UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
Commission file Number 0-14781
M.S. CARRIERS, INC.
(Exact name of Registrant as specified in its charter.)
Tennessee 62-1014070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3171 Directors Row, Memphis, TN 38131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 332-2500
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 practical
date:
Outstanding common shares at August 1, 1995 - 12,878,300
<PAGE>
M.S. Carriers, Inc.
Index to Form 10-Q
Contents
Part I - Financial Information
Item I - Financial Statements (Unaudited)
Balance Sheets as of June 30, 1995 and December 31, 1994................. 3
Statement of Income for the Three Months Ended June 30, 1995
and 1994 and the Six Months Ended June 30, 1995 and 1994............... 5
Statement of Stockholders' Equity for the Six Months Ended
June 30, 1995........................................................... 6
Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994.................................................. 7
Notes to Financial Statements............................................. 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 9
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.............. 11
Item 5 - Other Information................................................ *
Item 6 - Exhibits and Reports on Form 8-K................................. 12
Signatures................................................................ 13
* No Information Submitted Under This Caption.
<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
June 30 December 31
1995 1994
_________________________________________
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 15,996,585 $ 30,806,731
Accounts receivable:
Trade, net 28,187,329 33,327,599
Officers and employees 728,194 457,165
____________ ____________
28,915,523 33,784,764
Recoverable income taxes 449,047
Deferred income taxes 5,250,000 4,774,000
Prepaid expenses and other 6,467,861 4,419,081
____________ ____________
Total current assets 57,079,016 73,784,576
Property, plant and equipment:
Land and land improvements 6,221,980 6,201,674
Buildings 24,042,742 23,393,800
Revenue equipment 249,581,427 232,771,820
Service equipment and other 31,699,238 28,531,425
Construction in progress 4,764,105 2,813,438
____________ ____________
316,309,492 293,712,157
Accumulated depreciation and
amortization 99,414,857 95,019,410
____________ ____________
216,894,635 198,692,747
Other assets 3,862,070 3,595,196
____________ ____________
Total assets $277,835,721 $276,072,519
____________ ____________
____________ ____________
</TABLE>
<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
<CAPTION>
June 30 December 31
1995 1994
_________________________________________
(Unaudited)
<S> <C> <C>
Liabilities and stockholders'
equity
Current liabilities:
Trade accounts payable $ 6,452,877 $ 6,341,525
Accrued expenses 8,084,231 8,277,724
Claims payable 13,435,756 12,325,226
Incomes taxes payable 1,256,186
Current maturities of
long-term debt 17,120,458 16,693,512
____________ ____________
Total current liabilities 45,093,322 44,894,173
Long-term debt, less current
maturities 42,512,318 51,186,613
Deferred income taxes 34,716,045 32,068,000
Stockholders' equity:
Common stock, $.01 par value,
Authorized shares - 20,000,000 128,783 128,783
Issued and outstanding shares -
12,878,300 in 1995 and 1994
Additional paid-in capital 64,137,909 64,137,909
Retained earnings 92,630,469 84,842,041
Equity adjustment from foreign
currency translation (1,383,125) (1,185,000)
____________ ____________
Total stockholders' equity 155,514,036 147,923,733
Total liabilities and stockholders'
equity $277,835,721 $276,072,519
____________ ____________
____________ ____________
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
____________________________________________________________
<S> <C> <C> <C> <C>
Operating revenues $ 84,541,100 $ 69,558,611 $166,242,470 $129,991,031
Operating expenses:
Salaries, wages and benefits 31,072,636 26,482,495 62,464,395 51,055,008
Operations and maintenance 16,798,796 15,786,300 33,865,691 31,372,304
Taxes and licenses 2,617,212 2,136,303 5,089,288 4,094,222
Insurance and claims 4,030,613 3,590,805 7,656,195 6,501,179
Communications and utilities 1,522,238 876,570 3,002,295 2,066,308
Depreciation and amortization 9,852,236 8,219,784 19,197,369 15,821,415
Rent and purchased transportation 10,825,064 4,283,171 19,771,690 6,114,328
Other 502,765 486,713 1,148,210 956,328
____________ ____________ ____________ ____________
$ 77,221,560 $ 61,862,141 $152,195,133 $117,981,092
____________ ____________ ____________ ____________
Operating income 7,319,540 7,696,470 14,047,337 12,009,939
Other expense (income):
Interest expense 1,018,854 418,894 1,933,139 729,553
Other (35,176) (42,136) (100,353) (62,263)
____________ ____________ ____________ ____________
983,678 376,758 1,832,786 667,290
____________ ____________ ____________ ____________
Income before income taxes 6,335,862 7,319,712 12,214,551 11,342,649
Income taxes 2,311,123 2,901,000 4,426,123 4,503,000
____________ ____________ ____________ ____________
Net income $ 4,024,739 $ 4,418,712 $ 7,788,428 $ 6,839,649
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Earnings per share $0.31 $0.34 $0.59 $0.52
____________ ____________ ___________ ___________
____________ ____________ ___________ ___________
</TABLE>
See accompaning notes.
<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Unaudited)
Six Months Ended June 30, 1995
<CAPTION>
Equity
Adjustment
From
Additional Foreign
Common Stock Paid-In Retained Currency
Shares Amount Capital Earnings Translation Total
__________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at January
1, 1995 12,878,300 $128,783 $64,137,909 $84,842,041 $ (1,185,000) $147,923,733
Net Income 7,788,428 7,788,428
Equity Adjustment
from Foreign
Currency
Translation (198,125) (198,125)
__________________________________________________________________________
Balance at June
30, 1995 12,878,300 $128,783 $64,137,909 $92,630,469 $ (1,383,125) $155,514,036
__________________________________________________________________________
__________________________________________________________________________
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
Six Months Ended
June 30
1995 1994
___________________________________________
<S> <C> <C>
Operating activities
Net income $ 7,788,428 $ 6,839,649
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 19,197,369 15,821,415
Loss on disposals of property
and equipment 97,015
Provision for losses on accounts
receivable 111,354
Other 107,874
Provision for deferred income taxes 2,172,045 2,650,000
Changes in operating assets and
liabilities:
Accounts receivable 4,869,241 (4,501,812)
Current and other assets (3,113,001) (872,817)
Trade accounts payable 111,352 1,649,621
Other current liabilities (339,149) 1,947,945
_____________ ____________
23,005,731 16,902,721
_____________ ____________
Net cash provided by operating
activities 30,794,159 23,742,370
Investing activities
Purchases of property, plant and
equipment (37,742,895) (33,486,830)
Proceeds from disposals of property
and equipment 385,939 4,623
_____________ ____________
Net cash used in investing
activities (37,356,956) (33,482,207)
Financing activities
Proceeds from revolving line of
credit and long-term debt 44,653,716
Proceeds from issuance of Common
Stock 19,183
Principal payments on revolving
line of credit and long-term debt (8,247,349) (34,840,716)
_____________ _____________
Net cash provided by (used in)
financing activities (8,247,349) 9,832,183
_____________ _____________
Increase (decrease) in cash and cash
equivalents (14,810,146) 92,346
Cash and cash equivalents at
beginning of period 30,806,731 110,080
_____________ _____________
Cash and cash equivalents at end
of period $ 15,996,585 $ 202,426
_____________ ______________
_____________ ______________
</TABLE>
See accompanying notes.
<PAGE>
M.S. Carriers, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1995
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with 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 the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
month period ended June 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1995. For
further information and a listing of the Company's significant accounting
policies, refer to the financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1994.
2. Net Income Per Common Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
_________________________________________________________
<S> <C> <C> <C> <C>
Average common shares outstanding 12,878,300 12,878,300 12,878,300 12,877,327
Common stock equivalents 201,208 190,033 212,362 222,050
____________ ____________ ____________ ___________
Average common shares and common
stock equivalents 13,079,508 13,068,333 13,090,662 13,099,377
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income $ 4,024,739 $ 4,418,712 $ 7,788,428 $ 6,839,649
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income per common and
equivalent share $0.31 $0.34 $0.59 $0.52
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
</TABLE>
<PAGE>
M.S. Carriers, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 30, 1995
Results of Operations
Operating revenues for the first six months of 1995 increased 28% over the
same period in the prior year. For the quarter ended June 30, 1995, operating
revenues increased 22% over the same quarter of 1994. The Company's
increased revenues reflect additional volume from existing customers
as well as new volume from the expansion of the Company's customer base.
The operating ratio (operating expenses as a percent of operating revenues)
for the first six months of 1995 was 92% compared to 91% for the same period
in 1994 and was 91% for the second quarter of 1995 compared to 89% for the
same period in 1994. Operating expenses generally reflect increases
proportionate to the increased level of operations except as explained below.
Salaries, wages and benefits decreased from 38% and 39%, respectively, of
operating revenues for the three and six-month periods ended June 30, 1994 to
37% and 38%, respectively, for the same periods in 1995, due primarily to the
increased use of owner operators. Amounts paid to owner operators are
recorded as purchased transportation.
Operations and maintenance decreased from 23% and 24%, respectively, of
operating revenues for the three and six-month periods ended June 30,
1994 to 20% for the three and six-month periods ended June 30, 1995,
due primarily to the increased use of owner operators.
Rent and purchased transportation increased from 6% of operating revenues
for the three-month period ended June 30, 1994 to 13% for the same period
in 1995 and from 5% of operating revenues for the six-month period ended
June 30, 1994 to 12% for the same period in 1995. These increases reflect
increased expenses incurred related to the Company's logistics operations and
expenses incurred in conjunction with the increased use of owner operators.
The increase in interest expense is due to the increase in outstanding
debt during the six-months ended June 30, 1995 compared to the same
period in 1994.
The effective tax rates were 36.2% and 39.7% for the six-month period ended
June 30, 1995 and 1994, respectively. This decrease was due to reduced
state income taxes and tax benefits from leasing transactions.
<PAGE>
Liquidity and Capital Resources
The continued growth of the Company's business has required significant
investments in new revenue equipment and office and terminal facilities,
historically financed through cash from operations, secured borrowings,
unsecured credit facilities, and capital markets. During the six-month
period ending June 30, 1995, the Company expended in excess of $37,000,000
for purchases of property, plant and equipment funded solely through
cash from operations and cash on hand at December 31, 1994. At June 30,
1995, the Company had obligations of approximately $60,000,000 related to
purchases of revenue equipment.
The Company has a bank line of credit providing for borrowings of up to
$10,000,000, with interest at the lower of the bank's corporate prime rate or
the 30-day LIBOR rate plus .45%. At June 30, 1995 there were no amounts
outstanding under this line of credit. Management expects to maintain this
line of credit for an indefinite period.
The Company expects to finance its normal operating requirements and future
revenue equipment purchases through cash from operations and secured
borrowings.
<PAGE>
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders on May 5, 1995, Michael
S. Starnes, Carl J. Mungenast, James W. Welch, M.J. Barrow, Robert P. Hurt,
Gary S. Hardeman, Morris H. Fair and Jack H. Morris, III, were re-elected
as directors upon a vote of 9,805,188 for, 2,900 against and 99,200
abstaining. The Non-Employee Director's Stock Option Plan was approved at
the meeting upon a vote of 9,793,308 for, 93,590 against and 20,340
abstaining. No other matters were submitted to a vote of security holders
during the second quarter of 1995.
<PAGE>
PART II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) The exhibits filed as a part of this report are listed below:
Exhibit Number Description of Exhibit
_____________________________________________________________________________
3A Restated Charter of M.S. Carriers, Inc.*
3B Articles of Amendment to Charter of
M.S. Carriers, Inc.**
3C Amended and Restated By-Laws of M.S. Carriers, Inc.**
10A Incentive Stock Option Plan*
10B Amendment to Incentive Stock Option Plan*
10C 1993 Stock Option Plan**
10D Non-Employee Directors Stock Option Plan***
10E Employment Agreements with James W. Welch, M.J.
Barrow and Robert P. Hurt*
10F Employment Agreement with Michael S. Starnes
10G Employment Agreement with Carl J. Mungenast
10H 1993 Incentive Plan for Designated Key Employees
11 Statement regarding computation of per share
earnings
27 Financial Data Schedule
* Incorporated by references from exhibits to the
Registrant's Registration Statement on Form S-1
(Registration Number 33-12070).
** Incorporated by references from exhibits to the
Registrant's Registration Statement on Form S-3
(Registration Number 33-63280).
*** Incorporated by reference from Registrant's Proxy
Statement dated March 31, 1995.
(b) The Company did not file any reports on Form 8-K during the three months
ended June 30, 1995.
<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.
M.S. Carriers, Inc.
(Registrant)
August 14, 1995 Dwight Bassett
Date
Dwight Bassett, Controller
(Principal Financial Officer of the
Company)
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
__________________________________________________________________________
10F Employment Agreement with 15
Michael S. Starnes
10G Employment Agreement with 19
Carl J. Mungenast
10H 1993 Incentive Plan for 24
Designated Key Employees
11 Statement regarding computation 8
of per share earnings --
See Note 2 of the notes to
financial statements included
in Part I
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, made and entered into this 31st day of May, 1987,
by and between M.S. CARRIERS, INC., a Tennessee corporation (the "Company"),
and MICHAEL S. STARNES, a resident of Memphis, Tennessee (the "Employee");
W I T N E S S E T H:
WHEREAS, the Company has employed the Employee as its Chairman of the
Board, President and Chief Executive Officer; and
WHEREAS, the Company desires to continue to employ Employee and
Employee desires to remain in the Company's employment, all in accordance
with the terms, provisions, conditions and covenants herein contained; and
WHEREAS, the Company desires to protect its business by having Employee
enter into this Agreement, and Employee by the execution of this Agreement
acknowledges the reasonableness thereof and his willingness to be bound by
the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premieses and of the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged
by the parties, the parties do agree as follows:
1. EMPLOYMENT. The Company agrees to employ Employee, and Employee
----------
accepts employment by the Company and agrees to perform such duties
as may, from time to time, be assigned to Emploee by Company. Employee
agrees to devote his full time, attention and best efforts in the
faithful discharge of such duties and in the devlopment and furtherance
of Company's business. Employee agrees that, as long as he is employed
by Company, he will not undertake the planning or organizing of any
business activity competitive with the Company's nor engage in any such
activity. The term of Employee's employment hereunder shall commence
on the date hereof and shall continue thereafter until either party
shall have given the other party at least thirty (30) days prior
written notice that the party giving such notice wishes to terminate
Employee's employment hereunder.
<PAGE>
2. COMPENSATION.
------------
(a) Base Salary.
-----------
(1) Company agrees to accrue compensation to Employee until
January 1, 1988, at the rate of $23314.28/100 Dollars ($23314.28) per month.
Such accrue compensation shall be paid to Employee on February 1, 1988;
provided, however, in the event that Employee dies prior to February 1, 1988,
such accrue compensation shall be paid to his wife, NANCY B. STARNES, if she
is living, or to Employee's estate if his wife is not then living.
(2) Commencing January 1, 1988, the Employee's annual base
salary shall be determined by the Company, and shall be paid to Employee in
regular installments in accordance with the Company's usual payroll
procedures.
(b) Discretionary Bonus. In addition to the base salary, Employee
-------------------
shall be eligible to receive such bonus, from time to time, as the Board of
Directors of the Company, in the Board's sole discretion, shall determine.
Payment of such discretionary bonus, if any, shall be made at such time as the
Board shall determine, provided, that nothing herein shall be construed to
grant the Employee a right to a bonus.
(c) Employee Benefits. Employee shall be eligible to participate in
-----------------
such employee benefit plans as the Company may make available to its employees
in general from time to time, provided that the Employee shall meet the
eligibility requirements of such plans. In addition to participation in such
employee benefit plans, Employee shall be eligible for such further benefits
as the Board of Directors shall determine.
(d) Expense Reimbursement. Company shall reimburse to Employee all
---------------------
ordinary and necessary business expenses incurred directly in connection with
his employment duties hereunder, provided Employee shall satisfactorily
substantiate, in such detail as reasonably necessary, the business
relationship of such expenses.
3. NOTICE. All notices and other communications provided for by this
------
Agreement shall be in writing and shall be deemed to have been given if
delivered personally or sent by United States certified or registered mail,
postabe prepaid, return receipt requested;
<PAGE>
If to Company:
M.S. Carriers, Inc.
3150 Starnes Cove
Memhis, Tennessee 38116
Attention: Secretary
If to Employee:
Michael S. Starnes
1450 Massey Road, West
Memphis, Tennessee 38119
Or such other address as either party may be hereafter from time to time
specify in writing to the other party.
4. ASSIGNMENT. This Agreement shall not be assignable by Employee.
----------
5. BINDING EFFECT. This Agreement shall incure to the benefit of and
be binding upon the Company, its sucessors and assigns, including without
limitation, any person, partnership, company or corporation which may
acquire substantially all of the Company's assets or business or with or
into which the Company may be liquidated, consolidated, merged or otherwise
combined, and shall inure to the benefit of and be binding upon Employee
and his heirs, beneficiaries, executors and administrators.
6. VALIDITY. The validity, instruction, interpretation or performance
--------
of this Agreement shall be governed by the laws of the State of Tennessee.
7. ENTIRE AGREEMENT. This Agreement supercedes all previous agreements
----------------
between Employee and Company and contains the entire understanding and
agreement between the parties with respect to the subject matter hereof. The
Agreement cannot be amended, modified or supplemented in any respect except
by a subsequent written agreement entered into by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement, in duplicate,
the day and year first above written.
<PAGE>
COMPANY:
M.S. CARRIERS, INC.
By: Michael S. Starnes
MICHAEL S. STARNES,
Chairman of the Board
ATTEST: EMPLOYEE:
M.J. Barrow By: Michael S. Starnes
Secretary MICHAEL S. STARNES
EMPLOYMENT AGREEMENT
This Agreement, made and entered into this 1st day of April, 1994, by and
between M.S. CARRIERS, INC., a Tennessee corporation (the "Company") and
CARL J. MUNGENAST, a resident of Memphis, Tennessee (the "Employee"):
W I T N E S S E T H:
WHEREAS, the Company has agreed to employ the Employee as its Executive
Vice President; and
WHEREAS, the Company desires to continue to employ Employee and Employee
desires to remain in the Company's employment, all in accordance with the
terms, provisions, conditions and covenants herein contained; and
WHEREAS, the Company desires to protect its business by having Employee
enter into this Agreement, and Employee by the execution of this Agreement
acknowledges the reasonableness thereof and his willingness to be bound by
the terms and conditions hereof; and
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the parties,
the parties do agree as follows:
1. EMPLOYMENT. The Company agrees to employ Employee, and Employee
accepts employment by the Company and agrees to perform such duties as may,
from time to time, be assigned to Employee by Company. Employee agrees to
devote his full time, attention and best efforts in the faithful discharge
of such duties and in the development and furtherance of Company's business.
Employee agrees that, as long as he is employed by Company, he will not
undertake the planning or organizing of any business activity competitive
with the Company's nor engage in any such activity. The term of Employee's
employment hereunder shall commence on the date hereof and shall be one
(1) year. Employee's term of employment shall continue thereafter until
terminated by the first to occur of the following events:
(a) Employee's Death, Disability or Retirement. "Disability,"
for purposes of this Agreement, shall mean the inability of Employee due
to illness, accident or other physical or mental incapacity, to perform his
usual duties and services provided hereunder, for a period of ninety (90)
days or such longer period under the Company's short-term disability policy,
as it applies to Employee, at the time of his termination hereunder.
"Retirement," for purposes of this Agreement, shall mean termination in
accordance with the Company's retirement policy generally applicable to
its salaried employees.
<PAGE>
(b) The discharge of Employee for cause, which, as used herein,
shall mean if Employee: (i) deliberately performs any act intended to
inflict damage on the Company, (ii) violates any provision of this Agreement,
(iii) commits a felony or dishonest act, (iv) refuses or fails to carry out
resolutions of the Board of Directors of the Company, other than for
reasons set forth in paragraph (a) hereinabove.
(c) At any time on or after one (1) year from the effective date
of this Agreement, if either party shall have given the other party at
least thirty (30) days prior written notice that the party giving such
notice wishes to terminate Employee's employment hereunder.
2. COMPENSATION.
(a) Base Salary. Company agrees to pay Employee an annual base
salary to be paid to him in regular installments in accordance with the
Company's usual payroll procedures. The annual base salary to be paid
Employee for the period commencing April 1, 1994, and ending December 31,
1994, is $200,000 which shall be paid on a pro rata basis. Thereafter, the
Employee's annual base salary shall be determined by the Company.
(b) Incentive Plan. Employee may be entitled to additional
compensation pursuant to the terms and provisions of the Company's 1993
Incentive Plan.
(c) Employee Benefits. Employee shall be eligible to participate
in such employee benefit plans as the Company may make available to its
employees in general from time to time, provided that Employee shall meet
the eligibility requirements of such plans. Notwithstanding anything
contained herein to the contrary, Employee acknowledges that he has been
advised of the following specific benefits and/or benefit plans and,
nonetheless, declines to accept such benefits or be covered by such benefit
plans: (i) all medical and dental benefits; (ii) all group life insurance
benefits; (iii) all split-dollar insurance benefits; and (iv) all long
term disability benefits. Employee shall be entitled to the use of a
Company automobile in accordance with the Company guidelines for executive
officers.
(d) Expense Reimbursement. Company shall reimburse to Employee all
ordinary and necessary business expenses incurred directly in connection
with his employment duties hereunder, provided Employee shall satisfactorily
substantiate, in such detail as reasonably necessary, the business
relationship of such expenses.
3. NONCOMPETITION. For a period of two (2) years after the termination
of his employment with the Company:
(a) If Employee voluntarily terminates his employment or if the
Company terminates Employee for cause:
<PAGE>
(i) he will not for any reason, directly or indirectly,
either on his own account or as a partner or joint venturer or as an
employee or a consultant for any other person, firm or corporation,
solicit, service, market, direct, accept or handle any trucking
transportation business originating or terminating within a 250-mile
radius of Shelby County, Tennessee, for customers of the Company who
were such at the time of his termination;
(ii) he will not for any reason, directly or indirectly,
either on his own account or as a partner or joint venturer or as an
employee or a consultant for any other person, firm or corporation,
solicit, service, market, direct, accept or handle any trucking
transportation business for customers of the Company who were such at
the time of his termination and who have shipping business which is
transported on shipping lanes used by the Company, without limitation as
to distance; provided, that this restriction shall be limited to customers
from whom, during the calendar year preceding this termination, the Company
received revenues that were at least three percent (3%) of the Company's
total revenues from all customers for such year.
(b) If Employee voluntarily terminates his employment or if the
Company terminates Employee for cause, he will not for any reason, directly
or indirectly, in the area within a 250-mile radius of Shelby County,
Tennessee, engage in any trucking transportation business either on his
own account or as a partner or joint venturer or as an employee or
consultant for any other person, firm or corporation.
(c) Employee will not induce any person employed by the Company
to leave his employment with the Company.
(d) Employee will not use or divulge any confidential information
or trade secrets of the Company relating to customers or prospects of the
Company, all of which information Employee agrees is gathered at the expense
of and owned by the Company.
The above covenants are intended to be separate and divisible covenants
and, if for any reason, any one or more thereof shall be held to be invalid
or unenforceable, in whole or in part, the parties agree that the same
shall not be held to affect the validity or enforceability of any other such
covenant of this Agreement.
4. NOTICES. All notices and other communications provided for by
this Agreement shall be in writing and shall be deemed to have been given
if delivered personally or sent by United States certified or registered
mail, postage prepaid, return receipt requested.
<PAGE>
If to Company:
M.S. Carriers, Inc.
3171 Directors Row
Memphis, TN 38116
ATTN: Chairman of the Board
If to Employee:
Carl J. Mungenast
9490 Gotten Way
Germantown, TN 38139
Or such other address as either party may hereafter from time to time
specify in writing to the other party.
5. ENFORCEMENT. This Agreement may be enforced by an injunction by
any competent court enjoining and restraining any violation or threatened
violation hereof without the Company being required to show any actual
damage or to post any bond or other security.
6. ASSIGNMENT. This Agreement shall not be assignable by Employee.
7. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the Company, its successors and assigns, including, without
limitation, any person, partnership, company or corporation which may
acquire substantially all of the Company's assets or business or with or
into which the Company may be liquidated, consolidated, merged or otherwise
combined.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee
should die while any amount would still be payable to him hereunder if he
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.
8. VALIDITY. The validity, construction, interpretation or performance
of this Agreement shall be governed by the laws of the State of Tennessee.
This invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of
this Agreement which shall remain in full force and effect.
<PAGE>
9. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties with respect to the subject matter hereof.
The Agreement cannot be amended, modified or supplemented in any respect
except by a subsequent written agreement entered into by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement, in
duplicate, on the day and year first above written.
COMPANY:
M.S. CARRIERS, INC.
By: Michael S. Starnes
Michael S. Starnes, Chairman of
the Board
EMPLOYEE:
Carl J. Mungenast
Carl J. Mungenast
M.S. CARRIERS, INC.
1993 INCENTIVE PLAN
GROUND RULES FOR MSC INCENTIVE PLAN
FOR DESIGNATED KEY EMPLOYEES
March 1, 1993
I. General Introduction
--------------------
A. The 1993 Incentive Plan is designed to be consistent
-------------------
with the M.S. Carriers Incentive Philosophy, (Appendix A)
and will be improved periodically as the needs of the
company change.
B. The incentive plan is desinged to (1) promote team-
work in all areas of the company, (2) get people to
look at the "big picture", and (3) focus those managers
and key employees able to affect the bottom line on
actual profitability results for the purpose of
improving shareholder value. The quarterly OR
will establish the amount of incentive a participant can
receive. The objective is to tie the management group
together as a team which will result in higher net
income to the company. Participants will focus on
activities which affect profitability (things
that matter) rather than just activities (things that
keep us busy but have little botton line value.)
C. Eligibility: All executive, middle management department heads
-----------
and other key employees approved by executive management
incentive bounus plan.
II. Description of Incentive Plan
-----------------------------
A. Participation Criteria: To participate, an employee must:
----------------------
1. Be assigned to a position selected by executive management.
2. Be designated a member of the plan for the full quarter.
3. If you are absent for an extended period of time, such as
a leave of absence or protracted illness, your bonus will
be prorated, provided you work sometime during the quarter.
You will receive a percent of the bonus equal to the number
of work days you were present during the quarter, divided
by the total work days in the quarter
<PAGE>
4. If you reach age 65 and retire before the quarter is
completed, you will receive a bonus computed as in 3 above.
B. Mangers will be expected to hold monthly meetings with incentive
participants to discuss profitablity opportunities and to analyze
the quarterly results to identify ways improvements can be made.
C. The incentive plan system will be evaluated by executive
management each year so that improvements can be made to meet
the needs of the company through time.
D. The following scale will determine quarterly payout:
Operating % of Base Salary
Ratio Achieved Paid Incentive
-------------- ----------------
90.0% 4%
89.5% 6%
89.0% 12%
88.5% 15%
88.0% 18%
87.5% 21%
87.0% 24%
86.5% 27%
86.0% 30%
85.5% 33%
85.0% 36%
84.5% 39%
84.0% 40%
E. The projected incentive based on 1993 Plan for a participant
salary level of $30,000 is as follows:
Projected OR Projected
By Qtr. Incentive
------------ ---------
1 91.0% 0
2 86.1% 2,025
3 86.6% 1,800
4 87.3% 1,575
-----
5,400 (18% of base salary)
<PAGE>
APPENDIX A
----------
M.S. CARRIERS' INCENTIVE PHILOSOPHY
-----------------------------------
. We will not allow external business or economic factors to
influence positively or negatively the company's incentive
plan. The incentive plan will be reviewed annually to reflect
realistic changing business conditions.
. We will emphasize to participants that payments earned from
the incentive plan will vary and should not become a factor
in establishing an individual's or family's standard of living.
. We will pay incentives to participants to reflect the groups'
impact on operating ratio so that everyone's efforts will be
focused toward failure cost elimination and continous improvement
in customer and employee satisfaction.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AS OF JUNE 30, 1995, AND
THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1995,
AND THE NOTES RELATED THERETO AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 15,996,585
<SECURITIES> 0
<RECEIVABLES> 28,915,523
<ALLOWANCES> 594,900
<INVENTORY> 0
<CURRENT-ASSETS> 57,079,016
<PP&E> 316,309,492
<DEPRECIATION> 99,414,857
<TOTAL-ASSETS> 277,835,721
<CURRENT-LIABILITIES> 45,093,322
<BONDS> 42,512,318
<COMMON> 128,783
0
0
<OTHER-SE> 155,385,253
<TOTAL-LIABILITY-AND-EQUITY> 277,835,721
<SALES> 0
<TOTAL-REVENUES> 84,541,100
<CGS> 0
<TOTAL-COSTS> 77,221,560
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,018,854
<INCOME-PRETAX> 6,335,862
<INCOME-TAX> 2,311,132
<INCOME-CONTINUING> 4,024,739
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,024,739
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
