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 29, 1996
Commission File Number 0-14759
KLLM TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or
organization) Delaware
(I.R.S. Employer Identification No.64-0412551)
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
4,358,653 Common Shares were outstanding as of March
29, 1996.
<PAGE>
KLLM TRANSPORT SERVICES, INC. AND
SUBSIDIARIES
INDEX Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 29, 1996 (Unaudited) and
December 29, 1995 1
Consolidated Statements of Earnings
(Unaudited) Thirteen weeks ended March
29, 1996 and March 31, 1995 2
Condensed Consolidated Statements of Cash
Flows (Unaudited) Thirteen weeks ended
March 29, 1996 and March 31, 1995 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 29, December 29,
1996 1995
___________________________________
(Unaudited) (Note)
(In Thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $0 $0
Accounts receivable $30,296 $27,787
Inventories - at cost 1,323 1,315
Prepaid expenses:
Tires 3,801 4,096
Other 5,320 3,809
Deferred income taxes 1,940 1,940
_________ _________
Total current assets 42,680 38,947
Property and equipment 178,683 179,568
Less accumulated depreciation (60,368) (57,304)
________ _________
118,315 122,264
Intangible assets, net (Note B) 2,535 2,626
Other assets 385 411
_______ _________
$163,915 $164,248
========== =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable to banks $3,069 $2,758
Accounts payable and accrued expenses 15,123 13,076
Current maturities of long-term debt
and capital leases 4,812 5,937
______ _______
Total current liabilities 23,004 21,771
Long-term debt and capital leases, less
current maturities 58,414 59,594
Deferred income taxes 16,915 16,915
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 1996
and 1995, respectively;
outstanding shares - 4,358,653 in 1996
and 1995,respectively. 4,552 4,552
Additional paid-in capital 32,815 32,815
Retained earnings 30,301 30,687
________ _________
67,668 68,054
Less Common Stock in Treasury,
at cost, 193,566 shares
in 1996 and 1995, respectively. (2,086) (2,086)
________ _________
Total stockholders' equity 65,582 65,968
________ _________
$163,915 $164,248
======== ==========
</TABLE>
Note: The balance sheet at December 29, 1995 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
March 29, March 31,
1996 1995
(In Thousands, Except Per Share Amounts)
<S> <C> <C>
OPERATING REVENUE $63,736 $53,423
OPERATING EXPENSES:
Salaries, wages and
fringe benefits 18,707 15,624
Operating supplies
and expenses 18,033 14,614
Insurance, claims,
taxes and licenses 2,925 2,670
Depreciation and
amortization 5,677 5,460
Purchased transportation
and equipment rent 15,686 10,722
Other 2,305 2,503
Gain on sale of
revenue equipment (204) (521)
________ ________
TOTAL OPERATING EXPENSES 63,129 51,072
======== ========
OPERATING INCOME FROM
CONTINUING OPERATIONS 607 2,351
Interest and other income (6) 0
Interest expense 1,268 1,362
________ _______
1,262 1,362
________ _______
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES (655) 989
Income taxes (249) 370
________ _______
NET EARNINGS (LOSS) FROM CONTINUING
OPERATIONS ($406) $619
INCOME (LOSS) FROM OPERATIONS OF
DISCONTINUED DIVISION (Net
of tax expense (benefits) of $0 in
1996 and ($107) in 1995) ($189)
INCOME (LOSS) ON DISPOSAL OF
DISCONTINUED DIVISION (Net of
tax expense (benefit) of $13 in 1996
and $0 in 1995) 20
______________________________
NET EARNINGS (LOSS) ($386) $430
==============================
EARNINGS (LOSS) PER SHARE:
From Continuing Operations ($0.09) $0.14
From Operations of Discontinued
Division 0.00 (0.04)
From Disposal of Discontinued
Division 0.00 0.00
______________________________
NET EARNINGS (LOSS) PER COMMON
SHARE ($0.09) $0.10
==============================
</TABLE>
See accompanying notes.
<PAGE>
KLLM TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 29, March 31,
1996 1995
______________________
(In Thousands)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES $3,592 $3,902
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,972) (4,817)
Proceeds from disposition of equipment 1,375 3,270
________ _______
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (1,597) (1,547)
________ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 0 244
Net increase (decrease) in borrowings
under revolving line of credit (1,000) 0
Repayment of long-term debt and capital
leases (1,778) (301)
Net change in borrowings under working
capital line of credit 783 (3,490)
_______ _______
NET CASH FLOWS (USED) PROVIDED BY
FINANCING ACTIVITIES (1,995) (3,547)
_______ _______
Net Decrease in Cash and
Cash Equivalents 0 (1,192)
Cash and Cash Equivalents at Beginning
Of Period 0 1,352
_______ _______
Cash and Cash Equivalents at End
Of Period $0 $160
======== ========
</TABLE>
See accompanying notes.
<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.
In March 1995, the FASB issued Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company adopted
Statement 121 in the first quarter of 1996 and, based on
current circumstances, believes the adoption is not
material.
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 September 29, 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 1996 ended on Friday, March 29, 1996.
NOTE D - COMMITMENTS AND CONTINGENCIES
During 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
29, 1996, the Company generated $3.6 million in net cash
provided from operating activities.
Capital resources required by the Company during the
first quarter of 1996 were comparable to the same period
last year. In January 1995, the Company entered into an
operating lease for the majority of its revenue equipment
needs for that year. The payment terms of the operating lease
were more favorable than could have been obtained with
financing or capital leasing. In 1996, the Company has
returned to its traditional method of investing in
maintaining a modern fleet. Capital expenditures, net of
proceeds from trade-ins, during the first quarter of 1996 were
approximately $1,597,000 as compared to $1,547,000 in the first
quarter of 1995. This is as a result of the Company's decision to
curtail growth of the fleet and refocus attention on
improving utilization and profitability in the core trucking
business. Net capital expenditures for the remainder of 1996,
primarily for revenue equipment, are expected to be
approximately
$23,267,000.
At the end of 1995, the Company discontinued that
segment of the international operations aimed at maritime
containerized shipments. This division proved to be
unprofitable and difficult to manage; thus, in an effort to
minimize exposure on future earnings, the Company recognized a
one-time after-tax charge to 1995 earnings of $441,000, or
$0.10 per share, on the disposal of that unit. To date,
there have been no changes in the plan of disposal, or
circumstances related thereto.
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.
At March 29, 1996, the aggregate principal amount of
the Company's outstanding long-term indebtedness was
approximately $63.2 million. Of this total outstanding,
$3.8 million was in the form of 10.2% notes due July 15,
1998, $20.0 million in the form of 9.11% senior notes due
June 15, 2002, $34.0 million consisted of the revolving line of
credit due April 7, 1997, and $5.4 million principal was
relative to capital leases with varying maturities.
The Company has a $50,000,000 unsecured revolving line
of credit with a syndication of banks. As noted
above, borrowings of $34,000,000 were outstanding at March
29, 1996. 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, $2,716,000 of which was available
at March 29, 1996. 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 1996
increased 19.3% over the comparable period of 1995. The
increase in operating revenue in the first quarter consisted
of a 9.8% increase from the Company's traditional
over-the-road truckload business, of which a 6.2% increase
came from the owner-operator division, a 0.3% decrease from
rail services, 0.6% increase from transportation brokerage
services, and 9.2% increase from the addition of the dry-van
over-the-road truckload division. The basis for the net
revenue increase consists primarily of an increase in
available Company-operated equipment. The average number of
Company operated trucks in the first quarter of 1996 increased
by approximately 11.3% from the comparable period in 1995.
The operating ratio increased from 95.6% to 99.0% for
the first quarter of 1996 compared to the same period
in 1995. Until very late in the first quarter of 1996,
operating revenues and results continued to be affected by
an overall weak freight market which has plagued the industry
for the past year. In addition, in the first quarter of 1996, the
Company experienced a steady and significant increase in
fuel costs and an unusually large number of severe winter
storms. The relative change in the components of operating
expenses during the first quarter of 1996, when compared
to the same period last year, reflects the following: a) an
increase in driver pay and related costs of approximately
$2,703,000, of which $1,271,000 is attributable to the
inclusion of the dry-van over-the road truckload division
that was not a part of the Company during the same period
last year, b) the previously mentioned increased fuel costs of
approximately $2,155,000, of which $935,000 is attributable
to the dry-van over-the-road truckload division (within
these amounts, approximately $650,000, or $0.015 per mile is
associated with the rising fuel prices), c) an increase in
purchased transportation of approximately $1,509,000, of
which $814,000 is relative to dedicated services that were
not offered by the Company in the first quarter of last year
and $408,000 is attributable to the dry-van over-the-road
truckload division, and d) the increased equipment rent of
approximately $1,233,000 regarding the operating leases for
revenue equipment, as previously mentioned. Those leases
were gradually implemented throughout 1995. These
increased costs accounted for 0.9%, 0.8%, 0.7%, and 0.8%,
respectively, of the increase in the operating ratio. The
decrease in gain on sale of revenue equipment during the
first quarter of 1996 as compared to the same period in 1995
resulted in an increase in the operating ratio of 0.6%.
As a result of the foregoing, net earnings from
continuing operations decreased by $1,025,000 or 166% for
the first quarter of 1996 from the comparable period of 1995.
Earnings per share from continuing operations decreased
from $.14 to a loss of $.09 in the first quarter of 1996
compared to the same period 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.
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There was one report on Form 8-K filed for the
quarter ended March 29, 1996.
It was filed on February 14, 1996.<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 May 13, 1996 s/ J. Kirby Lane
Executive Vice President and
Chief Financial Officer
Date May 13, 1996 s/ Cindy F. Bailey
Corporate Controller
/TABLE
<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.
<TABLE>
<S> <C>
KLLM TRANSPORT SERVICES, INC.
(Registrant)
Date May 13, 1996 /s/ J. Kirby Lane
J. Kirby Lane
Executive Vice President and
Chief Financial Officer
Date May 13, 1996 /s/ Cindy F. Bailey
Cindy F. Bailey
Corporate Controller
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793765
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1997
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-29-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 30,296
<ALLOWANCES> 462
<INVENTORY> 1,323
<CURRENT-ASSETS> 42,680
<PP&E> 178,683
<DEPRECIATION> 60,368
<TOTAL-ASSETS> 163,915
<CURRENT-LIABILITIES> 23,004
<BONDS> 0
0
0
<COMMON> 4,552
<OTHER-SE> 61,030
<TOTAL-LIABILITY-AND-EQUITY> 65,582
<SALES> 0
<TOTAL-REVENUES> 63,736
<CGS> 0
<TOTAL-COSTS> 63,129
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,268
<INCOME-PRETAX> (655)
<INCOME-TAX> (249)
<INCOME-CONTINUING> (406)
<DISCONTINUED> 20
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (386)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
