-----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, RdDnaqkDigHbXmGqjIQs0yokQXbqqSaWyxWQ2sRbZRGlrjxZXYreCGA7gVlIz6KS LwmeIw0GbQE0p0pXFCxFcw== 0000801558-99-000001.txt : 19990217 0000801558-99-000001.hdr.sgml : 19990217 ACCESSION NUMBER: 0000801558-99-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANNON EXPRESS INC CENTRAL INDEX KEY: 0000801558 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 710650141 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13917 FILM NUMBER: 99539664 BUSINESS ADDRESS: STREET 1: 1457 ROBINSON STREET 2: P O BOX 364 CITY: SPRINGDALE STATE: AR ZIP: 72765 BUSINESS PHONE: 5017519209 MAIL ADDRESS: STREET 1: PO BOX 364 STREET 2: PO BOX 364 CITY: SPRINGDALE STATE: AR ZIP: 72765 10-Q 1 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 DECEMBER 31, 1998 ( )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. 0-16386 CANNON EXPRESS, INC. (Exact name of registrant as specified in its charter) Delaware 71-0650141 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1457 Robinson P.O. Box 364 Springdale, Arkansas 72765 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (501) 751-9209 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 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 Number of shares of $.01 par value common stock outstanding at February 5, 1999: 3,192,861 INDEX CANNON EXPRESS, INC. and SUBSIDIARIES PART 1 -- FINANCIAL INFORMATION ITEM 1 -- Financial Statements (Unaudited) Consolidated Balance Sheets as of December 31, 1998 and June 30, 1998...............................1 Consolidated Statements of Income and Retained Earnings for the Three Months and Six Months Ended December 31, 1998 and 1997.....3 Consolidated Statements of Cash Flows for the Six Months Ended December 31, 1998 and 1997......................4 Notes to Consolidated Financial Statements.................................5 ITEM 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations......................................6 PART II -- OTHER INFORMATION ITEM 1 -- Legal Proceedings ...............................................* ITEM 2 -- Changes in Securities............................................* ITEM 3 -- Defaults Upon Senior Securities..................................* ITEM 4 -- Submission of Matters to a Vote of Security-Holders.............11 ITEM 5 -- Other Information................................................* ITEM 6 -- Exhibits and Reports on Form 8-K................................11 *No information submitted under this caption. PART 1. ITEM 1. Financial Statements (Unaudited) Cannon Express, Inc. and Subsidiaries Consolidated Balance Sheets December 31 June 30 1998 1998 (Unaudited) (Note) Assets Current assets: Cash and cash equivalents $9,676,775 $3,817,505 Receivables, net of allowance for doubtful accounts (December 31, 1998-$167,398; June 30, 1998-$158,656): Trade 10,003,847 9,582,372 Other 2,054,111 1,473,937 Prepaid expenses and supplies 882,064 1,325,024 Deferred income taxes 1,725,000 1,875,000 Total current assets 24,341,797 18,073,838 Property and equipment: Land, buildings and improvements 1,210,138 1,210,138 Revenue equipment 86,874,439 92,546,207 Service, office and other equipment 2,852,850 2,743,709 90,937,427 96,500,054 Less allowances for depreciation 39,981,197 37,193,306 50,956,230 59,306,748 Other assets: Receivable from stockholders 23,406 23,406 Restricted cash 2,387,396 2,386,832 Marketable securities 551,745 584,322 Other 596,428 511,332 Total other assets 3,558,975 3,505,892 $78,857,002 $80,886,478 Note: The balance sheet at June 30, 1998 has been derived from the audited consolidated balance sheet at that date but it does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to consolidated financial statements. Cannon Express, Inc. and Subsidiaries Consolidated Balance Sheets (Continued) December 31 June 30 1998 1998 (Unaudited) (Note) Liabilities and stockholders' equity Current liabilities: Trade accounts payable $1,438,482 $1,609,825 Accrued expenses: Insurance reserves 3,059,953 3,144,259 Other 1,551,971 1,758,047 Federal and state income taxes payable 3,524,175 2,208,632 Current portion of long-term debt 23,384,257 18,794,463 Total current liabilities 32,958,838 27,515,226 Long-term debt, less current portion 24,267,537 29,768,122 Deferred income taxes 3,091,000 4,752,000 Other liabilities 59,539 100,862 Stockholders' equity: Common stock: $.01 par value; authorized 10,000,000 shares; issued 3,252,986 shares 32,530 32,530 Additional paid-in capital 3,720,988 3,720,988 Retained earnings 15,119,066 15,197,014 Unrealized depreciation on marketable securities, net of income taxes (192,232) - 18,680,352 18,950,532 Less treasury stock, at cost (60,125 shares) 200,264 200,264 18,480,088 18,750,268 $78,857,002 $80,886,478 Note: The balance sheet at June 30, 1998 has been derived from the audited consolidated balance sheet at that date but it does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to consolidated financial statements. Cannon Express, Inc. and Subsidiaries Consolidated Statements of Income and Retained Earnings Three Months Ended Six Months Ended December 31 December 31 1998 1997 1998 1997 (Unaudited) (Unaudited) Operating revenue $24,091,602 $30,884,078 $48,754,019 $58,941,915 Operating expenses and costs: Salaries, wages and fringe benefits 9,489,795 9,613,819 18,145,892 18,963,733 Operating supplies and expenses 7,359,623 8,348,014 15,232,271 16,886,003 Taxes and licenses 1,451,409 1,504,755 2,766,816 2,902,240 Insurance & claims 1,419,018 1,314,732 2,267,059 3,011,895 Depreciation and amort. 2,483,914 3,290,667 5,934,833 6,537,002 Rents and purchased transportation 880,475 3,538,088 1,979,096 5,540,410 Other 546,917 604,715 1,121,557 964,117 23,631,151 28,214,790 47,447,524 54,805,400 Operating income 460,451 2,669,288 1,306,495 4,136,515 Other income(expense) Interest expense (748,908) (863,009) (1,561,276) (1,764,779) Other income 60,317 77,929 127,833 176,737 (688,591) (785,080) (1,433,443) (1,588,042) Income before income taxes (228,140) 1,884,208 (126,948) 2,548,473 Federal and state income taxes Current 820,000 328,000 1,342,000 649,000 Deferred (908,000) 326,000 (1,391,000) 48,000 (88,000) 654,000 (49,000) 697,000 Net income (loss) (140,140) 1,230,208 (77,948) 1,851,473 Retained earnings at beginning of period 15,259,206 14,003,692 15,197,014 13,382,427 Retained earnings at end of period $15,119,066 $15,233,900 $15,119,066 $15,233,900 Basic earnings(loss) per share ($0.04) $0.39 ($0.02) $0.59 Average shares outstanding 3,192,861 3,167,621 3,192,861 3,157,072 Diluted earnings(loss) per share ($0.04) $0.38 ($0.02) $0.57 Diluted shares outstanding 3,219,236 3,266,308 3,232,057 3,246,067 See notes to consolidated financial statements. Cannon Express, Inc. and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended December 31 1998 1997 (Unaudited) Operating activities Net income (loss) $ (77,948) $ 1,851,473 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 6,975,842 6,436,107 Provision for losses on accounts receivable 30,000 15,000 Provision (credit) for deferred income taxes (1,391,000) 48,000 Loss (gain) on disposal of equipment (1,041,008) 100,895 Changes in operating assets and liabilities: Accounts receivable (1,031,649) 262,428 Prepaid expenses and supplies 540,399 525,248 Accounts payable, accrued expenses, taxes payable, and other liabilities 854,159 1,095,864 Other assets - (11,400) Net cash provided by operating activities 4,858,795 10,323,615 Investing activities Purchases of property and equipment (114,290) (1,019,783) Purchases of marketable securities (280,000) - Net increase in restricted cash (564) (751) Proceeds from sales of marketable securities - 50,000 Proceeds from equipment sales 2,306,120 7,150 Net cash provided by (used in) investing activities 1,911,266 (963,384) Financing activities Proceeds from long-term borrowing 5,500,000 - Principal payments on long-term debt and capital lease obligations (6,410,791) (7,454,295) Proceeds from exercise of stock options - 52,237 Net cash used in financing activities (910,791) (7,402,058) Increase in cash and cash equivalents 5,859,270 1,958,173 Cash and cash equivalents at beginning of period 3,817,505 3,995,626 Cash and cash equivalents at end of period $ 9,676,775 $ 5,953,799 See notes to consolidated financial statements. Notes to Consolidated Financial Statements (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated 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 and six month periods ended December 31, 1998 are not necessarily indicative of the results that may be expected for the year ended June 30, 1999. For further information, refer to the Company's consolidated financial statements and notes thereto included in its Form 10 - K for the fiscal year ended June 30, 1998. Note B - Net Income Per Share Three Months Ended Six Months Ended December 31 December 31 1998 1997 1998 1997 (Unaudited) (Unaudited) Average shares outstanding 3,192,861 3,167,621 3,192,861 3,157,072 Net effect of dilutive stock options 26,375 98,687 39,196 88,995 Diluted shares outstanding 3,219,236 3,266,308 3,232,057 3,246,067 Net income (loss) for the period ($140,140) $1,230,208 ($77,948) $1,851,473 Basic earnings (loss) per share ($.04) $.39 ($.02) $.59 Diluted earnings (loss) per share ($.04) $.38 ($.02) $.57 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations -- Second Quarter Operating revenue for the second quarter of fiscal 1999 (ended December 31, 1998) was $24,091,602 compared to $30,884,078 for the second quarter of fiscal 1998, representing a decrease of $6,792,476 or 22.0% for the period. This decrease was due to a reduction in the amount of business the Company received from its major customer (Wal-Mart). In March of 1998 the Company made a decision not to continue some of the freight movements at the rates then being offered. Management of the Company believes that its longer-term interests will be best served by diversifying its customer base. During the second quarter of fiscal 1999, Wal-Mart revenue was $6,658,088 compared to $17,321,639 during the same period of fiscal 1998, representing a decrease of $10,663,554 for the period. Of this amount, approximately $1,550,000 was due to the loss of one lane which would not have been profitable at the rates being offered. The Company has hired 3 salespersons to replace the lost business, however, to date the shortfall in revenue has not been totally replaced. The Company also saw a decrease in its logistics and intermodal revenue from $3,935,231 for the second quarter of fiscal 1998 to $861,649 for the same period of fiscal 1999. This decrease was due to the Company's not offering the same amount of excess freight to other companies' trucks as in the prior year. The Company believes that its sales efforts will be rewarded in the future through higher rates and with equipment utilization returning to historical levels. At December 31, 1998, the Company's fleet consisted of 848 trucks and 2,345 trailers, while on December 31, 1997, the Company's fleet consisted of 904 trucks and 2,114 trailers. Salaries, wages, and fringe benefits, made up primarily of drivers' wages, increased as a percentage of revenue to 39.4% in the second quarter of fiscal 1999 from 31.1% in the second quarter of fiscal 1998. Company drivers were awarded approximately $256,000 in bonuses for the three-month period ended December 31, 1998 as compared with $234,000 awarded during the three-month period ended December 31, 1997. Additionally, an annual safety bonus of $337,000 was paid in December 1998, as compared to $209,000 paid in December 1997. Operating supplies and expenses, as a percentage of revenue, increased to 30.5% in the second quarter of fiscal 1999 from 27.0% in the comparable period of fiscal 1998. This increase was mainly attributable to increased frequency and cost of repairs to older trucks compounding the time lost from hauling loads while those trucks were being repaired. Operating taxes and licenses also increased to 6.0% of revenue in fiscal 1999 from 4.9% in fiscal 1998. Insurance and claims were 5.9% of revenue in fiscal 1999, increasing from 4.3% of revenue in fiscal 1998. Depreciation and amortization decreased to 10.3% of revenue in fiscal 1999 from 10.7% in the same period of fiscal 1998. A gain on disposal of equipment of $975,670 was included in the second quarter of fiscal 1999 as compared to a loss of $74,189 in the second quarter of 1998. Rents and purchased transportation decreased to 3.7% of revenue in fiscal 1999 from 11.5% in fiscal 1998 due to decreased logistics operations. Other expenses were 2.3% of revenue in the second quarter of fiscal 1999 and 2.0% in the comparable period of fiscal 1998. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Cont'd Operating revenue for the second quarter of 1999 decreased by 22.0% over the comparable period of 1998, while operating expenses decreased by $4,583,639 or 16.2%. Accordingly, the Company's operating ratio increased to 98.1% in the second fiscal quarter of 1999 from 91.4% in the same period of fiscal 1998. Interest expense increased to 3.1% of revenue in the second quarter of fiscal 1999 from 2.8% recorded in the second quarter of fiscal 1998. The Company's effective income tax rate increased to 38.5% of income before income taxes during the second quarter of fiscal 1999 from 34.7% in the second quarter of fiscal 1998. During fiscal 1998, income tax consequences of certain equipment leasing transactions were recorded in the financial statements in reliance on opinion of tax counsel. Net loss for the second quarter of fiscal 1999 ended December 31, 1998 was ($140,140) ($.04 loss per share) compared to net income of $1,230,208 ($.38 earnings per share) during the comparable period of fiscal 1998, a decrease of $1,370,348 or 111.4% for the period. Results of Operations - Six Month Period Operating revenue for the first six months of fiscal 1999 ended December 31, 1998 was $48,754,019 compared to $58,941,915 for the comparable period of fiscal 1998, representing a decrease of $10,187,896 or 17.3%. As in the three-month period, this decrease was mainly due to a reduction in the amount of business the Company received from its major customer (Wal-Mart). For the six-month period ended December 31, 1998, Wal-Mart revenue was $15,135,215 compared to $30,805,526 for the same period of fiscal 1998, representing a decrease of $15,670,311. Of this amount, approximately $3,060,000 was due to the loss of one lane which would not have been profitable at the rates being offered. Logistics and intermodal revenue for the six-month period of fiscal 1999 decreased by $4,624,187 over the comparable period in fiscal 1998. As in the three-month period, a continued shortage of qualified drivers and fewer trucks and loads to offer other companies available for contract work impaired the Company's ability to produce revenue. Operating income decreased to $1,306,495 in the six months ended December 31, 1998 from $4,136,515 during the comparable period of fiscal 1998. Salaries, wages, and fringe benefits increased to 37.2% of revenues in the six-month period of fiscal 1999 from the 32.2% reported in the six-month period of fiscal 1998. Operating supplies and expenses increased to 31.2% of revenue in fiscal 1999 from 28.6% in fiscal 1998. The Company experienced an increase in the cost of operating its trucks as maintenance costs were incurred outside of warranty on its older fleet, although its fuel costs were lower by 14.4%. Taxes and licenses increased to 5.7% of revenue during fiscal 1999 from 4.9% in fiscal 1998. Insurance and claims were 4.6% of revenue in fiscal 1999, decreasing from 5.1% of revenue in fiscal 1998. Depreciation and amortization, as a percentage of revenue, increased to 12.2% of revenue in fiscal 1999 from 11.1% in the same period of fiscal 1998. A gain on disposal of equipment of $1,041,008 was included in the six-month period of fiscal 1999 as compared to a loss of $100,895 in the same period of 1998. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Cont'd Rents and purchased transportation decreased to 4.1% of revenue in the first six months of fiscal 1999 from 9.4% during the comparable period of fiscal 1998. As was the case in the three-month period, this decrease was caused primarily to the decreased logistics activities. Other expenses were 2.3% of revenue in the six-month period of fiscal 1999 and 1.6% in the comparable period of 1998. Interest expense increased to 3.2% of revenue in the first six months of fiscal 1999 from 3.0% recorded in the first six months of fiscal 1998. The Company's effective income tax rate increased to 38.5% of income before income taxes for the first six months of fiscal 1999 from 27.3% for the first six months of fiscal 1998. As in the three-month period, this benefit is a result of certain equipment leasing transactions consummated during the prior fiscal year. Net loss for the first six months of fiscal 1999 ended December 31, 1998 was $77,948 ($.02 loss per share) compared to net income of $1,851,473 ($.57 earnings per share) during the comparable period of fiscal 1998, a decrease of $1,929,421 for the six-month period. Fuel Cost and Availability The Company, and the motor carrier industry as a whole, is dependent upon the availability and cost of diesel fuel. Diesel fuel costs have declined during the first two quarters of fiscal 1999 over the same period of fiscal 1998. Fuel costs in the quarter ended December 31, 1998 were approximately 15.9% lower than in the same period of the prior year. For the six-month period of fiscal 1999, fuel costs were approximately 14.4% lower than in the six-month period of fiscal 1998. Historically, increases in fuel costs have been passed through to the Company.s customers, either in the form of fuel surcharges, or if deemed permanent in nature, through increased rates. Future cost increases or shortages of fuel could affect the Company.s future profitability. Liquidity and Capital Resources The Company's primary sources of liquidity have been cash flows generated from operations and proceeds from borrowings. The Company typically extends credit to its customers, billing freight charges after delivery. Accordingly, the ability of the Company to generate cash to satisfactorily meet its ongoing cash needs is substantially dependent upon timely payment by its customers. The Company has not experienced significant uncollectible accounts receivable. Operating activities provided cash flows of $4.9 million for the first six months of fiscal 1999 compared to $10.3 million for the same period of fiscal 1998. Cash flows from operations in the first two quarters of fiscal 1999 were the result of $7.0 million in depreciation and $2.1 million used in other working capital assets and liabilities. Investing activities provided net cash of $1.9 million during the first six months of fiscal 1999 compared to $1.0 million net cash used in the same period of fiscal 1998. Financing activities used net cash of $.9 million during the first two quarters of ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Cont'd fiscal 1999 compared to $7.4 million in fiscal 1997. During the second quarter of fiscal 1999, the Company entered into a sale/leaseback transaction for certain of its trucks which had been purchased for cash during the quarter ending December 31, 1996. The Company's working capital at December 31, 1998 was a deficit of $8.7 million compared to a deficit of $9.4 million at June 30, 1998. These deficits are largely due to the Company's current maturities of long-term debt which includes approximately $15.5 million that will be due on final note or lease payments for revenue equipment. Approximately $13.9 million will be due for trucks which are planned to be traded in or sold during fiscal 1999. Historically, the Company has received slightly more in cash when equipment is sold than the amount paid on final note or lease payments. The Company expects that its obligation for these final equipment payments will be approximately offset by cash received when the equipment is sold. Management believes that it is unlikely that the cost and availability of financing will be adversely affected by this working capital deficit in the near future. Like other truckload carriers, the Company experiences significant driver turnover. Management anticipates that competition for qualified drivers will intensify. The Company seeks to attract drivers by advertising job openings, encouraging referrals from existing employees and providing a training program for applicants whose experience does not meet the Company's minimum requirements, however, no assurance can be made that the Company will not continue to experience a shortage of drivers in the future. The Company was caught in a cycle of large demand for new trucks and long lead times for new truck orders. Due to the manufacturer's lead time for new trucks, the Company was unable to secure any replacement trucks on schedule and was forced to make expensive non-warranty repairs to its older equipment. The Company sold 28 trucks that were scheduled to be traded before taking delivery of the new replacement trucks in order to minimize expenses associated with those unmanned trucks, reducing its fleet to 848 trucks at December 31, 1998. This sale resulted in a gain of $256,974. The Company also sold 25 trucks in the quarter ended June 30, 1998 for the same reasons. The Company has 700 replacement trucks on order with deliveries beginning in February of 1999 and continuing incrementally through March of 2000 which will increase the Company's fleet to its former size of 905 trucks, net of trade-in units. The new truck specifications include features that afford the driver a higher level of comfort and appeal than the older models being traded in. Management believes that these new trucks, when placed in service, will reduce maintenance costs and time lost for repairs. Additionally, the Company is planning a new program to convert a portion of its drivers to owner-operators by helping high-quality drivers to lease or purchase one of the Company's trucks and be paid to operate it under a continuing contract with the Company to haul freight for its customers. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Cont'd The Company also sold 192 of its 48 foot trailers resulting in a gain of $677,270. The Company plans to convert the majority of its trailer fleet to 53 foot trailers in the future in order to allow it to compete for freight from the increasing number of customers who require 53 foot trailers for some or all of their shipments. The Company currently owns and operates 900 of the 53 foot trailers and 1445 of the 48 foot trailers. Year 2000 Issues The Company has completed an assessment of its internal systems with regard to Year 2000 compliance. All of its computer hardware and internal software is compliant. The Company will convert its EDI format to ASC X12, version 4010 which is year 2000 compliant. The Company's communication systems which include telephones, on-board computers for trucks, voice mail, and electronic mail (E-mail) are certified compliant, with the exception of the on-board computers which are scheduled by the vendor to be compliant by early 1999. The Company has assurances from its utilities providers of an implementation plan in place. Backup power generators are certified compliant. However, the Company's business requires that it operate in all regions of the United States, and the Company may rely indirectly on utility providers over which it has no control. Infrastructure failures could significantly reduce the Company's ability to serve its customers. The Company's trucks are certified compliant for the year 2000 by the manufacturer. The Company has conducted a survey of other internal electronic devices which may have embedded technology likely to be affected by the Year 2000 and believes that no critical devices will fail. The Company will seek written assurance from its customers and vendors of their Year 2000 compliance during the early part of 1999 to determine the extent of any effect on the Company's operations. The Company has not received written assurances from its significant customers and vendors that their systems will be timely converted and would not have an adverse effect on the Company. It is not possible at this time to quantify the amount of business that might be lost or other costs that could be incurred by the Company as a result of the Company's customers' and vendors' failure to remediate their Year 2000 issues. The Company believes that the most likely worst-case scenario which it may face would be the inability of one or more of its major customers to communicate electronically through EDI (Electronic Data Interchange). In that event, the Company believes that it would be able to continue its business as it did prior to EDI until those customers' systems return to normal. The Company estimates that its cost of becoming Year 2000 compliant will be less than $50,000, with the majority of the expense accounted for in the cost of operations through June 30, 1998. The Company subscribes to a service called Year 2000 Stocks via the internet at www.year2000stocks.com as one of the ways to stay abreast of the Year 2000 issues. Forward-Looking Statements This report contains forward-looking statements that are based on assumptions made by management from information currently available to management. These statements address future plans, expectations and events or conditions concerning various matters such as the results of the Company's sales efforts as set forth in the discussion of results of operations, capital expenditures, litigation and capital resources, accounting matters, and Year 2000 readiness. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, actual results could differ materially from those currently reported. PART II OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders On November 17, 1998, the Annual Meeting of Stockholders was held in Springdale, Arkansas. The only matter submitted to a vote of the stockholders was the reelection of Dean G. Cannon, Rose Marie Cannon, Uvalde R. Lindsey, and Roy E. Stanley to the Company's current Board of Directors whose terms expired in 1998. Over 99% of the shares present or represented by proxy were voted in favor of management.s nominees. ITEM 6. Exhibits and Reports on Form-K No reports on Form 8-K were filed during the three months ended December 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. CANNON EXPRESS, INC. (Registrant) Date: February 16, 1999 /s/ Dean G. Cannon President, Chairman of the Board, Chief Executive Officer and Chief Accounting Officer Date: February 16, 1999 /s/ Rose Marie Cannon Secretary, Treasurer and Director EX-27 2
5 6-MOS JUN-30-1999 DEC-31-1998 9,676,775 551,745 10,171,245 167,398 0 24,341,797 90,937,427 39,981,197 78,857,002 32,958,838 0 0 0 32,530 0 78,857,002 48,754,019 48,754,019 0 47,447,524 0 0 1,561,276 (126,948) (49,000) 0 0 0 0 (77,948) (.02) (.02)
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