-----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, K9M/G0Zzhq84uzPjMYV97Ui+3a6kxUtjX/DhiQ82fw7OWqkW2293YTsiDWQmOzFR tezo8fsrSFi9fLQw72sJbg== 0000950144-00-006294.txt : 20000512 0000950144-00-006294.hdr.sgml : 20000512 ACCESSION NUMBER: 0000950144-00-006294 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED HOLDINGS INC CENTRAL INDEX KEY: 0000909950 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 580360550 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13867 FILM NUMBER: 625951 BUSINESS ADDRESS: STREET 1: 160 CLAIRMONT AVE STREET 2: STE 510 CITY: DECATUR STATE: GA ZIP: 30030 BUSINESS PHONE: 4043701100 MAIL ADDRESS: STREET 1: 160 CLAIREMONT AVENUE SUITE 510 CITY: DECATUR STATE: GA ZIP: 30030 10-Q 1 ALLIED HOLDINGS, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 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: 0-22276 ALLIED HOLDINGS, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) GEORGIA 58-0360550 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) SUITE 200, 160 CLAIREMONT AVENUE, DECATUR, GEORGIA 30030 - ------------------------------------------------------------------------------- (Address of principal executive offices) (404) 373-4285 - ------------------------------------------------------------------------------- (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 requirements for the past 90 days. [X] Yes [ ] No Outstanding common stock, No par value at April 21, 2000............. 8,041,957 TOTAL NUMBER OF PAGES INCLUDED IN THIS REPORT: 12 1 2 INDEX PART I FINANCIAL INFORMATION
PAGE ITEM 1: FINANCIAL STATEMENTS Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999........................................... 3 Consolidated Statements of Operations for the Three Month Periods Ended March 31, 2000 and 1999............. 4 Consolidated Statements of Cash Flows for the Three Month Periods Ended March 31, 2000 and 1999................. 5 Notes to Consolidated Financial Statements..................... 6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 8
PART II OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K................................ 11 Signature Pages................................................. 12
2 3 PART 1 - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
MARCH 31 DECEMBER 31 2000 1999 ---------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,335 $ 13,984 Short-term investments 53,592 44,325 Receivables, net of allowance for doubtful accounts 128,986 121,058 Inventories 7,940 7,949 Deferred tax assets 14,605 16,119 Prepayments and other current assets 26,230 22,182 ---------- ---------- Total current assets 235,688 225,617 ---------- ---------- PROPERTY AND EQUIPMENT, NET 276,360 287,838 ---------- ---------- OTHER ASSETS: Goodwill, net 98,867 93,104 Other 43,603 43,361 ---------- ---------- Total other assets 142,470 136,465 ---------- ---------- Total assets $ 654,518 $ 649,920 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 149 $ 185 Trade accounts payable 42,704 42,931 Accrued liabilities 96,863 85,655 ---------- ---------- Total current liabilities 139,716 128,771 ---------- ---------- LONG-TERM DEBT, LESS CURRENT MATURITIES 330,058 330,101 ---------- ---------- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 11,949 11,973 ---------- ---------- DEFERRED INCOME TAXES 35,151 37,409 ---------- ---------- OTHER LONG-TERM LIABILITIES 72,078 74,752 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock, no par value; 20,000 shares authorized, 8,001 and 7,997 shares outstanding at March 31, 2000 and December 31,1999, respectively 0 0 Additional paid-in capital 44,892 44,437 Retained earnings 25,868 26,903 Cumulative other comprehensive income, net of tax (4,726) (4,240) Common stock in treasury, at cost, 62 shares at March 31, 2000 (468) (186) ---------- ---------- Total stockholders' equity 65,566 66,914 ---------- ---------- Total liabilities and stockholders' equity $ 654,518 $ 649,920 ========== ==========
The accompanying notes are an integral part of these consolidated balance sheets. 3 4 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31 -------------------------- 2000 1999 ---- ---- REVENUES $ 282,884 $ 261,249 ---------- ---------- OPERATING EXPENSES: Salaries, wages and fringe benefits 154,838 144,645 Operating supplies and expenses 51,582 44,781 Purchased transportation 27,153 25,282 Insurance and claims 12,056 13,617 Operating taxes and licenses 10,859 10,716 Depreciation and amortization 15,242 14,015 Rents 2,326 2,622 Communications and utilities 2,209 2,230 Other operating expenses 2,658 2,156 ---------- ---------- Total operating expenses 278,923 260,064 ---------- ---------- Operating income 3,961 1,185 ---------- ---------- OTHER INCOME (EXPENSE): Equity in earnings (loss) of joint ventures, net of tax 901 (774) Interest expense (8,401) (7,409) Interest income 1,320 291 ---------- ---------- (6,180) (7,892) ---------- ---------- LOSS BEFORE INCOME TAXES (2,219) (6,707) INCOME TAX BENEFIT 1,184 2,702 ---------- ---------- NET LOSS $ (1,035) $ (4,005) ========== ========== PER COMMON SHARE - BASIC AND DILUTED $ (0.13) $ (0.51) ========== ========== COMMON SHARES OUTSTANDING - BASIC AND DILUTED 7,898 7,790 ========== ==========
The accompanying notes are an integral part of these consolidated statements. 4 5 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31 -------------------------- 2000 1999 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,035) $ (4,005) ---------- ---------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 15,242 14,015 Loss (gain) on sale of property and equipment 103 (51) Deferred income taxes (374) (2,424) Compensation expense related to stock options and grants 237 146 Equity in (earnings) loss of joint ventures (901) 774 Amortization of Teamsters Union signing bonus 606 0 Change in operating assets and liabilities: Receivables, net of allowance for doubtful accounts (8,007) (15,885) Inventories 5 (1,076) Prepayments and other current assets (4,059) (4,123) Trade accounts payable (215) (7,799) Accrued liabilities 8,553 2,724 ---------- ---------- Total adjustments 11,190 (13,699) ---------- ---------- Net cash provided by (used in) operating activities 10,155 (17,704) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (3,241) (11,531) Proceeds from sale of property and equipment 44 146 Purchase of business, net of cash acquired (8,185) 0 Increase in short-term investments (9,267) (2,034) (Increase) decrease in the cash surrender value of life insurance (120) 193 ---------- ---------- Net cash used in investing activities (20,769) (13,226) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: (Repayments) proceeds from issuance of long-term debt, net (79) 29,990 Proceeds from issuance of common stock 218 0 Repurchase of common stock (282) 0 Proceeds from exercise of stock options 0 27 Other, net 1,653 (370) ---------- ---------- Net cash provided by financing activities 1,510 29,647 ---------- ---------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (545) 26 NET DECREASE IN CASH AND CASH EQUIVALENTS (9,649) (1,257) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,984 21,977 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,335 $ 20,720 ========== ==========
The accompanying notes are an integral part of these consolidated statements. 5 6 ALLIED HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The statements contained herein reflect all adjustments, all of which are of a normal, recurring nature, which are, in the opinion of management, necessary to present fairly the financial condition, results of operations and cash flows for the periods presented. Operating results for the three-month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. The interim financial statements should be read in conjunction with the financial statements and notes thereto of Allied Holdings, Inc. and Subsidiaries, (the "Company") included in the Company's 1999 Annual Report on Form 10-K. Note 2. Long-Term Debt On September 30, 1997, the Company issued $150 million of 8 5/8% senior notes (the "Notes") through a private placement. Subsequently, the senior notes were registered with the Securities and Exchange Commission. The net proceeds from the Notes were used to fund the acquisition of Ryder Automotive Carrier Services, Inc. and RC Management Corp., pay related fees and expenses, and reduce outstanding indebtedness. The Company's obligations under the Notes are guaranteed by substantially all of the subsidiaries of the Company (the "Guarantors"). Separate financial statements of the Guarantors are not provided herein as (i) the Guarantors are jointly and severally liable for the Company's obligations under the Notes, (ii) the subsidiaries which are not Guarantors are inconsequential to the consolidated operations of the Company and its subsidiaries and (iii) the net assets and earnings of the Guarantors are substantially equivalent to the net assets and earnings of the consolidated entity as reflected in these consolidated financial statements. There are no restrictions on the ability of the Guarantors to make distributions to the Company. Note 3. Comprehensive Income The Company had a comprehensive loss of $1.5 million in the first quarter of 2000 versus a comprehensive loss of $3.3 million in the first quarter of 1999. The difference between comprehensive income and net income is the foreign currency translation adjustment, net of income taxes. 6 7 Note 4. Accounting for Derivative Instruments and Hedging Activities In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. During 1999, SFAS No. 137 was issued which defers the effective date of SFAS No. 133 until fiscal quarters of all fiscal years beginning after June 15, 2000. The Company will adopt this statement in the first quarter of 2001. The Company has not yet quantified the impact of adopting SFAS No. 133 on the consolidated financial statements. This statement could increase volatility in earnings and other comprehensive income. Note 5. Segment Reporting The Company operates in one reportable industry segment: transporting automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automotive dealerships. Geographic financial information for the first quarter of 2000 and 1999 follows (in thousands):
2000 1999 ---------- ---------- Revenues: United States $ 234,938 $ 217,914 Canada 47,946 43,335 ---------- ---------- $ 282,884 $ 261,249 ========== ==========
Revenues are attributed to the respective countries based on the location of the origination terminal. Note 6. Stock Repurchase Plan The Company's Board of Directors has authorized management to take the necessary steps to repurchase up to 500,000 shares of the Company's outstanding common stock through fiscal year 2000 in open market transactions. The timing of these purchases and the number of shares purchased will be dictated by market conditions and other relevant factors. Through March 31, 2000, the Company has repurchased 61,652 shares. 7 8 Note 7. Litigation The Company is routinely a party to litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of vehicles. The Company does not believe that any of such pending litigation if adversely determined would have a material adverse effect on the Company. The Company is a defendant in a lawsuit (Gateway Development & Manufacturing, Inc. v. Commercial Carriers, Inc., et al, Index No. 1997/8920), pending in Supreme Court of Erie County, New York claiming that Company tortiously interfered with a business transaction involving the plaintiff and a defendant in the action other than the Company. The Company has filed an answer denying the material allegations of the complaint and denying any liability relating to the allegations made against the Company. The Company intends to vigorously defend this case, as it believes the claims against the Company are without merit. While the ultimate results of this litigation cannot be determined, management does not expect that the resolution of this proceeding will have a material adverse effect on the Company's consolidated financial position or results of operations. Note 8. Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues were $282.9 million in the first quarter of 2000 versus revenues of $261.3 million in the first quarter of 1999, an increase of 8.3%. The increase in revenues was due to higher vehicle delivery volumes resulting from increased new vehicle production and sales, together with the effect of rate increases negotiated during the second half of 1999. The Company experienced a net loss of $1.0 million in the first quarter of 2000 versus a net loss of $4.0 million in the first quarter of 1999. Basic and diluted loss per share in the first quarter of 2000 were $0.13 versus basic and diluted loss per share of $0.51 in the first quarter of 1999. Earnings improved for the first quarter of 2000 versus the first quarter of 1999 due to continued cost control measures implemented in the fourth quarter of 1999 and a reduction in cargo claims and on-the-job injuries, combined with higher vehicle deliveries and rate increases. Rate increases were obtained in the second half of 1999 in response to the increase in light truck deliveries, which adversely impacted load averages and operating results. These factors more than offset the effect of higher fuel costs. However, increased fuel costs, net of surcharges secured from customers, is estimated to have reduced earnings 8 9 in the first quarter of 2000 by approximately $1.6 million, or $0.20 per share. The following is a discussion of the changes in the Company's major expense categories: Salaries, wages and fringe benefits decreased from 55.4% of revenues in the first quarter of 1999 to 54.7% of revenues in the first quarter of 2000. The decrease was due primarily to the benefit of rate increases together with productivity and efficiency improvements, offset by annual wage increases. Operating supplies and expenses increased from 17.1% of revenues in the first quarter of 1999 to 18.2% of revenues in the first quarter of 2000. The increase was due primarily to increases in fuel prices. Insurance and claims expense decreased from 5.2% of revenues in the first quarter of 1999 to 4.3% of revenues in the first quarter of 2000. The decrease was a result of safety programs initiated in the fourth quarter of 1999, which resulted in a reduction in cargo claims. Equity in earnings of joint ventures increased from a loss of $774,000 in the first quarter of 1999 to earnings of $901,000 in the first quarter of 2000. The increase was due to earnings from the Company's joint ventures in the United Kingdom, which began operations in May 1999, combined with a reduction in the loss from the Company's Brazilian venture. Interest expense increased from $7.4 million, or 2.8% of revenues, in the first quarter of 1999, to $8.4 million, or 3.0% of revenues, in the first quarter of 2000. The increase was due to higher interest rates in 2000 versus 1999 combined with higher long-term debt levels. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities totaled $10.2 million for the three months ended March 31, 2000, versus net cash used for operating activities in the amount of $17.7 million for the three months ended March 31, 1999. The significant improvement in cash provided from operations was due to the reduction in the net loss for the first quarter of 2000, combined with a decrease in the change in the accounts receivable balance. In the first quarter of 2000, the accounts receivable balance increased less than in the first quarter of 1999 due to improved electronic billing efficiencies and collection efforts in 2000 versus 1999. Net cash used in investing activities totaled $20.8 million for the three months ended March 31, 2000 versus $13.2 million for the three months ended March 31, 1999. The increase was due primarily to the purchase of CT Group, a logistics services group in March 2000 for $8.2 million. A decrease in capital expenditures was offset by an increase in short-term investments. The investment portfolio mix of the Company's 9 10 captive insurance company changed during the first quarter of 2000 as short-term investments increased and cash decreased by $9.2 million. The change was the result of the captive insurance company's investment managers investing cash on hand. Capital expenditures were $3.2 million in the first quarter 2000 versus $11.5 million in the first quarter of 1999. The reduced level of capital spending was the result of efforts by the Company to limit capital expenditures in 2000. Net cash provided by financing activities totaled $1.5 million for the three months ended March 31, 2000 versus $29.6 million for the three months ended March 31, 1999. The decrease was due primarily to the improved cash generated from operations combined with reduced spending on capital expenditures as discussed above. DISCLOSURES ABOUT MARKET RISKS The market risk inherent in the Company's market risk sensitive instruments and positions is the potential loss arising from adverse changes in short-term investment prices, interest rates, fuel prices, and foreign currency exchange rates. SHORT-TERM INVESTMENTS - The Company does not use derivative financial instruments in its investment portfolio. The Company places its investments in instruments that meet high credit quality standards, as specified in the Company's investment policy guidelines. The policy also limits the amount of credit exposure to any one issue, issuer, and type of instrument. Short-term investments at March 31, 2000, which are recorded at a fair value of $53.6 million, have exposure to price risk. This risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in quoted prices and amounts to $5.4 million. INTEREST RATES - The Company primarily issues long-term debt obligations to support general corporate purposes including capital expenditures and working capital needs. The majority of the Company's long-term debt obligations bear a fixed rate of interest. A one-percentage point increase in interest rates affecting the Company's floating rate long-term debt would reduce pre-tax income by $1.4 million over the next fiscal year. A one-percentage point change in interest rates would not have a material effect on the fair value of the Company's fixed rate long-term debt. FUEL PRICES - The Company is dependent on diesel fuel to operate its fleet of rigs. Diesel fuel prices are subject to fluctuations due to unpredictable factors such as weather, government policies, changes in global demand, and global production. To reduce price risk caused by market fluctuations, the Company generally follows a policy of hedging a portion of its anticipated diesel fuel consumption. The instruments used are principally readily marketable exchange traded futures contracts, which are designated as hedges. The changes in market value of such contracts have a high correlation to the price changes of diesel fuel. Gains and losses resulting from fuel hedging transactions are recognized when the underlying fuel being hedged is used. A 10% increase in diesel fuel prices would reduce pre-tax income by $1.5 million over the next fiscal year. 10 11 FOREIGN CURRENCY EXCHANGE RATES - Although the majority of the Company's operations are in the United States, the Company does have foreign subsidiaries (primarily Canada). The net investments in foreign subsidiaries translated into dollars using exchange rates at March 31, 2000, are $82.6 million. The potential loss in fair value impacting other comprehensive income resulting from a hypothetical 10% change in quoted foreign currency exchange rates amounts to $8.3 million. The Company does not use derivative financial instruments to hedge its exposure to changes in foreign currency exchange rates. YEAR 2000 Year 2000 ("Y2K") issues were addressed by the Company. The Company, like most other major companies, addressed a universal problem commonly referred to as "Year 2000 Compliance," which related to the ability of computer programs and systems to properly recognize and process date sensitive information before and after January 1, 2000. The Company analyzed its internal information technology ("IT") systems ("IT systems") to identify any computer programs that were not Year 2000 Compliant and implemented changes required to make such systems Year 2000 Compliant. The Company's critical IT systems functioned without substantial Year 2000 Compliance problems. As of December 31, 1999, the Company's total incremental costs (historical plus estimated future costs) of addressing Y2K issues were estimated to be $5.0 million, of which approximately $4.1 million was incurred in 1999 and $900,000 was incurred in 1998. The Company estimates that approximately 30% of the costs incurred in 1999 were internal costs, including compensation and benefits of employees assigned primarily to Y2K procedures. Internal costs addressing Y2K issues during 1998 were not material. These costs were funded through operating cash flow. The Company did not incur material Y2K related costs in the first quarter of 2000. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: None (b) Reports on Form 8-K: (i) The Company filed a report on Form 8-K with the Securities and Exchange Commission on March 3, 2000 regarding the acquisition by Axis Group, Inc. of CT Group, Inc. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Allied Holdings, Inc. May 11, 2000 /s/ A. Mitchell Poole (Date) ---------------------------------- A. Mitchell Poole on behalf of Registrant as Vice Chairman and Chief Executive Officer May 11, 2000 /s/ Daniel H. Popky (Date) ---------------------------------- Daniel H. Popky on behalf of Registrant as Senior Vice President, Finance and Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ALLIED HOLDINGS, INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 4,335 53,592 128,986 0 7,940 235,688 276,360 0 654,518 139,716 0 0 0 0 65,566 659,513 282,884 282,884 278,923 278,923 0 0 8,401 (2,219) 1,184 (1,035) 0 0 0 (1,035) (.13) (.13)
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