-----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, B/eeqKVkbRoQfinYdxYiHq3JBWXhoqoEEgcD1XCD38DuiBQcKumWoprXWPdPfTmu orywYW3bHRdL2EWkNA8M7g== 0000039273-96-000004.txt : 19960515 0000039273-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000039273-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96564175 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 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 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 May 10, 1996, 16,446,695 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 - March 31, 1996 and December 31, 1995 2 Consolidated Statements of Income - Three months ended March 31, 1996 and 1995 3 Consolidated Condensed Statements of Cash Flows - Three months ended March 31, 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 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)
March 31, Dec. 31, 1996 1995 --------- -------- Assets Current assets Cash and cash equivalents $ 4,764 $ 7,480 Accounts receivable, net 39,558 37,093 Inventories 8,832 8,221 Tires 5,252 5,217 Other 4,208 3,636 ------- ------- Total current assets 62,614 61,647 Property and equipment, net 52,164 52,430 Other assets 10,922 9,585 ------- ------- $125,700 $123,662 ======= ======= Liabilities and Shareholders' Equity Current liabilities Trade accounts payable $ 16,781 $ 17,529 Accrued claims liabilities 8,262 8,401 Accrued payroll 4,654 4,679 Other 4,381 6,014 ------- ------- Total current liabilities 34,078 36,623 Long-term debt 2,000 -- Deferred credits and non-current liabilities 13,069 12,018 ------- ------- Total liabilities and deferred credits 49,147 48,641 ------- ------- Shareholders' equity Common stock 25,921 25,921 Paid-in capital 2,052 1,992 Retained earnings 51,688 50,830 ------- ------- 79,661 78,743 Less - Treasury stock 3,108 3,722 ------- ------- Total shareholders' equity 76,553 75,021 ------- ------- $125,700 $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 Ended March 31, ----------------------- 1996 1995 ------- ------- Revenue Freight revenue $67,809 $62,042 Non-freight revenue 6,364 4,936 ------ ------ 74,173 66,978 ------ ------ Operating Expenses Freight operating expenses Salaries, wages and related expenses 17,227 16,358 Purchased transportation 15,752 12,950 Supplies and expenses 19,190 17,250 Revenue equipment rent 4,836 4,253 Communications and utilities 867 897 Insurance and claims 3,428 3,262 Depreciation 2,511 2,692 Operating taxes and licenses 1,281 1,233 Gain on sale of equipment (168) (163) Miscellaneous expense 644 617 ------ ------ 65,568 59,349 Non-freight costs and operating expenses 6,262 4,656 ------ ------ 71,830 64,005 ------ ------ Income from operations 2,343 2,973 Interest and other expense (582) (380) ------ ------ Income before income tax 1,761 2,593 Provision for income tax 411 807 ------ ------ Net income $ 1,350 $ 1,786 ====== ====== Net income per share of common stock Primary and fully diluted $ .08 $ .11 ====== ====== Weighted average fully diluted shares 16,835 16,625 ====== ======
See accompanying notes. -3- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (In thousands) (Unaudited)
For the Three Months Ended March 31, --------------------- 1996 1995 -------- -------- Net cash (used in) provided by operating activities $(1,564) $ 2,564 ------ ------- Cash flows from investing activities Business dispositions -- 1,925 Expenditures for property and equipment (2,652) (4,673) Proceeds from sale of property and equipment 400 822 Company owned life insurance and other (876) (45) ------ ------- Net cash used in investing activities (3,128) (1,971) ------ ------- Cash flows from financing activities Borrowings under revolving credit agreement 8,000 12,000 Payments against revolving credit agreement (6,000) (14,000) Dividends paid (492) (479) Net treasury stock activity 468 191 ------ ------- Net cash provided by (used in) financing activities 1,976 (2,288) ------ ------- Net decrease in cash and cash equivalents (2,716) (1,695) Cash and cash equivalents at beginning of year 7,480 4,381 ------ ------- Cash and cash equivalents at end of quarter $ 4,764 $ 2,686 ====== =======
See accompanying notes. -4- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements March 31, 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 three months ended March 31, 1996 and 1995, the company funded contributions to its Employee Savings Plan by transferring 25,005 and 16,360 shares, respectively, of treasury stock to the Plan trustee. The fair market value of the transferred shares was approximately $225,000 for 1996 and approximately $204,000 for 1995. 3. SHAREHOLDERS' EQUITY As of March 31, 1996 and 1995, respectively, there were 16,376,000 and 16,045,000 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 below sets forth, as a percentage of freight revenue, certain major operating expenses for the three-month periods ended March 31, 1996 and 1995.
Three Months Ended March 31, ---------------- 1996 1995 ---- ---- Salaries, wages and related expenses 25.4% 26.4% Purchased transportation 23.2 20.9 Supplies and expenses 28.3 27.8 Revenue equipment rent 7.1 6.9 Insurance and claims 5.1 5.3 Depreciation 3.7 4.3 Other 3.9 4.1 ---- ---- Total freight operating expenses 96.7% 95.7% ==== ====
During the first quarter of 1996, revenue increased by 10.7% to $74,173,000 with freight revenue up $5.7 million or 9.3% and non-freight revenue up $1.4 million or about 28.9%. Less-than-truckload (LTL) revenue was 5% higher while full-truckload revenue increased by 11.4% as compared to the same period of 1995. Increases in the number of shipments transported and in the average revenue per shipment combined to increase LTL revenue while the increase in full- truckload revenue resulted primarily from a 10% increase in the number of shipments transported, partially offset by a decline of about 2% in the revenue per mile. During the first quarter of 1996 available trucking capacity exceeded the demand for motor carrier transportation services. This industry-wide oversupply of trucks, which also existed during most of 1995, decreased utilization and productivity and placed downward pressure on full-truckload freight rates. In addition, a rise in diesel fuel prices during the 1996 first quarter increased the company's per-mile fuel costs by about 12 percent over 1995's first quarter. Severe winter weather in the midwest and northeast also slowed operations during the first quarter. The oversupply of trucks, higher fuel costs and severe winter weather were the primary factors which adversely impacted operating results during the 1996 first quarter as net income declined by $436,000 or 24% from the same quarter of 1995 despite an increase in revenue of 10.7% 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 1,080 by the end of the quarter, while the number of full-truckload tractors -6- provided by owner-operators increased by about 25 units to a total of about 430 by quarter end. Full-truckload activities, which contributed 68% and 67% of freight revenue during the first 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. This increase 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-operated provided equipment, impacted the percent of freight revenue absorbed by the various categories of operating expenses between the two quarters. During the first quarter of 1996, the percentage of freight revenue absorbed by salaries, wages and related expenses was 25.4%, as compared to 26.4% during the year-ago quarter. Conversely, the portion of freight revenue absorbed by purchased transportation, which consists principally of payment to owner- operators, rose from 20.9% in 1995 to 23.2% 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. Supplies and expenses, which includes the cost of fuel consumed by the company- operated fleet rose during the 1996 quarter to 28.3% of freight revenue from 27.8% for 1995's first quarter. During the first quarter of 1996, fuel prices rose rapidly, resulting in 12% increase in the company's per-mile fuel cost. This increase in per-mile fuel cost together with the 2% decline in full- truckload revenue per mile resulted in a significant increase in the percent of revenue absorbed by fuel expense. Revenue equipment rent, which is primarily related to the company-operated, full-truckload fleet, rose from 6.9% to 7.1% of freight revenue while depreciation expense declined from 4.3% to 3.7% of freight revenue. These changes resulted primarily from the addition of new leased tractors and from the replacement of owned equipment with new leased tractors. Interest and other expense rose from $380,000 to $582,000 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 23.3% of pre-tax income for the first quarter of 1996, as compared to 31.1% 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. LIQUIDITY AND CAPITAL RESOURCES The company continues to maintain a strong financial structure with a good working capital position and strong capital resources. At March 31, 1996, working capital was $28.5 million as compared to $25.0 million at December 31, 1995. During the first quarter of 1996, net cash used in operating activities was $1,564,000, as compared to cash provided by operating activities of $2,564,000 -7- in the same period of 1995. The increased consumption of cash was related primarily to increased working capital requirements. As of March 31, 1996, the unused portion of the company's $50,000,000 revolving credit facility totaled approximately $41,000,000. This availability was approximately $43,000,000 at December 31, 1995. -8- 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 March 31, 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) May 10, 1996 By: /s/Stoney M. Stubbs, Jr. ------------------------------------------- Stoney M. Stubbs, Jr. Chairman of the Board May 10, 1996 By: /s/Burl G. Cott ------------------------------------------- Burl G. Cott Senior Vice President Principal Financial and Accounting Officer -10- 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 MARCH 31, 1996, AND THE CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS 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 MAR-31-1996 4,764 0 41,273 1,715 8,832 62,614 100,888 48,724 125,700 34,078 0 0 0 25,921 50,632 125,700 6,364 74,173 0 71,830 582 478 0 1,761 411 1,350 0 0 0 1,350 .08 .08
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