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 March 31, 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 March 31,
1995.
<PAGE>
KLLM TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
INDEX Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1995 (Unaudited) and December 30, 1994 1
Consolidated Statements of Earnings (Unaudited)
Thirteen weeks ended March 31, 1995 and April 1,
1994 2
Condensed Consolidated Statements of Cash Flows
(Unaudited) Thirteen weeks ended March 31, 1995
and April 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
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 30,
1995 1994
---------------------------
(Unaudited) (Note)
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $160 $1,397
Accounts receivable 26,231 24,063
Inventories - at cost 1,290 1,191
Prepaid expenses:
Tires 4,572 5,314
Other 4,531 3,764
Deferred income taxes 1,450 1,450
------- --------
Total current assets 38,234 37,179
Property and equipment 178,344 182,747
Less accumulated depreciation (54,875) (55,991)
-------- --------
123,469 126,756
======= ========
Intangible assets, net (Note B) 2,106 2,142
$163,809 $166,077
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $510 $4,000
Accounts payable and accrued expenses 9,519 8,670
Current maturities of long-term debt
and capital leases 2,503 2,483
------ ------
Total current liabilities 12,532 15,153
Long-term debt and capital leases, less
current maturities 66,210 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; 4,552,219 shares
issued; 4,509,251 shares outstanding. 4,552 4,552
Additional paid-in capital 32,946 33,121
Retained earnings 31,664 31,234
------ ------
69,162 68,907
Less Common Stock in Treasury, at cost,
42,968 shares (645) (1,064)
------ ------
Total Stockholders' Equity 68,517 67,843
------ ------
$163,809 $166,077
======= =======
</TABLE>
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)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
March 31, April 1,
1995 1994
--------------------------------------------
(In Thousands, Except Per Share Amounts)
<S> <C> <C>
OPERATING REVENUE $56,847 $47,297
OPERATING EXPENSES:
Salaries, wages and
fringe benefits 15,870 15,012
Operating supplies
and expenses 14,709 15,012
Insurance, claims,
taxes and licenses 2,720 2,560
Depreciation and
amortization 5,460 4,727
Purchased transportation
and equipment rent 13,683 5,933
Other 2,783 2,420
Gain on sale of
revenue equipment (521) (59)
--------------------------------
TOTAL OPERATING EXPENSES 54,704 45,605
--------------------------------
OPERATING INCOME 2,143 1,692
Interest and other income 0 (2)
Interest expense 1,450 1,157
--------------------------------
1,450 1,155
--------------------------------
EARNINGS BEFORE INCOME TAXES 693 537
Income taxes 263 200
--------------------------------
NET EARNINGS $430 $337
================================
NET EARNINGS PER COMMON SHARE $0.10 $0.07
================================
</TABLE>
<PAGE>
KLLM TRANSPORT SERVICES INC
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 31, April 1,
1995 1994
-----------------------
(In Thousands)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES $3,902 $3,147
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fresh International
Transportation, Inc. (Note B) (2,500)
Purchases of property and equipment (4,817) (7,210)
Proceeds from disposition of equipment 3,270 983
-------- --------
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (1,547) (8,727)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 244 4
Net increase (decrease) in borrowings
under revolving line of credit 6,000
Repayment of long-term debt and capital
leases (301) (282)
Net change in borrowings under working
capital line of credit (3,490) (313)
-------- --------
NET CASH FLOWS (USED) PROVIDED BY
FINANCING ACTIVITIES (3,547) 5,409
-------- --------
Net Decrease in Cash and
Cash Equivalents (1,192) (171)
Cash and Cash Equivalents at Beginning
Of Period 1,353 869
-------- -------
Cash and Cash Equivalents at End
Of Period $160 $698
========= =======
</TABLE>
<PAGE>
KLLM TRANSPORT SERVICES, INC
AND SUBSIDIARIES
NOTES TO CONDENSED 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 March 31, 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 March 31, 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 first quarter of 1995
ended on Friday, March 31, 1995.
NOTE D - COMMITMENTS AND CONTINGENCIES
During the quarter ended March 31, 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>
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 thirteen
weeks ended March 31, 1995, the Company generated
$3.9 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 ease plan with
terms more favorable than could have been obtained
with financing or capital leasing. During the first
quarter 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 $1,200,000. Capital
expenditures, net of proceeds from trade-ins,
during the first three months of 1995 were
approximately $1,547,000. Net capital
expenditures for the remainder of 1995, primarily
for revenue equipment, are expected to be
approximately $6,000,000.
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 $36,000,000 were outstanding at March 31,
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 a $4,150,000 in unsecured working
capital lines of credit with a bank, $3,640,000 of
which was available at March 31, 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 first quarter of
1995 increased 20% over the comparable period of
1994. The increase in operating revenue
in the first quarter consisted of 7% from the
Company's traditional over-the-road truckload
business, substantially all of which
came from the owner-operator division, 2%
from rail services, 5% from transportation
brokerage services, and 6% from international
services. 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 first quarter of 1995 increased
by approximately 11%, from the comparable
period in 1994.
The operating ratio decreased from 96.4%
to 96.2% for the first quarter of 1995 compared
to the same period in 1994. Operating
revenues, particularly in our trucking and rail
operations, 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 quarter of 1995 as
compared to the same period in 1994 resulted
in a decrease in the operating ratio of
0.8%. 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
increased by $93,000 or 28% for the first
quarter from the comparable period of 1994.
Earnings per share increased from $.07 to
$.10 in the first quarter of 1995.
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.
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - FDS
There were no reports on Form 8-K filed for the
quarter ended March 31, 1995.
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 May 12, 1995 ----------------------------
J. Kirby Lane
Executive Vice President and
Chief Financial Officer
Date May 12, 1995
-----------------------------
Cindy F. Bailey
Corporate Controller
</TABLE>
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
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<NAME>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 160
<SECURITIES> 0
<RECEIVABLES> 26,231
<ALLOWANCES> 147
<INVENTORY> 1,290
<CURRENT-ASSETS> 38,234
<PP&E> 178,344
<DEPRECIATION> 54,875
<TOTAL-ASSETS> 163,809
<CURRENT-LIABILITIES> 12,532
<BONDS> 0
<COMMON> 4,552
0
0
<OTHER-SE> 63,966
<TOTAL-LIABILITY-AND-EQUITY> 163,809
<SALES> 0
<TOTAL-REVENUES> 56,847
<CGS> 0
<TOTAL-COSTS> 54,704
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<INTEREST-EXPENSE> 1,450
<INCOME-PRETAX> 693
<INCOME-TAX> 263
<INCOME-CONTINUING> 430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 430
<EPS-PRIMARY> 0.10
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