<TABLE>
Part 1. Financial Information.
Item 1. Financial Statements.
MAYFLOWER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three months ended
(In thousands, March 31,
except per share data) 1994 1993
- ----------------------------------------------------------
(Unaudited)
<S> <C> <C>
Operating revenues:
Contract Services $ 73,915 $ 65,329
Transit 94,783 87,642
----------------------
168,698 152,971
Operating expenses:
Contract Services 63,172 54,222
Transit 79,518 74,315
General and administrative 21,469 21,158
----------------------
Operating profit 4,539 3,276
Other income (expense):
Interest income 257 521
Interest expense (2,127) (2,241)
Other, net (11) (122)
----------------------
Income before federal income taxes 2,658 1,434
Provision for federal income taxes 1,006 509
----------------------
Net income $ 1,652 $ 925
======================
Weighted average shares
outstanding 12,757 12,708
Earnings per share $ .13 $ .07
======================
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
MAYFLOWER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
As of As of
March 31, December 3
(Dollars in thousands) 1994 1993
- -------------------------------------- -------------------------
(Unaudited)
<S> <C> <C>
Assets :
Current assets:
Cash $ 6,052 $ 6,093
Receivables:
Trade receivables 75,987 74,136
Accrued unbilled accounts receivable 15,508 16,845
Other 16,924 15,814
Less allowance for possible collection losses (6,446) (6,174)
-------------------------
Total receivables 101,973 100,621
Equipment and inventory held for resale 12,134 8,911
Deferred income taxes 13,230 13,230
Prepaid expenses and deposits 8,707 8,147
-------------------------
Total current assets 142,096 137,002
Property and equipment:
Land 2,175 2,175
Buildings and improvements 16,728 16,273
Revenue equipment 122,360 117,561
Other operating equipment and improvements 9,850 9,072
Less accumulated depreciation (35,004) (30,334)
-------------------------
Net property and equipment 116,109 114,747
Intangible assets 52,293 53,372
Other assets 18,912 17,556
-------------------------
$ 329,410 $ 322,677
============= ==========
Liabilities and shareholders' investment:
Current liabilities:
Current maturities of long- term debt $ 2,682 $ 2,276
Trade accounts payable 37,665 39,141
Accrued expenses and deposits:
Liabilities on unbilled shipments 8,633 9,026
Reserve for self- insured claims 30,353 28,940
Salaries and withholding taxes 11,551 6,755
Other 10,658 11,667
-------------------------
Total current liabilities 101,542 97,805
Noncurrent liabilities:
Long-term debt, less current maturities 96,602 95,407
Deferred income taxes 29,963 29,963
Reserve for self- insured claims,
less current portion 11,210 11,210
Accrued postretirement benefits cost 5,752 5,621
Shareholders' investment:
Common shares; no par value; 30,000,000 authorized;
issued and outstanding: 12,662,529 in 1994 and
12,662,403 in 1993 73,883 73,865
Retained earnings 10,458 8,806
-------------------------
Total shareholders' investment 84,341 82,671
-------------------------
$ 329,410 $ 322,677
============= ==========
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
MAYFLOWER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended March 31,
(Dollars in thousands) 1994 1993
- ----------------------------------------- ----------------------------
(Unaudited)
<S> <C> <C>
Net cash provided by (used in):
Operating activities $5,908 $8,041
Investing activities (7,550) (1,646)
Financing activities 1,601 (12,528)
----------------------------
(41) (6,133)
Cash and cash equivalents-beginning of quarter 6,093 9,449
----------------------------
Cash and cash equivalents- end of quarter $6,052 $3,316
============ ============
Operating activities:
Net income $1,652 $925
Add items not affecting cash:
Depreciation 4,856 4,489
Amortization and other 1,204 1,699
Changes in certain working capital items:
Receivables (1,352) 1,280
Equipment and inventory held for resale (3,223) (8,021)
Prepaid expenses and deposits (560) 903
Trade accounts payable (1,476) 6,546
Reserve for self- insured claims 1,413 1,156
Other accrued expenses and deposits 3,394 (936)
----------------------------
Net cash provided by operating activities $5,908 $8,041
============ ============
Investing activities:
Purchases of property and equipment ($6,621) ($1,578)
Proceeds from disposal of property and
equip., less gains included in net income 402 531
Increase in other noncurrent assets
and noncurrent liabilities (1,331) (599)
----------------------------
Net cash used in investing activities ($7,550) ($1,646)
============ ============
Financing activities:
Proceeds from long- term debt $2,218 $4,130
Payment of long- term debt (617) (10,058)
Net change in revolving credit agreeements --- (6,600)
----------------------------
Net cash provided by (used in)
financing activities $1,601 ($12,528)
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
MAYFLOWER GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements presented
herein are prepared pursuant to the rules and regulations of the Securities
and Exchange Commission for interim financial reporting. Certain
information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles are condensed, incorporated by reference or
omitted, as allowed by the rules and regulations. Management of the
Company believes the interim financial statements include all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the financial condition and results of operations for the
interim periods presented. Reference is made to the Notes to Consolidated
Financial Statements included in the Company's 1993 Report on Form 10-
K for a summary of significant accounting policies and other information,
the substance of which has not changed materially as of March 31, 1994,
unless otherwise noted herein. Certain amounts within the 1993
Condensed Consolidated Financial Statements are reclassified to conform
with the 1994 presentation.
2. OPERATING PROFIT
Operating profit by segment is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended
March 31,
1994 1993
--------------------
<S> <C> <C>
Contract Services $ 7,628 $ 7,831
Transit (2,835) (4,250)
Corporate expenses (254) (305)
--------------------
$ 4,539 $ 3,276
====================
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
Contract Services and Transit are involved from time to time in various
actions that are incidental to the ordinary course of their businesses,
including property damage and personal injury claims. Management
believes that the disposition of these matters will not have a material
adverse effect on the financial position of the Company.
4. PROVISION FOR FEDERAL INCOME TAXES
For 1994 and 1993, effective rates that differed from the U.S. federal
statutory rates were used in recording federal tax expense. The primary
reasons for this difference are the nondeductibility of amortization of
certain intangible assets and the increase in the U.S. federal statutory rate
to 35% in 1994 from 34% in 1993.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994 COMPARED
WITH THREE MONTHS ENDED MARCH 31, 1993
Operating revenues for the three months ended March 31, 1994 totaled
$168.7 million, or an increase of 10.3% over operating revenues of $153.0
million during the first quarter last year. Net income for the three months
ended March 31, 1994 was $1.7 million compared to $925,000 for the same
period in 1993.
Contract Services
Contract Services operating revenues for the three months ended
March 31, 1994 were $73.9 million compared to $65.3 million for the same
period in 1993, an increase of 13.1%. Public Transportation revenues
increased $7.3 million, or 48.4%, to $22.4 million. This growth is
attributable to revenues earned from new customer contracts for
paratransit services and an acquisition in September 1993 of a public
transportation company located in North Carolina. School Transportation
revenues increased $1.3 million, or 2.6%, to $51.5 million, due largely to
price increases.
Operating profit for the three months ended March 31, 1994 was $7.6
million, a net decrease of $200,000 from the same period in 1993.
Although School Transportation gross margin increased approximately
$600,000 and general and administrative expenses were lower by
$200,000, a decrease of $1.0 million in Public Transportation gross margin
more than offset these favorable items.
The School Transportation gross margin increase was due principally
to increased revenues and reductions in insurance, fuel and driver
operating costs. The decrease in gross margin contributions from Public
Transportation business was due to operational difficulties in two major
operations, higher start-up costs on a new contract, and an increase in
driver wage and related costs, vehicle maintenance expenses and
insurance claims over the comparable period in 1993.
Significant steps have been taken to improve results in Public
Transportation throughout the remainder of this year. Increased pricing
will be effective in the third quarter at one of the larger troubled
operations. The other major service contract with less than desirable
results is scheduled to expire in December 1994. Re-pricing of that
business will be closely reviewed before a decision is made to rebid it.
Management believes the profitability of the new contract will improve
because start-up costs have been reduced.
Transit
Transit's operating revenues for the three months ended March 31,
1994 were $94.8 million, an increase of $7.1 million, or 8.1%, over the
comparable period in 1993. Line haul revenues, the largest component of
Transit revenues, increased $3.2 million, or 6.1%, during the three months
ended March 31, 1994 compared to last year.
Revenues earned from line haul for the Household Goods division
increased 9.4% primarily as a result of an increase in the average price
earned per shipment. While a nominal increase in shipments was realized
during the first quarter of 1994, a significant change in the mix of
shipments (from government and military to COD and corporate
accounts) was the major factor for the significant improvement in average
line haul price earned per shipment. Line haul revenues earned for the
Electronics & Trade Show division were flat in comparison to 1993.
Transit's operating loss for the three months ended March 31, 1994 was
$2.8 million compared to an operating loss of $4.2 million for the same
period in 1993. Due to the seasonal nature of Transit's business, the first
quarter normally results in a loss. Operating profit was favorably affected
by a $1.0 million gross margin improvement in the Household Goods
division, Transit's largest operating division, and an increase of
approximately $300,000 in operating profits realized by Transit's
insurance operations compared to the first quarter of 1993.
The improvement of $1.0 million in the Household Goods division
gross margin compared to the first quarter of 1993 was the result of higher
revenues, greater emphasis on fleet management and a reduction in net
cargo claims and insurance expenses. The heightened emphasis on fleet
management increased driver productivity and retention resulting in
reduced driver recruiting and training costs.
Despite the growth in revenues, overhead costs during the first quarter
did not vary significantly compared to the same period in 1993. Transit is
experiencing favorable results from cost containment programs and
organizational changes implemented in the latter part of 1993.
Management anticipates these positive trends will continue.
Interest Income and Interest Expense
Interest income for the three months ended March 31, 1994 was
$257,000 compared to $521,000 for the same period in 1993, a decrease of
$264,000. This decrease is primarily a result of a change in financing
arrangements of Transit's equipment sales and financing subsidiary. In
December 1993, this subsidiary began selling to various financial
institutions installment notes receivable recorded from sales of equipment
by this subsidiary. Previously, these notes receivable were financed
directly by the Company resulting in the recording of interest income.
Beginning in 1994, the positive interest margin is recorded as a component
of operating profit.
Interest expense for the three months ended March 31, 1994 was $2.1
million, a decrease of $114,000 from the comparable period in 1993. This
decrease is primarily due to the change in financing arrangements of
Transit's equipment sales and financing subsidiary as described above.
Seasonality
Peak business levels for Contract Services occur during the traditional
school months of September through May. For example, during 1993
approximately 86% of Contract Services' revenues were generated during
these nine months.
At Transit, proportionately more household goods moves occur during
the summer months. During 1993, for example, approximately 45% of the
Household Goods division's revenues were generated during the months
of June through September.
Due to the seasonal impact of revenue being generated by each of the
Company's two operating subsidiaries as discussed above, the Company
historically realizes higher net income in the second and fourth quarters
than in the first and third quarters of the year.
Liquidity and Capital Resources
Total cash decreased by $41,000 from December 31, 1993 to March 31,
1994. Operating activities contributed $5.9 million and financing activities
provided $1.6 million during the three month period. This was offset by
the use of cash in investing activities of $7.6 million.
The $5.9 million in cash provided by operations was primarily due to
$7.7 million provided by net income, after adding back items not affecting
cash. Net cash of $1.8 million was used for working capital purposes.
Cash was used to finance the increase in accounts receivable resulting
from the Company's revenue growth, to fund necessary inventory
purchases at Contract Services which are being spread more evenly over
1994 compared to 1993, and to reduce trade accounts payable. Offsetting
these uses of cash, other accrued expenses has increased during the three
month period due to increased federal tax liabilities and accrued payroll.
For the three months ended March 31, 1994, the Company used $7.6
million, net, for investing activities. The Company used $6.6 million for
the purchase of property and equipment, primarily the purchase of school
buses by Contract Services and, to a lesser extent, trailers by Transit.
The Company has working capital of $40.6 million at March 31, 1994,
which is comparable to working capital at December 31, 1993. The
Company also has $15.1 million available under its revolving credit
facility at March 31, 1994. Total debt at March 31, 1994, was $99.3 million
compared to $97.7 million at December 31, 1993, representing a $1.6
million increase in total debt during the three months ended March 31,
1994. During the quarter, the Company received $1.6 million, net, from an
equipment obligation facility used to finance certain bus purchases of
Contract Services.
At March 31, 1994, the Company has committed to approximately $30
million in capital expenditures during 1994. This includes $1 million for
50 trailers by Transit and $29 million, or 729 units, for school and public
transit buses by Contract Services. In acquiring these assets, the Company
will consider various available leasing alternatives and utilize funds
available under existing financing arrangements. The Company has also
entered into discussions with one of its existing lenders to expand the
facility for additional financing needs.
The Company believes cash flow from operations combined with
existing financing arrangements and other financing sources currently
being negotiated will be more than adequate to fund short and long- term
cash requirements.
PART II- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibit is filed as a part of this
Quarterly Report on Form 10-Q:
Exhibit
Number Exhibit
- ------- -------------------------
11 Calculation of Earnings Per Share
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the quarter.
SIGNATURE
The registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
MAYFLOWER GROUP, INC.
Date: May 13, 1994 By: /s/ Ronald W. Martin
- ------------------ ------------------------
Ronald W. Martin, Vice-President
Finance and Chief Accounting Officer
EXHIBIT 11
<TABLE>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND MARCH 31, 1993
(In thousands, except per share data)
<CAPTION>
Three months ended
March 31,
1994 1993
--------------------
<S> <C> <C>
Primary: (1)
Average shares outstanding 12,663 12,646
Net effect of options to purchase
common stock - based on the
treasury stock method using
estimated market price 94 62
--------------------
12,757 12,708
====================
Net Income $1,652 $ 925
====================
Earnings Per Share $.13 $.07
====================
</TABLE>
(1) Fully diluted earnings per share do not differ from primary earnings per
share.
