-----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, MgAZ7c4vfphEZyDQOpGyUMnPSHg6m9+kL7HFvE1ZgwlLV46gtrLE9aWmWVfZPEUy +Jn7moIHPptG7G63m+6fDQ== 0000790372-98-000010.txt : 19980518 0000790372-98-000010.hdr.sgml : 19980518 ACCESSION NUMBER: 0000790372-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: 98626275 BUSINESS ADDRESS: STREET 1: 3171 DIRECTORS ROW CITY: MEMPHIS STATE: TN ZIP: 38116 BUSINESS PHONE: 9013322500 MAIL ADDRESS: STREET 1: 3171 DIRECTORS ROW CITY: MEMPHIS STATE: TN ZIP: 38116 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 March 31, 1998 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 Director's 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 March 31, 1998 - 12,255,101 -1- PAGE M.S. Carriers, Inc. Index to Form 10-Q Contents Part I - Financial Information Item 1 - Financial Statements (Unaudited) Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997............................................. 3 Consolidated Statements of Income for the Three Months Ended March 31, 1998 and 1997....................................... 5 Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 1998................................... 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997................................. 7 Notes to 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...................................................... 14 -2- PAGE PART I - Financial Information Item 1. Financial Statements (Unaudited) M.S. Carriers, Inc. Consolidated Balance Sheets
March 31 December 31 1998 1997 --------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,902,026 $ 351,919 Accounts receivable: Trade, net 46,495,250 44,551,316 Officers and employees 887,576 660,370 --------------------------------------- 47,382,826 45,211,686 Recoverable income taxes 3,490,510 4,520,917 Deferred income taxes 5,882,000 5,427,000 Prepaid expenses and other 8,728,867 4,979,826 --------------------------------------- Total current assets 67,386,229 60,491,348 Property and equipment: Land and land improvements 6,246,745 6,221,032 Buildings 30,128,055 30,128,055 Revenue equipment 340,789,433 326,709,385 Service equipment and other 40,639,244 40,089,062 Construction in progress 489,434 114,015 --------------------------------------- 418,292,911 403,261,549 Less Accumulated depreciation and amortization 109,847,632 106,090,776 --------------------------------------- 308,445,279 297,170,773 Other assets 6,502,111 4,584,340 --------------------------------------- Total assets $382,333,619 $362,246,461 --------------------------------------- ---------------------------------------
See accompanying notes. -3- PAGE M.S. Carriers, Inc. Consolidated Balance Sheets (continued)
March 31 December 31 1998 1997 --------------------------------------- (Unaudited) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 5,200,590 $ 5,448,110 Accrued compensation and related costs 8,019,729 2,343,595 Accrued expenses 9,174,903 8,438,898 Claims payable 15,960,714 14,826,627 Current maturities of long-term debt 15,247,335 15,737,609 --------------------------------------- Total current liabilities 53,603,271 46,794,839 Long-term debt, less current maturities 86,146,859 79,977,266 Deferred income taxes 59,800,394 58,083,519 Stockholders' equity: Common stock Authorized shares - 20,000,000 Issued and outstanding shares - 12,255,101 at March 31, 1998 and 12,210,601 at December 31, 1997 122,551 122,106 Additional paid-in capital 65,176,440 64,175,260 Retained earnings 119,487,758 115,097,125 Cumulative translation adjustments (2,003,654) (2,003,654) --------------------------------------- Total stockholders' equity 182,783,095 177,390,837 --------------------------------------- Total liabilities and stockholders' equity $382,333,619 $362,246,461 --------------------------------------- ---------------------------------------
See accompanying notes. -4- PAGE M.S. Carriers, Inc. Consolidated Statements of Income (Unaudited)
Three Months Ended March 31 1998 1997 --------------------------------------- Operating revenues $117,203,825 $ 92,699,990 Operating expenses: Salaries, wages and benefits 36,455,819 31,566,921 Operations and maintenance 19,398,756 17,720,060 Taxes and licenses 2,545,722 2,470,530 Insurance and claims 5,194,804 4,293,679 Communications and utilities 1,619,945 1,254,897 Depreciation and amortization 11,347,848 9,378,652 Loss (gain) on disposals of revenue equipment 23,101 (87,590) Rent and purchased transportation 31,583,149 19,686,370 Other 679,752 523,080 --------------------------------------- 108,848,896 86,806,599 --------------------------------------- Operating income 8,354,929 5,893,391 Other expense (income): Interest expense 1,637,632 1,203,973 Other (197,086) 45,616 --------------------------------------- 1,440,546 1,249,589 --------------------------------------- Income before income taxes 6,914,383 4,643,802 Income taxes 2,523,750 1,643,822 --------------------------------------- Net income $ 4,390,633 $ 2,999,980 --------------------------------------- --------------------------------------- Basic earnings per share $0.36 $0.25 --------------------------------------- --------------------------------------- Dilited earnings per share $0.35 $0.25 --------------------------------------- ---------------------------------------
See accompanying notes. -5- PAGE M.S. Carriers, Inc. Consolidated Statement of Stockholders' Equity (Unaudited)
Cumulative Common Stock Paid-In Retained Translation Shares Amount Capital Earnings Adjustments Total ------------------------------------------------------------------------------- Balance at January 1, 1998 12,210,601 $122,106 $64,175,260 $115,097,125 $(2,003,654) $177,390,837 Net income 4,390,633 4,390,633 Exercise of employee stock options 44,500 445 1,001,180 1,001,625 ------------------------------------------------------------------------------- Balance at March 31, 1998 12,255,101 $122,551 $65,176,440 $119,487,758 $(2,003,654) $182,783,095 ------------------------------------------------------------------------------- -------------------------------------------------------------------------------
See accompanying notes. -6- PAGE M.S. Carriers, Inc. Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31 1998 1997 ----------------------------------- Operating activities Net income $ 4,390,633 $ 2,999,980 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,347,848 9,378,652 Loss (gain) on disposals of revenue equipment 23,101 (87,590) Other 34,539 75,087 Deferred income taxes 1,261,875 816,911 Changes in operating assets and liabilities: Accounts receivable (2,171,140) (5,468,419) Current and other assets (3,036,405) (2,093,753) Trade accounts payable (247,520) (2,215,975) Other current liabilities 5,712,139 3,012,383 ------------------------------------ Net cash provided by operating activities 17,315,070 6,417,276 Investing activities Purchases of property and equipment (23,866,143) (24,141,515) Proceeds from disposals of property and equipment 11,550,501 6,826,786 Business acquisition (6,956,000) ----------------------------------- Net cash used in investing activities (19,271,642) (17,314,729) Financing activities Net change in revolving line of credit obligations 8,092,000 50,659,000 Proceeds from issuance of common stock 1,001,625 Principal payments on long-term debt obligations (5,586,946) (40,313,184) ----------------------------------- Net cash provided by (used in) financing activities 3,506,679 (10,345,816) ----------------------------------- Increase (decrease) in cash and cash equivalents 1,550,107 (551,637) Cash and cash equivalents at beginning of period 351,919 1,153,993 ----------------------------------- Cash and cash equivalents at end of period $ 1,902,026 $ 602,356 ----------------------------------- -----------------------------------
See accompanying notes. -7- PAGE M.S. Carriers, Inc. Notes to Consolidated Financial Statements (Unaudited) March 31, 1998 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 three month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. 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, 1997. 2. Net Income Per Common Share
Three Months Ended March 31 1998 1997 ------------------------- Numerator: Net income available to common shareholders $ 4,390,633 $2,999,980 ------------------------- ------------------------- Denominator: Weighted-average shares for basic earnings per share 12,239,807 12,009,633 Dilutive employee stock options 469,945 82,372 -------------------------- Adjusted weighted average shares for diluted earnings per share 12,709,752 12,092,005 ------------------------- ------------------------- Basic earnings per share $0.36 $0.25 ------------------------- ------------------------- Diluted earnings per share $0.35 $0.25 ------------------------- -------------------------
-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 March 31 1998 1997 --------------------------- Operating revenues 100.0% 100.0% Operating expenses: Salaries, wages and benefits 31.1% 34.0% Operations and maintenance 16.6% 19.1% Taxes and licenses 2.2% 2.7% Insurance and claims 4.4% 4.6% Communications and utilities 1.4% 1.4% Depreciation and amortization 9.7% 10.1% Loss (gain) on disposals of revenue equipment - (0.1%) Rent and purchased transportation 26.9% 21.2% Other 0.6% 0.6% --------------------------- Total operating expenses 92.9% 93.6% --------------------------- Operating income 7.1% 6.4% Interest expense 1.4% 1.3% Other expense (income) (0.2%) 0.1% --------------------------- 1.2% 1.4% --------------------------- Income before income taxes 5.9% 5.0% Income taxes 2.2% 1.8% --------------------------- Net income 3.7% 3.2% --------------------------- ---------------------------
-9- Results of Operations Operating revenues for the first three months of 1998 increased $24.5 million, or 26.4%, to $117.2 million compared with $92.7 million for the same period in the prior year. The Company's increase in revenues was due primarily to increased capacity and increased logistic revenues. Total trucking revenues during the first quarter of 1998 increased 23.3% compared to the same period of 1997 and logistics revenues during the first quarter of 1998 increased 67.4% compared to the same period of 1997. The Company's fleet increased to 3,405 tractors at March 31, 1998 from 2,602 at March 31, 1997, an increase of 803 tractors. In March 1998, the Company concluded the purchase of certain assets relating to the U.S. operations of Challenger Motor Freight which added 195 tractors and 481 trailers to its fleet.
The sources of the Company's revenues were as follows: Three Months Ended March 31 1998 1997 -------------------- (in thousands) Domestic Linehaul $ 64,637 $44,678 Interline Service - Mexico 9,886 8,791* Dedicated 8,852 6,601 Regional 22,819 26,054* Logistics 11,010 6,576 -------------------- Total $117,204 $92,700 -------------------- --------------------
*Interline Service - Mexico revenue was restated for 1997 to include international freight carried by regional trucks. Regional revenue for 1997 was reduced by the same amount. The operating ratio (operating expenses as a percentage of revenues) for the first three months of 1998 was 92.9% compared to 93.6% for the same period of 1997. Salaries, wages and benefits decreased to 31.1% of operating revenues for the three month period ending March 31, 1998 from 34.0% for the same period in 1997. This decrease was due primarily to the owner-operator tractors representing a larger percentage of the average number of total tractors in service during the first quarter of 1998 compared to the first quarter of -10- 1997, which caused a shift in operating expenses as amounts paid to owner-operators are recorded as purchased transportation. The Company had 902 owner-operators at March 31, 1998 compared to 588 at March 31, 1997. Operations and maintenance expenses decreased to 16.6% of operating revenues for the three month period ending March 31, 1998 from 19.1% for the same period in 1997. This decrease was due primarily from the increased use of owner-operators by the Company. Depreciation and amortization was 9.7% and 10.1% of operating revenues for the first three months of 1998 and 1997, respectively. The decrease was primarily attributable to the increased use of owner-operators. Rent and purchased transportation increased to 26.9% of operating revenues in the first three months of 1998 compared to 21.2% for the same period in 1997 primarily as a result of the increased use of owner-operators by the Company and increased expense relating to logistic operations. Interest expense was $1,637,632 for the first quarter of 1998 compared to $1,203,973 for the same period in 1997. The increase in interest expense was due primarily from average debt outstanding being significantly higher during the first quarter of 1998 as compared to the first quarter of 1997. 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 three month period ending March 31, 1998, the Company had expenditures, net of sales, of $12,315,642 million for purchases of property and equipment. The Company funded these purchases of property and equipment through cash on hand, cash from operations and the Company's bank lines of credit. Net cash provided by operating activities was $17,315,070 million and net cash provided by financing activities was $3,506,679 million. The Company has bank lines of credit providing for borrowings of up to $80 million, with interest at the lower of the banks' corporate prime rate or the 30-day LIBOR rate plus .45%. At March 31, 1998 there was $56.6 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 -11- PAGE 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. Impact of Year 2000 The Company has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. Management estimates that the total year 2000 project costs will not have a material impact on the Company's results of operations, financial position or capital resources. 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 first quarter of 1998. 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: -12- Exhibit Page Number of 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 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 March 31, 1998. 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) s/Dwight M. Bassett Date: May 15, 1998 Dwight M. Bassett Director of Accounting (Chief Accounting Officer of the Company) -14- H:\ELINK\MSCFORMS\1Q10Q98.LIV EX-27 2 ART. 5 FINANCIAL DATA SCHEDULES FOR 1ST QTR 10-Q FOR 1998
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31,1998, AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31,1998, AND THE NOTES RELATED THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1,902,026 0 47,923,250 1,428,000 0 67,386,229 418,292,911 109,847,632 382,333,619 53,603,271 86,146,859 122,551 0 0 182,660,544 382,333,619 0 117,203,825 0 108,848,896 0 0 1,637,632 6,914,383 2,523,750 4,390,633 0 0 0 4,390,633 .36 .35
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