-----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, OEjtkPFqlPUWTb+92g4zNPM/V1pX/JRjvL9jyS9jVacsuBGJgwlMzPCoO71EQraG aIrLMFUT7Du03wMcrfPcVQ== 0001047469-98-005786.txt : 19980218 0001047469-98-005786.hdr.sgml : 19980218 ACCESSION NUMBER: 0001047469-98-005786 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980213 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: SEC FILE NUMBER: 000-23360 FILM NUMBER: 98536372 BUSINESS ADDRESS: STREET 1: 119 DESPATCH DRIVE CITY: EAST ROCHESTER STATE: NY ZIP: 14445- BUSINESS PHONE: 7163815470 MAIL ADDRESS: STREET 1: 119 DESPATCH DRIVE CITY: EAST ROCHESTER STATE: NY ZIP: 14445- 10-Q 1 FORM 10-Q 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 Quarter Ended December 31, 1997 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.) 119 Despatch Drive, East Rochester, New York 14445 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (716) 381-5470 - ------------------------------------------------------------------------------ (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 shares of Common Stock outstanding as of February 2, 1998 was 4,248,100. COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES INDEX ----- PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements: Condensed Consolidated Balance Sheets--December 31, 1997 and June 30, 1997 3 Condensed Consolidated Statements of Operations--Three Months and Six Months Ended December 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows--Six Months Ended December 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 PART II - OTHER INFORMATION Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)
December 31, June 30, 1997 1997* ------------ -------- (Unaudited) ASSETS Current assets: Cash $ 4 $ 10 Accounts receivable, net 5,270 4,009 Accounts receivable - officers and employees 42 47 Driver advances 18 16 Prepaid expenses 53 49 ------- ------- Total current assets 5,387 4,131 Property and equipment, net 120 110 Other assets: Deposits 8 8 Excess of purchase price over fair value of net assets acquired, net 2,578 2,638 ------- ------- Total assets $ 8,093 $ 6,887 ------- ------- ------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 13 $ 160 Accounts payable and accrued liabilities 4,533 4,612 Liabilities in excess of assets of discontinued subsidiary 348 404 Liabilities in excess of assets of discontinued operations 88 123 ------- ------- Total current liabilities 4,982 5,299 Long-term debt, less current portion 2,858 1,748 ------- ------- Total liabilities 7,840 7,047 ------- ------- Stockholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized, issuable in series, none issued -- -- Common stock, $.10 par value, 30,000,000 and 10,000,000 shares authorized, 4,248,000 shares issued and outstanding at December 31 and June 30, 1997 425 425 Additional paid-in capital 8,110 8,110 Retained earnings (deficit) (8,282) (8,695) ------- ------- Total stockholders' equity (deficit) 253 (160) ------- ------- Total liabilities and stockholders' equity $ 8,093 $ 6,887 ------- ------- ------- -------
* Condensed from audited financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements. 3 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, except Per Share Data)
Three Months Ended Six Months Ended December 31, December 31, ------------------ ------------------- 1997 1996 1997 1996 ------- -------- -------- -------- Transportation revenue $ 8,656 $ 10,039 $ 17,153 $ 20,586 ------- -------- -------- -------- Operating costs and expenses: Purchased transportation 7,572 7,426 15,066 14,693 Salaries and related expenses 455 1,381 901 2,738 Operating expenses 45 1,530 89 2,374 Revenue equipment rentals -- 456 -- 827 General supplies and expenses 236 536 451 921 Depreciation and amortization 41 2,291 82 2,550 ------- -------- -------- -------- Total operating costs and expenses 8,349 13,620 16,589 24,103 ------- -------- -------- -------- Operating income / (loss) 307 (3,581) 564 (3,517) Other income (expense): Interest expense (57) (176) (101) (351) Interest income -- -- -- -- Gain on disposition of assets -- (429) -- (406) ------- -------- -------- -------- Income (loss) before provision for income taxes 250 (4,186) 463 (4,274) Provision for income tax 38 13 58 21 ------- -------- -------- -------- Net income (loss) $ 212 $ (4,199) $ 405 $ (4,295) ------- -------- -------- -------- ------- -------- -------- -------- Basic earnings (loss) per common share: Continuing operations $ 0.05 $ (4.37) $ 0.10 $ (4.47) ------- -------- -------- -------- Net Income (loss) per common share $ 0.05 $ (4.37) $ 0.10 $ (4.47) ------- -------- -------- -------- ------- -------- -------- -------- Diluted earnings (loss) per common share: Continuing operations $ 0.04 $ (4.37) $ 0.08 $ (4.47) ------- -------- -------- -------- Net Income (loss) per common share $ 0.04 $ (4.37) $ 0.08 $ (4.47) ------- -------- -------- -------- ------- -------- -------- -------- Weighted average number of common shares 4,248,100* 960,000* 4,248,100* 960,000* --------- ------- --------- ------- --------- ------- --------- -------
* Reflects May 15, 1997 one for five reverse stock split 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 CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended December 31, ---------------- 1997 1996 -------- -------- Cash flows from operating activities: Net income (loss) from continuing operations $ 405 $ (4,295) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 82 2,550 (Gain) Loss on disposition of assets -- 406 Provision for uncollectible accounts receivable -- 3 (Increase) decrease in Accounts receivable (1,261) 404 Accounts receivable - miscellaneous 5 (61) Driver advance (2) 189 Inventories -- 7 Prepaid expenses (4) 323 Deposits -- (56) Increase (decrease) in: Notes payable - current portion 13 -- Accounts payable and accrued liabilities (239) 1,386 Liabilities in excess of discontinued subsidiary (56) -- Liabilities in excess of discontinued operations (35) (83) -------- -------- Net cash provided by (used in) operating activities (1,092) 773 -------- -------- Cash flows from investing activities: Collections on notes receivable -- 1 Additions to property and equipment (24) (113) Proceeds from disposal of property and equipment -- 93 -------- -------- Net cash used in investing activities (24) (19) -------- -------- Cash flows from financing activities: Principal payments on borrowings $(15,975) $(22,307) Borrowings from line of credit 17,085 21,521 -------- -------- Net cash provided by (used in) financing activities 1,110 (786) -------- -------- Decrease in cash (6) (32) Cash, beginning of period 10 37 -------- -------- Cash, end of period $ 4 $ 5 -------- -------- -------- -------- Supplemental disclosure of cash flow information: Cash paid for: Interest $ 101 $ 352 -------- -------- -------- -------- Income Taxes $ 58 $ 16 -------- -------- -------- -------- Net assets sold for assumption of debt and reduction of receivable $ -- $ 2,944 -------- -------- -------- --------
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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 on form 10K for the year ended June 30, 1997. 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 December 31, 1997, the results of operations for the three months and six months ended December 31, 1997 and 1996 and the cash flows for the six months ended December 31, 1997 and 1996. The results of operations for the three month and six month periods ended December 31, 1997 and 1996 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 audited consolidated financial statement for the year ended June 30, 1997 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. EARNINGS PER COMMON SHARE In February 1997, the Financial Accounting Standards Board issued a new statement titled "EARNINGS PER SHARE"("FAS 128"). The new statement is effective for both interim and annual periods ending after December 15, 1997. FAS 128 replaces the presentation of primary and fully diluted earnings per share with the presentation of basic and diluted earnings per share. Basic earnings per share excludes dilution and is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Common stock equivalents as of December 31, 1996 were anti-dilutive and excluded in the earnings per share computation. IMPACT OF RECENTLY ISSUED STANDARDS The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards 130, "REPORTING COMPREHENSIVE INCOME" and Statement of Financial Accounting Standards 131 "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION." Statement 130 establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, Statement 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that displays such information with the same prominence as other financial statements. Statement 131 supersedes Statement of Financial Accounting Standards 14 "FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS ENTERPRISE." Statement 131 establishes standards on the way that public companies report financial information about operating segments in annual financial statements and requires reporting of selected information about operating segments to interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, 6 geographic areas and major customers. Statement 131 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Statements 130 and 131 are effective for financial statements for periods beginning after December 15, 1997 and require comparative information for earlier years to be restated. Because of the recent issuance of these standards, management has been unable to fully evaluate the impact, if any, the standards may have on the future financial statement disclosures. Results of operations and financial position, however, will be unaffected by implementation of these standards. 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (000 omitted): December 31, June 30, Estimated 1997 1997 Useful Lives ------------ -------- ------------ Furniture and office equipment $ 166 $ 144 4 to 5 years Leasehold improvements 82 72 life of lease ----- ----- 248 216 Less accumulated depreciation and amortization 128 (106) ----- ----- $ 120 $ 110 ----- ----- ----- ----- 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following (000 omitted): December 31, June 30, 1997 1997 ------------ -------- Accounts payable $ 2,562 $ 2,331 Accrued purchased transportation 1,954 1,448 Other accrued expenses 17 833 ------- ------- $ 4,533 $ 4,612 ------- ------- ------- ------- 7 5. EARNING PER SHARE (In Thousands, Except Per Share Data)
For the Three Months Ended For the Six Months Ended December 31, December 31, -------------------------- ------------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Basic Earnings Per Share Net income (loss) $ 212 $(4,199) $ 405 $(4,295) Less - preferred stock dividends -- -- -- -- --------- ------- --------- ------- Net income applicable to common shareholders $ 212 $(4,199) $ 405 $(4,295) --------- ------- --------- ------- --------- ------- --------- ------- Weighted average number of common shares 4,248,100 960,000 4,248,100 960,000 --------- ------- --------- ------- --------- ------- --------- ------- Basic Earnings per Share 0.05 (4.37) 0.10 (4.47) --------- ------- --------- ------- --------- ------- --------- ------- Diluted Earnings per Share Net income from primary income per common share 212 (4,199) 405 (4,295) Add: preferred stock dividend -- -- -- -- --------- ------- --------- ------- Net income for diluted earnings per share 212 (4,199) 405 (4,295) --------- ------- --------- ------- --------- ------- --------- ------- Weighted average number of shares used in calculating basic earnings per common share 4,248,100 960,000 4,248,100 960,000 Add - common equivalent shares (determined using the "treasury stock" method) representing shares issuable upon exercise of options 735,073 -- 735,073 -- --------- ------- --------- ------- Weighted average number of shares used in calculation of diluted earnings per share 4,983,173 960,000 4,983,173 960,000 --------- ------- --------- ------- --------- ------- --------- ------- Diluted Earnings per Share $ 0.04 $ (4.37) $ 0.08 $ (4.47) --------- ------- --------- ------- --------- ------- --------- -------
8 6. DISCONTINUED SUBSIDIARY Having experienced significant losses in the long-haul trucking operation, Country Wide Truck Service, Inc. discontinued it's operation. On December 31, 1996, CW Truck made a General Assignment of all its assets for the pro rata benefit of all its creditors. In conjunction with the General Assignment, CW Truck sold all of its rolling stock assets for the outstanding debt on the equipment. Revenues applicable to the discontinued subsidiary were approximately $7,600,000, $22,700,000 and $29,100,000 for the years ended June 30, 1997, 1996 and 1995, respectively. Revenue applicable to the discontinued subsidiary for the three months ended December 31, 1996, was $3,294,038, and for the six months ended December 31, 1996 was $7,587,771. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net income from continuing operations for the three months and six months ended December 31, 1997 amounted to $212,148 and $404,779 respectively compared to a net loss of $(4,199,000) and $(4,295,000) for the prior year periods. The improved results were due to the liquidation of a trucking subsidiary effective December 31, 1996, and improved results from the Company's logistics subsidiary, Vertex Transportation, Inc. Transportation revenue for the three month period ended December 31, 1997 decreased 13.8% to $8,655,770 from $10,038,327 for the same three month period of fiscal year 1996, while six month transportation revenue decreased 16.7% to $17,152,517 from $20,585,451 for the six month period of fiscal year 1996. The reduction in revenue for the three and six month period ended December 31, 1997 was a result of the liquidation of the trucking subsidiary effective December 31, 1996 which had revenue in the three month period and six month period ended December 31, 1996 of $3,294,038 and $7,587,771 respectively. Transportation revenue for the Company's Vertex Transportation, Inc. subsidiary increased 14.1% to $8,655,770 for the three month period ended December 31, 1997, from $7,589,359 for the prior year period. For the six month period ended December 31,1997 the Vertex Transportation revenue increased 15% to $17,152,517 from $14,917,299 for the prior year period. Operating costs for the three month period and six month period ended December 31, 1997 decreased by $5,271,000 and $7,514,000 from the respective prior year period. As a percentage of sales, operating costs for the three month period and six month period ended December 31, 1997, decreased 39.2% and 20.4% respectively from the prior year period. This change is primarily attributable to the discontinuance of the trucking subsidiary partially offset by increased purchase transportation cost inherent in the logistics business. Depreciation and amortization expense for the three month period and six month period ended December 31, 1997 was $41,000 and $82,000 respectively as compared with $2,291,000 and $2,550,000 for the prior year periods. Interest expense was reduced to $57,000 for the three month period and $101,000 for the six month period ending December 31, 1997 as compared to $176,000 and $351,000 for the prior year periods. The decrease in depreciation and amortization expense is due to the liquidation of the trucking subsidiary and sale of the rolling stock. The decrease in interest is due to reduced borrowings and an improved lending rate. Having experienced significant losses in its trucking operation, Country Wide Truck Service, Inc., a Company subsidiary, discontinued its operation on December 31, 1996, and began an orderly liquidation process. On December 31, 1996, a General Assignment of all assets of CW Truck was made for the pro rata benefit of all creditors. In conjunction with the General Assignment, on December 31, 1996, all of the rolling stock assets were sold for the outstanding debt on the equipment. The Company maintains a continuing corporate guarantee on the debt secured by the rolling stock. Results of operation for CW Truck have been classified as continuing operations in the Company's financial statement for all periods presented. The increase in sales for the Company's Vertex Transportation, Inc. subsidiary for the three month period ended December 31, 1997 of $8,665,770 from $7,589,359 in the prior year period resulted in an increase in that subsidiary's net income of 165.3% to $344,637 from $129,890. For the six month period ending December 31, 1997 sales increased to $17,152,517 from $14,917,299 in the prior year period resulting in an increase in that subsidiary's net income of 76% to $648,785 from $368,577 for the prior year period. 10 LIQUIDITY AND CAPITAL RESOURCES On April 29, 1997, the Company, through its Vertex Transportation, Inc. subsidiary, secured new financing with a commercial bank. The new facility is a three year contract which allows for borrowing of up to $4,000,000 which is limited to 80% of eligible accounts receivable. The agreement bears an interest rate at the bank's prime lending rate plus 2 1/2% and is secured by essentially all of the Company's assets. Effective April 29, 1997 the Company's previous revolving credit line in the amount of $2,173,171 was paid. As of December 31, 1997 the Company had borrowings of $2,857,904 and unused borrowing capacity of $995,101 under the new credit facility. At December 31, 1997, the Company's ratio of current assets to current liabilities and its debt to equity were 1.1:1 and 31:1, respectively, as compared to 0.8:1 and (44):1, respectively at June 30, 1997. The Company ended the December 31, 1997 period with $4,000 of cash and working capital of $405,000. Based upon the Company's expected cash flow from operations and funds available as of April 29, 1997, from its new credit facility, management believes that the Company's capital resources are sufficient to meet its presently anticipated operating needs. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. 11 COUNTRY WIDE TRANSPORT SERVICES, INC. AND CONSOLIDATED SUBSIDIARY COMPANIES PART II. ITEM 5. OTHER INFORMATION During the fiscal year ended June 30, 1995, the Company discontinued it's 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. During the quarter ended December 31, 1996, the Company discontinued all operations relating to it's wholly owned subsidiary, CW Truck. On December 31, 1996 the Company made a General Assignment of all the assets of CW Truck for the pro rata benefit of all creditors of the subsidiary. In conjunction with the General Assignment the Company, on December 31, 1996, sold all the rolling stock assets of the Company for all the outstanding debt on the equipment. Effective December 16, 1997, the Securities and Exchange Commission declared effective an S-2 Registration Statement which was filed on behalf of certain selling shareholders as outlined in the S-2 Registration Statement. This statement effectively registered 3,288,000 of the Company's common stock. After this offering, the Company has outstanding 4,248,117 shares. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Reports on Form 8-K: 1. None (B) Exhibits 1. None 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. COUNTRY WIDE TRANSPORT SERVICES, INC. ------------------------------------- Registrant DATED: February 10, 1998 /s/ Timothy Lepper ------------------------------------- Timothy Lepper, President Chief Executive Officer Chief Financial Officer and Principal Accounting Officer 13 EX-27 2 EXHIBIT 27
5 1,000 6-MOS JUN-30-1998 OCT-01-1997 DEC-31-1997 4 0 5385 75 0 5387 248 128 8093 4982 0 0 0 425 (172) 8093 17153 17153 0 16589 0 0 101 463 58 405 0 0 0 405 .10 .08
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