-----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, ChF8IWFYTVv7f2i0MQZp0OcqlOJ4Mm7LrJslmzMCv5+4eweIlb3FtRCwhtwxwpQO ATCwhsZ4yF8yNrGj/Tp9cw== 0000039273-96-000006.txt : 19960814 0000039273-96-000006.hdr.sgml : 19960814 ACCESSION NUMBER: 0000039273-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FROZEN FOOD EXPRESS INDUSTRIES INC CENTRAL INDEX KEY: 0000039273 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 751301831 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10006 FILM NUMBER: 96610725 BUSINESS ADDRESS: STREET 1: 1145 EMPIRE CENTRAL PLACE CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146308090 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended June 30, 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 1-10006 Frozen Food Express Industries, Inc. -------------------------------------------------------------------- (Exact name of registrant as specified on its charter) Texas 75-1301831 -------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1145 Empire Central Place Dallas, Texas 75247-4309 -------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (2l4) 630-8090 -------------------------------------------------------------------- (Registrant's telephone number, including area code) None -------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (l) 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 filing requirements for the past 90 days. [X] Yes [ ] No As of August 1, 1996, 16,507,041 shares of the Registrant's Common Stock, $1.50 par value, were outstanding. INDEX
PART I - FINANCIAL INFORMATION Page No. Item l. Financial Statements Consolidated Condensed Balance Sheets - June 30, 1996 and December 31, 1995 2 Consolidated Statements of Income - Three and six months ended June 30, 1996 and 1995 3 Consolidated Condensed Statements of Cash Flows - Six months ended June 30, 1996 and 1995 4 Notes to Consolidated Condensed Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Exhibit 27.1 - Financial Data Schedule 11
-1- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In thousands) (Unaudited)
June 30, Dec. 31, 1996 1995 -------- -------- ASSETS Current assets Cash $ 4,232 $ 7,480 Accounts receivable, net 40,925 37,093 Inventories 8,504 8,221 Tires 5,076 5,217 Other current assets 6,234 3,636 ------- ------- Total current assets 64,971 61,647 Property and equipment, net 48,372 52,430 Other assets 14,610 9,585 ------- ------- $127,953 $123,662 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 12,635 $ 17,529 Accrued claims liabilities 7,521 8,401 Accrued payroll 5,779 4,679 Other 6,971 6,014 ------- ------- Total current liabilities 32,906 36,623 Long-term debt 5,000 -- Other and deferred credits 10,976 12,018 ------- ------- Total liabilities and deferred credits 48,882 48,641 ------- ------- Shareholders' equity Common stock 25,921 25,921 Paid-in capital 2,737 1,992 Retained earnings 53,949 50,830 ------- ------- 82,607 78,743 Less - Treasury stock 3,536 3,722 ------- ------- Total shareholders' equity 79,071 75,021 ------- ------- $127,953 $123,662 ======= =======
See accompanying notes. -2- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per-share amounts) (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- -------------------- 1996 1995 1996 1995 ------- ------- -------- -------- Revenue Freight revenue $72,662 $66,926 $140,471 $128,968 Non-freight revenue 6,747 6,911 13,111 11,847 ------ ------ ------- ------- 79,409 73,837 153,582 140,815 ------ ------ ------- ------- Costs and expenses Freight operating expenses Salaries, wages and related expenses 18,273 16,566 35,500 32,924 Purchased transportation 17,775 14,457 33,527 27,407 Supplies and expenses 19,375 17,968 38,565 35,218 Revenue equipment rent 5,357 4,457 10,193 8,710 Communications and utilities 917 760 1,784 1,657 Insurance and claims 2,910 3,329 6,338 6,591 Depreciation 2,229 2,640 4,740 5,332 Operating taxes and licenses 1,277 1,271 2,558 2,504 Gain on sale of equipment (317) (305) (485) (468) Miscellaneous expense 712 585 1,356 1,202 ------ ------- ------- ------- 68,508 61,728 134,076 121,077 Non-freight costs and operating expenses 6,330 6,043 12,592 10,699 ------ ------ ------- ------- 74,838 67,771 146,668 131,776 ------ ------ ------- ------- Income from operations 4,571 6,066 6,914 9,039 Interest and other expense (921) (600) (1,503) (980) ------ ------ ------- ------- Income before income tax 3,650 5,466 5,411 8,059 Provision for income tax 896 1,657 1,307 2,464 ------ ------ ------- ------- Net income $ 2,754 $ 3,809 $ 4,104 $ 5,595 ====== ====== ======= ======= Net income per share of common stock Primary and fully diluted $ .16 $ .23 $ .24 $ .34 ====== ====== ======= ======= Weighted average fully diluted shares 16,840 16,489 16,801 16,484 ====== ====== ======= =======
See accompanying notes. -3- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (In thousands) (Unaudited)
For the Six Months Ended June 30, ---------------------- 1996 1995 -------- -------- Net cash provided by operating activities $ 478 $ 5,645 ------- ------- Cash flows from investing activities Business dispositions 250 1,925 Expenditures for property and equipment (3,373) (6,959) Proceeds from sale of property and equipment 944 889 Company owned life insurance and other (5,987) (4,471) ------- ------- Net cash used in investing activities (8,166) (8,616) ------- ------- Cash flows from financing activities Borrowings under revolving credit agreement 20,000 26,000 Payments against revolving credit agreement (15,000) (22,000) Dividends paid (985) (965) Net treasury stock activity 425 677 ------- ------- Net cash provided by (used in) financing activities 4,440 3,712 ------- ------- Net increase in cash and cash equivalents (3,248) 741 Cash and cash equivalents at beginning of year 7,480 4,381 ------- ------- Cash and cash equivalents at end of quarter $ 4,232 $ 5,122 ======= =======
See accompanying notes. -4- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements June 30, 1996 and 1995 (Unaudited) 1. BASIS OF PRESENTATION The consolidated financial statements include Frozen Food Express Industries, Inc. (FFEX) and its subsidiary companies (the company), all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and have not been audited or reviewed by independent public accountants. In the opinion of management, all adjustments (which consisted only of normal recurring accruals) necessary to present fairly the financial position and results of operations have been made. Pursuant to SEC rules and regulations, certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements unless significant changes have taken place since the end of the most recent fiscal year. FFEX believes that the disclosures contained herein, when read in conjunction with the financial statements and notes included, or incorporated by reference, in FFEX's Form 10-K filed with the SEC on March 29, 1996, are adequate to make the information presented not misleading. It is suggested, therefore, that these statements be read in conjunction with the statements and notes (included, or incorporated by reference), in the aforementioned report on Form 10-K. 2. FINANCING AND INVESTING ACTIVITIES NOT AFFECTING CASH During the six months ended June 30, 1996 and 1995, the company funded contributions to its Employee Savings Plan by transferring 46,958 and 40,975 shares, respectively, of treasury stock to the Plan trustee. The fair market value of the transferred shares was approximately $506,000 for 1996 and approximately $484,000 for 1995. 3. SHAREHOLDERS EQUITY As of June 30, 1996 and 1995, respectively, there were 16,482,383 and 16,103,001 shares of stock outstanding. 4. COMMITMENTS AND CONTINGENCIES The company has accrued for costs related to public liability and work-related injury claims, some of which involve litigation. The aggregate amount of these claims is significant. In the opinion of management, these actions can be successfully defended or resolved, and any additional costs incurred over amounts accrued will not have a material adverse effect on the company's financial position or results of operations. -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The table sets forth, as a percentage of freight revenue, certain major operating expenses for the three- and six-month periods ended June 30, 1996 and 1995.
Three Months Six Months Ended June 30, Ended June 30, --------------- --------------- 1996 1995 1996 1995 ----- ----- ----- ----- Salaries, wages and related expenses 25.1% 24.8% 25.3% 25.5% Purchased transportation 24.5 21.6 23.9 21.3 Supplies and expenses 26.7 26.8 27.5 27.3 Revenue equipment rent 7.4 6.7 7.3 6.8 Insurance and claims 4.0 5.0 4.5 5.1 Depreciation 3.1 3.9 3.4 4.1 Other 3.5 3.4 3.5 3.8 ---- ---- ---- ---- Total freight operating expenses 94.3% 92.2% 95.4% 93.9% ==== ==== ==== ==== SECOND QUARTER OF 1996 VS. 1995 During the second quarter of 1996, revenue increased by 7.5% to $79,409,000 with freight revenue up $5.7 million or 8.6% and non-freight revenue down about 2.3%. Less-than-truckload (LTL) revenue was 7% higher while full-truckload revenue increased by 9.4% as compared to the same period of 1995. An increased number of shipments transported and the initiation of fuel adjustment charges combined to increase LTL revenue while the increase in full- truckload revenue resulted primarily from fuel adjustment charges and an 11% increase in the number of shipments transported partially offset by a decline of about 2.4% in average length of haul. During the second quarter of 1996 available trucking capacity exceeded the demand for motor carrier transportation services. This industry-wide oversupply of trucks decreased equipment utilization and productivity and placed downward pressure on full-truckload freight rates. In addition, a rise in diesel fuel prices beginning in the 1996 first quarter increased the company's per-mile fuel costs by about 12% over 1995's second quarter. The higher fuel costs, which were only partially recovered through fuel adjustment charges, and the oversupply of trucks were the primary factors which adversely impacted operating results during the 1996 second quarter as net income declined by $1,055,000 or 28% from the all time quarterly record set during the same quarter of 1995 despite an increase in revenue of 7.5% -6- The number of tractors in the fleet of company-operated, full-truckload equipment rose from approximately 1,060 at the beginning of 1996 to about 1,090 by the end of the quarter, while the number of full-truckload tractors provided by owner-operators increased by about 30 units to a total of about 435 by quarter end. Full-truckload activities, which contributed 63% and 67% of freight revenue during the second quarter of 1996 and 1995, respectively, are conducted primarily with company-operated equipment, while LTL activities are conducted primarily with equipment provided by owner-operators. The change in the percentage of freight revenue derived from full-truckload shipments, as well as fluctuations in the amount of total freight handled on company-operated versus owner-operator provided equipment, impacted the percent of freight revenue absorbed by the various categories of operating expenses between the two quarters. During both the second quarters of 1996 and 1995, the percentage of freight revenue absorbed by salaries, wages and related expenses was approximately 25%, while the portion of freight revenue absorbed by purchased transportation, which consists principally of payment to owner-operators, rose from 21.6% in 1995 to 24.5% in 1996. These changes resulted primarily from more rapid growth in the quantity of tractors provided by owner-operators as compared to the rate of growth in the company-operated, full truckload fleet. Revenue equipment rent, which is primarily related to the company-operated, full-truckload fleet, rose from 6.7% to 7.4% of freight revenue while depreciation expense declined from 3.9% to 3.1% of freight revenue. These changes resulted primarily from the replacement of owned tractors and trailers with new equipment financed with operating leases. Interest and other expense rose from $600,000 to $921,000 between the two quarters. This increase is related to net expenses associated with the company- owned life insurance (COLI) program, partially offset by lower interest expense associated with reduced borrowings under the company's line of credit. The provision for income tax was 24.5% of pre-tax income for the second quarter of 1996, as compared to 30.3% for 1995. This reduced effective income tax rate is primarily attributable to permanent tax savings resulting from the COLI program. The amount of the tax reduction exceeds the aforementioned net COLI expenses included in interest and other expenses. FIRST HALF 1996 VS. 1995 For the six months ended June 30,1996, revenue increased by 9.1%, but income from operations fell by 23.5%. Of the $12,767,000 increase in total revenue, revenue generated by the company-operated, full-truckload fleet increased by $2,114,000, and full-truckload revenue generated by owner-operator provided equipment rose by $6,882,000, or 34.2%. LTL revenue increased by $2,507,000, and non-freight revenue increased by $1,264,000. Supplies and expenses, which include the cost of fuel consumed by the company- operated fleet rose to 27.5% of freight revenue during the first half of 1996 as compared to 27.3% during 1995's first six months. During early 1996, fuel prices rose rapidly and have not appreciably relented. During the first six months of 1996, the company's per-mile fuel cost was 12% above that of the first half of 1995. The effect of the fuel price increase was mitigated in -7- part by the more rapid increase in the fleet of tractors provided by owner- operators, who directly incur the cost of fuel consumed by their tractors and in part by fuel adjustment charges which were added to the company's freight rates during a portion of the second quarter. Insurance and claims expense, as a percentage of freight revenue, was 4.5% during the first half of 1996 as compared to 5.1% during the first half of 1995. Partially because the company carries significant deductibles under its policies of liability insurance, premiums paid to insurance companies do not significantly contribute to overall insurance costs. Claims against the company for over-the-road accidents are the primary component of insurance and claims expense and these expenses tend to vary in relation to miles traveled. The provision for income tax decreased from 30.6% of 1995's first-half pre-tax income to 24.2% for 1996 (see above discussion of the second quarter effective tax rate which is also applicable to the first half comparisons). First half 1996 net income fell by 26.6% to $4,104,000. LIQUIDITY AND CAPITAL RESOURCES The company continues to maintain a strong financial structure with a good working capital position and strong capital resources. At June 30, 1996, working capital was $32.1 million as compared to $25.0 million at December 31, 1995. During the first half of 1996, net cash provided by operating activities was $478,000, as compared to cash provided by operating activities of $5,645,000 in the same period of 1995. The decreased generation of cash was related primarily to increased working capital requirements. As of June 30, 1996, the unused portion of the company's $50,000,000 revolving credit facility totaled approximately $38,000,000. This availability was approximately $43,000,000 at December 31, 1995. -8- PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The Annual Meeting of Shareholders of the company was held on April 25, 1996. At the meeting, the following persons were elected as directors of the company: Stoney M. Stubbs, Jr. T. Michael O'Connor Brian R. Blackmarr Edgar O. Weller Leroy Hallman Charles G. Robertson W. Grogan Lord Burl G. Cott The above listed individuals comprise all directors of the company. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended June 30, 1996. -9- SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. FROZEN FOOD EXPRESS INDUSTRIES, INC. ----------------------------------------------- (Registrant) August 13, 1996 By: /s/Stoney M. Stubbs, Jr. ------------------------------------------ Stoney M. Stubbs, Jr. Chairman of the Board August 13, 1996 By: /s/Burl G. Cott ------------------------------------------ Burl G. Cott Senior Vice President Principal Financial and Accounting Officer -10-
EX-27.1 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS OF FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES AS OF JUNE 30, 1996, AND THE CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JUN-30-1996 4,232 0 42,711 1,786 8,504 64,971 94,652 46,280 127,953 32,906 0 0 0 25,921 53,150 127,953 13,111 153,582 0 146,668 1,503 840 0 5,411 1,307 4,104 0 0 0 4,104 .24 .24
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