-----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, S3Pm80RdEHvtOGGQtVoHEzh1M7nupksQadVn/ZwoGZfwsOSawf8Ozg/AsXksrJsx At7gSezibcWVcHsB1k7GUw== 0000790372-98-000013.txt : 19980817 0000790372-98-000013.hdr.sgml : 19980817 ACCESSION NUMBER: 0000790372-98-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98690981 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 June 30, 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 August 1, 1998 - 12,259,601 -1- M.S. Carriers, Inc. Index to Form 10-Q Contents Part I - Financial Information Item 1 - Financial Statements (Unaudited) Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997............................................. 3 Consolidated Statements of Income for the Three Months Ended June 30, 1998 and 1997 and the Six Months Ended June 30, 1998 and 1997........................................ 5 Consolidated Statement of Stockholders' Equity for the Six Months Ended June 30, 1998.................................... 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997.................................. 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...................................................... 15 -2- PART I - Financial Information Item 1. Financial Statements (Unaudited) M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets
June 30 December 31 1998 1997 ----------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 495,145 $ 351,919 Accounts receivable: Trade, net 51,693,592 44,551,316 Officers and employees 1,212,360 660,370 ------------------------------------------ 52,905,952 45,211,686 Recoverable income taxes 3,234,853 4,520,917 Deferred income taxes 6,040,000 5,427,000 Prepaid expenses and other 7,795,523 4,979,826 ------------------------------------------ Total current assets 70,471,473 60,491,348 Property and equipment: Land and land improvements 6,554,355 6,221,032 Buildings 30,128,055 30,128,055 Revenue equipment 357,071,318 326,709,385 Service equipment and other 41,055,916 40,089,062 Construction in progress 862,821 114,015 ------------------------------------------- 435,672,465 403,261,549 Accumulated depreciation and amortization 113,777,494 106,090,776 ------------------------------------------- 321,894,971 297,170,773 Other assets 7,972,210 4,584,340 ------------------------------------------- Total assets $400,338,654 $362,246,461 ===========================================
See accompanying notes. -3- M.S. Carriers, Inc. and Subsidiaries Consolidated Balance Sheets (continued)
June 30 December 31 1998 1997 ---------------------------------------- (Unaudited) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 6,463,311 $ 5,448,110 Accrued compensation and related cost 8,890,689 2,343,595 Accrued expenses 9,373,517 8,438,898 Claims payable 16,410,137 14,826,627 Current maturities of long-term debt 17,872,258 15,737,609 ---------------------------------------- Total current liabilities 59,009,912 46,794,839 Long-term debt, less current maturities 89,609,709 79,977,266 Deferred income taxes 61,909,786 58,083,519 Stockholders' equity: Common stock, $.01 par value, 122,596 122,106 Authorized shares - 20,000,000 Issued and outstanding shares - 12,259,601 at June 30, 1998 and 12,210,601 at December 31, 1997 Additional paid-in capital 65,256,551 64,175,260 Retained earnings 126,433,754 115,097,125 Equity Adjustment from Foreign Currency Translation (2,003,654) (2,003,654) ----------------------------------------- Total stockholders' equity 189,809,247 177,390,837 ----------------------------------------- Total liabilities and stockholders' equity $400,338,654 $362,246,461 =========================================
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 1998 1997 1998 1997 --------------------------------------------------------------- Operating revenues $133,624,361 $101,511,950 $250,828,186 $194,211,940 Operating expenses: Salaries, wages and benefits 41,100,993 33,145,629 77,556,812 64,712,550 Operations and maintenance 21,398,722 16,231,237 40,797,478 33,951,297 Taxes and licenses 3,016,532 2,612,613 5,562,254 5,083,143 Insurance and claims 5,456,263 4,661,828 10,651,067 8,955,507 Communications and utilities 1,663,163 1,335,397 3,283,108 2,590,294 Depreciation and amortization 11,573,848 9,653,107 22,921,696 19,031,759 Loss (Gain) on disposals of revenue equipment (221,818) 25,413 (198,717) (62,177) Rent and purchased transportation 35,759,531 24,305,286 67,342,680 43,991,656 Other 1,068,278 451,877 1,748,030 974,957 --------------------------------------------------------------- Total Operating Expenses 120,815,512 92,422,387 229,664,408 179,228,986 --------------------------------------------------------------- Operating income 12,808,849 9,089,563 21,163,778 14,982,954 Other expense (income): Interest expense 2,265,073 1,399,031 3,902,705 2,603,004 Other (394,799) (1,514) (591,885) 44,102 --------------------------------------------------------------- 1,870,274 1,397,517 3,310,820 2,647,106 --------------------------------------------------------------- Income before income taxes 10,938,575 7,692,046 17,852,958 12,335,848 Income taxes 3,992,579 2,790,178 6,516,329 4,434,000 --------------------------------------------------------------- Net income $ 6,945,996 $ 4,901,868 $ 11,336,629 $ 7,901,848 =============================================================== Common shares and common stock equivalents 12,874,427 12,448,571 12,801,681 12,444,208 Earnings per share $0.54 $0.39 $0.89 $0.63 ===============================================================
See accompanying notes. -5- M.S. Carriers, Inc. and Subsidiaries Consolidated Statement of Stockholders' Equity (Unaudited) Six Months Ended June 30, 1998
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 11,336,629 11,336,629 Exercise of employee stock options 49,000 490 1,081,291 1,081,781 ------------------------------------------------------------------------------- Balance at June 30, 1998 12,259,601 $122,596 $65,256,551 $126,433,754 $(2,003,654) $189,809,247 ===============================================================================
See accompanying notes. -6- M.S. Carriers, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30 1998 1997 ------------------------------------ Operating activities Net income $11,336,629 $ 7,901,848 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,921,696 19,031,759 Gain on disposals of revenue equipment (198,717) (62,177) Provision for deferred income taxes 3,213,267 2,194,000 Changes in operating assets and liabilities: Accounts receivable (7,694,266) (9,088,031) Current and other assets (4,118,890) 1,024,757 Trade accounts payable 1,015,201 3,291,070 Other current liabilities 9,065,223 6,608,018 ------------------------------------ 24,203,514 22,999,396 Net cash provided by operating activities 35,540,143 30,901,244 Investing activities Purchases of property and equipment (58,873,872) (48,827,357) Proceeds from disposals of property and equipment 20,756,508 12,453,518 Business acquisition (6,956,000) ------------------------------------ Net cash used in investing activities (45,073,364) (36,373,839) Financing activities Net change in revolving line of credit and proceeds from long term debt 18,823,146 82,712,000 Proceeds from exercise of stock options 1,081,781 Principal payments on long-term debt (10,228,480) (78,091,430) ------------------------------------ Net cash provided by (used in) financing activities 9,676,447 4,620,570 ------------------------------------ Increase in cash and cash equivalents 143,226 (852,025) Cash and cash equivalents at beginning of period 351,919 1,153,993 ------------------------------------ Cash and cash equivalents at end of period $ 495,145 $ 301,968 ====================================
See accompanying notes. -7- M.S. Carriers, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) June 30, 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 six month period ended June 30, 1998 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, 1997. 2. Net Income Per Common Share
Three Months Ended Six Months Ended June 30 June 30 1998 1997 1998 1997 -------------------------------------------------- Numerator: Net income availalbe to common shareholders $6,945,996 $4,901,868 $11,336,629 $7,901,848 ================================================== Denominator: Weighted-average shares for basic earnings per share 12,256,486 12,009,633 12,248,192 12,009,633 Dilutive employee stock options 617,941 438,938 553,489 434,575 -------------------------------------------------- Adjusted weighted- average shares for diluted earnings per share 12,874,427 12,448,571 12,801,681 12,444,208 ================================================== Basic earnings per share $0.57 $0.41 $0.93 $0.66 ================================================== Diluted earnings per share $0.54 $0.39 $0.89 $0.63 ==================================================
-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 Six Months Ended June 30 Ended June 30 1998 1997 1998 1997 ------------------------------------- Operating revenues 100.0% 100.0% 100.0% 100.0% Operating expenses: Salaries, wages and benefits 30.7% 32.7% 30.9% 33.3% Operations and maintenance 16.0% 16.0% 16.3% 17.5% Taxes and licenses 2.3% 2.6% 2.2% 2.6% Insurance and claims 4.1% 4.6% 4.3% 4.6% Communications and utilities 1.2% 1.3% 1.3% 1.3% Depreciation and amortization 8.7% 9.5% 9.1% 9.8% Loss (Gain) on disposals of (.2%) - (.1%) - revenue equipment Rent and purchased transportation 26.8% 23.9% 26.9 22.7% Other .8% .5% .7% .5% ------------------------------------- Total operating expenses 90.4% 91.1% 91.6% 92.3% ------------------------------------- Operating income 9.6% 8.9% 8.4% 7.7% Interest expense 1.7% 1.4% 1.5% 1.3% Other expense (income) (.3%) - (.2%) - ------------------------------------- Income before income taxes 8.2% 7.5% 7.1% 6.4% Income taxes 3.0% 2.7% 2.6% 2.3% ------------------------------------- Net income 5.2% 4.8% 4.5% 4.1% =====================================
-9- Results of Operations Operating revenues for the first six months of 1998 increased $56.6 million, or 29.2%, to $250.8 million compared with $194.2 million for the same period in the prior year. For the quarter ended June 30, 1998, operating revenues increased $32.1 million, or 31.6%, to $133.6 million compared with $101.5 million for the same quarter of 1997. The Company's increase in revenues was due primarily to increased demand from customers, business acquisitions, expansion of the Company's fleet and increased logistics revenues. The Company's fleet increased to 3,401 tractors at June 30, 1998 from 2,615 at June 30, 1997, an increase of 786 tractors.
The sources of the Company's revenues were as follows: Three Months Ended Six Months Ended June 30 June 30 1998 1997 1998 1997 ------------------------------------------- (in thousands) (in thousands) Domestic Linehaul $ 73,792 $ 46,154 $140,432 $90,830 Interline Service - Mexico 12,505 8,799 22,445 16,315 Dedicated 10,905 6,850 17,702 13,454 Regional 24,106 31,376 46,922 58,705 Logistics 12,316 8,333 23,327 14,908 ------------------------------------------- Total $133,624 $101,512 $250,828 $194,212 ===========================================
The operating ratio (operating expenses as a percentage of revenues) for the first six months of 1998 was 91.6% compared to 92.3% for the same period of 1997 and was 90.4% for the second quarter of 1998 compared to 91.1% for the same quarter in 1997. Salaries, wages and benefits decreased to 30.9% and 30.7% of operating revenues for the six-month and three-month periods ending June 30, 1998, from 33.3% and 32.7% for the same periods in 1997. These decreases were due primarily to the increased use of owner-operators. The Company had 887 owner-operators at June 30, 1998 compared to 586 at June 30, 1997. Operations and maintenance expenses decreased to 16.3% of operating revenues for the six-month period ending June 30, 1998 from 17.5% for the same periods in 1996 due primarily to the increased use of owner-operators by the Company. Insurance and claims decreased to 4.3% and 4.1% of operating revenues for the six-month and three-month periods ended June 30, 1998 from 4.6% for the same periods ended June 30, 1997. These decreases were due primarily to the increased logistics revenues received by the Company in 1998. -10- Depreciation and amortization was 9.1% of operating revenues for the first six months of 1998 compared to 9.8% for the same period in 1997 and 8.7% of operating revenues for the quarter ended June 30, 1998, compared to 9.5% for the same quarter of 1997. These decreases resulted primarily from the increased use of owner-operators and increased logistics revenues. Rent and purchased transportation increased to 26.9% of operating revenues in the first six months of 1998 compared to 22.7% for the same period of 1997 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 26.8% of operating revenues for the quarter ended June 30, 1998, from 23.9% 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 six month period ending June 30, 1998, the Company had expenditures, net of equipment sales, of $38.1 million for purchases of property and equipment and $6.9 million related to a business acquisition. The Company funded these purchases of property and equipment and the business acquisition through cash on hand, cash from operations and the Company's bank lines of credit. Net cash provided by operating activities was $35.5 million and net cash provided by financing activities was $9.7 million. The Company has bank lines of credit providing for borrowings of up to $68.9 million, with interest at the lower of the bank's corporate prime rate or the 30-day LIBOR rate plus .45%. At June 30, 1998 there was $46.5 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. -11- 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 At the Company's annual meeting of shareholders on May 1, 1998, Michael S. Starnes, James W. Welch, M.J. Barrow, Morris H. Fair, Jack H. Morris, III, and Carl J. Mungenast were re-elected as directors upon the following vote: For Against Abstaining Michael S. Starnes 11,500,863 4,041 83,083 James W. Welch 11,504,050 854 83,083 M.J. Barrow 11,504,246 658 83,083 Morris H. Fair 11,504,357 547 83,083 Jack H. Morris, III 11,501,038 3,866 83,083 Carl J. Mungenast 11,497,346 7,558 83,083 No other matters were submitted to a vote of security holders during the second quarter of 1998. 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. -13- 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 registrant's Proxy Statement dated April 4, 1996 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 June 30, 1998. -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, 1998 Date S/Dwight M. Bassett Dwight M. Bassett, Director of Accounting (Chief Accounting Officer of the Company) -15- H:\ELINK\MSCFORMS\2Q10Q98.TXT EX-27 2 ART. 5 FINANCIAL DATA SCHEDULES FOR 2ND QTR 10-Q FOR 1998
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF JUNE 30,1998, AND THE RELATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30,1998, AND THE NOTES RELATED THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 APR-01-1998 JUN-30-1998 495,145 0 53,357,329 1,663,737 0 70,471,473 435,672,465 113,777,494 400,338,654 59,009,912 89,609,709 122,596 0 0 189,686,651 400,338,654 0 133,624,361 0 120,815,512 0 0 2,265,073 10,938,575 3,992,579 6,945,996 0 0 0 6,945,996 .57 .54
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