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 Period Ended June 30, 1995
Commission File Number 0-14759
KLLM TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware
64-0412551
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Post Office Box 6098
Jackson, Mississippi
39288
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(601) 939-2545
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
4,509,251 Common Shares were outstanding as of June 30,
1995.
<PAGE>
KLLM TRANSPORT SERVICES, INC. AND
SUBSIDIARIES
INDEX Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1995 (Unaudited) and December 30, 1994 1
Consolidated Statements of Earnings (Unaudited)
Twenty-six weeks ended June 30, 1995 and July 1,
1994 2
Condensed Consolidated Statements of Cash Flows
(Unaudited) Twenty-six weeks ended June 30, 1995
and July 1, 1994 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4
Item 2. 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 7<PAGE>
KLLM TRANSPORT SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information. They have been prepared in accordance
with the instructions to Form 10-Q and Article 10 of Regulation S-X and
accordingly, 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.
NOTE B - ACQUISITION OF CORPORATION
Effective May 1, 1995, the Company acquired substantially all of the
assets of Vernon Sawyer, Inc., a regional
dry-van truckload carrier based in Bastrop, Louisiana. Prior operations
of Vernon Sawyer, Inc. are immaterial to the
Company's revenue, net earnings and earnings per share for the periods
ended June 30, 1995 and December 30, 1994.
Effective March 1, 1994, the Company acquired all of the outstanding
stock of Fresh International
Transportation, Inc., a company which provides temperature controlled
transportation via double-stack containers on
railroads. Results from operations of the Company include operations of
the acquired company since March 1, 1994.
The excess of purchase price over the fair value of the assets acquired is
classified as goodwill and is included in
intangibles in the accompanying balance sheet. Goodwill is being
amortized by the straight line method over fifteen
years.
Prior operations of Fresh International Transportation, Inc. are
immaterial to the Company's revenue, net
earnings and earnings per share for the periods ended June 30, 1995 and
December 30, 1994.
NOTE C - FISCAL YEAR
The Company has adopted a fiscal year-end on the Friday nearest
December 31. Accordingly, the second
quarter of 1995 ended on Friday, June 30, 1995.
NOTE D - COMMITMENTS AND CONTINGENCIES
During the first half of 1995, the Company entered into certain
operating leases for revenue equipment with
an average annual minimum rental payment of $4,057,000 through 1999.
The Company is involved in various claims and routine litigation
incidental to its business. Management is
of the opinion that the outcome of these matters will not have a material
adverse effect on the consolidated financial
position or results of consolidated operations of the Company.
<PAGE>
KLLM TRANSPORT SERVICES, INC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 30,
1995 1994
_____________________________
(Unaudited) (Note)
(In Thousands)
ASSETS
Current assets:
Cash and cash equivalents $289 $1,397
Accounts receivable 27,674 24,063
Inventories - at cost 1,491 1,191
Prepaid expenses:
Tires 4,193 5,314
Other 4,032 3,764
Deferred income taxes 1,450 1,450
Total current assets 39,129 37,179
Property and equipment 190,703 182,747
Less accumulated depreciation (58,047) (55,991)
_________ ________
132,656 126,756
Intangible assets, net (Note B) 2,801 2,142
$174,586 $166,077
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $6,291 $4,000
Accounts payable and accrued expenses
10,138 8,670
Current maturities of long-term debt
and capital leases 6,212 2,483
Total current liabilities 22,641 15,153
Long-term debt and capital leases, less
current maturities 66,196 66,531
Deferred income taxes 16,550 16,550
Stockholders' equity:
Preferred Stock, $.01 value; authorized 5,000,000 shares; none issued
Common Stock, $1 par value; 10,000,000 shares authorized;
issued shares - 4,552,219 in 1995 and 1994, respectively;
outstanding shares - 4,509,251 in 1995 and 4,481,251 in
1994. 4,552 4,552
Additional paid-in capital 32,946 33,121
Retained earnings 32,346 31,234
69,844 68,907
Less Common Stock in Treasury, at cost, 42,968 shares in 1995
and 70,968 shares in 1994. (645) (1,064)
Total Stockholders' Equity 69,199 67,843
$174,586 $166,077
Note: The balance sheet at December 30, 1994 has been derived from the
audited financial statements
at the date indicated, but does not include all of the information and
footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.<PAGE>
KLLM TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, July 1, June 30, July 1,
1995 1994 1995 1994
____________________________________________________
(In Thousands, Except Per Share Amounts)
OPERATING REVENUE $63,011 $57,805
$119,858 $105,102
OPERATING EXPENSES:
Salaries, wages and
fringe benefits 17,957 16,263
33,827 31,276
Operating supplies
and expenses 16,206 16,197
30,914 31,209
Insurance, claims,
taxes and licenses 2,637 2,908
5,357 5,468
Depreciation and
amortization 5,860 5,302
11,320 10,029
Purchased transportation
and equipment rent 15,104 9,856
28,788 15,789
Other 2,857 2,611
5,640 5,030
Gain on sale of
revenue equipment (227) (128)
(748) (187)
______________________________
TOTAL OPERATING EXPENSES 60,394 53,009
115,098 98,614
OPERATING INCOME 2,617 4,796
4,760 6,488
Interest and other income (9) (8) (9) (10)
Interest expense 1,527 1,337 2,977 2,494
1,518 1,329 2,968 2,484
EARNINGS BEFORE INCOME TAXES 1,099 3,467 1,792 4,004
Income taxes 418 1,300 681 1,500
NET EARNINGS $681 $2,167 $1,111 $2,504
NET EARNINGS PER COMMON SHARE $0.15 $0.48 $0.25 $0.55
See accompanying notes.
<PAGE>
KLLM TRANSPORT SERVICES INC
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twenty-Six Weeks Ended
June 30, July 1,
1995 1994
________________________
(In Thousands)
NET CASH PROVIDED BY OPERATING
ACTIVITIES $11,445 $11,807
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Vernon Sawyer, Inc.
assets (Note B) (10,194)
Purchase of Fresh International
Transportation, Inc. (Note B) (2,566)
Purchases of property and equipment (12,907) (19,241)
Proceeds from disposition of equipment 4,663 2,383
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (18,438) (19,424)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 244 4
Purchase of common stock for treasury
(108)
Debt to fund Vernon Sawyer, Inc. acquisition 3,795
Net increase (decrease) in borrowings
under revolving line of credit 4,000 10,500
Repayment of long-term debt and capital
leases (1,029) (568)
Net change in borrowings under working
capital line of credit (1,081) (2,000)
NET CASH FLOWS (USED) PROVIDED BY
FINANCING ACTIVITIES 5,929 7,828
Net Decrease in Cash and
Cash Equivalents (1,064) 211
Cash and Cash Equivalents at Beginning
Of Period 1,353 869
Cash and Cash Equivalents at End
Of Period $289 $1,080
See accompanying notes.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
KLLM Transport Services, Inc.'s primary sources of liquidity are its
cash flow from operations and its existing
credit agreements. During the twenty-six weeks ended June 30, 1995, the
Company generated $11.4 million in net cash
provided from operating activities.
The growth of the Company's business has required significant
investments in new tractors and trailers, which
were previously financed largely through long-term debt and capitalized
leases. The vast majority of new tractors are
now (beginning January 1995) being leased under an operating lease plan
with terms more favorable than could have
been obtained with financing or capital leasing. During the first half of
1995, the Company entered into these operating
leases with average annual minimum rental payments of $4,057,000 through
1999. The commitment for 1995 is
approximately $2,000,000. Capital expenditures, net of proceeds from
trade-ins, during the first half of 1995 were
approximately $8,244,000. Net capital expenditures for the remainder of
1995, primarily for revenue equipment, are
expected to be approximately $1,255,000.
Effective May 1, 1995, the Company acquired substantially all of the
assets of Vernon Sawyer, Inc, a regional
dry-van truckload carrier based in Bastrop, Louisiana. The acquisition
was financed from net cash provided from
operating activities and existing credit facilities.
Effective March 1, 1994, the Company acquired all of the outstanding
stock of Fresh International
Transportation, Inc., a company which provides temperature controlled
transportation via double-stack containers on
railroads. The acquisition was financed from net cash provided from
operating activities.
The Company has a $50,000,000 unsecured revolving line of credit with
a syndication of banks. Borrowings
of $40,000,000 were outstanding at June 30, 1995. Under the terms of the
agreement, borrowings bear interest at (I)
the higher of prime rate or a rate based upon the Federal Funds Effective
Rate, (ii) a rate based upon the Eurodollar
rates, or (iii) an absolute interest rate as determined by each lender in
the syndication under a competitive bid process
at the Company's option. Facilities fees from 1/4% to 3/8% per annum are
charged on the unused portion of this line.
Working capital needs have generally been met from net cash provided
from operating activities. The
Company has $4,150,000 in unsecured working capital lines of credit with
a bank, $1,231,000 of which was available
at June 30, 1995. Interest is at a rate based upon the Eurodollar rates
with facility fees at 1/4% per annum on the unused
portion of the line.
The Company anticipates that its existing credit facilities along
with cash flow from operations will be
sufficient to fund operating expenses, capital expenditures, and debt
service.
Results of Operations
Operating revenue for the second quarter and first half of 1995
increased 9% and 14% over the comparable
periods of 1994. The increase in operating revenue in the second quarter
consisted of a 1% decrease from the
Company's traditional over-the-road truckload business, of which a 6%
increase came from the owner-operator division,
a 2% decrease from rail services, 5% increase from transportation
brokerage services, 2% increase from international
services, and 5% increase from the addition of our new dry-van
over-the-road truckload division. The increase in
operating revenue in the first half of 1995 consisted of a 3% increase
from the Company's traditional over-the-road
truckload business, of which a 7% increase came from the owner-operator
division, less than 1% increase from rail
services, 5% increase from transportation brokerage services, 3% increase
from international services, and 3% increase
from the addition of our new dry-van over-the-road truckload division. The
increase in revenue resulted from an increase
in available Company-operated equipment and an improvement in rates.
The average number of Company operated
trucks in the second quarter and first half of 1995 increased by
approximately 11%, from the comparable periods in
1994.
The operating ratio increased from 91.7% to 95.8% for the second
quarter and from 93.8% to 96.0% for the
first half of 1995 compared to the same periods in 1994. Operating
revenues and results, particularly in our trucking
and rail operations, were affected by an industry-wide softening in demand
for transportation services during the second
quarter of 1995. During the first half of 1995, operating revenues were
affected by the West Coast flooding, a Canadian
National Railway strike and industry-wide softness in the transportation
market. The relative change in the components
of operating expenses during 1995 reflects the increase in purchased
transportation by the newer operating divisions
as compared to 1994, and the increase in equipment rent regarding the new
operating leases for tractors and trailers, as
previously mentioned. The increase in gain on sale of revenue equipment
during the first half of 1995 as compared to
the same period in 1994 resulted in a decrease in the operating ratio of
0.5%. Substantially all of the growth in revenue
is from the newer operations. These divisions are lower margin than the
traditional over-the-road freight operation
which increases the operating ratio overall; however, they are not as
capital intensive.
As a result of the foregoing, net earnings decreased by $1,486,000 or
69% for the second quarter and by
$1,393,000 or 56% for the first half of 1995 from the comparable periods
of 1994. Earnings per share decreased from
$.48 to $.15 in the second quarter of 1995 and decreased from $.55 to $.25
in the first half of 1995 compared to the same
periods of 1994.
Seasonality
In the transportation industry, results of operations generally show
a seasonal pattern because customers reduce
shipments during and after the winter holiday season with its attendant
weather variations. The Company's operating
expenses have historically been higher in the winter months primarily due
to decreased fuel efficiency and increased
maintenance costs in colder weather.
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter 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.
KLLM TRANSPORT SERVICES, INC.
(Registrant)
<TABLE>
<S> <C>
Date August 14, 1995
J. Kirby Lane
Executive Vice President
and
Chief Financial Officer
Date August 14, 1995
Cindy F. Bailey
Corporate Controller
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL YEAR-END> 12/29/95
<PERIOD-END> 6/30/95
<PERIOD-TYPE> 6-MOS
<CASH> 289
<RECEIVABLES> 27,674
<ALLOWANCES> 147
<INVENTORY> 1,491
<CURRENT ASSETS> 39,129
<PP&E> 190,703
<DEPRECIATION> 58,047
<TOTAL ASSETS> 174,586
<CURRENT LIABILITIES> 22,641
<COMMON> 4,552
<OTHER S'EQUITY> 64,647
<TOTAL LIABILITY & EQUITY> 174,586
<TOTAL REVENUES> 119,858
<TOTAL COSTS> 115,098
<INTEREST EXPENSE> 2,977
<INCOME - PRETAX> 1,792
<INCOME TAX> 681
<INCOME-CONTINUING> 1,111
<NET INCOME> 1,111
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
