-----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, Pbb0tgSYAZWLn79p5UMHjG2xMXFYSFHc6ffb+fyBFU5BX1V650Doem+4gEU2EHyO u0aLBhV6BKjYgs1ZnchQ1Q== 0000931763-98-002459.txt : 19980921 0000931763-98-002459.hdr.sgml : 19980921 ACCESSION NUMBER: 0000931763-98-002459 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980918 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: US XPRESS ENTERPRISES INC CENTRAL INDEX KEY: 0000923571 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 621378182 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-24806 FILM NUMBER: 98711770 BUSINESS ADDRESS: STREET 1: 2931 SOUTH MARKET ST CITY: CHATTANOOGA STATE: TN ZIP: 37410 BUSINESS PHONE: 6156967377 MAIL ADDRESS: STREET 1: 2931 SOUTH MARKET ST CITY: CHATTONOOGA STATE: TN ZIP: 37410 10-Q/A 1 AMENDMENT #1 TO FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended Commission file number JUNE 30, 1998 0-24806 U.S. XPRESS ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEVADA 62-1378182 (State or other jurisdiction of (I.R.S. employer identification no.) Incorporation or organization) 2931 SOUTH MARKET STREET CHATTANOOGA, TENNESSEE 37410 (423) 697-7377 (Address of principal executive offices) (Zip Code) (Registrant's telephone no.) ---------------------------------------- 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 ------- ------- As of June 30, 1998, 12,010,245 shares of the registrant"s Class A common stock, par value $.01 per share, and 3,040,262 shares of Class B common stock, par value $.01 per share, were outstanding. U.S. XPRESS ENTERPRISES, INC. INDEX PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements.................... 3 Consolidated Statements of Operations for the Three Months Ended June 30, 1998 and 1997............ 4 Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997.......................... 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997...................... 7 Notes to Consolidated Financial Statements................... 8 2 AMENDMENT NO. 1 The undersigned Registrant hereby amends Part I, Item 1 of its Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the "Form 10-Q") and files such amended Part I, Item 1 herewith. PART I FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared by the Company, without audit, in accordance with the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the six months ended June 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of items that are of a normal recurring nature. These interim consolidated financial statements should be read in conjunction with the Company's latest annual consolidated financial statements (which are included in the 1997 Annual Report to Stockholders in the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 1998). 3 US XPRESS ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1998 1997 1998 1997 -------------- -------------- ------------- ------------- OPERATING REVENUE $ 138,433 $ 107,933 $ 262,343 $ 199,497 -------------- -------------- ------------- ------------- OPERATING EXPENSES: Salaries, Wages and Benefits 56,444 43,875 108,170 82,347 Fuel and Fuel Taxes 18,668 16,450 37,131 32,752 Vehicle Rents 7,947 7,224 15,833 13,343 Depreciation & Amortization 5,719 2,523 11,184 5,304 Purchased Transportation 13,033 8,843 23,662 13,989 Operating Expense & supplies 8,697 6,926 16,318 12,339 Insurance Premiums & Claims 4,621 3,550 8,840 6,520 Operating Taxes & Licenses 2,156 1,700 4,312 3,206 Communications & Utilities 2,155 1,874 4,169 3,383 General & Other Operating 7,371 6,933 13,870 13,296 -------------- -------------- ------------- ------------- Total Operating Expenses 126,811 99,898 243,489 186,479 -------------- -------------- ------------- ------------- INCOME FROM OPERATIONS 11,622 8,035 18,854 13,018 OTHER INCOME AND (EXPENSES): Interest Expense (2,190) (1,582) (3,962) (2,967) Other Income (Expense) 33 11 50 21 -------------- -------------- ------------- ------------- (2,157) (1,571) (3,912) (2,946) INCOME BEFORE INCOME TAX PROVISION 9,465 6,464 14,942 10,072 INCOME TAX PROVISION 3,783 2,585 5,976 4,024 ============== ============== ============= ============= NET INCOME $ 5,682 $ 3,879 $ 8,966 $ 6,048 ============== ============== ============= ============= EARNINGS PER SHARE-BASIC $ 0.38 $ 0.32 $ 0.60 $ 0.50 ============== ============== ============= ============= WEIGHTED AVERAGE SHARES - BASIC 15,049 12,101 15,043 12,093 ============== ============== ============= ============= EARNINGS PER SHARE - DILUTED $ 0.38 $ 0.32 $ 0.59 $ 0.50 ============== ============== ============= ============= WEIGHTED AVERAGE SHARES - DILUTED 15,152 12,209 15,155 12,197 ============== ============== ============= =============
(See accompanying Notes to Consolidated Financial Statements) PAGE 4 OF 12 4 U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands)
JUNE 30, 1998 DECEMBER 31, 1997 ------------------- ----------------------- (Unaudited) ASSETS - ---------------------------------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 1,607 $ 2,734 Customer receivables, Net of Allowance 70,796 58,496 Other receivables 5,021 9,085 Prepaid insurance and licenses 4,350 1,488 Operating and Installation supplies 4,767 4,213 Deferred income taxes 3,717 3,092 Other current assets 2,532 508 ---------------- --------------------- Total current assets 92,790 79,616 ---------------- --------------------- PROPERTY AND EQUIPMENT, AT COST: Land and buildings 7,693 6,845 Revenue and service equipment 184,717 151,081 Furniture and equipment 14,368 13,062 Leasehold improvements 24,150 9,411 ---------------- --------------------- 230,928 180,399 Less accumulated depreciation and amortization (44,236) (44,344) Net property and equipment 186,692 136,055 ---------------- --------------------- OTHER ASSETS: Goodwill, net 38,798 12,593 Other 6,283 5,513 ---------------- --------------------- Total Other Assets 45,081 18,106 ---------------- --------------------- TOTAL ASSETS $ 324,563 $ 233,777 ================ =====================
(See accompanying Notes to Consolidated Financial Statements) 5 U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands)
JUNE 30, 1998 DECEMBER 31, 1997 --------------------------- ----------------------------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------------------- CURRENT LIABILITIES: Accounts Payable $ 11,619 $ 8,634 Accrued Wages and Benefits 7,068 4,325 Claims and Insurance Accruals 4,781 5,750 Other Accrued Liabilities 4,735 5,200 Current Maturities of Long-Term Debt 263 12,336 ------------------------ ------------------------- Total current liabilities 28,466 36,245 ------------------------ ------------------------- LONG-TERM DEBT, NET OF CURRENT MATURITIES 128,655 50,678 ------------------------ ------------------------- DEFERRED INCOME TAXES 27,967 17,352 ------------------------ ------------------------- OTHER LONG-TERM LIABILITIES 1,634 1,009 ------------------------ ------------------------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 2,000,000 shares authorized, no shares issued Common stock Class A, $.01 par value, 120 120 30,000,000 shares authorized, 12,010,245 and 11,979,584 shares issued and outstanding at June 30, 1998 and December 31, 1997, respectively Common stock Class B, $.01 par value, 7,500,000 30 30 shares authorized, 3,040,262 shares issued and outstanding at June 30, 1998 and December 31, 1997 Additional paid-in capital 86,324 85,942 Retained earnings 51,600 42,634 Notes receivable from stockholders (233) (233) ------------------------ ------------------------- Total stockholders' equity 137,841 128,493 ------------------------ ------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 324,563 $ 233,777 ======================== =========================
(See accompanying Notes to Consolidated Financial Statements) 6
U.S. XPRESS ENTERPRISES CONSOLIDATED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1998 1997 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 8,966 $ 6,048 Adjustments to reconcile net income to net cash provided by (used in) operating activities Deferred income tax provision 4,883 3,103 Depreciation & Amortization 11,415 6,324 Gain on sale of equipment (231) (1,020) Change in receivables (1,265) (7,768) Change in prepaid insurance (2,729) (1,725) Change in operating supplies (46) 220 Change in other assets (3,304) 416 Change in accounts payable and other accrued liabilities (5,785) (7,312) Change in accrued wages and benefits 1,813 2,708 Other 31 2 -------- -------- Net cash provided by (used in) operating activities 13,748 996 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of property and equipment (59,975) 2,268 Proceeds from sales of property and equipment 32,630 14,020 Repayment of notes receivable from stockholders Acquisition of businesses, net of cash acquired (50,785) (8,038) -------- -------- Net cash used in investing activities (78,130) 8,250 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowing (pmts) under lines of credit 96,500 1,500 Payment of long-term debt (33,597) (32,635) Borrowings under long-term debt 23,991 Proceeds from exercise of stock options 77 192 Proceed from issuance of common stock, net 275 Forfeiture of 9,195 shares restricted stock (21) Change in other liabilities -------- -------- Net cash provided by (used in) financing activities 63,255 (6,973) -------- -------- NET INCREASE (DECREASE) IN CASH (1,127) 2,273 Cash, beginning of period 2,734 2,997 -------- -------- Cash, end of period $ 1,607 $ 5,270 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 2,005 $ 2,605 Cash paid during the period for income taxes $ 1,677 $ 2,588
(See accompanying Notes to Consolidated Financial Statements) 7 U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 1. ORGANIZATION AND OPERATIONS U. S. Xpress Enterprises, Inc. (the "Company") provides transportation services through two subsidiaries. U.S. Xpress, Inc. ("U.S. Xpress") is a truckload carrier serving the Continental United States, Canada and Mexico. CSI/Crown, Inc. ("CSI/Crown") provides transportation and logistics services to the floorcovering industry. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. Property and Equipment Property and equipment is carried at cost. Depreciation and amortization of property and equipment are computed using the straight-line method for financial reporting purposes and accelerated methods for tax purposes over the estimated useful lives of the related assets (net of salvage value) as follows: Buildings 10-30 years ------------------------------------------------ Revenue and service equipment 3-7 years ------------------------------------------------ Furniture and equipment 3-7 years ------------------------------------------------ Leasehold improvements 5-6 years ------------------------------------------------ Expenditures for normal maintenance and repairs are expensed. Renewals or betterments that affect the nature of an asset or increase its useful life are capitalized. Contract Wages Effective January 1, 1997, the Company entered into an agreement with Employee Solutions, Inc. ("ESI"), a Professional Employer Organization (PEO) in which the PEO is a co-employer with the Company for substantially all of the Company's personnel. The PEO is responsible for processing and administration of the Company's payroll, including tax reporting, and provides group health benefits and worker's compensation coverage. On July 22, 1998, the Company filed suit against ESI in the United States District Court for the Eastern District of Tennessee, at Chattanooga, in an action alleging breach of contract and seeking contractual and punitive damages. The complaint alleges that ESI agreed to perform certain employer organization services for Enterprises, including administration of programs related to wages, payroll taxes, worker's compensation, employee benefit programs and other insurance and related administration services. Enterprises has alleged that ESI breached its contract to provide such services and has wrongfully attempted to terminate the contract. Enterprises seeks declaratory relief against ESI to enforce the contract's arbitration provisions, and also seeks reimbursement of approximately $545,000 wrongfully withheld 8 by ESI, and other contractual and punitive damages. Effective August 20, 1998 the contract with ESI will terminate and U.S. Xpress will assume total control of all payroll. The Company presently believes that the contract termination and litigation will not have a material adverse impact on the Company. Fuel Purchase Commitments The Company uses both derivative financial instruments and forward purchase commitments to mitigate the effects of fluctuations in the price of fuel. During the six months ended June 30, 1998, the Company did not have in place any derivative financial instruments for fuel price protection. The Company did utilize fuel purchase commitments ranging from 1,500,000 gallons in January to 1,000,000 gallons in June 1998. The Company has additional commitments ranging from 1,000,000 gallons per month in July 1998 to 750,000 gallons per month in December of 1999 at varying price levels. Earnings Per Share Effective for the period ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS No. 128"), which changes the criteria for reporting earnings per share ("EPS") by replacing primary EPS with basic EPS and fully diluted EPS with diluted EPS. All prior EPS data have been restated. The difference in basic and diluted EPS is due to the assumed conversion of outstanding options resulting in approximately 103,000 and 108,000 equivalent shares in the three month period ended June 30, 1998 and 1997, respectively, and 112,000 and 104,000 equivalent shares in the six month period ended June 30, 1998 and 1997, respectively. Reclassifications Certain reclassifications have been made in the fiscal 1997 financial statements to conform with the 1998 presentation. 3. COMMITMENTS AND CONTINGENCIES The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of these matters, in the opinion of management, based in part on the advice of legal counsel, will not have a material adverse effect on the Company's financial position or results of operations. The Company has letters of credit of $4,290,000 outstanding at June 30, 1998. The letters of credit are maintained primarily to support the Company's insurance program. 9 4. DEBT In January, 1998, the Company obtained a new revolving credit facility providing capacity of up to $200,000,000. A portion of the availability under this new line was immediately used to retire the existing line of credit and pay off other long term indebtedness bearing higher interest rates. The credit facility operates as a revolving credit facility until its maturity in January, 2001. Interest on outstanding borrowings is based the London Interbank Offered Rate plus applicable margins, as defined in the credit agreement. The facility has optional one year extensions, with the agreement of all parties. In August 1998 the Company entered into an agreement to increase the capacity under the line of credit from $200,000,000 to $225,000,000. The other provisions of the credit facility remain unchanged. In February, 1998, the Company entered into Interest Rate Swap agreements providing for the Company to pay a fixed interest rate on $35,000,000 of its borrowings under the Line of Credit. The agreements provide for the Company to pay interest at a rate of approximately 5.72%, plus the applicable credit margin, for five years. Borrowings (including letters of credit) under the Credit Agreement are limited to the lesser of (a) 90% of the book value of eligible revenue equipment plus 85% of eligible receivables; or (b) $200,000,000. At June 30, 1998, $69.7 million of available borrowings were unused under the facility. The Credit Agreement contains a number of covenants that limit, among other things, the payment of dividends, the incurrence of additional debt, and liens on assets as security for other indebtedness. The Credit Agreement also requires the Company to meet certain financial tests, including a minimum amount of net worth, a minimum amount of fixed charge coverage and a maximum amount of leverage. The Company was in compliance with these covenants at June 30, 1998. Lease on Headquarters In March, 1998, the Company entered into an Agreement with a financial institution to provide funding for the construction of a new headquarters facility. When completed, the building will contain approximately 100,000 square feet of space for administrative and operating functions of the Company. It will be located in a commercial park in Chattanooga, Tennessee. The new building will be leased under an operating lease with an initial term of five years and providing for mutually agreeable extension terms of up to three years each. As of June 30, 1998, approximately $4.5 million had been expended for the construction of the facility. Upon completion of this facility, the Company will consolidate its administrative and operating functions and terminate its leases at its Market Street and Shallowford Road facilities also in Chattanooga. The expected completion date is December, 1998. 10 5. ACQUISITION OF VICTORY EXPRESS, INC. Effective January 29, 1998, the Company acquired Victory Express, Inc., a non-union truckload carrier based in Medway, Ohio, for $51 million in cash and assumption of approximately $2 million in debt. Prior to the acquisition, Victory had annual revenues of approximately $65 million. Victory Express serves customers located primarily in the Midwest and on the Eastern seaboard. The company employs approximately 790 persons, including approximately 640 drivers and driver trainees. Through this acquisition, management expects the Company to significantly expand its regional capabilities in the Midwest and extend its regional service capabilities to the East Coast. Victory Express= customer base is largely centered in automotive, paper, retail and air freight markets. In addition, U.S. Xpress continues to be presented with opportunities for additional business from its customers in the Midwest. 6. PRO FORMA FINANCIAL INFORMATION The following Pro Forma Financial Information is based on the historical financial statements of U.S. Xpress and adjusted to give effect to the acquisition of Victory Express. The Pro Forma Consolidated Statement of Operations for the six months ended June 30, 1997 and 1998, give effect to the acquisition as if it had occurred on January 1, 1997. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable.
1998 1997 ------- ------- OPERATING REVENUE 267,405 229,787 INCOME FROM OPERATIONS 19,329 15,319 INCOME BEFORE INCOME TAX PROVISION 15,072 10,273 NET INCOME 9,044 6,168 EARNINGS PER SHARE - BASIC 0.60 0.51 EARNINGS PER SHARE - DILUTED 0.60 0.51
7. YEAR 2000 COMPLIANCE Some computer systems that use two digits to indicate a year will not be able to process data properly for the year 2000. The Company has assessed the ability of its software and operating systems to function in the year 2000 and beyond. Systems in use by the Company in operations, accounting and purchasing are year 2000 compliant. Testing of U.S. Xpress systems for year 2000 compliance is scheduled for July 1998. Systems in use at CSI/Crown are presently 50% compliant with year 2000 requirements. Programming to make CSI/Crown systems compliant is expected to be completed by December 1998. Testing of CSI/Crown systems is scheduled for March 1999. 11 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 hereunto duly authorized. U.S. XPRESS ENTERPRISES, INC. (REGISTRANT) DATE: SEPTEMBER 16, 1998 BY: /S/ PATRICK E. QUINN --------------------------------- PATRICK E. QUINN PRESIDENT DATE: SEPTEMBER 16, 1998 BY: /S/ RAY M. HARLIN ------------------------------- RAY M. HARLIN PRINCIPAL FINANCIAL OFFICER 12 -----END PRIVACY-ENHANCED MESSAGE-----