-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V7x3rxh5F6Y7CANZjTWiZrpcsGYVREozEUjD2xE0l1iHYOy5jp9ejcTnpQZmfs7Y Rtw0NHdRbG4UKqZMdIJ3CQ== 0000930661-96-000473.txt : 19960517 0000930661-96-000473.hdr.sgml : 19960517 ACCESSION NUMBER: 0000930661-96-000473 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERITRUCK DISTRIBUTION CORP CENTRAL INDEX KEY: 0001004153 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 752619368 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-99716 FILM NUMBER: 96566774 BUSINESS ADDRESS: STREET 1: 301 COMMERCE ST STREET 2: STE 1101 CITY: FORT WORTH STATE: TX ZIP: 76102-5384 BUSINESS PHONE: 8173326020 MAIL ADDRESS: STREET 1: 301 COMMERCE ST STREET 2: SUITE 1101 CITY: FORT WORTH STATE: TX ZIP: 76102 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------- ------------------ Commission file number 33-99716 AMERITRUCK DISTRIBUTION CORP. (Exact name of registrant as specified in its charter) DELAWARE 75-2619368 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) City Center Tower II, Suite 1101, 301 Commerce Street, Fort Worth, Texas 76102 (Address of principal executive offices) (Zip Code) (817) 332-6020 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [_] No AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES TABLE OF CONTENTS Part I FINANCIAL INFORMATION Page ---- Item 1. Financial Statements 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II OTHER INFORMATION Item 1. Legal Proceedings 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 12 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands) (Unaudited)
Three Months Ended March 31, -------------------- 1996* 1995* --------- --------- Operating revenue $44,784 $20,203 ------- ------- Operating expenses: Salaries, wages and fringe benefits 14,094 6,160 Purchased transportation 10,776 5,642 Operating supplies and expenses 8,062 2,623 Depreciation and amortization of capital leases 2,985 1,453 Claims and insurance 1,681 879 Operating taxes and licenses 1,449 592 General supplies and expenses 1,815 624 Amortization of intangibles 235 122 Gain on disposal of property and equipment (187) (25) ------- ------- Total operating expenses 40,910 18,070 ------- ------- Operating income 3,874 2,133 Interest expense 3,699 675 Other income, net 37 41 ------- ------- Income before income taxes and extraordinary item 212 1,499 Income taxes 93 617 ------- ------- Income before extraordinary item 119 882 Extraordinary item, loss on early retirement of debt, net of taxes of $154 (230) - ------- ------- Net income (loss) $ (111) $ 882 ======= =======
* Comparisons between periods are affected by acquisitions--see Note 2. See accompanying notes to consolidated financial statements. 1 AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars and shares in thousands)
March 31, December 31, 1996 1995 ---------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,886 $ 15,286 Accounts and notes receivable, net 19,538 12,269 Prepaid expenses 6,561 4,057 Repair parts and supplies 1,071 844 Deferred income taxes 1,046 960 Other current assets 894 941 -------- -------- Total current assets 30,996 34,357 Property and equipment, net 88,761 67,191 Goodwill, net 32,482 32,705 Notes receivable 1,367 - Other assets 7,595 6,282 -------- -------- Total assets $161,201 $140,535 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Current portion of long-term debt $ 5,509 $ 10,566 Accounts payable and accrued expenses 13,991 12,071 Claims and insurance accruals 2,313 1,852 Other current liabilities 569 499 -------- -------- Total current liabilities 22,382 24,988 Long-term debt 131,047 107,769 Deferred income taxes 7,854 7,773 Other liabilities 1,846 1,822 -------- -------- Total liabilities 163,129 142,352 -------- -------- Stockholders' equity (deficiency): Common stock; $.01 par value; 3,278 shares issued and outstanding 33 33 Loans to stockholders (1,435) (1,435) Accumulated deficit (526) (415) -------- -------- Total stockholders' equity (deficiency) (1,928) (1,817) -------- -------- Total liabilities and stockholders' equity (deficiency) $161,201 $140,535 ======== ========
See accompanying notes to consolidated financial statements. 2 AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Three Months Ended March 31, ---------------------- 1996* 1995* -------- ------- OPERATING ACTIVITIES: Net income (loss) $ (111) $ 882 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization of capital leases 2,985 1,453 Amortization of intangibles 235 122 Gain on disposal of property and equipment (187) (25) Provision for deferred income taxes (61) 50 Other, net (280) 361 Changes in current assets and liabilities: Accounts and notes receivable, net (5,914) 2,053 Prepaid expenses (1,637) (373) Repair parts and supplies 12 (39) Other current assets 58 (11) Accounts payable and accrued expenses 1,762 1 Claims and insurance accruals 461 (19) Other current liabilities 70 (367) -------- ------- Net cash provided by (used in) operating activities (2,607) 4,088 -------- ------- INVESTING ACTIVITIES: Purchase of Freymiller assets, net of liabilities assumed (18,128) - Purchase of property and equipment (9,587) (1,590) Proceeds from sale of property and equipment 1,200 162 Other, net (261) - -------- ------- Net cash used in investing activities (26,776) (1,428) -------- ------- FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 29,448 1,521 Repayment of long-term debt (13,465) (3,423) -------- ------- Net cash provided by (used in) financing activities 15,983 (1,902) -------- ------- Net increase (decrease) in cash and cash equivalents (13,400) 758 Cash and cash equivalents, beginning of period 15,286 1,617 -------- ------- Cash and cash equivalents, end of period $ 1,886 $ 2,375 ======== ======= Supplemental cash flow information: Cash paid during the period for: Interest $ 1,015 $ 644 Income taxes 96 653 Property and equipment financed through capital lease obligations and other debt 110 915
* Comparisons between periods are affected by acquisitions--see Note 2. See accompanying notes to consolidated financial statements. 3 AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. ACCOUNTING POLICIES AND INTERIM RESULTS The 1995 Annual Report on Form 10-K for AmeriTruck Distribution Corp. ("AmeriTruck" or the "Company") and its wholly-owned subsidiaries includes a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. The statements for the periods presented are condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 1996 and December 31, 1995 and the results of operations and cash flows for the three-month periods ended March 31, 1996 and 1995 have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the entire year. Certain prior year data has been reclassified to conform to current year presentation. Separate financial statements of the Company's subsidiaries are not included because (a) all of the Company's direct and indirect subsidiaries have guaranteed the Company's obligations under the Indenture, dated as of November 15, 1995 (the "Indenture"), among the Company, such subsidiaries (in such capacity, the "Guarantors"), and The Bank of New York, as Trustee, (b) the Guarantors have fully and unconditionally guaranteed the 12 1/4% Senior Subordinated Notes due 2005 ("Subordinated Notes") issued under the Indenture on a joint and several basis, (c) the Company is a holding company with no independent assets or operations other than its investments in the Guarantors and (d) the separate financial statements and other disclosures concerning the Guarantors are not presented because management has determined that they would not be material. 2. ACQUISITIONS AmeriTruck was formed in August 1995 to effect the combination of six regional trucking lines in November 1995 (the "Acquisitions"): W&L Services Corp. ("W&L"), Thompson Bros., Inc. ("TBI"), J.C. Bangerter & Sons, Inc., ("Bangerter"), CMS Transportation Services, Inc. and certain related companies ("CMS"), Scales Transport Corporation and a certain related company ("Scales") and C.B.S. Express, Inc. ("CBS" and, collectively the "Operating Companies"). Prior to the Acquisitions, W&L and TBI had certain common stockholders who controlled approximately 87 percent of the common equity of W&L and TBI on a combined basis. In addition, these stockholders control approximately 67 percent of the outstanding common stock of AmeriTruck after the consummation of the Acquisitions. Therefore, these common stockholders of W&L and TBI have been treated as the acquirer for purposes of accounting for the Acquisitions. The accompanying AmeriTruck consolidated statements of operations and cash flows reflect only W&L and TBI combined results and cash flows for the three months ended March 31, 1995. In February 1996, the Company, through CMS, purchased (the "Purchase") certain assets of Freymiller Trucking Inc. ("Freymiller"). Freymiller had been the subject of a Chapter 11 bankruptcy proceeding in Oklahoma. Pursuant to the Purchase, CMS purchased certain specific automobiles, computer hardware and software, furniture and fixtures, rights to the trade name "Freymiller", existing spare parts, tires and fuel, rights under certain leases, certain leasehold improvements and shop equipment and installment sales contracts relating to tractors and trailers sold by Freymiller out of the ordinary course of business (with all of the foregoing referred to as the "Assets"). The Company also negotiated with Freymiller's lenders and lessors to purchase approximately 185 tractors and 309 trailers, previously operated by Freymiller, for approximately $14 million. An additional 80 trailers were leased for a seven year period. In exchange for the Assets, the Company paid approximately $2.7 million in cash at closing and assumed approximately $2 million in existing equipment financing. In addition, the Company assumed a lease for Freymiller's maintenance facility in Oklahoma City and certain routine executory business contracts. Except as provided above, the Company did not assume any obligations or liabilities of Freymiller. 4 In connection with these transactions, the Company purchased real property in Oklahoma City, Oklahoma from Freymiller's Chairman of the Board, President and Chief Executive Officer for approximately $1.5 million in cash. The Assets and this real estate will supplement the Company's existing temperature-controlled operations. 3. LONG-TERM DEBT NationsBank Credit Facility In February 1996, the Company and the Operating Companies entered into a Loan Agreement and related documents (collectively, the "NationsBank Credit Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to which NationsBank has committed, subject to the terms and conditions of the NationsBank Credit Facility, to provide a $30 million credit facility to the Company. Borrowings under the NationsBank Credit Facility can be used for acquisitions, operating capital, capital expenditures, letters of credit and general corporate purposes. Pursuant to the NationsBank Credit Facility, NationsBank has agreed to provide a $30 million revolving credit facility, with a $7 million sublimit for letters of credit, maturing on February 1, 1998, at which time the revolving credit facility will convert into a term loan maturing on February 1, 2003. Borrowings under the NationsBank Credit Facility bear interest at a per annum rate equal to either NationsBank's base rate or the rate of interest offered by NationsBank in the interbank eurodollar market plus an additional margin ranging from 1.5 percent to 1.75 percent based on the Senior Funded Debt Ratio of the Company. The Company also pays a letter of credit issuance fee and a quarterly unused facility fee. Borrowings under the NationsBank Credit Facility were $25.4 million at March 31, 1996. The Company's obligations under the NationsBank Credit Facility are collateralized by substantially all assets of the Company and its subsidiaries and are guaranteed in full by each of the Operating Companies. For purposes of the Indenture, such borrowings under the NationsBank Credit Facility constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness of the Operating Companies. The NationsBank Credit Facility contains customary representations and warranties and events of default and requires compliance with a number of affirmative and negative covenants, including a limitation on the incurrence of indebtedness and a requirement that the Company maintain a specified Senior Funded Debt Ratio and Fixed Charge Coverage Ratio. Volvo Credit Facilities In February 1996, the Company and the Operating Companies entered into a Loan and Security Agreement, a Financing Integration Agreement and related documents (collectively, the "Volvo Credit Facilities") with Volvo Truck Finance North America, Inc. ("Volvo") pursuant to which Volvo has committed, subject to the terms and conditions of the Volvo Credit Facilities, to provide (i) a $10 million line of credit facility (the "Volvo Line of Credit") to the Company and the Operating Companies, and (ii) up to $28 million in purchase money or lease financing (the "Equipment Financing Facility") in connection with the Operating Companies' acquisition of new tractors and trailers manufactured by Volvo GM Heavy Truck Corporation. Borrowings under the Volvo Line of Credit are secured by certain specified tractors and trailers of the Company and the Operating Companies (which must have a value equal to at least 1.75 times the outstanding amount of borrowings under the Volvo Line of Credit) and are guaranteed in full by each of the Operating Companies. Borrowings under the Volvo Line of Credit bear interest at the prime rate. The Volvo Line of Credit contains customary representations and warranties and events of default and requires compliance with a number of affirmative and negative covenants, including a profitability requirement and a coverage ratio. The Equipment Financing Facility is being provided by Volvo in connection with the Operating Companies' agreement to purchase 400 new trucks manufactured by Volvo GM Heavy Truck Corporation between March 1, 1996 and June 30, 1997. The Operating Companies have agreed to utilize such facility for at least the first 200 of the new trucks. The borrowings under the Equipment Financing Facility are collateralized by the specific trucks being financed and are guaranteed in full by each of the Operating Companies. Borrowings under this facility bear interest at the prime rate. There were no borrowings under the Volvo Credit Facilities at March 31, 1996. 5 The Equipment Financing Facility contains customary representations and warranties, covenants and events of default. For purposes of the Indenture, the borrowings under the Volvo Credit Facilities constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness of the Operating Companies. 4. CONTINGENCIES Bangerter has been named as a defendant in a lawsuit entitled The Ekotek ---------- Site PRP Committee v. Steven M. Self et al., Civil No. 2:94CV277K (U.S. ------------------------------------------ District Court Utah, Central Division), alleging that Bangerter is a potentially responsible party with respect to the removal and remediation cost of The Ekotek Site, located in North Salt Lake City, Utah. The suit alleges that hazardous waste generated by Bangerter, together with substantial volumes of additional hazardous waste generated by numerous other businesses, were taken to the site by a waste disposal firm engaged by Bangerter. It is the opinion of management and counsel that the probable exposure to Bangerter is approximately $40,000. It is reasonably possible that Bangerter could be required to pay up to $85,000. The Company cannot predict with any certainty that it will not in the future incur liability with respect to environmental compliance or liability associated with the contamination of additional sites owned or operated by the Company and the Operating Companies, sites formerly owned or operated by the Company and the Operating Companies (including contamination caused by prior owners and operators of such sites), or off-site disposal of hazardous material or waste that could have a material adverse effect on the Company's consolidated financial condition, operations or liquidity. The Company and the Operating Companies are a party to litigation incidental to its business, primarily involving claims for personal injury or property damages incurred in the transportation of freight. The Company is not aware of any claims or threatened litigation that might have a material adverse effect on the Company's consolidated financial position, operations or liquidity. 5. OTHER INCOME, NET Other income (expenses) consist of the following for the three months ended March 31, (in thousands):
1996 1995 ------ ------ Interest income $ 155 $ 42 Amortization of financing fees (113) - Miscellaneous, net (5) (1) ----- ---- $ 37 $ 41 ===== ====
6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following analysis should be read in conjunction with the consolidated financial statements included in Item 1 - "Financial Statements." Results for the three months ended March 31, 1995 include W&L and TBI results on a combined basis as the "Predecessor Company". Results for the three months ended March 31, 1996 for the Company include the results of W&L, TBI, Bangerter, CMS (including the Freymiller Assets since February 5, 1996), Scales and CBS for the entire quarter. Bangerter, CMS (including the Freymiller Assets), Scales and CBS are collectively referred to below as the "Acquired Companies." RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31, 1995 Net Income For the quarter ended March 31, 1996, the Company had a net loss of $111,000 compared with net income of $882,000 for the same period in 1995. The additional revenue and operating income from the Acquired Companies in the first quarter of 1996 was substantially offset by additional interest costs incurred on the Subordinated Notes and the NationsBank Credit Facility. The net loss in 1996 includes an extraordinary item, loss on early retirement of debt of $230,000, net of taxes of $154,000. These early retirements related to the use of proceeds from the Company's Subordinated Notes offering in 1995. Revenues First quarter revenues for 1996 improved $24.6 million, or 122 percent, compared with the first quarter of 1995. Approximately $22.8 million, or 93 percent of this increase, reflects revenues of the Acquired Companies. The Predecessor Company had increases in revenues of $1.7 million primarily attributable to increased volume during the three month period. Expenses The following table sets forth operating expenses as a percentage of revenues and the related variance from 1996 to 1995.
THREE MONTHS ENDED MARCH 31 VARIANCE -------------------- INCREASE 1996 1995 (DECREASE) --------- --------- ---------- Salaries, wages and fringe benefits 31.4% 30.5% 0.9% Purchased transportation 24.0 27.9 (3.9) Operating supplies and expenses 18.0 13.0 5.0 Depreciation and amortization of capital leases 6.7 7.2 (0.5) Claims and insurance 3.8 4.3 (0.5) Operating taxes and licenses 3.2 2.9 0.3 General supplies and expenses 4.1 3.1 1.0 Amortization of intangibles 0.5 0.6 (0.1) Gain on disposal of property and equipment (0.4) (0.1) (0.3) ---- ---- ---- Operating Ratio 91.3% 89.4% 1.9% ==== ==== ====
Salaries, wages and fringe benefits for the first quarter of 1996 increased $7.9 million or 128 percent compared with the first quarter 1995 due to the addition of $7.6 million in salaries, wages and fringe benefits attributable to the Acquired Companies. The 0.9 percentage point increase in salaries, wages and fringe benefits as a percentage of revenues is attributable primarily to the Acquired Companies, because at March 31, 1996 only 22 percent of their combined driver base consisted of owner operators whose costs are reflected in purchased transportation. In contrast at March 31, 1995, 50.7 percent of the Predecessor Company driver base consisted of owner operators. The Predecessor Company also had increases in wages and salaries for drivers and terminal personnel due to the increased mileage during the first quarter of 1996. 7 Purchased transportation costs were up $5.1 million in the first quarter 1996, but decreased on a percentage of revenue basis by 3.9 percentage points. The Acquired Companies added $4.3 million to these costs, but their driver base, which consists of just 22 percent owner operators, helped to lower purchased transportation costs as a percentage of revenue. The Predecessor Company showed an increase of $793,000 in purchased transportation costs due to expanded freight opportunities and its continued use of owner operator drivers. Operating supplies and expenses for the Company were $5.4 million higher for the quarter ended March 31, 1996 over 1995. Of this increase, $5.0 million is attributable to the Acquired Companies. The Predecessor Company also added $419,000 to this increase due to increased fuel costs and maintenance expenses. The 5.0 percentage point increase in operating supplies as a percent of revenues is mainly attributable to the Acquired Companies, whose driver base consists of 78 percent of Company employees, contributing to higher fuel and maintenance costs for Company owned equipment. The Company's fuel price has increased approximately $.12 per gallon from the first quarter of 1995 to 1996. Depreciation and amortization of capital leases were up $1.5 million, but decreased as a percentage of revenue in the first quarter of 1996 due to the acquisition of used assets from Freymiller and the short-term lease of certain Freymiller assets. This amount as a percentage of revenues is expected to increase as these assets are replaced with new trailers and tractors. Claims and insurance expenses were up $802,000, but as a percentage of revenues improved during the first quarter of 1996 due to continued favorable claims experience at the Predecessor Company and to the centralization of AmeriTruck's risk management program. General supplies and expenses increased by $1.2 million for the first quarter of 1996 when compared with the same period in 1995. The general supplies and expenses of the Acquired Companies account for the entire increase as the Predecessor Company had a slight decrease in this category. The largest components of these expenses of the Acquired Companies were building and equipment rents, utilities and office expenses. Interest expense increased $3.0 million for the quarter ended March 31, 1996 over the same period in 1995. Interest on the Subordinated Notes issued in November 1995 is the primary factor for this change. CONTINGENCIES Bangerter has been named as a defendant in a lawsuit entitled The Ekotek ---------- Site PRP Committee v. Steven M. Self et al., Civil No. 2:94CV277K (U.S. District - ------------------------------------------ Court Utah, Central Division), alleging that Bangerter is a potentially responsible party with respect to the removal and remediation cost of The Ekotek Site, located in North Salt Lake City, Utah. The suit alleges that hazardous waste generated by Bangerter, together with substantial volumes of additional hazardous waste generated by numerous other businesses, were taken to the site by a waste disposal firm engaged by Bangerter. It is the opinion of management and counsel that the probable exposure to Bangerter is approximately $40,000. It is reasonably possible that Bangerter could be required to pay up to $85,000. The Company cannot predict with any certainty that it will not in the future incur liability with respect to environmental compliance or liability associated with the contamination of additional sites owned or operated by the Company and the Operating Companies, sites formerly owned or operated by the Company and the Operating Companies (including contamination caused by prior owners and operators of such sites), or off-site disposal of hazardous material or waste that could have a material adverse effect on the Company's consolidated financial condition, operations or liquidity. The Company and the Operating Companies are a party to litigation incidental to its business, primarily involving claims for personal injury or property damages incurred in the transportation of freight. The Company is not aware of any claims or threatened litigation that might have a material adverse effect on the Company's consolidated financial position, operations or liquidity. 8 LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities for the three months ended March 31, 1996 was $2.6 million compared with net cash provided by operating activities of $4.1 million for the three months ended March 31, 1995. The decrease of $6.7 million was primarily attributable to a $6.3 million increase in accounts receivable during the first quarter of 1996 for the Acquired Companies and a decrease in net income of $1.0 million. These decreases were partially offset by an increase in depreciation and amortization of capital leases of $1.5 million. In November 1995, AmeriTruck completed a private placement of $100 million of 12 1/4% Senior Subordinated Notes due 2005 (the "Series A Notes"). The Series A Notes were exchanged for publicly registered 12 1/4% Senior Subordinated Notes due 2005, Series B (the "Subordinated Notes") in February 1996. The Subordinated Notes mature on November 15, 2005, and are unsecured subordinated obligations of the Company. These notes bear interest at the rate of 12.25 percent per annum from November 15, 1995, payable semiannually on May 15 and November 15 of each year, commencing on May 15, 1996. The Subordinated Notes are subject to optional redemption on the terms set forth in the Indenture. As of March 31, 1996, the Company has applied the net proceeds of the Series A Notes primarily to finance the Acquisitions and prepay debt and capitalized leases. NationsBank Credit Facility In February 1996, the Company and the Operating Companies entered into a Loan Agreement and related documents (collectively, the "NationsBank Credit Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to which NationsBank has committed, subject to the terms and conditions of the NationsBank Credit Facility, to provide a $30 million credit facility to the Company. Borrowings under the NationsBank Credit Facility can be used for acquisitions, operating capital, capital expenditures, letters of credit and general corporate purposes. Pursuant to the NationsBank Credit Facility, NationsBank has agreed to provide a $30 million revolving credit facility, with a $7 million sublimit for letters of credit, maturing on February 1, 1998, at which time the revolving credit facility will convert into a term loan maturing on February 1, 2003. Borrowings under the NationsBank Credit Facility bear interest at a per annum rate equal to either NationsBank's base rate or the rate of interest offered by NationsBank in the interbank eurodollar market plus an additional margin ranging from 1.5 percent to 1.75 percent based on the Senior Funded Debt Ratio of the Company. The Company also pays a letter of credit issuance fee and a quarterly unused facility fee. Borrowings under the NationsBank Credit Facility were $25.4 million at March 31, 1996 and were primarily used for the purchase of the Freymiller Assets. The Company's obligations under the NationsBank Credit Facility are collateralized by substantially all assets of the Company and its subsidiaries and are guaranteed in full by each of the Operating Companies. For purposes of the Indenture, such borrowings under the NationsBank Credit Facility constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness of the Operating Companies. The NationsBank Credit Facility contains customary representations and warranties and events of default and requires compliance with a number of affirmative and negative covenants, including a limitation on the incurrence of indebtedness and a requirement that the Company maintain a specified Senior Funded Debt Ratio and Fixed Charge Coverage Ratio. Volvo Credit Facilities In February 1996, the Company and the Operating Companies entered into a Loan and Security Agreement, a Financing Integration Agreement and related documents (collectively, the "Volvo Credit Facilities") with Volvo Truck Finance North America, Inc. ("Volvo") pursuant to which Volvo has committed, subject to the terms and conditions of the Volvo Credit Facilities, to provide (i) a $10 million line of credit facility (the "Volvo Line of Credit") to the Company and the Operating Companies, and (ii) up to $28 million in purchase money or lease financing (the "Equipment Financing Facility") in connection with the Operating Companies' acquisition of new tractors and trailers manufactured by Volvo GM Heavy Truck Corporation. Borrowings under the Volvo Line of Credit are secured by certain specified tractors and trailers of the Company and the Operating Companies (which must have a value equal to at least 1.75 times the outstanding amount of borrowings under the Volvo Line of Credit) and are guaranteed in full by each of the Operating Companies. Borrowings under the Volvo Line of Credit bear interest at the prime rate. The Volvo Line of Credit contains customary representations and warranties and events 9 of default and requires compliance with a number of affirmative and negative covenants, including a profitability requirement and a coverage ratio. The Equipment Financing Facility is being provided by Volvo in connection with the Operating Companies' agreement to purchase 400 new trucks manufactured by Volvo GM Heavy Truck Corporation between March 1, 1996 and June 30, 1997. The Operating Companies have agreed to utilize such facility for at least the first 200 of the new trucks. The borrowings under the Equipment Financing Facility are collateralized by the specific trucks being financed and are guaranteed in full by each of the Operating Companies. Borrowings under this facility bear interest at the prime rate. There were no borrowings outstanding at March 31, 1996. The Equipment Financing Facility contains customary representations and warranties, covenants and events of default. For purposes of the Indenture, the borrowings under the Volvo Credit Facilities constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness of the Operating Companies. The Operating Companies began taking delivery of the trucks in early May at the rate of 10 per week, with total expected deliveries for the second quarter of 80 trucks. Another 30 trucks are scheduled for delivery during the third quarter of 1996. To offset these expenditures of approximately $7.6 million, the Company intends to sell at least 83 used trucks from the Operating Companies for approximately $2.7 million. Capital Expenditures and Resources The Company had capital expenditures, net of cash proceeds from dispositions, of $8.4 million for the three months ended March 31, 1996, excluding the purchase of the Freymiller Assets, and $1.4 million for the three months ended March 31, 1995. These amounts also do not include capital expenditures financed through capital leases and other debt which amounted to approximately $110,000 and $915,000 for the first quarters of 1996 and 1995, respectively. The increase in capital expenditures during the first quarter of 1996 was primarily due to the purchase of new trailers. AmeriTruck projects 1996 capital expenditures to increase over 1995 levels. The Company will purchase at least 200 new trucks and 200 new trailers during 1996. In addition in February 1996, the Company, through CMS, purchased (the "Purchase") certain assets of Freymiller Trucking Inc. ("Freymiller"). Freymiller had been the subject of a Chapter 11 bankruptcy proceeding in Oklahoma. Pursuant to the Purchase, CMS purchased certain specific automobiles, computer hardware and software, furniture and fixtures, rights to the trade name "Freymiller", existing spare parts, tires and fuel, rights under certain leases, certain leasehold improvements and shop equipment and installment sales contracts relating to tractors and trailers sold by Freymiller out of the ordinary course of business (with all of the foregoing referred to as the "Assets"). The Company also negotiated with Freymiller's lenders and lessors to purchase approximately 185 tractors and 309 trailers previously operated by Freymiller for approximately $14 million. An additional 80 trailers were leased for a seven year period. In exchange for the Assets, the Company paid approximately $2.7 million in cash at closing and assumed approximately $2 million in existing equipment financing. In addition, the Company assumed a lease for Freymiller's maintenance facility in Oklahoma City and certain routine executory business contracts. Except as provided above, the Company did not assume any obligations or liabilities of Freymiller. In connection with these transactions, the Company purchased real property in Oklahoma City, Oklahoma from Freymiller's Chairman of the Board, President and Chief Executive Officer for approximately $1.5 million in cash. The Assets and this real estate will supplement the Company's existing temperature- controlled operations. These purchases and commitments will likely be financed using a combination of sources including, but not limited to cash from operations, leases, debt issuances and other miscellaneous sources. Each financing decision will be based upon the most appropriate alternative available. 10 Opportunistic Acquisitions The Company will pursue opportunistic acquisitions to broaden its geographic scope, to increase freight network density and to expand into other specialized trucking segments. Through acquisitions, the Company believes it can capture additional market share and increase its driver base without adopting a growth strategy based on widespread rate discounting and driver recruitment, which the Company believes would be less successful. The Company believes its large size relative to many other potential acquirers could afford it greater access to acquisition financing sources such as banks and capital markets. AmeriTruck has entered into a revolving credit facility with NationsBank of Texas, N.A. and a revolving credit facility with Volvo Truck Finance North America, Inc. As described above, these revolving credit facilities, subject to the conditions on borrowing contained therein, will give AmeriTruck the ability to pursue acquisitions that the Company could not otherwise fund through cash provided by operations. In addition, the Company may finance its acquisitions through equity issuances, seller financing and other debt financings. The Company is a holding company with no operations of its own. The Company's ability to make required interest payments on the Subordinated Notes depends on its ability to receive funds from the Operating Companies. The Company, at its discretion, controls the receipt of dividends or other payments from the Operating Companies. OTHER MATTERS The industry as a whole has seen dramatic increases in fuel prices. According to a Department of Energy survey, reported by the American Trucking Association, the price of diesel fuel has increased on a national average of 15.7 cents per gallon from January 1, 1996 to April 15, 1996. Steeper increases have occurred in the East Coast, Midwest and Gulf Coast regions. The Company has seen its fuel prices increase at a rate consistent with the national average. FORWARD LOOKING STATEMENTS AND RISK FACTORS From time to time, the Company issues statements in public filings or press releases, or officers of the Company make public oral statements with respect to the Company, that may be considered forward-looking. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company believes that the following important factors, among others, could cause the Company's actual results for its 1996 fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by, on behalf of, or with respect to, the Company: inflation and fuel costs; substantial leverage; absence of combined operating history; dependence on certain customers; cyclicality and other economic factors; competition; availability of drivers; regulation; claims exposure; and dependence on key personnel. Each of these risk factors is discussed in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 and are incorporated herein by reference. 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a party to litigation incidental to its business, primarily involving claims for personal injury or property damages incurred in the transportation of freight. The Company is not aware of any claims or threatened litigation that might have a material adverse affect on the Company's consolidated, financial position, operations or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the first quarter of 1996, no matters were submitted to a vote of security holders. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits The following exhibits are filed as part of this report: Exhibit Number Description -------------- ----------- *10.1 Loan and Security Agreement, dated February 21, 1996, between Volvo Truck Finance North America, Inc. ("Volvo") and the Company and certain of its Subsidiaries *10.2 Financing Integration Agreement, dated February 21, 1996, between Volvo and the Company and certain of its Subsidiaries *10.3 Loan Agreement, dated February 1, 1996, between the Company and NationsBank of Texas, N.A. *10.4 Asset Purchase Agreement, dated as of January 5, 1996, between CMS Transportation Services, Inc. and Freymiller Trucking, Inc., as debtor and debtor-in-possession *10.5 Consulting and Non-Competition Agreement, dated as of April 1, 1995, between Thompson Bros., Inc. and Dunbar Associates, Inc. 12 Computation of Ratio of Earnings to Fixed Charges 27 Financial Data Schedule * Incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 1996. B. Reports on Form 8-K During the quarter covered by this report, the registrant filed a Current Report on Form 8-K (date of report: May 3, 1996) reporting under Item 5, certain contracts which may be deemed to be "material contracts" within the meaning of Item 601 of Regulation S-K. Items 2, 3, and 5 of Part II were not applicable and have been omitted. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERITRUCK DISTRIBUTION CORP. By: /s/ Michael L. Lawrence --------------------------------- Michael L. Lawrence Chairman of the Board and Chief Executive Officer By: /s/ Kenneth H. Evans, Jr. --------------------------------- Kenneth H. Evans, Jr. Treasurer and Chief Financial and Accounting Officer Date: May 15, 1996 13 AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES EXHIBIT INDEX Page Exhibit Number Description Number - -------------- ----------- ------ 12 Computation of Ratio of Earnings to Fixed Charges 27 Financial Data Schedule EX-12 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (In thousands, except ratio amounts) (Unaudited)
Three Months Ended March 31, ------------------ 1996* 1995* ------- ------- Earnings: Income before income taxes and extraordinary item $ 212 $ 1,499 ------ ------- Fixed charges: Interest expense and amortization of debt discount and premium on all indebtedness 3,699 675 Portion of rent under long-term operating leases representative of an interest factor 380 49 Preferred stock dividend requirements of consolidated subsidiaries - 50 ------ ------- Total fixed charges 4,079 774 ------ ------- Earnings before income taxes and $4,291 $ 2,273 fixed charges ====== ======= Ratio of earnings to fixed charges 1.05x 2.94x ======= =======
* Comparisons between periods are affected by acquisitions--see Note 2 contained in the unaudited Notes to Consolidated Financial Statements. EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERITRUCK DISTRIBUTION CORP.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1,886 0 20,061 (523) 1,071 30,996 113,086 (24,325) 161,201 22,382 136,556 0 0 33 (1,961) 161,201 0 44,784 0 40,910 0 0 3,699 212 93 119 0 (230) 0 (111) 0 0
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