-----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, GqYKEVX9m3q8BgmxfvW8SnamJxPrG5Pi7BMETDNuLAhcGmA2EgjAZhIRn0SWuxK4 p6BNfKgt1M8U+OXsdkXQ+w== 0000039273-95-000004.txt : 19951119 0000039273-95-000004.hdr.sgml : 19951119 ACCESSION NUMBER: 0000039273-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95591006 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 September 30, 1995 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 November 8, 1995, 16,242,411 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 - September 30, 1995 and December 31, 1994 2 Consolidated Statements of Income - Three and nine months ended September 30, 1995 and 1994 4 Consolidated Condensed Statements of Cash Flows - Nine months ended September 30, 1995 and 1994 5 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Exhibit 27.1 - Financial Data Schedule 13
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In thousands) (Unaudited)
Sept.30, Dec. 31, 1995 1994 -------- -------- Assets Current assets Cash and cash equivalents $ 3,591 $ 4,381 Accounts receivable, net 41,319 36,643 Inventories 7,917 8,006 Tires 4,629 4,334 Other 4,044 3,692 ------- ------- Total current assets 61,500 57,056 ------- ------- Property and equipment Revenue equipment 63,276 64,401 Other 34,959 32,439 ------- ------- 98,235 96,840 Less depreciation 44,441 42,679 ------- ------- Net property and equipment 53,794 54,161 ------- ------- Other assets 8,731 5,619 ------- ------- $124,025 $116,836 ======= =======
See accompanying notes. FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets, Continued (In thousands) (Unaudited)
Sept.30, Dec. 31, 1995 1994 -------- -------- Liabilities and Shareholders' Equity Current liabilities Trade accounts payable $ 12,839 $ 12,580 Accrued claims liabilities 8,400 7,712 Accrued payroll 4,238 5,006 Federal income tax payable 466 -- Other 6,090 6,135 ------- ------- Total current liabilities 32,033 31,433 Long-term debt 6,000 9,000 Other and deferred credits 13,157 12,115 ------- ------- Total liabilities and deferred credits 51,190 52,548 ------- ------- Shareholders' equity Common stock 25,921 25,921 Paid-in capital 1,505 -- Retained earnings 49,761 43,513 ------- ------- 77,187 69,434 Less - Treasury stock and receivable from ESOP 4,352 5,146 ------- ------- Total shareholders' equity 72,835 64,288 ------- ------- $124,025 $116,836 ======= =======
See accompanying notes. FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per-share amounts) (Unaudited)
For the Three Months For the Nine Months Ended September 30, Ended September 30, -------------------- ------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Revenue Freight revenue $68,646 $65,273 $197,614 $186,531 Non-freight revenue 7,132 7,262 18,979 16,608 ------ ------ ------- ------- 75,778 72,535 216,593 203,139 ------ ------ ------- ------- Operating Expenses Freight operating expenses Salaries, wages and related expenses 17,346 15,987 50,270 46,267 Purchased transportation 15,364 14,012 42,771 39,821 Supplies and expenses 19,315 17,836 54,533 50,591 Revenue equipment rent 3,647 4,016 12,357 11,512 Communications and utilities 935 880 2,592 2,469 Insurance and claims 4,622 3,341 11,213 9,723 Depreciation 2,671 2,365 8,003 7,342 Operating taxes and licenses 1,252 1,280 3,756 3,656 Gain on sale of equipment (191) (158) (659) (382) Miscellaneous expense 620 586 1,822 1,759 ------ ------ ------- ------- 65,581 60,145 186,658 172,758 Non-freight costs and operating expenses 6,614 6,913 17,313 15,984 ------ ------ ------- ------- 72,195 67,058 203,971 188,742 ------ ------ ------- ------- Income from operations 3,583 5,477 12,622 14,397 Interest and other (634) (382) (1,614) (1,041) ------ ------- ------- ------- Income before income tax 2,949 5,095 11,008 13,356 Provision for income tax 847 1,661 3,311 4,390 ------ ------ ------- ------- Net income $ 2,102 $ 3,434 $ 7,697 $ 8,966 ====== ====== ======= ======= Net income per share of common stock Primary and fully diluted $ .13 $ .21 $ .47 $ .55 ====== ====== ======= ======= Weighted average fully diluted shares 16,538 16,503 16,494 16,443 ====== ====== ======= =======
See accompanying notes. FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (In thousands) (Unaudited)
For the Nine Months Ended Sept. 30, ---------------------- 1995 1994 -------- -------- Net cash provided by operating activities $ 12,548 $ 9,508 ------- ------- Cash flows from investing activities Business dispositions (acquisitions) 2,050 (937) Expenditures for property and equipment (9,328) (6,939) Proceeds from sale of property and equipment 1,735 5,385 Company owned life insurance (3,410) (978) Other (830) 125 ------- ------- Net cash used in investing activities (9,783) (3,344) ------- ------- Cash flows from financing activities Borrowings under revolving credit agreement 29,000 20,000 Payments against revolving credit agreement (32,000) (25,000) Dividends paid (1,449) (1,139) Net treasury stock activity 894 929 ------- ------- Net cash provided by (used in) financing activities (3,555) (5,210) ------- ------- Net increase in cash and cash equivalents (790) 954 Cash and cash equivalents at beginning of year 4,381 3,834 ------- ------- Cash and cash equivalents at end of quarter $ 3,591 $ 4,788 ======= =======
See accompanying notes. FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements September 30, 1995 and 1994 (Unaudited) 1. BASIS OF PRESENTATION The consolidated condensed 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 condensed 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, 1995, 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 nine months ended September 30, 1995 and 1994, the company funded contributions to its Employee Savings Plan by transferring 61,734 and 48,628 shares, respectively, of treasury stock to the Plan trustee. The fair market value of the transferred shares was approximately $691,000 for 1995 and approximately $779,000 for 1994. 3. SHAREHOLDERS' EQUITY As of September 30, 1995 and 1994, respectively, there were 16,229,347 and 12,757,111 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. NET INCOME PER SHARE For 1994, net income per share and weighted shares outstanding have been restated to give effect to a 5-for-4 stock split effected in the form of a 25% stock dividend paid during March, 1995. 6. PRIOR PERIOD AMOUNTS Certain prior period amounts have been reclassified to conform with current year presentation. 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 nine-month periods ended September 30, 1995 and 1994.
Three Months Nine months Ended Sept. 30, Ended Sept. 30, ----------------- ----------------- 1995 1994 1995 1994 ------ ------ ------ ------ Salaries, wages and related expense 25.3% 24.5% 25.4% 24.8% Purchased transportation 22.4 21.5 21.6 21.3 Supplies and expenses 28.1 27.3 27.6 27.1 Revenue equipment rent 5.3 6.1 6.3 6.2 Insurance and claims 6.7 5.1 5.7 5.2 Depreciation 3.9 3.6 4.0 3.9 Other 3.8 4.0 3.9 4.1 ------ ------ ------ ------ Total freight operating expenses 95.5% 92.1% 94.5% 92.6% ====== ====== ====== ======
Third Quarter of 1995 vs. 1994 During most of 1995 the motor carrier industry, including the temperature controlled segment in which the company is primarily involved, has experienced declines in productivity and equipment utilization due primarily to an increase in the number of trucks compared to the amount of freight available for transport. During years prior to 1995, truck availability had been reduced by periodic shortages of truck drivers. It has been estimated that as much as 5% to 8% of the full-truckload fleets were parked during parts of 1994 due to a lack of qualified driver personnel. Driver shortages have not been prevalent during 1995 which has increased the number of available trucks. The devaluation of the Mexican peso during the latter part of 1994 has significantly reduced the amount of U.S. freight transported by all motor carriers to Mexico. Trucks which previously were devoted to these operations now compete for domestic freight transportation further exacerbating the over- supply of trucks. The imbalance of trucks and freight causes per-truck utilization and freight rates to decline resulting in a narrowing of profit margins. During the third quarter of 1995, revenue increased by 4.5% to $75,778,000 with freight revenue up $3.4 million or 5.2% and non-freight revenue down $130,000 or 1.8%. Less-than-truckload (LTL) revenue was 2.9% lower while full- truckload revenue increased by 9.8% as compared to the same quarter of 1994. Full-truckload activities accounted for 67% and 64% of freight revenue during the third quarter of 1995 and 1994, respectively. The decrease in LTL revenue resulted primarily from a decrease in the number of shipments transported. General softness in the perishable commodity transportation industry resulted in decreased LTL shipments during 1995 as compared to 1994. The increase in full-truckload revenue resulted primarily from a 16% increase in the number of shipments transported. The effect of this increased volume was partially diminished by reduced average shipment revenue. The number of tractors in the fleet of company-operated, full-truckload equipment rose from approximately 1,000 at the beginning of 1995 to about 1,100 by the end of the quarter, while the number of full-truckload tractors provided by owner-operators increased by about 130 units. Full-truckload activities, which contributed 67% and 64% of freight revenue during the third quarters of 1995 and 1994, respectively, are conducted primarily with company-operated equipment, while LTL activities are conducted primarily with equipment provided by owner-operators. This increase in the percentage of freight revenue derived from full-truckload shipments impacted the percent of freight revenue absorbed by the various categories of operating expenses between the two quarters. During 1994, the company expanded transportation services for customers shipping products to and from Mexico and Canada. Approximately 6% of 1994's freight revenue was derived from international activities. During 1995, efforts to continue expanding international services have been negatively affected by the devaluation of the Mexican peso. As of September 30, 1995, approximately 26% of the full-truckload fleet consisted of tractors provided by owner-operators as compared to 22% at January 1, 1995, September 30, 1994 and January 1, 1994. This increased participation by the owner-operator fleet has also affected the mix of operating expenses as a percent of freight revenue. Purchased transportation, which consists primarily of payments to owner-operators, increased from 21.5% of freight revenue for the third quarter of 1994 to 22.4% for 1995. This increase is primarily related to the less rapid expansion of the company- operated, full-truckload fleet. Revenue equipment rent, which is primarily related to the company-operated, full-truckload fleet, fell from 6.1% to 5.3% of freight revenue while depreciation increased from 3.6% to 3.9% of freight revenue. Operating income declined from $5,477,000 to $3,583,000 between the two quarters. Due primarily to the previously discussed decline in per-truck utilization, weakened freight rates and to an increase in insurance costs. Interest and other expense rose from $382,000 to $642,000 between the two quarters. Due to substantially lower borrowings under the company's line of credit, interest expense associated with bank debt was significantly less during the 1995 quarter. This reduction was more than offset by net expenses associated with the implementation during the 1994 third quarter of a company- owned life insurance (COLI) program. The provision for income tax was 28.7% of pre-tax income for the third quarter of 1995, as compared to 32.6% for 1994. This reduced effective income tax rate is primarily attributable to increasing 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 Three Quarters 1995 vs. 1994 For the nine months ended September 30, 1995, revenue increased by 6.6% while income from operations fell by 12.3%. Of the $13,454,000 increase in total revenue, revenue generated by the company-operated, full-truckload fleet increased by $7,689,000, and full-truckload revenue generated by owner- operator provided equipment rose by $3,631,000, or 13.2%. LTL revenue decreased by $239,000 and non-freight revenue increased by $2,371,000. Insurance and claims expense, as a percentage of freight revenue, was 5.7% during the first three quarters of 1995 as compared to 5.2% during the first three quarters of 1994. 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. During 1995, the increased magnitude of potentially adverse claims has also impacted the company's operating results. The provision for income tax decreased from 32.9% of 1994's first three quarters' pre-tax income to 30.1% for 1995 (see above discussion of the third quarter effective tax rate). First three quarters' 1995 net income fell by 14.2% to $7,697,000. Due primarily to the previously discussed decline in per- truck utilization and weakened freight rates and to an increase in insurance costs. LIQUIDITY AND CAPITAL RESOURCES The company continues to maintain a strong financial structure with a good working capital position and strong capital resources. At September 30, 1995, working capital was $29.5 million as compared to $25.6 million at December 31, 1994. During the three quarters of 1995, net cash provided by operating activities was $12,548,000, as compared to cash provided by operating activities of $9,508,000 in the same period of 1994. The increased generation of cash was related primarily to improved collections of accounts receivable and decreased federal income tax payments. As of September 30, 1995, the unused portion of the company's $50,000,000 revolving credit facility totaled approximately $37,000,000. This availability was approximately $32,000,000 at December 31, 1994. PART II - OTHER INFORMATION 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 September 30, 1995. 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) November 13, 1995 By: /s/Stoney M. Stubbs, Jr. ------------------------ Stoney M. Stubbs, Jr. Chairman of the Board November 13, 1995 By: /s/Burl G. Cott ------------------------ Burl G. Cott Senior Vice President Principal Financial and Accounting Officer Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS OF FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES AS OF SEPTEMBER 30, 1995, AND THE CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 3,591 0 42,885 1,566 7,917 61,500 98,235 44,441 124,025 32,033 6,000 25,921 0 0 46,914 124,025 18,979 216,593 0 203,971 0 916 1,614 11,008 3,311 7,697 0 0 0 7,697 .47 .47
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