SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of
1934
Date of Report: February 12, 1998
-----------------
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)
AMENDMENT NO.1
The Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K,
filed December 12, 1997, as set forth in the pages attached hereto:
Item 7(a) Financial statements of business acquired;
Item 7(b) Pro forma financial information.
Item 7(c) Exhibits
<PAGE>
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements.
Audited financial statements of Transport South, Inc.
(the business acquired):
Report of Independent Certified Public Accountants
Balance Sheets - December 31, 1996 and September
30, 1997 (unaudited)
Statements of Income - Year ended December 31, 1996
and nine months ended September 30 1997 (unaudited)
Statement of Stockholders' Equity - Year ended
December 31, 1996 and nine months ended September
30 1997 (unaudited)
Statements of Cash Flows - Year ended December 31,
1996 and nine months ended September 30 1997
(unaudited)
Notes to Financial Statements for the year ended
December 31, 1996
(b) Kenan Transport Company and Transport South, Inc. Pro
Forma Combined Financial Statements (Unaudited):
Pro Forma Combined Condensed Balance Sheet -
September 30, 1997
Pro Forma Combined Condensed Statements of Income -
Year Ended December 31, 1996
Pro Forma Combined Condensed Statements of Income -
Nine Months Ended September 30, 1997
(c) Exhibits.
The Exhibits to this Report are listed in the Index to
Exhibits set forth elsewhere herein.
Page 1<PAGE>
<PAGE>
Item 7(a) Financial Statements
- -----------------------------------------------------------------------
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TRANSPORT SOUTH, INC.
December 31, 1996
Page 2<PAGE>
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
Transport South, Inc.
We have audited the accompanying balance sheet of Transport South, Inc.
as of December 31, 1996, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management as well as evaluating
the overall financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Transport
South, Inc. as of December 31, 1996, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
Grant Thornton LLP
Atlanta, Georgia
April 9, 1997
Page 3<PAGE>
<PAGE>
Transport South, Inc.
BALANCE SHEETS
ASSETS
December 31, September 30,
1996 1997
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $1,754,035 $ 250,542
Accounts receivable:
Trade, less allowance for doubtful
accounts of $236,000 in 1996 2,040,650 3,232,417
Affiliates 1,629,875 6,703,642
Other current assets 246,885 308,299
------------ ------------
Total current assets 5,671,445 10,494,900
PROPERTY AND EQUIPMENT, AT COST 28,297,304 26,217,271
Less accumulated depreciation (13,394,721) (14,442,291)
------------ ------------
Net property and equipment 14,902,583 11,774,980
------------ ------------
OTHER ASSETS 599,125 404,185
------------ ------------
$21,173,153 $22,674,065
============ ============
The accompanying notes are an integral part of these statements.
Page 4<PAGE>
<PAGE>
Transport South, Inc.
BALANCE SHEETS - continued
LIABILITIES AND STOCKHOLDERS EQUITY
December 31, September 30,
1996 1997
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Current portion of long-term debt $ 50,007 $ 51,914
Current portion of capital
lease obligations 1,293,606 1,147,305
Accounts payable:
Trade 2,528,994 1,877,447
Affiliates 706,489 2,355,642
Accrued claims 1,924,121 3,028,013
Accrued payroll and benefits 716,610 938,360
Other accrued liabilities 461,635 201,213
------------ ------------
Total current liabilities 7,681,462 9,599,894
OTHER LIABILITIES
Long-term debt 52,565 13,388
Capital lease obligations 3,921,212 2,769,775
Other liabilities 162,916 86,251
------------ ------------
Total other liabilities 4,136,693 2,869,414
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
authorized 10,000,000, issued and
outstanding 943,664 shares 9,437 9,433
Additional paid-in capital 4,320,626 4,332,496
Retained earnings 5,024,935 5,862,828
------------ ------------
Total stockholders' equity 9,354,998 10,204,757
------------ ------------
$21,173,153 $22,674,065
============ ============
Page 5<PAGE>
<PAGE>
Transport South, Inc.
STATEMENTS OF INCOME
Nine months
Year ended ended
December 31, September 30,
1996 1997
------------ ------------
(Unaudited)
Operating revenue $43,941,655 $32,115,326
Operating expenses
Wages and employee benefits 21,831,945 15,397,859
Fuel, parts, tires and other 13,894,641 9,125,515
Taxes and licenses 641,312 459,629
Claims and insurance 1,238,753 1,929,013
Communications, utilities and rent 2,078,899 1,506,384
Depreciation and amortization 4,295,044 2,951,502
------------ ------------
43,980,594 31,369,902
------------ ------------
Income (loss) from operations (38,939) 745,424
Other income (expense)
Gain on sale of property and equipment 431,341 171,411
Interest expense (404,486) (229,339)
Interest income - affiliate 99,431 176,130
Other, net 51,514 31,676
------------ ------------
177,800 149,878
------------ ------------
Income before income taxes 138,861 895,302
Income tax expense 25,034 36,090
------------ ------------
Net income $ 113,827 $ 859,212
============ ============
PRO FORMA INFORMATION (UNAUDITED)
Historical net income before
income taxes $ 138,861 $ 895,302
Pro forma income tax expense $ 116,000 $ 430,000
Pro forma net income $ 22,861 $ 465,302
Pro forma net income per common share $ .03 $ .49
Weighted average shares 888,637 944,312
The accompanying notes are an integral part of these statements.
Page 6<PAGE>
<PAGE>
Transport South, Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock Additional Total
-------------------- paid-in Retained stockholders'
Shares Amount capital earnings equity
------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 883,506 $8,835 $3,695,298 $6,079,352 $ 9,783,485
Purchase and retirement
of stock (5,131) (51) (583) (49,738) (50,372)
Sale of stock 65,289 653 625,911 - 626,564
Cash dividends - - - (1,118,507) (1,118,507)
Net income - - - 113,828 113,828
------- ------- ---------- ---------- -----------
Balance, December 31, 1996 943,664 9,437 4,320,626 5,024,935 9,354,998
Purchase and retirement
of stock (unaudited) (3,808) (38) (20,828) (21,319) (42,185)
Sale of stock (unaudited) 3,460 34 34,792 - 34,826
Purchase and sale of
stock for note receivable
(unaudited) - - (2,094) - (2,094)
Net income - - - 859,212 859,212
------- ------- ---------- ---------- -----------
Balance, September 30, 1997
(unaudited) 943,316 $9,433 $4,332,496 $5,862,828 $10,204,757
======= ======= ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
Page 7<PAGE>
<PAGE>
Transport South, Inc.
STATEMENTS OF CASH FLOWS
Nine months
Year ended ended
December 31, September 30,
1996 1997
------------ -----------
(Unaudited)
Cash flows from operating activities:
Net income $ 113,828 $ 859,212
Non-cash items included in income:
Depreciation and amortization 4,295,044 2,951,504
Provision for losses on accounts
receivable 110,925 66,015
Gain on disposal of assets (431,341) (171,411)
Cash effects of changes in:
Accounts receivable 64,543 (1,257,782)
Other current assets 29,908 (61,414)
Accounts payable (271,249) (651,547)
Accrued claims 315,560 1,103,892
Accrued payroll and benefits (434,942) 221,750
Other accrued liabilities (28,601) (260,422)
Other liabilities (115,000) (76,665)
Net receivable from affiliate 165,653 797,885
----------- -----------
Net cash provided by operating
activities 3,814,328 3,521,017
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (6,177,857) (97,899)
Cash proceeds from sale of assets 558,511 640,349
Net decrease (increase) in loans to
affiliate 5,616,500 (4,222,499)
----------- -----------
Net cash used by investing activities (2,846) (3,680,049)
Cash flows from financing activities:
Payments on notes payable (114,171) (37,270)
Repayments on capital lease obligations (1,426,050) (1,297,738)
Cash dividends (1,118,507) -
Proceeds from issuance of stock 626,564 34,826
Repurchase of stock (50,372) (44,279)
----------- -----------
Net cash used by financing activities (2,082,536) (1,344,461)
----------- -----------
Net increase (decrease) in cash 1,728,946 (1,503,493)
Cash and cash equivalents, at beginning
of period 25,089 1,754,035
----------- -----------
Cash and cash equivalents, at end
of period $1,754,035 $ 250,542
=========== ===========
The accompanying notes are an integral part of these statements.
Page 8<PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 - NATURE OF OPERATIONS
Transport South, Inc. is a common carrier of petroleum products
throughout the southern United States and its customers include gasoline
and other petroleum product retailers.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets.
Income Taxes - Taxable income, losses and credits flow through to the
stockholders pursuant to the Company's election of "S" Corporation income
tax status. Accordingly, income tax expense includes only those income
taxes payable to states which do not recognize "S" Corporation status.
The Company accounts for income taxes using the asset and liability
method. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates applied to taxable
income. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is provided for deferred tax
assets when it is more likely than not that the asset will not be
realized. Deferred income taxes were not significant at December 31,
1996.
Income tax payments for the years ended December 31, 1996 totalled
$50,450.
Cash - For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Pro Forma Net Income Per Common Share (Unaudited) - Pro forma net income
per common share is based on the weighted average number of common shares
and common equivalent shares outstanding during the period.
Claims Payable - Claims payable represents the estimated cost of open
claims that is retained and paid by the Company under its insurance
programs for workers' compensation, bodily injury and property damage.
These estimates are based on historical information along with certain
assumptions about future cash flows. Changes in assumptions for such
things as medical costs, environmental hazards, and legal actions, as
well as changes in accrual experience could cause these estimates to
change. In the accompanying Statement of Income, workers' compensation
costs are included in wages and employee benefits expenses and other
claims costs are included in claims and insurance expenses.
Page 9<PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Fair Value of Financial Instruments - The Company's financial instruments
include cash, cash equivalents and long-term obligations. The carrying
value of cash and cash equivalents approximates fair value due to the
relatively short period to maturity of the instruments. The carrying
value of the Company's long-term obligations approximates fair value
based upon borrowing rates currently available to the Company for
borrowings with comparable terms.
Interim Financial Information - The accompanying balance sheet as of
September 30, 1997 and accompanying statements of income and cash flows
for the nine months ended September 30, 1997, included herein have been
prepared by the Company and are unaudited. The information furnished in
the unaudited financial statements referred to above includes all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. These adjustments are all of
a normal recurring nature.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Page 10<PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 3 - PROPERTY AND EQUIPMENT
The components and estimated lives of property and equipment are as
follows at December 31, 1996:
Estimated
useful lives
(years)
-----------
Transportation equipment:
Tractors $13,834,336 5
Trailers 13,230,194 7
-----------
27,064,530
Furniture, Fixtures and equipment 1,037,724 3-5
Land 84,050
Land improvements 20,974 15
Buildings and improvements 90,026 13
-----------
$28,297,304
===========
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1996:
Installment notes payable, requiring
monthly repayments of $4,500,
including interest at 5% $102,572
Less current maturities 50,007
-----------
$ 52,565
===========
Future maturities of the installment note payable are approximately
$50,000 for 1997 and $50,000 for 1998.
Interest payments on long-term debt and capital lease obligations for the
year ended December 31, 1996 totalled $399,854.
Page 11 <PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 5 - CAPITAL LEASE OBLIGATIONS
The Company has a master lease agreement with a bank which provides for
lease financing of tractors and trailers. Assets under capital leases
are capitalized using interest rates appropriate at the inception of each
lease. The lease terms range from 60 - 84 months and require the Company
to fund a guaranteed residual value at the end of the lease term. The
cost and related accumulated amortization of tractors and trailers under
capital leases were as follows at December 31, 1996:
Capital lease equipment $ 8,671,684
Accumulated amortization (3,713,007)
-----------
$ 4,958,677
===========
The following is a schedule by years of future minimum payments under
capital leases as of December 31, 1996:
Year ending December 31,
1997 $ 1,597,209
1998 1,838,536
1999 1,419,324
2000 533,425
2001 500,802
-----------
Total 5,889,296
Less: amounts representing interest 674,478
Present value of capital lease -----------
obligations 5,214,818
Less: current portion 1,293,606
-----------
Long-term portion of capital lease
obligations $ 3,921,212
===========
Page 12 <PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 6 - TRANSACTIONS WITH AFFILIATE
Various transactions with an affiliated company are summarized as follows
for the year ended December 31, 1996:
Revenues from transportation services $14,000,000
Fuel, insurance and administrative services
expenses $2,200,000
At December 31, 1996, approximately $200,000 of accounts receivable from
affiliates represents short-term cash investments managed by an
affiliate. Interest income from these receivables from affiliates was
$99,431 in 1996, and is included in other income.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company has acquired certain
assets of petroleum carriers and entered into compensation and
non-compete agreements with the sellers. The agreements require fixed
annual payments as well as variable payments based on sales through 1999.
Fixed annual payments on these compensation and non-compete agreements
are as follows:
Year ending December 31,
1997 $ 115,000
1998 115,000
1999 48,000
----------
$ 278,000
==========
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's financial position.
Page 13 <PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 8 - LEASES
The Company leases certain terminal locations and transportation
equipment under both cancelable and non-cancelable operating leases.
Total lease expense was approximately $1,125,000 in 1996.
Future commitments on non-cancelable leases are as follows at December
31, 1996:
Lease
Year ending December 31, Obligation
----------
1997 $ 924,000
1998 882,000
1999 435,000
2000 222,000
2001 113,000
----------
$2,576,000
==========
NOTE 9 - INCOME TAXES (Unaudited)
A pro forma adjustment for income taxes is shown on the statement of
income, as if the Company was taxed as a "C" corporation. The 1996 pro
forma provision for income taxes differs from the amount of income tax
determined by applying the applicable federal rates due to the following:
Tax at applicable federal rate of 34% $ 47,000
State tax, net 6,000
Non-deductible items, primarily meals
and entertainment 44,000
Other 19,000
--------
$116,000
========
Page 14 <PAGE>
<PAGE>
Transport South, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued the following
Statements of Financial Accounting Standards (SFAS):
SFAS 128, Earnings Per Share, which is effective for financial statements
for periods ending after December 15, 1997. The new standard eliminates
primary and fully diluted earnings per share and requires presentation of
basic and diluted earnings per share together with disclosure of how the
per share amounts were computed.
SFAS 129, Disclosure of Information about Capital Structure, which is
effective for financial statements for periods ending after December 15,
1997. SFAS 129 requires disclosure of certain information about a
Company's securities.
Management does not expect the adoption of these new standards to have a
material impact on the Company's results of operations or financial
condition.
Page 15 <PAGE>
<PAGE>
Item 7(b) Kenan Transport Company and Transport South, Inc.
Unaudited Pro Forma Condensed Financial Statements
- ------------------------------------------------------------------------
The following sets forth unaudited pro forma information for the
Company as of September 30, 1997, and for the nine months ending
September 30, 1997, and the year ended December 31, 1996 after giving
effect to the Transaction described in Note 1 hereto.
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the Transaction occurred on September 30, 1997. The
unaudited Pro Forma Condensed Consolidated Statements of Income for the
nine months ended September 30, 1997, and the year ended December 31,
1996, are presented as if the Transaction occurred as of the beginning of
the period presented.
In management's opinion, all material adjustments necessary to
reflect the transaction are presented in the pro forma adjustments
column, which are described below.
The unaudited Pro Forma Condensed Consolidated Balance Sheet and the
unaudited Pro Forma Condensed Consolidated Statements of Income should be
read in conjunction with the Consolidated Financial Statements of Kenan
Transport Company and the notes thereto. The unaudited Pro Forma
Condensed Consolidated Balance Sheet is not necessarily indicative of
what the actual financial position of the Company would have been at
September 30, 1997, nor does it purport to represent the future financial
position of the Company. The unaudited Pro Forma Condensed Consolidated
Statements of Income are not necessarily indicative of what the actual
results of operations of the Company would have been assuming the
transaction had been consummated as of the beginning of the respective
periods, nor does it purport to represent the results of operations for
future periods.
Page 16 <PAGE>
<PAGE>
Kenan Transport Company
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1997
(Dollars in thousands)
(Unaudited)
Historical
--------------------
Transport Pro Forma Pro Forma
Kenan South Adjustments Total
--------- --------- ------------ --------
Current Assets $21,692 $10,495 (10,495) (a) $13,763
(10,903) (b)
474 (c)
2,500 (d)
Operating Property, Net 45,058 11,775 (11,775) (a) 52,058
7,000 (c)
Other Assets 1,151 404 (404) (a) 8,742
7,591 (c)(e)
-------- -------- --------
$67,901 $22,674 $74,563
======== ======== ========
Current Liabilities $10,716 $ 9,600 (8,126) (a) $13,233
500 (d)
543 (e)
Deferred Income Taxes 9,119 9,119
Long-term Debt and
Lease Obligations 2,869 (724) (a) 4,145
2,000 (d)
Stockholders' Equity 48,066 10,205 (10,205) (a) 48,066
-------- -------- --------
$67,901 $22,674 $74,563
======== ======== ========
Adjustments:
(a) Reflects the elimination of assets and liabilities and equity
not acquired in the transaction.
(b) Reflects the cash used to consummate the acquisition.
(c) Reflects the allocation of purchase price.
(d) Reflects the borrowing under the Company's line of credit to
maintain certain working capital needs as a result of the
acquisition.
(e) Reflects the estimate of transaction costs.
The accompanying notes are an integral part of these condensed
consolidating pro forma financial statements.
Page 17 <PAGE>
<PAGE>
Kenan Transport Company
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine-Month Period Ending September 30, 1997
(Dollars in Thousands)
(Unaudited)
Historical
--------------------
Transport Pro Forma Pro Forma
Kenan South Adjustments Total
--------- --------- ------------ --------
Operating Revenues $52,429 $32,115 (11,115) (a) $73,429
Operating Expenses 48,344 31,370 (9,800) (b) 68,374
(1,540) (c)
-------- -------- --------
Operating Income 4,085 745 5,055
Interest expense (229) (160) (d) (389)
Interest income and other 168 379 547
-------- -------- --------
Income before taxes 4,253 895 5,213
Provision for
income taxes 1,633 36 530 (e) 2,199
-------- -------- --------
Net income $ 2,620 $ 859 $ 3,014
======== ======== ========
Basic and diluted
earnings per share $ 1.10 $ 1.26
======== ========
Adjustments:
(a) Reflects the elimination of customers which are not expected to
be retained by the Company.
(b) Reflects the elimination of operating expenses which are not
expected to be incurred by the Company due to the reduced
operating revenue.
(c) Reflects the elimination of depreciation and amortization of
the Seller and the recognition of depreciation and amortization
of $1,412 related to acquired assets.
(d) Reflects the interest expense on the draw down on the Company's
line of credit of $2,500.
(e) Reflects the income taxes related to the pro forma net income
of the Seller.
The accompanying notes are an integral part of these condensed
consolidating pro forma financial statements.
Page 18 <PAGE>
<PAGE>
Kenan Transport Company
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Year Ending December 31, 1996
(Dollars in Thousands)
(Unaudited)
Historical
--------------------
Transport Pro Forma Pro Forma
Kenan South Adjustments Total
--------- --------- ------------ --------
Operating Revenues $68,795 $43,942 (15,942) (a) $96,795
Operating Expenses 62,551 43,981 (14,500) (b) 89,617
(2,415) (c)
-------- -------- --------
Operating Income 6,244 (39) 7,178
Interest expense (404) (210) (d) (614)
Interest income and other 10 582 592
-------- -------- --------
Income before taxes 6,254 139 7,156
Provision for
income taxes 2,449 25 350 (e) 2,824
-------- -------- --------
Net income $ 3,805 $ 114 $ 4,332
======== ======== ========
Basic and diluted
earnings per share $ 1.59 $ 1.81
======== ========
Adjustments:
(a) Reflects the elimination of customers which are not expected to
be retained by the Company.
(b) Reflects the elimination of operating expenses which are not
expected to be incurred by the Company due to the reduced
operating revenue.
(c) Reflects the elimination of depreciation and amortization of
the Seller and the recognition of depreciation and amortization
of $1,880 related to acquired assets.
(d) Reflects the interest expense on the draw down on the Company's
line of credit of $2,500.
(e) Reflects the income taxes related to the pro forma net income
of the Seller
The accompanying notes are an integral part of these condensed
consolidating pro forma financial statements.
Page 19 <PAGE>
<PAGE>
Kenan Transport Company
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Dollars in Thousands)
1. The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the Transaction occurred on September 30, 1997. The
unaudited Pro Forma Condensed Consolidated Statements of Income for
the nine months ended September 30, 1997, and the year ended December
31, 1996, are presented as if the Transaction occurred as of the
beginning of the period presented.
The Company purchased a majority of the transportation assets of
Transport South Inc. on December 1, 1997. The purchase price for the
acquired assets consisted of $10,903 that was paid from the Company's
existing cash balances and $3,619 in assumed liabilities. The excess
of cost over the fair value of net assets acquired resulting from the
preliminary price allocation is $7,591.
The Transaction will be accounted for by the Company as a purchase
whereby the basis for accounting for Transport South, Inc.'s assets
and liabilities will be based upon their fair market values at the
date of the acquisition. Pro forma adjustments, including the
preliminary purchase price allocation and estimated cost savings
resulting from the Transaction represent the Company's preliminary
determination of these adjustments and are based upon preliminary
information, assumptions and operating decisions which the Company
considers reasonable under the circumstances. Final amounts may
differ significantly from those set forth herein.
2. Basis of Presentation
The accompanying Unaudited Condensed Consolidated Pro Forma Financial
Statements of Kenan Transport Company (the Company) have been
prepared in accordance with the instructions to Form 8-K and do no
include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments considered necessary for a
fair presentation have been included. For further information, refer
to the consolidated financial statements and notes thereto for the
year ended December 31, 1996, included in the Company's Form 10-K
dated March 14, 1997.
Page 20 <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: February 12, 1998 BY: /s/ William L. Boone
--------------------------
Vice President-Finance and
Chief Financial Officer
Page 21 <PAGE>
<PAGE>
INDEX TO EXHIBITS
The exhibits filed as part of this report are listed below:
Exhibit
Number Description
- --------- ---------------------------------------------------------
23 Consent of Independent Certified Public Accountants
Page 22 <PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated April 9, 1997, accompanying the financial
statements of Transport South, Inc. included in the Form 8-K/A, dated
February 12, 1998, of Kenan Transport Company. We hereby consent to the
incorporation by reference of said report in the Registration Statement of
Kenan Transport Company on Form S-8 (File No. 33-2494, dated January 23,
1986).
Grant Thornton LLP
Atlanta, Georgia
February 12, 1998
