<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the period ended March 31, 1995
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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
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Commission file Number 0-6200
Frozen Food Express Industries, Inc.
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(Exact name of registrant as specified on its charter)
Texas 75-1301831
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1145 Empire Central Place Dallas, Texas 75247
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(Address of principal executive offices) (Zip Code)
(2l4) 630-8090
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(Registrant's telephone number, including area code)
None
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (l) 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 filing requirements
for the past 90 days.
[X] Yes [ ] No
As of May 3, 1995, 16,062,453 shares of the Registrant's Common Stock, $l.50 par
value, were outstanding.
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INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item l. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1995, and December 31, 1994 2
Consolidated Statements of Income -
Three months ended March 31, 1995 and 1994 3
Consolidated Condensed Statements of Cash Flows -
Three months ended March 31, 1995 and 1994 4
Notes to Consolidated Condensed Financial
Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Financial Data Schedule 10
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<PAGE>
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, Dec. 31,
1995 1994
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<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 2,686 $ 4,381
Accounts receivable, net 34,187 36,643
Inventories 7,483 8,006
Tires 4,485 4,334
Other 5,636 3,692
--------- ---------
Total current assets 54,477 57,056
--------- ---------
Property and equipment
Revenue equipment 65,590 64,401
Other 32,948 32,439
--------- ---------
98,538 96,840
Less depreciation 43,054 42,679
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Net property and equipment 55,484 54,161
--------- ---------
Other assets 5,928 5,619
--------- ---------
$ 115,889 $ 116,836
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Trade accounts payable $ 11,506 $ 12,580
Accrued claims liabilities 7,526 7,712
Accrued payroll 3,684 5,006
Federal income tax payable 765 -
Other 7,116 6,135
--------- ---------
Total current liabilities 30,597 31,433
Long-term debt 7,000 9,000
Other and deferred credits 11,976 12,115
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Total liabilities and
deferred credits 49,573 52,548
--------- ---------
Stockholders' equity
Common stock 25,921 25,921
Paid-in capital 316 -
Retained earnings 44,820 43,513
--------- ---------
71,057 69,434
Less - Treasury stock and
receivable from ESOP 4,741 5,146
--------- ---------
Total stockholders' equity 66,316 64,288
--------- ---------
$ 115,889 $ 116,836
========= =========
</TABLE>
See accompanying notes.
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<PAGE>
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per-share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------
1995 1994
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<S> <C> <C>
Revenue
Freight revenue $ 62,042 $ 56,552
Non-freight revenue 4,936 3,749
-------- --------
66,978 60,301
-------- --------
Operating Expenses
Freight operating expenses
Salaries, wages and related expenses 16,358 14,203
Purchased transportation 12,950 12,452
Supplies and expenses 17,250 15,542
Revenue equipment rent 4,253 3,411
Communications and utilities 897 757
Insurance and claims 3,262 3,095
Depreciation 2,692 2,478
Operating taxes and licenses 1,233 1,150
Gain on sale of equipment (163) (141)
Miscellaneous expense 617 586
-------- --------
59,349 53,533
Non-freight costs and operating expenses 4,656 3,834
-------- --------
64,005 57,367
-------- --------
Income from operations 2,973 2,934
Interest and other expense (380) (249)
-------- --------
Income before income tax 2,593 2,685
Provision for income tax 807 940
-------- --------
Net income $ 1,786 $ 1,745
======== ========
Net income per share of common stock
Primary and fully diluted $ .11 $ .10
======== ========
Weighted average fully diluted shares 16,625 16,635
======== ========
</TABLE>
See accompanying notes.
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<PAGE>
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended March 31,
---------------------
1995 1994
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<S> <C> <C>
Net cash provided by (used in) operating activities $ 2,564 $ (1,611)
-------- --------
Cash flows from investing activities
Business dispositions 1,925 -
Expenditures for property and equipment (4,673) (2,087)
Proceeds from sale of property and equipment 822 3,580
Other (45) 97
-------- --------
Net cash (used in) provided by investing activities (1,971) 1,590
-------- --------
Cash flows from financing activities
Borrowings under revolving credit agreement 12,000 7,000
Payments against revolving credit agreement (14,000) (2,000)
Dividends paid (479) (378)
Net Treasury stock proceeds 191 270
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Net cash (used in) provided by financing activities (2,288) 4,892
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Net (decrease) increase in cash and cash equivalents (1,695) 4,871
Cash and cash equivalents at beginning of year 4,381 3,834
-------- --------
Cash and cash equivalents at end of quarter $ 2,686 $ 8,705
======== ========
</TABLE>
See accompanying notes.
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<PAGE>
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
March 31, 1995 and 1994
(Unaudited)
1. BASIS OF PRESENTATION
---------------------
The consolidated condensed financial statements include Frozen Food Express
Industries, Inc. (FFEX) and its subsidiary companies (the Company), all of which
are wholly-owned. All significant intercompany accounts and transactions have
been eliminated in consolidation. The condensed financial statements included
herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) and have not been audited or reviewed
by independent public accountants. In the opinion of management, all
adjustments (which consisted only of normal recurring accruals) necessary to
present fairly the financial position and results of operations have been made.
Pursuant to SEC rules and regulations, certain information and disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted from these
statements unless significant changes have taken place since the end of the most
recent fiscal year. FFEX believes that the disclosures contained herein, when
read in conjunction with the financial statements and notes included, or
incorporated by reference, in FFEX's Form 10-K filed with the SEC on March 29,
1995, are adequate to make the information presented not misleading. It is
suggested, therefore, that these statements be read in conjunction with the
statements and notes (included, or incorporated by reference), in the
aforementioned report on Form 10-K.
2. FINANCING AND INVESTING ACTIVITIES NOT AFFECTING CASH
-----------------------------------------------------
During the three months ended March 31, 1995 and 1994, the Company funded
contributions to its Employee Savings Plan by transferring 16,360 and 29,465
shares, respectively, of treasury stock to the Plan trustee. The fair market
value of the transferred shares was approximately $204,000 for 1995 and
approximately $393,000 for 1994.
3. STOCKHOLDERS' EQUITY
--------------------
As of March 31, 1995 and 1994, respectively, there were 16,045,000 and
12,617,000 shares of stock outstanding.
4. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company has accrued for costs related to public liability and work-related
injury claims, some of which involve litigation. The aggregate amount of these
claims is significant. In the opinion of management, these actions can be
successfully defended or resolved, and any additional costs incurred over
amounts accrued will not have a material adverse effect on the Company's
financial position or results of operations.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
The table below sets forth, as a percentage of freight revenue, certain major
operating expenses for the three-month periods ended March 31, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1995 1994
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<S> <C> <C>
Salaries, wages and related expenses 26.4% 25.1%
Purchased transportation 20.9 22.0
Supplies and expenses 27.8 27.5
Revenue equipment rent 6.9 6.0
Insurance and claims 5.3 5.5
Depreciation 4.3 4.4
Other 4.1 4.2
---- ----
Total freight operating expenses 95.7% 94.7%
==== ====
</TABLE>
During the first quarter of 1995, revenue increased by 11% to $66,978,000 with
freight revenue up $5.5 million or 9.7% and non-freight revenue up $1.2 million
or about 31.7%. Less-than-truckload (LTL) revenue was 4.3% higher while full-
truckload revenue increased by 12.6% as compared to the same period of 1994.
Full-truckload activities accounted for 67% and 65%, respectively, of
consolidated freight revenue during the first quarters of 1995 and 1994.
The increase in LTL revenue resulted primarily from increases in the average
revenue per hundredweight, resulting primarily from freight rate increases
implemented during 1994, and the average weight of these shipments. These
increases were partially offset by a 3% decline in the number of LTL shipments
handled.
The increase in full-truckload revenue resulted primarily from a 10% increase in
the number of shipments transported.
The number of tractors in the fleet of company-operated, full-truckload
equipment rose from approximately 1,000 at the beginning of 1995 to about 1,040
by the end of the quarter, while the number of full-truckload tractors provided
by owner-operators increased by about 50 units.
Full-truckload activities, which contributed 67% and 65% of freight revenue
during the first quarters of 1995 and 1994, respectively, are conducted
primarily with company-operated equipment, while LTL activities are conducted
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<PAGE>
primarily with equipment provided by owner-operators. This increase in the
percentage of freight revenue derived from full-truckload shipments impacted the
percent of freight revenue absorbed by the various categories of operating
expenses between the two quarters.
For the first quarter of 1994, salaries, wages and related expenses absorbed
25.1% of freight revenue versus 26.4% for the same period of 1995. Supplies and
expenses, which includes fuel purchased for company-operated equipment, absorbed
27.5% of freight revenue in the first three months of 1994 versus 27.8% for the
same period of 1995. These increases are primarily related to the increase in
the percent of total freight revenue provided by full-truckload, company-
operated equipment. Conversely, purchased transportation, which consists
primarily of payments to owner-operators, decreased from 22.0% of freight
revenue for the first quarter of 1994 to 20.9% for 1995.
Revenue equipment rent, which is primarily related to the company-operated,
full-truckload fleet, rose from 6.0% to 6.9% of freight revenue while
depreciation expense declined from 4.4% to 4.3% of freight revenue. These
changes resulted primarily from the addition of new leased tractors and from the
replacement of owned equipment with new leased tractors after the first quarter
of 1994.
Operating income increased from $2,934,000 to $2,973,000 between the two
quarters.
Interest and other expense rose from $249,000 to $380,000 between the two
quarters. Due to substantially lower borrowings under the company's line of
credit, interest expense associated with bank debt was significantly less during
the 1995 quarter. This reduction was more than offset by net expenses
associated with the implementation during the 1994 second quarter of a company-
owned life insurance ("COLI") program.
The provision for income tax was 31% of pre-tax income for the first quarter of
1995, as compared to 35% for 1994. This reduced effective income tax rate is
primarily attributable to permanent tax savings resulting from the COLI program.
The amount of the tax reduction exceeds the aforementioned net COLI expenses
included in interest and other expenses.
LIQUIDITY AND CAPITAL RESOURCES
The company continues to maintain a strong financial structure with a good
working capital position and strong capital resources. At March 31, 1995,
working capital was $23.9 million as compared to $25.6 million at December 31,
1994.
During the first quarter of 1995, net cash provided by operating activities was
$2,564,000, as compared to cash used in operating activities of $1,611,000 in
the same period of 1994. The increased generation of cash was related primarily
to improved collections of accounts receivable and decreased federal income tax
payments.
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<PAGE>
As of March 31, 1995, the unused portion of the company's $50,000,000 revolving
credit facility totaled approximately $34,000,000. This availability was
approximately $32,000,000 at December 31, 1994.
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March
31, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
------------------------------------
(Registrant)
May 11, 1995 By: /s/ Stoney M. Stubbs, Jr.
-------------------------
Stoney M. Stubbs, Jr.
Chairman of the Board
May 11, 1995 By: /s/ Burl G. Cott
-------------------------
Burl G. Cott
Senior Vice President
Principal Financial and
Accounting Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF FROZEN FOOD EXPRESS INDUSTRIES, INC. AND
SUBSIDIARIES AS OF MARCH 31, 1995, AND THE CONSOLIDATED STATEMENTS OF INCOME,
CASH FLOW AND STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,686
<SECURITIES> 0
<RECEIVABLES> 35,348
<ALLOWANCES> 1,161
<INVENTORY> 7,483
<CURRENT-ASSETS> 54,477
<PP&E> 98,538
<DEPRECIATION> 43,054
<TOTAL-ASSETS> 115,889
<CURRENT-LIABILITIES> 30,597
<BONDS> 7,000
<COMMON> 25,921
0
0
<OTHER-SE> 40,395
<TOTAL-LIABILITY-AND-EQUITY> 115,889
<SALES> 4,936
<TOTAL-REVENUES> 66,978
<CGS> 0
<TOTAL-COSTS> 64,005
<OTHER-EXPENSES> 380
<LOSS-PROVISION> 1,233
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,593
<INCOME-TAX> 807
<INCOME-CONTINUING> 1,786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,786
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
