-----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, P8KzVyMQxtWng0nKMidOxzO53SIDY+kudYlXKk5+4ccuurVj6fq3iYwA+FCldVtq JeTl1/HzElm+dALrBg4tSQ== 0000950115-98-000956.txt : 19980515 0000950115-98-000956.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950115-98-000956 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JEVIC TRANSPORTATION INC CENTRAL INDEX KEY: 0001044066 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 222373402 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23095 FILM NUMBER: 98621032 BUSINESS ADDRESS: STREET 1: 600 CREEK RD P O BOX 5157 CITY: DELANCO STATE: NJ ZIP: 08075 BUSINESS PHONE: 6094617111 10-Q 1 QUARTERLY REPORT - -------------------------------------------------------------------------------- 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, 1998 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 000-23095 JEVIC TRANSPORTATION, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2373402 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 Creek Road, Delanco, NJ 08075 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) 609-461-7111 ---------------------------------------------------- (Registrant's telephone number, including area code) N/A --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 -- -- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Equity, no par value, 10,665,872 shares outstanding as of April 29, 1998, consisting of two series: Class A Common Stock, no par value, 5,739,544 shares outstanding as of April 29, 1998 Common Stock, no par value, 4,926,328 shares outstanding as of April 29, 1998 - -------------------------------------------------------------------------------- JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES INDEX Page ---- Part I. Financial Information Item 1. Consolidated Financial Statements (unaudited) Consolidated Balance Sheets--March 31, 1998 and December 31, 1997 1 Consolidated Statements of Income--Three months ended March 31, 1998 and 1997 2 Consolidated Statements of Cash Flows-- Three months ended March 31, 1998 and 1997 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II. Other Information Item 6. Exhibits and reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K None. Item 1. Consolidated Financial Statements JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share information)
March 31, December 31, 1998 1997 ---------- ------------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents........................................ $ 4,427 $ 7,185 Accounts receivable, less allowance for doubtful accounts of $1,594 and $1,527............................................. 22,488 21,792 Prepaid expenses and other....................................... 3,090 3,172 Deferred income taxes............................................ 1,973 1,862 ----------- ----------- Total current assets.................................... 31,978 34,011 PROPERTY AND EQUIPMENT, net.......................................... 83,592 77,894 OTHER ASSETS......................................................... 1,720 1,463 ----------- ----------- $ 117,290 $ 113,368 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt and capital lease obligations.. $ 1,961 $ 1,976 Accounts payable and accrued expenses............................ 13,465 12,514 Claims and insurance reserves.................................... 4,512 3,917 Deferred freight revenues........................................ 1,870 1,752 ----------- ----------- Total current liabilities.............................. 21,808 20,159 ----------- ----------- LONG-TERM DEBT....................................................... 15,207 15,679 ----------- ----------- DEFERRED INCOME TAXES................................................ 12,320 11,782 ----------- ----------- OTHER LIABILITIES.................................................... 96 211 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, no par value, 10,000,000 shares authorized; none issued and outstanding......................................... -- -- Common stock, no par value, 40,000,000 shares authorized; 4,926,328 and 4,918,656 issued and outstanding, respectively .. -- -- Class A common stock, no par value, 10,000,000 shares authorized; 5,739,544 shares issued and outstanding ....................... -- -- Additional paid-in capital....................................... 71,916 71,816 Retained earnings (accumulated deficit) ......................... (4,057) (6,279) ----------- ----------- Total shareholders' equity............................. 67,859 65,537 ----------- ----------- $ 117,290 $ 113,368 =========== ===========
The accompanying notes are an integral part of these statements. 1 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share information) (unaudited) Three Months Ended March 31, -------------------------- 1998 1997 --------- --------- OPERATING REVENUES $ 54,899 $ 44,280 --------- --------- OPERATING EXPENSES: Salaries, wages and benefits............... 27,729 22,738 Supplies and other expenses................ 9,551 8,738 Purchased transportation................... 6,360 4,642 Depreciation and amortization.............. 3,545 2,622 Operating taxes and licenses............... 2,551 2,164 Insurance and claims....................... 1,350 970 Loss on sale of equipment.................. 4 28 --------- --------- 51,090 41,902 --------- --------- Operating income...................... 3,809 2,378 INTEREST EXPENSE, net.......................... 254 758 OTHER INCOME, net.............................. (29) (31) --------- --------- Income before income taxes............ 3,584 1,651 INCOME TAXES................................... 1,362 83 --------- --------- NET INCOME..................................... $ 2,222 $ 1,568 ========= ========= Basic net income per share................. $ 0.21 $ 0.23 ========= ========= Diluted net income per share............... $ 0.20 $ 0.22 ========= ========= The accompanying notes are an integral part of these statements. 2 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Three Months Ended March 31, ----------------------- 1998 1997 --------- --------- OPERATING ACTIVITIES: Net income.............................................................. $ 2,222 $ 1,568 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization..................................... 3,545 2,622 Loss on sale of equipment......................................... 4 28 Provision for bad debts........................................... 91 237 Deferred income tax provision .................................... 426 -- Changes in assets and liabilities-- Increase in accounts receivable............................... (787) (1,817) Decrease in prepaid expenses and other........................ 83 285 Increase in other assets...................................... (257) (69) Increase (decrease) in accounts payable and accrued expenses.. 1,420 (1,736) Increase (decrease) in claims and insurance reserves.......... 595 (103) Increase (decrease) in accrued income taxes................... (583) 56 Increase in deferred freight revenues......................... 118 165 --------- --------- Net cash provided by operating activities............... 6,877 1,236 --------- --------- INVESTING ACTIVITIES: Proceeds from sale of equipment......................................... 147 72 Capital expenditures.................................................... (9,394) (7,641) --------- --------- Net cash used in investing activities................... (9,247) (7,569) --------- --------- FINANCING ACTIVITIES: Payments of long-term debt.............................................. (488) (2,122) Proceeds from issuance of long-term debt................................ -- 9,918 Payments of capital lease obligations................................... -- (191) Distributions to shareholder............................................ -- (362) Proceeds from Employee Stock Purchase Plan.............................. 100 -- --------- --------- Net cash provided by (used in) financing activities..... (388) 7,243 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................................................... (2,758) 910 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..................................................... 7,185 2,403 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD.................................... $ 4,427 $ 3,313 ========= =========
The accompanying notes are an integral part of these statements. 3 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Basis of Presentation The accompanying unaudited consolidated financial statements of Jevic Transportation, Inc. and subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three months ended March 31, 1998, are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 2. Earnings Per Share Basic and diluted net income per share have been computed under the guidelines of Statement of Financial Accounting Standards No. 128, "Earnings per Share." Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, consisting of dilutive common stock options using the treasury stock method. The table below sets forth the reconciliation of basic to diluted net income per share:
Three Months Ended March 31, ---------------------------------------------------------------------- 1998 1997 ------------------------------ ------------------------------ Per Per Net Share Net Share Income Shares Amount Income Shares Amount ------ ------ ------ ------ ------ ------ Basic net income per share........... $2,222 10,662 $0.21 $1,568 6,858 $0.23 Effect of dilutive securities......... -- 206 (0.01) -- 166 (0.01) ------ ------ ----- ------ ----- ----- Diluted net income per share......... $2,222 10,868 $0.20 $1,568 7,024 $0.22 ====== ====== ===== ====== ===== =====
4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Jevic was founded in 1981 after the deregulation of the trucking industry, and has developed an operating system which combines the high revenue yield characteristics of a typical LTL carrier with the operating flexibility and low fixed costs of a truckload carrier. Most other motor carriers have continued to specialize as either truckload, moving one shipment at a time, or less-than-truckload, moving multiple small shipments through networks of up to 500 terminals. The Company's system uses a small number of regional facilities which serve as origination points for consolidation of both small and large shipments. The shipments are then loaded onto line-haul trailers in a sequence which permits direct unloading at each shipment's destination, eliminating the need to rehandle individual shipments at one or more breakbulk terminals. Management focuses on adjusting freight mix to maximize asset utilization. The Company maintains a high percentage of variable costs in order to minimize the impact of short-term swings in demand. Because of the distinct nature of Jevic's operating system, the Company believes that profitability measures and expense ratios traditionally used to evaluate truckload or less-than-truckload carriers are not meaningful. Jevic's results of operations have been impacted by two key trends. First, Jevic has been increasing the percentage of its shipments transported by owner-operators, who supply their own tractor and bear all associated expenses in return for a contracted rate. As a result, purchased transportation has increased as a percentage of operating revenues, offset by a reduction, as a percentage of operating revenues, of drivers' salaries, wages and benefits, depreciation, fuel, operating taxes and licenses and other supplies and operating expenses. Additionally, Jevic has shifted from a policy of leasing revenue equipment to purchasing revenue equipment. As a result, depreciation and interest expense has increased as a percentage of operating revenues while lease expense, which is included in supplies and other expenses, has decreased. 5 Results of Operations The following table sets forth for the periods indicated the percentage of operating revenues represented by certain items in the Company's statements of income: Three Months Ended March 31, -------------------- 1998 1997 ----- ------ Operating revenues 100.0% 100.0% ----- ----- Operating expenses: Salaries, wages and benefits................. 50.5 51.3 Supplies and other expenses.................. 17.4 19.7 Purchased transportation..................... 11.6 10.5 Depreciation and amortization................ 6.5 5.9 Operating taxes and licenses................. 4.6 4.9 Insurance and claims......................... 2.5 2.2 Loss on sale of equipment.................... 0.0 0.1 ----- ----- 93.1 94.6 ----- ----- Operating income................................. 6.9 5.4 Interest expense, net............................ 0.5 1.7 Other income, net................................ (0.1) (0.1) ----- ----- Income before income taxes....................... 6.5% 3.7% ===== ===== Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997 Operating Revenues Operating revenues increased 23.9% for the three months ended March 31, 1998 to $54.9 million from $44.3 million for the comparable period of 1997. The increase resulted primarily from a 15.2% increase in total shipments. The Company's average tractor fleet grew 16.1% in the first quarter of 1998 over the first quarter of 1997, and average revenues per tractor per week increased 3.4% to $4,091 during the three months ended March 31, 1998 from $3,957 during the three months ended March 31, 1997. Operating Expenses Operating expenses increased 22.0% to $51.1 million for the three months ended March 31, 1998 from $41.9 million for the comparable period of 1997. As a percentage of operating revenues, operating expenses decreased to 93.1% for the three months ended March 31, 1998 from 94.6% for the comparable period of 1997. This increase in operating expenses is primarily due to increased revenues, as the majority of the Company's operating expenses are variable in nature. The percentage decrease was primarily the result of the Company's increased use of owner-operators in addition to increased tractor utilization. 6 Salaries, wages and benefits increased 22.0% to $27.7 million for the three months ended March 31, 1998 from $22.7 million for the comparable period of 1997. As a percentage of operating revenues, salaries, wages and benefits decreased to 50.5% for the three months ended March 31, 1998 from 51.3% for the comparable period of 1997. This percentage decrease was primarily due to the Company's increased use of owner-operators in 1998. Supplies and other expenses, which primarily consist of operating leases, fuel, tolls, tires, parts and bad debt expense, increased 10.3% to $9.6 million for the three months ended March 31, 1998 from $8.7 million for the comparable period of 1997. As a percentage of operating revenues, supplies and other expenses decreased to 17.4% for the three months ended March 31, 1998 from 19.7% for the comparable period of 1997. This percentage decrease was primarily due to the Company's continuing shift toward the purchase of revenue equipment rather than leasing such equipment under operating leases, and, to a lesser extent, the Company's increased use of owner-operators in 1998. Purchased transportation increased 39.1% to $6.4 million for the three months ended March 31, 1998 from $4.6 million for the comparable period of 1997. As a percentage of operating revenues, purchased transportation increased to 11.6% for the three months ended March 31, 1998 from 10.5% for the comparable period of 1997. The increase was primarily due to the increased use of owner-operators to supplement the Company's fleet and to substitute for higher cost, outside line-haul transportation. As a percentage of total purchased transportation expense, owner-operator expense increased to 55.7% for the three months ended March 31, 1998 from 47.7% for the comparable period of 1997. Depreciation and amortization expense increased 34.6% to $3.5 million for the three months ended March 31, 1998 from $2.6 million for the comparable period of 1997. As a percentage of operating revenues, depreciation and amortization increased to 6.5% for the three months ended March 31, 1998 from 5.9% for the comparable period of 1997. The increase was primarily attributable to the Company's continuing shift toward the purchase of additional and replacement revenue equipment rather than leasing such equipment under operating leases. Operating taxes and licenses increased 18.2% to $2.6 million for the three months ended March 31, 1998 from $2.2 million for the comparable period of 1997. As a percentage of operating revenues, operating taxes and licenses decreased to 4.6% for the three months ended March 31, 1998 from 4.9% for the comparable period of 1997. This percentage decrease was primarily attributable to a decrease in fuel taxes due to the Company's increased use of owner-operators, who pay for their own taxes and licenses. Insurance and claims increased 30.0% to $1.3 million for the three months ended March 31, 1998 from $1.0 million for the comparable period of 1997. As a percentage of operating revenues, insurance and claims increased to 2.5% for the three months ended March 31, 1998 from 2.2% for the comparable period of 1997. The percentage increase was attributable to the purchase of additional insurance coverages in 1998 that were not in effect in the comparable period of 1997. 7 Interest Expense Interest expense decreased 62.5% to $300,000 for the three months ended March 31, 1998 from $800,000 for the comparable period of 1997. As a percentage of operating revenues, interest expense decreased to 0.5% for the three months ended March 31, 1998 from 1.7% for the comparable period of 1997. Interest expense decreased due to the Company having paid off debt with part of the proceeds of the initial public offering in October 1997. Income Taxes Income taxes increased 1,300% to $1.4 million for the three months ended March 31, 1998 from $100,000 for the comparable period of 1997. In the first quarter of 1998 the Company was subject to corporate federal and state income taxes. Prior to the Company's initial public offering in October 1997 the Company was an S corporation, and, accordingly, was not subject to corporate income taxes, except for certain states for certain periods. Liquidity and Capital Resources The Company's primary sources of liquidity have been funds provided by operations, equipment leases and bank borrowings. Net cash provided by operating activities was approximately $6.9 million for the first three months of 1998 compared to $1.2 million for the corresponding period in 1997. The increase in cash provided by operations is attributable to the Company's increased income before depreciation and amortization expense in 1998 and the timing of certain payments, resulting in increased accounts payable. Capital expenditures, net of trade-in allowances, totaled approximately $9.4 million during the first three months of 1998 compared to $7.6 million in the comparable period of 1997. For the three months ended March 31, 1998, the $9.4 million of capital expenditures were comprised of $6.1 million of revenue equipment, $3.0 million of facilities and $300,000 of other equipment. The Company generally purchases new line-haul tractors and replaces them after three years. Regional and local tractors are replaced after five years, depending on levels of use. The Company generated cash proceeds from sales of used tractors of $147,000 in the three months ended March 31, 1998 versus $72,000 in the comparable period of the prior year. Net cash used in financing activities was approximately $400,000 for the three months ended March 31, 1998 compared to net cash provided of $7.2 million for the comparable period of 1997. At March 31, 1998, total borrowings under long-term debt totaled $17.2 million, maturing through 2007, and obligations relating to operating leases totaled $9.2 million through 2013, of which $1.8 million related to a facility lease with the Company's founders. Jevic is a party to a $25 million credit facility with CoreStates Bank, N.A. The credit facility includes a $7 million working capital revolving line of credit, with borrowings limited to 80% of the Company's eligible accounts receivable, as defined, and an $18 million term loan facility used to purchase or refinance revenue equipment. At March 31, 1998, there was $3.5 million outstanding under the term loan facility and $462,500 of outstanding standby letters of credit under the revolver. The Company believes that its cash and cash equivalents, funds generated from operations and available borrowings under its current or future 8 credit facilities will be sufficient to fund the Company's activities at least through 1999. While the Company intends to selectively pursue acquisitions of companies that are complementary with its operations, the Company currently does not have any commitments or agreements for any business acquisition and is not in active negotiations regarding any such acquisition. Inflation The Company does not believe that inflation has had a material impact on its results of operations for the past three years. Seasonality In the trucking industry, revenues generally follow a seasonal pattern as customers reduce shipments during and after the winter holiday season. In addition, highway transportation can be adversely affected depending upon the severity of the weather in various sections of the country during the winter months. The Company's operating expenses have historically been higher in winter months, due primarily to decreased fuel efficiency and increased maintenance costs for revenue equipment in colder weather. Accordingly, the Company's results of operations may fluctuate to reflect such seasonality. Year 2000 Costs Many computer systems were not designed to handle dates beyond the year 1999, and, therefore, computer hardware and software will need to be modified prior to the year 2000 in order to remain functional. The company is in the process of upgrading its primary computer platform in order to provide increased enterprise computing and additional disaster recovery capabilities. This new system will be Year 2000 compliant. Management is in the process of determining whether all of the Company's other computer systems are Year 2000 compliant. Management does not expect the costs associated with any required conversions of such other systems to ensure Year 2000 compliance to be significant. In the event that any of the Company's significant vendors or customers do not successfully achieve Year 2000 compliance on a timely basis, the Company's business or operations could be adversely affected. Cautionary Statement for Forward Looking Information Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made above. These include, but are not limited to, general economic factors, availability of employee drivers and owner-operators, capital requirements, competition, acquisition of revenue equipment, unionization, fuel, seasonality, claims exposure and insurance costs, difficulty in managing growth, regulation, environmental hazards and dependence on key personnel. Further information on these and other factors which could affect the Company's financial results can be found in the Company's periodic reports on forms 10-K and 10-Q. 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized, on the 15th day of May, 1998. JEVIC TRANSPORTATION, INC. By: /s/ HARRY J. MUHLSCHLEGEL -------------------------- Harry J. Muhlschlegel Chief Executive Officer By: /s/ BRIAN J. FITZPATRICK ------------------------- Senior Vice President and Chief Financial Officer EX-27 2 FDS
5 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 4,427 0 24,082 1,594 0 31,978 116,788 33,196 117,290 21,808 0 0 0 71,916 (4,057) 117,290 54,899 54,899 0 51,090 (29) 0 254 3,584 1,362 2,222 0 0 0 2,222 0.21 0.20
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