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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, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-12058
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KENAN TRANSPORT COMPANY
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(Exact name of registrant as specified in its charter)
North Carolina 56-0516485
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
University Square - West, 143 W. Franklin Street
Chapel Hill, North Carolina, 27516-3910
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(Address of principal executive offices, including Zip Code)
(919) 967-8221
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(Registrant's telephone number, including Area Code)
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
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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, 1995
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Common stock, no par value 2,389,497
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KENAN TRANSPORT COMPANY
INDEX
Page
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Part I - Financial Information
Consolidated Balance Sheets as of March 31, 1995 and
December 31, 1994 1
Consolidated Statements of Income for the three months
ended March 31, 1995 and 1994 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and 1994 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 6
Signatures 7
Index to Exhibits 8
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PART I - FINANCIAL INFORMATION
KENAN TRANSPORT COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
ASSETS (Unaudited) (Note 1)
- - -------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $15,993 $12,759
Short-term investments -- 1,000
Accounts receivable 3,497 4,249
Operating supplies and parts 598 574
Prepayments --
Tires 1,093 1,295
Insurance, licenses and other 1,028 602
Deferred income taxes 1,660 1,660
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Total Current Assets 23,869 22,139
Operating Property
Land 3,205 3,201
Buildings and leasehold improvements 4,981 4,972
Revenue equipment 47,571 47,434
Other equipment 3,732 3,667
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59,489 59,274
Accumulated depreciation (25,524) (24,259)
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Net Operating Property 33,965 35,015
Other Assets 475 471
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$58,309 $57,625
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LIABILITIES AND STOCKHOLDERS' EQUITY
- - -------------------------------------------------------------------------
Current Liabilities
Accounts payable $ 1,134 $ 1,257
Wages and employee benefits payable 3,834 4,603
Claims payable 3,785 3,866
Other accrued expenses 79 153
Income taxes payable 581 --
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Total Current Liabilities 9,413 9,879
Deferred Income Taxes 8,052 7,975
Stockholders' Equity
Common stock; no par; 20,000,000 shares
authorized; 2,389,497 and 2,378,339
shares issued and outstanding 2,996 2,798
Retained earnings 37,848 36,973
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40,844 39,771
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$58,309 $57,625
========================
The Notes to Consolidated Financial Statements are an integral part of
these balance sheets.
</TABLE>
Page 1<PAGE>
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KENAN TRANSPORT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1995 and 1994
(Unaudited and dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Operating Revenue $15,397 $15,550
Operating Expenses
Wages and employee benefits 7,916 7,838
Fuel, parts, tires and other 2,739 2,891
Taxes and licenses 987 1,039
Claims and insurance 522 529
Communications, utilities and rent 348 287
Depreciation 1,349 1,326
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13,861 13,910
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Operating Income 1,536 1,640
Interest income and other expenses, net 171 75
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Income before Provision for Income Taxes 1,707 1,715
Provision for income taxes 683 695
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Net Income $ 1,024 $ 1,020
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Weighted average number of shares
outstanding (in thousands) 2,380 2,372
Earnings per share $ .43 $ .43
Operating ratio 90.0% 89.5%
Dividends paid per share $ .0625 $ .0600
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
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KENAN TRANSPORT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1995 and 1994
(Unaudited and dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
- - ------------------------------------------------------------------------
<S> <C> <C>
Cash Provided by (Applied to):
Operations $ 2,682 $ 2,675
Purchases of operating property, net (299) (691)
Short-term investments, net 1,000 (1,500)
Dividends (149) (143)
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Net Increase in Cash and Cash Equivalents 3,234 341
Beginning Cash and Cash Equivalents 12,759 9,046
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Ending Cash and Cash Equivalents $15,993 $ 9,387
========================
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
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KENAN TRANSPORT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
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The financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) that are, in the opinion of
management, necessary for a fair statement of results for the interim
periods.
The balance sheet at December 31, 1994 has been taken from the
audited financial statements at that date.
The results of operations for the three months ended March 31,
1995 and 1994 are not necessarily indicative of the results to be
expected for the full year.
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KENAN TRANSPORT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors that have affected the Company's financial position
andoperating results during the periods included in the accompanying
financial statements.
Results of Operations
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Revenue for the first quarter of 1995 was $15,397,000, a decrease of
$153,000 and 1% from the first quarter of 1994. Net income was $1,024,000
compared to $1,020,000 in 1994. Earnings per share were $.43 for both
quarters. Warmer weather, compared to historical averages and the first
quarter of 1994, affected demand for heating fuels and our revenue from
transportation of those products. Miles operated decreased 1% to
10,334,000 in 1995 while average freight rates remained unchanged.
Operating expenses for the first quarter of 1995 were $13,861,000
compared to $13,910,000 in 1994. Operating expenses decreased during the
quarter as a result of effective cost control, operating efficiencies and
lower demand. Our operating ratio for the quarter was 90.0% compared to
89.5% for 1994.
The Company is pursuing expansion into new operating territories in
the Southeast by taking advantage of the opportunities presented by
Federal preemption of state regulation of trucking entry, rates and
routes.
Liquidity and Capital Resources
- - -------------------------------
The Company's financial condition at March 31, 1995 was strong.
Working capital was $14,456,000 compared to $12,499,000 at March 31, 1994
and the current ratios were 2.5 and 2.3, respectively. Cash and cash
equivalents totaled $15,993,000 at March 31, 1995, and the Company had no
debt outstanding under its $7,000,000 bank line of credit.
Cash flows for the first three months of 1995 totaled $3,234,000
compared to $341,000 during the first quarter of 1994. The $2,893,000
increase in cash flows for the quarter is due largely to shifts in cash
and investments from short-term investments to cash equivalent
investments. Cash flows from operations for the first quarter of 1995 were
$2,682,000 compared to $2,675,000 in 1994.
The Company has second quarter cash commitments of approximately
$4,000,000 for tractor and trailer replacements. It is expected that
capital expenditure requirements will be met with internal cash resources.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- - ------- --------------------------------
(a) The Exhibits to this Form 10-Q are listed on the accompanying
Index to Exhibits.
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1995.
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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.
KENAN TRANSPORT COMPANY
(Registrant)
DATE: May 10, 1995 BY:/s/ William L. Boone
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Vice President-Finance and
Chief Financial Officer
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INDEX TO EXHIBITS
The exhibits filed as part of this report are listed below:
Exhibit
Number Description
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10(a) Supplemental Executive Retirement Plan, effective January
1, 1990, filed as Exhibit 10(e) to the Registrant's Form
10-K for the year ended December 31, 1990, which is
incorporated herein by reference to such Form 10-K.
10(b) Employee Stock Bonus Plan effective January 1, 1985,
filed as Exhibit 10(c) to the Registrant's Form 10-K for
the year ended December 31, 1984, which is incorporated
herein by reference to such Form 10-K.
10(c) Amendment to Employee Stock Bonus Plan dated January 6,
1987, filed as Exhibit 10(d) to the Registrant's Form
10-K for the year ended December 31, 1986, which is
incorporated herein by reference to such Form 10-K.
10(d) 1994 Stock Bonus Plan effective January 1, 1994, filed as
Exhibit 10(b) to the Registrant's Form 10-Q Quarterly
Report for the quarter ended June 30, 1994, which is
incorporated herein by reference to such Form 10-Q.
27 Financial Data Schedule for the 1st Quarter 10-Q
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000745379
<NAME> KENAN TRANSPORT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 15,993
<SECURITIES> 0
<RECEIVABLES> 3,497
<ALLOWANCES> 0
<INVENTORY> 598
<CURRENT-ASSETS> 23,869
<PP&E> 59,489
<DEPRECIATION> 25,524
<TOTAL-ASSETS> 58,309
<CURRENT-LIABILITIES> 9,413
<BONDS> 0
<COMMON> 2,996
0
0
<OTHER-SE> 37,848
<TOTAL-LIABILITY-AND-EQUITY> 58,309
<SALES> 0
<TOTAL-REVENUES> 15,397
<CGS> 0
<TOTAL-COSTS> 13,861
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,707
<INCOME-TAX> 683
<INCOME-CONTINUING> 1,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,024
<EPS-PRIMARY> .43
<EPS-DILUTED> 0
</TABLE>
