-----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, Ud0kUz2gcYNPHks8+N6fwLbvC637bhkTcA8gHrfhoyWgFnPutJaZBxPWVSUV/rbM KJP3jyNpqT+PBWv2Lza9VQ== 0000793765-97-000018.txt : 19971118 0000793765-97-000018.hdr.sgml : 19971118 ACCESSION NUMBER: 0000793765-97-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971003 FILED AS OF DATE: 19971117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KLLM TRANSPORT SERVICES INC CENTRAL INDEX KEY: 0000793765 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 640412551 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14759 FILM NUMBER: 97722537 BUSINESS ADDRESS: STREET 1: 3475 LAKELAND DR CITY: JACKSON STATE: MS ZIP: 39288 BUSINESS PHONE: 6019392545 MAIL ADDRESS: STREET 1: P.O.BOX 6098 CITY: JACKSON STATE: MS ZIP: 39288 10-Q 1 QUARTERLY REPORT 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 Period Ended Commission File Number October 3, 1997 64-0412551 KLLM TRANSPORT SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 64-0412551 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Post Office Box 6098 Jackson, Mississippi 39288 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (601) 939-2545 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No 4,368,589 Common Shares were outstanding as of October 3, 1997. KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES INDEX Page Number PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Balance Sheets October 3, 1997 (Unaudited) and January 3, 1997 1 Consolidated Statements of Earnings (Unaudited) Thirteen weeks and Thirty-nine weeks ended October 3, 1997 and September 27, 1996 2 Condensed Consolidated Statements of Cash Flows (Unaudited) Thirty-nine weeks ended October 3, 1997 and September 27, 1996 3 Notes to Condensed Consolidated Financial Statements (Unaudited) 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K 7 KLLM TRANSPORT SERVICES, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS October 3, January 3, 1997 1997 ---------- ------------ (Unaudited) (Note) (In Thousands) ASSETS Current assets: Cash and cash equivalents $0 $2,874 Accounts receivable 25,373 22,684 Inventories - at cost 693 891 Prepaid expenses: Tires 4,512 4,282 Other 1,208 1,365 Deferred income taxes 3,325 3,325 ------- ------- Total current assets 35,111 35,421 Property and equipment 189,704 179,613 Less accumulated depreciation (59,342) (57,738) -------- -------- 130,362 121,875 Intangible assets, net (Note C) 169 2,259 Other assets 232 339 -------- -------- $165,874 $159,894 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $0 $3,598 Accounts payable and accrued 22,570 16,414 expenses Current maturities of long-term debt and capital leases 4,885 4,848 --------- -------- Total current liabilities 27,455 24,860 Long-term debt and capital leases, less current maturities 53,029 49,747 Deferred income taxes 18,787 18,787 Stockholders' equity: Preferred Stock, $.01 value; authorized 5,000,000 shares; none issued Common Stock, $1 par value; 10,000,000 shares authorized; issued shares - 4,558,754 in 1997 and 1996, respectively; outstanding shares - 4,368,589 in 1997 and 4,344,955 in 1996. 4,559 4,559 Additional paid-in capital 32,849 32,811 Retained earnings 31,276 31,453 ------- ------- 68,684 68,823 Less Common Stock in Treasury, at cost, 190,165 shares in 1997 and 213,799 in 1996. (2,081) (2,323) ------- ------- Total stockholders' equity 66,603 66,500 ------- ------- $165,874 $159,894 ========= ==========
Note: The balance sheet at January 3, 1997 has been derived from the audited financial statements at the date indicated, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes. KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended October 3, September 27, October 3, September 27, 1997 1996 1997 1996 ------------------------ -------------------------- (In Thousands, Except Per Share Amounts) OPERATING REVENUE FROM TRUCK LOAD OPERATIONS $60,127 $59,810 $183,338 $185,086 OPERATING EXPENSES: Salaries, wages and fringe benefits 18,364 17,742 56,507 54,808 Operating supplies and expenses 14,784 16,237 46,341 51,991 Insurance, claims, taxes and licenses 3,430 3,695 10,965 9,813 Depreciation and amortization 5,426 5,492 15,857 16,516 Purchased transportation and equipment rent 12,875 13,475 39,704 40,920 Other 2,786 2,345 8,055 7,145 (Gain) loss on sale of revenue equipment (109) (652) 240 (996) -------------------- ------------------- TOTAL OPERATING EXPENSES FROM TRUCK LOAD OPERATIONS 57,556 58,334 177,669 180,197 -------------------- -------------------- OPERATING INCOME FROM TRUCK LOAD OPERATIONS 2,571 1,476 5,669 4,889 OPERATING REVENUE FROM RAIL CONTAINER OPERATIONS 0 2,656 3,319 8,225 OPERATING EXPENSES 0 2,669 4,128 8,310 RESTRUCTURING CHARGE - Note C 0 0 1,906 0 --------------------- -------------------- OPERATING LOSS FROM RAIL CONTAINER OPERATIONS 0 13) (2,715) (85) Interest and other income (10) (18) (53) (37) Interest expense 1,119 1,131 3,234 3,600 --------------------- -------------------- 1,109 1,113 3,181 3,563 --------------------- -------------------- EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,462 350 (227) 1,241 Income taxes 575 220 (50) 558 --------------------- -------------------- NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS 887 130 (177) 683 LOSS FROM OPERATIONS OF DISCONTINUED DIVISION (Net of tax expense (benefits) of $0 in 1996 and ($23) and ($202) for the 1995 thirteen week and thirty nine week periods, respectively) LOSS ON DISPOSAL OF DISCONTINUED DIVISION (Net of tax benefit of $31 and $27 for the 1996 thirteen week and thirty nine week periods, respectively) 0 (39) 0 (33) ------------------------ -------------------- NET EARNINGS (LOSS) $887 $91 ($177) $650 ======================== ==================== EARNINGS (LOSS) PER SHARE: From Continuing Operations $0.20 $0.03 ($0.04) $0.16 From Disposal of Discontinued Division 0.00 (0.01) 0.00 (0.01) ------------------------ -------------------- NET EARNINGS (LOSS) PER COMMON SHARE $0.20 $0.02 ($0.04) $0.15 ======================== ====================
See accompanying notes. KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Thirty-Nine Weeks Ended October 3, September 27, 1997 1996 ------------ -------------- (In Thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES $21,856 $26,085 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (33,243) (23,151) Proceeds from disposition of equipment 8,579 6,358 --------- ---------- NET CASH FLOWS USED IN INVESTING ACTIVITIES (24,664) (16,793) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 213 427 Redemption of treasury shares 0 (854) Net increase in borrowings under revolving line of credit 8,000 0 Repayment of long-term debt, capital leases, and notes payable to banks (4,879) (7,188) Net decrease in borrowings under working capital line of credit (3,400) (514) ------------ ------------ NET CASH FLOWS USED IN FINANCING ACTIVITIES (66) (8,129) ------------ ------------ Net Increase (Decrease)in Cash and Cash Equivalents (2,874) 1,163 Cash and Cash Equivalents at Beginning Of Period 2,874 0 ------------- ------------ Cash and Cash Equivalents at End Of Period $0 $1,163 ============= ============
See accompanying notes. KLLM TRANSPORT SERVICES, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. They have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and accordingly, 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. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of earnings per share is not expected to be material. NOTE B- FISCAL YEAR The Company has adopted a fiscal year-end on the Friday nearest December 31. Accordingly, the third quarter of 1997 ended on Friday, October 3, 1997. NOTE C - RAIL CONTAINER RESTRUCTURING CHARGE During the second quarter of 1997 the Company completed its plan to exit the rail container market. A one-time restructuring charge of $1,906,000 was recorded for the write-off of intangible assets pertaining to the rail container operation and the accrual of certain expenses related to the subleasing of rail containers and exiting this market. NOTE D- COMMITMENTS AND CONTINGENCIES The Company is involved in various claims and routine litigation incidental to its business. Management is of the opinion that the outcome of these matters will not have a material adverse effect on the consolidated financial position or results of consolidated operations of the Company. The Company has entered into heating oil (diesel fuel) swap agreements in order to hedge its exposure to price fluctuations. At October 3, 1997, the Company had approximately 20% of its remaining 1997 anticipated fuel requirements under swap agreements which expire in January 1998. Gains and losses on such agreements are recognized in operating expenses as part of fuel cost over the hedge period. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources KLLM Transport Services, Inc.'s primary sources of liquidity are its cash flow from operations and its existing credit agreements. During the thirty-nine weeks ended October 3, 1997, the Company generated $21.9 million in net cash from operating activities. Capital resources required by the Company during the first nine months of 1997 of $24.7 million were approximately $7.9 million more than the same period last year. This increase is primarily a result of accelerating the replacement of tractors in the fleet. Net capital expenditures for the remainder of 1997, primarily for revenue equipment, are expected to be approximately $7.0 million. The Company has a $50 million unsecured revolving line of credit with a syndication of banks. Borrowings of $38 million were outstanding at October 3, 1997. Under the terms of the agreement, borrowings bear interest at (I) the higher of prime rate or a rate based upon the Federal Funds Effective Rate, (ii) a rate based upon the Eurodollar rates, or (iii) an absolute interest rate as determined by each lender in the syndication under a competitive bid process at the Company's option. Facilities fees from one-fourth per cent to 3/8 per center per annum are charged on the unused portion of this line. At October 3, 1997, the aggregate principal amount of the Company's outstanding long-term indebtedness was approximately $57.9 million. Of this total outstanding, $1.2 million was in the form of 10.2% notes due July 1998, $14.3 million in the form of 9.11% senior notes due June 2002, $38.0 million consisted of the revolving line of credit due April 1999, and $4.4 million in principal was related to capital leases with varying maturities. Working capital needs have generally been met from net cash provided from operating activities. The Company has $4,000,000 in an unsecured working capital line of credit with a bank, all of which was available at October 3, 1997. Interest is at a rate based upon the Eurodollar rates with facility fees at one-fourth per cent per annum on the unused portion of the line. The Company anticipates that its existing credit facilities along with cash flow from operations will be sufficient to fund operating expenses, capital expenditures, and debt service. Results of Operations Operating revenue from truckload operations increased 0.5% for the third quarter of 1997 and decreased 0.9% for the first nine months of 1997 compared to the comparable periods of 1996. The decrease in truckload operating revenue in the first nine months of 1997 was due to a decrease in the transportation brokerage and trailer on flatcar services partially offset by an increase in truck fleet operations. Both transportation brokerage and trailer on flatcar services are no longer in operation. A slight increase in revenue per total mile for the third quarter and for the first nine months of 1997 was partially offset by a decrease in fuel surcharges when compared to the same period last year. The empty mile percentage improved for both the third quarter and the first nine months of 1997 when compared to 1996. Average miles per truck increased by approximately 2% for both the third quarter and the first nine months of 1997 when compared to 1996. The operating ratio within the truckload operation improved from 97.5% to 95.7% for the third quarter of 1997 compared to the same period in 1996. For the first nine months of 1997 compared to the same period in 1996, the operating ratio within the truckload operation improved from 97.3% to 96.9%. The Company has continued to maintain a stronger use of owner-operated tractors and fewer company-owned tractors than in 1996. This change in the mix of the fleet affects the comparability of components of operating expenses by increasing purchased transportation and decreasing wages, depreciation, and various operating supplies and expenses. Purchased transportation also reflects the significant reductions in transportation brokerage and rail operations. Driver wages were increased at the start of 1997 to offset cancellation of reimbursement of certain expenses to drivers. The effect was to increase wages and decrease operating supplies $1.0 million compared to the third quarter of 1996 and $3.3 million compared to the first nine months of 1996. Operating supplies and expenses in the third quarter were also affected by a decrease in fuel prices and the benefit of cost reduction efforts. Insurance and claims costs which were high in the first quarter as a result of our reassessment of reserving and claims management practices were lower in the second and third quarters of 1997. Insurance costs during the third quarter of 1997 were 7.9% less than the third quarter of 1996. Due to the quantity of equipment available in the used equipment market, the proceeds on equipment sold during the third quarter and the first nine months of 1997 were less per unit than anticipated resulting in a loss on the sale of revenue equipment. As a result of the foregoing, net income from continuing truckload operations increased by $793,000 for the third quarter and increased by $840,000 for the first nine months of 1997 from the comparable periods of 1996. Earnings per share from continuing truckload operations increased from $.03 to $.20 in the third quarter and from $.17 to $.35 in the first nine months of 1997 compared to the same periods in 1996. During the second quarter the Company completed its plan to exit the rail container operation. As anticipated, the Company incurred no additional charges during the third quarter of 1997. As a result the effect of the rail container operation on earnings per share was a loss of $0.39 per share for the nine months of 1997. Factors Affecting Future Performance The Company's future operating results may be affected by various trends and factors which are beyond the Company's control. These include adverse changes in demand for trucking services, availability of drivers and fuel prices. Accordingly, past performance should not be presumed to be an accurate indication of future performance. Seasonality In the transportation industry, results of operations generally show a seasonal pattern because customers reduce shipments during and after the winter holiday season with its attendant weather variations. The Company's operating expenses have historically been higher in the winter months primarily due to decreased fuel efficiency and increased maintenance costs in colder weather. The foregoing statements contain forward-looking statements which involve risks and uncertainties and the Company's actual experience may differ materially from that discussed above. Factors that may cause such a difference include, but are not limited to, those discussed in "Factors Affecting Future Performance" as well as future events that have the effect of reducing the Company's available cash balances, such as unanticipated operating losses or capital expenditures related to possible future acquisitions. Readers are cautioned not to place undue reliance on forward- looking statements, which reflect management's analysis only as the date hereof. The Company assumes no obligation to update forward- looking statements. PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K There were no Form 8-K filing for the quarter ended October 3, 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. KLLM TRANSPORT SERVICES,INC. ---------------------------- (Registrant) Date November 14, 1997 s/Steven K. Bevilaqua ---------------------------- Steven K. Bevilaqua President and Chief Executive Officer Date November 14, 1997 s/Steven L. Dutro ---------------------------- Steven L. Dutro Vice President-Finance and Acting Chief Financial Officer
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. KLLM TRANSPORT SERVICES, INC. ----------------------------- (Registrant) Date November 14, 1997 s/Steven K. Bevilaqua ----------------------------- Steven K. Bevilaqua President and Chief Executive Officer Date November 14, 1997 /s/ Steven L. Dutro ----------------------------- Steven L. Dutro Vice President-Finance and Acting Chief Financial Officer
EX-27 2
5 3-MOS JAN-02-1998 OCT-03-1997 0 0 25,373 546 693 35,111 189,704 59,342 165,874 27,455 0 0 0 4,559 62,044 165,874 0 186,657 0 183,703 0 0 3,234 (277) (50) (177) 0 0 0 (177) (0.04) (0.04)
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