-----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, LUEGM5BdVlAsWq04ks2LerZ8HV3MrIj3yasBHvHgS78B8/Ur+SGHe3b8NtReE6j5 Vj3hg1rCvXvtf8oJWs3Jcw== 0000846729-95-000005.txt : 19951027 0000846729-95-000005.hdr.sgml : 19951027 ACCESSION NUMBER: 0000846729-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951026 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FREIGHTWAYS CORP CENTRAL INDEX KEY: 0000846729 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 742391754 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17570 FILM NUMBER: 95584340 BUSINESS ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 BUSINESS PHONE: 5017419000 MAIL ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 34-0-17570 American Freightways Corporation (Exact name of registrant as specified in its charter) Arkansas 74-2391754 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 2200 Forward Drive, Harrison, Arkansas 72601 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (501) 741-9000 Not Applicable (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 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. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding at September 30, 1995: 30,836,305. PART I. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000's omitted, except per share data)
September 30, December 31, 1995 1994 ------------ ------------ (Unaudited) (Note) Assets Current assets Cash and cash equivalents $ 4,594 $ 3,999 Trade receivables, less allowance for doubtful accounts (1995-$663; 1994-$639) 58,284 39,818 Operating supplies and inventories 2,291 1,519 Prepaid expenses 6,419 4,247 Deferred income taxes 6,217 4,664 Income taxes receivable 4,153 -- -------- --------- Total current assets 81,958 54,247 Property and equipment 494,305 396,594 Allowances for depreciation and amortization (deduction) (123,441) (98,701) --------- --------- 370,864 297,893 Other assets 2,883 3,208 --------- --------- $455,705 $ 355,348 ========= ========= Liabilities and Shareholders' Equity Current liabilities Trade accounts payable $ 12,175 $ 13,358 Accrued expenses 32,634 24,449 Federal and state income taxes -- 233 Current portion of long-term debt 5,825 6,338 --------- --------- Total current liabilities 50,634 44,378 Long-term debt, less current portion (Note B) 166,381 104,843 Deferred income taxes 40,409 28,947 Shareholders' equity: Common stock, par value $.01 per share-- authorized 250,000 shares; issued and outstanding 30,836 in 1995 and 30,496 in 1994 308 305 Additional paid-in capital 97,575 93,347 Retained earnings 100,398 83,528 --------- --------- 198,281 177,180 --------- --------- $455,705 $ 355,348 ========= ========= Note: The condensed consolidated balance sheet at December 31, 1994, has been derived from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements.
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (000's omitted, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 ------------------ ----------------- Operating revenue $149,392 $124,134 $423,894 $ 347,063 Operating expenses and costs: Salaries, wages and benefits 89,462 65,983 240,728 183,049 Operating supplies and expenses 9,303 7,989 27,192 23,064 Operating taxes and licenses 5,961 5,085 17,515 14,139 Insurance 5,685 4,299 15,011 10,737 Communications and utilities 2,875 2,333 8,133 6,839 Depreciation and amortization 9,963 7,037 27,505 20,254 Rents and purchased transportation 12,321 11,946 34,029 35,022 Other 7,376 5,584 19,555 15,406 -------- -------- -------- -------- 142,946 110,256 389,668 308,510 -------- -------- -------- -------- Operating income 6,446 13,878 34,226 38,553 Other income (expense): Interest expense (2,636) (1,686) (7,326) (4,930) Interest income 45 41 120 165 Gain on disposal of assets 14 246 59 227 Other, net 89 58 241 170 -------- -------- -------- -------- (2,488) (1,341) (6,906) (4,368) Income before income taxes and extraordinary item 3,958 12,537 27,320 34,185 -------- -------- -------- -------- Federal and state income taxes: Current (2,327) ( 563) 541 6,237 Deferred 3,841 5,326 9,909 6,755 -------- -------- -------- -------- 1,514 4,763 10,450 12,992 -------- -------- -------- -------- Income before extraordinary item 2,444 7,774 16,870 21,193 Extraordinary item (Note B): Loss on early extinguishment of debt (less applicable income taxes of $205) -- ( 335) -- ( 335) -------- -------- -------- -------- Net income $ 2,444 $ 7,439 $ 16,870 $ 20,858 ======== ======== ======== ======== Per share (Note E) Income before extraordinary item $ .08 $ 0.25 $ .54 $ 0.70 Extraordinary item -- ( 0.01) -- ( 0.01) -------- -------- -------- -------- Net income $ 0.08 $ 0.24 $ 0.54 $ 0.69 ======== ======== ======== ======== Average shares outstanding 31,398 31,342 31,400 30,043 ======== ======== ======== ======== See notes to condensed consolidated financial statements.
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 1995 1994 -------------------- (000's omitted) Net cash provided by operating activities $ 37,462 $ 40,822 Investing activities Proceeds from sales of equipment 548 513 Capital expenditures (100,952) (77,039) --------- --------- Net cash used by investing activities (100,404) (76,526) Financing activities Principal payments on long-term debt (23,911) (50,107) Proceeds from notes payable and long-term borrowings 84,936 47,000 Proceeds from issuance of common stock 2,512 39,117 --------- --------- Net cash provided by financing activities 63,537 36,010 --------- --------- Net increase in cash and cash equivalents $ 595 $ 306 ========= ========= See notes to condensed consolidated financial statements.
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1995 NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all 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 of the nine month period ended September 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the Company's consolidated financial statements and footnotes thereto included in Form 10-K for the year ended December 31, 1994. NOTE B - LONG-TERM DEBT As of September 30, 1995, the Company has outstanding borrowings of $64,000,000 under its existing $125,000,000 unsecured revolving line of credit. The proceeds of these borrowings were used for the purchase of revenue equipment and for the purchase and construction of terminal facilities. At September 30, 1995, the amount available for borrowing under the line of credit was $61,000,000. In addition to this credit facility, the Company has obtained letters of credit totaling $7,000,000 to provide collateral on its self-insurance plan. The line of credit bears interest at a variable interest rate based upon the London Interbank rate or the lender's prime rate in effect at the time of the borrowing. During the quarter ended September 30, 1994, the Company repaid $2,933,000 of mortgage notes and incurred a $540,000 charge on the early retirement of the indebtedness. This charge is reflected in the condensed consolidated statement of income as an extraordinary charge net of the applicable income tax effect of $205,000. As of September 30, 1995, the Company has outstanding borrowings of $65,000,000 under an uncommitted Master Shelf Agreement which provides for the issuance of up to $90,000,000 of senior promissory notes with an average life not to exceed eight years. NOTE C - COMMON STOCK OFFERING On May 11, 1994, the Company sold 1,750,000 shares of its common stock in a public offering at $18.25 per share. Proceeds to the Company, net of underwriting discounts, commissions and other costs were $30,145,000. On June 10, 1994, the underwriters exercised an overallotment provision in the underwriting agreement for an additional 375,000 shares of common stock. Net proceeds from the exercise of the overallotment provision were $6,506,000. NOTE D - COMMITMENTS Commitments for the purchase of revenue equipment and the purchase or construction of terminals aggregated approximately $55,312,000 at September 30, 1995. NOTE E - EARNINGS PER SHARE
Quarter Ended September 30, 1995 1994 --------------------------- (Thousands omitted except per share amounts) Weighted average shares outstanding 30,821 30,382 Net effect of dilutive stock options based on treasury stock method 577 960 ----------- --------- Total weighted average shares outstanding 31,398 31,342 =========== ========= Net income $ 2,444 $ 7,439 =========== ========= Earnings per common share and common share equivalents $ 0.08 $ 0.24 =========== ========= Earnings per common share and common share equivalents are computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following table sets forth, for the periods indicated, the percentages of operating expenses and other items to operating revenues: Three Months Ended Nine Months Ended 9/30/95 9/30/94 9/30/95 9/30/94 ------- ------- ------- ------- Operating revenue 100.0% 100.0% 100.0% 100.0% Operating expenses and costs: Salaries, wages and benefits 59.9% 53.2% 56.8% 52.8% Operating supplies and expenses 6.2% 6.4% 6.4% 6.6% Operating taxes and licenses 4.0% 4.1% 4.1% 4.1% Insurance 3.8% 3.4% 3.6% 3.1% Communications and utilities 1.9% 1.9% 1.9% 2.0% Depreciation and amortization 6.7% 5.7% 6.5% 5.8% Rents and purchased transportation 8.3% 9.6% 8.0% 10.1% Other 4.9% 4.5% 4.6% 4.4% ------- ------- ------- ------- Total operating expenses and costs 95.7% 88.8% 91.9% 88.9% ------- ------- ------- ------- Operating income 4.3% 11.2% 8.1% 11.1% Interest expense (1.8)% (1.4)% (1.7)% (1.4)% Other income, net 0.1% 0.3% 0.1% 0.1% ------- ------- ------- ------- Income before income taxes and extraordinary item 2.6% 10.1% 6.5% 9.8% Income taxes 1.0% 3.8% 2.5% 3.7% ------- ------- ------- ------- Income before extraordinary item 1.6% 6.3% 4.0% 6.1% Extraordinary loss on early extinguishment of debt, net of tax -- 0.3% -- 0.1% ------- ------- ------- ------- Net income 1.6% 6.0% 4.0% 6.0% ======= ======= ======= ======
Results of Operations Results of operations for the nine months ended September 30, 1994 were materially impacted by a 24-day strike during April 1994 called by the International Brotherhood of Teamsters against several competing companies in the less-than-truckload industry. As a result, comparisons of operations for the nine months ended September 30, 1995 to the strike-impacted 1994 period are also materially affected. In addition, results of operations for the three and nine month periods ended September 30, 1995 were materially impacted by excess capacity within the less-than-truckload industry and the Company. This excess capacity resulted in reduced margins from discounted pricing and reduced freight density. The Company utilized its excess capacity by accelerating the pace of expansion of its service territory. Management believes this accelerated expansion of service territory will better position the Company for the long term; however, it cannot predict the effect of the expansions upon nearer term results considering the restricted margins the Company continues to experience because of excess industry capacity. Operating Revenue - ----------------- Operating revenue for the nine months ended September 30, 1995 was $423,894,000, up 22.1%, compared to $347,063,000 for the nine months ended September 30, 1994. Operating revenue for the three months ended September 30, 1995 was $149,392,000, up 20.3%, compared to $124,134,000 in the three months ended September 30, 1994. The growth in operating revenue in the nine months ended September 30, 1995 compared to the nine months ended September 30, 1994 was primarily attributable to a 21.3% increase in tonnage handled by the Company from new and existing customers. The major reasons for this increase in tonnage were: - - On January 1, 1995, the Company expanded its all-points coverage to the states of North Carolina and South Carolina with the opening of thirteen new terminals. - - On April 17, 1995, the Company expanded its service territory with the addition of terminal locations in: Colorado Springs, Denver, Fort Collins and Pueblo, CO; Des Moines, IA; Minneapolis/St. Paul, MN; Omaha, NE; Madison and Milwaukee, WI. - - On July 10, 1995, the Company expanded its all-points coverage to the states of Colorado, Iowa, Nebraska and Wisconsin with the opening of twelve new terminal locations. - - On August 14, 1995, the Company opened seven terminal locations in the state of Florida and provided all-points coverage to that state. With the addition of Florida, the Company provides all-points coverage to 21 states. - - The deregulation of intra-state commerce as of January 1, 1995 by the Federal Aviation Administration Authorization Act of 1994. - - The Company continued to increase its market penetration into existing service territories. In addition to the increase in tonnage, operating revenue for the nine months ended September 30, 1995 was increased by a 0.6% increase in revenue per hundred weight as compared to the nine months ended September 30, 1994. The major factor contributing to this increase in revenue per hundred weight was a 3.7% increase, to 582 miles, in the Company's average length of haul. The increase in average length of haul was primarily a result of the Company's expanded service territory. Management expects that growth in operating revenue is sustainable in the near future. Any growth in operating revenue will primarily be the result of increased tonnage handled by the Company. Operating Expenses - ------------------ Operating expenses as a percentage of operating revenue increased to 91.9% in the nine months ended September 30, 1995 from 88.9% in the nine months ended September 30, 1994. Operating expenses as a percentage of operating revenue increased to 95.7% in the three months ended September 30, 1995 from 88.8% in the three months ended September 30, 1994. This overall increase was primarily attributable to: - - Salaries, wages and benefits as a percentage of operating revenue increased to 56.8% in the nine months ended September 30, 1995 from 52.8% in the nine months ended September 30, 1994. The increase in salaries, wages and benefits as a percentage of operating revenue was primarily a result of three factors. First, the utilization of Company-operated terminals, rather than contractor-operated terminals, in expansions of service territory contributed to this increase. Second, the continuation of the Company's philosophy of sharing its success with its associates through increased wages and enhanced benefit packages contributed to this increase. On March 6, 1995, the Company increased the wages of its drivers, dockmen and clerical workers by approximately 5.5%. The third factor was the accelerated expansion of service territory during 1995. Within the expansion territory, wages and benefits were disproportionately high in relation to operating revenues as new associates were added to establish an operating base. Management does not expect salaries, wages and benefits as a percentage of operating revenue to continue in an upward trend, but expects these expenses to gradually stabilize or improve. - - Insurance as a percentage of operating revenue increased to 3.6% in the nine months ended September 30, 1995 from 3.1% in the nine months ended September 30, 1994. This increase was primarily a result of the Company's increased experience of accidents and cargo claims, particularly in the areas of cargo care and liability insurance. During the twelve months prior to September 30, 1995, accidents and cargo claims returned to historical levels after being somewhat lower in the prior two years. Management does not expect a continuation of the upward trend in insurance expenses as they relate to operating revenue but expects a stabilization of these expenses near historical levels. - - Depreciation and amortization as a percentage of operating revenue increased to 6.5% in the nine months ended September 30, 1995 from 5.8% in the nine months ended September 30, 1994. This increase was primarily a result of decreased usage of rented equipment in favor of Company-owned equipment. Management expects this increased utilization of Company-owned equipment, rather than rented equipment, to continue in the near term. These increases in operating expenses as a percentage of operating revenue were partially offset by improvements in the following area: - - Rents and purchased transportation as a percentage of operating revenue decreased to 8.0% in the nine months ended September 30, 1995 from 10.1% in the nine months ended September 30, 1994. This decrease was due to two primary reasons. The first was the Company's philosophy of utilizing Company-operated terminals rather than contractor-operated terminals in expansions of service territory. The second primary reason for the decrease in rents and purchased transportation as a percentage of operating revenue was the decreased usage of rented equipment in favor of Company-owned equipment. Other - ----- Interest expense as a percentage of operating revenue increased to 1.7% in the nine months ended September 30, 1995 from 1.4% in the nine months ended September 30, 1994. This increase was primarily attributable to increased borrowings incurred by the Company to finance the expansion of service territory and support continued growth in operating revenue. The effective tax rate of the Company was 38.3% for the first nine months of 1995, up from 38.0% for the first nine months of 1994. The change was primarily attributable to increased state income taxes. Net income for the nine months ended September 30, 1995, was $16,870,000, down 19.1%, from $20,858,000 for the nine months ended September 30, 1994. Liquidity and Capital Resources The continued growth in operating revenue and the expansion of service territory initiated during 1995 required significant capital resources in the nine months ended September 30, 1995. The Company invested $100,952,000 in capital expenditures during the nine months ended September 30, 1995 comprised of $61,171,000 in additional revenue equipment, $21,470,000 in new terminal facilities or the expansion of existing terminal facilities and $18,311,000 in other equipment. Management expects capital expenditures for the full year of 1995 will be approximately $130,000,000. At September 30, 1995, the Company had commitments for land, terminals, revenue and other equipment of approximately $55,312,000. These commitments were for the completion of projects in process at September 30, 1995, and for the purchase of additional revenue equipment in anticipation of increased revenue levels. The Company provided for its capital resource requirements in the nine months ended September 30, 1995 with cash from operations and financing activities. Cash from operations totaled $37,462,000 in the nine months ended September 30, 1995 compared to $40,822,000 in the nine months ended September 30, 1994. Financing activities augmented cash flow by $63,537,000 in the nine months ended September 30, 1995 by utilizing two primary sources of financing: the revolving line of credit and the Master Shelf facility. - - The Company experiences periodic cash flow fluctuations common to the industry. Cash outflows are heaviest during the first part of any given year while cash inflows are normally weighted towards the last two quarters of the year. To smooth these fluctuations and to provide flexibility to fund future growth, the Company utilizes a variable-rate, unsecured revolving line of credit provided by NationsBank of Texas, N.A., Texas Commerce Bank, N.A. and Wachovia Bank of Georgia, N.A. Effective May 31, 1995, the limit of this line of credit facility was increased to $125,000,000 from $75,000,000. During the nine months ended September 30, 1995, the Company utilized this facility to provide $27,000,000 of net financing, bringing outstanding borrowings under the facility to $64,000,000 and leaving $61,000,000 available for borrowing. The Company also maintains a short-term, unsecured revolving line of credit with NationsBank of Texas, N.A. Effective May 9, 1995, the limit of this short-term facility was increased to $7,500,000 from $5,000,000. At September 30, 1995, $7,500,000 was available for borrowing. In addition, the Company maintains a $10,000,000 line of credit with NationsBank, N.A. to obtain letters of credit for its self-insurance program. At September 30, 1995, the Company had obtained letters of credit totaling $7,000,000 for this purpose. - - To assist in financing longer-lived assets, the Company has an uncommitted Master Shelf Agreement with the Prudential Insurance Company of America which provides for the issuance of up to $90,000,000 in medium to long-term unsecured notes at an interest rate calculated at issuance. During the nine months ended September 30, 1995, the Company utilized this agreement to issue a $15,000,000 note at 8.55% with a ten year maturity and a $20,000,000 note at 6.92% with a ten year maturity. The proceeds of these notes were used primarily to repay borrowings from the revolving line of credit or to fund capital expenditures. At September 30, 1995, $25,000,000 was available under this facility for borrowing. Management expects that the Company's existing working capital and its available lines of credit are sufficient to meet the Company's commitments as of September 30, 1995, and to fund current operating and capital needs. However, if additional financing is required, management believes it will be available. The Company uses off-balance sheet financing in the form of operating leases primarily in two areas; terminal facilities and computer equipment. At September 30, 1995, future rental commitments on operating leases were $38,867,000. The Company prefers to utilize operating leases for these two areas and plans to use them in the future when such financing is available and suitable. Environmental At September 30, 1995, the Company had no outstanding inquiries with any state or federal environmental agency. Recent Events Effective January 1, 1996, the Company will open twelve terminal locations in Delaware, Maryland, Virginia and West Virginia and provide all-points coverage to those states. With the addition of these four states, the Company will provide all-points coverage to 25 states. INDEX AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements (unaudited) - ------- Condensed consolidated balance sheets--September 30, 1995 and December 31, 1994 Condensed consolidated statements of income--Three months ended September 30, 1995 and 1994; Nine months ended September 30, 1995 and 1994 Condensed consolidated statements of cash flows--Nine months ended September 30, 1995 and 1994 Notes to condensed consolidated financial statements-- September 30, 1995 Item 2. Management's Discussion and Analysis of Financial - ------- Condition and Results of Operations PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K - ------- (a) Exhibits: --------- (10) The Company did not have any exhibits during the three month period ended September 30, 1995. (27) Financial Data Schedule. (b) Reports on Form 8-K ------------------- The Company did not file any reports on Form 8-K during the three month period ended September 30, 1995. 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. AMERICAN FREIGHTWAYS CORPORATION -------------------------------- (Registrant) Date: October 26, 1995 /s/James R. Dodd - ----------------------- --------------------------- James R. Dodd Executive Vice President- Accounting & Finance and Chief Financial Officer EX-27 2
5 This schedule contains summary financial information extracted from the September 30, 1995 year to date consolidated financial statements and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 4,594 0 58,947 663 2,291 81,958 494,305 123,441 455,705 50,634 166,381 308 0 0 197,973 455,705 0 423,894 0 389,668 0 0 7,326 27,320 10,450 16,870 0 0 0 16,870 .54 .54 Provision for doubtful accounts included in costs and expenses applicable to revenues.
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