-----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, R5ay7ofLgfL58c+GtXsSpwN8Pn4tIuD5pws3xZQRJBRaRvai+iEhaOQjcBsWstqv fZzaIpnhvCa5odVdCib66w== 0000039273-97-000012.txt : 19970514 0000039273-97-000012.hdr.sgml : 19970514 ACCESSION NUMBER: 0000039273-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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: 97601640 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, 1997 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 5, 1997, 16,689,000 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, 1997 and December 31, 1996 2 Consolidated Statements of Income - Three months ended March 31, 1997 and 1996 3 Consolidated Condensed Statements of Cash Flows - Three months ended March 31, 1997 and 1996 4 Notes to Consolidated Condensed Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Exhibit 27.1 - Financial Data Schedule 12
-1- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In thousands) (Unaudited)
March 31, Dec. 31, 1997 1996 -------- -------- Assets Current assets Cash and cash equivalents $ 1,020 $ 6,670 Accounts receivable, net 44,433 39,464 Inventories 7,807 8,440 Tires on equipment in use 5,233 5,517 Other current assets 5,737 5,395 ------- ------- Total current assets 64,230 65,486 Property and equipment, net 58,529 51,880 Other assets 12,483 12,188 ------- ------- $135,242 $129,554 ======= ======= Liabilities and Shareholders' Equity Current liabilities Trade accounts payable $ 10,392 $ 13,997 Accrued claims liabilities 6,295 6,887 Accrued payroll 3,044 4,950 Other 6,433 5,490 ------- ------- Total current liabilities 26,164 31,324 Long-term debt 9,000 -- Deferred credits and non-current liabilities 14,700 14,277 ------- ------- Total liabilities and deferred credits 49,864 45,601 ------- ------- Shareholders' equity Common stock 25,921 25,921 Paid-in capital 3,765 3,462 Retained earnings 58,257 57,386 ------- ------- 87,943 86,769 Less - Treasury stock 2,565 2,816 ------- ------- Total shareholders' equity 85,378 83,953 ------- ------- $135,242 $129,554 ======= =======
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, ----------------------- 1997 1996 ------- ------- Revenue Freight revenue $67,826 $67,809 Non-freight revenue 4,860 6,364 ------ ------ 72,686 74,173 ------ ------ Operating Expenses Freight operating expenses Salaries, wages and related expenses 16,517 17,227 Purchased transportation 15,924 15,752 Supplies and expenses 19,069 19,190 Revenue equipment rent 5,612 4,836 Communications and utilities 833 867 Insurance and claims 2,925 3,428 Depreciation 2,432 2,511 Operating taxes and licenses 1,193 1,281 Gain on sale of equipment (552) (168) Miscellaneous expense 811 644 ------ ------ 64,764 65,568 Non-freight costs and operating expenses 4,974 6,262 ------ ------ 69,738 71,830 ------ ------ Income from operations 2,948 2,343 Interest and other expense 978 582 ------ ------ Income before income tax 1,970 1,761 Provision for income tax 599 411 ------ ------ Net income $ 1,371 $ 1,350 ====== ====== Net income per share of common stock Primary and fully diluted $ .08 $ .08 ====== ====== Weighted average fully diluted shares 16,672 16,835 ====== ====== 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, ------------------------- 1997 1996 --------- -------- Net cash used in operating activities $ (5,176) $(1,564) ------- ------ Cash flows from investing activities Expenditures for property and equipment (10,615) (2,652) Proceeds from sale of property and equipment 1,800 400 Company owned life insurance and other (466) (876) ------- ------ Net cash used in investing activities (9,281) (3,128) ------- ------ Cash flows from financing activities Borrowings under revolving credit agreement 10,000 8,000 Payments against revolving credit agreement (1,000) (6,000) Dividends paid (500) (492) Net treasury stock activity 307 468 ------- ------ Net cash provided by financing activities 8,807 1,976 ------- ------ Net decrease in cash and cash equivalents (5,650) (2,716) Cash and cash equivalents at beginning of year 6,670 7,480 ------- ------ Cash and cash equivalents at end of quarter $ 1,020 $ 4,764 ======= ======
See accompanying notes. -4- FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements March 31, 1997 and 1996 (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 27, 1997, 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, 1997 and 1996, the company funded contributions to its Employee Savings Plan by transferring 27,052 and 25,005 shares, respectively, of treasury stock to the Plan trustee. The fair market value of the transferred shares was approximately $250,000 for 1997 and approximately $225,000 for 1996. 3. SHAREHOLDERS' EQUITY As of March 31, 1997 and 1996, respectively, there were 16,705,000 and 16,376,000 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- 5. EARNINGS PER SHARE The company intends to adopt Financial Accounting Standard No. 128, "Earnings Per Share" (FAS 128) effective December 15, 1997. FAS 128 requires the replacement of "primary" earnings per share with "basic" earnings per share and "fully diluted" earnings per share with "diluted" earnings per share. Had the company adopted FAS No. 128 for the quarter ended March 31, 1997, there would have been no impact on reported earnings per share. -6- 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, 1997 and 1996.
Three Months Ended March 31, ------------------- 1997 1996 ---- ---- Salaries, wages and related expenses 24.4% 25.4% Purchased transportation 23.5 23.2 Supplies and expenses 28.1 28.3 Revenue equipment rent 8.3 7.1 Insurance and claims 4.3 5.1 Depreciation 3.6 3.7 Other 3.3 3.9 ---- ---- Total freight operating expenses 95.5% 96.7% ==== ==== During the first quarter of 1997, revenue fell by 2.0% to $72,685,000 with freight revenue up $17,000 and non-freight revenue down $1.5 million. Less- than-truckload (LTL) revenue was 1.9% higher while full-truckload revenue declined by less than 1% as compared to the same period of 1996. During the first three months of 1997 freight revenue included fuel adjustment charges, the amount of which was negligible during the 1996 quarter. These charges, which are triggered by increases in the market price of fuel, are the primary cause of 1997's slightly higher revenue. The 1997 decline in non-freight revenue was primarily attributable to an unusually large sale of trailer refrigeration units which occurred during the first quarter of 1996. During the first quarter of 1997 available refrigerated trucking capacity exceeded the demand for refrigerated motor carrier transportation services. This oversupply of trucks, which also existed during most of 1995 and 1996, decreased utilization and productivity and placed downward pressure on full- truckload freight rates. In addition, higher diesel fuel prices during the 1997 first quarter increased the company's per-gallon fuel costs by almost 7% over 1996's first quarter. During the 1997 quarter, the higher cost of fuel was only partially offset by increased revenue from fuel adjustment charges. Severe winter weather in the midwest and northeast also slowed operations during the first quarter. -7- The industry oversupply of refrigerated trucks, higher fuel costs and severe winter weather were the primary factors which adversely impacted operating results during the first quarters of 1997 and 1996 as net income for the first three months of 1997 was almost equal to that for the same period of 1996 which was $436,000 less than the same quarter of 1995. The number of tractors in the fleet of company-operated, full-truckload equipment rose from approximately 1,110 at the beginning of 1997 to about 1,135 by the end of the quarter, while the number of full-truckload tractors provided by owner-operators decreased by about 30 units to a total of about 400 by quarter end. Full-truckload activities, which contributed 68% of freight revenue during both first quarters of 1997 and 1996, are conducted primarily with company-operated equipment, while LTL activities are conducted primarily with equipment provided by owner-operators. Fluctuations in the amount of total freight handled by 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 1997, the percentage of freight revenue absorbed by salaries, wages and related expenses was 24.4%, as compared to 25.4% during the year-ago quarter. Conversely, the portion of freight revenue absorbed by purchased transportation, which consists principally of payments to owner- operators, rose from 23.2% in 1996 to 23.5% in 1997. Insurance and claims expenses fell from 5.1% to 4.3% of freight revenue between the first quarters of 1996 and 1997 as a result of more favorable experience with regard to claims associated with vehicular accidents. Revenue equipment rent, which is primarily related to the company-operated, full-truckload fleet, rose from 7.1% to 8.3% of freight revenue while depreciation expense declined from 3.7% to 3.6% 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. Gains on sale of equipment rose from $168,000 to $552,000 between the quarters. The volume of owned equipment dispositions tends to vary between quarters. Income from operations rose by 26% during the first quarter of 1997. Interest and other expense rose from $582,000 to $978,000 between the two quarters. This increase is related to increased borrowings during the 1997 quarter to finance capital expenditures and working capital and to an increase in borrowings during the 1997 quarter to finance capital expenditures and working capital and to an increase in net expenses associated with the company- owned life insurance (COLI) program. Pre-tax income rose by 12% during the first quarter of 1997. The provision for income tax was 30.4% of pre-tax income for the first quarter of 1997, as compared to 23.3% for 1996. The lower 1996 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. The increased 1997 tax provision resulted primarily from the impact of recent legislation which limits deductibility of interest expenses associated with COLI programs. -8- 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, 1997, working capital was $38.1 million as compared to $34.2 million at December 31, 1996. During the first quarter of 1997, net cash used in operating activities was $5,176,000, as compared to $1,564,000 in the same period of 1996. The increased consumption of cash was related primarily to increased working capital requirements. As of March 31, 1997, the unused portion of the company's $50,000,000 revolving credit facility totaled approximately $36,000,000. This availability was approximately $45,000,000 at December 31, 1996. -9- 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, 1997. -10- 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 12, 1997 By: /s/Stoney M. Stubbs, Jr. ------------------------------------------ Stoney M. Stubbs, Jr. Chairman of the Board May 12, 1997 By: /s/Burl G. Cott ------------------------------------------ Burl G. Cott Senior Vice President Principal Financial and Accounting Officer -11-
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, 1997, AND THE CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 1,020 0 39,811 2,540 7,807 64,230 104,783 46,254 135,242 26,164 0 0 0 25,921 59,457 135,242 4,860 72,686 0 69,738 978 576 140 1,970 599 1,371 0 0 0 1,371 .08 .08
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