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 March 31, 1997
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 Director's 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 March 31, 1997 - 12,009,633
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<PAGE>
M.S. Carriers, Inc.
Index to Form 10-Q
Contents
Part I - Financial Information
Item I - Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996.... 3
Consolidated Statements of Income for the Three Months Ended
March 31, 1997 and 1996................................................. 5
Consolidated Statement of Stockholders' Equity for the Three
Months Ended March 31, 1997............................................. 6
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1997 and 1996................................................. 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... ............................................ 12
Item 2 - Changes in Securities............................................ 12
Item 3 - Defaults Upon Senior Securities.................................. 12
Item 4 - Submission of Matters to a Vote of Security Holders.............. 12
Item 5 - Other Information................................................ 12
Item 6 - Exhibits and Reports on Form 8-K................................. 12
Signatures................................................................ 14
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<PAGE>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements (unaudited)
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
March 31 December 31
1997 1996
_________________________________________
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 602,356 $ 1,153,993
Accounts receivable:
Trade, net 38,963,073 33,018,388
Officers and employees 1,029,981 1,506,247
_______________________________________
39,993,054 34,524,635
Recoverable income taxes 5,092,196 5,870,263
Deferred income taxes 3,811,000 3,755,000
Prepaid expenses and other 7,299,704 4,898,183
_______________________________________
Total current assets 56,798,310 50,202,074
Property and equipment:
Land and land improvements 6,147,876 6,110,279
Buildings 30,128,055 30,128,055
Revenue equipment 266,800,408 260,026,924
Service equipment and other 37,110,862 37,014,110
Construction in progress 144,391 177,218
_______________________________________
340,331,592 333,456,586
Accumulated depreciation and
amortization 95,092,201 96,240,862
_______________________________________
245,239,391 237,215,724
Other assets 3,639,128 3,243,916
_______________________________________
Total assets $305,676,829 $290,661,714
_______________________________________
_______________________________________
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
<CAPTION>
March 31 December 31
1997 1996
_________________________________________
(Unaudited)
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 5,072,174 $ 7,288,149
Accrued expenses 12,691,278 9,733,798
Claims payable 11,749,113 11,694,210
Current maturities of
long-term debt 13,183,947 14,315,462
_____________________________________
Total current liabilities 42,696,512 43,031,619
Long-term debt, less current
maturities 56,850,619 45,373,288
Deferred income taxes 48,918,334 48,045,423
Stockholders' equity:
Common stock, $.01 par value, 120,096 120,096
Authorized shares - 20,000,000
Issued and outstanding shares -
12,009,633 at March 31, 1997 and
at December 31, 1996
Additional paid-in capital 59,959,590 59,959,590
Retained earnings 99,135,332 96,135,352
Cumulative translation adjustments (2,003,654) (2,003,654)
_______________________________________
Total stockholders' equity 157,211,364 154,211,384
Total liabilities and stockholders'
equity $305,676,829 $290,661,714
________________________________________
________________________________________
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
<CAPTION>
Three Months Ended
March 31
1997 1996
___________________________________________
<S> <C> <C>
Operating revenues $ 92,699,990 $ 79,690,228
Operating expenses:
Salaries, wages and benefits 31,566,921 31,272,571
Operations and maintenance 17,720,060 16,411,632
Taxes and licenses 2,470,530 2,394,767
Insurance and claims 4,293,679 4,297,390
Communications and utilities 1,254,897 1,357,231
Depreciation and amortization 9,378,652 9,459,154
Gain on disposals of revenue equipment (87,590) (459,016)
Rent and purchased transportation 19,686,370 10,588,490
Other 523,080 489,458
______________________________________
86,806,599 75,811,677
______________________________________
Operating income 5,893,391 3,878,551
Other expense (income):
Interest expense 1,203,973 1,288,474
Other 45,616 (155,620)
_______________________________________
1,249,589 1,132,854
_______________________________________
Income before income taxes 4,643,802 2,745,697
Income taxes 1,643,822 1,020,626
_______________________________________
Net income $ 2,999,980 $ 1,725,071
_______________________________________
_______________________________________
Common shares and common stock
equivalents 12,096,982 12,456,183
Earnings per share $0.25 $0.14
_______________________________________
_______________________________________
</TABLE>
See accompanying notes.
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<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1997
<CAPTION>
Additional Cumulative
Common Stock Paid-In Retained Translation
Shares Amount Capital Earnings Adjustments Total
__________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at January
1, 1997 12,009,633 $120,096 $59,959,590 $96,135,352 $(2,003,654) $154,211,384
Net Income 2,999,980 2,999,980
_______________________________________________________________________________________________
Balance at March
31, 1997 12,009,633 $120,096 $59,959,590 $99,135,332 $(2,003,654) $157,211,364
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
Three Months Ended
March 31
1997 1996
___________________________________________
<S> <C> <C>
Operating activities
Net income $ 2,999,980 $ 1,725,071
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 9,378,652 9,459,154
Gain on disposals of revenue
equipment (87,590) (459,016)
Other 75,087 79,249
Deferred income taxes 816,911 502,063
Changes in operating assets and
liabilities:
Accounts receivable (5,468,419) (2,523,091)
Current and other assets (2,093,753) (1,405,987)
Trade accounts payable (2,215,975) 2,147,359
Other current liabilities 3,012,383 (1,673,866)
_______________________________________
Net cash provided by operating
activities 6,417,276 7,850,936
Investing activities
Purchases of property and
equipment (24,141,515) (7,606,375)
Proceeds from disposals of property
and equipment 6,826,786 1,893,560
_______________________________________
Net cash used in investing
activities (17,314,729) (5,712,815)
Financing activities
Proceeds from revolving line of
credit and long-term debt 50,659,000 29,375,769
Proceeds from issuance of common stock 554,584
Repurchase of common stock (4,301,250)
Principal payments on revolving
line of credit and long-term debt (40,313,184) (27,083,791)
_______________________________________
Net cash provided by (used in)
financing activities 10,345,816 (1,454,688)
_______________________________________
Increase (decrease) in cash and cash
equivalents (551,637) 683,433
Cash and cash equivalents at
beginning of period 1,153,993 486,459
_______________________________________
Cash and cash equivalents at end
of period $ 602,356 $ 1,169,892
_______________________________________
_______________________________________
</TABLE>
See accompanying notes.
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<PAGE>
M.S. Carriers, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1997
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 three
month period ended March 31, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997.
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,
1996.
2. Net Income Per Common Share
Three Months Ended
March 31
1997 1996
____________________________________
Average common shares outstanding 12,009,633 12,295,149
Common stock equivalents 87,349 161,034
____________________________________
Average common shares and
common stock equivalents 12,096,982 12,456,183
____________________________________
____________________________________
Net income $ 2,999,980 $ 1,725,071
____________________________________
____________________________________
Net income per common and
equivalent share $ 0.25 $ 0.14
____________________________________
____________________________________
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following table sets forth the percentage relationship of revenue and
expense items to operating revenues for the periods indicated.
Percentage of Operating Revenues
Three Months Ended March 31
1997 1996
___________________________________
Operating revenues 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits 34.0% 39.2%
Operations and maintenance 19.1% 20.6%
Taxes and licenses 2.7% 3.0%
Insurance and claims 4.6% 5.4%
Communications and utilities 1.4% 1.7%
Depreciation and amortization 10.1% 11.9%
Gain on disposals of revenue equipment (0.1%) (0.6%)
Rent and purchased transportation 21.2% 13.3%
Other 0.6% 0.6%
__________________________________
Total operating expenses 93.6% 95.1%
__________________________________
Operating income 6.4% 4.9%
Interest expense 1.3% 1.6%
Other expense (income) 0.1% (0.2%)
__________________________________
Income before income taxes 5.0% 3.5%
Income taxes 1.8% 1.3%
__________________________________
Net income 3.2% 2.2%
__________________________________
__________________________________
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<PAGE>
Results of Operations
Operating revenues for the first three months of 1997 increased
$13 million, or 16.3%, to $92.7 million compared with $79.7 million for
the same period in the prior year. The Company's increase in revenues was
due primarily to increased capacity and increased logistic revenues. The
Company's fleet increased to 2,602 tractors at March 31, 1997 from 2,288 at
March 31, 1996, an increase of 314 tractors.
The sources of the Company's revenues were as follows:
Three Months Ended
March 31
1997 1996
___________________________________
(in thousands)
Domestic Linehaul $ 44,678 $ 40,037
Interline Service - Mexico 7,516 7,657
Dedicated 6,601 6,324
Regional 27,329 21,341
Logistics 6,576 4,331
______________________
Total $ 92,700 $ 79,690
______________________
______________________
Revenues per mile were $1.20 for the first quarter of 1997 compared to
$1.23 for the first quarter of 1996, due to a decrease in the average
loaded rate per mile experienced by the Company. The decline in the average
loaded rate per mile corresponds with the average length of haul increasing
to 600 miles in the first quarter of 1997 from 529 miles in the first
quarter of 1996.
The operating ratio (operating expenses as a percentage of revenues) for
the first three months of 1997 was 93.6% compared to 95.1% for the same
period of 1996.
Salaries, wages and benefits decreased to 34.0% of operating revenues for
the three month period ending March 31, 1997 from 39.2% for the same period
in 1996, due primarily to the increased use of owner-operators.
Operations and maintenance expenses decreased to 19.1% of operating revenues
for the three month period ending March 31, 1997 from 20.6% for the same
period in 1996. This decrease was due primarily from the increased use of
owner-operators by the Company.
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<PAGE>
Insurance and claims decreased to 4.6% of operating revenues for the three
month period ending March 31, 1997 from 5.4% for the same period of 1996.
This decrease was due to adjustments made in the first quarter 1996 to
reflect increased liability related to claims incurred in prior periods.
Depreciation and amortization was 10.1% and 11.9% of operating revenues
for the first three months of 1997 and 1996, respectively. The decrease
was primarily attributable to the increased use of owner-operators.
Rent and purchased transportation increased to 21.2% of operating revenues in
the first three months of 1997 compared to 13.3% for the same
period in 1996 primarily as a result of the increased use of owner-operators
by the Company and increased expense relating to logistic operations. The
Company had 588 owner-operators at March 31, 1997 compared to 270 at
March 31, 1996.
Interest expense was $1,203,973 for the first quarter of 1997 compared to
$1,288,474 for the same period in 1996. The decrease in interest expense
was due primarily to the amount of structured debt obligations at higher
interest rates outstanding during the first quarter of 1997 being
significantly less than the amount of such debt outstanding during the
same period of 1996. The average debt outstanding was higher during the
first quarter of 1997 as compared to the first quarter of 1996.
Liquidity and Capital Resources
The Company's business has required significant investment in new equipment
and office and terminal facilities, historically financed through cash from
operations, secured borrowings, unsecured credit facilities and capital
markets.
During the three month period ending March 31, 1997, the Company
had expenditures, net of sales, of $17.3 million for purchases of property
and equipment. The Company funded these purchases of property and equipment
through cash on hand, cash from operations and the Company's bank line of
credit. Net cash provided by operating activities was $6.4 million and net
cash provided by financing activities was $10.3 million.
The Company has a bank line of credit providing for borrowings of up to $48.5
million, with interest at the lower of the bank's corporate prime rate or the
30-day LIBOR rate plus .45%. At March 31, 1997 there was $39.3 million
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 planned
revenue equipment purchases through cash from operations, the Company's bank
line of credit and secured borrowings. In the future, the Company will
continue to have significant capital requirements, which may require the
Company to seek additional borrowings or to access capital markets. The
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<PAGE>
availability of debt financing or equity capital will depend upon the
Company's financial condition and results of operations as well as
prevailing market conditions and other factors over which the Company has
little or no control.
PART II - Other Information
Item 1. Legal Proceedings
The Company is involved in certain ordinary routine litigation incidental
to its business. The Company does not expect that the outcome of any of
these proceedings will have a material adverse effect upon the Company's
operations or its financial position.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
first quarter of 1997.
Item 5. Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) The exhibits filed as a part of this report are listed below:
Exhibit Page Number or Incorporation
Number Description By Reference
3(i).1 Restated Charter of M.S. Carriers, Incorporated by reference from
Inc. exhibits to the registrant's
Registration Statement on Form
S-1 (Registration Number
33-12070).
3(i).2 Articles of Amendment to Charter Incorporated by reference from
of M.S. Carriers, Inc. exhibits to the registrant's
Registration Statement on Form
S-3 (Registration Number
33-63280).
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<PAGE>
3(ii) Amended and Restated By-Laws of M.S. Incorporated by reference from
Carriers, Inc. exhibits to the registrant's
Registration Statement on
Form S-3 (Registration Number
33-63280).
10.1 Incentive Stock Option Plan Incorporated by reference from
exhibits to the registrant's
Registration Statement on
Form S-1 (Registration Number
33-12070).
10.2 Amendment to Incentive Stock Option Incorporated by reference from
Plan exhibits to the registrant's
Registration Statement on
Form S-1 (Registration Number
33-12070).
10.3 1993 Stock Option Plan Incorporated by reference from
exhibits to the registrant's
Registration Statement on
Form S-3 (Registration Number
33-63280).
10.4 Non-Employee Directors Stock Option Incorporated by reference
Plan from registrant's Proxy
Statement dated March 31, 1995.
10.5 Employment Agreements with James W. Incorporated by reference
Welch, M.J. Barrow and Robert P. from exhibits to the
Hurt registrant's Statement on
Form S-1 (Registration
Number 33-12070).
10.6 Employment Agreement with Michael S. Incorporated by reference
Starnes from exhibits to the
registrant's 2nd Quarter
1995 Form 10-Q.
10.7 1993 Incentive Plan for Designated Incorporated by reference
Key Employees from exhibits to the
registrant's 2nd Quarter
1995 Form 10-Q.
10.8 1996 Stock Option Plan Incorporated by reference
from registrant's Proxy
Statement dated April 4,
1996
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<PAGE>
11 Statement regarding computation of 8
per share earnings
27 Financial Data Schedule NOT INCLUDED WITH PAPER FILING
(b) On February 13, 1997, the Company filed a Form 8-K which contained
copies of the slides used by Michael S. Starnes, the Company's chief
executive officer, during his presentation to the Seventh Annual
Transportation Conference given on the same date.
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<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)
Date: May 15, 1997 s/ Daniel P. Goodspeed
Daniel P. Goodspeed, Controller
(Chief Accounting Officer of the
Company)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AS OF MARCH 31, 1997, AND
THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997,
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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 602,356
<SECURITIES> 0
<RECEIVABLES> 39,530,646
<ALLOWANCES> 567,573
<INVENTORY> 0
<CURRENT-ASSETS> 56,798,310
<PP&E> 340,331,592
<DEPRECIATION> 95,092,201
<TOTAL-ASSETS> 305,676,829
<CURRENT-LIABILITIES> 42,696,512
<BONDS> 56,850,619
<COMMON> 120,096
0
0
<OTHER-SE> 157,091,268
<TOTAL-LIABILITY-AND-EQUITY> 305,676,829
<SALES> 0
<TOTAL-REVENUES> 92,699,990
<CGS> 0
<TOTAL-COSTS> 86,806,599
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,203,973
<INCOME-PRETAX> 4,643,802
<INCOME-TAX> 1,643,822
<INCOME-CONTINUING> 2,999,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,999,980
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
