<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1996
or
[_] 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 33-99716
AMERITRUCK DISTRIBUTION CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2619368
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
City Center Tower II, Suite 1101, 301 Commerce Street,
Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
(817) 332-6020
(Registrant's telephone number, including area code)
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. [X] Yes [_] No
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION Page
----
Item 1. Financial Statements 1
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 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996* 1995*
--------- ---------
<S> <C> <C>
Operating revenue $44,784 $20,203
------- -------
Operating expenses:
Salaries, wages and fringe benefits 14,094 6,160
Purchased transportation 10,776 5,642
Operating supplies and expenses 8,062 2,623
Depreciation and amortization of
capital leases 2,985 1,453
Claims and insurance 1,681 879
Operating taxes and licenses 1,449 592
General supplies and expenses 1,815 624
Amortization of intangibles 235 122
Gain on disposal of property and
equipment (187) (25)
------- -------
Total operating expenses 40,910 18,070
------- -------
Operating income 3,874 2,133
Interest expense 3,699 675
Other income, net 37 41
------- -------
Income before income taxes and
extraordinary item 212 1,499
Income taxes 93 617
------- -------
Income before extraordinary item 119 882
Extraordinary item, loss on early
retirement of debt, net of taxes of $154 (230) -
------- -------
Net income (loss) $ (111) $ 882
======= =======
</TABLE>
* Comparisons between periods are affected by acquisitions--see Note 2.
See accompanying notes to consolidated financial statements.
1
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,886 $ 15,286
Accounts and notes receivable,
net 19,538 12,269
Prepaid expenses 6,561 4,057
Repair parts and supplies 1,071 844
Deferred income taxes 1,046 960
Other current assets 894 941
-------- --------
Total current assets 30,996 34,357
Property and equipment, net 88,761 67,191
Goodwill, net 32,482 32,705
Notes receivable 1,367 -
Other assets 7,595 6,282
-------- --------
Total assets $161,201 $140,535
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities:
Current portion of long-term debt $ 5,509 $ 10,566
Accounts payable and accrued
expenses 13,991 12,071
Claims and insurance accruals 2,313 1,852
Other current liabilities 569 499
-------- --------
Total current liabilities 22,382 24,988
Long-term debt 131,047 107,769
Deferred income taxes 7,854 7,773
Other liabilities 1,846 1,822
-------- --------
Total liabilities 163,129 142,352
-------- --------
Stockholders' equity (deficiency):
Common stock; $.01 par value;
3,278 shares issued and
outstanding 33 33
Loans to stockholders (1,435) (1,435)
Accumulated deficit (526) (415)
-------- --------
Total stockholders' equity
(deficiency) (1,928) (1,817)
-------- --------
Total liabilities and
stockholders' equity
(deficiency) $161,201 $140,535
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996* 1995*
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (111) $ 882
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of capital leases 2,985 1,453
Amortization of intangibles 235 122
Gain on disposal of property and equipment (187) (25)
Provision for deferred income taxes (61) 50
Other, net (280) 361
Changes in current assets and liabilities:
Accounts and notes receivable, net (5,914) 2,053
Prepaid expenses (1,637) (373)
Repair parts and supplies 12 (39)
Other current assets 58 (11)
Accounts payable and accrued expenses 1,762 1
Claims and insurance accruals 461 (19)
Other current liabilities 70 (367)
-------- -------
Net cash provided by (used in) operating activities (2,607) 4,088
-------- -------
INVESTING ACTIVITIES:
Purchase of Freymiller assets, net of liabilities assumed (18,128) -
Purchase of property and equipment (9,587) (1,590)
Proceeds from sale of property and equipment 1,200 162
Other, net (261) -
-------- -------
Net cash used in investing activities (26,776) (1,428)
-------- -------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 29,448 1,521
Repayment of long-term debt (13,465) (3,423)
-------- -------
Net cash provided by (used in) financing activities 15,983 (1,902)
-------- -------
Net increase (decrease) in cash and cash equivalents (13,400) 758
Cash and cash equivalents, beginning of period 15,286 1,617
-------- -------
Cash and cash equivalents, end of period $ 1,886 $ 2,375
======== =======
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 1,015 $ 644
Income taxes 96 653
Property and equipment financed through capital lease
obligations and other debt 110 915
</TABLE>
* Comparisons between periods are affected by acquisitions--see Note 2.
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ACCOUNTING POLICIES AND INTERIM RESULTS
The 1995 Annual Report on Form 10-K for AmeriTruck Distribution Corp.
("AmeriTruck" or the "Company") and its wholly-owned subsidiaries includes
a summary of significant accounting policies and should be read in
conjunction with this Form 10-Q. The statements for the periods presented
are condensed and do not contain all information required by generally
accepted accounting principles to be included in a full set of financial
statements. In the opinion of management, all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the
financial position as of March 31, 1996 and December 31, 1995 and the
results of operations and cash flows for the three-month periods ended
March 31, 1996 and 1995 have been included. The results of operations for
any interim period are not necessarily indicative of the results of
operations to be expected for the entire year. Certain prior year data has
been reclassified to conform to current year presentation.
Separate financial statements of the Company's subsidiaries are not
included because (a) all of the Company's direct and indirect subsidiaries
have guaranteed the Company's obligations under the Indenture, dated as of
November 15, 1995 (the "Indenture"), among the Company, such subsidiaries
(in such capacity, the "Guarantors"), and The Bank of New York, as Trustee,
(b) the Guarantors have fully and unconditionally guaranteed the 12 1/4%
Senior Subordinated Notes due 2005 ("Subordinated Notes") issued under the
Indenture on a joint and several basis, (c) the Company is a holding
company with no independent assets or operations other than its investments
in the Guarantors and (d) the separate financial statements and other
disclosures concerning the Guarantors are not presented because management
has determined that they would not be material.
2. ACQUISITIONS
AmeriTruck was formed in August 1995 to effect the combination of six
regional trucking lines in November 1995 (the "Acquisitions"): W&L Services
Corp. ("W&L"), Thompson Bros., Inc. ("TBI"), J.C. Bangerter & Sons, Inc.,
("Bangerter"), CMS Transportation Services, Inc. and certain related
companies ("CMS"), Scales Transport Corporation and a certain related
company ("Scales") and C.B.S. Express, Inc. ("CBS" and, collectively the
"Operating Companies"). Prior to the Acquisitions, W&L and TBI had certain
common stockholders who controlled approximately 87 percent of the common
equity of W&L and TBI on a combined basis. In addition, these stockholders
control approximately 67 percent of the outstanding common stock of
AmeriTruck after the consummation of the Acquisitions. Therefore, these
common stockholders of W&L and TBI have been treated as the acquirer for
purposes of accounting for the Acquisitions. The accompanying AmeriTruck
consolidated statements of operations and cash flows reflect only W&L and
TBI combined results and cash flows for the three months ended March 31,
1995.
In February 1996, the Company, through CMS, purchased (the "Purchase")
certain assets of Freymiller Trucking Inc. ("Freymiller"). Freymiller had
been the subject of a Chapter 11 bankruptcy proceeding in Oklahoma.
Pursuant to the Purchase, CMS purchased certain specific automobiles,
computer hardware and software, furniture and fixtures, rights to the trade
name "Freymiller", existing spare parts, tires and fuel, rights under
certain leases, certain leasehold improvements and shop equipment and
installment sales contracts relating to tractors and trailers sold by
Freymiller out of the ordinary course of business (with all of the
foregoing referred to as the "Assets"). The Company also negotiated with
Freymiller's lenders and lessors to purchase approximately 185 tractors and
309 trailers, previously operated by Freymiller, for approximately $14
million. An additional 80 trailers were leased for a seven year period. In
exchange for the Assets, the Company paid approximately $2.7 million in
cash at closing and assumed approximately $2 million in existing equipment
financing. In addition, the Company assumed a lease for Freymiller's
maintenance facility in Oklahoma City and certain routine executory
business contracts. Except as provided above, the Company did not assume
any obligations or liabilities of Freymiller.
4
<PAGE>
In connection with these transactions, the Company purchased real property
in Oklahoma City, Oklahoma from Freymiller's Chairman of the Board,
President and Chief Executive Officer for approximately $1.5 million in
cash. The Assets and this real estate will supplement the Company's
existing temperature-controlled operations.
3. LONG-TERM DEBT
NationsBank Credit Facility
In February 1996, the Company and the Operating Companies entered into a
Loan Agreement and related documents (collectively, the "NationsBank Credit
Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to
which NationsBank has committed, subject to the terms and conditions of the
NationsBank Credit Facility, to provide a $30 million credit facility to
the Company. Borrowings under the NationsBank Credit Facility can be used
for acquisitions, operating capital, capital expenditures, letters of
credit and general corporate purposes. Pursuant to the NationsBank Credit
Facility, NationsBank has agreed to provide a $30 million revolving credit
facility, with a $7 million sublimit for letters of credit, maturing on
February 1, 1998, at which time the revolving credit facility will convert
into a term loan maturing on February 1, 2003. Borrowings under the
NationsBank Credit Facility bear interest at a per annum rate equal to
either NationsBank's base rate or the rate of interest offered by
NationsBank in the interbank eurodollar market plus an additional margin
ranging from 1.5 percent to 1.75 percent based on the Senior Funded Debt
Ratio of the Company. The Company also pays a letter of credit issuance fee
and a quarterly unused facility fee. Borrowings under the NationsBank
Credit Facility were $25.4 million at March 31, 1996.
The Company's obligations under the NationsBank Credit Facility are
collateralized by substantially all assets of the Company and its
subsidiaries and are guaranteed in full by each of the Operating Companies.
For purposes of the Indenture, such borrowings under the NationsBank Credit
Facility constitute Senior Indebtedness of the Company and Guarantor Senior
Indebtedness of the Operating Companies.
The NationsBank Credit Facility contains customary representations and
warranties and events of default and requires compliance with a number of
affirmative and negative covenants, including a limitation on the
incurrence of indebtedness and a requirement that the Company maintain a
specified Senior Funded Debt Ratio and Fixed Charge Coverage Ratio.
Volvo Credit Facilities
In February 1996, the Company and the Operating Companies entered into a
Loan and Security Agreement, a Financing Integration Agreement and related
documents (collectively, the "Volvo Credit Facilities") with Volvo Truck
Finance North America, Inc. ("Volvo") pursuant to which Volvo has
committed, subject to the terms and conditions of the Volvo Credit
Facilities, to provide (i) a $10 million line of credit facility (the
"Volvo Line of Credit") to the Company and the Operating Companies, and
(ii) up to $28 million in purchase money or lease financing (the "Equipment
Financing Facility") in connection with the Operating Companies'
acquisition of new tractors and trailers manufactured by Volvo GM Heavy
Truck Corporation. Borrowings under the Volvo Line of Credit are secured by
certain specified tractors and trailers of the Company and the Operating
Companies (which must have a value equal to at least 1.75 times the
outstanding amount of borrowings under the Volvo Line of Credit) and are
guaranteed in full by each of the Operating Companies. Borrowings under the
Volvo Line of Credit bear interest at the prime rate. The Volvo Line of
Credit contains customary representations and warranties and events of
default and requires compliance with a number of affirmative and negative
covenants, including a profitability requirement and a coverage ratio.
The Equipment Financing Facility is being provided by Volvo in connection
with the Operating Companies' agreement to purchase 400 new trucks
manufactured by Volvo GM Heavy Truck Corporation between March 1, 1996 and
June 30, 1997. The Operating Companies have agreed to utilize such facility
for at least the first 200 of the new trucks. The borrowings under the
Equipment Financing Facility are collateralized by the specific trucks
being financed and are guaranteed in full by each of the Operating
Companies. Borrowings under this facility bear interest at the prime rate.
There were no borrowings under the Volvo Credit Facilities at March 31,
1996.
5
<PAGE>
The Equipment Financing Facility contains customary representations and
warranties, covenants and events of default. For purposes of the Indenture,
the borrowings under the Volvo Credit Facilities constitute Senior
Indebtedness of the Company and Guarantor Senior Indebtedness of the
Operating Companies.
4. CONTINGENCIES
Bangerter has been named as a defendant in a lawsuit entitled The Ekotek
----------
Site PRP Committee v. Steven M. Self et al., Civil No. 2:94CV277K (U.S.
------------------------------------------
District Court Utah, Central Division), alleging that Bangerter is a
potentially responsible party with respect to the removal and remediation
cost of The Ekotek Site, located in North Salt Lake City, Utah. The suit
alleges that hazardous waste generated by Bangerter, together with
substantial volumes of additional hazardous waste generated by numerous
other businesses, were taken to the site by a waste disposal firm engaged
by Bangerter. It is the opinion of management and counsel that the probable
exposure to Bangerter is approximately $40,000. It is reasonably possible
that Bangerter could be required to pay up to $85,000. The Company cannot
predict with any certainty that it will not in the future incur liability
with respect to environmental compliance or liability associated with the
contamination of additional sites owned or operated by the Company and the
Operating Companies, sites formerly owned or operated by the Company and
the Operating Companies (including contamination caused by prior owners and
operators of such sites), or off-site disposal of hazardous material or
waste that could have a material adverse effect on the Company's
consolidated financial condition, operations or liquidity.
The Company and the Operating Companies are a party to litigation
incidental to its business, primarily involving claims for personal injury
or property damages incurred in the transportation of freight. The Company
is not aware of any claims or threatened litigation that might have a
material adverse effect on the Company's consolidated financial position,
operations or liquidity.
5. OTHER INCOME, NET
Other income (expenses) consist of the following for the three months ended
March 31, (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Interest income $ 155 $ 42
Amortization of financing fees (113) -
Miscellaneous, net (5) (1)
----- ----
$ 37 $ 41
===== ====
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis should be read in conjunction with the consolidated
financial statements included in Item 1 - "Financial Statements." Results for
the three months ended March 31, 1995 include W&L and TBI results on a combined
basis as the "Predecessor Company". Results for the three months ended March
31, 1996 for the Company include the results of W&L, TBI, Bangerter, CMS
(including the Freymiller Assets since February 5, 1996), Scales and CBS for the
entire quarter. Bangerter, CMS (including the Freymiller Assets), Scales and CBS
are collectively referred to below as the "Acquired Companies."
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995
Net Income
For the quarter ended March 31, 1996, the Company had a net loss of
$111,000 compared with net income of $882,000 for the same period in 1995. The
additional revenue and operating income from the Acquired Companies in the
first quarter of 1996 was substantially offset by additional interest costs
incurred on the Subordinated Notes and the NationsBank Credit Facility. The net
loss in 1996 includes an extraordinary item, loss on early retirement of debt
of $230,000, net of taxes of $154,000. These early retirements related to the
use of proceeds from the Company's Subordinated Notes offering in 1995.
Revenues
First quarter revenues for 1996 improved $24.6 million, or 122 percent,
compared with the first quarter of 1995. Approximately $22.8 million, or 93
percent of this increase, reflects revenues of the Acquired Companies. The
Predecessor Company had increases in revenues of $1.7 million primarily
attributable to increased volume during the three month period.
Expenses
The following table sets forth operating expenses as a percentage of
revenues and the related variance from 1996 to 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 VARIANCE
-------------------- INCREASE
1996 1995 (DECREASE)
--------- --------- ----------
<S> <C> <C> <C>
Salaries, wages and fringe
benefits 31.4% 30.5% 0.9%
Purchased transportation 24.0 27.9 (3.9)
Operating supplies and expenses 18.0 13.0 5.0
Depreciation and amortization of
capital leases 6.7 7.2 (0.5)
Claims and insurance 3.8 4.3 (0.5)
Operating taxes and licenses 3.2 2.9 0.3
General supplies and expenses 4.1 3.1 1.0
Amortization of intangibles 0.5 0.6 (0.1)
Gain on disposal of property and
equipment (0.4) (0.1) (0.3)
---- ---- ----
Operating Ratio 91.3% 89.4% 1.9%
==== ==== ====
</TABLE>
Salaries, wages and fringe benefits for the first quarter of 1996 increased
$7.9 million or 128 percent compared with the first quarter 1995 due to the
addition of $7.6 million in salaries, wages and fringe benefits attributable to
the Acquired Companies. The 0.9 percentage point increase in salaries, wages and
fringe benefits as a percentage of revenues is attributable primarily to the
Acquired Companies, because at March 31, 1996 only 22 percent of their combined
driver base consisted of owner operators whose costs are reflected in purchased
transportation. In contrast at March 31, 1995, 50.7 percent of the Predecessor
Company driver base consisted of owner operators. The Predecessor Company also
had increases in wages and salaries for drivers and terminal personnel due to
the increased mileage during the first quarter of 1996.
7
<PAGE>
Purchased transportation costs were up $5.1 million in the first quarter
1996, but decreased on a percentage of revenue basis by 3.9 percentage points.
The Acquired Companies added $4.3 million to these costs, but their driver base,
which consists of just 22 percent owner operators, helped to lower purchased
transportation costs as a percentage of revenue. The Predecessor Company showed
an increase of $793,000 in purchased transportation costs due to expanded
freight opportunities and its continued use of owner operator drivers.
Operating supplies and expenses for the Company were $5.4 million higher
for the quarter ended March 31, 1996 over 1995. Of this increase, $5.0 million
is attributable to the Acquired Companies. The Predecessor Company also added
$419,000 to this increase due to increased fuel costs and maintenance expenses.
The 5.0 percentage point increase in operating supplies as a percent of revenues
is mainly attributable to the Acquired Companies, whose driver base consists of
78 percent of Company employees, contributing to higher fuel and maintenance
costs for Company owned equipment. The Company's fuel price has increased
approximately $.12 per gallon from the first quarter of 1995 to 1996.
Depreciation and amortization of capital leases were up $1.5 million, but
decreased as a percentage of revenue in the first quarter of 1996 due to the
acquisition of used assets from Freymiller and the short-term lease of certain
Freymiller assets. This amount as a percentage of revenues is expected to
increase as these assets are replaced with new trailers and tractors.
Claims and insurance expenses were up $802,000, but as a percentage of
revenues improved during the first quarter of 1996 due to continued favorable
claims experience at the Predecessor Company and to the centralization of
AmeriTruck's risk management program.
General supplies and expenses increased by $1.2 million for the first
quarter of 1996 when compared with the same period in 1995. The general
supplies and expenses of the Acquired Companies account for the entire increase
as the Predecessor Company had a slight decrease in this category. The largest
components of these expenses of the Acquired Companies were building and
equipment rents, utilities and office expenses.
Interest expense increased $3.0 million for the quarter ended March 31,
1996 over the same period in 1995. Interest on the Subordinated Notes issued in
November 1995 is the primary factor for this change.
CONTINGENCIES
Bangerter has been named as a defendant in a lawsuit entitled The Ekotek
----------
Site PRP Committee v. Steven M. Self et al., Civil No. 2:94CV277K (U.S. District
- ------------------------------------------
Court Utah, Central Division), alleging that Bangerter is a potentially
responsible party with respect to the removal and remediation cost of The Ekotek
Site, located in North Salt Lake City, Utah. The suit alleges that hazardous
waste generated by Bangerter, together with substantial volumes of additional
hazardous waste generated by numerous other businesses, were taken to the site
by a waste disposal firm engaged by Bangerter. It is the opinion of management
and counsel that the probable exposure to Bangerter is approximately $40,000.
It is reasonably possible that Bangerter could be required to pay up to $85,000.
The Company cannot predict with any certainty that it will not in the future
incur liability with respect to environmental compliance or liability associated
with the contamination of additional sites owned or operated by the Company and
the Operating Companies, sites formerly owned or operated by the Company and the
Operating Companies (including contamination caused by prior owners and
operators of such sites), or off-site disposal of hazardous material or waste
that could have a material adverse effect on the Company's consolidated
financial condition, operations or liquidity.
The Company and the Operating Companies are a party to litigation
incidental to its business, primarily involving claims for personal injury or
property damages incurred in the transportation of freight. The Company is not
aware of any claims or threatened litigation that might have a material adverse
effect on the Company's consolidated financial position, operations or
liquidity.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the three months ended March 31,
1996 was $2.6 million compared with net cash provided by operating activities of
$4.1 million for the three months ended March 31, 1995. The decrease of $6.7
million was primarily attributable to a $6.3 million increase in accounts
receivable during the first quarter of 1996 for the Acquired Companies and a
decrease in net income of $1.0 million. These decreases were partially offset by
an increase in depreciation and amortization of capital leases of $1.5 million.
In November 1995, AmeriTruck completed a private placement of $100 million
of 12 1/4% Senior Subordinated Notes due 2005 (the "Series A Notes"). The
Series A Notes were exchanged for publicly registered 12 1/4% Senior
Subordinated Notes due 2005, Series B (the "Subordinated Notes") in February
1996. The Subordinated Notes mature on November 15, 2005, and are unsecured
subordinated obligations of the Company. These notes bear interest at the rate
of 12.25 percent per annum from November 15, 1995, payable semiannually on May
15 and November 15 of each year, commencing on May 15, 1996. The Subordinated
Notes are subject to optional redemption on the terms set forth in the
Indenture. As of March 31, 1996, the Company has applied the net proceeds of
the Series A Notes primarily to finance the Acquisitions and prepay debt and
capitalized leases.
NationsBank Credit Facility
In February 1996, the Company and the Operating Companies entered into a
Loan Agreement and related documents (collectively, the "NationsBank Credit
Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to which
NationsBank has committed, subject to the terms and conditions of the
NationsBank Credit Facility, to provide a $30 million credit facility to the
Company. Borrowings under the NationsBank Credit Facility can be used for
acquisitions, operating capital, capital expenditures, letters of credit and
general corporate purposes. Pursuant to the NationsBank Credit Facility,
NationsBank has agreed to provide a $30 million revolving credit facility, with
a $7 million sublimit for letters of credit, maturing on February 1, 1998, at
which time the revolving credit facility will convert into a term loan maturing
on February 1, 2003. Borrowings under the NationsBank Credit Facility bear
interest at a per annum rate equal to either NationsBank's base rate or the rate
of interest offered by NationsBank in the interbank eurodollar market plus an
additional margin ranging from 1.5 percent to 1.75 percent based on the Senior
Funded Debt Ratio of the Company. The Company also pays a letter of credit
issuance fee and a quarterly unused facility fee. Borrowings under the
NationsBank Credit Facility were $25.4 million at March 31, 1996 and were
primarily used for the purchase of the Freymiller Assets.
The Company's obligations under the NationsBank Credit Facility are
collateralized by substantially all assets of the Company and its subsidiaries
and are guaranteed in full by each of the Operating Companies. For purposes of
the Indenture, such borrowings under the NationsBank Credit Facility constitute
Senior Indebtedness of the Company and Guarantor Senior Indebtedness of the
Operating Companies.
The NationsBank Credit Facility contains customary representations and
warranties and events of default and requires compliance with a number of
affirmative and negative covenants, including a limitation on the incurrence of
indebtedness and a requirement that the Company maintain a specified Senior
Funded Debt Ratio and Fixed Charge Coverage Ratio.
Volvo Credit Facilities
In February 1996, the Company and the Operating Companies entered into a
Loan and Security Agreement, a Financing Integration Agreement and related
documents (collectively, the "Volvo Credit Facilities") with Volvo Truck Finance
North America, Inc. ("Volvo") pursuant to which Volvo has committed, subject to
the terms and conditions of the Volvo Credit Facilities, to provide (i) a $10
million line of credit facility (the "Volvo Line of Credit") to the Company and
the Operating Companies, and (ii) up to $28 million in purchase money or lease
financing (the "Equipment Financing Facility") in connection with the Operating
Companies' acquisition of new tractors and trailers manufactured by Volvo GM
Heavy Truck Corporation. Borrowings under the Volvo Line of Credit are
secured by certain specified tractors and trailers of the Company and the
Operating Companies (which must have a value equal to at least 1.75 times the
outstanding amount of borrowings under the Volvo Line of Credit) and are
guaranteed in full by each of the Operating Companies. Borrowings under the
Volvo Line of Credit bear interest at the prime rate. The Volvo Line of Credit
contains customary representations and warranties and events
9
<PAGE>
of default and requires compliance with a number of affirmative and negative
covenants, including a profitability requirement and a coverage ratio.
The Equipment Financing Facility is being provided by Volvo in connection
with the Operating Companies' agreement to purchase 400 new trucks
manufactured by Volvo GM Heavy Truck Corporation between March 1, 1996 and June
30, 1997. The Operating Companies have agreed to utilize such facility for
at least the first 200 of the new trucks. The borrowings under the Equipment
Financing Facility are collateralized by the specific trucks being financed and
are guaranteed in full by each of the Operating Companies. Borrowings under
this facility bear interest at the prime rate. There were no borrowings
outstanding at March 31, 1996.
The Equipment Financing Facility contains customary representations and
warranties, covenants and events of default. For purposes of the Indenture, the
borrowings under the Volvo Credit Facilities constitute Senior Indebtedness of
the Company and Guarantor Senior Indebtedness of the Operating Companies.
The Operating Companies began taking delivery of the trucks in early May
at the rate of 10 per week, with total expected deliveries for the second
quarter of 80 trucks. Another 30 trucks are scheduled for delivery during the
third quarter of 1996. To offset these expenditures of approximately $7.6
million, the Company intends to sell at least 83 used trucks from the Operating
Companies for approximately $2.7 million.
Capital Expenditures and Resources
The Company had capital expenditures, net of cash proceeds from
dispositions, of $8.4 million for the three months ended March 31, 1996,
excluding the purchase of the Freymiller Assets, and $1.4 million for the
three months ended March 31, 1995. These amounts also do not include capital
expenditures financed through capital leases and other debt which amounted to
approximately $110,000 and $915,000 for the first quarters of 1996 and 1995,
respectively. The increase in capital expenditures during the first quarter of
1996 was primarily due to the purchase of new trailers.
AmeriTruck projects 1996 capital expenditures to increase over 1995 levels.
The Company will purchase at least 200 new trucks and 200 new trailers during
1996. In addition in February 1996, the Company, through CMS, purchased (the
"Purchase") certain assets of Freymiller Trucking Inc. ("Freymiller").
Freymiller had been the subject of a Chapter 11 bankruptcy proceeding in
Oklahoma. Pursuant to the Purchase, CMS purchased certain specific automobiles,
computer hardware and software, furniture and fixtures, rights to the trade name
"Freymiller", existing spare parts, tires and fuel, rights under certain leases,
certain leasehold improvements and shop equipment and installment sales
contracts relating to tractors and trailers sold by Freymiller out of the
ordinary course of business (with all of the foregoing referred to as the
"Assets"). The Company also negotiated with Freymiller's lenders and lessors to
purchase approximately 185 tractors and 309 trailers previously operated by
Freymiller for approximately $14 million. An additional 80 trailers were leased
for a seven year period. In exchange for the Assets, the Company paid
approximately $2.7 million in cash at closing and assumed approximately $2
million in existing equipment financing. In addition, the Company assumed a
lease for Freymiller's maintenance facility in Oklahoma City and certain routine
executory business contracts. Except as provided above, the Company did not
assume any obligations or liabilities of Freymiller.
In connection with these transactions, the Company purchased real property
in Oklahoma City, Oklahoma from Freymiller's Chairman of the Board, President
and Chief Executive Officer for approximately $1.5 million in cash. The Assets
and this real estate will supplement the Company's existing temperature-
controlled operations.
These purchases and commitments will likely be financed using a combination
of sources including, but not limited to cash from operations, leases, debt
issuances and other miscellaneous sources. Each financing decision will be
based upon the most appropriate alternative available.
10
<PAGE>
Opportunistic Acquisitions
The Company will pursue opportunistic acquisitions to broaden its
geographic scope, to increase freight network density and to expand into other
specialized trucking segments. Through acquisitions, the Company believes it can
capture additional market share and increase its driver base without adopting a
growth strategy based on widespread rate discounting and driver recruitment,
which the Company believes would be less successful. The Company believes its
large size relative to many other potential acquirers could afford it greater
access to acquisition financing sources such as banks and capital markets.
AmeriTruck has entered into a revolving credit facility with NationsBank of
Texas, N.A. and a revolving credit facility with Volvo Truck Finance North
America, Inc. As described above, these revolving credit facilities, subject to
the conditions on borrowing contained therein, will give AmeriTruck the ability
to pursue acquisitions that the Company could not otherwise fund through cash
provided by operations. In addition, the Company may finance its acquisitions
through equity issuances, seller financing and other debt financings.
The Company is a holding company with no operations of its own. The
Company's ability to make required interest payments on the Subordinated Notes
depends on its ability to receive funds from the Operating Companies. The
Company, at its discretion, controls the receipt of dividends or other payments
from the Operating Companies.
OTHER MATTERS
The industry as a whole has seen dramatic increases in fuel prices.
According to a Department of Energy survey, reported by the American Trucking
Association, the price of diesel fuel has increased on a national average of
15.7 cents per gallon from January 1, 1996 to April 15, 1996. Steeper increases
have occurred in the East Coast, Midwest and Gulf Coast regions. The Company has
seen its fuel prices increase at a rate consistent with the national average.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
From time to time, the Company issues statements in public filings or press
releases, or officers of the Company make public oral statements with respect to
the Company, that may be considered forward-looking. In connection with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, the Company believes that the following important factors, among others,
could cause the Company's actual results for its 1996 fiscal year and beyond to
differ materially from those expressed in any forward-looking statements made
by, on behalf of, or with respect to, the Company: inflation and fuel costs;
substantial leverage; absence of combined operating history; dependence on
certain customers; cyclicality and other economic factors; competition;
availability of drivers; regulation; claims exposure; and dependence on key
personnel. Each of these risk factors is discussed in more detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
are incorporated herein by reference.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to litigation incidental to its business, primarily
involving claims for personal injury or property damages incurred in the
transportation of freight. The Company is not aware of any claims or threatened
litigation that might have a material adverse affect on the Company's
consolidated, financial position, operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the first quarter of 1996, no matters were submitted to a vote of
security holders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The following exhibits are filed as part of this report:
Exhibit Number Description
-------------- -----------
*10.1 Loan and Security Agreement, dated February 21,
1996, between Volvo Truck Finance North
America, Inc. ("Volvo") and the Company and
certain of its Subsidiaries
*10.2 Financing Integration Agreement, dated February
21, 1996, between Volvo and the Company and
certain of its Subsidiaries
*10.3 Loan Agreement, dated February 1, 1996, between
the Company and NationsBank of Texas, N.A.
*10.4 Asset Purchase Agreement, dated as of January 5,
1996, between CMS Transportation Services, Inc.
and Freymiller Trucking, Inc., as debtor and
debtor-in-possession
*10.5 Consulting and Non-Competition Agreement, dated
as of April 1, 1995, between Thompson Bros.,
Inc. and Dunbar Associates, Inc.
12 Computation of Ratio of Earnings to Fixed
Charges
27 Financial Data Schedule
* Incorporated by reference to the Company's Current Report on
Form 8-K filed with the Securities and Exchange Commission on
May 3, 1996.
B. Reports on Form 8-K
During the quarter covered by this report, the registrant filed a
Current Report on Form 8-K (date of report: May 3, 1996) reporting
under Item 5, certain contracts which may be deemed to be "material
contracts" within the meaning of Item 601 of Regulation S-K.
Items 2, 3, and 5 of Part II were not applicable and have been omitted.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERITRUCK DISTRIBUTION CORP.
By: /s/ Michael L. Lawrence
---------------------------------
Michael L. Lawrence
Chairman of the Board and
Chief Executive Officer
By: /s/ Kenneth H. Evans, Jr.
---------------------------------
Kenneth H. Evans, Jr.
Treasurer and Chief Financial and
Accounting Officer
Date: May 15, 1996
13
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
EXHIBIT INDEX
Page
Exhibit Number Description Number
- -------------- ----------- ------
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
<PAGE>
EXHIBIT 12
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratio amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996* 1995*
------- -------
<S> <C> <C>
Earnings:
Income before income taxes
and extraordinary item $ 212 $ 1,499
------ -------
Fixed charges:
Interest expense and amortization
of debt discount and premium on
all indebtedness 3,699 675
Portion of rent under long-term
operating leases representative
of an interest factor 380 49
Preferred stock dividend
requirements of consolidated
subsidiaries - 50
------ -------
Total fixed charges 4,079 774
------ -------
Earnings before income taxes and $4,291 $ 2,273
fixed charges ====== =======
Ratio of earnings to fixed charges 1.05x 2.94x
======= =======
</TABLE>
* Comparisons between periods are affected by acquisitions--see Note 2
contained in the unaudited Notes to Consolidated Financial Statements.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERITRUCK
DISTRIBUTION CORP.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,886
<SECURITIES> 0
<RECEIVABLES> 20,061
<ALLOWANCES> (523)
<INVENTORY> 1,071
<CURRENT-ASSETS> 30,996
<PP&E> 113,086
<DEPRECIATION> (24,325)
<TOTAL-ASSETS> 161,201
<CURRENT-LIABILITIES> 22,382
<BONDS> 136,556
0
0
<COMMON> 33
<OTHER-SE> (1,961)
<TOTAL-LIABILITY-AND-EQUITY> 161,201
<SALES> 0
<TOTAL-REVENUES> 44,784
<CGS> 0
<TOTAL-COSTS> 40,910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,699
<INCOME-PRETAX> 212
<INCOME-TAX> 93
<INCOME-CONTINUING> 119
<DISCONTINUED> 0
<EXTRAORDINARY> (230)
<CHANGES> 0
<NET-INCOME> (111)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
