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 March 31, 1996.
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: 26,653,974 shares
outstanding as of May 8, 1996.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets - March 31, 1996
(Unaudited) and
December 31, 1995
Condensed Consolidated Statements of
Income (Three Month
Period - Unaudited) - March 31, 1996 and 1995
Condensed Consolidated Statements of
Cash Flows (Three Month
Period - Unaudited) - March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1996 1995
ASSETS
Current Assets
Cash and Cash Equivalents 12,272,661 5,769,772
Marketable Securities 11,316,398 8,503,995
Accounts Receivable, Net 32,644,196 31,344,382
Deferred Income Taxes 4,386,806 4,408,898
Prepaid Expenses and Supplies 4,834,602 4,666,710
Refundable Income Taxes -0- 1,418,300
Total Current Assets 65,454,663 56,112,057
Property and Equipment 305,689,161 304,961,299
Less: Accumulated Depreciation 108,150,765 105,138,829
Total Property and Equipment 197,538,396 199,822,470
Other Assets
Goodwill 9,139,285 9,231,529
Investments in Limited Partnerships 10,531,390 10,677,567
Other 880,008 1,032,940
Total Other Assets 20,550,683 20,942,036
TOTAL ASSETS 283,543,742 276,876,563
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable 16,692,749 16,692,749
Accounts Payable 8,873,176 7,316,348
Income Taxes 801,883 -0-
Estimated Liability for Claims 7,932,071 6,280,942
Accrued Expenses - Other 11,342,796 9,602,991
Total Current Liabilities 45,642,675 39,893,030
Long-Term Liabilities
Estimated Liability for Claims 8,282,439 9,169,106
Deferred Income Taxes 26,120,587 25,995,320
Notes Payable 4,543,310 5,048,581
Other 1,438,062 1,401,762
Total Long-Term Liabilities 40,384,398 41,614,769
Stockholders' Equity
Common Stock 29,942,628 29,942,628
Paid-In Capital 155,303 135,260
Retained Earnings 176,371,720 174,260,390
Treasury Stock - At Cost (8,952,982) (8,969,514)
Total Stockholders' Equity 197,516,669 195,368,764
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 283,543,742 276,876,563
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1996 1995
Operating Revenues 82,391,790 83,416,865
Operating Expenses 74,158,231 69,998,978
Operating Income 8,233,559 13,417,887
Interest Expense (322,524) (438,747)
Other Income (213,983) 447,996
Income Before Income Taxes 7,697,052 13,427,136
Income Taxes 2,654,247 4,918,205
Net Income 5,042,805 8,508,931
Weighted Average Shares Outstanding (Note) 26,650,185 26,630,071
Net Income per Common Share (Note) .19 .32
Dividends per Common Share .11 .11
NOTE: Common share equivalents are not included since the effect of
their inclusion is not material.
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ARNOLD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1996 1995
Operating Activities
Net Income 5,042,805 8,508,931
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 6,871,903 6,017,436
Provision for Deferred Taxes 147,359 1,205,730
Other (217,548) (702,052)
Changes in Operating Assets and Liabilities:
(Increase) in Accounts Receivable (1,299,814) (1,159,828)
(Increase) in Prepaid Expenses and
Supplies (167,892) (781,733)
Increase in Accounts Payable
and Accrued Expenses 6,281,278 3,361,950
Other 36,300 35,100
Net Cash Provided by Operating
Activities 16,694,391 16,485,534
Investing Activities
Proceeds from Sale of Investment Securities 96,576 2,205,486
Purchase of Investment Securities (2,908,570) (505,938)
Proceeds from Disposition of Property and
Equipment 1,609,584 2,455,547
Purchase of Property and Equipment (5,607,755)(15,750,195)
Capital Contributions to Limited Partner-
ships -0- (1,546,245)
Acquisition of Primary Assets of
T.W. Owens & Sons, Inc. -0- (11,120,700)
Other 18,834 16,341
Net Cash Used In Investing
Activities (6,791,331)(24,245,704)
Financing Activities
Cash Dividends Paid (2,931,475) (2,929,327)
Principal Payments on Long-term Debt (505,271) -0-
Other 36,575 3,850
Net Cash Used In Financing
Activities (3,400,171) (2,925,477)
Increase (Decrease) in Cash and Cash
Equivalents 6,502,889 (10,685,647)
Cash and Cash Equivalents at Beginning
of Year 5,769,772 23,554,745
Cash and Cash Equivalents at End of Period 12,272,661 12,869,098
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest 347,930 481,062
Income Taxes 288,358 2,304,738
THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ARNOLD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: 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.
The results of operations for the three-month period ending
March 31, 1996 and 1995 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 first quarter of 1996 were
$82,391,790, a decrease of $1,025,075 or 1% under Operating
Revenues for 1995's first quarter. For the same periods, Operat-
ing Expenses increased $4,159,253 or 6%; Income before Income
Taxes decreased $5,730,084, a decrease of 43%, and Net Income
decreased $3,466,126, or 41% to $5,042,805. Earnings Per Share
decreased to $.19 for the first quarter of 1996 from $.32 for the
first quarter of 1995, a 41% decrease.
The Company's revenue figures for the first quarter of 1996
as compared to the first quarter of 1995 are essentially un-
changed due to level business volume at the Arnold Transportation
Services companies, Lebarnold, Inc. ("Lebarnold"), SilverEagle
Transport, Inc. ("SilverEagle") and D.W. Freight, Inc. ("Dal-
worth") and at New Penn Motor Express, Inc. ("New Penn").
Set forth below is a schedule of the Unaudited Operating
Revenues, Expenses and Operating Income of the LTL and TL
companies:
(Dollars in Thousands)
First Quarter Ended March 31,
1996 1995
Amount % Amount %
NEW PENN MOTOR EXPRESS
AND RELATED COMPANIES (LTL)
Operating Revenues 41,503 100.0 42,780 100.0
Operating Expenses 34,586 83.3 33,711 78.8
Operating Income 6,917 16.7 9,069 21.2
(Dollars in Thousands)
First Quarter Ended March 31,
1996 1995
Amount % Amount %
ARNOLD TRANSPORTATION SERVICES (TL)
Operating Revenues 40,888 100.0 40,637 100.0
Operating Expenses 39,572 96.8 36,288 89.3
Operating Income 1,316 3.2 4,349 10.7
The Company's working capital at the end of the first
quarter of 1996 was $19,811,988, which is an increase of
$3,592,961 or 22% from the end of the 1995 fiscal year. Factors
contributing to the increase in working capital were the Com-
pany's profitable first quarter and lower capital expenditures.
The Company's investment in Property and Equipment (Less
Accumulated Depreciation) as of the end of the first quarter of
1996 stood at $197,538,396. This figure represents a decrease
from December 31, 1995, of $2,284,074 or 1% and reflects an
increase in accumulated depreciation and a temporary slackening
in the Company's ongoing capital expansion program. Funding for
the Company's continuing capital expansion program will be accom-
plished through the use of cash generated from current operating
and investment activities, supplemented when necessary by short
or long-term financing.
Results for the first quarter of 1996 were adversely
affected by problems faced by the trucking industry as a whole,
primarily over-capacity for current freight demand and weather.
All divisions of Arnold Industries have been facing severe
competition in the form of price-cutting. Throughout the North-
east and Middle Atlantic States, the sections of the country in
which New Penn operates, the first quarter of 1996 produced some
of the worst winter weather in many years. New Penn continued to
provide outstanding service, but did so at far higher cost than
usual. New Penn experienced some growth in daily revenues in
March, but the month of March had two fewer working days in 1996
than in 1995. SilverEagle and Lebarnold encountered winter snow
and ice, and Dalworth's operations were hurt by flooding. Texas
deregulated intra-state carriage, and several carriers entered a
market that already was showing signs of trouble, which seriously
impacted Dalworth's operating revenues and profitability. Fuel
prices rose dramatically in the first quarter and remain unusu-
ally high.
Company management remains focused on improving operating
efficiencies while at the same time seeking growth opportunities
by, among other things, offering expanded trucking and ware-
housing related services to meet the needs of existing and
prospective customers. Management will continue to seek oppor-
tunities for profitable expansion of the Company.
At the Annual Meeting, held May 1, 1996, stockholders
re-elected Edward H. Arnold, Ronald E. Walborn and Arthur L.
Peterson to serve as members of the Board of Directors, each for
a two-year term. The Company also announced that the Board of
Directors declared the regular quarterly dividend of eleven cents
per share, payable June 3, 1996, to stockholders of record
on May 17, 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) NONE APPLICABLE
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: May 13, 1996 By /s/ Heath L. Allen
Heath L. Allen, Secretary
Date: May 13, 1996 /s/ Ronald E. Walborn
Ronald E. Walborn, Treasurer
<TABLE> <S> <C>
<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 THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,272,661
<SECURITIES> 11,316,398
<RECEIVABLES> 33,781,800
<ALLOWANCES> 1,403,092
<INVENTORY> 0
<CURRENT-ASSETS> 65,454,663
<PP&E> 305,689,161
<DEPRECIATION> 108,150,765
<TOTAL-ASSETS> 283,543,742
<CURRENT-LIABILITIES> 45,642,675
<BONDS> 0
0
0
<COMMON> 29,942,628
<OTHER-SE> 167,574,041
<TOTAL-LIABILITY-AND-EQUITY> 283,543,742
<SALES> 0
<TOTAL-REVENUES> 82,391,790
<CGS> 0
<TOTAL-COSTS> 74,158,231
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 269,934
<INTEREST-EXPENSE> 322,524
<INCOME-PRETAX> 7,697,052
<INCOME-TAX> 2,654,247
<INCOME-CONTINUING> 5,042,805
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,042,805
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
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