FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1996 Commission File No 0-11300
BUILDERS TRANSPORT, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 58-1186216
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 7005, 2029 WEST DEKALB STREET, CAMDEN, SOUTH CAROLINA 29020
- -----------------------------------------------------------------------------
(address of principal executive offices and zip code)
Registrant's telephone number, including area code (803) 432-1400
-------------
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
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 11, 1996
- ---------------------------- -----------------------------
Common Stock, par value $.01 5,087,532
per share
BUILDERS TRANSPORT, INCORPORATED
INDEX TO FORM 10-Q
Part I FINANCIAL INFORMATION Page No.
- ------------------------------- --------
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 1
Condensed Consolidated Statements of Income for the Three
Months Ended September 30, 1996 and 1995 and the Nine Months
Ended September 30, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1996 and 1995 4
Notes to Condensed Consolidated Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
Part II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS *
ITEM 2. CHANGES IN SECURITIES *
ITEM 3. DEFAULTS UPON SENIOR SECURITIES *
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS *
ITEM 5. OTHER INFORMATION *
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
* No information submitted under this caption.
PART 1. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
September 30 December 31
1996 1995
----------- -----------
(Unaudited) (Note)
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 45 $ 109
Accounts receivable, less allowances
(September 30,1996 - $706;
December 31, 1995 - $511) 36,305 28,815
Prepaid expenses 15,865 17,171
Repair parts and operating supplies 3,139 3,233
--------- ---------
TOTAL CURRENT ASSETS 55,354 49,328
PROPERTY AND EQUIPMENT 304,873 301,924
Less accumulated depreciation
and amortization (111,516) (102,662)
--------- ---------
TOTAL PROPERTY AND EQUIPMENT 193,357 199,262
OTHER ASSETS 24,703 23,471
--------- ---------
TOTAL ASSETS $273,414 $272,061
========= =========
-1-
September 30 December 31
1996 1995
----------- -----------
(Unaudited) (Note)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 10,074 $ 9,551
Other current liabilities 12,203 12,572
Current maturities of long-term debt 37,262 36,366
--------- ---------
TOTAL CURRENT LIABILITIES 59,539 58,489
LONG-TERM DEBT
Revolving credit agreement 12,430 3,469
Convertible Subordinated Debentures 44,632 46,789
Capital leases and other 110,937 114,504
--------- ---------
TOTAL LONG-TERM DEBT 167,999 164,762
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 2,013 2,013
Other 7,379 8,508
--------- ---------
TOTAL OTHER LIABILITIES 9,392 10,521
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares; no shares issued
at September 30, 1996 or December 31, 1995
Common stock, par value $.01 per share
Authorized 25,000,000 shares; Issued
6,270,600 shares at September 30, 1996 and
6,218,347 shares at December 31, 1995 63 62
Paid-in capital 33,674 33,281
Unearned compensation related to
ESOP receivable (4,372) (4,477)
Retained earnings 22,131 24,201
--------- ---------
51,496 53,067
Less cost of common stock in treasury
(1,202,048 shares at September 30, 1996 and
1,168,083 shares at December 31, 1995) (15,012) (14,778)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 36,484 38,289
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 273,414 $ 272,061
========= =========
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles.
See notes to Condensed Consolidated Financial Statements
-2-
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
--------- --------- --------- ---------
(In thousands, except (In thousands, except
per share amounts) per share amounts)
OPERATING REVENUE $ 73,462 $ 73,249 $ 217,390 $ 221,210
OPERATING EXPENSES:
Wages, salaries, and employee
benefits 30,344 29,789 89,657 90,016
Operations and maintenance 16,921 15,483 46,450 45,325
Operating taxes and licenses 6,824 6,870 20,647 20,797
Insurance and claims 4,357 5,493 11,919 12,576
Communications and utilities 1,145 1,226 3,581 3,558
Depreciation and equipment rents 6,792 6,483 20,169 18,616
(Gain) loss on disposition of
operating assets 363 (139) (960) (460)
Rents and purchased transportation 5,765 4,962 16,163 14,204
Other operating expenses 270 309 878 967
--------- --------- --------- ---------
Total Operating Expenses 72,781 70,476 208,504 205,599
--------- --------- --------- ---------
OPERATING INCOME 681 2,773 8,886 15,611
OTHER DEDUCTIONS:
Interest and other expenses 4,120 3,920 12,280 10,904
INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (3,439) (1,147) (3,394) 4,707
PROVISION FOR INCOME TAXES (1,341) (447) (1,324) 1,836
--------- --------- --------- ---------
NET INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (2,098) (700) (2,070) 2,871
--------- --------- --------- ---------
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE -- -- -- (7,291)
--------- --------- --------- ---------
NET LOSS $ (2,098) $ (700) $ (2,070) $ (4,420)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $ (.41) $ (.13) $ (.39) $ (.83)
========= ========= ========= =========
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 5,169,179 5,384,470 5,243,480 5,344,622
See notes to Condensed Consolidated Financial Statements
-3-
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Nine Months Ended
September 30
1996 1995
----------- -----------
(In thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 11,791 $ 20,890
INVESTING ACTIVITIES
Purchases of property and equipment (1,858) (5,735)
Proceeds from disposal of property and equipment 5,786 7,777
--------- ---------
NET CASH PROVIDED BY INVESTING
ACTIVITIES 3,928 2,042
FINANCING ACTIVITIES
Proceeds from lines of credit and
long-term borrowings 17,734 3,044
Principal payments on lines of credit,
long-term debt and capital lease obligations (33,287) (25,967)
Proceeds from the issuance of common stock 4 69
Purchase of Treasury Stock (234) (74)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (15,783) (22,928)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (64) 4
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 109 9
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 45 $ 13
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 11,971 $ 10,703
Noncash investing activity:
Property and equipment acquired
through capital leases $ 17,548 $ 61,935
Noncash financing activity:
Common stock issued under employee
benefit plans $ 390 $ 25
See notes to Condensed Consolidated Financial Statements
-4-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Note A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
1996, are not necessarily indicative of the results that may be expected for
the year ended December 31, 1996. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
Note B -- EARNINGS PER SHARE
Three Months Ended Six Months Ended
September 30 September 30
1996 1995 1996 1995
----------- ----------- ----------- -----------
PRIMARY:
Average shares outstanding 6,270,442 6,214,445 6,258,470 6,210,583
Assumed exercise of stock
options 76,805 293,658 158,088 257,227
Treasury stock (1,178,068) (1,123,633) (1,173,078) (1,123,188)
----------- ----------- ----------- -----------
Totals 5,169,179 5,384,470 5,243,480 5,344,622
=========== =========== =========== ===========
Net loss $(2,098,492) $ (699,530) $(2,069,769) $(4,419,020)
=========== =========== =========== ===========
Per share amount:
Net loss $ (.41) $ (.13) $ (.39) $ (.83)
=========== =========== =========== ===========
FULLY DILUTED:
Average shares outstanding 6,270,442 6,214,445 6,258,470 6,210,583
Assumed exercise of stock
options 76,805 297,797 206,042 272,495
Assumed conversion of 8%
Convertible Subordinated
Debentures issued
September 9, 1985 1,001,516 1,078,014 1,050,557 1,085,900
Assumed conversion of
6 1/2% Convertible
Subordinated Debentures
issued May 9, 1986 592,079 592,079 592,079 601,793
Treasury stock (1,178,068) (1,123,633) (1,173,078) (1,123,188)
----------- ----------- ----------- -----------
Totals 6,762,774 7,058,702 6,934,070 7,047,583
=========== =========== =========== ===========
Net loss $(2,098,492) $ (699,530) $(2,069,769) $(4,419,020)
-5-
Add 8% Convertible
Subordinated Debentures
interest, net of
income tax effect 300,582 324,286 942,601 972,158
Add 6 1/2% Convertible
Subordinated Debentures
interest, net of
income tax effect 223,375 218,519 667,697 666,312
----------- ----------- ----------- -----------
Totals $(1,574,535) $ (156,725) $ (459,471) $(2,780,550)
=========== =========== =========== ===========
Per share amount:
Net loss $ (.23)*$ (.02)*$ (.07)*$ (.39)*
=========== =========== =========== ===========
* Anti-dilutive
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES (continued)
Note C -- CREDIT AGREEMENT
During the first nine months of 1996, the Company purchased 700 new trailers
and refinanced certain previously purchased tractors and trailers. The debt
and capital leases associated with these activities was approximately $22
million. Additionally, the Company has placed orders for 200 new tractors to
be purchased during the fourth quarter of 1996. The expected cost of these
units is $14-$15 million which will be financed using capital leases.
In June 1996, the Company and its lenders amended the revolving credit
facility to provide to the Company, among other things, lower rates and fees,
increased borrowing capacity and an extension of the scheduled expiration date
of the credit agreement. In September 1996, the Company prepaid a portion of
its term loan with its primary lenders. As a result of this prepayment, the
remaining outstanding balance of this loan was $2 million and is to be paid in
quarterly installments of $500,000.
-7-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Operating revenues for the third quarter of 1996 were $73.5 million, compared
to $73.2 million for the second quarter of 1995, and for the first nine months
of 1996, were $217.4 million, compared to $221.2 million for the first nine
months of 1995.
The Company had a net loss of $2.1 million for both the third quarter and
first nine-month period of 1996, as compared to net losses of $700,000 and
$4.4 million for the comparable periods of 1995. Included in the 1995 nine-
month results is the cumulative effect of the accounting change resulting
from the adoption of Statement of Financial Accounting Standards No. 121
Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets
To Be Disposed Of as of January 1, 1995.
The operating ratio (operating expenses as a percentage of operating revenues)
was 99.1% and 95.9% for the third quarter and first nine months of 1996,
respectively, compared to 96.2% and 92.9% for the same periods in 1995.
Operating income during the third quarter was $681,000, compared to $2.8
million in the third quarter of 1995 and for the first nine months of 1996 was
$8.9 million, compared to $15.6 million for the first nine months of 1995.
The increase in operating expenses as a percentage of revenues, was partially
attributable to a substantial increase in fuel prices in 1996. Fuel prices
are at their highest levels in recent years. These higher fuel prices
increased the Company's operating costs by approximately $1 million during the
third quarter of 1996.
The Company's operating profitability was also reduced because approximately
5% of the tractor fleet was unmanned. Unmanned tractors reduced operating
profitability during the third quarter approximately $2.5 million. While the
Company believes progress is being made toward remanning the parked tractors
it will likely take several more months to fully re-man the Company's fleet.
See the discussion below under Recent Trends and Developments.
Although the Company is making progress in resolving the problems of higher
fuel prices and unmanned equipment, it is expected that these problems will
hinder the Company's operations into 1997. In addition to the corrective
actions taken to address the driver shortage and fuel price situations, the
Company is also focusing on opportunities to enhance the quality of revenue,
increase equipment utilization and reduce operating costs.
The Company increased its use of owner-operators to 212 contractors, on
average, during the third quarter of 1996, compared to an average of 179 owner-
operators during the corresponding period in 1995. This caused an increase in
the Company's rents and purchased transportation expenses during the third
quarter of 1996, as compared to the third quarter of 1995.
-8-
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results may be affected by a number of factors
such as: uncertainties relative to economic conditions; industry factors
including, among others, competition, rate pressure, driver availability and
fuel prices; and, the Company's ability to sell its services profitability,
successfully increase market share in its core businesses and effectively
manage expense growth relative to revenue growth in anticipation of continued
pressure on gross margins. The Company's operating results could be adversely
affected should the Company be unable to anticipate customer demand accurately
or to effectively manage the impact on the Company of changes in the trucking,
transportation and logistics industries.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results, past financial performances should not be
considered to be a reliable indicator of future performance, and investors
should not use historical trends to anticipate results or trends in future
periods.
RECENT DEVELOPMENT AND TRENDS
Over the past year or so, the Company experienced weakened freight demand.
This situation is now improving, and the Company's recent freight volume
has been relatively strong. While the Company is more optimistic about future
business levels, the Company cannot predict whether this positive trend will
continue or when the Company can obtain meaningful rate increases from a
significant portion of its customers. While the Company's freight volume was
relatively strong throughout the third quarter, the trucking business tends to
be seasonal, and the Company expects that demand for its services will be
somewhat less during the upcoming winter months.
As noted above, fuel prices were sharply higher during the second and third
quarters of 1996. While the Company has passed some of the additional costs
along to its customers through fuel surcharges, the Company has been unable to
collect enough fuel surcharges to offset the increases in fuel prices. The
price of diesel fuel could remain high for several months. Historically, fuel
prices are higher during the winter months, and fuel futures contracts for the
first part of 1997 have traded at consistently high levels for several months.
If the price of fuel remains high, the Company's operating profitability will
continue to suffer.
The Company experienced a shortage of qualified drivers during the second and
third quarters of 1996. As a result, approximately 5% of its tractor fleet
went unmanned. The Company believes it is currently making consistent
progress toward manning its empty tractors. It will take several more months,
however, to fully re-man the Company's tractor fleet. Moreover, some of the
Company's competitors have announced driver pay increases for 1997. This
could adversely impact the Company's driver recruiting and retention and
increase driver pay rates. Driver availability and retention are industry-wide
issues, and the Company expects that finding and keeping high quality drivers
will continue to be a major challenge for the Company.
-9-
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
The Company's cash flow and cash requirements tend to fluctuate during the
year. Generally more cash is required during the first part of the year,
primarily to fund the Company's annual prepayments of operating taxes and
licenses and less profitable operations. Cash flow from operations generally
increases consistently beginning in the second quarter through year end.
The current ratio was .93 at September 30, 1996, compared to .84 at December
31, 1995. Accounts Receivable have increased by 26%, since December 31, 1995,
due to seasonal increases in volume, receivable collections delays resulting
from problems associated with the Company's conversion to new computer
software and an increase in other receivables.
Cash provided by operations was $11.8 million for the first nine months of
1996, as compared to $20.1 million for the first nine months of 1995. Lower
operating income and increased accounts receivable caused operating cash flows
to decline during the first nine months of 1996 compared to the same period in
1995. Management expects that cash generated from operations will increase as
the Company collects it receivables. The Company uses its revolving credit
facility to smooth cyclical cash flows associated with its operations. In
anticipation of the seasonal diminished cash flow from operations and the
payment of annual operating taxes and licenses in the first quarter of 1997,
the Company has taken certain measures to improve liquidity and cash reserves.
The Company's revolving credit facility has been increased by $2.5 million to
$17.5 million. Additionally, the Company has refinanced some equipment which
previously had been purchased through borrowings under the revolving credit
facility. As of September 30, 1996, the Company had borrowing availability
under the revolving credit facility of $5.1 million. Based on current cash
flow projections, the $5.1 million borrowing capacity should provide the
Company with sufficient liquidity during the slower winter months through the
first quarter of 1997.
-10-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Date Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended September 30, 1996.
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.
BUILDERS TRANSPORT, INCORPORATED
Date: November 14, 1996 By: /S/ ROBERT Y. FOX
----------------------- -----------------------------
Robert Fox
Vice President and
Chief Financial Officer
Signed in the dual capacity
of a duly authorized officer
of the Registrant and the
Principal Accounting Officer
of the Registrant
-11-
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 36,305
<ALLOWANCES> 706
<INVENTORY> 3,139
<CURRENT-ASSETS> 55,354
<PP&E> 304,873
<DEPRECIATION> 111,516
<TOTAL-ASSETS> 273,414
<CURRENT-LIABILITIES> 59,539
<BONDS> 167,999
0
0
<COMMON> 63
<OTHER-SE> 36,421
<TOTAL-LIABILITY-AND-EQUITY> 273,414
<SALES> 217,390
<TOTAL-REVENUES> 217,390
<CGS> 0
<TOTAL-COSTS> 208,504
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,280
<INCOME-PRETAX> (3,394)
<INCOME-TAX> (1,324)
<INCOME-CONTINUING> (2,070)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,070)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> (.39)<F1>
<FN>
<F1>Fully diluted EPS calculation is anti-dilutive.
</FN>
</TABLE>
