<PAGE> 1
================================================================================
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 June 30, 1999
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 000-23341
MOTOR CARGO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0406479
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
845 West Center Street
North Salt Lake, Utah 84054
(801) 292-1111
(Address of principal executive offices and telephone number)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On July 31, 1999, there were
6,925,040 outstanding shares of the Registrant's Common Stock, no par value.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,685,285 $ 7,514,654
Receivables 14,512,951 14,182,974
Prepaid expenses 2,092,224 2,630,416
Supplies inventory 394,402 459,711
Deferred income taxes 1,517,605 1,365,000
Income taxes receivable -- 622,648
----------- -----------
Total current assets 22,202,467 26,775,403
PROPERTY AND EQUIPMENT, AT COST 93,923,451 85,954,356
Less accumulated depreciation
and amortization 43,985,298 40,560,113
----------- -----------
49,938,153 45,394,243
OTHER ASSETS
Deferred charges 434,918 426,461
Unrecognized net pension obligation 63,861 63,861
----------- -----------
498,779 490,322
=========== ===========
$72,639,399 $72,659,968
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 3
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term obligations $ 104,470 $ 99,990
Accounts payable 4,277,274 4,237,515
Accrued liabilities 5,787,452 5,021,286
Accrued income taxes 1,068,388 --
Accrued claims 1,698,265 1,382,085
----------- -----------
Total current liabilities 12,935,849 10,740,876
LONG-TERM OBLIGATIONS, less current
maturities 1,336,472 5,389,852
DEFERRED INCOME TAXES 7,159,884 7,255,000
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, no par value; Authorized -
25,000,000 shares - none issued -- --
Common stock, no par value; Authorized -
100,000,000 shares - issued 6,925,040 shares as
of June 30, 1999 and 6,987,820 shares as of
December 31, 1998 11,849,600 12,135,490
Retained earnings 39,357,594 37,138,750
----------- -----------
51,207,194 49,274,240
----------- -----------
$72,639,399 $72,659,968
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating revenues $ 32,353,017 $ 28,327,739 $ 61,083,847 $ 53,915,321
------------ ------------ ------------ ------------
Operating expenses
Salaries, wages and benefits 14,570,117 12,592,455 28,500,763 24,634,011
Operating supplies and expenses 5,303,965 3,709,958 9,611,014 7,413,790
Purchased transportation 4,353,263 4,558,239 8,424,731 8,338,200
Operating taxes and licenses 1,245,292 950,296 2,302,460 1,835,101
Insurance and claims 1,180,152 985,461 2,155,328 1,919,218
Depreciation and amortization 2,155,829 1,990,380 4,240,338 3,821,160
Communications and utilities 461,164 474,258 894,138 921,282
Building rents 685,503 565,175 1,364,735 1,066,359
------------ ------------ ------------ ------------
Total operating expenses 29,955,285 25,826,222 57,493,507 49,949,121
============ ============ ============ ============
Operating income 2,397,732 2,501,517 3,590,340 3,966,200
Other income (expense)
Interest expense (32,177) (31,666) (68,794) (107,020)
Other, net 99,224 132,327 133,439 180,769
------------ ------------ ------------ ------------
67,048 100,661 64,645 73,749
------------ ------------ ------------ ------------
Earnings before income taxes 2,464,780 2,602,178 3,654,985 4,039,949
Income taxes 967,142 1,013,970 1,436,142 1,563,258
------------ ------------ ------------ ------------
NET EARNINGS $ 1,497,638 $ 1,588,208 $ 2,218,843 $ 2,476,691
============ ============ ============ ============
Earnings per share: (note 2)
Basic $ 0.22 0.23 0.32 0.35
Diluted 0.22 0.23 0.32 0.35
============ ============ ============ ============
Weighted-average shares outstanding:
Basic 6,925,040 6,990,000 6,951,911 6,990,000
Diluted 6,925,040 6,998,000 6,951,911 6,908,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended
June 30,
------------------------------
1999 1998
----------- -----------
(unaudited)
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 2,218,843 $ 2,476,691
----------- -----------
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 4,240,338 3,821,160
Provision for losses on trade
and other receivables 121,100 105,000
Gain on disposition of property and equipment (59,382) (75,297)
Deferred income taxes (247,721) (355,000)
Charge associated with stock issuance to an officer 40,000 --
Changes in assets and liabilities
Receivables (451,077) 42,379
Prepaid expenses 538,192 469,027
Supplies inventory 65,309 84,770
Income taxes 1,691,036 683,033
Other assets (8,457) (42,416)
Accounts payable 39,759 (690,114)
Accrued liabilities and claims 1,064,906 951,277
----------- -----------
Total adjustments 7,034,003 4,993,819
----------- -----------
Net cash provided by operating activities 9,252,846 7,470,510
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (8,809,915) (6,455,865)
Proceeds from disposition of property and equipment 85,050 303,946
Repurchase of shares (308,450) --
----------- -----------
Net cash used in
investing activities (9,033,315) (6,151,919)
----------- -----------
</TABLE>
(Continued)
5
<PAGE> 6
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Six months ended
June 30,
------------------------------
1999 1998
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from financing activities
Principal payments on long-term
obligations (4,048,900) (5,044,795)
----------- -----------
Net cash used in financing activities (4,048,900) (5,044,795)
----------- -----------
Net decrease in
cash and cash equivalents (3,829,369) (3,726,204)
Cash and cash equivalents at beginning of period 7,514,654 8,616,702
----------- -----------
Cash and cash equivalents at end of period $ 3,685,285 $ 4,890,498
=========== ===========
Supplemental cash flow information
Cash paid during the period for
Interest $ 29,177 $ 116,000
Income taxes 16,500 1,060,000
</TABLE>
Noncash investing and financing activities
During the first quarter of 1999, in connection with shares issued per the
restricted stock agreement, 2,180 shares valued at $17,440 were withheld by the
Company as tax withholdings.
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The interim consolidated financial information included herein is
unaudited; however, the information reflects all adjustments
(consisting of normal recurring adjustments) that are, in the opinion
of management, necessary to the fair presentation of the consolidated
financial position, results of operations, and cash flows for the
interim periods. The consolidated financial statements should be read
in conjunction with the Notes to consolidated financial statements
included in the audited consolidated financial statements for Motor
Cargo Industries, Inc. (the "Company") for the year ended December 31,
1998 which are included in the Company's Annual Report on Form 10-K for
such year (the "1998 10-K"). Results of operations for interim periods
are not necessarily indicative of annual results of operations. The
consolidated balance sheet at December 31, 1998, was extracted from the
Company's audited consolidated financial statements contained in the
1998 10-K, and does not include all disclosures required by generally
accepted accounting principles for annual consolidated financial
statements.
2. EARNINGS PER SHARE
Basic earnings per common share ("EPS") are based on the weighted
average number of common shares outstanding during each such period.
Diluted earnings per common share are based on shares outstanding
(computed under basic EPS) and potentially dilutive common shares.
Potential common shares included in dilutive earnings per share
calculations include stock options granted but not exercised. A
reconciliation of weighted-average shares outstanding is presented
below:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $1,497,638 $1,588,208 $2,218,843 $2,476,691
Weighted-average shares outstanding - basic 6,925,040 6,990,000 6,951,911 6,990,000
Effect of dilutive stock options -- 8,000 -- 8,000
Weighted-average shares outstanding - assuming
dilution 6,925,040 6,998,000 6,951,911 6,998,000
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's
consolidated financial condition, liquidity and capital resources and results of
operations. This analysis should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "1998 10-K").
OVERVIEW
Motor Cargo Industries, Inc. (the "Company") is a regional
less-than-truckload ("LTL") carrier which provides transportation and logistics
services to shippers within the Company's core service region. The Company's
core service region is the western United States, including Arizona, California,
Colorado, Idaho, New Mexico, Oregon, western Texas, Utah and Washington. The
Company transports general commodities, including consumer goods, packaged
foodstuffs, electronics, computer equipment, apparel, hardware, industrial goods
and auto parts for a diversified customer base. The Company offers a broad range
of services, including expedited scheduling and full temperature-controlled
service. Through its wholly-owned subsidiary, MC Distribution Services, Inc.
("MCDS"), the Company also provides customized logistics, warehousing and
distribution management services.
In 1997, the Company initiated a program to establish market and
operations presence in several major business economic areas ("BEAs") outside of
the Company's core service region. Unlike more traditional inter-regional
expansion models, the Company only solicits tonnage from these markets moving
west into its core service region. The Company primarily utilizes third-party
truckload carriers to transport freight from these markets to its core service
region. The Company initiated this strategy of selling into the region in an
effort to improve lane, route and service center densities in its core service
region without requiring the Company to incur the costs associated with building
an inter-regional terminal network. The Company commenced operations at its
first BEA expansion facility in Dallas in October 1997. In April 1998, the
Company commenced operations at its second BEA expansion facility in Chicago.
During the second quarter of 1999, the Company carefully examined its
BEA operations in Chicago and Dallas. The Company's Dallas operation continues
to show positive growth and margin yield. The Company determined that the
Chicago operation, however, was not profitable, and would not produce acceptable
levels of profitability for the near or intermediate term. As a result, in mid
July 1999, the Company discontinued freight pick-up operations and closed its
service center in Chicago. A small percentage of the freight handled by the
Chicago operation will continue to be handled by the Company at other existing
facilities. The Company currently has no immediate plans to open additional BEA
operations; however, the Company will continue to evaluate additional BEA
markets with the potential for success comparable to the Company's Dallas
operation. The Company intends to evaluate all available strategies for
obtaining tonnage from markets outside its core service region.
On August 1, 1999, the Company secured a service center in Fremont,
California. The Newark and Benicia, California service centers will be
consolidated into the larger Fremont service center. The Company believes this
consolidation will result in a reduction in line-haul expense and re-handling of
freight.
On August 1, 1999, the Company also converted its pick-up and delivery
operations in Boise and Twin Falls, Idaho from independent agencies to
Company-owned service centers. The Company expects that Company-owned service
centers in these locations will facilitate improved line-haul relay and freight
consolidation to and from the Northwest.
8
<PAGE> 9
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 earnings:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Operating revenues 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and benefits 45.0 44.4 46.7 45.6
Operating supplies and expenses 16.4 13.1 15.7 13.8
Purchased transportation 13.4 16.1 13.8 15.5
Operating taxes and licenses 3.9 3.4 3.8 3.4
Insurance and claims 3.7 3.5 3.5 3.6
Depreciation and amortization 6.7 7.0 6.9 7.1
Communications and utilities 1.4 1.7 1.5 1.7
Building rents 2.1 2.0 2.2 1.9
----- ----- ----- -----
Total operating expenses 92.6 91.2 94.1 92.6
----- ----- ----- -----
Operating income 7.4 8.8 5.9 7.4
Other income (expense)
Interest expense (0.1) (0.1) (0.1) (0.2)
Other, net 0.3 0.5 0.2 0.3
----- ----- ----- -----
Earnings before income taxes 7.6 9.2 6.0 7.5
Income taxes 3.0 3.6 2.4 2.9
----- ----- ----- -----
Net earnings 4.6 5.6 3.6 4.6
===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
Operating revenues increased 14.2% to $32.4 million for the three
months ended June 30, 1999, compared to $28.3 million for the same period in
1998. The increase was primarily attributable to an increased volume of freight
within the Company's core service region. Approximately 3% of the 14.2% growth
was attributable to revenue obtained because a competitor discontinued business
at the end of May 1999. Freight from the Company's BEA operations also
contributed to the revenue growth. As discussed above, the Company discontinued
freight pick-up operations and closed its service center in Chicago subsequent
to the end of the second quarter. The number of shipments during the second
quarter of 1999 increased by 18.7% to 261,000 compared to 219,900 for the second
quarter of 1998.
Revenues contributed by MCDS increased to $929,000 for the second
quarter of 1999, compared to $592,000 for the second quarter of 1998. The
increase was due primarily to the expansion of a contract with one customer and
the addition of several smaller customers.
As a percentage of operating revenues, salaries, wages and benefits
increased to 45.0% for the second quarter of 1999 from 44.4% for the second
quarter of 1998. This increase was due primarily to increased staffing of full
time employees with their associated benefits. This included staffing of the
Company's new service center in Benicia, California. Also, additional line
drivers were employed by the Company in the second quarter of 1999, compared to
the second quarter of 1998. During the second quarter of 1998, the Company
utilized more purchased transportation instead of employee-drivers.
Purchased transportation decreased to 13.4% of revenues for the three
months ended June 30, 1999 as compared to 16.1% for the same period in 1998.
This was primarily caused by shifting costs from purchased transportation to
other expense categories such as payroll, operating expenses, operating taxes
and licenses and depreciation associated with having approximately 30 more
employee line drivers during the second quarter of 1999 compared to the second
quarter of 1998. The Company has increased its staff of employee drivers in
order to reduce overall costs and provide more reliable and consistent service.
9
<PAGE> 10
Total operating expenses increased to 92.6% of operating revenues for
the three months ended June 30, 1999 from 91.2% for the same period in 1998.
This increase was primarily due to increased salaries, wages, benefits and
investment in sales, marketing and operations. Fuel costs, as a percentage of
operating revenues, were comparable to prior periods. Fuel prices have increased
in recent months, however, particularly in the latter part of the second
quarter. As a result, beginning in August 1999, the Company will implement a
variable fuel surcharge tied to the west coast average fuel price index.
Net earnings decreased 5.7% to $1,498,000 for the three months ended
June 30, 1999, compared to $1,588,000 for the same period in 1998. Net earnings
per share decreased $0.01 to $0.22 for the second quarter of 1999, compared to
net earnings per share of $0.23 for the second quarter of 1998.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30,
1998
Operating revenues increased 13.3% to $61.1 million for the six months
ended June 30, 1999, compared to $53.9 million for the same period in 1998. The
increase was attributable to an increased volume of freight within the Company's
core service region, as well as freight from the Company's BEA operations. The
number of shipments during the six months ended June 30, 1999 increased by 18.1%
to 496,300, compared to 420,100 for the same period in 1998.
Revenues for MCDS increased to $1,779,000 for the six months ended June
30, 1999 from $1,068,000 for the same period in 1998. The increase was due
primarily to the expansion of a contract with one customer and the addition of
several smaller customers.
As a percentage of operating revenues, salaries, wages and benefits
increased to 46.7% for the six months ended June 30, 1999 from 45.6% for the
same period of 1998. This increase was due primarily to increased staffing of
full time employees with their associated benefits. This included staffing of
the Company's BEA expansion facility in Chicago and a new service center in
Benicia, California. Also, additional line drivers were employed by the Company
in the first half of 1999, compared to the first half of 1998. During the first
half of 1998, the Company utilized more purchased transportation instead of
employee-drivers.
Purchased transportation decreased to 13.8% of revenues for the six
months ended June 30, 1999 as compared to 15.5% for the same period in 1998.
This was primarily caused by shifting costs from purchased transportation to
other expense categories such as payroll, operating expenses, operating taxes
and licenses, and depreciation associated with having an average of
approximately 26 more employee line drivers during the first six months of 1999
compared to the first six months of 1998. The Company has increased its staff of
employee drivers in order to reduce overall costs and provide more reliable and
consistent service.
Total operating expenses increased to 94.1% of operating revenues for
the six months ended June 30, 1999 from 92.6% for the same period in 1998. This
increase was primarily due to increased salaries, wages and benefits. Fuel
costs, as a percentage of operating revenues, were comparable to prior periods.
Fuel prices have increased in recent months, however, particularly in the latter
part of the second quarter. As a result, beginning in August 1999, the Company
will implement a variable fuel surcharge tied to the west coast average fuel
price index.
Net earnings decreased 10.4% to $2,219,000 for the six months ended
June 30, 1999, compared to $2,477,000 for the same period in 1998. Net earnings
per share decreased $0.03 to $0.32 for the six months ended June 30, 1999
compared to net earnings per share of $0.35 for the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are funds provided by
operations and bank borrowings. Net cash provided by operating activities was
approximately $9.3 million for the first six months of 1999 compared to $7.5
million for the corresponding period in 1998. Net cash provided by operating
activities is primarily attributable to the Company's earnings before
depreciation and amortization expense.
10
<PAGE> 11
Capital expenditures totaled approximately $8.8 million during the
first six months of 1999 compared to $6.5 million in the comparable period of
1998. The increase in capital expenditures was primarily due to the purchase of
revenue equipment and land and construction costs at new terminal facilities.
Net cash used in financing activities was $4.0 million for the six
months ended June 30, 1999 compared to $5.0 million for the comparable period of
1998. At June 30, 1999, total borrowings under long-term obligations totaled
approximately $1.4 million.
The Company is a party to a loan agreement with Zions First National
Bank ("Zions") that provides for a revolving line of credit in an amount not
exceeding $5 million. The loan agreement provides for the issuance of letters of
credit and may be used for this purpose, as well as to fund the working capital
needs of the Company. As of March 31, 1999, there was no outstanding balance
under this revolving line of credit.
Zions has also provided a second revolving line of credit to the
Company in an amount not to exceed $20 million. The Company intends to use
amounts available under this credit facility primarily to purchase equipment
used in operations and for other strategic purposes. As of June 30, 1999, there
was no outstanding balance under this facility.
All amounts outstanding under the two loan facilities described above
accrue interest at a variable rate established from time to time by Zions. The
Company does have the option, however, to request that specific advances accrue
interest at a fixed rate quoted by Zions subject to certain prepayment
restrictions. All amounts outstanding under the two loan facilities are
collateralized by the Company's inventory, chattel paper, accounts receivable
and equipment now owned or hereafter acquired by the Company.
During the first quarter of 1999, the Company announced a share
repurchase program. The Board of Directors of the Company authorized the
repurchase of up to 700,000 shares. As of June 30, 1999, a total of 60,600
shares had been repurchased by the Company for approximately $308,000.
SEASONALITY
The Company experiences some seasonal fluctuations in freight volume.
Historically, the Company's shipments decrease during the winter months. In
addition, the Company's operating expenses historically have been higher in the
winter months due to decreased fuel efficiency and increased maintenance costs
for revenue equipment in colder weather.
THE YEAR 2000 ISSUE
The Company utilizes computer hardware and software in its operations.
Certain computer applications could fail or create erroneous results due to the
upcoming change in the century (the "Year 2000 Issue"). The Company has
performed an analysis and has implemented procedures to address the Year 2000
Issue. The Company regularly upgrades its computer hardware and believes that it
will not incur any additional expenses to modify computer hardware due to the
Year 2000 Issue. In addition, the Company has received commitments from software
vendors that will allow the Company to upgrade third-party software programs
with minimal expense to the Company. The Company anticipates, however, that it
will incur expenses of approximately $100,000 to upgrade and test certain
proprietary software developed for the Company. As of June 30, 1999,
approximately $90,000 of these expenses had been incurred. The Company has
completed the modification of its proprietary software and has completed the
majority of testing for such software.
The Company is also contacting vendors and customers to determine the
extent to which the Company may be vulnerable to third party year 2000 issues.
It is not possible at this time to quantify the amount of business that might be
lost or the costs that could be incurred by the Company as a result of the
Company's significant customers' and suppliers' failure to remediate their Year
2000 issues. The Company will establish, where needed, contingency plans based
on testing experience and responses from significant customers and suppliers.
Based upon current information, the Company believes that all hardware
and software modifications necessary to operate and effectively manage the
Company will be performed by the year 2000 and that related costs
11
<PAGE> 12
will not have a material impact on the results of operations, cash flow, or
financial condition of the Company. There can be no assurances, however, that
management's estimates and evaluations will prove to be accurate, and actual
results could differ materially from those anticipated. Factors which might
cause material changes include, but are not limited to, the availability of Year
2000 personnel, the readiness of third parties and the Company's ability to
respond to unforeseen Year 2000 complications.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION
Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events, future revenues or performance, capital expenditures, financing
needs, plans or intentions relating to acquisitions by the Company and other
information that is not historical information. When used in this report, the
words "estimates," "expects," "anticipates," "forecasts," "plans," "intends,"
"believes" and variations of such words or similar expressions are intended to
identify forward-looking statements. Additional forward-looking statements may
be made by the Company from time to time. All such subsequent forward-looking
statements, whether written or oral and whether made by or on behalf of the
Company, are also expressly qualified by these cautionary statements.
The Company's forward-looking statements are based upon the Company's
current expectations and various assumptions. The Company's expectations,
beliefs and projections are expressed in good faith and are believed by the
Company to have a reasonable basis, including without limitation, management's
examination of historical operating trends, data contained in the Company's
records and other data available from third parties, but there can be no
assurance that management's expectations, beliefs and projections will result or
be achieved or accomplished. The Company's forward-looking statements apply only
as of the date made. The Company undertakes no obligation to publicly update or
revise forward-looking statements which may be made to reflect events or
circumstances after the date made or to reflect the occurrence of unanticipated
events.
There are a number of risks and uncertainties that could cause actual
results to differ materially from those set forth in, contemplated by or
underlying the forward-looking statements contained in this report. These risks
include, but are not limited to, economic factors and fuel price fluctuations,
the availability of employee drivers and independent contractors, risks
associated with geographic expansion, capital requirements, claims exposure and
insurance costs, competition and environmental hazards. Each of these risks and
certain other uncertainties are discussed in more detail in the 1998 10-K. There
may also be other factors, including those discussed elsewhere in this report,
that may cause the Company's actual results to differ from the forward-looking
statements. Any forward-looking statements made by or on behalf of the Company
should be considered in light of these factors.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on June 21,
1999. At the meeting:
1. The following persons were elected as Directors of the Company
to serve until the next Annual Meeting or until their
successors are elected and qualified.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
---- --------- --------------
<S> <C> <C>
Harold R. Tate 5,835,094 4,653
Marshall L. Tate 5,834,494 5,253
Marvin L. Friedland 5,836,344 3,403
Robert Anderson 5,835,744 4,003
James Clayburn LaForce, Jr 5,836,344 3,403
</TABLE>
2. The selection of Grant Thornton LLP as independent auditors to
audit the Consolidated Financial Statements of the Company and
its subsidiaries for the year ending December 31, 1999 was
ratified by the shareholders as follows:
<TABLE>
<S> <C>
Votes For: 5,837,547
Votes Against: 700
Abstentions: 1,500
Broker Non-Votes: 0
</TABLE>
3. The Company's 1999 Stock Option Plan for Nonemployee Directors
was approved by the Shareholders as follows:
<TABLE>
<S> <C>
Votes For: 5,387,447
Votes Against: 443,250
Abstentions: 9,050
Broker Non-Votes: 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report.
10.1 1999 Stock Option Plan for Non-Employee Directors
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter for which
this report is filed.
13
<PAGE> 14
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.
MOTOR CARGO INDUSTRIES, INC.
/s/ Lynn H. Wheeler
--------------------------------
LYNN H. WHEELER
Vice President of Finance and
Chief Financial Officer
(Authorized Signatory and
Principal Financial and
Accounting Officer)
Date: August 11, 1999
14
<PAGE> 15
INDEX TO EXHIBITS
Exhibits
10.1 1999 Stock Option Plan for Non-Employee Directors
27 Financial Data Schedule.
15
<PAGE> 1
EXHIBIT 10.1
MOTOR CARGO INDUSTRIES, INC.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
<PAGE> 2
MOTOR CARGO INDUSTRIES, INC.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE
<TABLE>
<S> <C> <C>
I. PURPOSES........................................................................................1
II. AMOUNT OF STOCK SUBJECT TO THE PLAN.............................................................1
III. ADMINISTRATION..................................................................................1
IV. ELIGIBILITY.....................................................................................3
V. OPTION PRICE AND PAYMENT........................................................................3
VI. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT
OF EXERCISE.....................................................................................4
VII. TERMINATION OF DIRECTORSHIP.....................................................................5
VIII. EXERCISE OF OPTIONS.............................................................................6
IX. USE OF PROCEEDS.................................................................................6
X. NON-TRANSFERABILITY OF OPTIONS..................................................................7
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN
TRANSACTIONS....................................................................................7
XII. RIGHT TO TERMINATE DIRECTORSHIP.................................................................8
XIII. PURCHASE FOR INVESTMENT.........................................................................8
XIV. ISSUANCE OF STOCK CERTIFICATES; LEGENDS;
PAYMENT OF EXPENSES.............................................................................9
XV. LISTING OF SHARES AND RELATED MATTERS..........................................................10
XVI. AMENDMENT OF THE PLAN..........................................................................10
XVII. TERMINATION OR SUSPENSION OF THE PLAN..........................................................10
XVIII. SAVINGS PROVISION..............................................................................10
XIX. GOVERNING LAW..................................................................................11
XX. PARTIAL INVALIDITY.............................................................................11
XXI. EFFECTIVE DATE.................................................................................11
</TABLE>
i
<PAGE> 3
MOTOR CARGO INDUSTRIES, INC.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
I. PURPOSES
Motor Cargo Industries, Inc. (the "Company") desires to afford certain
of the non-employee members of the Board of Directors of the Company an
opportunity to acquire a proprietary interest in the Company, and thus to create
in such directors an increased interest in and a greater concern for the welfare
of the Company and its subsidiaries and to increase their identification with
the interests of the stockholders of the Company.
The stock options ("Options") granted under the Plan are not intended
to be options that meet the requirements for incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of Common Shares of the Company which either may be
purchased pursuant to the exercise of Options granted under the Plan shall not
exceed, in the aggregate, One Hundred Thousand (100,000) of the currently
authorized Common Shares, no par value, of the Company (the "Shares"), such
number to be subject to adjustment in accordance with Article XI of the Plan.
Shares that are the subject of Options shall be counted only once in determining
whether the maximum number of Shares that may be purchased or awarded under the
Plan has been exceeded.
Shares which may be acquired under the Plan may be either authorized
but unissued Shares, Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. If and to the extent that Options
granted under the Plan expire or terminate without having been exercised, the
Shares covered by such expired or terminated Options may again be subject to an
Option under the Plan.
Subject to Article XXI hereof, the Company may, from time to time
during the period beginning on January 1, 1999 (the "Effective Date") and ending
on December 31, 2008 (the
1
<PAGE> 4
"Termination Date"), grant to non-employee directors of the Company Options
under the terms hereinafter set forth.
III. ADMINISTRATION
The board of directors of the Company (the "Board of Directors") shall
designate from among its members a committee (the "Committee") to administer the
Plan. The Committee shall consist of no fewer than two members of the Board of
Directors. A majority of the members of the Committee shall constitute a quorum,
and the act of a majority of the members of the Committee shall be the act of
the Committee. Any member of the Committee may be removed at any time either
with or without cause by resolution adopted by the Board of Directors, and any
vacancy on the Committee at any time may be filled by resolution adopted by the
Board of Directors.
Any or all powers and functions of the Committee may be exercised at
any time and from time to time by the Board of Directors or an executive
committee of the Board of Directors (the "Executive Committee"; references below
to the Committee shall be deemed to include references to the Board of Directors
and the Executive Committee, except as the context otherwise requires).
Subject to the express provisions of the Plan, the Committee shall have
authority in its discretion, to determine the persons to whom Options shall be
granted, the time when such persons shall be granted Options, the number of
Shares which shall be subject to each Option, the purchase price of each Share
which shall be subject to each Option, the period(s) during which such Options
shall be exercisable (whether in whole or part), and the other terms and
provisions thereof (which need not be identical).
Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and the Options granted thereunder, to amend
the Plan and the Options granted thereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the Options (which need not be identical) and to make all other
determinations necessary or advisable for administering the Plan. The Committee
also shall have the authority to require, in its discretion as a condition of
the
2
<PAGE> 5
granting of any such Option, that the director agree (a) not to sell or
otherwise dispose of Shares acquired pursuant to the exercise of such Option for
a period of six (6) months following the date of the acquisition of such Option.
In no event will a director who is subject to the reporting requirements of
Section 16(a) of the Exchange Act be entitled to sell or otherwise dispose of
any Shares acquired pursuant to exercise of any such Options for a period of six
(6) months from the date of the acquisition of such Options.
The determination of the Committee on matters referred to in this
Article III shall be conclusive.
The Committee may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Board of Directors, the Executive Committee or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any award of Options granted hereunder.
IV. ELIGIBILITY
Options may be granted only to non-employee directors of the Company.
The Plan does not create a right in any person to participate in the Plan, nor
does it create a right in any person to have any Options granted to him or her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall, in its best judgment, determine to
be not less than seventy-five percent (75%) of the fair market value per Share
at the date the Option is granted.
If the Shares are listed on a national securities exchange in the
United States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the closing
quotation at which such Shares are sold on such national securities exchange on
the
3
<PAGE> 6
date such Option is granted. In the event that the Shares are listed on a
national securities exchange in the United States on such date but the Shares
are not traded on such date, or such national securities exchange is not open
for business on such date, the fair market value per Share shall be determined
as of the closest preceding date on which such exchange shall have been open for
business and the Shares were traded. If the Shares are listed on more than one
national securities exchange in the Untied States on the date any such Option is
granted, the Committee shall determine which national securities exchange shall
be used for the purpose of determining the fair market value per Share.
If on the date any Option is granted a public market exists for the
Shares but such Shares are not listed on a national securities exchange in the
United States, the fair market value per Share shall be deemed to be the average
of the closing bid and asked quotations in the over-the-counter market for such
Shares in the United States on the date such Option is granted. In the event
that there are no bid and asked quotations in the over-the-counter market in the
United States for such Shares on the date such Option is granted, the fair
market value per Share shall be deemed to be the average of the closing bid and
asked quotations in the over-the-counter market in the United States for such
shares on the closest date preceding the date such Option is granted for which
such quotations are available.
For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash; provided, however, that in lieu of
cash, the holder of an Option may, if the terms of such Option so provide and to
the extent permitted by applicable law, exercise an Option in whole or in part,
by delivering to the Company Common Shares of the Company (in proper form for
transfer and accompanied by all requisite stock transfer tax stamps or cash in
lieu thereof) owned by such holder having a fair market value equal to the cash
exercise price applicable to that portion of the Option being exercised by the
delivery of such shares, the fair market value of the Common Shares so delivered
to be determined as of the date
4
<PAGE> 7
immediately preceding the date on which the Option is exercised, or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
VI. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option granted hereunder shall be exercisable at such times, in
such amounts and during such period or periods as the Committee shall determine
at the date of the grant of such Option. The Committee shall have the right to
accelerate, in whole or in part, from time to time, conditionally or
unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a
fraction of a Share.
A person entitled to receive Shares upon the exercise of an Option
shall not have the rights of a stockholder with respect to such Shares until the
date of issuance of a stock certificate to him for such Shares; provided,
however, that until such stock certificate is issued, any holder of an Option
using previously acquired Shares in payment of an option exercise price shall
continue to have the rights of a stockholder with respect to such previously
acquired Shares.
VII. TERMINATION OF DIRECTORSHIP
Upon termination of the directorship with the Company of any
non-employee director, any Option previously granted to the director, unless
otherwise specified by the Committee in the Option, shall, to the extent not
theretofore exercised, terminate and become null and void; provided, however,
that:
(a) if the director shall die while a director of the Company
or during either the three (3) month or one (1) year period, whichever
is applicable, specified in clause (b) below and at a time when such
director was entitled to exercise an Option as herein provided, the
5
<PAGE> 8
legal representative of such director, or such person who acquired such
Option by bequest or inheritance or by reason of the death of the
director, may, not later than one (1) year from the date of death,
exercise such Option, to the extent not theretofore exercised, in
respect of any or all of such number of Shares as specified by the
Committee in such Option; and
(b) if the directorship of any non-employee director to whom
such Option shall have been granted shall terminate for any reason
other than for cause, and while such director is entitled to exercise
such Option as herein provided, such director shall have the right to
exercise such Option so granted in respect of any or all of such number
of Shares as specified by the Committee in such Option, at any time up
to and including (i) three (3) months after the date of such
termination of directorship, and (ii) one (1) year after the date of
termination of directorship in the case of termination by reason of
disability.
In no event, however, shall any person be entitled to exercise any
Option after the expiration of the period of exercisability of such Option, as
specified therein.
If the directorship of a non-employee director is terminated for cause,
any Option granted hereunder shall, unless otherwise specified by the Committee
in the Option, forthwith terminate with respect to any unexercised portion
thereof.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased grantee or by a person who acquired an Option
granted hereunder by bequest or inheritance or by reason of the death of any
director or former director, written notice of such exercise shall be
accompanied by a certified copy of letters testamentary or equivalent proof of
the right of such legal representative or other person to exercise such Option.
For the purposes of the Plan, the term "for cause" shall mean as
determined by the Committee or the Board of Directors, in its sole discretion,
(i) there has been a theft, embezzlement, or other criminal misappropriation of
funds by the director, whether from the Company or any other person; (ii)
6
<PAGE> 9
there has been an incident or occurrence of substance abuse by the director that
impaired or that impairs the director's ability to perform his duties and
responsibilities to the Company; (iii) director has been convicted of or has
entered a plea of guilty or nolo contendere to a felony or to any other crime,
which other crime is punishable by incarceration for a period of one (1) year or
longer, or which is a crime involving moral turpitude; or (iv) the director has
in a material way, engaged in conduct injurious to the Company.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to
all or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and accompanied by payment of the purchase price. Subject to the terms of
Articles XIII, XIV and XV hereof, the Company shall cause certificates for the
Shares so purchased to be delivered at the principal business office of the
Company, against payment of the full purchase price, on the date specified in
the notice of exercise.
IX. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of the Company and used for its
general corporate purposes as the Board of Directors shall determine.
X. NON-TRANSFERABILITY OF OPTIONS
An Option granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, and any Option granted hereunder shall be exercisable, during the
lifetime of the holder, only by such holder. Except to the extent provided
above, Options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
7
<PAGE> 10
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
Notwithstanding any other provision contained herein, in the event of
any change in the Shares subject to the Plan or to any Option granted under the
Plan (through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off, combination of shares,
exchange of shares, or other like change in capital structure of the Company),
the Committee shall make appropriate adjustments to the maximum number of Shares
which may be acquired under the Plan pursuant to the exercise of Options, the
maximum number of shares for which Options may be granted to any one director or
the non-employee directors of the Company as a group, and the number of Shares
and price per Share subject to outstanding Options as shall be equitable to
prevent dilution or enlargement of rights under such Options, and the
determination of the Committee as to these matters shall be conclusive.
In the event of a "change in control" of the Company, all then
outstanding Options shall immediately become exercisable. For purposes of the
Plan, a "change in control" of the Company occurs if (a) more than fifty percent
(50%) of the total combined voting power of all classes of stock of the Company
normally entitled to vote for the election of directors of the Company is
acquired by another person, firm or corporation or by a cooperating group of
such individuals or entities, or (b) the Board of Directors approves a
consolidation or merger of the Company with another corporation, the
consummation of which would result in the occurrence of an event described in
clause (a) above.
The Committee, in its sole discretion, may determine that, upon the
occurrence of a transaction described in the preceding paragraph, each Option
outstanding hereunder shall terminate within a specified number of days after
notice to the holder, and such holder shall receive, with respect to each Share
subject to such Option, an amount equal to the excess of the fair market value
of such Shares immediately prior to the occurrence of such transaction over the
exercise price per Share of such Option; such amount shall be payable in cash,
in one or more of the kinds of property payable in such transaction, or in a
combination thereof, as the Committee in its discretion shall determine. The
provisions contained in the preceding sentence shall be inapplicable to an
Option granted within six (6) months
8
<PAGE> 11
before the occurrence of a transaction described above if the holder of such
Option is subject to the reporting requirements of Section 16(a) of the Exchange
Act.
XII. RIGHT TO TERMINATE DIRECTORSHIP
Neither the Plan nor any Option shall confer upon the director any
right with respect to continuing his or her relationship as a director of the
Company, nor shall the Plan or any Option interfere in any way with the
director's right or the Company's right to terminate such relationship, with or
without cause.
XIII. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Committee may require the holder of
an Option granted hereunder, as a condition of exercise of such Option, to
execute and deliver to the Company a written statement in form satisfactory to
the Committee, in which such holder represents and warrants that such holder is
purchasing or acquiring the Shares acquired thereunder for such holder's own
account, for investment only and not with a view to the resale or distribution
thereof, and agrees that any subsequent resale or distribution of any of such
Shares shall be made only pursuant to either (i) a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), which Registration Statement has become effective and is current with
regard to the Shares being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption
the holder shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel of the Company, as to the application of such exemption thereto. The
foregoing restriction shall not apply to (x) issuances by the Company so long as
the Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (y) reofferings of Shares by affiliates of the
Company (as defined in Rule 405 or any successor rule or regulation promulgated
under the Securities Act) if the Shares being reoffered are registered under the
Securities Act and a prospectus in respect thereof is current.
9
<PAGE> 12
Nothing herein shall be construed as requiring the Company to register
Shares subject to any Option under the Securities Act. In addition, if at any
time the Committee shall determine that the listing or qualification of the
Shares subject to such Option on any securities exchange or under any applicable
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
an Option, or the issuance of Shares thereunder, such Option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
XIV. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
Upon any exercise of an Option which may be granted hereunder and, in
the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.
The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as the Committee,
in its discretion, determines to be necessary or appropriate to (a) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, or (b) implement the provisions of the Plan and any
agreement between the Company and the optionee or grantee with respect to such
Shares.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration Statement has
been filed by the Company for its own corporate purposes (and the Company so
states) in which event the recipient of the Shares shall bear only such fees and
10
<PAGE> 13
expenses as are attributable solely to the inclusion of the Shares he or she
receives in the Registration Statement.
All Shares issued as provided herein shall be fully paid and
nonassessable to the extent permitted by law.
XV. LISTING OF SHARES AND RELATED MATTERS
The Board of Directors may delay any issuance or delivery of Shares if
it determines that listing, registration or qualification of Shares covered by
the Plan upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of Shares under the Plan, until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board of
Directors.
XVI. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan, provided
that no amendment shall be made, without the approval of the stockholders of the
Company, that will (a) increase the total number of Shares reserved for Options
under the Plan (other than an increase resulting from an adjustment provided for
in Article XI hereof), (b) modify the provisions of the Plan relating to
eligibility, or (c) materially increase the benefits accruing to participants
under the Plan, unless permitted by applicable law. The rights and obligations
under any Option granted before amendment of the Plan or any unexercised portion
of such Option shall not be adversely affected by amendment of the Plan or the
Option without the consent of the holder of such Option.
XVII. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in
11
<PAGE> 14
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option was granted. The
power of the Committee to construe and administer any Options granted prior to
the termination or suspension of the Plan under Article III nevertheless shall
continue after such termination or during such suspension.
XVIII. SAVINGS PROVISION
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
XIX. GOVERNING LAW
The Plan and Options as may be granted hereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
domestic substantive laws of the State of Utah, without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any other jurisdiction.
XX. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be
deemed to affect the validity of any other provision.
XXI. EFFECTIVE DATE
The Plan shall become effective at 9:00 a.m., Salt Lake City time, on
the Effective Date; provided, however, that if the Plan is not approved by a
vote of the stockholders of the Company at an annual meeting or any special
meeting or by unanimous written consent within twelve (12) months after the
Effective Date, the Plan and any Options granted thereunder shall terminate.
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,685
<SECURITIES> 0
<RECEIVABLES> 14,513
<ALLOWANCES> 0
<INVENTORY> 394
<CURRENT-ASSETS> 22,202
<PP&E> 93,923
<DEPRECIATION> 43,985
<TOTAL-ASSETS> 72,639
<CURRENT-LIABILITIES> 12,936
<BONDS> 0
0
0
<COMMON> 11,850
<OTHER-SE> 39,358
<TOTAL-LIABILITY-AND-EQUITY> 72,639
<SALES> 61,084
<TOTAL-REVENUES> 61,084
<CGS> 0
<TOTAL-COSTS> 57,494
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69
<INCOME-PRETAX> 3,655
<INCOME-TAX> 1,436
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,219
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.32
</TABLE>
