinued operations of the towing services segment
      and the distributor group for the years ended December 31, 2006, 2005 and 2004
      were as follows (in thousands):




**2006**
            
            **2005**
            
            **2004****Dist.**
            
            **Towing**
            
            **Total**
            
            **Dist.**
            
            **Towing**
            
            **Total**
            
            **Dist.**
            
            **Towing**
            
            **Total**Net
                Sales
            
            **$**
            **—**
            
            **$**
            **—**
            
            **$**
            **—**
            
            $
            11,460
            
            $
            —
            
            $
            11,460
            
            $
            37,810
            
            $
            —
            
            $
            37,810Operating
                income (loss)
            
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            (134
            )
            
            16
            
            
            (118
            )
            
            (659
            )
            
            (111
            )
            
            (770
            )Income
                (loss) before taxes
            
            
            **—**
            
            
            **126**
            
            
            **126**
            
            
            (114
            )
            
            —
            
            
            (114
            )
            
            (1,244
            )
            
            (127
            )
            
            (1,371
            )Net
                income (loss) from discontinued operations
            
            **$**
            **—**
            
            **$**
            **18,370**
            
            **$**
            **18,370**
            
            
            (114
            )
            
            —
            
            
            (114
            )
            
            (1,276
            )
            
            (235
            )
            
            (1,511
            )




F-18
 
  Upon
        deconsolidation of RoadOne, Inc., the Company had no discontinued assets
        or
        liabilities on the balance sheet at December 31, 2006. The following assets
        and
        liabilities are classified as held for sale at December 31, 2005 (in
        thousands):




**2005****Dist.**
            
            **Towing**
            
            **Total**Cash
                and temporary investments
            
            $
            23
            
            $
            —
            
            $
            23Accounts
                receivable, net
            
            
            1,774
            
            
            401
            
            
            2,175Inventories
            
            
            187
            
            
            —
            
            
            187Prepaid
                expenses and other current assets
            
            
            37
            
            
            —
            
            
            37Current
                assets of discontinued operations held for sale
            
            $
            2,021
            
            $
            401
            
            $
            2,422Property,
                plant and equipment
            
            $
            —
            
            $
            647
            
            $
            647Noncurrent
                assets of discontinued operations held for sale
            
            $
            —
            
            $
            647
            
            $
            647Current
                portion of long-term debt
            
            $
            —
            
            $
            —
            
            $
            —Other
                current liabilities
            
            
            273
            
            
            5,971
            
            
            6,244Current
                liabilities of discontinued operations held for sale
            
            $
            273
            
            $
            5,971
            
            $
            6,244Long-term
                debt
            
            $
            —
            
            $
            —
            
            $
            —Noncurrent
                liabilities of discontinued operations held for sale
            
            $
            —
            
            $
            —
            
            $
            —




**12.**
            **QUARTERLY
                FINANCIAL INFORMATION
                (UNAUDITED)**




The
      following is a summary of the unaudited quarterly financial information for
      the
      years ended December 31, 2006 and 2005 (in thousands, except per share
      data):




**Net
                Sales**
            
            **Operating
                Income**
            
            **Gain
                (Loss) From Discontinued Operations**
            
            **Net**
              **Income****(1)**
            
            **Basic
                Income Per Share**
            
            **Diluted
                Income Per Share***2006*First
                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*2005*First
                Quarter
            
            $
            76,896
            
            $
            3,476
            
            $
            (46
            )
            $
            2,025
            
            $
            0.19
            
            $
            0.18Second
                Quarter
            
            
            92,938
            
            
            7,302
            
            
            (34
            )
            
            5,165
            
            
            0.46
            
            
            0.45Third
                Quarter
            
            
            89,480
            
            
            7,214
            
            
            (30
            )
            
            5,422
            
            
            0.49
            
            
            0.47Fourth
                Quarter
            
            
            92,570
            
            
            7,656
            
            
            (4
            )
            
            5,974
            
            
            0.52
            
            
            0.52Total
            
            $
            351,884
            
            $
            25,648
            
            $
            (114
            )
            $
            18,586
            
            $
            1.66
            
            $
            1.62




(1)
            Net
                income for the fourth quarter of 2006 was effected by the recognition
                of a
                deferred tax asset as described in Note
                7.




F-19


**MILLER
      INDUSTRIES, INC. AND SUBSIDIARIES**




**SCHEDULE
      II -VALUATION AND QUALIFYING
      ACCOUNTS**




**Balance
                at**
              **Beginning
                of**
              **Period**
            
            **Charged
                to**
              **Expenses**
            
            **Accounts**
              **Written
                Off**
            
            **Balance
                at**
              **End
                of**
              **Period****(In
                Thousands)**Year
                ended December 31, 2004:Deduction
                from asset accounts:Allowance
                for doubtful accounts
            
            $
            1,062
            
            
            567
            
            
            (513
            )
            $
            1,116Year
                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
            )
            $
            2,488




**Balance
                at**
              **Beginning
                of**
              **Period**
            
            **Charged
                to**
              **Expense**
            
            **Claims**
            
            **Balance
                at**
              **End
                of Period****(In
                Thousands)**Year
                ended December 31, 2004:Product
                Warranty Reserve:
            
            $
            639
            
            
            1,520
            
            
            (1,494
            )
            $
            665Year
                ended December 31, 2005:Product
                Warranty Reserve:
            
            $
            665
            
            
            1,744
            
            
            (1,608
            )
            $
            801Year
                ended December 31, 2006:Product
                Warranty Reserve:
            
            $
            801
            
            
            1,716
            
            
            (1,678
            )
            $
            839





S-1





**Balance
                at**
              **Beginning
                of**
              **Period**
            
            **Additions**
              **(Reductions)**
            
            **Balance
                at**
              **End
                of Period****(In
                Thousands)**Year
                ended December 31, 2004:Deferred
                Tax Valuation Allowance:
            
            $
            13,299
            
            
            2,889
            
            $
            16,188Year
                ended December 31, 2005:Deferred
                Tax Valuation Allowance:
            
            $
            16,188
            
            
            (7,375
            )
            $
            8,813Year
                ended December 31, 2006:Deferred
                Tax Valuation Allowance:
            
            $
            8,813
            
            
            (8,813
            )
            $
            0




Note:
            The
                Allowance for Doubtful Accounts and Product Warranty Reserve tables
                above
                reflect activity for continuing operations for the years ended December
                31, 2006, 2005 and 2004. 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 14 th day of
        March, 2007.
 **MILLER INDUSTRIES,
                INC.**By:
              /s/ Jeffrey
                I. BadgleyJeffrey
                  I. Badgley
                President,
                  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 14 th  day
        of
        March, 2007.
  **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 Financial OfficerJ.
                  Vincent Mish
              
              (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**
              
              **Description**21
              
              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