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 March 31, 1998 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 April 30, 1998
- - ---------------------------- -----------------------------
Common Stock, par value $.01 5,284,019
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 March 31, 1998
and December 31, 1997 1
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1998 and 1997 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 *
ITEM 2. CHANGES IN SECURITIES *
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS *
ITEM 5. OTHER INFORMATION *
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
* No information submitted under this caption.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
March 31 December 31
1998 1997
----------- -----------
(Unaudited) (Note)
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 43 $ 48
Accounts receivable, less allowances
(March 31, 1998 - $821
December 31, 1997 - $591) 28,435 29,873
Prepaid expenses 14,999 13,226
Repair parts and operating supplies 2,592 2,541
--------- ---------
TOTAL CURRENT ASSETS 46,069 45,688
PROPERTY AND EQUIPMENT 300,534 301,536
Less accumulated depreciation
and amortization (146,278) (140,211)
--------- ---------
TOTAL PROPERTY AND EQUIPMENT 154,256 161,325
OTHER ASSETS 2,199 2,316
--------- ---------
TOTAL ASSETS $ 202,524 $ 209,329
========= =========
-1-
March 31 December 31
1998 1997
----------- -----------
(Unaudited) (Note)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 19,811 $ 21,066
Other current liabilities 21,905 18,762
Current maturities of long-term debt 179,874 118,291
--------- ---------
TOTAL CURRENT LIABILITIES 221,590 158,119
LONG-TERM DEBT
Credit Facility -- --
Convertible Subordinated Debentures -- --
Capital leases and other -- 65,414
--------- ---------
TOTAL LONG-TERM DEBT -- 65,414
OTHER LIABILITIES 12,613 12,753
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares; no shares issued
at March 31, 1998 or December 31, 1997
Common stock, par value $.01 per share
Authorized 25,000,000 shares; Issued
6,491,070 shares at March 31, 1998 and
December 31, 1997 65 65
Paid-in capital 34,265 34,265
Unearned compensation related to
ESOP receivable (4,162) (4,197)
Retained earnings (46,801) (41,544)
--------- ---------
(16,633) (11,411)
Less cost of common stock in treasury
(1,207,051 shares at March 31, 1998 and
at December 31, 1997) (15,046) (15,046)
--------- ----------
TOTAL STOCKHOLDERS' EQUITY (31,679) (26,457)
--------- ---------
CONTINGENT LIABILITIES
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 202,524 $ 209,329
========= =========
Note: The balance sheet at December 31, 1997, 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 OPERATIONS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Three Months Ended
March 31 March 31
1998 1997
----------- -----------
(Note)
(In thousands, except per
share amounts)
OPERATING REVENUE $ 65,424 $ 70,993
OPERATING EXPENSES:
Wages, salaries, and employee benefits 26,705 28,728
Operations and maintenance 13,791 17,435
Operating taxes and licenses 5,899 6,727
Insurance and claims 4,450 3,887
Communications and utilities 1,172 944
Depreciation and equipment rents 6,617 7,026
Loss on disposition of operating assets 282 378
Rents and purchased transportation 7,826 5,454
Other operating expenses 306 220
--------- ---------
Total Operating Expenses 67,048 70,799
--------- ---------
OPERATING INCOME (LOSS) (1,624) 194
OTHER DEDUCTIONS:
Interest and other expenses 3,633 4,133
--------- ---------
LOSS BEFORE INCOME TAXES (5,257) (3,939)
PROVISION FOR INCOME TAXES -- (1,530)
--------- ---------
NET LOSS $ (5,257) $ (2,409)
========= =========
NET LOSS PER SHARE $ (0.99) $ (0.46)
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 5,284,019 5,190,932
See notes to condensed consolidated financial statements
-3-
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Three Months Ended
March 31 March 31
1998 1997
----------- -----------
(In thousands)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 3,916 $ 3,539
INVESTING ACTIVITIES
Purchases of property and equipment (93) (661)
Proceeds from disposal of property and equipment 3 91
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES
(90) (570)
FINANCING ACTIVITIES
Proceeds from lines of credit and
long-term borrowings 2,590 5,397
Principal payments on lines of credit,
long-term debt and capital lease obligations (6,421) (8,368)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (3,831) (2,971)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (5) (2)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 48 50
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 43 $ 48
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 2,350 $ 3,820
Noncash investing activity:
Property and equipment acquired
through capital leases $ -- $ 5,068
Noncash financing activity:
Common stock issued under employee
benefit plans $ -- $ 592
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 three-month period ended March 31,
1998, are not necessarily indicative of the results that may be expected for
the year ended December 31, 1998. 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, 1997.
NOTE B - LONG-TERM DEBT
Subsequent to March 31, 1998, the Company has defaulted on the scheduled
payments under its equipment capital leases ($116.5 million), which also
constitute defaults under the Credit Facility that would permit acceleration
of that debt. The capital leases represent primarily leased revenue equipment
capitalized for approximately $197 million with accumulated amortization of
approximately $80.0 million. The Company continues to be in default with
respect to the two series of Convertible Subordinated Debentures. The
Company did not make interest payments due May 1, 1997, November 1, 1997
and May 1, 1998 with respect to its 61/2% Convertible Subordinated
Debentures. The Company did not make the interest payments due August 15,
1997 and February 15, 1998 or sinking fund payment due August 15, 1997 on
its 8% Convertible Subordinated Debentures.
As a result of the above defaults, the Credit Facility, the equipment capital
leases and 61/2% and 8% convertible subordinated debentures have been
reclassified as current liabilities. Under the existing capital lease
agreements the lenders have the option to accelerate or terminate the leases
or to recall and dispose of the equipment with any deficiencies to be paid
by the Company.
-5-
Note C - EARNINGS PER SHARE
Three Months Ended
March 31 March 31
1998 1997
----------- -----------
BASIC AND DILUTED:
Average shares outstanding 6,491,070 6,397,983
Treasury stock (1,207,051) (1,207,051)
----------- -----------
Totals $ 5,284,019 5,190,932
=========== ===========
Net loss $(5,257,000) $ (2,409,000)
=========== ===========
Per share amount:
Net loss $ (0.99) $ (0.46)
=========== ===========
NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, REPORTING COMPREHENSIVE INCOME, which establishes standards for the
reporting and display of comprehensive income and its components in a full
set of general purpose financial statements. The Company adopted SFAS
No. 130 in the first quarter of 1998.
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, which requires that a publicly-held
company report financial and descriptive information about its operating
segments in financial statements issued to shareholders for interim and
annual periods. The Statement also requires additional disclosures with
respect to products and services, geographic areas of operations and major
customers. The Company adopted Statement No. 131 in the first quarter
1998.
The impact of the adoption of these statements was not material.
-6-
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATING RESULTS
The operating ratio (operating expenses as a percentage of operating revenues)
was 102.5% during the first quarter of 1998 as compared to 99.7% in the first
quarter of 1997. Operating loss for the first quarter of 1998 was $1.6
million compared to operating income of $194,000 for the first quarter of
1997. Operating expenses as a percentage of revenues were generally higher
in 1998 as compared to 1997 primarily as a result of reduced revenue in the
first quarter of 1998, that was partially offset by lower fuel costs and
reductions in other operating expenses.
Operating revenues for the first quarter of 1998 were $65.4 million, compared
to $71.0 million for the first quarter of 1997.
The Company had a net loss of $5.3 million for the first quarter of 1998, as
compared to a net loss of $2.4 million for the first quarter of 1997.
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
The Company has suspended monthly payments on its equipment debt for April
and May, 1998. Further, the Company did not make interest payments due May
1, 1997, November 1, 1997 and May 1, 1998 with respect to its 6 1/2%
Convertible Subordinated Debentures aggregating $2.2 million. The Company
did not make the interest payments due August 15,1997 aggregating and
February 15, 1998 or sinking fund payment due August 15, 1997 on its 8%
Convertible Subordinated Debentures aggregating $4.1 million. (see "Recent
Development and Trends" and "Factors That May Affect Future Results")
Prepaid expenses increased by approximately 13% since December 31, 1997,
primarily due to the normal annual prepayment of licenses and taxes.
Accounts Receivable decreased by 5%, as compared to December 31, 1997,
due to seasonal increases in freight revenue volume.
Even though there was lower operating income in the first quarter of 1998,
compared to the first quarter of 1997, operating cash flows increased
slightly as a result of increased reserves for claims payable in 1998 as
compared to 1997. 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
m operations generally increases consistently beginning in the second
quarter through year-end. The Company uses the revolving portion of its
Credit Facility to smooth cyclical cash flows associated with its operations.
-7-
RECENT DEVELOPMENTS AND TRENDS
As noted above, the Company has suspended monthly payments on its equipment
debt for April and May, 1998 aggregating $7.0 million. The Company is
therefore in default under those agreements, and, while the Company has no
payment defaults under its general credit facility (pursuant to which
$16.4 million is outstanding as of March 31, 1998), the equipment debt
defaults constitute cross defaults under the general credit facility that
would permit acceleration of that debt. The Company has not made the
interest payments due May 1, 1997, November 1, 1997 and May 1, 1998 with
respect to its 61/2% Convertible Subordinated Debentures. The Company has
not made the interest payments due August 15, 1997 and February 15, 1998 or
sinking fund payment due August 15, 1997 on its 8% Convertible Subordinated
Debentures. These are events of default permitting acceleration of
the $46.8 million outstanding principal balance on those debentures. The
Company has received no demands or notices of default under its general
credit agreement.
The Company is in default with all equipment creditors representing
approximately $116.5 million in outstanding equipment debt. Equipment
creditors are exercising various remedies ranging from termination of leases
and demand for return of equipment to acceleration of remaining amounts
under the applicable equipment obligations. Pursuant to the Company's
suspension of monthly payments on its equipment debt, some equipment
creditors have notified the Company that equipment leases are terminated and
some equipment debtors have repossed the equipment.
The Company has, during first quarter 1998, engaged in discussion with
representatives of holders of the Company's Convertible Subordinated
Debentures. Such discussions did not result in an agreement to successfully
restructure the Company. The Company is currently in discussion with
potential sources of additional financing that, if made available, could
potentially contribute to a restructuring that could improve the Company's
prospects. The Company has recently engaged and independent consulting firm
ection under the bankruptcy laws. (see "Factors That May Affect Future
Results")
FORWARD LOOKING STATEMENTS
Statements in this document that are not historical facts are hereby identified
as "forward looking statements" for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. The Company cautions readers that such "forward
looking statements", including without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs and income, wherever they occur in this document
or in other statements attributable to the Company are necessarily estimates
reflecting the best judgment of the Company's senior management and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the "forward looking statements." Such
"forward looking statements" should, therefore, be considered in light of
various important factors including those set forth below and others set forth
from time to time in the Company's reports and registration statements filed
with the SEC.
-8-
The foregoing discussions under "FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF
CAPITAL" and "RECENT DEVELOPMENTS AND TRENDS" are particularly susceptible to
the risks and uncertainties discussed below. Moreover, the Company through its
senior management may from time to time make such "forward looking statements"
about the matters described herein or other matters concerning the Company.
The Company disclaims any intent or obligation to update "forward looking
statements."
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 profitably,
manage expense growth relative to revenue growth in anticipation of continued
pressure on gross margins. Furthermore, the Company is currently unable to
generate adequate cash flow through normal operations to pay both operations
expense and monthly payments on its equipment debt. The Company may find it
appropriate in the near future to seek protection under the bankruptcy laws.
Failure to obtain additional financing will have a severe negative impact on
the Company's operations in coming months. 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 logistic industires.
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.
-9-
PART II. OTHER INFORMATION
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
For a discussion of certain defaults see "Management's Discussion and Analysis
of the Financial Condition and Results of Operations - Recent Developments and
Trends" and Note B to Condensed Consolidated Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended March 31, 1998.
Exhibit 27 Financial Data Schedule (for SEC use only)
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: May 20, 1998 By: /s/Stanford M. Dinstein
-------------------- ---------------------------
Stanford M. Dinstein
Vice Chairman and
Chief Executive Officer
and Treasurer
Signed in the dual capacity
of a duly authorized officer
of the Registrant and the
Principal Financial Officer
of the Registrant
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 43
<SECURITIES> 0
<RECEIVABLES> 28,435
<ALLOWANCES> 821
<INVENTORY> 2,592
<CURRENT-ASSETS> 46,069
<PP&E> 300,534
<DEPRECIATION> 146,278
<TOTAL-ASSETS> 202,524
<CURRENT-LIABILITIES> 221,590
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> (31,744)
<TOTAL-LIABILITY-AND-EQUITY> 202,524
<SALES> 65,424
<TOTAL-REVENUES> 65,424
<CGS> 0
<TOTAL-COSTS> 67,048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,633
<INCOME-PRETAX> (5,257)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,257)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,257)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> (.99)<F1>
<FN>
<F1>
</FN>
</TABLE>
