FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995 .
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 No. 0-10894
ARNOLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2200465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
625 South Fifth Avenue, Lebanon, Pennsylvania
(Address of principal executive offices)
17042
(Zip Code)
(717) 274-2521
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Common Stock, par value $1.00 per share: 26,636,454 shares
outstanding as of November 6, 1995.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets - September 30, 1995
(Unaudited) and December 31, 1994
Condensed Consolidated Statements of
Income (Three and Nine Month
Periods - Unaudited) - September 30, 1995 and
1994
Condensed Consolidated Statements of
Cash Flows (Nine Month
Period - Unaudited) - September 30, 1995 and
1994
Notes to Condensed Consolidated Financial Statements
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<TABLE>
<CAPTION>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents 15,594,819 23,554,745
Marketable Securities 10,548,027 18,088,238
Accounts Receivable, Net 31,699,587 28,557,503
Deferred Income Taxes 3,775,698 4,110,806
Prepaid Expenses and Supplies 5,588,907 4,357,441
Total Current Assets 67,207,038 78,668,733
Property and Equipment 295,447,587 261,567,562
Less: Accumulated Depreciation 99,592,218 91,964,289
Total Property and Equipment 195,855,369 169,603,273
Other Assets
Goodwill 9,323,772 8,787,601
Investments in Limited Partnerships 4,033,613 2,237,183
Other 1,106,871 982,295
Total Other Assets 14,464,256 12,007,079
TOTAL ASSETS 277,526,663 260,279,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable 27,989,073 27,989,073
Accounts Payable 8,021,478 9,755,914
Income Taxes (1,905,900) 1,540,523
Estimated Liability for Claims 5,533,481 5,359,288
Accrued Expenses - Other 10,785,296 9,185,437
Total Current Liabilities 50,423,428 53,830,235
Long-Term Liabilities
Estimated Liability for Claims 9,768,951 9,768,951
Deferred Income Taxes 24,139,279 18,946,962
Other 1,367,130 1,275,580
Total Long-Term Liabilities 35,275,360 29,991,493
Stockholders' Equity
Common Stock 29,942,628 29,942,628
Paid-In Capital 90,410 75,283
Retained Earnings 170,794,536 155,458,904
Treasury Stock - At Cost (8,999,699) (9,019,458)
Total Stockholders' Equity 191,827,875 176,457,357
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 277,526,663 260,279,085
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenues 248,697,282 221,879,157 81,897,502 80,868,189
Operating Expenses 210,390,980 186,862,081 70,661,625 66,151,122
Operating Income 38,306,302 35,017,076 11,235,877 14,717,067
Interest Expense (1,354,666) (927,866) (449,297) (357,285)
Other Income 1,095,268 569,348 325,914 22,973
Income Before Income Taxes
and Extraordinary Loss 38,046,904 34,658,558 11,112,494 14,382,755
Income Taxes 13,941,990 12,967,794 4,039,969 5,424,176
Income Before
Extraordinary Loss 24,104,914 21,690,764 7,072,525 8,958,579
Extraordinary Loss <FN1> -0- 388,666 -0- 388,666
Net Income 24,104,914 21,302,098 7,072,525 8,569,913
Weighted Average Shares
Outstanding <FN2> 26,633,465 26,609,746 26,636,454 26,616,431
Income per Common Share <FN2>
Income Before
Extraordinary Loss .91 .82 .27 .34
Net Income .91 .80 .27 .32
Dividends per Common Share .33 .30 .11 .10
<FN>
<FN1> Write-off of intrastate operating authorities, net of income taxes.
<FN2> Common share equivalents are not included since the effect of their
inclusion is not material.
</FN>
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months Ended
September 30,
1995 1994
<S> <C> <C>
Operating Activities
Net Income 24,104,914 21,302,098
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Extraordinary Loss -0- 388,666
Depreciation and Amortization 18,613,307 15,136,484
Provision for Deferred Taxes 5,517,424 4,692,109
Other (1,833,270) (555,941)
Changes in Operating Assets and Liabilities:
(Increase) in Accounts Receivable (3,142,084) (4,208,780)
(Increase) in Prepaid Expenses and Supplies (1,231,466) (850,204)
Increase (Decrease) in Accounts Payable
and Accrued Expenses (3,406,807) 3,678,910
Other 91,550 47,050
Net Cash Provided by Operating Activities 38,713,568 39,630,392
Investing Activities
Proceeds from Sale of Investment Securities 8,639,341 22,135,561
Purchase of Investment Securities (761,303) (19,246,591)
Proceeds from Disposition of Property and Equipment 6,487,742 3,006,636
Purchase of Property and Equipment (49,550,450) (34,796,012)
Other (2,734,627) (1,054,076)
Net Cash Used In Investing Activities (37,919,297) (29,954,482)
Financing Activities
Cash Dividends Paid (8,789,083) (7,983,045)
Principal Payments on Mortgages and Other Debt -0- (51,776)
Other 34,886 112,774
Net Cash Used In Financing Activities (8,754,197) (7,922,047)
Increase (Decrease) in Cash and Cash Equivalents (7,959,926) 1,753,863
Cash and Cash Equivalents at Beginning of Year 23,554,745 9,311,798
Cash and Cash Equivalents at End of Period 15,594,819 11,065,661
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest 1,362,014 914,002
Income Taxes 11,870,551 10,756,606
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED FINANCIAL STATEMENTS.
</TABLE>
ARNOLD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note I: Basis of Presentation
The financial information included herein is unaudited;
however, such information reflects all adjustments (consisting
solely of normal adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the
interim period. This financial information should be read in
conjunction with the Financial Statements, Notes and information
included in the Company's latest annual report on Form 10-K and
any intervening reports.
The results of operations for the three and nine-month
periods ending September 30, 1995, and 1994 are not necessarily
indicative of the results to be expected for the full year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Operating Revenues for the third quarter of 1995 were
$81,897,502, an increase of $1,029,313 or 1.3% over Operating
Revenues for 1994's third quarter. For the same periods, Operat-
ing Expenses increased $4,510,503, or 6.8%; Income before Income
Taxes decreased $3,270,261, a decrease of 22.7%; and Net Income
decreased $1,497,388, or 17.5%. Earnings Per Share decreased to
$.27 from $.32 for the respective quarters, a 15.6% decrease.
The Net Income and Earnings per Share figures for the 1994 period
reflect an extraordinary charge taken by the Company respecting
operating licenses which amounted to a reduction of $388,666 to
Net Income, or two cents ($.02) per share.
Operating Revenues for the nine months ended September 30,
1995 were $248,697,282, an increase of $26,818,125, or 12.1% over
the comparable period in 1994. For the same periods, Operating
Expenses increased $23,528,899, or 12.6%; Income Before Income
Taxes increased $3,388,346, an increase of 9.8%; and Net Income
increased $2,802,816, or 13.2%. Earnings Per Share increased
from $.80 to $.91, or 13.8%. The Net Income and Earnings per
Share figures for 1994 also reflect the extraordinary charge for
write-off of intrastate operating authorities noted in the
preceding discussion of third quarter results.
The Company's overall revenue figures for the third quarter
of 1995 were slightly ahead of the comparable period in 1994. A
$2.6 million drop in third quarter revenue at New Penn Motor
Express, Inc. ("New Penn") was offset by a revenue increase of
just under $3.6 million at the Arnold Logistics Companies,
namely, Lebarnold, Inc. ("Lebarnold") and SilverEagle Transport,
Inc. ("SilverEagle") and D.W. Freight, Inc. ("DW"). The revenue
gains are attributable primarily to increased volume at the
Arnold Logistics subsidiaries. New Penn's decrease is attribut-
able to intense competition and to slowing economic conditions in
the Northeast.
The overall gains reflected in the Company's revenue figures
for the nine month period ended September 30, 1995, as compared
to the same period in 1994, result from revenue gains at each
operating subsidiary. Revenues for New Penn for the first nine
months of 1995 showed an increase of approximately $9.8 million
from the same period in 1994. Revenues for the first nine months
of 1995 among the three divisions of the Arnold Logistics group,
Lebarnold, SilverEagle and DW, reflect increases of approximately
$2.7 million, $11.3 million and $3.0 million, respectively, when
compared to the first three quarters of 1994. These revenue
increases result primarily from increased volume. Lower 1994
numbers reflect the effects of the Teamsters strike at New Penn
in April of 1994.
The Company's working capital at the end of the third
quarter of 1995 was $16,783,610. This is a decrease of
$8,054,888 or 32.4% from the end of the 1994 fiscal year. The
main reason for the decrease in working capital is the Company's
ongoing capital expansion program.
The Company's investment in Property and Equipment (Less
Accumulated Depreciation) as of the end of the third quarter of
1995 stood at $195,855,369. This figure represents an increase
from December 31, 1994 of $26,252,096, or 15.5% and reflects the
Company's ongoing capital expansion program. Funding for the
Company's continuing capital expansion program will likely be
accomplished through the use of cash generated from current
operating and investment activities, supplemented, when neces-
sary, by short or long-term financing. Management continues to
seek opportunities for profitable expansion of the Company.
On October 27, 1995, the Company announced its quarterly
cash dividend of $.11 per share.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ARNOLD INDUSTRIES, INC.
(Registrant)
Date: November 10, 1995 By /s/ Heath L. Allen
Heath L. Allen, Secretary
Date: November 10, 1995 /s/ Ronald E. Walborn
Ronald E. Walborn, Treasurer
