-----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, AHegspaLPTFozIgsYA414Y2+IBraY5PfPOPkeHRqYCqPwwhLwzyNMUiVF9wMm6bw XW/0df4oYGXceEZhElV0yg== 0000950144-97-008860.txt : 19970813 0000950144-97-008860.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950144-97-008860 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK VII INC CENTRAL INDEX KEY: 0000795425 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 431074964 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14810 FILM NUMBER: 97657008 BUSINESS ADDRESS: STREET 1: 10100 NW EXECUTIVE HILLS BLVD STREET 2: STE 200 CITY: KANSAS CITY STATE: MO ZIP: 64153 BUSINESS PHONE: 8168910500 FORMER COMPANY: FORMER CONFORMED NAME: MNX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MNX TRUCKING DATE OF NAME CHANGE: 19870512 10-Q 1 MARK VII, INC. FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------- ------------ Commission File No. 0-14810 MARK VII, INC. ---------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 43-1074964 ------------------------------ ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 965 Ridge Lake Boulevard, Suite 103 Memphis, Tennessee 38120 -------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (901) 767-4455 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 practicable date. Class Outstanding at August 1, 1997 - ---------------------------- ----------------------------- Common stock, $.10 par value 4,617,922 Shares 2 MARK VII, INC. AND SUBSIDIARIES FORM 10-Q -- FOR THE QUARTER ENDED JUNE 28, 1997 INDEX
Page Part I. FINANCIAL INFORMATION Item 1. Financial Statements a) Consolidated Statements of Income--Three Months Ended June 28, 1997 and June 29, 1996 3 b) Consolidated Statements of Income--Six Months Ended June 28, 1997 and June 29, 1996 4 c) Consolidated Balance Sheets--June 28, 1997 and 5 December 28, 1996 d) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 28, 1997 and June 29, 1996 6 e) Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12
2 3 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. MARK VII, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
FOR THE THREE MONTHS ENDED ----------------------------- JUNE 28, 1997 JUNE 29, 1996 ------------- ------------- OPERATING REVENUES $ 164,877 $142,755 TRANSPORTATION COSTS 143,935 123,994 --------- -------- NET REVENUES 20,942 18,761 OPERATING EXPENSES: Salaries and related costs 4,040 4,249 Selling, general and administrative 13,440 11,642 --------- -------- Total Operating Expenses 17,480 15,891 OPERATING INCOME 3,462 2,870 INTEREST AND OTHER EXPENSE, NET (101) 80 --------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 3,563 2,790 PROVISION FOR INCOME TAXES 1,497 1,172 --------- -------- NET INCOME $ 2,066 $ 1,618 ========= ======== EARNINGS PER SHARE $ .42 $ .34 ========= ======== AVERAGE COMMON SHARES AND EQUIVALENTS OUTSTANDING 4,885 4,783 DIVIDENDS PAID -- --
See "Notes to Consolidated Financial Statements." 3 4 MARK VII, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
FOR THE SIX MONTHS ENDED ------------------------------ JUNE 28, 1997 JUNE 29, 1996 ------------- ------------- OPERATING REVENUES $ 310,791 $264,785 TRANSPORTATION COSTS 271,314 229,719 --------- -------- NET REVENUES 39,477 35,066 OPERATING EXPENSES: Salaries and related costs 8,209 8,337 Selling, general and administrative 25,693 22,120 --------- -------- Total Operating Expenses 33,902 30,457 OPERATING INCOME 5,575 4,609 INTEREST AND OTHER EXPENSE, NET (115) 173 --------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 5,690 4,436 PROVISION FOR INCOME TAXES 2,390 1,863 --------- -------- NET INCOME $ 3,300 $ 2,573 ========= ======== EARNINGS PER SHARE $ .68 $ .54 ========= ======== AVERAGE COMMON SHARES AND EQUIVALENTS OUTSTANDING 4,885 4,804 DIVIDENDS PAID -- --
See "Notes to Consolidated Financial Statements." 4 5 MARK VII, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
JUNE 28, 1997 DEC. 28, 1996 ------------- ------------- ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 10,491 $ 959 Accounts receivable, net of allowance 66,434 73,315 Notes and other receivables, net of allowance 4,873 7,583 Other current assets 1,010 1,131 -------- -------- Total current assets 82,808 82,988 DEFERRED INCOME TAXES 919 946 NET PROPERTY AND EQUIPMENT 4,680 4,518 INTANGIBLES AND OTHER ASSETS 2,283 2,540 NET ASSETS OF DISCONTINUED OPERATIONS 3,054 2,605 -------- -------- $ 93,744 $ 93,597 ======== ======== LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Accrued transportation expenses $ 50,232 $ 52,734 Deferred income taxes 2,046 2,193 Other current and accrued liabilities 7,462 8,031 -------- -------- Total current liabilities 59,740 62,958 -------- -------- LONG-TERM OBLIGATIONS 1,053 601 -------- -------- CONTINGENCIES AND COMMITMENTS SHAREHOLDERS' INVESTMENT: Common stock, $.10 par value, authorized 10,000,000 shares, issued 4,969,122 and 4,950,522 shares 497 495 Paid-in capital 28,886 28,665 Retained earnings 10,032 6,732 -------- -------- 39,415 35,892 Less: 352,000 and 332,000 shares of treasury stock, at cost (6,464) (5,854) -------- -------- Total shareholders' investment 32,951 30,038 -------- -------- $ 93,744 $ 93,597 ======== ========
See "Notes to Consolidated Financial Statements." 5 6 MARK VII, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
FOR THE SIX MONTHS ENDED ----------------------------- JUNE 28, 1997 JUNE 29, 1996 ------------- ------------- OPERATING ACTIVITIES: Net cash provided by operating activities $ 11,102 $ 3,922 -------- ------- INVESTING ACTIVITIES: Additions to property and equipment (954) (569) Retirements of property and equipment 310 296 -------- ------- Net cash used for investing activities (644) (273) -------- ------- FINANCING ACTIVITIES: Proceeds received from exercise of stock options 223 -- Purchase of treasury stock (610) (1,952) Repayments of long-term obligations (90) (108) Net repayments under line of credit -- (690) -------- ------- Net cash used for financing activities (477) (2,750) -------- ------- Net cash provided by continuing operations 9,981 899 Net cash used in discontinued operations (449) (762) -------- ------- Net increase in cash and cash equivalents 9,532 137 Cash and cash equivalents: Beginning of period 959 272 -------- ------- End of period $ 10,491 $ 409 ======== ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest 75 131 Income taxes, net of refunds received 1,605 1,127
See "Notes to Consolidated Financial Statements." 6 7 MARK VII, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) GENERAL: The consolidated financial statements include Mark VII, Inc., a Delaware corporation, and its wholly owned subsidiaries, collectively referred to herein as "the Company". The Company is a sales, marketing and service organization that acts as a provider of transportation services and a manager of transportation logistics. The Company has a network of transportation sales personnel that provides services throughout the United States, as well as Mexico and Canada. The principal operations of the Company are conducted by its transportation services subsidiary, Mark VII Transportation Company, Inc. ("Mark VII"). The condensed, consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements unless significant changes have taken place since the end of the most recent fiscal year. For this reason, the condensed, consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's 1996 Annual Report on Form 10-K. The results for the three and six months ended June 28, 1997 are not necessarily indicative of the results for the entire year 1997. 7 8 MARK VII, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Three and six months ended June 28, 1997 vs. three and six months ended June 29, 1996. The following table sets forth the percentage relationship of the Company's revenues and expense items to operating revenues for the periods indicated:
QUARTER SIX MONTHS ------------------ ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- OPERATING REVENUES 100.0% 100.0% 100.0% 100.0% TRANSPORTATION COSTS 87.3 86.9 87.3 86.8 ----- ----- ----- ----- NET REVENUES 12.7 13.1 12.7 13.2 OPERATING EXPENSES: Salaries and related costs 2.4 3.0 2.6 3.1 Selling, general and administrative 8.2 8.0 8.3 8.3 ----- ----- ----- ----- TOTAL OPERATING EXPENSES 10.6 11.0 10.9 11.4 ----- ----- ----- ----- OPERATING INCOME 2.1 2.1 1.8 1.8 INTEREST AND OTHER EXPENSE, NET (.1) .1 .0 .1 ----- ----- ----- ----- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 2.2% 2.0% 1.8% 1.7% ===== ===== ===== =====
General - The transportation services operation contracts with carriers for the transportation of freight by rail, truck, ocean or air for shippers. Operating revenues include the carriers' charges for carrying shipments plus commissions and fees, as well as revenues from fixed fee arrangements on a portion of the Company's integrated logistics projects. The carriers with whom the Company contracts provide transportation equipment, the charge for which is included in transportation costs. As a result, the primary operating costs incurred by the transportation services operations and logistics projects are for purchased transportation. Net revenues include only the commissions and fees. Selling, general and administrative expenses primarily consist of the percentage of net revenue paid to agencies and independent sales contractors as consideration for providing sales and marketing, arranging for movement of shipments, entering billing and accounts payable information on shipments and maintaining customer relations, as well as other company operating expenses. Certain costs incurred by the Company's dedicated trucking fleets are also reported in salaries and related costs and selling, general and administrative expenses. 8 9 Operating Revenues - The total number of shipments for the second quarter increased 23% to 158,000 in 1997 versus 128,000 for the same period of 1996. Year-to-date, the number of shipments was 291,000, up 14% from the 235,000 shipments for the same period of 1996. This increase in the number of shipments resulted from the expansion of services to existing and new customers. Net Revenues - The Company's net revenues as a percentage of operating revenues declined for both the second quarter and first six months of 1997 compared to the same periods of 1996 due to the closure of certain unprofitable dedicated trucking operations during 1996. This decrease in net revenues as a percentage of operating revenues during 1997 has been offset by proportionate decreases in operating expenses as a percentage of operating revenues. Operating Expenses - As discussed above under Net Revenues, the closing of certain dedicated trucking fleets has resulted in fluctuations in operating expenses as a percentage of operating revenues. In general, the Company's dedicated trucking fleets have relatively higher fixed costs as a percentage of operating revenues than the Company's transportation services and logistics management operations. Interest and Other Expense, Net - Interest and other expenses declined in 1997 due to decreased borrowings under the line of credit and increased interest income as cash flow from operations has exceeded the Company's operating needs and capital requirements during the last few fiscal quarters. Provision for Income Taxes - The Company's effective tax rate was 42% in both 1997 and 1996. LIQUIDITY AND CAPITAL RESOURCES In recent years, the Company's working capital needs have been met through cash flow from operations and a line of credit from a lending institution. Most recently, the Company's cash flows from operations have been adequate to meet its working capital needs. On June 28, 1997, there were no borrowings on the line of credit, but letters of credit totaling $6,463,000 had been issued on Mark VII's behalf to secure insurance deductibles and purchases of operating services, resulting in unused borrowing capacity of $13,537,000. On July 29, 1997, the Company replaced its line of credit with a line from a new lender. The interest rate for borrowings under the new $25,000,000 unsecured revolving credit facility (the "Facility") is a variable rate based upon the 30 day LIBOR Funding Rate, as defined, plus 50 to 125 basis points. The Company pays a varying fee of .35% to 1.00% on outstanding letters of credit and a varying commitment fee of .15% to .30% on the unused portion of the Facility, as defined. At July 29, 1997, the interest rate was 6.19% and the letter of credit fee and commitment fee were .35% and .15%, respectively. The line of credit expires on July 1, 2000, but may be extended, by mutual agreement of the lender and the Company, for subsequent periods of one year each. Among the covenants contained in the Facility are maintenance of certain financial ratios, including debt to net worth, cash plus accounts receivable to current liabilities plus debt and debt to earnings before income taxes, deprecation and amortization (all as defined). Other covenants include the level of capital and lease expenditures, acquisitions and mergers, dividends and redemptions of stock. At June 28, 1997, the Company had a ratio of current assets to current liabilities of approximately 1.4 to 1. Management believes that the Company will have sufficient cash flow from operations and borrowing capacity to cover its operating needs and capital requirements for the foreseeable future. OTHER INFORMATION Except for the historical information contained herein, this document contains forward-looking statements based on management's current expectations of the Company's near term results, based on current information available pertaining to the Company. Actual future results and trends may differ materially depending on a variety of factors, including competition in the marketplace, changes in volume discount agreements, changes in the carrier base, changes in capacity and changes in government regulations. In response to systems issues related to the year 2000, the Company has begun the design of new financial systems scheduled to be implemented during the first half of 1998. Additionally, the Company is performing an 9 10 in-depth review of the year 2000 compliance aspects of all peripheral systems not included in the above system. Management is confident that all issues arising from the year 2000 will be addressed during the course of these two projects. Results of operations in the transportation industry generally show a seasonal pattern, as customers reduce shipments during and after the winter holiday season. In recent years, the Company's operating income and earnings have been higher in the second and third quarters than in the first and fourth quarters. 10 11 MARK VII, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION. Item 1. Legal Proceedings. NONE Item 2. Changes in Securities. NONE Item 3. Defaults Upon Senior Securities. NONE Item 4. Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Shareholders of the Company was held on May 16, 1997. (b) Not Applicable (c) 1. Election of Directors. All nominees for director were elected pursuant to the following vote:
Name of Nominee Votes in favor Withheld --------------- -------------- -------- James T. Graves 3,605,275 1,030,847 Thomas J. Fitzgerald 3,605,503 1,030,619
(d) Not Applicable Item 5. Other Information. NONE Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits
Exhibit No. Description ----------- ----------- 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. NONE 11 12 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. Mark VII, Inc. (Registrant) August 12, 1997 /s/ Philip L. Dunavant - --------------- ------------------------------------------------------- (Date) Philip L. Dunavant, Executive Vice President, Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MARK VII, INC. FOR THE SIX MONTHS ENDED JANUARY 03, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JAN-03-1998 DEC-28-1996 JUN-28-1997 10,491 0 66,434 1,996 0 82,808 9,048 4,368 93,744 59,740 0 0 0 497 32,454 93,744 0 310,791 0 271,314 33,902 0 94 5,690 2,390 3,300 0 0 0 3,300 .68 .68
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