-----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, LiS/bmeT/uteI4CE8jQOaWGuNQUuFl3jMFck8wGyyxfhziRdH0qOSQmOW1n78TIj YY3icPwVHYbIZgI0ZeJvFQ== 0000745379-95-000009.txt : 19951119 0000745379-95-000009.hdr.sgml : 19951119 ACCESSION NUMBER: 0000745379-95-000009 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: KENAN TRANSPORT CO CENTRAL INDEX KEY: 0000745379 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 560516485 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12058 FILM NUMBER: 95589275 BUSINESS ADDRESS: STREET 1: 143 W FRANKLIN ST STREET 2: UNIVERSITY SQ WEST POST OFFICE BOX 2729 CITY: CHAPEL HILL STATE: NC ZIP: 27516-3910 BUSINESS PHONE: 9199678221 MAIL ADDRESS: STREET 1: UNIVERSITY SQUARE WEST STREET 2: 143 W FRANKLIN ST P O BOX 2729 CITY: CHAPEL HILL STATE: NC ZIP: 27515-2729 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-12058 ------- KENAN TRANSPORT COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) North Carolina 56-0516485 ------------------------------- ---------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) University Square - West, 143 W. Franklin Street Chapel Hill, North Carolina, 27516-3910 ------------------------------------------------------------ (Address of principal executive offices, including Zip Code) (919) 967-8221 ------------------------------------------------------------ (Registrant's telephone number, including Area Code) 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. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 31, 1995 -------------------------- ------------------------------- Common stock, no par value 2,389,497 KENAN TRANSPORT COMPANY INDEX Page ---- Part I - Financial Information Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 1 Consolidated Statements of Income for the three and nine months ended September 30, 1995 and 1994 2 Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 3 Notes to Consolidated Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 - 6 Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K 7 Signatures 8 Index to Exhibits 9 PART I - FINANCIAL INFORMATION KENAN TRANSPORT COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in thousands) September 30, December 31, 1995 1994 ASSETS (Unaudited) (Note 1) - ----------------------------------------------------------------------- Current Assets Cash and cash equivalents $ 7,152 $12,759 Short-term investments 5,446 1,000 Accounts receivable 3,706 4,249 Operating supplies and parts 533 574 Prepayments -- Tires 1,307 1,295 Insurance, licenses and other 878 602 Deferred income taxes 1,720 1,660 ----------------------- Total Current Assets 20,742 22,139 Operating Property Land 3,384 3,201 Buildings and leasehold improvements 5,659 4,972 Revenue equipment 51,624 47,434 Other equipment 3,493 3,667 ----------------------- 64,160 59,274 Accumulated depreciation (25,804) (24,259) ----------------------- Net Operating Property 38,356 35,015 Other Assets 476 471 ----------------------- $59,574 $57,625 ======================= LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------- Current Liabilities Accounts payable $ 1,020 $ 1,257 Wages and employee benefits payable 4,317 4,603 Claims payable 3,899 3,866 Other accrued expenses 188 153 ----------------------- Total Current Liabilities 9,424 9,879 Deferred Income Taxes 8,327 7,975 Stockholders' Equity Common stock; no par; 20,000,000 shares authorized; 2,389,497 and 2,378,339 shares issued and outstanding 2,996 2,798 Retained earnings 38,827 36,973 ----------------------- 41,823 39,771 ----------------------- $59,574 $57,625 ======================= The Notes to Consolidated Financial Statements are an integral part of these balance sheets. Page 1 KENAN TRANSPORT COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited and dollars in thousands except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------ 1995 1994 1995 1994 - ---------------------------------------------------------------------------------------- Operating Revenue $15,128 $14,229 $45,015 $43,867 Operating Expenses Wages and employee benefits 7,886 7,199 23,235 22,216 Fuel, parts, tires and other 2,921 2,531 8,419 8,048 Taxes and licenses 934 915 2,869 2,900 Claims and insurance 614 654 1,772 1,811 Communications, utilities and rent 430 300 1,113 876 Depreciation 1,419 1,351 4,115 3,940 ------------------------------------------- 14,204 12,950 41,523 39,791 ------------------------------------------- Operating Income 924 1,279 3,492 4,076 Interest income and other expenses, net 48 62 365 276 ------------------------------------------- Income before Provision for Income Taxes and Extraordinary Item 972 1,341 3,857 4,352 Provision for income taxes 389 540 1,543 1,757 ------------------------------------------- Income before Extraordinary Item 583 801 2,314 2,595 Extraordinary item -- write off intrastate operating rights, net of tax -- (823) -- (823) ------------------------------------------- Net Income $ 583 $ (22) $ 2,314 $ 1,772 =========================================== Weighted average number of shares outstanding (in thousands) 2,389 2,378 2,387 2,376 Earnings Per Share: Before extraordinary item $ .24 $ .34 $ .97 $ 1.09 Extraordinary item -- (.35) -- (.35) ------------------------------------------- $ .24 $ (.01) $ .97 $ .74 =========================================== Operating ratio 93.9% 91.0% 92.2% 90.7% Dividends paid per share $ .0650 $ .0625 $ .1900 $ .1825 The Notes to Consolidated Financial Statements are an integral part of these statements.
Page 2 KENAN TRANSPORT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited and dollars in thousands) 1995 1994 - ----------------------------------------------------------------------- Cash Provided by (Applied to): Operations $ 6,755 $ 7,725 Purchases of operating property, net (7,456) (5,600) Short-term investments, net (4,446) 500 Dividends (460) (440) ------------------------ Net Increase (Decrease) in Cash and Cash Equivalents (5,607) 2,185 Beginning Cash and Cash Equivalents 12,759 9,046 ------------------------ Ending Cash and Cash Equivalents $ 7,152 $ 11,231 ======================== The Notes to Consolidated Financial Statements are an integral part of these statements. Page 3 KENAN TRANSPORT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The financial information included herein is unaudited; however, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The balance sheet at December 31, 1994 has been taken from the audited financial statements at that date. The results of operations for the three and nine months ended September 30, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 2. Purchase of Assets On June 29, 1995, the Company purchased the transportation assets of Cary Oil Company, Inc. for cash and entered into a long-term contract to provide transportation services to Cary Oil. Page 4 KENAN TRANSPORT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors that have affected the Company's financial position and operating results during the periods included in the accompanying financial statements. Results of Operations - ------------------------------- Revenue for the third quarter of 1995 was $15,128,000, an increase of $899,000 and 6% over the third quarter of 1994. Net income was $583,000 ($.24 per share) compared to a $22,000 loss ($.01 per share) in the third quarter of 1994. The 1994 third quarter net loss includes an extraordinary charge of $823,000 ($.35 per share) for the write-off of intrastate operating rights. Miles operated increased 5% to 9,987,000 in comparison to the third quarter of 1994. The increase in third quarter revenue reflects the effect of the Company's program to take advantage of growth opportunities provided by intrastate deregulation of trucking in 1995 and growth in transportation contract relationships. Our entry into new markets in Alabama and Tennessee and the implementation of transportation services to Cary Oil Company under a long-term contract provided the growth in revenue for the quarter. Revenue for the nine months ended September 30, 1995 was $45,015,000, an increase of $1,148,000 and 3% over 1994. Net income was $2,314,000 ($.97 per share) compared to $1,772,000 ($.74 per share) in 1994. The 1994 nine-month earnings include an extraordinary charge of $823,000 ($.35 per share). Miles operated increased 2% to 29,987,000 in 1995. Operating expenses for the third quarter of 1995 totaled $14,204,000, an increase of $1,254,000 and 10% over the third quarter of 1994. Operating expenses increased due to increased driver wages as we continue our program to enhance driver pay to attract and retain highly qualified professional drivers and added fixed costs incurred for the expansion program and costs associated with the start-up of the Cary Oil operation. Our operating ratio of 93.9% for the quarter, though higher than historical performance, still compares favorably with the trucking industry. Operating expenses for the nine months ended September 30, 1995 totaled $41,523,000, an increase of $1,732,000 and 4% over the first nine months of 1994. The operating ratio was 92.2% compared to 90.7% in 1994. The increase in operating expenses that lead to the decrease in margins in 1995 was due to the items discussed above. Increased costs to expand our markets may continue to impact profits during the fourth quarter of 1995. Page 5 KENAN TRANSPORT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED Liquidity and Capital Resources - ------------------------------- The Company's financial condition at September 30, 1995 was strong. Working capital was $11,318,000 and the current ratios were 2.2 at September 30, 1995 and December 31, 1994. The Company had no debt outstanding under its $7,000,000 bank line of credit. Cash equivalents together with short-term investments totaled $12,598,000 at September 30, 1995. Cash flows from operations for the first nine months of 1995 were down $970,000 from 1994 levels due largely to the timing of payments made for operating property and expenses. Net purchases of operating property in 1995 were up $1,856,000 over 1994 levels due primarily to the purchase of assets from Cary Oil and tractors purchased under the Company's equipment replacement program. The cash dividend was increased 4% to an annual rate of $.26 per share effective with the quarterly payment in July. This was the seventeenth consecutive annual increase in the dividend. The Company's operations require the storage of fuel for use in its tractors in both underground and aboveground tanks. Beginning in 1989, the Company began a program to upgrade its fuel storage facilities. Under the program, the Company incurs costs to replace tanks, remediate soil contamination resulting from overfills, spills and leaks and monitor facilities on an ongoing basis. These costs are recorded when it is probable that a liability has been incurred and the related amount can be reasonably estimated. Such costs have not been and are not expected to be material to the Company's operations or liquidity. Page 6 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ------- --------------------------------- (a) The Exhibits on this Form 10-Q are listed on the accompanying Index to Exhibits (b) No reports on Form 8-K have been filed during the quarter ended September 30, 1995. Page 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KENAN TRANSPORT COMPANY (Registrant) DATE: November 8, 1995 BY: /s/ William L. Boone ---------------------------- Vice President-Finance and Chief Financial Officer Page 8 INDEX TO EXHIBITS The exhibits filed as part of this report are listed below: Exhibit Number Description --------- ----------------------------------------------------------- 27 Financial Data Schedule for the 3rd Quarter 10-Q. Page 9 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000745379 KENAN TRANSPORT COMPANY 1,000 9-MOS DEC-31-1995 SEP-30-1995 7,152 0 3,706 0 533 20,742 64,160 25,804 59,574 9,424 0 2,996 0 0 38,827 59,574 0 45,015 0 41,523 0 0 0 3,857 1,543 2,314 0 0 0 2,314 .97 .97
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