-----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, IMsSb3X1twgpyBrIPm3hD9+JJOz5/XMo/KEa1fGfNHcAYxbr67pHiK04iSYm4Mg4 +QCuZ9W7uB+6hHa+2pJWSw== 0000790372-97-000012.txt : 19971117 0000790372-97-000012.hdr.sgml : 19971117 ACCESSION NUMBER: 0000790372-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-14781 FILM NUMBER: 97721959 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, 1997 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, 1997 - 12,183,101 - 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, 1997 and December 31, 1996. . . . . . . . . . . . . . . . . . . . . . .3 Consolidated Statements of Income for the Three Months Ended September 30, 1997 and 1996 and the Nine Months Ended September 30, 1997 and 1996 . . . . . . . . 5 Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 1997. . . . . . . . . . . . . 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996. . . . . . . . . . . . . 7 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . 8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . 9 Item 3 - Quantitative and Qualitative Disclosures About Market Risks . . . . . . . . . . . . . . . . . . . . . 11 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 - 2 - PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets
September 30 December 31 1997 1996 (Unaudited) ___________________________________ Assets Current assets: Cash and cash equivalents $ 1,164,620 $ 1,153,993 Accounts receivable: Trade, net 42,372,136 33,018,388 Officers and employees 1,291,041 1,506,247 ___________________________________ 43,663,177 34,524,635 Recoverable income taxes 2,495,164 5,870,263 Deferred income taxes 4,843,000 3,755,000 Prepaid expenses and other 6,516,806 4,898,183 ___________________________________ Total current assets 58,682,767 50,202,074 Property and equipment: Land and land improvements 6,221,032 6,110,279 Buildings 30,128,055 30,128,055 Revenue equipment 308,581,049 260,026,924 Service equipment and other 37,691,568 37,014,110 Construction in progress 1,539,297 177,218 ___________________________________ 384,161,001 333,456,586 Accumulated depreciation and amortization 101,950,940 96,240,862 ___________________________________ 282,210,061 237,215,724 Other assets 3,944,630 3,243,916 ___________________________________ Total assets $344,837,458 $290,661,714 ___________________________________ ___________________________________
See accompanying notes. - 3 - TABLE M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets (continued) September 30 December 31 1997 1996 ______________________________________ (Unaudited) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 14,531,307 $ 7,288,149 Accrued expenses 16,557,369 9,733,798 Claims payable 14,417,467 11,694,210 Current maturities of long-term debt 20,229,842 14,315,462 ______________________________________ Total current liabilities 65,735,985 43,031,619 Long-term debt, less current maturities 54,982,472 45,373,288 Deferred income taxes 52,859,885 48,045,423 Stockholders' equity: Common stock, $.01 par value, 121,631 120,096 Authorized shares - 20,000,000 Issued and outstanding shares - 12,163,101 at September 30, 1997 and 12,009,633 at December 31, 1996 Additional paid-in capital 63,533,860 59,959,590 Retained earnings 109,607,279 96,135,352 Cumulative translation adjustments (2,003,654) (2,003,654) ______________________________________ Total stockholders' equity 171,259,116 154,211,384 ______________________________________ Total liabilities and stockholders' equity $344,837,458 $290,661,714 ______________________________________ ______________________________________ 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 1997 1996 1997 1996 _______________________________________________________ Operating revenues $107,465,935 $85,822,977 $301,677,875 $249,780,482 Operating expenses: Salaries, wages and benefits 33,288,290 31,744,986 98,000,840 94,336,135 Operations and maintenance 17,680,798 16,119,444 51,632,095 48,804,729 Taxes and licenses 2,818,984 1,684,384 7,902,127 6,487,765 Insurance and claims 4,933,022 4,029,075 13,888,529 12,561,977 Communications and utilities 1,367,845 1,212,927 3,958,139 3,854,623 Depreciation and amortization 9,908,039 9,078,669 28,939,798 27,516,400 Loss (gain) on disposals of revenue equipment 53,722 (310,969) (8,455) (1,544,567) Rent and purchased transportation 26,624,458 13,989,970 70,616,114 36,889,831 Other 464,925 586,346 1,439,882 1,649,886 _______________________________________________________ 97,140,083 78,134,832 276,369,069 230,556,779 _______________________________________________________ Operating income 10,325,852 7,688,145 25,308,806 19,223,703 Other expense (income): Interest expense 1,739,182 1,110,858 4,342,186 3,623,884 Other (68,674) (66,537) (24,572) (346,985) _______________________________________________________ 1,670,508 1,044,321 4,317,614 3,276,899 _______________________________________________________ Income before income taxes 8,655,344 6,643,824 20,991,192 15,946,804 Income taxes 3,085,265 2,387,308 7,519,265 5,772,031 _______________________________________________________ Net income $ 5,570,079 $ 4,256,516 $ 13,471,927 $ 10,174,773 _______________________________________________________ _______________________________________________________ Common shares and common stock equivalents 12,589,587 12,205,507 12,554,948 12,294,998 Earnings per share $0.44 $0.35 $1.07 $0.83 _______________________________________________________ _______________________________________________________
See accompanying notes. -5- M.S. Carriers, Inc. and Subsidiaries Consolidated Statement of Stockholders' Equity (Unaudited) Nine Months Ended September 30, 1997
Cumulative Common Stock Paid-In Retained Translation Shares Amount Capital Earnings Adjustments Total ____________________________________________________________________________________ Balance at January 1, 1997 $12,009,633 $120,096 $59,959,590 $96,135,352 $(2,003,654) $154,211,384 Issuance of common stock 153,468 1,535 3,574,270 3,575,805 Net Income 13,471,927 13,471,927 ____________________________________________________________________________________ Balance at September 30, 1997 $12,163,101 $121,831 $63,533,860 $109,607,279 $(2,003,654) $171,259,116 ____________________________________________________________________________________ ____________________________________________________________________________________
See accompanying notes. -6- M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30 1997 1996 ______________________________________ Operating activities Net income $ 13,471,927 $10,174,773 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,939,798 27,516,400 Gain on disposal of revenue equipment (8,455) (1,544,567) Other 150,174 231,891 Provision for deferred income taxes 3,726,462 2,875,116 Changes in operating assets and liabilities: Accounts receivable (9,138,542) (3,976,171) Current and other assets 2,171,742 4,525,308 Trade accounts payable 7,243,158 2,154,838 Other current liabilities 8,770,442 561,066 ______________________________________ 41,854,779 32,343,881 ______________________________________ Net cash provided by operating activities 55,326,706 42,518,654 Investing activities Purchases of property and equipment (72,210,590) (32,803,834) Proceeds from disposals of property and equipment 17,458,948 11,637,449 ______________________________________ Net cash used in investing activities (54,751,642) (21,166,385) Financing activities Proceeds from revolving line of credit and long-term debt 134,354,000 86,872,515 Proceeds from exercise of stock options 802,994 Reurchase of Common Stock (11,530,250) Principal payments on revolving line of credit and long-term debt (134,918,437) (97,707,708) ______________________________________ Net cash provided by (used in) financing activities (564,437) (21,562,449) ______________________________________ Increase (decrease) in cash and cash equivalents 10,627 (210,180) Cash and cash equivalents at beginning of period 1,153,993 486,459 ______________________________________ Cash and cash equivalents at end of period $ 1,164,620 $ 276,279 ______________________________________ ______________________________________
See accompanying notes. -7- M.S. Carriers, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) September 30, 1997 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, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. 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, 1996. 2. Net Income Per Common Share
Three Months Ended Nine Months Ended September 30 September 30 1997 1996 1997 1996 _______________________________________________________ Average common shares 12,009,633 11,998,281 12,009,633 12,161,280 outstanding Common stock equivalents 579,954 207,226 545,315 133,718 _______________________________________________________ Average common shares and common stock equivalents 12,589,587 12,205,507 12,554,948 12,294,998 _______________________________________________________ _______________________________________________________ Net income $ 5,570,079 $ 4,256,516 $ 13,471,927 $10,174,773 _______________________________________________________ _______________________________________________________ Net income per common and equivalent share $0.44 $0.35 $1.07 $0.83 _______________________________________________________ _______________________________________________________
3. Non Cash Transaction On September 18, 1997, the Company purchased 261 tractors and 486 trailers operated by New Hi-Way Express, Inc., an Arkansas based truckload carrier in exchange for Common Stock and other consideration. -8- PAGE
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 1997 1996 1997 1996 _______________________________________________________ Operating revenues 100.0% 100.0% 100.0% 100.0% Operating expenses: Salaries, wages and benefits 31.0 37.0 32.5 37.8 Operations and maintenance 16.4 18.8 17.1 19.5 Taxes and licenses 2.6 2.0 2.6 2.6 Insurance and claims 4.6 4.7 4.6 5.0 Communications and utilities 1.3 1.4 1.3 1.5 Depreciation and amortization 9.2 10.6 9.6 11.0 Loss (gain) on disposals of revenue equipment 0.1 (0.4) - (0.6) Rent and purchased transportation 24.8 16.3 23.4 14.8 Other 0.4 0.6 0.5 0.7 _______________________________________________________ Total operating expenses 90.4 91.0 91.6 92.3 _______________________________________________________ Operating income 9.6 9.0 8.4 7.7 Interest expense (1.6) (1.3) (1.4) (1.4) Other income 0.1 0.1 - 0.1 _______________________________________________________ Income before income taxes 8.1 7.8 7.0 6.4 Income Taxes 2.9 2.8 2.5 2.3 _______________________________________________________ Net income 5.2% 5.0% 4.5% 4.1% _______________________________________________________ _______________________________________________________
Results of Operations Operating revenues for the first nine months of 1997 increased $51.9 million, or 20.8%, to $301.7 million compared with $249.8 million for the same period in the prior year. For the quarter ended September 30, 1997, operating revenues increased $21.6 million, or 25.2%, to $107.5 million compared with $85.8 million for the same quarter of 1996. The Company's increase in revenues was due primarily to increased demand from customers, expansion of the Company's fleet and increased logistics revenues. The Company's fleet increased to 3,113 tractors at September 30, 1997 from 2,426 at September 30, 1996, an increase of 687 tractors. -9- CAPTION The sources of the Company's revenues were as follows: Three Months Ended Nine Months Ended September 30 September 30 1997 1996 1997 1996 ___________________________________________ (in thousands) (in thousands) Domestic Linehaul $ 51,877 $ 39,371 $144,660 $121,321 Interline Service - Mexico 7,738 8,115 22,100 23,407 Dedicated 6,815 7,263 20,275 20,460 Regional 30,791 24,773 89,490 68,983 Logistics 10,245 6,301 25,153 15,609 ___________________________________________ Total $107,466 $ 85,823 $301,678 $249,780 ___________________________________________ ___________________________________________
The operating ratio (operating expenses as a percentage of revenues) for the first nine months of 1997 was 91.6% compared to 92.3% for the same period of 1996 and was 90.4% for the third quarter of 1997 compared to 91.0% for the same quarter in 1996. Salaries, wages and benefits decreased to 32.5% and 31.0% of operating revenues for the nine-month and three-month periods ending September 30, 1997, from 37.8% and 37.0% for the same periods in 1996. These decreases were due primarily to the increased use of owner- operators. The Company had 743 owner-operators at September 30, 1997 compared to 338 at September 30, 1996. Operations and maintenance expenses decreased to 17.1% and 16.4% of operating revenues for the nine-month and three-month periods ending September 30, 1997 from 19.5% and 18.8% for the same periods in 1996 due primarily from the increased use of owner-operators by the Company. Insurance and claims decreased to 4.6% of operating revenues for the nine- month and three-month periods ended September 30, 1997 from 5.0% and 4.7% for the same periods ended September 30, 1996. These decreases were due primarily to increased logistics revenues in 1997 and adjustments made during 1996 to reflect increased liability related to claims incurred in prior periods. Depreciation and amortization was 9.6% of operating revenues for the first nine months of 1997 compared to 11.0% for the same period in 1996 and 9.2% of operating revenues for the quarter ended September 30, 1997 compared to 10.6% for the same quarter of 1996. These decreases resulted primarily from the increased use of owner- operators and increased logistics revenues. The Company reported minimal gain from the disposals of revenue equipment during the nine-month period ended September 30, 1997 compared to reported gains of .6% of operating revenues for the same period of 1996. For the quarter ended September 30, 1997 the Company reported a loss equal to .1% of operating revenues from the disposals of revenue equipment compared to a reported gain from the disposals of revenue equipment of .4% of operating revenues for the same quarter of 1996. Rent and purchased transportation increased to 23.4% of operating revenues in the first nine months of 1997 compared to 14.8% for the same period of 1996 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 increased to 24.8% of operating revenues for the quarter ended September 30, 1997 from 16.3% for the same quarter in 1996 for the same reasons. Liquidity and Capital Resources The Company's business has required significant investment 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, 1997, the Company had expenditures, net of sales, of $54.8 million for purchases of property and equipment. The Company funded these purchases of property and equipment through cash on hand and cash from operations. Net cash provided by operating activities was $55.3 million. The Company has bank lines of credit providing for borrowings of up to $58.6 million, with interest at the lower of the bank's corporate prime rate or the 30-day LIBOR rate plus .45%. At September 30, 1997 there was $46.4 million outstanding under these lines of credit. Management expects to maintain these lines of credit for an indefinite period. The Company expects to finance its normal operating requirements and planned revenue equipment purchases through cash from operations, the Company's bank lines of credit and secured borrowings. In the future, the Company will continue to have significant capital requirements, which may require the Company to seek additional borrowings or to access capital markets. The availability of debt financing or equity capital will depend upon the Company's financial condition and results of operations as well as prevailing market conditions and other factors over which the Company has little or no control. Item 3. Quantitative and Qualitative Disclosures About Market Risks Not Applicable 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 1997. Item 5. Other Information None 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). 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, 1997. 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, 1997 s/Dwight M. Bassett Dwight M. Bassett, Director of Accounting (Chief Accounting Officer of the Company) EX-27 2 ART. 5 FINANCIAL DATA SCHEDULES FOR 3RD QTR 10-Q FOR 1997
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997, 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 1,164,620 0 42,949,250 577,114 0 58,682,767 384,161,001 101,950,940 344,837,458 65,735,985 54,982,472 120,096 0 0 171,137,485 344,837,458 0 107,465,935 0 97,140,083 0 0 1,739,182 8,655,344 3,085,265 5,570,079 0 0 0 5,570,079 .44 .44
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