-----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, A6f47MVD/rSqBiokLsvnPyZmRke5JQ37HEScVW4AFaFoeIW5ZLU5zZZbYIJmsHvi ElCLM/fZfICQbLXhtRlKKw== 0000950144-97-012302.txt : 19971117 0000950144-97-012302.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950144-97-012302 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDAIR SERVICES INC CENTRAL INDEX KEY: 0000912728 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 621120025 STATE OF INCORPORATION: TN FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22490 FILM NUMBER: 97719144 BUSINESS ADDRESS: STREET 1: 430 AIRPORT RD CITY: GREENEVILLE STATE: TN ZIP: 37745 BUSINESS PHONE: 6156397196 MAIL ADDRESS: STREET 1: P.O. BOX 1058 CITY: GREENEVILLE STATE: TN ZIP: 37744 10-Q 1 LANDAIR SERVICES INC. FORM 10-Q FQE: 9/30/97 1 UNITED STATES 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 the Quarterly Period Ended September 30, 1997 Commission File No. 000-22490 LANDAIR SERVICES, INC. (Exact name of registrant as specified in its charter) TENNESSEE 62-1120025 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 430 AIRPORT ROAD GREENEVILLE, TENNESSEE 37745 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (423) 636-7000 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. YES X NO ---- ---- The number of shares outstanding of the registrant's common stock, $.01 par value, as of November 11, 1997 was 5,994,569. 2 TABLE OF CONTENTS LANDAIR SERVICES, INC.
Page Number PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets - September 30, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Income - Three months ended September 30, 1997 and 1996; Nine months ended September 30, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements - September 30, 1997 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 11 ITEM 2. Changes in Securities 11 ITEM 3. Defaults Upon Senior Securities 11 ITEM 4. Submission of Matters to a Vote of Security Holders 11 ITEM 5. Other Information 11 ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 EXHIBIT INDEX 13
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) LANDAIR SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1997 1996 ================================ (Unaudited) (Note) (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 148 $ 28 Accounts receivable, less allowance of $726 in 1997 and $415 in 1996 27,646 23,671 Other current assets 5,348 4,505 --------------------- Total current assets 33,142 28,204 Property and equipment 105,010 97,445 Less accumulated depreciation and amortization 33,552 27,166 --------------------- 71,458 70,279 Other assets 587 591 --------------------- Total assets $105,187 $99,074 ===================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,049 $ 5,525 Accrued expenses 12,294 7,391 Current portion of long-term debt 10,038 7,701 Current portion of capital lease obligations 2,087 1,797 --------------------- Total current liabilities 28,468 22,414 Long-term debt, less current portion 12,026 18,346 Capital lease obligations, less current portion 6,850 8,748 Deferred income taxes 10,555 8,302 Shareholders' equity: Preferred stock -- -- Common stock, $.01 par value: Authorized shares - 20,000,000 Issued and outstanding shares - 5,973,486 in 1997 and 5,952,880 in 1996 60 60 Additional paid-in capital 26,335 26,202 Retained earnings 20,893 15,002 --------------------- Total shareholders' equity 47,288 41,264 --------------------- Total liabilities and shareholders' equity $105,187 $99,074 =====================
Note: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date, but does not include all of the financial information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements. 3 4 LANDAIR SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended Nine months ended ------------------------------- ------------------------------ September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ------------------------------ ------------------------------ (In thousands, except per share data) Operating revenue $50,456 $39,295 $136,963 $115,167 Operating expenses: Purchased transportation 15,843 12,629 44,118 37,471 Salaries, wages, and employee benefits 14,086 10,911 38,732 31,898 Depreciation and amortization 2,815 2,687 8,118 7,909 Fuel and fuel taxes 2,846 2,573 8,140 8,175 Insurance and claims 2,080 2,440 7,055 6,153 Operating leases 1,682 1,603 4,659 4,374 Other operating expenses 5,297 4,326 14,408 12,692 -------------------------------------------------------- 44,649 37,169 125,230 108,672 Income from operations 5,807 2,126 11,733 6,495 Other income (expense): Interest expense (651) (694) (1,990) (2,288) Other, net 32 0 (97) 26 -------------------------------------------------------- (619) (694) (2,087) (2,262) Income before income taxes 5,188 1,432 9,646 4,233 Income taxes 2,012 545 3,755 1,616 -------------------------------------------------------- Net income $ 3,176 $ 887 $ 5,891 $ 2,617 ======================================================== Net income per share: Primary $ .51 $ .15 $ .96 $ .43 ======================================================== Fully diluted $ .51 $ .15 $ .94 $ .43 ======================================================== Dividends declared per share $ -- $ -- $ -- $ -- ========================================================
See notes to condensed consolidated financial statements. 4 5 LANDAIR SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine months ended ---------------------------- September 30, September 30, 1997 1996 ------------ ------------- (In thousands) Cash from operations $ 15,114 $ 7,180 Investing activities: Proceeds from disposal of property and equipment 980 2,700 Purchases of property and equipment (10,520) (6,028) Other 4 (135) -------- ------- (9,536) (3,463) Financing activities: Proceeds from long-term debt 4,990 1,664 Payments of long-term debt (8,973) (8,119) Payments of capital lease obligations (1,608) (1,649) Common Stock issued under Stock Purchase Plan 78 -- Proceeds from exercise of stock options 55 579 -------- ------- (5,458) (7,525) -------- ------- Increase (decrease) in cash and cash equivalents $ 120 $(3,808) ======== =======
See notes to condensed consolidated financial statements. 5 6 LANDAIR SERVICES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1997 NOTE 1 - 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 of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Landair Services, Inc. annual report on Form 10-K for the year ended December 31, 1996. NOTE 2 - NET INCOME PER SHARE Net income per share is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Common stock equivalents consist of outstanding stock options and have been included in the calculation of net income per share using the treasury stock method. See Note 6. NOTE 3 - INCOME TAXES For the three months and nine months ended September 30, 1997 and 1996, the effective income tax rate varied from the statutory federal income tax rate of 34% primarily as a result of the effect of state income taxes, net of the federal benefit, and permanent differences. NOTE 4 - CONTINGENCIES The Company is, from time to time, a party to litigation arising in the normal course of its business, most of which involve claims for personal injury and property damage incurred in connection with the transportation of freight. Management believes none of these actions, individually or in the aggregate, will have a material adverse effect on the financial condition or results of operations of the Company. 6 7 NOTE 5 - CHANGE IN ACCOUNTING ESTIMATE Effective July 1, 1996, the Company changed the estimated useful life of tires in service to reflect the increased warranty periods provided by the tire manufacturers. The change resulted in a decrease in other expenses of $280,000, an increase in net earnings of $171,000 and an increase in earnings per share of $.03 for the nine months ended September 30, 1997. NOTE 6 - ADOPTION OF NEW ACCOUNTING RULES In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement No. 128 on the calculation of primary earnings per share for the three months and nine months ended September 30, 1997 is expected to result in an increase of $.02 and $.03 per share, respectively. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth expenses as a percentage of operating revenue for the periods indicated.
Three months ended Nine months ended ----------------------------- ---------------------------- September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ---------------------------- ---------------------------- Operating revenue 100.0% 100.0% 100.0% 100.0% Operating expenses: Purchased transportation 31.4 32.1 32.2 32.5 Salaries, wages, and employee benefits 27.9 27.8 28.3 27.7 Depreciation and amortization 5.6 6.8 5.9 6.9 Fuel and fuel taxes 5.7 6.5 5.9 7.1 Insurance and claims 4.1 6.2 5.2 5.3 Operating leases 3.3 4.1 3.4 3.8 Other operating expenses 10.5 11.1 10.5 11.1 --------------------- ----------------------- 88.5 94.6 91.4 94.4 Income from operations 11.5 5.4 8.6 5.6 Other income (expense): Interest expense (1.3) (1.8) (1.5) (2.0) Other, net 0.1 0.0 (0.1) 0.0 --------------------- ----------------------- (1.2) (1.8) (1.6) (2.0) --------------------- ----------------------- Income before income taxes 10.3 3.6 7.0 3.6 Income taxes 4.0 1.3 2.7 1.3 --------------------- ----------------------- Net income 6.3% 2.3% 4.3% 2.3% ===================== =======================
Results of Operations Operating revenue increased by $11.2 million, or 28%, to $50.5 million in the third quarter of 1997 from $39.3 million in 1996. For the first nine months of 1997, operating revenue of $137.0 million was $21.8 million, or 19%, higher than the same period of 1996. The increase in operating revenue compared to the prior-year periods is attributable to additional volume from the Company's Forward Air operations, which increased 40% and 31% during the third quarter and first nine months of 1997, respectively, coupled with increased revenue in the Company's Truckload operations, which increased 15% and 7%, respectively, due to improvements in utilization and yield and additional tractors in service. The Forward Air and Truckload operations also benefited from the disruption to the national transportation system brought about by the UPS strike which contributed approximately $2.3 million and $500,000 of additional revenue, respectively, during the third quarter of 1997. 8 9 The operating ratio (operating expenses as a percentage of operating revenue) for the three months and nine months ended September 30, 1997 was 88.5% and 91.4%, respectively, compared to 94.6% and 94.4% for the respective periods in 1996. Except as explained below, operating expenses in the aggregate generally reflect increases proportionate to the increased level of operations. The improvement in the operating ratio for the third quarter of 1997 was partially attributed to the non-recurring revenue that resulted from the UPS strike. This additional revenue net of variable costs and income taxes, but not allocated fixed costs, resulted in an estimated additional $1.4 million of pre-tax income from operations and $.14 of earnings per share during the quarter. On a pro forma basis, excluding the impact of the UPS strike, the Company's operating ratio for the three months and nine months ended September 30, 1997 would have been 91.3% and 92.5%, respectively. The components of operating expenses fluctuate between periods primarily because of the ratio of owner-operators to Company-operated equipment. For the quarters ended September 30, 1997 and 1996, respectively, the Company operated 551 and 523 Company-owned tractors and leased 382 and 376 tractors from owner-operators. Depreciation and amortization expense as a percentage of operating revenue was 5.6% and 5.9% in the third quarter and first nine months of 1997, respectively, compared to 6.8% and 6.9% for the respective periods in 1996. The improvement in depreciation and amortization expense as a percentage of operating revenue is primarily attributed to increased utilization of operating assets. Fuel and fuel taxes were 5.7% and 5.9% of operating revenue in the third quarter and first nine months of 1997, respectively, compared to 6.5% and 7.1% for the respective periods in 1996. The decrease in fuel and fuel taxes as a percentage of operating revenue during 1997 is partially attributed to a decrease in fuel costs, net of surcharges passed on to customers, of approximately 7% during the third quarter and first nine months of 1997. Insurance and claims were 4.1% and 5.2% of operating revenue for the three months and nine months ended September 30, 1997, respectively, compared to 6.2% and 5.3% for the respective periods in 1996. The decrease in costs during the third quarter of 1997 is due primarily to a decrease in the severity of accidents compared to the corresponding quarter of 1996. Operating leases were 3.3% and 3.4% of operating revenue in the third quarter and first nine months of 1997, respectively, compared to 4.1% and 3.8% for the respective periods in 1996. The decrease in operating lease expense as a percentage of operating revenue is attributed to increased utilization of leased operating equipment and facilities. 9 10 Included in income from operations for the third quarter and first nine months of 1997 were gains (losses) on the sale of revenue equipment in the amount of $(60,000) and $(40,000), respectively, compared to $216,000 and $386,000 for the respective periods in 1996. See Note 5 to the September 30, 1997 Condensed Consolidated Financial Statements for the current year financial impact of a change in the estimated useful life of tires in service. Interest expense was $651,000 and $2.0 million, respectively, for the three months and nine months ended September 30, 1997, compared to $694,000 and $2.3 million for the respective periods in 1996. The decrease in interest costs during 1997 is due to lower average net borrowings in 1997. The effective tax rate for the third quarter and first nine months of 1997 was 39% compared to 38% for the respective periods in 1996. Liquidity and Sources of Capital Cash flows from operations were $15.1 million for the first nine months of 1997 compared with $7.2 million in the same period of 1996. The $7.9 million increase in cash flows from operations was principally attributable to increased business volumes and collection of the related accounts receivable. Management believes available borrowing under existing lines of credit, future borrowing under installment notes for revenue equipment, and cash generated by operations will be sufficient to fund the Company's cash needs and anticipated capital expenditures over the near term. 10 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is, from time to time, a party to litigation arising in the normal course of its business, most of which involve claims for personal injury and property damage incurred in connection with the transportation of freight. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the financial condition or results of operations of the Company. ITEM 2. CHANGES IN SECURITIES Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable ITEM 6 . EXHIBITS AND REPORTS ON FORM 8-K The following exhibits are included herein: (a) Exhibits - The response to this portion of Item 6 is submitted as a separate section of this report. (b) Reports on Form 8-K - The Company did not file any reports on Form 8-K during the three months ended September 30, 1997. 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. Landair Services, Inc. Date: November 14, 1997 By: /s/ Edward W. Cook ---------------------- Edward W. Cook Chief Financial Officer and Senior Vice President 12 13 EXHIBIT INDEX Exhibit Number Exhibit ------- ------- 11 Statement Re: Computation of Per Share Earnings 27 Financial Data Schedule (Electronic Filing Only) 13 EX-11 2 COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three months ended Nine months ended ------------------------------- -------------------------------- September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ------ ------ ------ ------ (In thousands, except per share data) Primary: Average outstanding shares 5,967 5,949 5,958 5,922 Net effect of dilutive stock options - based on the treasury stock method using the average market price 251 108 164 135 ------ ------ ------ ------ Totals 6,218 6,057 6,122 6,057 ====== ====== ====== ====== Net income $3,176 $ 887 $5,891 $2,617 ====== ====== ====== ====== Per share amount $ .51 $ .15 $ .96 $ .43 ====== ====== ====== ====== Fully diluted: Average shares outstanding 5,967 5,949 5,958 5,922 Net effect of dilutive stock options - based on the treasury stock method using the quarter-end market price if higher than the average market price 296 108 296 141 ------ ------ ------ ------ Totals 6,263 6,057 6,254 6,063 ====== ====== ====== ====== Net income $3,176 $ 887 $5,891 $2,617 ====== ====== ====== ====== Per share amount $ .51 $ .15 $ .94 $ .43 ====== ====== ====== ======
EX-27 3 FINANICAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LANDAIR SERVICES, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000912728 LANDAIR SERVICES, INC. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 148 0 28,372 726 0 33,142 105,010 33,552 105,187 28,468 0 0 0 60 47,228 105,187 0 136,963 0 125,230 97 0 1,990 9,646 3,755 5,891 0 0 0 5,891 .96 .94
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