-----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, O1q0gSGdyl4/lGjY4ThmEx0tew12zed4FjDh9M8OntaP3sTPYrwvuDZo/Lykr2+9 Fg4yyv3i5IhrlPaUUAs8DA== 0000912057-96-026161.txt : 19961118 0000912057-96-026161.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026161 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNTRY WIDE TRANSPORT SERVICES INC CENTRAL INDEX KEY: 0000810950 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 954105996 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23360 FILM NUMBER: 96662621 BUSINESS ADDRESS: STREET 1: 325 N COTA ST CITY: CORONA STATE: CA ZIP: 91720 BUSINESS PHONE: 9095496000 MAIL ADDRESS: STREET 1: 325 N COTA STREET CITY: CORONA STATE: CA ZIP: 91720 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------------------------------------- FORM 10-Q Quarter Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 --------------------------------------------------------------- For Quarter Ended September 30, 1996 Commission File Number 0-23360 COUNTRY WIDE TRANSPORT SERVICES, INC. ------------------------------------------------------------------------- (Exact name of registrant as specified in charter) DELAWARE 95-4105996 ------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 325 N. COTA STREET, CORONA, CALIFORNIA 91270 ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (909) 549-6000 ------------------------------------------------------------------------- (Registrant's telephone number, including area code) ------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 requires for the past 90 days. Yes X No ----- ----- The number of common stock outstanding as of October 31, 1996 was 4,800,487. 1 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES INDEX Part I - Financial Information Page - ------------------------------ ---- Item 1. Financial Statements: Condensed Consolidated Balance Sheets--September 30, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Operations--Three Months Ended September 30, 1996 and 1995 5 Condensed Consolidated Statements of Cash Flows--Three Months Ended September 30, 1996 and 1995 7 Notes to Condensed Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II - Other Information Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 2 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) September 30, June 30, 1996 1996* --------- --------- (Unaudited) ASSETS Current assets: Cash $ 51 $ 37 Accounts receivable, net 5,168 5,199 Accounts receivable - miscellaneous 51 85 Driver advances 213 203 Notes receivable - current portion 15 -- Inventories 26 29 Prepaid expenses 352 380 --------- --------- Total current assets 5,876 5,933 Property and equipment, net 3,336 3,580 Note receivable - long-term 25 -- Other assets: Deposits 283 270 Excess of purchase price over fair value of net assets acquired, net 4,778 4,825 --------- --------- Total assets $ 14,298 $ 14,608 --------- --------- --------- --------- * Condensed from audited financial statements. Continued 3 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) September 30, June 30, 1996 1996* --------- --------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 4,460 $ 4,329 Accounts payable and accrued liabilities 5,524 5,584 --------- --------- Total current liabilities 9,984 9,913 Long-term debt, less current portion 2,374 2,616 Liabilities in excess of assets of discontinued operations 134 177 --------- --------- Total liabilities 12,492 12,706 --------- --------- Stockholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized, issuable in series, none issued -- -- Common stock, $.02 par value, 10,000,000 shares authorized, 4,801,000 shares issued and outstanding at September 30 and June 30, 1996, respectively 96 96 Warrants 40 40 Additional paid-in capital 6,763 6,763 Retained earnings (5,093) (4,997) --------- --------- Total stockholders' equity 1,806 1,902 --------- --------- Total liabilities and stockholders' equity $ 14,298 $ 14,608 --------- --------- --------- --------- * Condensed from audited financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, except Per Share Data) Three Months Ended September 30, ------------------------ 1996 1995 --------- --------- Transportation revenue $ 10,547 $ 12,950 --------- --------- Operating costs and expenses: Purchased transportation 7,267 9,034 Salaries and related expenses 1,357 1,463 Operating expenses 844 1,168 Revenue equipment rentals 371 485 General supplies and expenses 385 559 Depreciation and amortization 259 331 --------- --------- Total operating costs and expenses 10,483 13,040 --------- --------- Operating income (loss) 64 (90) Other income (expense): Interest expense (175) (158) Interest income -- 33 Gain on disposition of assets 23 21 --------- --------- Net (loss) from continuing operations before provision for income taxes, discontinued operations and extraordinary item (88) (194) Provision for income tax 8 -- --------- --------- Net (loss) from continuing operations $ (96) $ (194) --------- --------- Continued 5 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, except Per Share Data) Three Months Ended September 30, -------------------------- 1996 1995 ----------- ----------- Net (loss) from continuing operations $ (96) $ (194) ----------- ----------- Discontinued operations: (Loss) from operations of discontinued business segments, net of applicable income tax (expense) of ($25) for the three months ended September 30, 1995 (note 5) -- (762) ----------- ----------- Net (loss) before extraordinary item (96) (956) Extraordinary item: Gain on forgiveness of debt of discontinued operations, net of applicable income tax expense of $1,630 (note 5) -- 2,370 ----------- ----------- Net income (loss) $ (96) $ 1,414 ----------- ----------- Income (loss) per common share: Continuing operations $ (.02) $ (0.04) Discontinued operations -- (0.16) Extraordinary item -- 0.50 ----------- ----------- Net Income (loss) per common share $ (.02) $ 0.30 ----------- ----------- Weighted average number of common shares 4,800,487 4,800,487 ----------- ----------- ----------- ----------- The accompanying notes are an integral part of these condensed consolidated financial statements. 6 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) Three Months Ended September 30, ---------------------- 1996 1995 -------- -------- Cash flows from operating activities: Net (loss) from continuing operations $ (96) $ (194) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 259 331 (Gain) on disposition of assets (23) (21) Provision for uncollectible accounts receivable 8 34 (Increase) decrease in Accounts receivable 26 126 Accounts receivable - miscellaneous 34 (12) Driver advance (9) (22) Inventories 3 (1) Prepaid expenses 28 66 Deposits (13) (86) Increase (decrease) in: Accounts payable and accrued liabilities (60) 868 Liabilities in excess of discontinued operations (43) -- -------- -------- Net cash provided by operating activities from continuing operations 114 1,089 -------- -------- Net (loss) from discontinued operations (762) Depreciation and amortization -- 8 Gain on disposition of assets -- 14 Changes in operating assets -- 180 -------- -------- Net cash (used in) operating activities from discontinued operations -- (560) -------- -------- Cash flows from investing activities: Increase in notes receivable -- (29) Collections on notes receivable 1 -- Additions to property and equipment (60) (165) Proceeds from disposal of property and equipment 70 792 -------- -------- Net cash provided by investing activities 11 598 -------- -------- Continued 7 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) Three Months Ended September 30, ------------------------- 1996 1995 ---------- ---------- Cash flows from financing activities: Principal payments on borrowings $ (11,299) $ (16,033) Net cash borrowings from line of credit 11,188 14,875 ---------- ---------- Net cash (used in) financing activities (111) (1,158) ---------- ---------- Increase (decrease) in cash 14 (31) Cash, beginning of period 37 57 ---------- ---------- Cash, end of period $ 51 $ 26 ---------- ---------- ---------- ---------- Supplemental disclosure of cash flow information: Cash paid for: Interest $ 153 $ 187 ---------- ---------- ---------- ---------- Income Taxes $ 1 $ 9 ---------- ---------- ---------- ---------- Noncash investing and financing transactions: Purchase of property and equipment with debt or reduction of receivable $ -- $ 1,668 ---------- ---------- ---------- ---------- Property and equipment sold for receivable $ 41 $ 10 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these condensed consolidated financial statements. 8 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in the Company's Annual Report to Stockholders for the year ended June 30, 1996. 2. STATEMENT OF INFORMATION FURNISHED The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 1996, the results of operations for the three months ended September 30, 1996 and 1995 and the cash flows for the three months ended September 30, 1996 and 1995. The results of operations for the three month periods ended September 30, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's 1996 Annual Report. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (000 omitted): September 30, June 30, Estimated 1996 1996 Useful Lives --------- -------- ------------- Revenue equipment $ 3,741 $ 3,834 5 to 7 years Service cars 11 11 5 years Furniture and office equipment 516 505 4 to 5 years Leasehold improvements 142 137 life of lease Machinery and equipment 29 29 5 years --------- -------- 4,439 4,516 Less accumulated depreciation and amortization (1,103) (936) --------- -------- $ 3,336 $ 3,580 --------- -------- --------- -------- 9 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following (000 omitted): September 30, June 30, 1996 1996 ------------ ---------- Accounts payable $ 1,178 $ 1,390 Accrued insurance 445 469 Accrued purchased transportation 2,990 2,766 Other accrued expenses 911 959 ------------ ---------- $ 5,524 $ 5,584 ------------ ---------- ------------ ---------- 5. DISCONTINUED OPERATIONS Having experienced significant losses in the produce sales segment, the Company's Board of Directors decided on June 26, 1995 to discontinue the entire segment through an orderly liquidation process which they estimated would occur over the subsequent two month period. Immediately thereafter, the Company commenced to close the operations and on September 18, 1995 made a General Assignment of all assets of its subsidiary, Nationwide Produce Co., for the pro rata benefit of all creditors of the subsidiary. Revenues applicable to the discontinued product sales segment were approximately $52,953,000, $22,723,000, and $20,053,000 for the years ended June 30, 1995, 1994, and 1993, respectively. During the three months ended September 30, 1995, the Company recognized a net gain to the extent of unpaid liabilities of Nationwide Produce Co. (not guaranteed or assumed by the Company) in excess of assets and operating losses from July 1, 1995 to date of liquidation amounting to $4,000,000 before income tax. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net loss from continuing operations for the quarter ended September 30, 1996 amounted to $96,000 compared to $194,000 for the prior year period. The decreased loss was primarily attributable to an increase in pricing and cost reduction measures during the current quarter. First quarter operating revenue decreased 18.6% to $10,547,000 from $12,950,000 for the first quarter of 1995. The decrease reflects a reduction in the Company's tractor fleet from 214 units at September 30, 1995 to 105 units at September 30, 1996 which resulted in a decrease in loaded miles from 5,999,000 to 4,093,000 for the period. The reduction in the number of units reflects the Company's efforts to downsize the operations by concentrating the freight lanes. Operating revenue for the Company's Vertex Transportation, Inc. subsidiary increased $164,000 to $7,328,000 for the three months ended September 30, 1996. Vertex is a full service freight forwarder providing its customers transportation services including truckload, less than truckload distributation, warehousing, consolidations, and multi-modal transportation. During the first quarter demand for the Company's temperature-controlled truckload services weakened due to increased competition in produce-related freight while pricing increased 2.1% or $.024 per mile compared with the prior year period. Operating costs for the first quarter decreased by $2,557,000 from the prior year period. As a percentage of sales, operating costs for the quarter decreased 1.3% from the prior year period and is primarily attributable to a $164,000 decrease in revenue equipment rentals resulting from a reduction of the Company's trailer fleet, as well as a 1% reduction in operating expenses expressed as a percentage of sales. Depreciation and amortization expense and interest expense for the quarter ended September 30, 1996 were $259,000 and $175,000 respectively, as compared with $331,000 and $158,000, respectively, in the comparable 1995 period. The decrease in depreciation and amortization is attributable to a decrease in capitalized trailers and the increase in interest expense reflects the Company's higher incremental borrowing rates. Having experienced significant losses in the produce segment, the Company's Board of Directors decided on June 26, 1995 to wind-down and discontinue the entire product sales segment through an orderly liquidation which was estimated to occur over the subsequent two month period. Immediately thereafter, the Company commenced to close the operations and on September 18, 1995 made a General Assignment of all assets of its subsidiary, Nationwide Produce Co., for the pro rata benefit of all creditors of the subsidiary. During the quarter ended September 30, 1995, the Company's product sales segment generated a net loss of $762,000. Results of operations for the product sales segment have been classified as discontinued operations in the Company's financial statements for all periods presented. During the three months ended September 30, 1995, the Company recognized a net gain to the extent of unpaid liabilities of Nationwide Produce Co. (not guaranteed or assumed by the Company) in excess of assets and operating losses from July 1, 1995 to date of liquidation amounting to $4,000,000 before income tax. 11 LIQUIDITY AND CAPITAL RESOURCES Pursuant to a loan agreement with a commercial bank dated June 30, 1996, the Company utilizes a credit facility which provides for maximum outstanding borrowings of $4.75 million reducing to $4.65 million at October 31, 1996. Borrowings are limited to 80% of eligible accounts and at September 30, 1996, the outstanding indebtedness under the credit facility was $3,815,000 and is classified as a current liability in the Company's financial statements. The agreement bears interest at the banks prime rate plus 3% and expires on December 31, 1996. At September 30, 1996 the Company was in violation of certain covenants of the Agreement and management has commenced negotiations with other lending institutions in order to have alternative financing in place upon expiration of this agreement. At September 30, 1996, the Company's ratio of current assets to current liabilities and its debt to equity were 0.6:1 and 6.9:1, respectively, as compared to 0.6:1 and 6.7:1, respectively at June 30, 1996. At September 30, 1996 no significant capital expenditures were planned or committed. The Company ended the September 30, 1996 period with $51,000 of cash and negative working capital of $4,108,000. Based upon the Company's expected cash flow from operations and funds available under existing or substitute credit facilities, management believes that the Company's capital resources are sufficient to meet its presently anticipated operating needs and capital expenditure requirements. However, should these resources provide inadequate or unavailable, the Company may be required to seek additional financing through capital investment. 12 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES Part II. Other Information ITEM 1. LEGAL INFORMATION During the month of September 1995, the Company's transportation subsidiary, CW Truck, had a cargo claim that approximated $600,000 filed against it by one of its customers. The insurance carrier citing certain exceptions in the cargo policy declined to pay the claim and referred the issue to litigation on February 27, 1996. The Company initiated legal action against the insurance carrier and its agent. The customer additionally filed a cross claim against the Company. Management feels that the Company's suit will be successful. Therefore, no contingent liability has been recorded in the Company's financial statements as of September 30, 1996. ITEM 5. OTHER INFORMATION During the fiscal year ended June 30, 1995, the Company discontinued its product sales segment which was operated by the Company's wholly-owned subsidiary, Nationwide Produce Co., since July 1992 when the Company acquired all of the outstanding stock of Nationwide from Martrade Ltd. The Company's discontinuance of the product sales segment culminated in the filing of a General Assignment during September 1995 of all assets of Nationwide Produce Co. for the pro rata benefit of all creditors of the subsidiary. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: 1. Report on Form 8-K dated September 23, 1996 regarding the letter of intent for the acquisition of the Company by Continental American Transportation, Inc. 13 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. COUNTRY WIDE TRANSPORT SERVICES, INC. ------------------------------------- Registrant DATED: November 14, 1996 /s/Timothy Lepper ------------------------------------- Timothy Lepper President and Chief Executive Officer DATED: November 14, 1996 /s/Nathan W. Gordon ------------------------------------- Nathan W. Gordon Chief Financial Officer 14 EX-27 2 EX 27
5 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 51 0 5,347 128 26 5,876 4,439 1,103 14,298 9,984 2,374 0 0 96 1,710 14,298 10,547 10,547 0 10,483 152 0 175 (88) 8 (96) 0 0 0 (96) (0.02) (0.02)
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