-----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, HaQzpjwdSXfYxbxrMRhdVdzEISSM5YsIub6qAjXGtOwzBKhp7nAHpNyZUX1P7JkV VDOO7cUf2p5Q550WfrDB3Q== 0000790372-96-000014.txt : 19961118 0000790372-96-000014.hdr.sgml : 19961118 ACCESSION NUMBER: 0000790372-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96665721 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 September 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 November 1, 1996 - 12,009,633 - 1 - M.S. Carriers, Inc. Index to Form 10-Q Contents Part I - Financial Information Item I - Financial Statements (Unaudited) Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . . . . . . .3 Consolidated Statements of Income for the Three Months Ended September 30, 1996 and 1995 and the Nine Months Ended September 30, 1996 and 1995 . . . . . . . . 5 Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 1996. . . . . . . . . . . . . 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 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. . . . . . . . . . . . . . 13 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 - 2 - PART I - FINANCIAL INFORMATION Item 1. Financial Statements M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets
September 30 December 31 1996 1995 ____________________________________ (Unaudited) Assets Current assets: Cash and cash equivalents $ 276,279 $ 486,459 Accounts receivable: Trade, net 31,358,937 27,643,708 Officers and employees 1,442,671 1,181,729 _____________________________________ 32,801,608 28,825,437 Recoverable income taxes 4,277,297 Deferred income taxes 3,298,000 4,136,679 Prepaid expenses and other 4,364,570 5,125,254 ____________________________________ Total current assets 40,740,457 42,851,126 Property, plant and equipment: Land and land improvements 6,091,060 5,568,043 Buildings 30,128,055 28,589,080 Revenue equipment 256,780,112 254,132,265 Service equipment and other 36,550,996 33,757,292 Construction in progress 229,342 3,218,800 _____________________________________ 329,779,565 325,265,480 Accumulated depreciation and amortization 100,727,171 91,407,638 _____________________________________ 229,052,394 233,857,842 Other assets 3,512,689 3,225,277 ____________________________________ Total assets $273,305,540 $279,934,245 ____________________________________ ____________________________________
- 3 - M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets (continued)
September 30 December 31 1996 1995 _____________________________________ (Unaudited) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 6,491,685 $ 4,336,847 Accrued expenses 9,653,280 8,130,784 Claims payable 10,839,857 13,142,682 Income taxes payable 1,341,395 Current maturities of long-term debt 14,838,907 16,666,155 ____________________________________ Total current liabilities 43,165,124 42,276,468 Long-term debt, less current maturities 38,368,613 47,376,558 Deferred income taxes 39,793,637 37,757,200 Stockholders' equity: Common stock, $.01 par value: Authorized shares - 20,000,000 120,096 124,644 Issued and outstanding shares - 12,009,633 at September 30, 1996 and 12,464,400 at December 31, 1995 Additional paid-in capital 59,959,590 62,076,687 Retained earnings 93,871,081 92,301,919 Equity adjustment from foreign currency translation (1,972,601) (1,979,231) _____________________________________ Total stockholders' equity 151,978,166 152,524,019 _____________________________________ Total liabilities and stockholders' $273,305,540 $279,934,245 equity _____________________________________ _____________________________________
See accompanying notes. - 4 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 1996 1995 1996 1995 ____________________________________________________________ Operating revenues $ 85,822,977 $ 84,326,406 $249,780,482 $250,568,876 Operating expenses: Salaries, wages and benefits 31,744,986 32,533,431 94,336,135 94,997,826 Operations and maintenance 16,119,444 17,001,491 48,804,729 50,830,687 Taxes and licenses 1,684,384 2,514,021 6,487,765 7,603,309 Insurance and claims 4,029,075 4,018,213 12,561,977 11,674,408 Communications and utilities 1,212,927 1,678,114 3,854,623 4,680,409 Depreciation and amortization 9,078,669 9,818,082 27,516,400 29,015,451 Gain on disposal of revenue equipment (310,969) (1,544,567) Rent and purchased transportation 13,989,970 11,215,610 36,889,831 30,987,300 Other 586,346 621,009 1,649,886 1,769,219 _________________________________________________________ 78,134,832 79,399,971 230,556,779 231,558,609 _________________________________________________________ Operating income 7,688,145 4,926,435 19,223,703 19,010,267 Other expense (income): Interest expense 1,110,858 1,008,931 3,623,884 2,942,070 Other (66,537) (92,953) (346,985) (156,811) _________________________________________________________ 1,044,321 915,978 3,276,899 2,785,259 _________________________________________________________ Income before income taxes 6,643,824 4,010,457 15,946,804 16,225,008 Income taxes 2,387,308 1,429,377 5,772,031 5,855,500 _________________________________________________________ Net income $ 4,256,516 $ 2,581,080 $ 10,174,773 $ 10,369,508 _________________________________________________________ _________________________________________________________ Weighted average of common shares and common stock equivalents 12,205,507 13,055,128 12,294,998 13,071,960 Earnings per share $0.35 $0.20 $0.83 $0.79 _________________________________________________________ _________________________________________________________
See accompanying notes. - 5 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statement of Stockholders' Equity (Unaudited) Nine Months Ended September 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 10,174,773 10,174,773 Repurchase of Common Stock (586,100) (5,861) (2,918,778) (8,605,611) (11,530,250) Issuance of Common Stock upon Exercise of Stock Options 131,333 1,313 801,681 802,994 Equity Adjustment from Foreign Currency Translation 6,630 6,630 __________________________________________________________________________________ Balance at September 30, 1996 12,009,633 $120,096 $59,959,590 $93,871,081 $(1,972,601) $151,978,166 __________________________________________________________________________________ __________________________________________________________________________________
See accompanying notes. - 6 - M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30 1996 1995 ___________________________________________ Operating activities Net income $ 10,174,773 $ 10,369,508 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,516,400 29,015,451 Gain on disposal of revenue equipment (1,544,567) Other 231,891 161,648 Provision for deferred income taxes 2,875,116 2,850,445 Changes in operating assets and liabilities: Accounts receivable (3,976,171) 3,101,617 Current and other assets 4,525,308 (2,449,798) Trade accounts payable 2,154,838 (613,015) Other current liabilities 561,066 1,105,316 ____________ ____________ 32,343,881 33,171,664 ____________ ____________ Net cash provided by operating activities 42,518,654 43,541,172 Investing activities Purchases of property, plant and equipment (32,803,834) (59,033,026) Proceeds from disposal of property and equipment 11,637,449 485,000 _____________ ____________ Net cash used in investing activities (21,166,385) (58,548,026) Financing activities Proceeds from revolving line of credit and long-term debt 86,872,515 Proceeds from exercise of stock options 802,994 Repurchase of Common Stock (11,530,250) Principal payments on revolving line of credit and long-term debt (97,707,708) (12,439,375) _____________ _____________ Net cash used in financing activities (21,562,449) (12,439,375) _____________ _____________ Decrease in cash and cash equivalents (210,180) (27,446,229) Cash and cash equivalents at beginning of period 486,459 30,806,731 _____________ _____________ Cash and cash equivalents at end of period $ 276,279 $ 3,360,502 _____________ ______________ _____________ ______________
See accompanying notes. - 7 - M.S. Carriers, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) September 30, 1996 1. Basis of Presentation The accompanying unaudited consolidated 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 nine-month period ended September 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 Nine Months Ended September 30 September 30 1996 1995 1996 1995 __________________________ ___________________________ Average common shares outstanding 11,998,281 12,878,300 12,161,280 12,878,300 Common stock equivalents 207,226 176,828 133,718 193,660 ____________ ____________ ____________ ____________ Average common shares and common stock equivalents 12,205,507 13,055,128 12,294,998 13,071,960 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ Net income $ 4,256,516 $ 2,581,080 $ 10,174,773 $ 10,369,508 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ Net income per common and equivalent share $0.35 $0.20 $0.83 $0.79 ____________ ____________ ____________ ___________ ____________ ____________ ____________ ___________
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 $2,560,000 and an increase in net income of $1,608,000 or $0.13 per share for the first nine 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 September 30, 1996. - 8 - Item 2. 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 Nine Months Ended September 30 September 30 1996 1995 1996 1995 _____________________________ ______________________________ Operating revenues 100.0% 100.0% 100.0% 100.0% Operating expenses: Salaries, wages and benefits 37.0 38.6 37.8 37.9 Operations and maintenance 18.8 20.2 19.5 20.3 Taxes and licenses 2.0 3.0 2.6 3.0 Insurance and claims 4.7 4.8 5.0 4.6 Communications and utilities 1.4 2.0 1.5 1.9 Depreciation and amortization 10.6 11.6 11.0 11.6 Gain on disposal of revenue equipment (0.4) (0.6) Rent and purchased transportation 16.3 13.3 14.8 12.4 Other 0.6 0.7 0.7 0.7 ________________________________________________________________ Total operating expenses 91.0 94.2 92.3 92.4 ________________________________________________________________ Operating income 9.0 5.8 7.7 7.6 Interest expense (1.3) (1.2) (1.4) (1.2) Other income 0.1 0.1 0.1 0.1 ____________________________ ______________________________ Income before income taxes 7.8 4.7 6.4 6.5 Income Taxes 2.8 1.7 2.3 2.4 ___________________________ ______________________________ Net income 5.0% 3.0% 4.1% 4.1% ___________________________ ______________________________ ___________________________ ______________________________
- 9 - Results of Operations Operating revenues for the first nine months of 1996 decreased 0.3% from the same period in the prior year. For the quarter ended September 30, 1996, operating revenues increased 1.8% from the same quarter of 1995. The Company's slight decline in year to date revenues was due primarily to over capacity of equipment, soft market conditions and the adverse weather experienced in the first quarter. Market conditions began to improve during the second quarter of 1996 and the improvement continued during the quarter ended September 30, 1996. The sources of the Company's revenues were as follows:
Domestic Linehaul $39,371 $41,339 $121,321 $122,492 Interline Service - Mexico 8,115 6,947 23,407 20,718 Dedicated 7,263 6,520 20,460 15,042 Regional 24,773 24,853 68,983 78,693 _____________________________________________________________ Total Trucking 79,522 79,659 234,171 236,945 Logistics 6,301 4,667 15,609 13,624 _____________________________________________________________ Total Company $85,823 $84,326 $249,780 $250,569 _____________________________________________________________ _____________________________________________________________
The operating ratio (operating expenses as a percentage of revenues) for the first nine months of 1996 was 92.3% compared to 92.4% for the same period of 1995 and was 91.0% for the third quarter of 1996 compared to 94.2% for the same quarter in 1995. Salaries, wages and benefits decreased to 37.8% and 37.0% of operating revenues for the nine-month and three-month periods ended September 30, 1996, from 37.9% and 38.6% for the same periods in 1995. The decrease in the three-month period was due primarily to the increase in the number of owner-operators used by the Company during the third quarter of 1996. Operations and maintenance expenses decreased to 19.5% and 18.8% of operating revenues for the nine-month and three-month periods ended September 30, 1996, from 20.3% and 20.2% for the same periods in 1995, due primarily to the increased use of owner-operators by the Company during 1996. Taxes and licenses decreased to 2.6% and 2.0% of operating revenues for the nine-month and three-month periods ended September 30, 1996, from 3.0% and 3.0% for the same periods ended September 30, 1995. These decreases were due primarily to various tax refunds recorded during the third quarter of 1996. - 10 - Communications and utilities decreased to 1.5% and 1.4% of operating revenues for the nine-month and three-month periods ended September 30, 1996, from 1.9% and 2.0% for the same periods ended September 30, 1995. This was due to cost control measures implemented during 1996. Depreciation and amortization was 11.0% of operating revenues for the first nine months of 1996 compared to 11.6% for the same period in 1995 and 10.6% of operating revenues for the quarter ended September 30, 1996, compared to 11.6% for the same quarter of 1995. These decreases resulted from the increased use of owner-operators and 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. The Company reported gains equal to 0.6% and 0.4% of operating revenues from the disposal of revenue equipment during the nine-month and three-month periods ended September 30, 1996, compared to no reported gains during the same periods of 1995. In the past, the Company did not recognize gains from the disposal of revenue equipment rather the Company reduced the basis of new additions of revenue equipment. Rent and purchased transportation increased to 14.8% of operating revenues in the first nine months of 1996 compared to 12.4% for the same period of 1995 and 16.3% of operating revenues for the quarter ended September 30, 1996, compared to 13.3% for the same quarter in 1995. These increases were the result of the increased use of owner-operators by the Company and increased expenses relating to logistics operations. Net income for the quarter ended September 30, 1996 increased 64.9% over net income for the same quarter of 1995; however, earnings per share increased to $.35 from $.20, or 75.0%, due to the increase in net income and the stock repurchase plan of the Company which resulted in fewer shares of common stock outstanding during the quarter ended September 30, 1996 as compared to the quarter ended September 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 nine-month period ending September 30, 1996, the Company expended (net of trade-ins and equipment sales) in excess of $21.1 million for purchases of property, plant and equipment. During the third quarter of 1996, the Company completed its stock repurchase plan which was announced in November 1995. During the first nine months of 1996, the Company repurchased 586,100 of its shares at an aggregate cost of $11.5 million. The Company funded these purchases of property, plant and equipment and the repurchase of its common shares through cash from operations and unsecured credit facilities. 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 September 30, 1996 there was $14.8 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, the Company's bank line of credit and secured borrowings. - 11 - 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 No matters were submitted to a vote of security holders during the third 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 1993 Incentive Plan for Designated Incorporated by reference Key Employees from exhibits to the registrant's 2nd Quarter 1995 Form 10-Q. 10.8 1996 Stock Option Plan Incorporated by reference from registrant's Proxy Statement dated April 4, 1996. 11 Statement regarding computation of 8 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 September 30, 1996. 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) Date: November 14, 1996 s/ M.J. Barrow M.J. Barrow, Senior Vice President (Chief Financial Officer of the Company) - 14 - EX-27 2 ART. 5 FINANCIAL DATA SCHEDULES FOR 3RD QTR 10-Q FOR 1996
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996, AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996, AND THE NOTES RELATED THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1996 JUL-01-1996 SEP-30-1996 276,279 0 31,924,860 565,923 0 40,740,457 329,779,565 100,727,171 273,305,540 43,165,124 39,793,637 120,096 0 0 151,858,070 273,305,540 0 85,822,977 0 78,134,832 0 0 1,110,858 6,643,824 2,387,308 4,256,516 0 0 0 4,256,516 .35 .35
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