-----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, FCIzcrfoBaw0Ee5hMuRn0b1GyNbMRtaAduuq0XVZGaG/esh0aDqCGAonWg21frHn 6CaYN8PnFNbGaydlXc+K7Q== 0000950144-00-006866.txt : 20000517 0000950144-00-006866.hdr.sgml : 20000517 ACCESSION NUMBER: 0000950144-00-006866 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 636651 BUSINESS ADDRESS: STREET 1: 135 RIVERVIEW DR CITY: RICHLAND STATE: MS ZIP: 39218 BUSINESS PHONE: 6019392545 MAIL ADDRESS: STREET 1: P.O.BOX 6098 CITY: JACKSON STATE: MS ZIP: 39288 10-Q 1 KLLM TRANSPORT SERVICES, INC. 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, 2000 Commission File Number 0-14759 ---------------- --------- 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.) 135 Riverview Drive Richland, Mississippi 39218 --------------------- ----- (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 --- --- 4,101,468 Common Shares were outstanding as of March 31, 2000. 2 KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES INDEX
Page Number ------ PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Balance Sheets March 31, 2000 (Unaudited) and December 31, 1999 1 Consolidated Statements of Earnings (Unaudited) Thirteen weeks ended March 31, 2000 and April 2, 1999 2 Condensed Consolidated Statements of Cash Flows (Unaudited) Thirteen weeks ended March 31, 2000 and April 2, 1999 3 Notes to Condensed Consolidated Financial Statements (Unaudited) 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Item 3. Quantitative and Qualitative Disclosures about Market Risk 6 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K 7
3 KLLM TRANSPORT SERVICES, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2000 1999 --------- ------------ (Unaudited) (Note) (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,618 $ 511 Accounts receivable 23,677 26,704 Inventories - at cost 715 686 Prepaid expenses: Tires 3,700 3,625 Other 1,911 3,474 Deferred income taxes 5,101 5,101 --------- --------- Total current assets 36,722 40,101 Property and equipment 155,028 145,589 Less accumulated depreciation (50,464) (46,543) --------- --------- 104,564 99,046 --------- --------- $ 141,286 $ 139,147 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 2,569 Accounts payable and accrued expenses 17,722 $ 14,032 Accrued claims expense 11,733 12,865 --------- --------- Total current liabilities 32,024 26,897 Long-term debt, less current maturities 46,000 48,000 Deferred income taxes 13,283 13,283 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 2000 and 1999; outstanding shares - 4,101,468 in 2000 and 4,098,967 in 1999 4,559 4,559 Additional paid-in capital 32,808 32,822 Retained earnings 16,777 17,777 --------- --------- 54,144 55,158 Less common stock in treasury, 457,286 shares in 2000 and 459,787 shares in 1999, at cost (4,165) (4,191) --------- --------- Total stockholders' equity 49,979 50,967 --------- --------- $ 141,286 $ 139,147 ========= =========
Note: The balance sheet at December 31, 1999 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. 4 KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Thirteen Weeks Ended --------------------------------------------- March 31, April 2, 2000 1999 ----------- ----------- (In Thousands, Except Share and Per Share Amounts) OPERATING REVENUE $ 57,593 $ 55,331 OPERATING EXPENSES: Salaries, wages and fringe benefits 20,833 19,342 Operating supplies and expenses 15,919 13,146 Insurance, claims, taxes and licenses 2,745 3,143 Depreciation and amortization 4,885 4,367 Purchased transportation and equipment rent 11,625 12,351 Other 2,449 2,679 Gain on sale of revenue equipment (130) (117) ----------- ----------- TOTAL OPERATING EXPENSES 58,326 54,911 ----------- ----------- OPERATING INCOME (LOSS) (733) 420 Interest and other income (51) (8) Interest expense 943 803 ----------- ----------- 892 795 ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES (1,625) (375) Income tax (benefit) expense (625) (150) ----------- ----------- NET EARNINGS (LOSS) $ (1,000) $ (225) =========== =========== BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE $ (0.24) $ (0.05) =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 4,100,039 4,373,115 =========== ===========
See accompanying notes. 2 5 KLLM TRANSPORT SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Thirteen Weeks Ended March 31, April 2, 2000 1999 -------- ------- (In Thousands) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 10,929 $ (892) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (12,322) (7,034) Proceeds from disposition of property, equipment and assets held for sale 1,931 2,592 -------- ------- NET CASH FLOWS USED IN INVESTING ACTIVITIES (10,391) (4,442) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock for treasury 0 (960) Net change in borrowings under revolving line of credit (2,000) 4,000 Net change in borrowings under working capital line of credit 2,569 2,212 -------- ------- NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 569 5,252 -------- ------- Net Increase (Decrease) in Cash and Cash Equivalents 1,107 (82) Cash and Cash Equivalents at Beginning of Period 511 756 -------- ------- Cash and Cash Equivalents at End of Period $ 1,618 $ 674 ======== ======= NONCASH FINANCING ACTIVITIES Common stock issued for services $ 12 $ 15 ======== =======
See accompanying notes. 3 6 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 June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133). The provisions of SFAS No. 133 require all derivatives to be recorded on the balance sheet at fair value. SFAS No. 133 establishes "special accounting" for fair value hedges, cash flow hedges, and hedges of foreign currency exposures of net investments in foreign operations. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Management expects the effect of the adoption of this statement will be insignificant to the results of the consolidated operations and financial position of the Company when it becomes effective for fiscal 2001. NOTE B- FISCAL YEAR The Company has adopted a fiscal year-end on the Friday nearest December 31. Accordingly, the first quarter of 2000 ended on Friday, March 31, 2000. NOTE C- 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. To hedge its exposure to price fluctuations, the Company periodically enters into heating oil (diesel fuel) swap agreements. Agreements to purchase approximately 2% of the remaining anticipated fuel requirements for 2000 were in place as of March 31, 2000. Such agreements are settled monthly and are accounted for as hedges with gains and losses recognized in operating expenses using the accrual method as part of the fuel cost over the hedge period. The Company does not engage in speculative transactions nor does the Company hold or issue derivative instruments for trading purposes. 4 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Operating revenue for the first quarter of 2000 increased 4% from the comparable period of 1999 while the number of trucks in operation remained fairly consistent. The increase in operating revenue in the first quarter consisted of a 1% increase from the Company's traditional over-the-road temperature-controlled freight services and a 3% increase from the dry-van over-the-road truckload division and resulted from higher utilization of equipment (3%) and an increase in average revenue per total mile (1%). Fuel surcharges added $1,308,000 to operating revenues in the first quarter of 2000. The Company had no fuel surcharges in the first quarter of 1999. The operating ratio increased from 99.2% to 101.2% for the first quarter of 2000 compared to the same period in 1999. Fuel charges, within operating supplies, were much higher than expected for the first quarter of 2000. Net of surcharges and fuel hedges, the higher fuel costs in the first quarter of 2000 reduced operating income for the quarter by approximately $1,800,000 compared to the same period in 1999. During the first quarter of 2000, many driver performance related expenses continued to improve, having the effect of reducing operating supplies and insurance, taxes and licenses from the levels in the prior year. As a result of the foregoing, operating income decreased by $1,153,000 for the first quarter of 2000 when compared to the comparable period of 1999. For the first three months of 2000, interest expense was $140,000 more than last year as a result of an increase in the level of debt and in the interest rates charged on that debt. The net loss increased $775,000 for the first quarter of 2000 compared to the same period in 1999. Basic and diluted earnings per share decreased $.19 to a loss of $.24 in the first quarter of 2000 compared to the same period in 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity are cash flow from operations and its existing credit agreements. During the thirteen weeks ended March 31, 2000, the Company generated $10,929,000 in net cash from operating activities. During the first three months of 2000, the Company's purchase of equipment net of equipment sales were approximately $10 million. Net capital expenditures for the remainder of 2000, primarily for revenue equipment, are expected to be approximately $10 million. The Company has a $60,000,000 unsecured revolving line of credit (the "Revolver") with a syndication of banks. Borrowings under the Revolver of $46,000,000 were outstanding at March 31, 2000. Under the terms of the Revolver, 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 1/4% to 1/2% per annum are charged on the unused portion of this line. At March 31, 2000, borrowings under the Revolver represented the Company's only long-term debt outstanding. Working capital needs have generally been met from net cash provided from operating activities. The Company has a $5 million unsecured working capital line of credit with a bank, $2,431,000 of which was available at March 31, 2000. Interest is at a rate based upon the Eurodollar rates with facility fees at 3/8% 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, debt service, and any additional stock repurchases. 5 8 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. As described in the SEC filings made subsequent to the end of the first quarter of 2000, a change in the control of the company is possible. The related bidding process described in the filings is not complete. 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. FORWARD LOOKING INFORMATION 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 of the date hereof. The Company assumes no obligation to update forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK MARKET RISK Market risk relating to the Company's operations result primarily from changes in interest rates and the price of heating oil (diesel fuel), as well as credit risk concentration. The Company does not use financial instruments for trading purposes and is not a party to any leveraged derivatives. The Company's interest expense is sensitive to changes in the general level of U. S. interest rates. 6 9 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Exhibit 27 - Financial Data Schedule There was one Form 8-K filing for the quarter ended March 31, 2000. The 8K reported the election of a director and was filed on February 15, 2000. 7 10 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 May 12, 2000 /s/ Jack Liles ------------------------------------- Jack Liles Chairman of the Board, President and Chief Executive Officer Date May 12, 2000 /s/ Steven L. Dutro ------------------------------------- Steven L. Dutro Senior Vice President and Chief Financial Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-29-2000 JAN-01-2000 MAR-31-2000 1,618 0 24,052 375 715 36,722 155,028 50,464 141,286 32,024 0 0 0 4,559 45,420 141,286 0 57,593 0 58,326 (51) 0 943 (1,625) (625) (1,000) 0 0 0 (1,000) (0.24) (0.24)
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