-----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, KLE0Y51PU5NmB2+2VjrFK72PZe0jO3Ko2N4efaUXI0xy2sPJQLHVKRrW08qCvwZK lPhFpF6IcUa0CntlD/Mtkw== 0000950137-97-001880.txt : 19970514 0000950137-97-001880.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950137-97-001880 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AASCHE TRANSPORTATION SERVICES INC CENTRAL INDEX KEY: 0000927809 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 363964954 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24576 FILM NUMBER: 97602012 BUSINESS ADDRESS: STREET 1: 10214 N MT VERNON RD CITY: SHANNON STATE: IL ZIP: 61078 BUSINESS PHONE: 8158642421 MAIL ADDRESS: STREET 1: 10214 N MT VERNON ROAD CITY: SHANNON STATE: IL ZIP: 61078 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 MARCH 31, 1997 -------------- [ ] 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 0-24576 ------- AASCHE TRANSPORTATION SERVICES, INC. ------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 36-3964954 - ------------------------------- -------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 10214 NORTH MOUNT VERNON ROAD SHANNON, ILLINOIS 61078 (Address of Principal Executive Offices) 815-864-2421 (Registrant's telephone number, including area code) N/A - --------------------------------------------------------------------------- (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. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date 3,994,177 SHARES OF PAR VALUE $.0001 COMMON STOCK 2 PART I: FINANCIAL INFORMATION Item 1. Financial Statements AASCHE TRANSPORTATION SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited)
March 31, December 31, 1997 1996 ---- ---- ASSETS Current assets: Trade receivables, less allowance for doubtful accounts of $71 $ 5,618 $ 6,682 Prepaid expenses and other current assets 3,107 2,033 -------------- -------------- Total current assets 8,725 8,715 Property and equipment, at cost 37,260 43,901 Less accumulated depreciation and amortization (12,933) (14,349) -------------- -------------- Net property and equipment 24,327 29,552 -------------- -------------- Excess of cost over net assets acquired, less accumulated amortization of $528 and $448 7,542 7,622 Deferred income taxes 3,022 3,022 Other assets 403 415 TOTAL ASSETS $ 44,019 $ 49,326 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Cash overdraft $ 193 $ 349 Accounts payable 1,217 2,299 Accrued liabilities 2,164 2,366 Guaranteed obligation of Employee Stock Ownership Plan 244 244 Line of credit 4,892 5,242 Current maturities of long-term debt with unrelated parties 3,553 4,922 Current maturities of long-term debt with related party 995 995 Current maturities of capital lease obligations with unrelated parties 2,390 2,596 Current maturities of capital lease obligations with related parties 1,434 1,303 -------------- -------------- Total current liabilities 17,082 20,316 Long-term debt with unrelated parties, less current maturities 5,285 5,767 Long-term debt with related party, less current maturities 2,225 2,545 Capital lease obligations with unrelated parties, less current maturities 5,046 6,163 Capital lease obligations with related parties, less current maturities 9 327 Deferred income taxes 3,677 3,677 -------------- -------------- Total liabilities 33,324 38,795 Stockholders' equity: Common stock, $.0001 par value, 10,000,000 shares authorized, 3,994,177 and 3,953,077 shares issued and outstanding - - Additional paid-in capital 14,698 14,598 Guarantee of Employee Stock Ownership Plan obligation (244) (244) Accumulated deficit (3,759) (3,823) -------------- -------------- Total stockholders' equity 10,695 10,531 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 44,019 $ 49,326 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. 2 3 AASCHE TRANSPORTATION SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share and share data) (Unaudited)
Three Months Ended March 31, --------------------------- 1997 1996 ------------- ------------ NET REVENUES $17,313 $19,038 OPERATING EXPENSES: Salaries, wages and benefits 6,145 6,407 Fuel 3,099 3,089 Purchased transportation 2,825 2,899 Supplies and maintenance 1,487 1,700 Depreciation and amortization 1,395 2,191 Taxes and licenses 462 491 Insurance 511 654 Communications and utilities 222 202 (Gain) loss on disposition of equipment (37) 30 Litigation settlement - 150 Other 518 253 ---------- ---------- Total operating expenses 16,627 18,066 ---------- ---------- OPERATING INCOME 686 972 OTHER (EXPENSES) INCOME: Interest expense (588) (964) Other 5 23 ---------- ---------- INCOME BEFORE INCOME TAX (PROVISION) BENEFIT 103 31 INCOME TAX (PROVISION) BENEFIT (39) 40 ---------- ---------- NET INCOME $ 64 $ 71 ========== ========== NET INCOME PER COMMON SHARE $ 0.02 $ 0.02 ========== ========== Weighted average common and common equivalent shares outstanding 4,096,080 3,966,593 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 3 4 AASCHE TRANSPORTATION SERVICES, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in thousands, except share data) (Unaudited)
Guarantee Common Stock of Employee ----------------------- Stock $.0001 Par Value Additional Ownership Total ----------------------- Paid-In Plan Accumulated Stockholders' Shares Amount Capital Obligation Deficit Equity ---------------------------------------------------------------------------------------------- Balance at December 31, 1996 3,953,077 $ - $14,598 $(244) $(3,823) $10,531 Exercise of Series A warrants 41,100 - 100 - - 100 Net income - - - - 64 64 ---------------------------------------------------------------------------------------------- Balance at March 31, 1997 3,994,177 $ - $14,698 $(244) $(3,759) $10,695 ==============================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 4 5 AASCHE TRANSPORTATION SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Three Months Ended March 31, ----------------------------------------- 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 64 $ 71 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,395 2,191 (Gain) loss on disposition of equipment (37) 30 Deferred income taxes - (21) Changes in other current operating items: Trade receivables 1,065 (472) Prepaid expenses and other assets (1,074) (475) Accounts payable (1,082) 326 Accrued liabilities (204) (263) ---------- ---------- Net cash provided by operating activities 127 1,387 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment additions: Revenue equipment (600) - Building, office equipment and other (48) (46) Proceeds from the sale of equipment 4,608 726 ---------- ---------- Net cash provided by investing activities 3,960 680 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments) borrowings on line of credit (350) 1,047 Principal payments on long-term debt with unrelated parties (1,922) (1,675) Principal payments on long-term debt with related party (249) (249) Principal payments on capital leases with unrelated parties (1,323) (1,048) Principal payments on capial leases with related parties (187) (209) Proceeds from exercise of Series A warrants 100 - ---------- ---------- Net cash used in financing activities (3,931) (2,134) ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (CASH OVERDRAFT) 156 (67) CASH AND CASH EQUIVALENTS (CASH OVERDRAFT): Beginning of period (349) 503 ---------- ---------- End of period $ (193) $ 436 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 588 $ 907 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 5 6 AASCHE TRANSPORTATION SERVICES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 (in thousands, except per share and share data) (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes these disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments necessary for fair presentation for the periods presented have been reflected and are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the three years ended December 31, 1996, 1995, and 1994, as filed with the Securities and Exchange Commission as part of the Company's Annual Report on Form 10-K. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the year. NOTE 2 - PURCHASE OF AG TRANSPORTATION SERVICE, INC. AND AG. CARRIERS, INC. On May 16, 1995, the Company purchased all of the outstanding common stock of AG Transportation Service, Inc. and the net assets of AG. Carriers, Inc. (collectively, AG Carriers) in exchange for $11,250 consisting of $5,275 cash, $1,000 in the Company's common stock (115,075 shares) and two notes payable in the amount of $4,975. In accordance with the original purchase agreement, the Company guaranteed the total value of the Company's common stock issued in the purchase. If during the period from May 16, 1997 through September 12, 1997, the closing price per share of the Company's common stock has not reached at least $8.69 per share, then on the 30th day following September 12, 1997, the Company shall issue sufficient additional shares of the Company's common stock such that all of the shares issued have a total value of $1,000. In the event the additional shares are required to be issued, management believes this will not have a material adverse impact on the financial position or operations of the Company. AG Carriers is a Florida-based carrier specializing in transporting temperature-controlled foodstuffs and juice concentrates. NOTE 3 - MERGER WITH POLAR EXPRESS CORPORATION On December 22, 1995, the Company completed a merger, pursuant to which Polar Express Corporation ("Polar") became a wholly owned subsidiary of the Company. Under the terms of the merger agreement, 1,401,355 shares of the Company's common stock were issued in exchange for all of the outstanding common shares and unit purchase options of Polar. Approximately 5% of these shares were held in an escrow account to cover liability and litigation costs related to the litigation described in Note 6. In addition, the Company issued 1,006,905 warrants to purchase the Company's common stock in exchange for all the outstanding warrants of Polar. In January 1997, 41,100 of these warrants were exercised. The merger was accounted for as a pooling of interests. Polar is an Arkansas-based truckload carrier specializing in transporting temperature-controlled and time-sensitive freight. 6 7 In April 1997, Polar was merged into Asche Transfer, Inc., a wholly-owned subsidiary of the Company, and renamed Asche Transfer Inc.'s Southwest Division. The merger will be accounted for similar to a pooling of interests. NOTE 4 - PROPERTY AND EQUIPMENT In December 1996, the Company entered into various agreements for the sale and leaseback of certain Polar motor carrier equipment which reduced expenses $171 or $0.03 net income per common share in the first quarter of 1997. The leases are classified as operating leases in accordance with SFAS No. 13, Accounting for Leases. In February 1997, the Company entered into a purchase agreement to sell 68 Polar tractors and 141 Polar trailers for $4,592. The transaction generated $1,373 in net cash proceeds to the Company with no significant earnings effect in 1997. The transaction was completed in March 1997. NOTE 5 - NET INCOME PER SHARE Net income per share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding. NOTE 6 - LITIGATION SETTLEMENT In May 1996, the Company settled all outstanding litigation related to Polar's acquisition of Polar Express, Inc. ("PEI") for $150 or $0.02 net income per common share. This amount, which was provided for during the quarter ended March 31,1996, did not include the Company's legal costs incurred related to its defense of this matter, which had been expensed as incurred and had not been included in the settlement amount. In conjunction with the Polar merger, 5% of the Company's common stock issued in the merger (69,941 shares) were held in an escrow account pending final determination of the litigation. Upon reaching a final settlement, 34,030 of the common shares held in the escrow account were retired by the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management's discussion and analysis of financial condition and results of operations contain forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors. Beginning in 1992, the Company commenced a program to increase its size and operational efficiency. This program changed the Company's strategic direction by implementing a shift to company-owned revenue equipment and equipping tractors with the QUALCOMMTM two-way satellite-based tracking and communication system and advanced computer software systems. The Company also implemented a strategy of pursuing strategic acquisitions of other temperature-controlled truckload carriers. Since its initial public offering, the Company acquired all of the assets of AG Carriers (the "AG Acquisition") and merged with Polar (the "Polar Merger"). In February 1997, the Company sold 68 Polar tractors and 141 Polar trailers. 7 8 RESULTS OF OPERATIONS - --------------------- COMPARISON OF THE THREE MONTH PERIOD ENDED MARCH 31, 1997 WITH THE THREE MONTH PERIOD ENDED MARCH 31, 1996. Net revenues decreased $1.7 million, or 9.1%, to $17.3 million in 1997, from $19.0 million in 1996, largely due to having less tractors in service. During the first three months of 1997, the Company decreased its owned tractor fleet by 85 units. Average revenue per tractor increased 0.06% to $31,723 in 1997 from $31,704 in 1996. Total miles decreased 1.0 million, or 5.9%, to 15.5 million in 1997 from 16.5 million in 1996, largely due to having less tractors in service. Average miles per tractor decreased 2.0% to 28,444 miles in 1997 from 29,010 miles in 1996. The Company's operating ratio (operating expenses divided by operating revenues) increased 1.1%, to 96.0% in 1997 from 94.9% in 1996. The increase in the operating ratio is largely due to increased fuel prices. Total operating expenses decreased $1.4 million, or 8.0%, to $16.6 million in 1997, compared to $18.1 million in 1996, largely due to having less tractors in service. Salaries, wages, and benefits decreased $0.3 million, or 4.1%, to $6.1 million in 1997 compared to $6.4 million in 1996, largely due to having less personnel to service the fewer tractors in service, which more than offset increases in overall compensation of drivers that were needed to enhance driver recruitment and retention. Fuel expenses increased $0.01 million, or 0.3% to $3.1 million in 1997 compared to $3.1 million in 1996, largely due to increased fuel prices, which more than offset the decrease in tractors in service. Purchased transportation expense decreased $0.07 million, or 2.6%, to $2.8 million in 1997 compared to $2.9 million in 1996. Supplies and maintenance expenses decreased $0.2 million, or 12.5%, to $1.5 million in 1997 compared to $1.7 million in 1996. Depreciation and amortization expense decreased $0.8 million, or 36.3%, to $1.4 million in 1997 compared to $2.2 million in 1996, largely due to having less tractors in service. Litigation settlement expense represents the provision for final settlement of all outstanding litigation related to Polar's acquisition of PEI. Interest expense decreased $0.4 million, or 39.0%, to $0.6 million in 1997 compared to $1.0 million in 1996, due to lower debt levels and a lower overall interest rate. 8 9 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 1997, the Company had a net working capital deficit of $8.4 million, attributable to the growth of the Company through acquisitions and operations. The working capital deficit also results from the financing of revenue equipment purchases (noncurrent assets) through borrowings, a portion of which is in current liabilities. The Company historically has funded its working capital requirements through a combination of operating profits, short turnover in trade receivables, effective cash management practices and borrowing under its revolving bank line of credit. The Company has a revolving bank line of credit with a $6.0 million borrowing limit based on a percentage of eligible trade receivables, $4.9 million of which was borrowed against this line of credit at March 31, 1997, and approximately $0.1 million was available. The Company's growth in prior years and the significant investment in its modern fleet of tractors and temperature-controlled trailers has been financed substantially through long-term debt and capital lease obligations collateralized by the equipment. The Company's outstanding debt and capital lease obligations, including current maturities, aggregated $26.1 million and $30.1 million at March 31, 1997 and December 31, 1996, respectively. In October 1994, the Company completed an initial public offering of its common stock that raised net proceeds to the Company of $6.4 million. To date, the Company has utilized proceeds to repay outstanding indebtedness under its revolving bank line of credit and certain long-term debt obligations, to purchase trailers, and for the AG Acquisition and the Polar Merger. The AG Acquisition and the Polar Merger, as well as the growth of Asche Transfer's fleet, has resulted in a debt to equity ratio (calculated excluding payables and other liabilities) of 2.44:1 at March 31, 1997, and 2.86:1 at December 31, 1996. In January 1997, the Company borrowed $1 million against the appraised value of approximately $1.5 million of a terminal and maintenance facility. In February 1997, the Company entered into a purchase agreement to sell certain Polar motor carrier equipment for $4.6 million. The transaction was completed in March 1997 and generated $1.4 million in net cash proceeds to the Company. The Company believes that available cash, cash flow from future operations, and borrowings available under its line of credit will be sufficient to meet its current working capital needs. As the Company continues to facilitate its planned future growth in 1997, the Company's capital needs may require additional borrowings or an equity infusion. 9 10 PART II: OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - None. (b) Reports on Form 8-K for the quarter ended March 31, 1997 - None. 10 11 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Aasche Transportation Services, Inc. Date May 13, 1997 BY: s/Leon M. Monachos ----------------------------------------- Leon M. Monachos, Chief Financial Officer Date May 13, 1997 BY: s/Larry L. Asche ----------------------------------------- Larry L. Asche, Chairman and Chief Executive Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 0 0 5,618 71 0 8,725 37,260 12,933 44,019 17,082 0 0 0 0 10,695 44,019 0 17,313 0 16,627 583 0 588 103 39 64 0 0 0 64 0.02 0.02
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