-----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, GktELHumRxugVkIXAWKGUM99LQK0uclFcER5zN3N26ca1XdF5J9TA3eQZ06oaa0r eiHwtq+SK8l4003YCOcuJg== 0000778161-96-000006.txt : 19961115 0000778161-96-000006.hdr.sgml : 19961115 ACCESSION NUMBER: 0000778161-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTRENET INC CENTRAL INDEX KEY: 0000778161 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 351597565 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14060 FILM NUMBER: 96662021 BUSINESS ADDRESS: STREET 1: 400 TECHNECENTER DRIVE SUITE 200 CITY: MILFORD STATE: OH ZIP: 45150 BUSINESS PHONE: 5135766666 FORMER COMPANY: FORMER CONFORMED NAME: CIRCLE EXPRESS INC DATE OF NAME CHANGE: 19900702 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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 0-14060 INTRENET, INC. (Exact name of registrant as specified in its charter) Indiana 35-1597565 (State or other jurisdiction of (IRS Employer Identification No) incorporation or organization) 400 TechneCenter Drive, Suite 200, Milford, Ohio 45150 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (513) 576-6666 Not Applicable Former name, former address and former fiscal year,if changed since last report 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 APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, without par value, 13,412,138 shares issued and outstanding at November 1, 1996 INTRENET, INC. FORM 10-Q SEPTEMBER 30, 1996 INDEX PAGE Part I - Financial Information: Item 1. Financial Statements: Condensed Consolidated Balance Sheets September 30, 1996 and December 31, 1995 ...... 3 Condensed Consolidated Statements of Operations Three Months and Nine Months Ended ....................4 September 30, 1996 and 1995 Condensed Consolidated Statement of Shareholders' Equity Nine Months Ended September 30, 1996 ................5 Condensed Consolidated Statements of Cash Flows Three Months and Nine Months Ended ................... 6 September 30, 1996 and 1995 Notes to Condensed Consolidated Financial Statement 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................. 8 Part II - Other Information: Item 1. Legal Proceedings ................... 11 Item 2. Changes in Securities ................... 11 Item 3. Defaults Upon Senior Securities ............... 11 Item 4. Submission of Matters to a Vote of Security Holders ................... 11 Item 5. Other Information ................... 11 Item 6. Exhibits and Reports on Form 8-K............... 11 INTRENET, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets September 30, 1996 and December 31, 1995 (In Thousands of Dollars)
Assets 1996 1995 (Unaudited) Current assets: Cash and cash equivalents $ 1,217 $ 171 Receivables, principally freight revenue less allowance for doubtful accounts of $714 in 1996 and $572 in 1995 26,612 20,972 Prepaid expenses and other 5,052 5,573 Total current assets 32,881 26,716 Property and equipment, at cost, less accumulated depreciation 35,701 29,577 Reorganization value in excess of amounts allocated to identifiable assets, net of accumulated amortization 7,716 8,031 Deferred income taxes, net 2,723 2,723 Other assets 681 591 Total assets $ 79,702 $ 67,638 Liabilities and Shareholders' Equity Current liabilities: Current debt and capital lease obligations $ 6,720 $ 6,134 Accounts payable and cash overdrafts 9,289 7,744 Current accrued claim liabilities 7,824 7,031 Other accrued expenses 7,873 6,430 Total current liabilities 31,706 27,339 Long-term debt and capital lease obligations 24,439 14,981 Long-term accrued claim liabilities 2,700 2,300 Total liabilities 58,845 44,620 Shareholders' equity: Common stock, without par value; 20,000,000 shares authorized; 13,227,338 and 13,197,728 shares issued and outstanding, respectively 16,294 16,245 Retained earnings since January 1, 1991 4,563 6,773 Total shareholders' equity 20,857 23,018 Total liabilities and shareholders' equity $ 79,702 $ 67,638 The accompanying notes are an integral part of these consolidated financial statements.
INTRENET, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations Three Months and Nine Months Ended September 30, 1996 and 1995 (Unaudited) (In Thousands of Dollars, Except Per Share Data)
Three Months Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Operating revenues $ 57,797 $ 53,097 $ 168,112 $ 162,796 Operating expenses: Purchased transportation and equipment rents 22,330 20,667 64,932 60,901 Salaries, wages, and benefits 15,775 14,009 45,440 43,781 Fuel and other operating expenses 12,328 11,799 36,861 34,949 Operating taxes and licenses 2,781 2,478 8,046 7,477 Insurance and claims 2,394 1,643 6,422 5,546 Depreciation 1,587 1,175 3,732 3,502 Other operating expenses 774 531 2,762 2,763 57,969 52,302 168,195 158,919 Operating income (loss) (172) 795 (83) 3,877 Interest expense (622) (713) (1,812) (2,234) Other expense, net (96) 258 (315) 27 Earnings (loss) before income taxes (890) 340 (2,210) 1,670 Provision for income taxes - (102) - (501) Net earnings (loss) $ (890) $ 238 $ (2,210) $ 1,169 Earnings (loss) per common and common equivalent share $ (0.07) $ 0.02 $ (0.16) $ 0.09 The accompanying notes are an integral part of these consolidated financial statements.
INTRENET, INC. AND SUBSIDIARIES Condensed Consolidated Statement of Shareholders' Equity For the Nine Months Ended September 30, 1996 (In Thousands of Dollars)
Retained Shareholders' Common Stock Earnings Equity Shares Dollars Balance, December 31, 1995 13,197,728 $16,245 $6,773 $23,018 Exercise of stock options 29,610 49 - 49 Net loss for 1996 - - (2,210) (2,210) Balance, September 30, 1996 13,227,338 $16,294 $4,563 $20,857 The accompanying notes are an integral part of these consolidated financial statements.
INTRENET, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Three Months and Nine Months Ended September 30, 1996 and 1995 (Unaudited) (In Thousands of Dollars)
Three Months Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Cash flows from operating activities: Net earnings (loss) $ (890) $ 238 $ (2,210) $ 1,169 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Deferred income taxes - 102 - 501 Depreciation and amortization 1,692 1,280 4,047 3,817 Provision for doubtful accounts 98 (141) 254 159 Changes in assets and liabilities, net: Receivables 726 (1,519) (5,894) (2,756) Prepaid expenses 995 943 520 (318) Accounts payable and accrued expenses 1,543 (566) 3,926 1,382 Other - 482 - 703 Net cash provided by operating activities 4,164 819 643 4,657 Cash flows from financing activities: Net borrowings (repayments) on line of credit, net (1,606) (2,708) 2,336 (1,000) Principal payments on long-term debt (1,928) (1,896) (5,483) (4,696) Issuance of long term debt - 2,299 - 2,299 Proceeds from exercise of stock options - - 49 304 Net cash (used in) financing activities (3,534) (2,305) (3,098) (3,093) Cash flows from investing activities: Additions to property and equipment (389) (1,946) (1,079) (6,174) Disposals of property and equipment 754 28 4,580 559 Sale of operating assets of C.I. Whitten - 2,913 - 2,913 Net cash provided by (used in) investing activities 365 995 3,501 (2,702) Net increase (decrease) in cash and cash equivalents 995 (491) 1,046 (1,138) Cash and cash equivalents: Beginning of period 222 2,087 171 2,734 End of period $ 1,217 $ 1,596 $ 1,217 $ 1,596 The accompanying notes are an integral part of these consolidated financial statements.
INTRENET, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements September 30, 1996 (Unaudited) (1) Unaudited Consolidated Financial Statements The accompanying unaudited consolidated financial statements include the accounts of Intrenet, Inc. and all of its subsidiaries (collectively, the Company). Operating subsidiaries at September 30, 1996 were Roadrunner Trucking, Inc. (RRT), Eck Miller Transportation Corporation (EMT), Advanced Distribution System, Inc. (ADS), Roadrunner Distribution Services, Inc. (RDS) and INET Logistics, Inc. (INL). All significant intercompany transactions are eliminated in consolidation. Through its subsidiaries, the Company provides general and specialized truckload carrier and intermodal brokerage services on a regional basis throughout the forty-eight continental states and Canada. The consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In management's opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. Pursuant to SEC rules and regulations, certain information and footnote 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. For this reason, the accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes for the year ended December 31, 1995 included in the Company's 1995 Annual Report on Form 10-K. The results for the three month and nine month periods ended September 30, 1996 are not necessarily indicative of the results to be expected for the entire year. (2) Earnings Per Common and Common Equivalent Share Earnings per common and common equivalent share have been computed on the basis of the weighted average common shares outstanding during the periods. No effect has been included for options or warrants outstanding, if the effect would be antidilutive. (3) Income Taxes Income taxes in interim periods are generally provided on the basis of the estimated effective tax rate for the year. In 1996, however, as a result of the year-to-date pre-tax losses, and the uncertainty related to forecasting future operating results in the current competitive operating environment, the Company has not recorded any income tax benefit in the nine months ended September 30, 1996. The tax benefit from the losses will be recorded when earnings recover, and the tax benefit becomes realizable. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Introduction The Company reported a net loss of $ 890,000 ($ 0.07 per share) on revenues of $ 57.8 million in the three months and a net loss of $ 2.2 million ($ 0.16 per share) on revenues of $ 168.1 million in the nine months ended September 30, 1996. This compares with net earnings of $ 238,000 on revenues of $ 53.1 million, and net earnings of $ 1.2 million on revenues of $ 162.8 million in the comparable periods of 1995, respectively. In the three months ended September 30, 1996, the Company recorded approximately $ 1.2 million in charges: to account for certain corporate personnel severance arrangements ($ 0.2 million); to write-off certain computer equipment ($ 0.3 million); to record the settlement and legal costs of previously disclosed litigation ($ 0.1 million); to reserve for unfavorable developments in several workers compensation and vehicle accident claim reserves ($ 0.4 million); and to account for certain other charges ($ 0.2 million). The 1995 nine month results include a $ 1.8 million pre-tax loss from the operations of the Company's former munitions carrier, C.I. Whitten Transfer Company (CIW), which was sold in August, 1995. As discussed more fully below, the Company's performance throughout 1996 reflects the soft market trends which began in late 1995 and continued into 1996. Over-capacity in the truckload industry, severe weather conditions and higher fuel costs combined to produce lower freight rates, reduced equipment utilization, and significantly higher operating costs in the first quarter of 1996. These factors led to reduced profit margins, resulting in an inability to cover other fixed costs in the first quarter period. Although business strengthened in the second and third quarters as better weather, a stronger U.S. economy and a resumption of construction activity in the country increased demand for transportation services, substantially higher fuel prices, competitive pressures on freight rates, and other increased costs continued to negatively impact the Company's profit margins. In addition to these operating factors, as discussed in the first paragraph above, the Company recorded approximately $ 1.2 million of charges in the third quarter to account for the effects of several items. A discussion of the impact of the above and other factors on the results of operations in the three months and nine months ended September 30, 1996 as compared to the comparable periods of 1995 follows. 1996 Compared to 1995 Three Months Ended 9/30 % Nine Months Ended 9/30 % Key Operating Statistics 1996 1995 Change 1996 1995 Change Operating Revenues ($ millions) $ 57.8 $53.1 8.8% $168.1 $162.8 3.3% Net Earnings (Loss) ($ 000's) $(890) $238 NM $(2,210) $1,169 NM Average Number of Tractors 2,041 2,011* 1.5% 2,061 1,944* 6.0% Total Loads (000's) 66.6 61.2* 8.8% 194.7 182.1* 6.9% Revenue Miles (millions) 42.4 37.7* 12.6% 124.1 113.4* 9.4% Average Revenue per Revenue Mile $1.28 $1.29* (0.8%) $1.28 $1.30* (1.5%) * Certain 1995 amounts exclude the effects of CIW, which was sold in August, 1995. Operating Revenues Operating revenues for the three months and nine months ended September 30, 1996 totaled $ 57.8 million and $ 168.1 million, respectively, as compared to $ 53.1 million and $ 162.8 million for the same periods in 1995. Despite intense competitive conditions in the truckload industry, the Company's four truckload carriers have continued to grow throughout 1996. Revenue at these carriers was up $ 5.8 million, or 11.2%, in the three months, and $ 11.4 million, or 7.3%, in the nine months ended September 30, 1996, over the comparable 1995 periods. The approximately 9.4 % increase in revenue miles (volume) in 1996 over 1995 (excluding CIW), is attributable to a 6.0 % increase in the average number of tractors deployed, and an increase in average length of haul. Volumes in the second and third quarters of 1996 were substantially better than in the first quarter of 1996, as a result of a strengthening U.S. economy and a return to more normal operating efficiencies. Revenue miles in the third quarter of 1996 were up 12.6 % over the comparable 1995 quarter as a result of stronger shipper demand reflecting the relatively strong U.S. economy. The increased number of tractors in 1996 over 1995 is the result of the Company's internal growth plans which resulted in an increase in the number of company-operated tractors, coupled with an increase in the average number of owner-operator tractors under contract. Approximately 60 % of the Company's revenue in the three month and nine month periods ended September 30, 1996 was generated by company-operated equipment, and 35 % by owner-operator equipment. This relationship is essentially unchanged from the comparable 1995 periods. The remaining 5% of revenues was from freight brokered to other carriers. The decline in the average revenue per revenue mile (price) of 1.5 % in 1996 as compared to 1995, is the result of generally lower transportation rates due to increased competitive conditions, and to reduced traffic opportunities in 1996 due to excess industry capacity, which required the Company to move more equipment with lower-priced spot market loads. Operating Expenses The following table sets forth the percentage relationship of operating expenses to operating revenues for the three month and nine month periods ended September 30. The reduced per mile freight rates in 1996 account partially for the increase in operating expenses when expressed as a percentage of revenue. Three Months Ended 9/30 Nine Months Ended 9/30 1996 1995 1996 1995 Operating revenues 100 % 100 % 100 % 100 % Operating expenses: Purchased Transportation and equipment rents 38.6 38.9 38.6 37.4 Salaries, wages and benefits 27.3 26.4 27.0 26.9 Fuel and other operating expenses 21.3 22.2 21.9 21.5 Operating taxes and licenses 4.8 4.7 4.8 4.6 Insurance and claims 4.1 3.1 3.8 3.4 Depreciation 2.8 2.2 2.2 2.1 Other operating expenses 1.3 1.0 1.7 1.7 Total operating expenses 100.2% 98.5% 100.0% 97.6% Purchased transportation and equipment rents increased in 1996 over 1995 as a percentage of revenue due to the lower revenue per mile in 1996 over 1995. Salaries and wages increased as a result of driver wage increases implemented in 1995 in response to competitive conditions, to the costs of certain corporate personnel severance arrangements, and to unfavorable developments in several workers compensation claim reserves recorded in the third quarter of 1996. Fuel and other operating expenses increased as fuel costs were approximately two cents per total mile higher in 1996 versus 1995, as a result of the approximately ten cent per gallon increase in the cost of diesel fuel. While the effects of the higher fuel costs have been blunted, to a degree, through the implementation of fuel surcharges, competitive conditions have limited the Company's ability to implement surcharges to only a portion of its revenues. Management estimates that the higher fuel costs, increased fuel expenses by approximately $ 0.6 million in the three months and $ 1.9 million in the nine months ended September 30, 1996, when compared to fuel prices paid in the comparable periods of 1995. Insurance and claims expense was higher in 1996 over 1995 as a result of higher accident levels, and the recording of reserves for unfavorable developments in several vehicle accident claim reserves. Depreciation increased primarily as a result of the addition of a new 53 foot dry van trailer fleet at RDS in 1996 which is being financed under capital leases . Other operating expenses remained relatively constant in 1996 over 1995. Interest Expense Interest expense decreased in 1996 over 1995, primarily as a result of lower average borrowings at lower average interest rates under the Company's bank credit facility in 1996 than in 1995. Further, a $ 105,000 decline in interest costs is attributable to the conversion of the Company's 7% convertible subordinated debentures on March 31, 1995. Provision for Income Taxes Income taxes in interim periods are generally provided on the basis of the estimated effective tax rate for the year. In 1996, however, as a result of the year-to-date pre-tax losses, and the uncertainty related to forecasting future operating results in the current competitive operating environment, the Company has not recorded any income tax benefit in the nine months ended September 30, 1996. The tax benefit attributable to the losses will be recorded when earnings recover, and the tax benefit becomes realizable. Liquidity and Capital Resources The Company generated $ 1.0 million of cash in the first nine months of 1996. As reflected in the accompanying Consolidated Statements of Cash Flows, the Company generated $ 0.6 million of cash from operating activities, and $ 3.5 million from investing activities, primarily from the sale of 48 foot van trailers at RDS. Approximately $ 3.1 million, net, of this cash was used in financing activities for principal payments on long-term debt. In March 1996, the Company began to reduce the sale of certain customer accounts receivable to a collection clearing house, a process which was completed on June 30, 1996. This resulted in an increased use of cash from operating activities to finance approximately $ 4.0 million of accounts receivable, net, which would otherwise have been sold to the clearing house. The Company's day-to-day financing is provided by borrowings under its bank credit facility. The credit facility consists of a $ 5 million term loan with a final maturity of December 31, 1999, and a $ 28 million revolving line of credit which expires January 15, 1999. Quarterly principal payments of $ 312,500 on the term loan commenced on April 1, 1996. The line of credit includes provisions for the issuance of up to $ 12 million in stand-by letters of credit which, as issued, reduce available borrowings under the line of credit. Borrowings under the line of credit are limited to amounts determined by a formula tied to the Company's eligible accounts receivable and inventories, as defined in the credit facility. Borrowings under the revolving line of credit totaled $ 3.0 million at September 30, 1996, and outstanding letters of credit totaled $ 5.6 million at that date. The combination of these two bank credits totaled $ 8.6 million, leaving approximately $11.5 million of borrowing capacity under the credit facility at September 30, 1996. Borrowing capacity since then and through the date of this report has been in the $ 12.0 million to $ 13.0 million range. The Company believes that cash generated from operations, and cash available to it under the bank credit facility will be sufficient to meet the Company's needs for the foreseeable future. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. In July, 1996, the Company settled the previously reported litigation filed against it in the United States District Court for the District of New Jersey by Compton Management Corporation ("Compton"). The complaint sought compensatory damages of not less than $1,000,000 and punitive damages of at least $5,000,000. The Company paid Compton $ 25,000 in settlement of all claims and the complaint was dismissed with prejudice on September 25, 1996. Management believes the amount paid to Compton was less than the likely cost of defense. There are no material pending legal proceedings to which the Company or any of its subsidiaries is a party of or which any of their property is the subject other than routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transporting of freight. The Company maintains insurance which covers liability resulting from transportation related claims in amounts management believes are prudent and consistent with accepted industry practices, subject to deductibles for the first $100,000 to $250,000 of exposure for each incident. The Company is not aware of any claims or threatened claims that might materially affect the Company's operating or financial results. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 11 - Computation of Per Share Earnings Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTRENET, INC. (Registrant) November 13, 1996 /s/ Jonathan G. Usher Jonathan G. Usher, Vice President - Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) EX-11 2 INTRENET, INC. STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Weighted average shares outstanding 13,227,338 13,197,728 13,223,448 13,197,728 during period Assumed exercise of options and 153,731 454,286 170,432 512,118 warrants Shares assumed for fully diluted earnings 13,381,069 13,652,014 13,393,880 13,709,846 per share Earnings for the period: ($ in Thousands) Net earnings (Loss) $ (890) $ 238 $ (2,210) $ 1,169 Earnings per common and common equivalent share $ (0.07) $ 0.02 $ (0.16) $ 0.09 Exhibit 11
EX-27 3
5 0000778161 INTRENET, INC. 1000 U.S. DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 1,217 0 27,326 (714) 0 32,881 35,701 0 79,702 31,706 24,439 0 0 16,294 4,563 79,702 0 168,112 0 168,195 315 0 1,812 (2,210) 0 (2,210) 0 0 0 (2,210) (.16) (.16)
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