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
Commission File Number 0-12058
-------
KENAN TRANSPORT COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0516485
------------------------------- ---------------
(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
-----------------------------------------------------------
(Address of principal executive offices, including Zip Code)
(919) 967-8221
-----------------------------------------------------------
(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
------- -------
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, 1996
-------------------------- -----------------------------
Common stock, no par value 2,389,497
<PAGE>
<PAGE>
KENAN TRANSPORT COMPANY
INDEX
Page
----
Part I - Financial Information
Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995 1
Consolidated Statements of Income for the three months
ended March 31, 1996 and 1995 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 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
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
KENAN TRANSPORT COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1996 1995
ASSETS (Unaudited) (Note 1)
- -------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 9,415 $ 3,220
Short-term investments 810 6,886
Accounts receivable 4,799 4,945
Operating supplies and parts 526 506
Prepayments --
Tires 1,161 1,238
Insurance, licenses and other 1,226 639
Deferred income taxes 1,772 1,878
------------------------
Total Current Assets 19,709 19,312
Operating Property
Land 3,398 3,398
Buildings and leasehold improvements 7,639 7,159
Revenue equipment 55,667 54,379
Other equipment 3,758 3,492
------------------------
70,462 68,428
Accumulated depreciation (28,250) (27,163)
------------------------
Net Operating Property 42,212 41,265
Other Assets 760 611
------------------------
$62,681 $61,188
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------
Current Liabilities
Accounts payable $ 1,577 $ 975
Wages and employee benefits payable 4,107 4,148
Claims payable 3,931 4,153
Other accrued expenses 87 160
Income taxes payable 598 308
------------------------
Total Current Liabilities 10,300 9,744
Deferred Income Taxes 8,819 8,767
Stockholders' Equity
Common stock; no par; 20,000,000 shares
authorized; 2,389,497 shares issued
and outstanding 2,996 2,996
Retained earnings 40,566 39,681
------------------------
43,562 42,677
------------------------
$62,681 $61,188
========================
The Notes to Consolidated Financial Statements are an integral part of
these balance sheets.
Page 1<PAGE>
<PAGE>
KENAN TRANSPORT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
(Unaudited and dollars in thousands except per share amounts)
1996 1995
- ------------------------------------------------------------------------
Operating Revenue $17,587 $15,397
Operating Expenses
Wages and employee benefits 8,926 7,916
Fuel, parts, tires and other 3,298 2,739
Taxes and licenses 1,124 987
Claims and insurance 601 522
Communications, utilities and rent 429 348
Depreciation 1,561 1,349
------------------------
15,939 13,861
------------------------
Operating Income 1,648 1,536
Interest income and other expenses, net 70 171
------------------------
Income before Provision for Income Taxes 1,718 1,707
Provision for income taxes 678 683
------------------------
Net Income $ 1,040 $ 1,024
========================
Weighted average number of shares
outstanding (in thousands) 2,389 2,380
Earnings per share $ .44 $ .43
Operating ratio 90.6% 90.0%
Dividends paid per share $ .0650 $ .0625
The Notes to Consolidated Financial Statements are an integral part of
these statements.
Page 2<PAGE>
<PAGE>
KENAN TRANSPORT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited and dollars in thousands)
1996 1995
- ------------------------------------------------------------------------
Cash Provided by (Applied to):
Operations $ 2,782 $ 2,682
Purchases of operating property, net (2,508) (299)
Sales of short-term investments, net 6,076 1,000
Dividends (155) (149)
------------------------
Net Increase in Cash and Cash Equivalents 6,195 3,234
Beginning Cash and Cash Equivalents 3,220 12,759
------------------------
Ending Cash and Cash Equivalents $ 9,415 $15,993
========================
The Notes to Consolidated Financial Statements are an integral part of
these statements.
Page 3<PAGE>
<PAGE>
KENAN TRANSPORT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
- --------------------------
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, 1995 has been taken from the
audited financial statements at that date.
The results of operations for the three months ended March 31,
1996 and 1995 are not necessarily indicative of the results to be
expected for the full year.
Page 4<PAGE>
<PAGE>
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
and operating results during the periods included in the accompanying
financial statements.
Results of Operations
- -------------------------------
Revenue for the first quarter of 1996 was $17,587,000, an increase of
$2,190,000 and 14% from the first quarter of 1995. Net income was
$1,040,000 compared to $1,024,000 in 1995. Earnings per share were $.44
compared to $.43 during the same period last year. Colder than normal
weather during the first quarter positively affected demand for heating
fuels and our revenue from transportation of those products. The addition
of transportation services to Cary Oil and entry into Alabama and
Tennessee markets also contributed to revenue growth for the quarter.
Miles operated increased 10% to 11,391,000 in 1996.
Operating expenses for the first quarter of 1996 were $15,939,000
compared to $13,861,000 in 1995, an increase of 15%. Operating expenses
increased due to additional costs incurred to handle the growth in
revenue, higher costs of driver pay primarily caused by waiting time at
congested pipeline terminals during peak demand periods and higher fuel
prices. The severe winter weather and tight petroleum supplies combined
to increase the price of diesel fuel used in our operation by 18%. Our
operating ratio for the quarter was 90.6% compared to 90.0% in 1995 and
an industry ratio over 96% for all of 1995.
Liquidity and Capital Resources
- -------------------------------
The Company believes its liquidity and capital resources are
sufficient for the foreseeable future. Working capital was $9,409,000
compared to $9,568,000 at December 31, 1995, and the current ratios were
1.91 and 1.98, respectively. Cash and cash equivalents totaled $9,415,000
at March 31, 1996, and the Company had no debt outstanding under its
$7,000,000 bank line of credit.
Cash flows for the first three months of 1996 totaled $6,195,000
compared to $3,234,000 during the same period last year. Cash flows from
operations were $2,782,000 compared to $2,682,000 in 1995. Completion of
a new terminal facility in Atlanta, Georgia during the first quarter of
1996 caused net purchases of operating property to increase $2,209,000
over 1995 levels. Cash provided from the sale of short-term investments
was up $5,076,000 over the first quarter of 1995 as short-term
investments matured and were reinvested in cash equivalents.
The Company has second quarter cash commitments of approximately
$5,900,000 for tractor and trailer replacements, substantially completing
capital expenditures for the year. It is expected that capital
expenditure requirements will be met with internal cash resources.
The Company's operations require the storage of fuel for use in its
tractors in both underground and aboveground tanks. In 1989 the Company
implemented a program to upgrade its fuel storage facilities. Under the
program, the Company incurs costs to replace tanks, remediate soil
contamination resulting from overfills, spills and leaks and monitor
facilities on an ongoing basis. These costs are recorded when it is
probable that a liability has been incurred and the related amount can be
reasonably estimated. Such costs have not been and are not expected to be
material to the Company's operations or liquidity.
Page 5<PAGE>
<PAGE>
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, 1996.
Page 6<PAGE>
<PAGE>
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, 1996 BY:/s/ William L. Boone
----------------------------
Vice President-Finance and
Chief Financial Officer
Page 7<PAGE>
<PAGE>
INDEX TO EXHIBITS
The exhibits filed as part of this report are listed below:
Exhibit
Number Description
--------- --------------------------------------------------------
27 Financial Data Schedule for the quarter ending March 31,
1996.
Page 8<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1996, 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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,415
<SECURITIES> 0
<RECEIVABLES> 4,799
<ALLOWANCES> 0
<INVENTORY> 526
<CURRENT-ASSETS> 19,709
<PP&E> 70,462
<DEPRECIATION> 28,250
<TOTAL-ASSETS> 62,681
<CURRENT-LIABILITIES> 10,300
<BONDS> 0
0
0
<COMMON> 2,996
<OTHER-SE> 40,566
<TOTAL-LIABILITY-AND-EQUITY> 62,681
<SALES> 0
<TOTAL-REVENUES> 17,587
<CGS> 0
<TOTAL-COSTS> 15,939
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,718
<INCOME-TAX> 678
<INCOME-CONTINUING> 1,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,040
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
