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 June 30, 2000
( ) 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 (July 31, 2000).
Class A Common Stock, $.01 par value: 5,372,958 shares
Class B Common Stock, $.01 par value: 913,751 shares
Exhibit Index is on Page 13
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C> <C>
Item 1. Financial Statements:
Condensed consolidated statements of financial position as of
June 30, 2000 and September 30, 1999 3
Condensed consolidated statements of earnings for the three months and nine
months ended June 30, 2000 and 1999 4
Condensed consolidated statements of cash flows for the nine months ended June
30, 2000 and 1999 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 13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
<S> <C> <C>
June 30, 2000 September 30, 1999
------------- ------------------
(Unaudited)
Current Assets:
Cash $ 6,158,612 $ 8,658,268
Receivables, net of allowance for doubtful accounts of
$260,000 and $285,000, respectively 26,635,241 22,862,685
Operating supplies 1,667,520 1,468,216
Prepaid expenses and other 5,148,881 5,367,117
----------------------- ------------------------
Total current assets 39,610,254 38,356,286
----------------------- ------------------------
Property and Equipment, at cost:
Land 8,387,972 8,387,972
Revenue equipment 42,089,929 45,089,385
Buildings and improvements 18,572,335 18,484,326
Office furniture and equipment 9,119,369 8,889,433
----------------------- ------------------------
78,169,605 80,851,116
Less accumulated depreciation and amortization (26,070,812) (23,203,536)
----------------------- ------------------------
52,098,793 57,647,580
----------------------- ------------------------
Other Assets 746,042 726,140
----------------------- ------------------------
$ 92,455,089 $ 96,730,006
======================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 3,491,688 $ 7,459,577
Current portion of capitalized lease obligations 2,020,299 1,855,675
Accounts payable 5,304,928 6,108,118
Accrued liabilities 3,353,364 3,419,629
Accrued claims payable 2,004,171 1,970,336
----------------------- ------------------------
Total current liabilities 16,174,450 20,813,335
----------------------- ------------------------
Long-Term Debt, net of current portion 13,000,000 11,718,580
----------------------- ------------------------
Capitalized Lease Obligations, net of current portion -- 589,181
----------------------- ------------------------
Deferred Income Taxes 7,665,063 7,665,063
----------------------- ------------------------
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, 5,372,958 and 5,372,683
shares issued, respectively 53,730 53,727
Class B common stock, $.01 par value, 5,000,000
shares authorized, 913,751 shares issued 9,138 9,138
Treasury stock, 176,600 shares held at cost (1,053,147) (1,053,147)
Additional paid-in capital 48,279,728 48,277,256
Retained earnings 8,326,127 8,656,873
----------------------- ------------------------
Total stockholders' equity 55,615,576 55,943,847
----------------------- ------------------------
$ 92,455,089 $ 96,730,006
======================= ========================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of
these condensed consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
Operating Revenue $ 60,947,670 $ 53,599,181 $169,966,928 $155,862,817
--------------------------------------------------------- ----------------
Operating Expenses:
Salaries, wages, and benefits 24,720,374 23,197,573 69,483,898 67,933,038
Fuel & fuel taxes 13,824,960 9,614,285 36,394,774 26,916,966
Operating supplies and expenses 7,221,985 7,446,816 20,466,909 21,634,545
Taxes and licenses 1,682,139 1,629,903 5,072,350 5,545,865
Insurance and claims 1,925,803 1,849,620 4,937,940 4,966,929
Communications and utilities 1,003,943 1,121,009 2,811,961 3,271,198
Depreciation and amortization 1,060,415 1,110,584 3,245,230 3,189,634
Rent 9,590,497 8,687,677 26,993,666 25,809,447
--------------------------------------------------------- ----------------
Total operating expenses 61,030,116 54,657,467 169,406,728 159,267,622
--------------------------------------------------------- ----------------
Operating earnings (loss) (82,446) (1,058,286) 560,200 (3,404,805)
Net interest expense (335,444) (334,745) (1,076,992) (1,012,779)
--------------------------------------------------------- ----------------
Loss before income taxes (417,890) (1,393,031) (516,792) (4,417,584)
Benefit for income taxes (150,440) (526,566) (186,045) (1,669,847)
--------------------------------------------------------- ----------------
Net loss $ (267,450) $ (866,465) $ (330,747) $ (2,747,737)
========================================================= ================
Net loss per common share
Basic $ ( 0.04) $ ( 0.14) $ (0.05) $ (0.45)
========================================================= ================
Diluted $ ( 0.04) $ ( 0.14) $ (0.05) $ (0.45)
========================================================= ================
Weighted average common shares outstanding
Basic 6,110,109 6,109,834 6,110,109 6,119,167
========================================================= ================
Diluted 6,110,109 6,109,834 6,110,109 6,119,167
========================================================= ================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of
these condensed consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
---------------------------------------------
<S> <C> <C>
June 30, 2000 June 30, 1999
------------- -------------
Cash Flows From Operating Activities:
Net loss $ (330,747) $ (2,747,737)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,245,230 3,189,634
Changes in operating assets and liabilities:
Receivables, net (3,772,556) (3,283,805)
Operating supplies (199,304) 24,335
Prepaid expenses and other (1,423,122) (1,724,438)
Deferred tax asset (14,980) --
Other assets (19,902) (105,574)
Accounts payable (803,190) 1,123,941
Income taxes receivable 1,656,338 --
Accrued liabilities (66,264) 319,282
Accrued claims payable 33,835 337,596
---------------------------------------------
Net cash used in operating activities (1,694,662) (2,866,766)
---------------------------------------------
Cash Flows From Investing Activities:
Purchase of property and equipment (14,037,104) (3,921,776)
Proceeds from the sale of property and equipment 16,340,661 6,395,000
---------------------------------------------
Net cash provided by investing activities 2,303,557 2,473,224
---------------------------------------------
Cash Flows From Financing Activities:
Principal payments on long-term debt (5,686,469) (5,646,096)
Borrowings under line-of-credit agreement 3,000,000 6,700,000
Principal payments under capitalized lease obligations (424,557) (1,923,196)
Increase in receivable from sale of equipment -- (531,255)
Purchase of treasury stock -- (521,600)
Net proceeds from issuance of Class A common stock 2,475 1
---------------------------------------------
Net cash used in financing activities (3,108,551) (1,922,146)
---------------------------------------------
Net Decrease In Cash (2,499,656) (2,315,688)
Cash at Beginning of Period 8,658,268 7,826,365
---------------------------------------------
Cash at End of Period $ 6,158,612 $ 5,510,677
=============================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 1,076,992 $ 1,103,149
Cash paid during the period for income taxes 54,175 32,486
Supplemental Schedule of Noncash Investing and Financing Activities:
Sale of equipment in exchange for receivable paid after
period end -- 531,255
<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, 1999 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 Form 10-K of Simon Transportation Services
Inc. for the year ended September 30, 1999. 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 report 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 third fiscal
quarters and nine months of its 2000 and 1999 fiscal years, respectively.
Results of Operations
Three months ended June 30, 2000 and 1999
Operating revenue increased $7.3 million (13.7%) to $60.9 million for
the three months ended June 30, 2000, from $53.6 million for the corresponding
period of 1999. The increase in operating revenue was primarily attributable to
an 11.8% increase in weighted average tractors, to 1,854 in the 2000 period from
1,658 in the corresponding 1999 period, and an increase in average revenue per
tractor per week, including an increase in fuel surcharge, to $2,529 in the 2000
period from $2,512 in the 1999 period.
Salaries, wages, and benefits increased $1.5 million (6.6%) to $24.7
million during the quarter ended June 30, 2000 from $23.2 million in the 1999
period. As a percentage of revenue, salaries, wages, and benefits decreased to
40.6% of revenue for the three months ended June 30, 2000, from 43.3% for the
corresponding period of 1999. The decrease was primarily attributable to a
reduction of the Company's shop and administrative personnel. In July 1999, the
Company eliminated the positions of approximately 25% of its non-driver
personnel, mostly from the shop area. In addition, the fixed costs of shop and
administrative personnel were offset by a higher per mile rate in the 2000
period.
Fuel and fuel taxes increased $4.2 million (43.8%) to $13.8 million
during the quarter ended June 30, 2000 from $9.6 million in the 1999 period. As
a percentage of revenue, fuel and fuel taxes increased to 22.7% of revenue for
the three months ended June 30, 2000, from 17.9% for the corresponding period of
1999, principally as a result of higher fuel prices in the 2000 period as
compared with the 1999 period. The Company has agreements in place with a
substantial number of customers who have agreed to pay fuel surcharges to help
offset the escalation in fuel prices.(*)
Operating supplies and expenses decreased $0.2 million (3.0%) to $7.2
million during the quarter ended June 30, 2000 from $7.4 million in the 1999
period. As a percentage of revenue, operating supplies and expenses decreased to
11.8% of revenue for the three months ended June 30, 2000, from 13.9% for the
corresponding period of 1999, primarily as a result of decreased costs of
repairs not covered under vehicle warranties and the Company's efforts to reduce
the amount spent on operating supplies and expenses. In addition, improved
revenue per mile in the 2000 period reduced operating supplies and expenses
stated as a percentage of revenue.(*)
Taxes and licenses increased $0.1 million (3.2%) to $1.7 million during
the quarter ended June 30, 2000 from $1.6 million for the corresponding period
of 1999. As a percentage of revenue, taxes and licenses decreased to 2.8% of
revenue for the three months ended June 30, 2000, from 3.0% for the
(*) May contain forward-looking statements.
<PAGE>
corresponding period of 1999. The decrease was primarily attributable to more
efficient licensing of the Company's fleet coupled with improved revenue per
mile in the 2000 period. The fixed licensing costs were partially offset by a
higher per mile rate during the 2000 period.
Insurance and claims increased $0.1 million (4.1%) to $1.9 million
during the quarter ended June 30, 2000 from $1.8 million for the corresponding
period of 1999. As a percentage of revenue, insurance and claims decreased to
3.2% of revenue for the three months ended June 30, 2000, from 3.5% for the
corresponding period of 1999. The Company received an extension of the highest
DOT safety and fitness rating of "satisfactory" on July 6, 2000.
Communications and utilities decreased $0.1 million (10.4%) to $1.0
million during the quarter ended June 30, 2000, from $1.1 million for the
corresponding period of 1999. As a percentage of revenue, communications and
utilities decreased to 1.6% of revenue for the three months ended June 30, 2000,
compared with 2.1% for the corresponding period of 1999. The decrease as a
percentage of revenue was primarily attributable to improved revenue per mile in
the 2000 period and more efficient use of the Company's satellite communication
and long distance services. The Company has reduced its long distance phone
rates by over 40%.(*)
Depreciation and amortization remained constant at $1.1 million during
each of the quarters ended June 30, 2000 and 1999. As a percentage of revenue,
depreciation and amortization (adjusted for the net gain on the sale of property
and equipment) decreased to 1.7% of revenue for the three months ended June 30,
2000, from 2.1% for the corresponding period of 1999. The decrease as a
percentage of revenue was primarily attributable to improved revenue per mile in
the 2000 period and the fact that the Company has financed new equipment under
operating lease agreements. The Company realized a net gain of $378,363 on the
sale of property and revenue equipment during the 2000 period compared with a
$527,387 net gain during the 1999 period.
Rent increased $0.9 million (10.4%) to $9.6 million during the quarter
ended June 30, 2000 from $8.7 million for the corresponding period of 1999. As a
percentage of revenue, rent decreased to 15.7% of revenue for the three months
ended June 30, 2000, from 16.2% for the corresponding period of 1999 as the
Company reduced its tractor to trailer ratio from the 1999 period. The Company
continued to utilize operating leases to finance new equipment in the quarter
ended June 30, 2000. If the Company continues to use operating lease financing,
its operating ratio will continue to 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 decreased
to 100.1% for the three months ended June 30, 2000, from 102.0% for the
corresponding period of 1999.
Net interest expense remained constant at $335,000 during the each of
the quarters ended June 30, 2000 and 1999. As a percentage of revenue, net
interest expense remained constant at 0.6% of revenue for the three months ended
June 30, 2000 and the corresponding period of 1999.
The Company's effective combined federal and state income tax rates for
the three months ended June 30, 2000 and 1999 were 36.0% and 37.8%,
respectively.
As a result of the factors described above, the Company experienced a
net loss of $267,450 for the three months ended June 30, 2000, compared with a
net loss of $866,465 for the corresponding period of 1999.
Nine months ended June 30, 2000 and 1999
Operating revenue increased $14.1 million (9.0%) to $170.0 million for
the nine months ended June 30, 2000, from $155.9 million for the corresponding
period of 1999. The increase in operating revenue was primarily attributable to
an 8.2% increase in weighted average tractors, to 1,749 in the 2000 period from
1,617 in the 1999 period. This increase was partially offset by a decrease in
average revenue per tractor per week, including fuel surcharge, to $2,489 in the
2000 period from $2,492 in the 1999 period.
Salaries, wages, and benefits increased $1.6 million (2.3%) to $69.5
million during the nine months ended June 30, 2000 from $67.9 million in the
1999 period. As a percentage of revenue, salaries, wages, and benefits decreased
to 40.9% of revenue for the nine months ended June 30, 2000, from 43.6% for the
corresponding period of 1999. The decrease was primarily attributable to a
(*) May contain forward-looking statements.
<PAGE>
reduction of the Company's shop and administrative personnel. In July 1999, the
Company eliminated the positions of approximately 25% of its non-driver
personnel, mostly from the shop area. In addition, the fixed costs of shop and
administrative personnel were offset by a higher per mile rate in the 2000
period.
Fuel and fuel taxes increased $9.5 million (35.2%) to $36.4 million
during the nine months ended June 30, 2000 from $26.9 million in the 1999
period. As a percentage of revenue, fuel and fuel taxes increased to 21.4% of
revenue for the nine months ended June 30, 2000, from 17.3% for the
corresponding period of 1999, principally as a result of higher fuel prices. The
Company has agreements with a substantial number of customers who have agreed to
pay fuel surcharges to help offset the escalation in fuel surcharges.(*)
Operating supplies and expenses decreased $1.1 million (5.4%) to $20.5
million during the nine months ended June 30, 2000 from $21.6 million in the
1999 period. As a percentage of revenue, operating supplies and expenses
decreased to 12.0% of revenue for the nine months ended June 30, 2000, from
13.9% for the corresponding period of 1999. The decrease was primarily a result
of decreased costs of repairs not covered under vehicle warranties and the
Company's efforts to reduce the amount spent on operating supplies and expenses.
In addition, improved revenue per mile in the 2000 period reduced operating
supplies and expenses stated as a percentage of revenue.(*)
Taxes and licenses decreased $0.4 million (8.5%) to $5.1 million during
the nine months ended June 30, 2000 from $5.5 million for the corresponding
period of 1999. As a percentage of revenue, taxes and licenses decreased to 3.0%
of revenue for the nine months ended June 30, 2000, from 3.6% of revenue for the
corresponding period of 1999. The decrease was primarily attributable to more
efficient licensing of the Company's fleet coupled with improved revenue per
mile in the 2000 period. The fixed licensing costs were partially offset by a
higher per mile rate during the 2000 period.
Insurance and claims decreased $0.1 million (0.6%) to $4.9 million
during the nine months ended June 30, 2000 from $5.0 million for the
corresponding period of 1999. As a percentage of revenue, insurance and claims
decreased to 2.9% of revenue for the nine months ended June 30, 2000, from 3.2%
for the corresponding period of 1999. Improved revenue per mile in the 2000
period reduced insurance and claims stated as a percentage of revenue. In
addition, the Company received an extension of the highest DOT safety and
fitness rating of "satisfactory" on July 6, 2000.
Communications and utilities decreased $0.5 million (14.0%) to $2.8
million during the nine months ended June 30, 2000 from $3.3 million for the
corresponding period of 1999. As a percentage of revenue, communications and
utilities decreased to 1.7% of revenue for the nine months ended June 30, 2000,
compared with 2.1% for the corresponding period of 1999. The decrease as a
percentage of revenue was principally attributable to improved revenue per mile
in the 2000 period and more efficient use of the Company's satellite
communication and long distance services. The Company has reduced its long
distance phone rates by over 40%.(*)
Depreciation and amortization remained constant at $3.2 million during
each of the nine month periods ended June 30, 2000 and 1999. As a percentage of
revenue, depreciation and amortization (adjusted for the net gain on the sale of
property and equipment) remained essentially constant at 1.9% of revenue for the
nine months ended June 30, 2000, compared with 2.0% for the corresponding period
of 1999. The Company realized a net gain of $1,456,663 on the sale of property
and revenue equipment during the 2000 period compared with a $1,775,036 net gain
during the 1999 period.
Rent increased $1.2 million (4.6%) to $27.0 million during the nine
months ended June 30, 2000 from $25.8 million for the corresponding period of
1999. As a percentage of revenue, rent decreased to 15.9% of revenue for the
nine months ended June 30, 2000, from 16.6% for the corresponding period of 1999
as the Company reduced its tractor to trailer ratio from the 1999 period. The
decrease is also attributable to improved revenue per mile in the 2000 period.
The Company added new equipment and replaced equipment that had been financed
under capital lease arrangements with equipment financed under operating leases.
The Company has utilized operating leases in the most recent nine months. If the
Company continues to use operating lease financing, its operating ratio will
(*) May contain forward-looking statements.
<PAGE>
continue to 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 decreased
to 99.7% for the nine months ended June 30, 2000, from 102.2% for the
corresponding period of 1999.
Net interest expense increased $0.1 million (6.3%) to $1.1 million
during the nine months ended June 30, 2000 from $1.0 million for the
corresponding period of 1999. As a percentage of revenue, net interest expense
remained constant at 0.6% of revenue for the nine months ended June 30, 2000,
and the corresponding period of 1999.
The Company's effective combined federal and state income tax rates for
the nine months ended June 30, 2000 and 1999 were 36.0% and 37.8%, respectively.
As a result of the factors described above, the Company experienced a
net loss of $330,747 for the nine months ended June 30, 2000, compared to a net
loss of $2,747,737 for the corresponding period of 1999.
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, and cash flow from operations. The
Company's primary sources of liquidity currently are cash and cash equivalents,
and borrowings and leases with financial institutions and equipment
manufacturers. During the nine-month periods ended June 30, 2000 and 1999, the
Company continued to finance its tractors with operating leases.
Net cash used in operating activities was $1.7 million for the nine
months ended June 30, 2000. Accounts receivable increased $3.8 million, prepaid
licensing on revenue equipment increased $1.4 million, and accrued payables and
other liabilities decreased $0.9 million during the period. These uses of cash
were substantially offset by Federal and state income tax refunds of $1.6
million received during the period and a non-cash charge of $3.2 million in
depreciation.
Net cash provided by investing activities was $2.3 million for the nine
months ended June 30, 2000, as the Company purchased $14.0 million of new
revenue equipment and furniture and fixtures. The Company sold property and
equipment for $16.3 million. The Company expects capital expenditures for
purchased or leased equipment (primarily for revenue equipment and satellite
communications units), net of revenue equipment sales and trade-ins, to be
approximately $23.0 million through calendar 2000. The Company expects projected
capital expenditures to be funded mostly with operating leases, borrowings and
cash flows from operations.(*)
Net cash used in financing activities was $3.1 million in the 2000
period, consisting primarily of a $3.0 million borrowing on the Company's line
of credit offset by payments of $6.1 million of principal under the Company's
long-term debt and capitalized lease agreements.
The maximum amount committed under the Company's line of credit at June
30, 2000 was $20 million. As of June 30, 2000, the Company had drawn $13 million
against the line. The interest rate on the line of credit is 1.75 percent above
the 30-day London Interbank Offered Rate ("LIBOR") in effect from time to time.
At June 30, 2000, the Company had other outstanding long-term debt and
capitalized lease obligations (including current portions) of approximately $5.5
million, most of which comprised obligations for the purchase of revenue
equipment.
The Company's working capital at June 30, 2000 was $23.4 million.
Management believes that available borrowings under the line of credit, and
future borrowings under installment notes payable or lease arrangements for
revenue equipment will allow the Company to continue to meet its working capital
(*) May contain forward-looking statements.
<PAGE>
requirements, anticipated capital expenditures, and obligations under debt and
capitalized and operating leases at least through calendar year 2000.(*)
Quantitative and Qualitative Disclosures About Market Risk
The principal market risks (i.e., the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed are
fluctuation in fuel prices and interest rates on our debt financing.
We are not engaged in any fuel hedging transactions. Thus, we are
exposed to fluctuations in fuel prices but are not exposed to any market risk
involving hedging costs.
We also are exposed to interest rate risks on our debt financing. Our
variable rate debt consists of a revolving line of credit, an unsecured term
loan and an equipment finance term loan carrying interest rates tied to LIBOR or
the Eurodollar rate. These variable interest rates expose us to the risk that
interest rates may rise. At June 30, 2000, assuming borrowing equal to the $13.0
million drawn on the line of credit and $1.1 million on other outstanding
variable rate loans, a one percentage point increase in the LIBOR and Eurodollar
rate would increase our annual interest expense by approximately $141,000. The
balance of our equipment financing carries fixed interest rates and includes
term notes payable and capitalized leases totaling approximately $4.4 million.
These fixed interest rates expose us to the risk that interest rates may fall. A
one percentage point decline in interest rates would have the effect of
increasing the premium we pay over market interest rates by one percentage point
or approximately $44,000 annually.
(*) May contain forward-looking statements.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company and certain of its officers and directors have
been named as defendants in a securities class action filed in the
United States District Court for the District of Utah, Caprin v. Simon
Transportation Services, Inc., et al., No. 2:98CV 863K (filed December
3, 1998). Plaintiffs in this action allege that defendants made
material misrepresentations and omissions during the period February
13, 1997 through April 2, 1998 in violation of Sections 11, 12(2) and
15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Company intends to vigorously defend this action.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 23, 2000, Jerry Moyes, a shareholder of the Company,
announced his intention to solicit written consents from the Company's
shareholders for the purpose of amending the Company's bylaws and
electing Mr. Moyes and his designees as a majority of the Company's
Board of Directors. On June 13, 2000, the Company announced its
opposition to Mr. Moyes' consent solicitation. On June 30, 2000, Mr.
Moyes announced that he had withdrawn his solicitation. No meeting of
the Company's shareholders was held with respect to Mr. Moyes
solicitation effort and no tendered consents were delivered to the
Company for tabulation.
Item 5. Other Information.
None.
<PAGE>
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
10.1 * Outside Director Stock Option Plan.
10.2 * Incentive Stock Plan.
10.3 * ss.401(k) Plan.
10.4 # Loan Agreement (Line of Credit) dated September 29, 1999 (replaced
loan agreement dated April 29, 1996) 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 Annual Report on
Form 10-K for the period ended September 30, 1999, Commission
File No. 0-27208, dated December 11, 1999, and incorporated
herein by reference.
(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: August 14, 2000 By: /s/ Alban B. Lang
---------------- -----------------
(Signature)
Alban B. Lang
Treasurer and Chief Financial Officer
