UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
------------------------------------
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, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27208
Simon Transportation Services Inc.
(Exact name of registrant as specified in its charter)
Nevada 87-0545608
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
5175 West 2100 South
West Valley City, Utah 84120
(801) 924-7000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)
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 the filing
requirements for at least the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (April 30, 1998).
Class A Common Stock, $.01 par value: 5,372,873 shares
Class B Common Stock, $.01 par value: 913,751 shares
Exhibit Index is on Page 12
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
PAGE
NUMBER
Item 1. Financial Statements:
Condensed consolidated statements of financial position as of
March 31, 1998 and September 30, 1997 3
Condensed consolidated statements of operations for the three months and six
months ended March 31, 1998 and 1997 4
Condensed consolidated statements of cash flows for the six months ended March
31, 1998 and 1997 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial condition and results of
operations 7
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
<TABLE>
<S> <C> <C>
March 31, 1998 September 30, 1997
-------------- ------------------
(Unaudited)
Current Assets:
Cash $ 10,144,044 $ 12,766,001
Receivables, net of allowance for doubtful accounts of
$99,000 and $62,000, respectively 18,869,839 20,712,286
Operating supplies 923,417 752,213
Prepaid expenses and other 4,263,645 2,193,950
------------------------ ------------------------
Total current assets 34,200,945 36,424,450
------------------------ ------------------------
Property and Equipment, at cost:
Land 7,646,922 7,632,711
Revenue equipment 49,697,517 59,392,072
Buildings and improvements 18,094,352 14,321,869
Office furniture and equipment 7,890,524 5,974,291
------------------------ ------------------------
83,329,315 87,320,943
Less accumulated depreciation and amortization (16,502,447) (16,166,473)
------------------------ ------------------------
66,826,868 71,154,470
------------------------ ------------------------
Other Assets 205,770 125,450
======================== ========================
$ 101,233,583 $ 107,704,370
======================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 7,533,549 $ 6,382,697
Current portion of capitalized lease obligations 3,807,096 5,346,645
Accounts payable 4,265,450 3,593,420
Accrued liabilities 2,076,840 3,957,055
Accrued claims payable 1,564,331 1,259,674
------------------------ ------------------------
Total current liabilities 19,247,266 20,539,491
------------------------ ------------------------
Long-Term Debt, net of current portion 12,904,418 14,638,389
------------------------ ------------------------
Capitalized Lease Obligations, net of current portion 2,659,730 6,423,385
------------------------ ------------------------
Deferred Income Taxes 6,254,445 6,254,445
------------------------ ------------------------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued -- --
Class A common stock, $.01 par value, 20,000,000 shares
authorized, 5,372,803 and 5,320,313 shares issued,
respectively 53,728 53,203
Class B common stock, $.01 par value, 5,000,000 shares
authorized, 913,751 and 962,661 shares issued, 9,138 9,627
respectively
Additional paid-in capital 48,265,792 48,233,608
Retained earnings 11,839,066 11,552,222
------------------------ ------------------------
Total stockholders' equity 60,167,724 59,848,660
------------------------ ------------------------
$ 101,233,583 $ 107,704,370
======================== ========================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
For the Three Months Ended For the Six Months Ended
--------------------------------------------------------------------------
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
-------------- -------------- -------------- --------------
Operating Revenue $ 46,149,338 $ 35,764,826 $ 93,155,831 $ 69,931,019
--------------------------------------------------------- ----------------
Operating Expenses:
Salaries, wages, and benefits 19,351,827 13,870,537 37,363,142 27,042,345
Fuel & fuel taxes 8,262,994 6,962,624 17,360,048 13,620,260
Operating supplies and expenses 7,798,494 4,483,082 13,580,171 8,833,581
Taxes and licenses 1,546,438 1,052,165 3,356,344 2,488,630
Insurance and claims 1,898,971 834,118 2,919,698 1,460,478
Communications and utilities 1,060,020 604,713 1,845,162 1,134,717
Depreciation and amortization 1,135,528 1,286,521 2,338,682 2,800,066
Rent 7,200,228 4,208,799 13,112,175 7,655,406
--------------------------------------------------------- ----------------
Total operating expenses 48,254,500 33,302,559 91,875,422 65,035,483
--------------------------------------------------------- ----------------
Operating earnings (loss) (2,105,162) 2,462,267 1,280,409 4,895,536
Net interest expense 430,370 237,298 819,245 683,921
--------------------------------------------------------- ----------------
Earnings (loss) before provision for income taxes (2,535,532) 2,224,969 461,164 4,211,615
Provision (benefit) for income taxes (Note 3) (958,431) 841,038 174,320 1,591,990
========================================================= ================
Net earnings (loss) $ (1,577,101) $ 1,383,931 $ 286,844 $ 2,619,625
========================================================= ================
Net earnings (loss) per common share
Basic $ (0.25) $ 0.25 $ 0.05 $ 0.51
========================================================= ================
Diluted $ (0.25) $ 0.25 $ 0.04 $ 0.50
========================================================= ================
Weighted average common shares outstanding
Basic 6,286,202 5,528,261 6,285,301 5,131,394
========================================================= ================
Diluted 6,286,202 5,640,626 6,437,440 5,243,759
========================================================= ================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C>
For the Six Months Ended
---------------------------------------------
March 31, 1998 March 31, 1997
Cash Flows From Operating Activities:
Net earnings $ 286,844 $ 2,619,625
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 2,338,682 2,800,066
Changes in operating assets and liabilities:
Decrease (increase) in receivables, net 1,363,947 (220,905)
Increase in operating supplies (171,204) (354,523)
Increase in prepaid expenses and other (2,069,695) (1,109,585)
(Increase) decrease in other assets (80,320) 193,195
Increase in accounts payable 672,030 585,624
Decrease in accrued liabilities (1,880,215) (600,770)
Increase (decrease) in accrued claims payable 304,657 (80,149)
---------------------------------------------
Net cash provided by operating activities 764,726 3,832,578
---------------------------------------------
Cash Flows From Investing Activities:
Purchase of property and equipment (6,797,880) (12,901,451)
Proceeds from the sale of property and equipment 8,786,800 5,147,150
---------------------------------------------
Net cash provided by (used in) investing activities 1,988,920 (7,754,301)
---------------------------------------------
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 2,900,000 5,757,244
Principal payments on long-term debt (3,483,119) (1,398,301)
Principal payments under capitalized lease obligations (5,303,204) (2,127,529)
Decrease in receivable from sale of equipment 478,500 --
Net proceeds from issuance of Class A common stock 32,220 22,941,531
---------------------------------------------
Net cash (used in) provided by financing activities (5,375,603) 25,172,945
---------------------------------------------
Net (Decrease) Increase In Cash (2,621,957) 21,251,222
Cash at Beginning of Period 12,766,001 5,571,431
---------------------------------------------
Cash at End of Period $ 10,144,044 $ 26,822,653
=============================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 1,006,188 $ 957,861
Cash paid during the period for income taxes 667,137 2,122,344
Supplemental Schedule of Noncash Investing and Financing Activities:
Sale of equipment in exchange for receivable paid after
period end 610,000 227,850
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements include the
accounts of Simon Transportation Services Inc., a Nevada
holding company, and its wholly owned subsidiary, Dick Simon
Trucking, Inc. (together, the "Company"). All significant
intercompany balances and transactions have been eliminated in
consolidation.
The financial statements have been prepared, without audit, in
accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the
accompanying financial statements include all adjustments
which are necessary for a fair presentation of the results for
the interim periods presented, such adjustments being of a
normal recurring nature. Certain information and footnote
disclosures have been condensed or omitted pursuant to such
rules and regulations. The September 30, 1997 condensed
consolidated statement of financial position was derived from
the audited balance sheet of the Company for the year then
ended. It is suggested that these condensed consolidated
financial statements and notes thereto be read in conjunction
with the consolidated financial statements and notes thereto
included in the Annual Report on Form 10-K of Simon
Transportation Services Inc. for the year ended September 30,
1997. Results of operations in interim periods are not
necessarily indicative of results to be expected for a full
year.
Forward-Looking Statements
This quarterly report and statements by the Company in reports to its
stockholders and public filings, as well as oral public statements by Company
representatives may contain certain forward looking information that is subject
to certain risks and uncertainties that could cause actual results to differ
materially from those projected. Without limitation, these risks and
uncertainties include economic recessions or downturns in customers' business
cycles, excessive increases in capacity within the truckload markets, decreased
demand for transportation services offered by the Company, rapid inflation and
fuel price increases, increases in interest rates, and the availability and
compensation of qualified drivers. Readers should review and consider the
various disclosures made by the Company in this quarterly statement and in its
reports to its stockholders and periodic reports on Forms 10-K and 10-Q.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's fiscal year ends on September 30 of each year. Thus, the
fiscal periods discussed in this report represent the Company's second fiscal
quarters and first six months of its 1998 and 1997 fiscal years, respectively.
During the quarter ended March 31, 1998, the Company experienced a net
loss attributable to a revenue shortfall, increased expenses associated with
driver wages, and increased claims expense due to unusually severe accident
experience. Revenue was approximately $6 million below Company expectations
because of fewer tractors than anticipated in the Company's fleet, a significant
increase in the number of tractors without drivers, lower than expected revenue
per mile, and soft freight demand from large customers. The Company implemented
a driver wage increase in January but has not recovered the increase through
increased freight rates. Revenue per mile was lower in March than in January and
February, which is the opposite of most years. Also, the number of unseated
trucks in the Company's fleet increased significantly in March. To assist in
recruiting and retaining drivers, the Company approved an additional driver wage
increase of $.02 per mile effective April 15, 1998. The wage increase will have
a short term, negative impact on earnings until freight rates are raised. The
Company is actively seeking rate increases to cover our increases in operating
costs, including the driver wage increase.
Results of Operations
Three months ended March 31, 1998 and 1997
Operating revenue increased $10.4 million (29.0%) to $46.1 million for
the three months ended March 31, 1998, from $35.8 million for the corresponding
period of 1997. The increase in operating revenue was primarily attributable to
a 36.2% increase in weighted average tractors, to 1,450 in the 1998 period from
1,065 in the corresponding 1997 period. This increase was partially offset by a
decrease in average revenue per tractor per week, to $2,450 in the 1998 period
from $2,614 in the 1997 period.
Salaries, wages, and benefits increased $5.5 million (39.5%) to $19.4
million during the quarter ended March 31, 1998 from $13.9 million in the 1997
period. As a percentage of revenue, salaries, wages, and benefits increased to
41.9% of revenue for the three months ended March 31, 1998, from 38.8% for the
corresponding period of 1997. The change is primarily attributable to a two cent
per mile increase in the driver base pay per mile effective January 1, 1998, an
increase in the number of administrative personnel necessary to staff our new
Atlanta facility, and the cost of employer provided benefits tied to the gross
wages paid to employees. The Company has raised the driver base pay per mile an
additional two cents effective April 15, 1998.
Fuel and fuel taxes increased $1.3 million (18.7%) to $8.3 million
during the quarter ended March 31, 1998 from $7.0 million in the 1997 period. As
a percentage of revenue, fuel and fuel taxes decreased to 17.9% of revenue for
the three months ended March 31, 1998, from 19.5% for the corresponding period
of 1997, principally as a result of lower fuel prices.
Operating supplies and expenses increased $3.3 million (74.0%) to $7.8
million during the quarter ended March 31, 1998 from $4.5 million in the 1997
period. As a percentage of revenue, operating supplies and expenses increased to
16.9% of revenue for the three months ended March 31, 1998, from 12.5% for the
corresponding period of 1997, primarily as a result of increased costs of
repairs not covered under vehicle warranties and the cost of preparing equipment
for trade. The Company accelerated the disposition of its remaining 48 foot
<PAGE>
trailers to take advantage of an opportunity to acquire 53 foot trailers and
standardize its fleet with all 53 foot trailers.
Taxes and licenses increased $494,000 (47.0%) to $1.5 million during
the quarter ended March 31, 1998 from $1.1 million for the corresponding period
of 1997. As a percentage of revenue, taxes and licenses increased to 3.4% of
revenue for the three months ended March 31, 1998 from 2.9% for the
corresponding period of 1997. Since taxes and licenses are a relatively fixed
cost, the increase as a percentage of revenue is consistent with the
corresponding decrease in average revenue per tractor per week for the quarter
ended March 31, 1998 compared with the corresponding period of 1997.
Insurance and claims increased $1.1 million (127.7%) to $1.9 million
during the quarter ended March 31, 1998 from $830,000 for the corresponding
period of 1997. As a percentage of revenue, insurance and claims increased to
4.1% of revenue for the three months ended March 31, 1998, from 2.3% for the
corresponding period of 1997 because of an increase in the number and severity
of accidents experienced by the Company during the quarter.
Communications and utilities increased $455,000 (75.3%) to $1.1 million
during the quarter ended March 31, 1998 from $605,000 for the corresponding
period of 1997. As a percentage of revenue, communications and utilities
increased to 2.3% of revenue for the three months ended March 31, 1998, from
1.7% for the corresponding period of 1997, primarily as a result of an access
fee charged to the Company by the owners of pay telephones based on phone calls
to toll free numbers. In addition, the fixed costs of utilities for the
Company's terminals and costs associated with the usage of the Company's
satellite tracking system did not remain proportionate with the decreased
revenue per tractor.
Depreciation and amortization decreased $151,000 (11.7%) to $1.1
million during the quarter ended March 31, 1998 from $1.3 million for the
corresponding period of 1997. As a percentage of revenue, depreciation and
amortization (adjusted for the net gain on the sale of property and equipment)
decreased to 2.5% of revenue for the three months ended March 31, 1998, from
3.6% for the corresponding period of 1997. The decrease was primarily
attributable to the use of operating leases rather than capital leases to
acquire new equipment during the last year. The Company realized a net gain of
$635,053 on the sale of property and revenue equipment during the 1998 period
compared with a $321,050 net gain during the 1997 period.
Rent increased $3.0 million (71.1%) to $7.2 million during the quarter
ended March 31, 1998 from $4.2 million for the corresponding period of 1997. As
a percentage of revenue, rent increased to 15.6% of revenue for the three months
ended March 31, 1998, from 11.8% for the corresponding period of 1997 as the
Company added new equipment and replaced equipment that had been financed under
capital lease arrangements with equipment financed under operating leases. In
addition, the fixed monthly rental payments were not as efficiently spread over
lower revenue per tractor. The Company has utilized operating leases in the most
recent quarter because of more favorable terms. If the Company continues to use
operating lease financing, its operating ratio may be affected in future periods
because the implied financing costs of such equipment are included as operating
expenses instead of interest expense.
As a result of the foregoing, the Company's operating ratio increased
to 104.6% for the three months ended March 31, 1998, from 93.1% for the
corresponding period of 1997.
Net interest expense increased $193,000 (81.4%) to $430,000 during the
quarter ended March 31, 1998 from $237,000 for the corresponding period of 1997.
As a percentage of revenue, net interest expense increased to 0.9% of revenue
for the three months ended March 31, 1998, from 0.7% for the corresponding
period in 1997 as a result of higher average debt and capitalized lease balances
in the 1998 period compared with the 1997 period.
The Company's effective combined federal and state income tax rate for
the three months ended March 31, 1998 and 1997 was 37.8%.
<PAGE>
As a result of the factors described above, the Company experienced a
net loss of $1,577,101 for the three months ended March 31, 1998, compared with
net earnings of $1,383,931 for the corresponding period of 1997.
Six months ended March 31, 1998 and 1997
Operating revenue increased $23.2 million (33.2%) to $93.2 million for
the six months ended March 31, 1998, from $69.9 million for the corresponding
period of 1997. The increase in operating revenue was primarily attributable to
a 38.7% increase in weighted average tractors, to 1,426 in the 1998 period from
1,028 in the corresponding 1997 period. This increase was partially offset by a
decrease in average revenue per tractor per week, to $2,519 in the 1998 period
from $2,639 in the 1997 period.
Salaries, wages, and benefits increased $10.3 million (38.2%) to $37.4
million during the six months ended March 31, 1998 from $27.0 million in the
1997 period. As a percentage of revenue, salaries, wages, and benefits increased
to 40.1% of revenue for the six months ended March 31, 1998, from 38.7% for the
corresponding period of 1997. The change is primarily attributable to an
increase in the driver base pay per mile effective January 1, 1998, an increase
in the number of administrative personnel necessary to staff our new Atlanta
facility, and the cost of employer provided benefits tied to the gross wages
paid to employees.
Fuel and fuel taxes increased $3.7 million (27.5%) to $17.4 million
during the six months ended March 31, 1998 from $13.6 million in the 1997
period. As a percentage of revenue, fuel and fuel taxes decreased to 18.6% of
revenue for the six months ended March 31, 1998, from 19.5% for the
corresponding period of 1997, principally as a result of lower fuel prices.
Operating supplies and expenses increased $4.7 million (53.7%) to $13.6
million during the six months ended March 31, 1998 from $8.8 million in the 1997
period. As a percentage of revenue, operating supplies and expenses increased to
14.6% of revenue for the six months ended March 31, 1998, from 12.6% for the
corresponding period of 1997, primarily as a result of increased costs of
repairs not covered under vehicle warranties and the cost of preparing equipment
for trade.
Taxes and licenses increased $868,000 (34.9%) to $3.4 million during
the six months ended March 31, 1998 from $2.5 million for the corresponding
period of 1997. As a percentage of revenue, taxes and licenses remained
essentially unchanged at 3.6% of revenue for the six months ended March 31, 1998
and 1997.
Insurance and claims increased $1.5 million (99.9%) to $2.9 million
during the six months ended March 31, 1998 from $1.5 million for the
corresponding period of 1997. As a percentage of revenue, insurance and claims
increased to 3.1% of revenue for the six months ended March 31, 1998, from 2.1%
for the corresponding period of 1997 because of an increase in the number and
severity of accidents experienced by the Company during the period.
Communications and utilities increased $710,000 (62.6%) to $1.8 million
during the six months ended March 31, 1998 from $1.1 million for the
corresponding period of 1997. As a percentage of revenue, communications and
utilities increased to 2.0% of revenue for the six months ended March 31, 1998,
from 1.6% for the corresponding period of 1997, primarily as a result of an
access fee charged to the Company by the owners of pay telephones based on phone
calls to toll free numbers. In addition, the fixed costs of utilities for the
Salt Lake and Atlanta terminals and the cost of usage of the Company's satellite
tracking system did not remain proportionate with the decrease in revenue per
tractor.
Depreciation and amortization decreased $461,000 (16.5%) to $2.3
million during the six months ended March 31, 1998 from $2.8 million for the
corresponding period of 1997. As a percentage of revenue, depreciation and
amortization (adjusted for the net gain on the sale of property and equipment)
<PAGE>
decreased to 2.5% of revenue for the six months ended March 31, 1998, from 4.0%
for the corresponding period of 1997. The decrease was primarily attributable to
the use of operating leases rather than capital leases to acquire new equipment
during the last year. The Company realized a net gain of $1,322,496 on the sale
of property and revenue equipment during the 1998 period compared with a
$635,053 net gain during the 1997 period.
Rent increased $5.5 million (71.3%) to $13.1 million during the six
months ended March 31, 1998 from $7.7 million for the corresponding period of
1997. As a percentage of revenue, rent increased to 14.1% of revenue for the six
months ended March 31, 1998, from 10.9% for the corresponding period of 1997 as
the Company added new equipment and replaced equipment that had been financed
under capital lease arrangements with equipment financed under operating leases.
In addition, the fixed monthly rental payments were not as efficiently spread
over lower revenue per tractor. The Company has utilized operating leases in the
most recent six months because of more favorable terms. If the Company continues
to use operating lease financing, its operating ratio may be affected in future
periods because the implied financing costs of such equipment are included as
operating expenses instead of interest expense.
As a result of the foregoing, the Company's operating ratio increased
to 98.6% for the six months ended March 31, 1998, from 93.0% for the
corresponding period of 1997.
Net interest expense increased $135,000 (19.8%) to $820,000 during the
six months ended March 31, 1998 from $685,000 for the corresponding period of
1997. As a percentage of revenue, net interest expense remained essentially
constant at 0.9% of revenue for the six months ended March 31, 1998, compared
with 1.0% for the corresponding period in 1997.
The Company's effective combined federal and state income tax rate for
the six months ended March 31, 1998 and 1997 was 37.8%.
As a result of the factors described above, net earnings decreased to
$286,844 for the six months ended March 31, 1998, compared with net earnings of
$2,619,625 for the corresponding period of 1997.
Liquidity and Capital Resources
The growth of the Company's business has required significant
investment in new revenue equipment that the Company historically has financed
with borrowings under installment notes payable to commercial lending
institutions and equipment manufacturers, equipment leases from third-party
lessors, borrowings under its line of credit, funds provided by its public
offerings in November 1995 and February 1997, and cash flow from operations. The
Company's primary sources of liquidity currently are cash and cash equivalents,
cash flow from operations, and borrowings and leases with financial institutions
and equipment manufacturers. Management believes the Company's sources of
liquidity are adequate to meet its current and projected needs.(*)
The Company's primary source of cash flow from operations is net
earnings adjusted for depreciation. The Company's principal uses of cash flow
from operations are to service debt or lease payments associated with new
revenue equipment and to internally finance accounts receivable associated with
growth in the business. Net cash provided by operating activities was $765,000
for the six months ended March 31, 1998. The primary sources of funds were net
earnings of $287,000 increased by $2.3 million in depreciation, increases of
$670,000 in accounts payable and $305,000 in claims payable, and a decrease in
accounts receivable $1.4 million. The primary uses of funds were $2.1 million to
prepay licensing on revenue equipment, $1.9 million to reduce accrued
liabilities, and increases in operating supplies and other assets of $170,000
and $80,000, respectively.
- -----------------
(*) May contain "forward-looking" statements.
<PAGE>
Net cash provided by investing activities was $2.0 million for the six
months ended March 31, 1998, as the Company purchased $6.8 million of new
property and revenue equipment and a new facility in Atlanta, Georgia. The
Company sold revenue equipment for $8.8 million. The Company expects capital
expenditures (primarily for revenue equipment, and satellite communications
units), net of revenue equipment sales and trade-ins, to be approximately $91.7
million through fiscal 1999.
Net cash used in financing activities was $5.4 million in the 1998
period, consisting primarily of $2.9 million of new borrowings for the purchase
of the Atlanta facility, a reduction of $479,000 in receivables from the sale of
revenue equipment, and payments of $8.8 million of principal under the Company's
long-term debt and capitalized lease agreements. In addition, the Company
received $32,000 from the exercise of stock options and the issuance of stock to
individuals who participate in the Company's stock option plans.
The Company's borrowings consist of $16.3 million for revenue equipment
debt and capitalized leases, and $10.6 million for the Company's new
headquarters in Salt Lake City and the Atlanta facility. The Company maintains a
$5 million, unsecured line of credit with a financial institution. Borrowings on
the line of credit bear interest at one-half percent (.5%) above the 30-day
London Interbank Offered Rate ("LIBOR") in effect from time to time. The Company
had not drawn against the line of credit at March 31, 1998.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No reportable events or material changes occurred during the
quarter for which this report is filed.
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
Number Description
3.1 * Articles of Incorporation
3.2 * Bylaws
4.1 * Articles of Incorporation
4.2 * Bylaws
10.2 * Outside Director Stock Option Plan.
10.3 * Incentive Stock Plan.
10.4 * 401(k) Plan.
10.11 # Loan Agreement (Line of Credit) dated April 29, 1996 (replaced
loan agreement dated December 1, 1995) between U.S. Bank of
Utah and Simon Transportation Services Inc.
11 Schedule of Computation of Net Income Per Share
27 Financial Data Schedule
* Incorporated by reference from the Company's Registration
Statement on Form S-1, Registration No. 33-96876, effective
November 17, 1995.
# Incorporated by reference from the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996, Commission
File No. 0-27208, dated August 9, 1996.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SIMON TRANSPORTATION SERVICES INC.,
a Nevada corporation
Date: May 5, 1998 By: /s/ Alban B. Lang
------------------------ -----------------
(Signature)
Alban B. Lang
Treasurer and Chief Financial Officer
SIMON TRANSPORTATION SERVICES INC.
SCHEDULE OF COMPUTATION OF NET EARNINGS PER SHARE
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
For the Three Months Ended For the Six Months Ended
------------------------------------------------------------------------
Basic and Diluted: March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
-------------- -------------- -------------- --------------
Common shares outstanding beginning of period: 6,285,784 4,744,918 6,283,674 4,742,668
Common share equivalents:
Employee stock options outstanding
Basic -- -- -- --
Diluted -- 112,365 152,139 112,365
Employee stock options exercised
Basic 418 65 1,627 1,391
Diluted 418 65 1,627 1,391
Shares issued in secondary offering
February 13, 1997
Basic -- 783 278 -- 387,335
Diluted -- 783,278 -- 387,335
--------------------------------------------------------- ----------------
Number of common shares and common
share equivalents outstanding
Basic 6,286,202 5,528,261 6,285,301 5,131,394
=================== ============== =================== ================
Diluted 6,286,202 5,640,626 6,437,440 5,243,759
========================================================= ================
Net earnings (loss) $ (1,577,101) $ 1,383,931 $ 286,844 $ 2,619,625
Net earnings (loss) per common share
and common share equivalent
Basic $ (0.25) $ 0.25 $ 0.05 $ 0.51
========================================================= ================
Diluted $ (0.25) $ 0.25 $ 0.04 $ 0.50
========================================================= ================
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted
from the Company's consolidated financial statements and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 10,144,044
<SECURITIES> 0
<RECEIVABLES> 19,868,899
<ALLOWANCES> (99,000)
<INVENTORY> 529,297
<CURRENT-ASSETS> 34,200,945
<PP&E> 83,329,315
<DEPRECIATION> (16,502,447)
<TOTAL-ASSETS> 101,223,583
<CURRENT-LIABILITIES> 19,247,266
<BONDS> 0
0
0
<COMMON> 62,866
<OTHER-SE> 60,104,858
<TOTAL-LIABILITY-AND-EQUITY> 101,233,583
<SALES> 0
<TOTAL-REVENUES> 93,155,831
<CGS> 0
<TOTAL-COSTS> 91,875,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 819,245
<INCOME-PRETAX> 461,164
<INCOME-TAX> 174,320
<INCOME-CONTINUING> 286,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 286,844
<EPS-PRIMARY> .05
<EPS-DILUTED> .04
</TABLE>
