-----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, NB3t5JVjL1OL/Spz7Fp8rsxISDoG8gW2V8jGxPaoXdE41BTpgWmBMQQ1lJh3p9nS F558oemmPspjUGrjwEQRiw== 0000928385-00-001166.txt : 20000417 0000928385-00-001166.hdr.sgml : 20000417 ACCESSION NUMBER: 0000928385-00-001166 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAREY INTERNATIONAL INC CENTRAL INDEX KEY: 0000747201 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 521171965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22551 FILM NUMBER: 601725 BUSINESS ADDRESS: STREET 1: 4530 WISCONSIN AVE NW CITY: WASHINGTON STATE: DC ZIP: 20016 BUSINESS PHONE: 2028951200 MAIL ADDRESS: STREET 1: 4530 WISCONSIN AVE NW CITY: WASHINGTON STATE: DC ZIP: 20016 10-Q 1 FORM 10-Q DATED 02/29/00 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended February 29, 2000 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 000-22551 Carey International, Inc. ------------------------- (Exact name of registrant as specified in its charter) ------------------------------------------------------ Delaware 52-1171965 -------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4530 Wisconsin Avenue, NW, Suite 500, Washington, DC 20016 ---------------------------------------------------------- (Address of principal executive offices, including zip code) ------------------------------------------------------------ (202) 895-1200 -------------- (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 ------ ------ There were 9,741,206 shares of the registrant's common stock, par value $0.01 per share, outstanding at April 12, 2000. CAREY INTERNATIONAL, INC. AND SUBSIDIARIES INDEX ----- PART I: FINANCIAL INFORMATION Item 1: Financial Statements (unaudited): Consolidated balance sheets as of November 30, 1999 and February 29, 2000 Consolidated statements of operations for the three months ended February 28, 1999 and February 29, 2000 Consolidated statements of cash flows for the three months ended February 28, 1999 and February 29, 2000 Notes to consolidated financial statements Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations PART II: OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K CAREY INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
November 30, February 29, 1999 2000 -------------- --------------- (In thousands) ASSETS Cash and cash equivalents $ 8,595 $ 5,034 Accounts receivable, net 32,418 33,099 Notes receivable from contracts, current portion 1,739 1,417 Prepaid expenses and other current assets 1,630 2,891 -------------- --------------- Total current assets 44,382 42,441 Notes receivable from contracts, excluding current portion 9,098 9,454 Fixed assets, net 27,358 29,646 Franchise rights, net 11,405 11,304 Goodwill and other intangible assets, net 76,971 78,200 Trade name, trademark and contract rights, net 6,111 6,063 Deposits and other assets 2,812 2,815 -------------- --------------- Total assets $178,137 $179,923 ============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of notes payable $ 3,014 $ 2,920 Current portion of capital leases 584 537 Accounts payable and accrued expenses 24,289 21,584 -------------- --------------- Total current liabilities 27,887 25,041 Notes payable, excluding current portion 25,070 27,805 Capital leases, excluding current portion 1,427 1,298 Deferred taxes and other long-term liabilities 4,242 4,240 Deferred revenue 14,859 14,969 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value; 20,000,000 authorized shares, 9,680,380 and 9,734,385 issued and outstanding shares at November 30,1999 and February 29, 2000 respectively 97 97 Additional paid-in capital 81,509 82,618 Retained earnings 23,046 23,855 -------------- --------------- Total stockholders' equity 104,652 106,570 -------------- --------------- Total liabilities and stockholders' equity $178,137 $179,923 ============== =============== The accompanying notes are an integral part of these consolidated financial statements.
1 CAREY INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended ---------------------------- February 28, February 29, 1999 2000 ------------ -------------- (In thousands, except per share data) Revenue, net $ 36,440 $ 48,879 Cost of revenue 24,403 34,236 ------------ -------------- Gross profit 12,037 14,643 Selling, general and administrative expense 9,232 12,621 ------------ -------------- Operating income 2,805 2,022 Other income (expense): Interest expense (108) (440) Interest income 117 94 Gain on sales of fixed assets 32 52 ------------ -------------- Income before provision for income taxes 2,846 1,728 Provision for income taxes 1,193 726 ------------ -------------- Net income $ 1,653 $ 1,002 ============ ============== Net income per common share - basic $ 0.17 $ 0.10 ============ ============== Net income per common share - diluted $ 0.17 $ 0.10 ============ ============== Weighted average common shares used in computing net income per common share - basic 9,488 9,706 ============ ============== Weighted average common shares used in computing net income per common share - diluted 9,886 10,226 ============ ============== The accompanying notes are an integral part of these consolidated financial statements.
2 CAREY INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended ---------------------------- February 28, February 29, 1999 2000 ------------- -------------- (In thousands) Cash flows from operating activities: Net income $ 1,653 $ 1,002 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of fixed assets 766 1,396 Amortization of intangible assets 694 856 Gain on sales of fixed assets (32) (52) Provision for deferred taxes 907 - Change in deferred revenue (112) 110 Changes in operating assets and liabilities: Accounts receivable (1,787) (681) Notes receivable from contracts 4 (34) Prepaid expenses, deposits and other assets (994) (1,235) Accounts payable and accrued expenses (551) (2,899) Deferred taxes and other long-term liabilities (3) (3) ------------- -------------- Net cash provided by (used in) operating activities 545 (1,540) ------------- -------------- Cash flows from investing activities: Proceeds from sales of fixed assets 282 322 Purchases of fixed assets (1,558) (4,024) Acquisitions of chauffeured vehicle service companies (7,211) (855) ------------- -------------- Net cash used in investing activities (8,487) (4,557) ------------- -------------- Cash flows from financing activities: Principal payments under capital lease obligations (701) (175) Payments of notes payable (1,547) (751) Proceeds from notes payable 4,500 3,392 Issuance of common stock 179 70 ------------- -------------- Net cash provided by financing activities 2,431 2,536 ------------- -------------- Net decrease in cash and cash equivalents (5,511) (3,561) Cash and cash equivalents at beginning of period 14,456 8,595 ------------- -------------- Cash and cash equivalents at end of period $ 8,945 $ 5,034 ============= ============== The accompanying notes are an integral part of these consolidated financial statements.
3 CAREY INTERNATIONAL, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Background and organization General Carey International, Inc. (the "Company") provides chauffeured vehicle and related services through a worldwide network of owned and operated companies, licensees and affiliates serving 480 cities in 75 countries. The Company owns and operates service providers in the form of wholly-owned subsidiaries in the following cities: Boston, Chicago, Detroit, Hartford, Indianapolis, Jacksonville, London, Los Angeles, Miami, New York, Paris, Philadelphia, San Francisco, Stamford, Washington, D.C., and West Palm Beach. In addition, the Company licenses the "Carey" name, and provides central reservations, billing and sales and marketing services to its licensees. The Company's worldwide network includes affiliates in locations in which the Company has neither owned and operated locations nor licensees. The Company provides central reservations and billing services to such affiliates. Acquisitions The Company is engaged in a program of acquiring chauffeured vehicle service and related businesses. The chauffeured vehicle service and related businesses that the Company seeks to acquire may be in cities in which the Company has owned and operated service providers, licensees operating under the Carey trade name and service mark, and affiliates of the Company. In the period ended February 29, 2000, the Company acquired a chauffeured vehicle service company in Paris . In March 2000, the Company acquired a chauffeured vehicle service company in White Plains, New York. 2. Basis of presentation The accompanying consolidated financial statements and these notes do not include all of the disclosures included in the Company's audited consolidated financial statements for the years ended November 30, 1998 and 1999, and should be read in conjunction with those financial statements. The consolidated financial statements included herein have not been audited. However, in the opinion of management, the consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the periods reflected. The results for these periods are not necessarily indicative of the results for the full fiscal year. 4 CAREY INTERNATIONAL, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. Acquisitions In the periods ended February 28, 1999 and February 29, 2000, the following acquisition activity was recorded by the Company:
Three months ended --------------------------- February 28, February 29, 1999 2000 ------------ ------------- Net assets purchased: (In thousands) Receivables and other assets $ 969 $ - Fixed assets 2,379 - Franchise rights 272 - Goodwill and other intangibles assets 7,398 1,894 Accounts payable and accrued expenses (396) - ------------ ------------- $10,622 $ 1,894 ============ ============= Consideration: Cash payments $ 7,210 $ 855 Notes assumed related to vehicle acquisitions 2,318 - Issuance of common stock (64,437 and 48,626 shares in 1999 and 2000, 1,094 1,039 respectively) ------------ ------------- $10,622 $ 1,894 ============ =============
4. Revolving credit facility In January 1999, the Company entered into a three-year Revolving Credit Facility consisting of an unsecured revolving line of credit of $75.0 million (the "Credit Facility"). Loans made under the Credit Facility bear interest at the Company's option at either the bank's prime rate or at a varying rate above the LIBOR rate, depending on the ratio of the Company's debt to equity. Commitment fees equal to 0.375% per annum are payable on the unused portion of the Credit Facility. The terms of the Credit Facility (i) prohibit the payment of dividends by the Company, (ii) with certain exceptions, prevent the Company from incurring or assuming other indebtedness that is not subordinate to the borrowings under the Credit Facility, and (iii) require the Company to comply with certain financial covenants. As of February 29, 2000, the Company had borrowed $24.3 million under the Credit Facility. 5 CAREY INTERNATIONAL, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 5. Commitments and contingencies The Company is from time to time a party to litigation arising in the ordinary course of business. Management believes that no pending legal proceeding will have a material adverse effect on the business, financial condition, results of operations or cash flows of the Company. 6. Comprehensive income In 1999, the Company adopted SFAS No. 130, Comprehensive Income. Comprehensive income for the Company is calculated by adjusting "Net income" for the change in the unrealized gains or losses from foreign currency translations. In the periods ended February 28,1999 and February 29, 2000, comprehensive income did not materially differ from net income. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended February 29, 2000 (the "2000 Period") Compared to Three Months Ended February 28, 1999 (the "1999 Period") Revenue, Net. Revenue, net increased $12.4 million or 34.1% from $36.4 million in the 1999 Period to $48.9 million in the 2000 Period. Of the increase, $6.8 million resulted from expanded use of the Carey network, including an increase in business from corporate travel customers and business travel arrangers. A further $5.6 million of the increase was due to revenues from companies acquired by the Company subsequent to the 1999 Period. Cost of Revenue. Cost of revenue increased $9.8 million or 40.2% from $24.4 million in the 1999 Period to $34.2 million in the 2000 Period. The increase was primarily attributable to higher costs due to increased business levels and to higher costs associated with businesses acquired by Carey subsequent to the 1999 Period. Cost of revenue increased as a percentage of revenue, net from 67.0% in the 1999 Period to 70.0% in the 2000 Period, primarily reflecting increased reliance on farm-outs to service peak periods of demand and correspondingly narrower margins than those achieved with independent operators, seasonal and other reductions in revenues not offset by reduced costs of revenues and unrecovered cost increases in the Company's central reservations and central billing functions as investments in these areas grew to meet the demands of the revenue growth of the Company. Selling, General and Administrative Expense. Selling, general and administrative expense increased $3.4 million or 36.7% from $9.2 million in the 1999 Period to $12.6 million in the 2000 Period. The increase largely was due to the costs associated with higher business levels and costs of acquired businesses including personnel costs, administrative expenses and marketing expenses, and an increase in amortization of intangibles related to acquired businesses. Selling, general and administrative expense increased as a percentage of revenue, net from 25.3% in the 1999 Period to 25.8% in the 2000 Period. The higher level of these expenses in relation to revenue, net reflected the seasonal and other reductions in revenues noted earlier without a corresponding reduction in cost and higher levels of training and recruitment costs in response to the Company's growth and on-going deployment of new systems. Three Months Ended February 29, 2000 (the "2000 Period") Compared to Three Months Ended February 28, 1999 (the "1999 Period") Interest Expense. Interest expense increased from approximately $108,000 in the 1999 Period to approximately $440,000 in the 2000 Period, primarily as a result of the use of debt to fund acquisitions during 1999 and 2000. Interest income decreased from approximately $117,000 in the 1999 period to approximately $94,000 in the 2000 period. Provision for Income Taxes. The provision for income taxes decreased approximately $467,000 from $1.2 million in the 1999 Period to approximately $726,000 in the 2000 Period. The decrease primarily was a result of the decrease in pre-tax income of the Company from $2.8 million in the 1999 Period to $1.7 million in the 2000 Period. Net Income. As a result of the foregoing, the Company's net income decreased approximately $651,000 or 39.4% from $1.7 million in the 1999 Period to $1.0 million in the 2000 Period. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --(Continued) Liquidity and Capital Resources Cash and cash equivalents decreased $3.6 million during the 2000 Period from $8.6 million at November 30, 1999 to $5.0 million at February 29, 2000. Operating activities decreased net cash by approximately $1.5 million during the 2000 Period compared to an increase of approximately $545,000 in the 1999 Period. The overall net decrease in cash and cash equivalents at February 29, 2000 from November 30, 1999 primarily related to net cash used in chauffeured vehicle service operations and the use of cash to acquire chauffeured vehicle service companies, purchase fixed assets and retire debt. Cash used in investing activities during the 2000 Period decreased by $3.9 million over the 1999 Period. Cash of $8.5 million was used in the 1999 Period to acquire chauffeured vehicle service companies and purchase fixed assets, net of cash from sale of fixed assets, whereas cash of $4.6 million was used in the 2000 Period to acquire chauffeured vehicle service companies and purchase fixed assets, net of cash from sale of fixed assets. Cash provided by financing activities during the 2000 Period increased by approximately $100,000 over the 1999 Period, primarily as a result of the net notes payable activity used in financing new acquisitions and the purchase of fixed assets. At February 29, 2000, the Company had notes payable outstanding of $30.7 million, of which approximately $2.9 million is to be repaid over the next 12 months. In January 1999, the Company entered into a three-year Revolving Credit Facility consisting of an unsecured revolving line of credit of $75.0 million (the "Credit Facility"). The Credit Facility is used for acquisitions and working capital. Loans made under the Credit Facility bear interest at the Company's option at either the banks' prime lending rate or at a varying rate above the LIBOR rate, depending upon the ratio of the Company's debt to equity. Commitment fees equal to 0.375% per annum are payable on the unused portion of the Credit 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --(Continued) Facility. The terms of the Credit Facility (i) prohibit the payment of dividends by the Company, (ii) with certain exceptions, prevent the Company from incurring or assuming other indebtedness that is not subordinated to the borrowings under the Credit Facility and (iii) require the Company to comply with certain financial covenants. As of February 29, 2000, the Company had borrowed $24.3 million under the Credit Facility. While there can be no assurance, and depending on the methods of financing and size of potential acquisitions, management believes that cash flow from operations, cash and cash equivalents and funds from the Credit Facility will be adequate to meet the Company's capital requirements for the next 12 months. While the Company has financed many acquisitions primarily with cash over the past twelve months, it may seek to finance future acquisitions by using common stock for a portion or all of the consideration to be paid. The Company is in the process of upgrading its central and subsidiary reservation systems as well as its financial and certain other computer software and hardware systems. The upgrades are expected to provide significant enhancements to the Company's customer service and management information capabilities along with increased opportunities for more efficient processing and distribution of information. The Company has also undertaken an initiative to upgrade its web site on the worldwide web and to integrate an e-commerce capability with its program of enhancements and upgrades. The Company is currently committed to or anticipates spending approximately $7 to $10 million over the next 12 to 18 months on designing, developing and deploying software and replacing or upgrading computer-related hardware as part of its program of enhancements and upgrades and worldwide web initiatives. Factors To Be Considered The information set forth above contains forward-looking statements, which involve risks and uncertainties. The Company's actual results could differ materially from the results anticipated in these forward-looking statements. Readers should refer to discussion under "Risk Factors" contained in the Company's Registration Statement on Form S-1 (No. 333-59599) filed with the Securities and Exchange Commission, which is incorporated herein by reference, concerning certain factors which could cause the Company's actual results to differ materially from the results anticipated in the forward-looking statements contained herein. 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit: 27 Financial Data Schedule (for the three months ended February 29, 2000) (b) Reports on Form 8-K None 10 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 hereunto duly authorized. Carey International, Inc. Date: April 14, 2000 By: /s/ Vincent A. Wolfington -------------------------- Vincent A. Wolfington Chairman, Chief Executive Officer Date: April 14, 2000 By: /s/ David H. Haedicke ---------------------- David H. Haedicke Executive Vice President, Chief Financial Officer 11 EXHIBIT INDEX NUMBER DESCRIPTION 27 Financial Data Schedule (for the three months ended February 29, 2000) EX-27 2 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 1,000 3-MOS NOV-30-2000 DEC-01-1999 FEB-29-2000 5,034 0 34,303 1,204 0 42,441 39,421 9,775 179,923 25,041 27,805 0 0 97 106,473 179,923 0 48,879 0 34,236 12,424 197 440 1,728 726 0 0 0 0 1,002 0.10 0.10
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