-----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, JKUKKhsG0fW7kRdILtpnY+flSGA+Uyfv2WyS6YG5dM7rl3iB1KE3FhTIoP8oUBdb qS76GPHBBnDMDaj+/W6qBA== 0000790372-96-000010.txt : 19960816 0000790372-96-000010.hdr.sgml : 19960816 ACCESSION NUMBER: 0000790372-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MS CARRIERS INC CENTRAL INDEX KEY: 0000790372 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 621014070 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14781 FILM NUMBER: 96614466 BUSINESS ADDRESS: STREET 1: 3171 DIRECTORS ROW STREET 2: P O BOX 30788 CITY: MEMPHIS STATE: TN ZIP: 38131 BUSINESS PHONE: 9013322500 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 Commission file Number 0-14781 M.S. CARRIERS, INC. (Exact name of Registrant as specified in its charter.) Tennessee 62-1014070 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3171 Directors Row, Memphis, TN 38131 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (901) 332-2500 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 practical date: Outstanding common shares at August 1, 1996 - 11,989,633 M.S. Carriers, Inc. Index to Form 10-Q Contents Part I - Financial Information Item I - Financial Statements (Unaudited) Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995.... 3 Consolidated Statements of Income for the Three Months Ended June 30, 1996 and 1995 and the Six Months Ended June 30, 1996 and 1995.......... 5 Consolidated Statement of Stockholders' Equity for the Six Months Ended June 30, 1996..................................................... 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995.................................................. 7 Notes to Consolidated Financial Statements................................ 8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... 9 Part II - Other Information Item 1 - Legal Proceedings................................................ 12 Item 2 - Changes in Securities............................................ 12 Item 3 - Defaults Upon Senior Securities.................................. 12 Item 4 - Submission of Matters to a Vote of Security Holders.............. 12 Item 5 - Other Information................................................ 12 Item 6 - Exhibits and Reports on Form 8-K................................. 12 Signatures................................................................ 15 - 2 - M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets
June 30 December 31 1996 1995 _________________________________________ (Unaudited) Assets Current assets: Cash and cash equivalents $ 358,257 $ 486,459 Accounts receivable: Trade, net 30,381,506 27,643,708 Officers and employees 1,535,911 1,181,729 ____________ ____________ 31,917,417 28,825,437 Recoverable income taxes 0 4,277,297 Deferred income taxes 3,532,000 4,136,679 Prepaid expenses and other 5,402,716 5,125,254 ____________ ____________ Total current assets 41,210,390 42,851,126 Property, plant and equipment: Land and land improvements 5,568,043 5,568,043 Buildings 28,885,056 28,589,080 Revenue equipment 249,626,171 254,132,265 Service equipment and other 34,835,722 33,757,292 Construction in progress 3,312,067 3,218,800 ____________ ____________ 322,227,059 325,265,480 Accumulated depreciation and amortization 99,317,052 91,407,638 ____________ ____________ 222,910,007 233,857,842 Other assets 2,724,465 3,225,277 ____________ ____________ Total assets $266,844,862 $279,934,245 ____________ ____________ ____________ ____________ - 3 -
M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets (continued)
June 30 December 31 1996 1995 _________________________________________ (Unaudited) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 4,261,154 $ 4,336,847 Accrued expenses 8,511,024 8,130,784 Claims payable 11,490,146 13,142,682 Income taxes payable 262,209 0 Current maturities of long-term debt 15,512,637 16,666,155 ____________ ____________ Total current liabilities 40,037,170 42,276,468 Long-term debt, less current maturities 37,902,830 47,376,558 Deferred income taxes 38,833,982 37,757,200 Stockholders' equity: Common stock, $.01 par value, Authorized shares - 20,000,000 121,073 124,644 Issued and outstanding shares - 12,107,300 at June 30, 1996 and 12,464,400 at December 31, 1995 Additional paid-in capital 60,323,973 62,076,687 Retained earnings 91,549,545 92,301,919 Equity adjustment from foreign currency translation (1,923,711) (1,979,231) ____________ ____________ Total stockholders' equity 150,070,880 152,524,019 Total liabilities and stockholders' equity $266,844,862 $279,934,245 ____________ ____________ ____________ ____________
See accompanying notes. - 4 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended June 30 June 30 1996 1995 1996 1995 ____________________________________________________________ Operating revenues $ 84,267,277 $ 84,541,100 $163,957,505 $166,242,470 Operating expenses: Salaries, wages and benefits 31,318,578 31,072,636 62,591,149 62,464,395 Operations and maintenance 16,273,653 16,798,796 32,685,285 33,865,691 Taxes and licenses 2,408,614 2,617,212 4,803,381 5,089,288 Insurance and claims 4,235,512 4,030,613 8,532,902 7,656,195 Communications and utilities 1,284,465 1,522,238 2,641,696 3,002,295 Depreciation and amortization 8,978,577 9,852,236 18,437,731 19,197,369 Gain on disposal of revenue equipment (774,582) - (1,233,598) - Rent and purchased transportation 12,311,371 10,825,064 22,899,861 19,771,690 Other 574,082 502,765 1,063,540 1,148,210 ____________ ____________ ___________ ____________ 76,610,270 77,221,560 152,421,947 152,195,133 ____________ ____________ ___________ ____________ Operating income 7,657,007 7,319,540 11,535,558 14,047,337 Other expense (income): Interest expense 1,224,552 1,018,854 2,513,026 1,933,139 Other (124,828) (35,176) (280,448) (100,353) ____________ ____________ ____________ ____________ 1,099,724 983,678 2,232,578 1,832,786 ____________ ____________ ____________ ____________ Income before income taxes 6,557,283 6,335,862 9,302,980 12,214,551 Income taxes 2,364,097 2,311,123 3,384,723 4,426,123 ____________ ____________ ____________ ____________ Net income $ 4,193,186 $ 4,024,739 $ 5,918,257 $ 7,788,428 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ Common shares and Common stock equivalents 12,379,679 13,079,508 12,427,996 13,090,662 Earnings per share $0.34 $0.31 $0.48 $0.59 ____________ ____________ ___________ ___________ ____________ ____________ ___________ ___________
See accompanying notes. - 5 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statement of Stockholders' Equity (Unaudited) Six Months Ended June 30, 1996
Equity Adjustment From Additional Foreign Common Stock Paid-In Retained Currency Shares Amount Capital Earnings Translation Total __________________________________________________________________________________ Balance at January 1, 1996 12,464,400 $124,644 $62,076,687 $92,301,919 ($1,979,231) $152,524,019 Net Income 5,918,257 5,918,257 Repurchase of Common Stock (463,100) (4,631) (2,306,238) (6,670,631) (8,981,500) Issuance of Common Stock upon Exercise of Stock Options 106,000 1,060 553,524 554,584 Equity Adjustment from Foreign Currency 55,520 55,520 __________________________________________________________________________________ Balance at June 30, 1996 12,107,300 $121,073 $60,323,973 $91,549,545 ($1,923,711) $150,070,880 __________________________________________________________________________________ __________________________________________________________________________________
See accompanying notes. - 6 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30 1996 1995 ___________________________________________ Operating activities Net income $ 5,918,257 $ 7,788,428 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,437,731 19,197,369 Gain on disposal of revenue equipment (1,233,598) - Other 205,694 107,874 Provision for deferred income taxes 1,681,461 2,172,045 Changes in operating assets and liabilities: Accounts receivable (3,091,980) 4,869,241 Current and other assets 4,158,275 (3,113,001) Trade accounts payable (75,693) 111,352 Other current liabilities (817,889) (339,149) ____________ ____________ 19,264,001 23,005,731 Net cash provided by operating activities 25,182,258 30,794,159 Investing activities Purchases of property, plant and equipment (12,624,767) (37,742,895) Proceeds from disposals of property and equipment 6,368,469 385,939 _____________ ____________ Net cash used in investing activities (6,256,298) (37,356,956) Financing activities Proceeds from revolving line of credit and long-term debt 50,189,787 Proceeds from exercise of stock options 554,584 Decrease in Equity due to repurchase of Common Stock (8,981,500) Principal payments on revolving line of credit and long-term debt (60,817,033) (8,247,349) _____________ _____________ Net cash used in financing activities (19,054,162) (8,247,349) Increase (decrease) in cash and cash equivalents (128,202) (14,810,146) Cash and cash equivalents at beginning of period 486,459 30,806,731 _____________ _____________ Cash and cash equivalents at end of period $ 358,257 $ 15,996,585 _____________ ______________ _____________ ______________
See accompanying notes. - 7 - M.S. Carriers, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) June 30, 1996 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information and a listing of the Company's significant accounting policies, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. 2. Net Income Per Common Share
Three Months Ended Six Months Ended June 30 June 30 1996 1995 1996 1995 __________________________ ___________________________ Average common shares outstanding 12,205,487 12,878,300 12,251,504 12,878,300 Common stock equivalents 174,192 201,208 176,492 212,362 ____________ ____________ ____________ ____________ Average common shares and common stock equivalents 12,379,679 13,079,508 12,427,996 13,090,662 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ Net income $ 4,193,186 $ 4,024,739 $ 5,918,257 $ 7,788,428 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ Net income per common and equivalent share $0.34 $0.31 $0.48 $0.59 ____________ ____________ ____________ ___________ ____________ ____________ ____________ ___________
3. Change in Accounting Estimate Effective February 1, 1996, the Company changed the estimated salvage value of substantially all of its trailers to more accurately reflect market conditions. This change in accounting estimate resulted in a decrease in depreciation expense of $1,600,000 and an increase in net income of $1,005,000 or $.08 per share for the first six months of 1996 and a decrease in depreciation expense of $960,000 and an increase in net income of $603,000 or $.05 per share for the quarter ended June 30, 1996. - 8 - M.S. Carriers, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations The following table sets forth the percentage relationship of revenue and expense items to operating revenues for the periods indicated.
Percentage of Operating Revenues Three Months Ended June 30 Six Months Ended June 30 1996 1995 1996 1995 _____________________________ ______________________________ Operating revenues 100.0% 100.0% 100.0% 100.0% Operating expenses: Salaries, wages and benefits 37.2% 36.7% 38.2% 37.6% Operations and maintenance 19.3% 19.9% 19.9% 20.4% Taxes and licenses 2.9% 3.1% 2.9% 3.1% Insurance and claims 5.0% 4.8% 5.2% 4.6% Communications and utilities 1.5% 1.8% 1.6% 1.8% Depreciation and amortization 10.6% 11.6% 11.2% 11.5% Gain on disposal of revenue equipment ( .9%) - (.7%) - Rent and purchased transportation 14.6% 12.8% 14.0% 11.9% Other .7% .6% .7% .7% ____________________________ ______________________________ Total operating expenses 90.9% 91.3% 93.0% 91.6% ____________________________ ______________________________ Operating income 9.1% 8.7% 7.0% 8.4% Interest expense 1.4% 1.2% 1.5% 1.2% Other expense (income) (.1%) - (.2%) (.1%) ____________________________ ______________________________ Income before income taxes 7.8% 7.5% 5.7% 7.3% Income Taxes 2.8% 2.7% 2.1% 2.6% ___________________________ ______________________________ Net income 5.0% 4.8% 3.6% 4.7% ___________________________ ______________________________ ___________________________ ______________________________
- 9 - Results of Operations Operating revenues for the first six months of 1996 decreased 1.4% from the same period in the prior year. For the quarter ended June 30, 1996, operating revenues decreased .3% from the same quarter of 1995. The Company's decline in year to date revenues was due primarily to over capacity of equipment, soft market conditions and the effect of adverse weather experienced in the first quarter. Market conditions improved during the quarter ended June 30, 1996 but revenues were slightly less compared to the same quarter of 1995 because the Company's fleet of tractors was slightly less in the quarter ended June 30, 1996 than in the same quarter of 1995. The sources of the Company's revenues were as follows: Three Months Ended Six Months Ended June 30 June 30 1996 1995 1996 1995 ______________________ _____________________ (in thousands) (in thousands) Domestic Linehaul $41,914 $42,894 $81,951 $81,154 Interline Service-Mexico 7,635 6,677 15,292 13,771 Dedicated 6,873 4,491 13,197 8,522 Regional 22,869 25,510 44,210 53,840 Logistics 4,976 4,969 9,308 8,955 _______ ________ _______ _______ Total $84,267 $84,541 $163,958 $166,242 The operating ratio (operating expenses as a percentage of revenues) for the first six months of 1996 was 93.0% compared to 91.6% for the same period of 1995 and was 90.9% for the second quarter of 1996 compared to 91.3% for the same quarter in 1995. The favorable comparison for the second quarter resulted primarily from increased utilization of revenue equipment and from cost control procedures implemented by the Company during the year. Salaries, wages and benefits increased to 38.2% and 37.2% of operating revenues for the six-month and three-month periods ending June 30, 1996, from 37.6% and 36.7% for the same periods in 1995. These increases were due primarily to a slight decrease in revenue per mile which causes the expense ratios to increase. Operations and maintenance expenses decreased to 19.9% of operating revenues for the first six months of 1996 from 20.4% for the same period in 1995, due primarily from the increased use of owner-operators by the Company. Insurance and claims increased to 5.2% and 5.0% of operating revenues for the six-month and three-month periods ended June 30, 1996, from 4.6% and 4.8% for the same periods ended June 30, 1996. These increases were due primarily to adjustments to reflect increased liability related to claims incurred in prior periods. - 10 - Depreciation and amortization was 11.2% of operating revenues for the first six months of 1996 compared to 11.5% for the same period in 1995 and 10.6% of operating revenues for the quarter ended June 30, 1996, compared to 11.6% for the same quarter of 1995. These decreases resulted from a change in accounting estimate to increase the estimated salvage value of substantially all of the Company's trailers to more accurately reflect market conditions and the increased use of owner-operators. The Company reported gains equal to .7% and .9% of operating revenues from the disposal of revenue equipment during the six-month and three-month periods ended June 30, 1996, compared to no reported gains during the same periods of 1995. In the past, the Company elected not to recognize gain from the disposal of revenue equipment rather the Company reduced basis of new additions of revenue equipment. Rent and purchased transportation increased to 14% of operating revenues in the first six months of 1996 compared to 11.9% for the same period of 1995 primarily as a result of the increased use of owner-operators by the Company and increased expenses relating to logistics operations. Rent and purchased transportation were 14.6% of operating revenues for the quarter ended June 30, 1996, compared to 12.8% for the same quarter in 1995. Net income for the quarter ended June 30, 1996 increased 4.1% over net income for the same quarter of 1995; however, earnings per share increased to $.34 from $.31 due to the stock repurchase plan of the Company which resulted in fewer shares of common stock outstanding at June 30, 1996 as compared to June 30, 1995. Liquidity and Capital Resources The Company's business has required significant investments in new equipment and office and terminal facilities, historically financed through cash from operations, secured borrowings, unsecured credit facilities, and capital markets. During the three month period ending June 30, 1996, the Company expended (net of trade-ins and equipment sales) in excess of $6.2 million for purchases of property, plant and equipment. From time to time, the Company has and may continue to repurchase shares of its common stock. The timing and amount of such repurchases depend on the market conditions and other factors. During the first six months of 1996, the Company repurchased 463,100 of its shares at an aggregate cost of $9.0 million. - 11 - The Company funded these purchases of property, plant and equipment and the repurchase of its common shares through cash from operations. The Company has a bank line of credit providing for borrowings of up to $30,000,000, with interest at the lower of the bank's corporate prime rate or the 30-day LIBOR rate plus .45%. At June 30, 1996 there was $10.9 million outstanding under this line of credit. Management expects to maintain this line of credit for an indefinite period. The Company expects to finance its normal operating requirements and future revenue equipment purchases through cash from operations and the Company's bank line of credit. PART II - Other Information Item 1. Legal Proceedings The Company is involved in certain ordinary routine litigation incidental to its business. The Company does not expect that the outcome of any of these proceedings will have a material adverse effect upon the Company's operations or its financial position. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders At the Company's annual meeting of shareholders on May 3, 1996, Michael S. Starnes, Carl J. Mungenast, James W. Welch, M.J. Barrow, Robert P. Hurt, Morris H. Fair and Jack H. Morris, III, were re-elected as directors upon a vote of 10,557,309 for, 0 against and 345,134 abstaining. The Company's 1996 Stock Option Plan was approved at the meeting upon a vote of 7,393,215 for, 1,917,945 against and 138,239 abstaining. No other matters were submitted to a vote of security holders during the second quarter of 1996. Item 5. Other Information None - 12 - Item 6 - Exhibits and Reports on Form 8-K (a) The exhibits filed as a part of this report are listed below: Exhibit Page Number or Incorporation Number Description By Reference 3(i).1 Restated Charter of M.S. Carriers, Incorporated by reference from Inc. exhibits to the registrant's Registration Statement on Form S-1 (Registration Number 33-12070). 3(i).2 Articles of Amendment to Charter Incorporated by reference from of M.S. Carriers, Inc. exhibits to the registrant's Registration Statement on Form S-3 (Registration Number 33-63280). 3(ii) Amended and Restated By-Laws of M.S. Incorporated by reference from Carriers, Inc. exhibits to the registrant's Registration Statement on Form S-3 (Registration Number 33-63280). 10.1 Incentive Stock Option Plan Incorporated by reference from exhibits to the registrant's Registration Statement on Form S-1 (Registration Number 33-12070). 10.2 Amendment to Incentive Stock Option Incorporated by reference from Plan exhibits to the registrant's Registration Statement on Form S-1 (Registration Number 33-12070). 10.3 1993 Stock Option Plan Incorporated by reference from exhibits to the registrant's Registration Statement on Form S-3 (Registration Number 33-63280). 10.4 Non-Employee Directors Stock Option Incorporated by reference Plan from registrant's Proxy Statement dated March 31, 1995. 10.5 Employment Agreements with James W. Incorporated by reference Welch, M.J. Barrow and Robert P. from exhibits to the Hurt registrant's Statement on Form S-1 (Registration Number 33-12070). - 13 - 10.6 Employment Agreement with Michael S. Incorporated by reference Starnes from exhibits to the registrant's 2nd Quarter 1995 Form 10-Q. 10.7 Employment Agreement with Carl J. Incorporated by reference Mungenast from exhibits to the registrant's 2nd Quarter 1995 Form 10-Q. 10.8 1993 Incentive Plan for Designated Incorporated by reference Key Employees from exhibits to the registrant's 2nd Quarter 1995 Form 10-Q. 10.9 1996 Stock Options Plan Incorporated by reference from registrant's Proxy Statement dated April 4, 1996. 11 Statement regarding computation of 9 per share earnings 27 Financial Data Schedule NOT INCLUDED WITH PAPER FILING (b) The Company did not file any reports on Form 8-K during the three months ended June 30, 1996. - 14 - 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. M.S. Carriers, Inc. (Registrant) August 14, 1996 s/ Dwight Bassett Date Dwight Bassett, Controller (Chief Accounting Officer of the Company) - 15 - EX-27 2 ART. 5 FINANCIAL DATA SCHEDULES FOR 2ND QTR 10-Q FOR 1996
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF JUNE 30, 1996, AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1996, AND THE NOTES RELATED THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1996 APR-01-1996 JUN-30-1996 358,257 0 31,024,931 643,425 0 41,210,390 322,227,059 99,317,052 266,844,862 40,037,170 37,902,830 121,073 0 0 149,949,807 266,844,862 0 84,267,277 0 76,610,270 0 0 1,224,552 6,557,283 2,364,097 4,193,186 0 0 0 4,193,186 .34 .34
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