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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 September 30, 1997
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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 000-23095
JEVIC TRANSPORTATION, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2373402
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Creek Road, Delanco, NJ 08075
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
609-461-7111
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Equity, no par value, 10,658,200 shares outstanding as of October 21,
1997, consisting of two series:
Class A Common Stock, no par value, 5,739,544 shares outstanding as of
October 21, 1997
Common Stock, no par value, 4,918,656 shares outstanding as of October 21, 1997
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<PAGE>
JEVIC TRANSPORTATION, INC.
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets--September 30, 1997 (unaudited)
and December 31, 1996 1
Condensed Statements of Income--Three
and nine months ended September 30, 1997 and 1996 (unaudited) 2
Condensed Statements of Cash Flows--
Nine months ended September 30, 1997 and 1996 (unaudited) 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds 13
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits 16
Signatures 18
<PAGE>
Item 1. Financial Statements
JEVIC TRANSPORTATION, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share information)
<TABLE>
<CAPTION>
September 30, 1997
December 31, -----------------------
1996 Actual Pro Forma
------------ -------- ---------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 2,403 $ 6,864 $ 18,897
Accounts receivable, less allowance for doubtful accounts of
$999, $1,395 and $1,395 ..................................... 17,123 20,850 20,850
Prepaid expenses and other ..................................... 2,335 3,330 3,190
Deferred income taxes .......................................... 174 208 2,083
-------- -------- --------
Total current assets .................................. 22,035 31,252 45,020
PROPERTY AND EQUIPMENT, net ........................................ 58,967 67,292 68,592
OTHER ASSETS ....................................................... 1,353 1,827 1,827
-------- -------- --------
$ 82,355 $100,371 $115,439
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease
obligations ................................................. $ 10,682 $ 11,554 $ 4,775
Accounts payable and accrued expenses .......................... 12,640 16,030 16,030
Claims and insurance reserves .................................. 3,385 3,010 3,010
Deferred freight revenues ...................................... 1,245 1,759 1,759
-------- -------- --------
Total current liabilities ............................ 27,952 32,353 25,574
-------- -------- --------
LONG-TERM DEBT ..................................................... 28,855 35,758 14,220
-------- -------- --------
DEFERRED INCOME TAXES .............................................. 984 1,167 11,671
-------- -------- --------
OTHER LIABILITIES .................................................. 493 255 255
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 10,000,000 shares authorized;
none issued and outstanding .................................. -- -- --
Common stock, no par value 40,000,000 shares authorized;
548,656 (actual) and 4,348,656 (pro forma) issued and
outstanding at September 30, 1997 ............................ -- -- --
Class A common stock, no par value 10,000,000 shares authorized;
6,858,200, 6,309,544 and 6,309,544, shares issued and
outstanding, respectively..................................... -- -- --
Additional paid-in capital ..................................... 1,128 1,128 63,719
Retained earnings .............................................. 22,943 29,710 --
-------- -------- --------
Total shareholders' equity ........................... 24,071 30,838 63,719
-------- -------- --------
$ 82,355 $100,371 $115,439
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
JEVIC TRANSPORTATION, INC.
CONDENSED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES .............................. $48,871 $39,591 $139,288 $113,159
------- ------- -------- --------
OPERATING EXPENSES:
Salaries, wages and benefits ................ 24,238 20,170 70,821 59,829
Supplies and other expenses ................. 8,858 7,955 26,229 24,186
Purchased transportation .................... 4,603 2,109 13,198 7,627
Depreciation and amortization ............... 2,890 2,268 8,272 6,299
Operating taxes and licenses ................ 2,449 2,169 6,751 6,487
Insurance and claims ........................ 876 754 2,852 2,526
(Gain) loss on sale of equipment ............ 24 27 123 (100)
------- ------- -------- --------
43,938 35,452 128,246 106,854
------- ------- -------- --------
Operating income ....................... 4,933 4,139 11,042 6,305
INTEREST EXPENSE, net ........................... 864 799 2,493 2,185
OTHER INCOME, net ............................... (36) (71) (91) (119)
------- ------- -------- --------
Income before state income taxes ....... 4,105 3,411 8,640 4,239
STATE INCOME TAXES .............................. 170 221 350 301
------- ------- -------- --------
NET INCOME ...................................... $ 3,935 $ 3,190 $ 8,290 $ 3,938
======= ======= ======== ========
PRO FORMA DATA (Note 3):
Income before income taxes .................. $ 4,105 $ 3,411 $ 8,640 $ 4,239
Pro forma income taxes ...................... 1,642 1,365 3,456 1,696
------- ------- -------- --------
Pro forma net income ........................ $ 2,463 $ 2,046 $ 5,184 $ 2,543
======= ======= ======== ========
Pro forma net income per share .............. $ 0.32 $ 0.26 $ 0.67 $ 0.33
======= ======= ======== ========
Shares used in computing pro forma
net income per share ..................... 7,765 7,765 7,765 7,765
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
JEVIC TRANSPORTATION, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................ $ 8,290 $ 3,938
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation and amortization ....................... 8,272 6,299
(Gain) loss on sale of equipment .................... 123 (100)
Provision for bad debts ............................. 745 283
Deferred state income taxes ......................... 149 --
Changes in assets and liabilities--
(Increase) in accounts receivable ............... (4,472) (3,188)
(Increase) in prepaid expenses and other ........ (995) (140)
(Increase) in other assets ...................... (474) (93)
Increase in accounts payable and accrued expenses 3,152 1,921
Increase (decrease) in claims and insurance
reserves ..................................... (375) 414
Increase (decrease) in deferred freight revenues 514 (16)
-------- --------
Net cash provided by operating activities ... 14,929 9,318
-------- --------
INVESTING ACTIVITIES:
Proceeds from sale of equipment ........................... 382 92
Capital expenditures ...................................... (17,102) (15,349)
-------- --------
Net cash used in investing activities .................. (16,720) (15,257)
-------- --------
FINANCING ACTIVITIES:
Payments of long-term debt ................................ (7,315) (5,805)
Proceeds from issuance of long-term debt .................. 15,539 13,415
Payments of capital lease obligations ..................... (450) (611)
Distributions to shareholder .............................. (1,522) 396
-------- --------
Net cash provided by financing activities ... 6,252 7,395
-------- --------
NET INCREASE IN CASH
AND CASH EQUIVALENTS ...................................... 4,461 1,456
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ....................................... 2,403 1,146
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................... $ 6,864 $ 2,602
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed financial statements of Jevic
Transportation, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for fair presentation have been included. Operating results
for the three and nine month periods ended September 30, 1997, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Company's S-1 registration statement (file
no. 333-33469) filed with the Securities and Exchange Commission as part of the
Company's initial public offering on October 7, 1997.
2. Initial Public Offering of Common Stock
The Company completed an initial public offering (the "Offering") of its Common
Stock on October 7, 1997. The Company sold 3,800,000 shares of Common Stock at
$15 per share. Additionally, 570,000 shares of Common Stock were purchased from
certain selling shareholders at $15 per share by the underwriters upon the
exercise of an over-allotment option. The net proceeds to the Company, after
deducting estimated underwriting discounts and expenses, were approximately
$52.2 million. The Company did not receive any proceeds from the sale of shares
by the selling shareholders. A pro forma balance sheet has been presented to
reflect the Offering and related transactions.
The Company was subject to taxation under Subchapter S of the Internal Revenue
Code until the termination of the S Corporation status on October 3, 1997. The
pro forma balance sheet as of September 30, 1997 reflects the estimated increase
in the net deferred tax liability of $8.6 million, recorded by the Company as a
result of the termination of its S Corporation status. The net deferred income
tax liability represents the tax effects of the cumulative differences between
the financial reporting and income tax bases of certain assets and liabilities
as of the termination of the S Corporation status and will be recorded as a
one-time, income tax provision in the statement of income for the three months
ended December 31, 1997. Deferred taxes will be adjusted to reflect any change
in the net deferred tax asset upon filing the final S Corporation tax return.
Additionally, in October 1997, the Company made $10 million of distributions to
the S Corporation shareholders.
-4-
<PAGE>
Pro Forma Information
Pro Forma Balance Sheet Information
The pro forma balance sheet of the Company as of September 30, 1997 reflects (i)
the net proceeds to the Company of approximately $52.2 million from the Offering
(see Note 2), (ii) the repayment of $28.3 million of outstanding indebtedness,
(iii) a $10 million distribution to certain shareholders of the Company,
(iv) the Company's purchase of its Charlotte facility from certain of its
shareholders for $2 million, resulting in a $700,000 deemed distribution and
(v) an increase in the Company's net deferred tax liability as a result of the
Company's termination of its S Corporation status (estimated at $8.6 million as
of September 30, 1997).
Pro Forma Income Statement Data
On October 3, 1997, the Company terminated its status as an S Corporation and,
as a result, the Company is now subject to federal and additional state income
taxes. Accordingly, for informational purposes, the accompanying statements of
income for the three and nine months ended September 30, 1997 and 1996 include
an unaudited pro forma adjustment for the income taxes that would have been
recorded had the Company been a C Corporation, based on the tax laws in effect
during the respective periods.
Pro Forma Net Income Per Share
Pro forma net income per share was calculated by dividing pro forma net income
by the weighted average number of shares of common stock outstanding for the
respective periods adjusted for the effect of dilutive common stock options, and
after giving effect to the estimated number of shares that would be required to
be sold (using the initial public offering price of $15 per share, less
underwriting discounts and commissions and estimated offering expenses) to fund
a $10 million distribution to the S Corporation shareholders.
3. New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No.
128 is designed to improve the earnings per share information provided in
financial statements by simplifying the existing computational guidelines,
revising the disclosure requirements and increasing comparability of earnings
per share data on an international basis. This pronouncement is effective for
periods beginning after December 15, 1997; earlier adoption is not permitted.
The adoption is not expected to have a material impact on the Company's
financial statements.
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Jevic was founded in 1981 after the deregulation of the trucking industry, and
has developed an operating system which combines the high revenue yield
characteristics of a typical LTL carrier with the operating flexibility and low
fixed costs of a truckload carrier. Most other motor carriers have continued to
specialize as either truckload, moving one shipment at a time, or
less-than-truckload, moving multiple small shipments through networks of up to
500 terminals.
The Company's system uses a small number of regional facilities which serve as
origination points for consolidation of both small and large shipments. The
shipments are then loaded onto line-haul trailers in a sequence which permits
direct unloading at each shipment's destination, eliminating the need to
rehandle individual shipments at one or more breakbulk terminals. Management
focuses on adjusting freight mix to maximize asset utilization. The Company
maintains a high percentage of variable costs in order to minimize the impact of
short-term swings in demand.
Because of the distinct nature of Jevic's operating system, the Company believes
that profitability measures and expense ratios traditionally used to evaluate
truckload or less-than-truckload carriers are not meaningful. Jevic's results of
operations have been impacted by two key trends. First, Jevic has been
increasing the percentage of its shipments transported by owner-operators, who
supply their own tractor and bear all associated expenses in return for a
contracted rate. As a result, purchased transportation has increased as a
percentage of operating revenues, offset by a reduction, as a percentage of
operating revenues, of drivers' salaries, wages and benefits, depreciation,
fuel, operating taxes and licenses and other supplies and operating expenses.
Additionally, Jevic has shifted from a policy of leasing revenue equipment to
purchasing revenue equipment. As a result, depreciation and interest expense has
increased as a percentage of operating revenues while lease expense, which is
included in supplies and other expenses, has decreased.
The Company completed the initial public offering of its common stock on October
7, 1997. The Company sold 3,800,000 shares of common stock at $15 per share. The
net proceeds to the Company, after deducting estimated underwriting discounts
and expenses, were approximately $52.2 million.
-6-
<PAGE>
Results of Operations
The following table sets forth for the periods indicated the percentage of
operating revenues represented by certain items in the Company's statements of
income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Operating revenues ................... 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Operating expenses:
Salaries, wages and benefits ..... 49.6 50.9 50.8 52.9
Supplies and other expenses ...... 18.1 20.1 18.8 21.4
Purchased transportation ......... 9.4 5.3 9.5 6.7
Depreciation and amortization .... 5.9 5.7 5.9 5.6
Operating taxes and licenses ..... 5.0 5.5 4.8 5.7
Insurance and claims ............. 1.8 1.9 2.0 2.2
(Gain) loss on sale of equipment . 0.1 0.1 0.1 (0.1)
----- ----- ----- -----
89.9 89.5 91.9 94.4
----- ----- ----- -----
Operating income ..................... 10.1 10.5 8.1 5.6
Interest expense, net ................ 1.8 2.0 1.8 1.9
Other income, net .................... (0.1) (0.2) (0.1) (0.1)
----- ----- ----- -----
Income before income taxes ........... 8.4 8.7 6.4 3.8
===== ===== ===== =====
</TABLE>
Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996
Operating Revenues
Operating revenues increased 23.5% for the three months ended September 30, 1997
to $48.9 million from $39.6 million for the comparable period of 1996. The
increase resulted primarily from an 18.4% increase in total shipments. The
Company's average tractor fleet grew 22.0% in the third quarter of 1997 over the
third quarter of 1996, and average revenues per tractor per week increased
slightly to $3,875 during the three months ended September 30, 1997 from $3,830
during the three months ended September 30, 1996.
Operating Expenses
Operating expenses increased 23.7% to $43.9 million for the three months ended
September 30, 1997 from $35.5 million for the comparable period of 1996. As a
percentage of operating revenues, operating expenses increased to 89.9% for the
three months ended September 30, 1997 from 89.5% for the comparable period of
1996. The increase in operating expenses is primarily due to increased revenues,
as the majority of the Company's operating expenses are variable in nature. The
percentage increase was primarily attributable to the increased use of purchased
transportation, including higher cost, outside line-haul transportation to meet
short-term capacity requirements.
Salaries, wages and benefits increased 19.8% to $24.2 million for the three
months ended September 30, 1997 from $20.2 million for the comparable period of
1996. As a percentage of
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<PAGE>
operating revenues, salaries, wages and benefits decreased to 49.6% for the
three months ended September 30, 1997 from 50.9% for the comparable period of
1996. This percentage decrease was primarily due to the Company's increased use
of owner-operators in 1997.
Supplies and other expenses, which primarily consist of operating leases, fuel,
tolls, tires, parts and bad debt expense, increased 11.3% to $8.9 million for
the three months ended September 30, 1997 from $8.0 million for the comparable
period of 1996. As a percentage of operating revenues, supplies and other
expenses decreased to 18.1% for the three months ended September 30, 1997 from
20.1% for the comparable period of 1996. This percentage decrease was primarily
due to the Company's continuing shift toward the purchase of revenue equipment
financed with debt rather than leasing such equipment under operating leases,
and, to a lesser extent, the Company's increased use of owner-operators in 1997.
Purchased transportation increased 119.0% to $4.6 million for the three months
ended September 30, 1997 from $2.1 million for the comparable period of 1996. As
a percentage of operating revenues, purchased transportation increased to 9.4%
for the three months ended September 30, 1997 from 5.3% for the comparable
period of 1996. The increase was primarily due to the increased use of
owner-operators to supplement the Company's fleet and to substitute for higher
cost, outside line-haul transportation. As a percentage of total purchased
transportation expense, owner-operator expense increased to 66.7% for the three
months ended September 30, 1997 from 29.2% for the comparable period of 1996.
Depreciation and amortization expense increased 26.1% to $2.9 million for the
three months ended September 30, 1997 from $2.3 million for the comparable
period of 1996. As a percentage of operating revenues, depreciation and
amortization increased to 5.9% for the three months ended September 30, 1997
from 5.7% for the comparable period of 1996. The increase was primarily
attributable to the Company's continuing shift toward the purchase of additional
and replacement revenue equipment financed with debt rather than leasing such
equipment under operating leases.
Operating taxes and licenses increased 9.1% to $2.4 million for the three months
ended September 30, 1997 from $2.2 million for the comparable period of 1996. As
a percentage of operating revenues, operating taxes and licenses decreased to
5.0% for the three months ended September 30, 1997 from 5.5% for the comparable
period of 1996. This percentage decrease was primarily attributable to a
decrease in fuel taxes due to the Company's increased use of owner-operators,
who pay for their own taxes and licenses.
Insurance and claims increased 12.5% to $900,000 for the three months ended
September 30, 1997 from $800,000 for the comparable period of 1996. As a
percentage of operating revenues, insurance and claims decreased to 1.8% for the
three months ended September 30, 1997 from 1.9% for the comparable period of
1996.
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<PAGE>
Interest Expense
Interest expense increased 12.5% to $900,000 for the three months ended
September 30, 1997 from $800,000 for the comparable period of 1996. As a
percentage of operating revenues, interest expense decreased to 1.8% for the
three months ended September 30, 1997 from 2.0% for the comparable period of
1996. Increased debt levels in 1997, resulting from the increase in owned rather
than leased equipment, were partially offset by lower average interest rates.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
Operating Revenues
Operating revenues increased 23.1% for the nine months ended September 30, 1997
to $139.3 million from $113.2 million for the comparable period of 1996. The
increase resulted primarily from a 16.7% increase in total shipments. The
Company's average tractor fleet grew 21.2% in the first nine months of 1997 over
1996, and average revenues per tractor per week increased slightly to $3,808
during the nine months ended September 30, 1997 from $3,748 during the nine
months ended September 30, 1996.
Operating Expenses
Operating expenses increased 19.9% to $128.2 million for the nine months ended
September 30, 1997 from $106.9 million for the comparable period of 1996. As a
percentage of operating revenues, operating expenses decreased to 91.9% for the
nine months ended September 30, 1997 from 94.4% for the comparable period of
1996. The increase in operating expenses is primarily due to increased revenues,
as the majority of the Company's operating expenses are variable in nature. The
percentage decrease was primarily attributable to the decrease in 1997 of driver
wages, equipment rent and outside line-haul and local transportation expense as
a percentage of revenues due to the increased use of owner-operators.
Salaries, wages and benefits increased 18.4% to $70.8 million for the nine
months ended September 30, 1997 from $59.8 million for the comparable period of
1996. As a percentage of operating revenues, salaries, wages and benefits
decreased to 50.8% for the nine months ended September 30, 1997 from 52.9% for
the comparable period of 1996. This percentage decrease was primarily due to the
Company's increased use of owner-operators in 1997.
Supplies and other expenses increased 8.3% to $26.2 million for the nine months
ended September 30, 1997 from $24.2 million for the comparable period of 1996.
As a percentage of operating revenues, supplies and other expenses decreased to
18.8% for the nine months ended September 30, 1997 from 21.4% for the comparable
period of 1996. This percentage decrease was due to the Company's continuing
shift toward the purchase of revenue equipment financed with debt rather than
leasing such equipment under operating leases and the Company's increased use of
owner-operators in 1997.
Purchased transportation increased 73.7% to $13.2 million for the nine months
ended September 30, 1997 from $7.6 million for the comparable period of 1996. As
a percentage of operating revenues, purchased transportation increased to 9.5%
for the nine months ended September 30, 1997 from 6.7% for the comparable period
of 1996. The increase was primarily due to the increased use of owner-operators
to supplement the Company's fleet and to
-9-
<PAGE>
substitute for higher cost, outside line-haul transportation. As a percentage of
total purchased transportation expense, owner-operator expense increased to
61.7% for the nine months ended September 30, 1997 from 11.5% for the comparable
period of 1996.
Depreciation and amortization expense increased 31.7% to $8.3 million for the
nine months ended September 30, 1997 from $6.3 million for the comparable period
of 1996. As a percentage of operating revenues, depreciation and amortization
increased to 5.9% for the nine months ended September 30, 1997 from 5.6% for the
comparable period of 1996. The increase was primarily attributable to the
Company's continuing shift toward the purchase of additional and replacement
revenue equipment financed with debt rather than leasing such equipment under
operating leases.
Operating taxes and licenses increased 4.6% to $6.8 million for the nine months
ended September 30, 1997 from $6.5 million for the comparable period of 1996. As
a percentage of operating revenues, operating taxes and licenses decreased to
4.8% for the nine months ended September 30, 1997 from 5.7% for the comparable
period of 1996. This percentage decrease was primarily attributable to a
decrease in fuel taxes due to the Company's increased use of owner-operators,
who pay for their own taxes and licenses.
Insurance and claims increased 16.0% to $2.9 million for the nine months ended
September 30, 1997 from $2.5 million for the comparable period of 1996. As a
percentage of operating revenues, insurance and claims decreased to 2.0% for the
nine months ended September 30, 1997 from 2.2% for the comparable period of
1996.
Interest Expense
Interest expense increased 13.6% to $2.5 million for the nine months ended
September 30, 1997 from $2.2 million for the comparable period of 1996. As a
percentage of operating revenues, interest expense decreased to 1.8% for the
nine months ended September 30, 1997 from 1.9% for the comparable period of
1996. The Company had higher debt levels in 1997 due to the purchases of revenue
equipment being financed with debt, but was offset by the Company's increased
use of owner-operators.
Liquidity and Capital Resources
The Company's primary sources of liquidity have been funds provided by
operations, equipment leases and bank borrowings. Net cash provided by operating
activities was approximately $14.9 million for the first nine months of 1997
compared to $9.3 million for the corresponding period in 1996. The increase in
cash provided by operations is primarily attributable to the Company's increased
income before depreciation and amortization expense in 1997.
Capital expenditures, net of trade-in allowances, totaled approximately $17.1
million during the first nine months of 1997 compared to $15.3 million in the
comparable period of 1996. For the nine months ended September 30, 1997, the
$17.1 million of capital expenditures were comprised of $15.8 million of revenue
equipment, $900,000 of facilities and $200,000 of other equipment.
The Company generally purchases new line-haul tractors and replaces them after
three years. Regional and local tractors are generally replaced after five
years, depending on levels of use. The
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<PAGE>
Company generated cash proceeds from sales of used tractors of $382,000 in the
nine months ended September 30, 1997 versus $92,000 in the comparable period of
the prior year.
Net cash provided by financing activities was approximately $6.3 million for the
nine months ended September 30, 1997 compared to $7.4 million for the comparable
period of 1996. At September 30, 1997, total borrowings under long-term debt
totaled $46.5 million, maturing through 2007, and obligations relating to
operating leases totaled $10.0 million through 2001, of which $1.1 million
related to facility leases with the current shareholders.
On October 7, 1997, the Company completed its initial public offering, which
provided the Company with $52.2 million of net proceeds. The Company used a
portion of such proceeds to pay down indebtedness ($28.3 million), make
distributions to S Corporation shareholders ($10 million) and purchase its
Charlotte, North Carolina facility ($2 million).
Jevic is a party to a $25 million credit facility with CoreStates Bank, N.A. The
credit facility includes a $7 million working capital revolving line of credit,
with borrowings limited to 80% of the Company's eligible accounts receivable,
and an $18 million term loan facility used to purchase or refinance revenue
equipment. At September 30, 1997, there was $12.6 million outstanding under the
credit facility, of which $200,000 represented outstanding standby letters of
credit and the remainder of which was outstanding under the term loan facility.
After repaying certain indebtedness in October with offering proceeds, there was
$3.7 million outstanding under the credit facility.
The Company believes that the net proceeds from the Offering, funds generated
from operations and available borrowings under its current or future credit
facilities will be sufficient to fund the Company's activities at least through
1998.
Inflation
The Company does not believe that inflation has had a material impact on its
results of operations for the past three years.
Seasonality
In the trucking industry, revenues generally follow a seasonal pattern as
customers reduce shipments during and after the winter holiday season. In
addition, highway transportation can be adversely affected depending upon the
severity of the weather in various sections of the country during the winter
months. The Company's operating expenses have historically been higher in winter
months, due primarily to decreased fuel efficiency and increased maintenance
costs for revenue equipment in colder weather. Accordingly, the Company's
results of operations may fluctuate to reflect such seasonality.
-11-
<PAGE>
Cautionary Statement for Forward Looking Information
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations may contain forward-looking statements.
There are a number of risks and uncertainties that could cause actual results to
differ materially from those anticipated by the statements made above. These
include, but are not limited to, general economic factors, availability of
employee drivers and owner-operators, capital requirements, competition,
acquisition of revenue equipment, unionization, fuel, seasonality, claims
exposure and insurance costs, difficulty in managing growth, regulation,
environmental hazards and dependence on key personnel. Further information on
these and other factors which could affect the Company's financial results can
be found in the Company's S-1 Registration Statement (file no. 333-33469) and
Prospectus dated October 7, 1997.
-12-
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Jevic filed a Registration Statement on Form S-1 (the
"Registration Statement") with respect to 3,800,000 shares (the "Firm Shares")
of its Common Stock, no par value ("Common Stock") and an additional 570,000
shares (the "Option Shares") of Common Stock to be sold by certain shareholders
(the "Option Shareholders") of the Company solely to cover over-allotments, if
any. The Registration Statement (file no. 333-33469) was declared effective by
the Commission on October 6, 1997. The managing underwriters for the offering
were BT Alex. Brown Incorporated, William Blair & Co., L.L.C. and Schroder & Co.
Inc. The offering of the Firm Shares commenced and was completed, with all of
the Firm Shares having been sold, on October 7, 1997. The offering of the Option
Shares commenced and was completed, with all of the Option Shares having been
sold, on October 16, 1997.
The following table illustrates the number of shares
registered and the aggregate price of the shares registered for the account of
the Company and for the Option Shareholders. All shares registered for the
account of the Company and the Option Shareholders were sold in the offering.
None of the proceeds of the sales made by the Option Shareholders were received
by Jevic.
Shares Registered Aggregate Price
----------------- ---------------
Jevic Transportation, Inc. 3,800,000 $57,000,000
Option Shareholders:
Harry J. Muhlschlegel 110,698 $ 1,660,470
Karen B. Muhlschlegel 110,698 $ 1,660,470
Harry J. Muhlschlegel 71,429 $ 1,071,435
Grantor Annuity Trust
Dated October 24, 1996
Harry J. Muhlschlegel, Trustee
Karen B. Muhlschlegel 71,429 $ 1,071,435
Grantor Annuity Trust
Dated October 24, 1996
Karen B. Muhlschlegel, Trustee
-13-
<PAGE>
Jeffrey Muhlschlegel 68,582 $ 1,028,730
1994 Income Trust
Dated December 31, 1994
George K. Reynolds III, Esq. &
Bruce D. Burdick, Trustees
Jennifer Muhlschlegel 68,582 $ 1,028,730
1994 Income Trust
Dated December 31, 1994
George K. Reynolds III, Esq. &
Bruce D. Burdick, Trustees
Vicki Whittall 68,582 $ 1,028,730
1994 Income Trust
Dated December 31, 1994
George K. Reynolds III, Esq. &
Bruce D. Burdick, Trustees
Underwriting discounts and commissions amounted to $1.05 per
share offered. The Company incurred an aggregate $3,990,000 in underwriting
discount and commissions and approximately $800,000 in other expenses in
connection with the offering. None of such expenses were direct or indirect
payments to directors or officers of the Company, to persons owning 10 percent
or more of any class of equity securities of the Company or to any affiliate of
the Company. The net offering proceeds to the Company after deducting the total
expenses were approximately $52.2 million.
The Company has used approximately $28.3 million of the net
offering proceeds to repay certain borrowing incurred to purchase revenue
equipment. This represents a material deviation from the $18.2 million of
borrowings the Company had indicated an intent to repay in the Prospectus.
Because its projects to purchase and expand regional facilities could not be
transacted immediately, the Company determined to repay additional borrowings in
the current period and to use internally-generated cash, together with
borrowings, as necessary, to finance the proposed regional facilities projects
when and as those projects come to fruition. The Company has used an additional
$6.0 million of the aggregate net proceeds, along with available cash, to repay
$10 million of short-term notes issued to fund a special dividend declared by
the Board of Directors of the Company in August 1997. A majority of these funds
($5.8 million) were paid to certain officers and directors of the Company and
certain trusts of which those officers and directors act as trustees. In
addition, $2.0 million of the net offering proceeds have been used to purchase
the Company's Charlotte regional facility from existing shareholders and $3.0
million of the net offering proceeds have been used to purchase revenue
equipment. $7.0 million of the net offering proceeds have been invested in a
money market account pending application to the Company's planned regional
facility expansion projects, and the remaining $5.9 million of net proceeds are
being used by the Company for working capital. The above amounts are reasonable
estimates of the Company's uses of the net proceeds of the offering to
-14-
<PAGE>
date. Except as specified, none of such uses were direct or indirect payments to
directors or officers of the Company, persons owning 10 percent or more of any
class of equity securities of the Company or to affiliates of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
By unanimous written consent of the Company's shareholders
effective July 30, 1997, the Company's shareholders resolved to amend the
Company's Certificate of Incorporation to (i) authorize two classes of common
capital stock of the Company: "Common Stock" and "Class A Common Stock," (ii)
reclassify each of the Company's outstanding shares of stock as shares of Class
A Common Stock and (iii) define the relative designations, voting powers,
preferences, limitations, restrictions and other rights with respect to each
class of stock.
By unanimous written consent of the Company's shareholders
effective August 11, 1997, the Company's shareholders resolved to approve,
confirm and ratify all of the lawful acts and proceedings of the directors of
the Company, for and on behalf of the Company, since the organizational meeting
of directors.
By unanimous written consent of the Company's shareholders
effective August 12, 1997, the Company's shareholders resolved to adopt the
Jevic Transportation, Inc. 1997 Incentive Plan (the "1997 Incentive Plan") and
to reserve 1,500,000 shares of the Company's authorized but unissued Common
Stock for issuance under said Plan, and to further adopt the Jevic
Transportation, Inc. Employee Stock Purchase Plan and to reserve 300,000 shares
of the Company's authorized but unissued Common Stock for issuance under said
Plan.
By unanimous written consent of the Company's shareholders
effective September 15, 1997, the Company's shareholders resolved to amend the
requirements for eligibility to participate in the 1997 Incentive Plan.
By unanimous written consent of the Company's shareholders
effective October 3, 1997, the Company's shareholders resolved to restate and
integrate and further amend the Company's Certificate of Incorporation to (i)
increase the number of shares of authorized capital stock of the Company from
1,500 to 60,000,000, including the addition of a second class designated
Preferred Stock, of which 10,000,000 shares have been authorized but none have
been issued, (ii) effect a 34,291-for-one split of the issued and outstanding
shares of the Company's Common Stock and Class A Common Stock, (iii) further
define the relative voting powers, preferences, limitations, restrictions and
other special or relative rights of the Company's Common Stock and Class A
Common Stock, (iv) provide for a classified Board of Directors consisting of a
number of directors to be fixed from time to time by the Board, and, further, to
provide that directs shall not be liable to the Company or its shareholders for
damages under the circumstances set forth under the New Jersey Business
Corporation Act, (v) provide that actions to be taken by the shareholders of the
Company shall be taken only at an annual or special meeting or by unanimous
written consent and (vi) provide that certain provisions of the
-15-
<PAGE>
Company's Restated Certificate of Incorporation may be amended only by a
supermajority vote. In the same consent, the Company's shareholders further
resolved to amend and restate the Company's By-laws.
By unanimous written consent of the Company's shareholders
effective October 6, 1997, the Company's shareholders elected Gordon R. Bowker
and Samuel H. Jones, Jr. as Class I directors, with terms expiring at the
Company's annual meeting in 1998, Paul J. Karvois and Karen B. Muhlschlegel as
Class II directors, with terms expiring at the Company's annual meeting in 1999,
and Harry J. Muhlschlegel as a Class III director, with a term expiring at the
Company's annual meeting in 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 1997 Incentive Plan, as amended, incorporated by
reference to Exhibit 10.1 to the Registration
Statement of the Company on Form S-1 (file no.
333-33469), effective October 6, 1997.
10.2 Employee Stock Purchase Plan, incorporated by
reference to Exhibit 10.3 to the Registration
Statement of the Company on Form S-1 (file no. 333-
33469), effective October 6, 1997.
10.3 Lease Agreement made and entered into as of April 12,
1995 between Harry J. Muhlschlegel and Karen
Muhlschlegel and the Company, as amended,
incorporated by reference to Exhibit 10.10 to the
Registration Statement of the Company on Form S-1
(file no. 333-33469), effective October 6, 1997.
10.4 Amended and Restated Lease Agreement by and between
Harry Muhlschlegel and Karen Muhlschlegel and the
Company, incorporated by reference to Exhibit 10.11
to the Registration Statement of the Company on Form
S-1 (file no. 333-33469), effective October 6, 1997.
10.5 Tax Indemnity Agreement between the Company and each
of its shareholders, incorporated by reference to
Exhibit 10.20 to the Registration Statement of the
Company on Form S-1 (file no. 333-33469), effective
October 6, 1997.
10.6 Administrative Services Agreement, dated August 12,
1997, between the Company and Jevic Transportation
Services, Inc., incorporated by reference to Exhibit
10.1 to the Registration Statement of the Company on
Form S-1 (file no. 333-33469), effective October 6,
1997.
-16-
<PAGE>
11.1 Statement re: Computation of Per Share Earnings.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended September 30, 1997.
-17-
<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 hereunto duly authorized.
JEVIC TRANSPORTATION, INC.
By: /s/ Harry J.Muhlschlegel
---------------------------
Harry J. Muhlchlegel
Chief Executive Officer
/s/ Brian J. Fitzpatrick
--------------------------
Brian J. Fitzpatrick
Chief Financial Officer
Date: November 19, 1997
-18-
<PAGE>
EXHIBIT 11.1
JEVIC TRANSPORTATION, INC.
PRO FORMA NET INCOME PER SHARE CALCULATION
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Pro forma net income ....................... $2,463 $2,046 $5,184 $2,543
====== ====== ====== ======
Weighted average shares outstanding ........ 6,858 6,858 6,858 6,858
Dilutive effect of common stock
equivalents.............................. 179 179 179 179
Weighted average number of shares that were
required to be sold to fund distributions
to the S Corporation shareholders ....... 728 728 728 728
------ ------ ------ ------
Shares used in computing pro forma
income per share ........................ 7,765 7,765 7,765 7,765
====== ====== ====== ======
Pro forma net income per share ............. $ 0.32 $ 0.26 $ 0.67 $ 0.33
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,844
<SECURITIES> 0
<RECEIVABLES> 22,245
<ALLOWANCES> 1,395
<INVENTORY> 0
<CURRENT-ASSETS> 31,252
<PP&E> 94,588
<DEPRECIATION> 27,296
<TOTAL-ASSETS> 100,372
<CURRENT-LIABILITIES> 32,353
<BONDS> 0
0
0
<COMMON> 1,128
<OTHER-SE> 29,710
<TOTAL-LIABILITY-AND-EQUITY> 100,372
<SALES> 48,871
<TOTAL-REVENUES> 48,871
<CGS> 0
<TOTAL-COSTS> 43,938
<OTHER-EXPENSES> (36)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 864
<INCOME-PRETAX> 4,105
<INCOME-TAX> 170
<INCOME-CONTINUING> 3,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,935
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
