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 June 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 August 8, 1995.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets - June 30, 1995 and
(Unaudited) December 31, 1994
Condensed Consolidated Statements of - June 30, 1995
Income (Three and Six Month and 1994
Periods - Unaudited)
Condensed Consolidated Statements of - June 30, 1995
Cash Flows (Six Month and 1994
Periods - Unaudited)
Notes to Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents 7,334,061 23,554,745
Marketable Securities 10,541,740 18,088,238
Accounts Receivable, Net 32,613,570 28,557,503
Deferred Income Taxes 3,022,698 4,110,806
Prepaid Expenses and Supplies 6,476,137 4,357,441
Total Current Assets 59,988 206 78,668,733
Property and Equipment 293,010,340 261,567,562
Less: Accumulated Depreciation 95,039,327 91,964,289
Total Property and Equipment 197,971,013 169,603,273
Other Assets
Goodwill 9,416,015 8,787,601
Investments in Limited
Partnerships 4,043,863 2,237,183
Other 1,109,803 982,295
Total Other Assets 14,569,681 12,007,079
TOTAL ASSETS 272,528,900 260,279,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable 27,989,073 27,989,073
Accounts Payable 8,653,451 9,755,914
Income Taxes (1,174,472) 1,540,523
Estimated Liability for Claims 6,073,352 5,359,288
Accrued Expenses - Other 11,003,482 9,185,437
Total Current Liabilities 52,544,886 53,830,235
Long-Term Liabilities
Estimated Liability for Claims 9,768,951 9,768,951
Deferred Income Taxes 21,183,922 18,946,962
Other 1,345,780 1,275,580
Total Long-Term Liabilities 32,298,653 29,991,493
Stockholders' Equity
Common Stock 29,942,628 29,942,628
Paid-In Capital 90,410 75,283
Retained Earnings 166,652,022 155,458,904
Treasury Stock - At Cost (8,999,699) (9,019,458)
Total Stockholders' Equity 187,685,361 176,457,357
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 272,528,900 260,279,085
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenues 166,799,780 141,010,968 83,382,915 65,981,603
Operating Expenses 139,729,355 120,710,959 69,730,377 57,593,905
Operating Income 27,070,425 20,300,009 13,652,538 8,387,698
Interest Expense (905,369) (570,581) (466,622) (318,869)
Other Income 769,354 546,375 321,358 316,574
Income Before Income
Taxes 26,934,410 20,275,803 13,507,274 8,385,403
Income Taxes 9,902,021 7,543,618 4,983,816 3,074,491
Net Income 17,032,389 12,732,185 8,523,458 5,310,912
Weighted Average Shares
Outstanding <FN1> 26,631,946 26,606,347 26,633,801 26,610,653
Net Income per Common
Share <FN1> .64 .48 .32 .20
Dividends per Common
Share .22 .20 .11 .10
<FN>
<F1>
NOTE: 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 CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Operating Activities
Net Income 17,032,389 12,732,185
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 12,233,898 9,925,915
Provision for Deferred Taxes 3,315,068 1,769,868
Other (1,637,572) (392,018)
Changes in Operating Assets
and Liabilities:
(Increase) in Accounts
Receivable (4,056,067) (1,041,056)
(Increase) in Prepaid Expenses
and Supplies (2,118,696) (410,289)
Increase (Decrease) in Accounts
Payable and Accrued Expenses (1,285,349) 933,388
Other 70,200 59,720
Net Cash Provided by Operating
Activities 23,553,871 23,577,713
Investing Activities
Proceeds from Sale of Investment
Securities 8,512,738 16,116,296
Purchase of Investment Securities (615,610) (10,359,847)
Proceeds from Disposition of Property
and Equipment 5,827,232 1,609,173
Purchase of Property and Equipment (44,937,170) (21,382,799)
Other (2,737,558) (993,908)
Net Cash Used In Investing
Activities (33,950,368) (15,011,085)
Financing Activities
Cash Dividends Paid (5,859,073) (5,321,551)
Principal Payments on Mortgages
and Other Debt 0 (51,776)
Other 34,886 64,876
Net Cash Used In Financing
Activities (5,824,187) (5,308,451)
Increase (Decrease) in Cash and Cash
Equivalents (16,220,684) 3,258,177
Cash and Cash Equivalents at Beginning
of Year 23,554,745 9,311,798
Cash and Cash Equivalents at End of Period 7,334,061 12,569,975
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest 913,533 588,217
Income Taxes 9,305,488 8,894,843
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED 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 and Notes thereto
included in the Company's latest annual report on Form 10-K and
any intervening reports.
The results of operations for the three and six-month
periods ending June 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 second quarter of 1995 were
$83,382,915, an increase of $17,401,312 or 26.4% from Operating
Revenues for 1994's second quarter. For the same periods,
Operating Expenses increased $12,136,472 or 21.1%; Income Before
Income Taxes increased $5,121,871, an increase of 61.1% and Net
Income increased $3,212,546 or 60.5%. Earnings Per Share in-
creased to $.32 from $.20 for the respective quarters.
Operating Revenues for the six months ended June 30, 1995
were $166,799,780, an increase of $25,788,812 or 18.3% over the
comparable period in 1994. For the same periods, Operating
Expenses increased $19,018,396 or 15.8%; Income Before Taxes
increased $6,658,607, an increase of 32.8% and Net Income in-
creased $4,300,204 or 33.8%. Earnings Per Share increased to
$.64 from $.48 for the respective six-month periods.
The dramatic increase in Operating Revenue, Income Before
Taxes and Net Income for the Company's second quarter of 1995,
when compared to the second quarter of 1994, is attributable to
the Company's careful pursuit of growth opportunities at each of
its operating subsidiaries and its aggressive rebound from the
short term effects of the nationwide Teamsters' strike experi-
enced by New Penn Motor Express, Inc. ("New Penn"), the Company's
largest subsidiary, which prevented New Penn from moving freight
for twenty-four days in the second quarter of 1994. New Penn's
revenues increased by over $12 Million for the second quarter of
1995 as compared to 1994, primarily as a result of increased
business volume.
Revenues among the Arnold Logistics group also continue to
grow. Lebarnold, Inc. ("Lebarnold"), SilverEagle Transport, Inc.
("SilverEagle") and D.W. Freight, Inc. ("DW") together produced a
revenue increase of approximately $5 Million when compared to
their 1994 second quarter performance. This revenue increase
results primarily from increased volume at each of these sub-
sidiaries and also reflects the January 1995 acquisition of
substantially all of the assets of T.W. Owens & Sons, Inc. by
SilverEagle.
Results for the six-month period ended June 30, 1995, com-
pared to the same period in 1994, reflect the contrast between
two excellent quarters in 1995 and the strike-impaired second
quarter of 1994. These results also reflect the ongoing growth
of the Company, including both the Owens acquisition in January
1995 and the H.R. Hill acquisition in March 1994 as previously
reported.
The Company's working capital at the end of the second
quarter of 1995 was $7,443,320, a decrease of $17,395,178 or
70.0% from the end of the 1994 fiscal year. The main reason for
the decrease in working capital was the Company's acquisition of
property and equipment, particularly the January 1995 acquisition
of T.W. Owens for approximately $11 Million in cash.
The Company's investment in Property and Equipment (Less
Accumulated Depreciation) as of the end of the second quarter of
1995 stood at $197,971,013. This figure represents an increase
from December 31, 1994 of $28,367,740 or 16.7%. This increase
reflects the Company's ongoing capital expansion program includ-
ing the Owens acquisition noted above. Funding for the Company's
continuing capital expansion program will be accomplished through
the use of working capital generated from current operating and
investment activities, supplemented, when necessary, by short or
long-term debt financing.
The Company's operating subsidiaries continue to experience
fierce pricing competition from others in the trucking industry.
Company management remains focused on improving operating effi-
ciencies while at the same time seeking growth opportunities by
offering expanded trucking and warehousing related services to
meet the needs of existing and prospective customers. Management
will continue to seek opportunities for profitable expansion of
the Company.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On May 3, 1995 the Company held its Annual Meeting of
Stockholders. The following individuals were elected to serve as
Directors for a new two-year term:
Name For Withheld
Kenneth F. Leedy 21,168,287 22,541
Heath L. Allen 21,165,811 25,017
Carlton E. Hughes 21,168,689 22,139
Edward H. Arnold, Ronald E. Walborn and Arthur L. Peterson
continue in their present two-year terms as Directors.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) NONE
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: August 10, 1995 By /s/ Heath L. Allen
Heath L. Allen, Secretary
Date: August 10, 1995 By /s/ Ronald E. Walborn
Ronald E. Walborn, Treasurer
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<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN
ARNOLD INDUSTRIES, INC.'S FORM 10-Q FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 7,334,061
<SECURITIES> 10,541,740
<RECEIVABLES> 34,000,107
<ALLOWANCES> 1,513,557
<INVENTORY> 0
<CURRENT-ASSETS> 59,988,206
<PP&E> 293,010,340
<DEPRECIATION> 95,039,327
<TOTAL-ASSETS> 272,528,900
<CURRENT-LIABILITIES> 52,544,886
<BONDS> 0
<COMMON> 29,942,628
0
0
<OTHER-SE> 157,742,733
<TOTAL-LIABILITY-AND-EQUITY> 272,528,900
<SALES> 0
<TOTAL-REVENUES> 166,799,780
<CGS> 0
<TOTAL-COSTS> 139,729,355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 557,148
<INTEREST-EXPENSE> 905,369
<INCOME-PRETAX> 26,934,410
<INCOME-TAX> 9,902,021
<INCOME-CONTINUING> 17,032,389
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,032,389
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
