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 April 4, 1997 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
4,355,922 Common Shares were outstanding as of April 4,
1997.
<PAGE>
KLLM TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
April 4, 1997 (Unaudited) and January 3, 1997 1
Consolidated Statements of Earnings (Unaudited)
Thirteen weeks ended April 4, 1997 and
March 29, 1996 2
Condensed Consolidated Statements of Cash Flows
(Unaudited) Thirteen weeks ended April 4, 1997
and March 29, 1996 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
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KLLM TRANSPORT SERVICES, INC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
April 4, January 3,
1997 1997
(Unaudited) (Note)
(In Thousands)
ASSETS
Current assets:
Cash and cash equivalents $0 $2,874
Accounts receivable 25,009 22,684
Inventories - at cost 843 891
Prepaid expenses:
Tires 4,218 4,282
Other 3,082 1,365
Deferred income taxes 3,325 3,325
________ ______
Total current assets 36,477 35,421
Property and equipment 179,443 179,613
Less accumulated depreciation (62,573) (57,738)
_________ _______
116,870 121,875
Intangible assets, net 2,145 2,259
Other assets 291 339
_________ ________
$155,783 $159,894
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $1,587 $3,598
Accounts payable and accrued expenses 16,784 16,414
Current maturities of long-term debt
and capital leases 4,860 4,848
_______ _______
Total current liabilities 23,231 24,860
Long-term debt and capital leases, less
current maturities 47,554 49,747
Deferred income taxes 18,787 18,787
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 - 4,558,754 in 1997 and
4,558,754 in 1996;
outstanding shares - 4,355,922 in 1997
and 4,344,955 in 1996. 4,559 4,559
Additional paid-in capital 32,865 32,811
Retained earnings 30,998 31,453
________ _______
68,422 68,823
Less Common Stock in Treasury, at cost,
202,832 shares in 1997
and 213,799 shares in 1996. (2,211) (2,323)
________ _______
Total stockholders' equity 66,211 66,500
________ _______
$155,783 $159,894
========== =========
</TABLE>
Note: The balance sheet at January 3, 1997 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>
<S> <C> <C>
Thirteen Weeks Ended
April 4, March 29,
1997 1996
______________________
(In Thousands, Except Per Share Amounts)
OPERATING REVENUE $62,767 $63,736
OPERATING EXPENSES:
Salaries, wages and
fringe benefits 19,141 18,707
Operating supplies
and expenses 16,157 18,033
Insurance, claims,
taxes and licenses 4,037 2,925
Depreciation and
amortization 5,263 5,677
Purchased transportation
and equipment rent 14,980 15,686
Other 2,722 2,305
Gain (loss) on sale of
revenue equipment 167 (204)
____________________
TOTAL OPERATING EXPENSES 62,467 63,129
OPERATING INCOME FROM CONTINUING OPERATIONS 300 607
Interest and other income (26) (6)
Interest expense 1,056 1,268
____________________
1,030 1,262
____________________
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (730) (655)
Income taxes (275) (249)
____________________
NET LOSS FROM CONTINUING OPERATIONS ($455) ($406)
INCOME ON DISPOSAL OF DISCONTINUED DIVISION
(Net of tax expense of $13 in 1996) 20
____________________
NET LOSS ($455) ($386)
=====================
LOSS PER SHARE:
From Continuing Operations ($0.10) ($0.09)
From Operations of Discontinued Division
From Disposal of Discontinued Division 0.00 0.00
_____________________
NET LOSS PER COMMON SHARE ($0.10) ($0.09)
======================
</TABLE>
See accompanying notes.
<PAGE>
KLLM TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C>
Thirteen Weeks Ended
April 4, March 29,
1997 1996
___________________________
(In Thousands)
NET CASH PROVIDED BY OPERATING
ACTIVITIES $1,625 $3,592
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (774) (2,972)
Proceeds from disposition of equipment 367 1,375
________ _______
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (407) (1,597)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 99 0
Net decrease in borrowings
under revolving line of credit 1,879) (1,000)
Repayment of long-term debt and capital
leases (312) (1,778)
Net change in borrowings under working
capital line of credit (2,000) 783
_________ ________
NET CASH FLOWS USED IN
FINANCING ACTIVITIES (4,092) (1,995)
_________ ________
Net Decrease in Cash and
Cash Equivalents (2,874) 0
Cash and Cash Equivalents at Beginning
Of Period 2,874 0
_________ _________
Cash and Cash Equivalents at End
Of Period $0 $0
========= =========
</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 February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share,
which is required to be adopted on December 31, 1997. At that
time, the company will be required to change the
method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for
calculating earnings per share, the dilutive effect of stock
options will be excluded. The impact of Statement 128 on
the calculation of earnings per share is not expected to be
material.
NOTE B- FISCAL YEAR
The Company has adopted a fiscal year-end on the Friday
nearest December 31. Accordingly, the first quarter
of 1997 ended on Friday, April 4, 1997.
NOTE C- COMMITMENTS AND CONTINGENCIES
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.
The Company has entered into heating oil (diesel fuel) swap
agreements in order to hedge its exposure to price
fluctuations. At April 4, 1997, the Company had approximately
14% of its remaining 1997 anticipated fuel
requirements under swap agreements which expire in January 1998.
Gains and losses on hedging contracts are
recognized in operating expenses as part of the fuel cost over
the hedge period. Also, the Company establishes prices
for a portion of its anticipated fuel purchases over specified
periods of time through various fuel purchase agreements.
<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 April 4,
1997, the Company generated $1.6 million in net cash
provided from operating activities.
Capital resources required by the Company during the first
quarter of 1997 were approximately $1.2 million
less than the same period last year. 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 1997, primarily for revenue equipment, are
expected to be approximately $19.2 million.
The Company has a $50,000,000 unsecured revolving line of
credit with a syndication of banks. Borrowings
of $28,000,000 were outstanding at April 4, 1997. 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.
At April 4, 1997, the aggregate principal amount of the
Company's outstanding long-term indebtedness was
approximately $52.4 million. Of this total outstanding, $2.5
million was in the form of 10.2% notes due July 15, 1998,
$17.1 million in the form of 9.11% senior notes due June 15,
2002, $28.0 million consisted of the revolving line of
credit due April 7, 1998, and $4.8 million principal was relative
to capital leases with varying maturities.
Working capital needs have generally been met from net cash
provided from operating activities. The Company has $4,000,000
in an unsecured working capital line of
credit with a bank, $3,480,000 of which was available
at April 4, 1997. 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 1997 decreased
1.5% over the comparable period of 1996. The
decrease in operating revenue in the first quarter consisted of a
1.3% increase from the Company's traditional over-the-road
temperature-controlled freight services, a 2.5% decrease from
rail services, 4.9% decrease from transportation
brokerage services, and 4.5% increase from the dry-van
over-the-road truckload division. The average revenue per mile
including fuel surcharges increased from $1.112 to $1.126 for the
first quarter of 1997 as compared to the same period
in 1996. This resulted primarily from an increase in fuel
surcharges. Total miles per truck per week for the first quarter
of 1997 increased 3.1% over the same period in the prior year,
while at the same time, deadhead percentage remained
fairly constant.
The operating ratio increased from 99.1% to 99.5% for the
first quarter of 1997 compared to the same period
in 1996. The Company has continued to increase the use of
owner-operated tractors and has decreased the company-owned
fleet. This change affects the comparability of components of
operating expenses by increasing purchased
transportation and decreasing wages, depreciation, and various
operating supplies and expenses. Purchased
transportation also reflects the significant reductions in
transportation brokerage and rail operations. Driver wages were
increased at the start of 1997 to offset cancellation of
reimbursement of certain expenses to drivers. The effect in the
first quarter was to increase wages and decrease operating
supplies $1.1 million compared to the first quarter of 1996.
Operating supplies and expenses were also affected by higher fuel
prices and the benefit of various cost reduction efforts
impacting loading and other expenses compared to the first
quarter of 1996.
Insurance and claims costs for the first quarter of 1997
significantly increased, approximately $1.5 million or
38.0%, over the first quarter of 1996 (6.4% of operating revenues
as compared to 4.5% last year). The increase was
relative to both past and current claims. A reassessment of our
reserving and claims management practices have led
to the adoption of a more conservative approach in reserving for
claims coupled with a more aggressive approach to
managing those claims.
As a result of the foregoing, net loss from continuing
operations increased by $49,000 or 11.9% for the first
quarter of 1997 from the comparable period of 1996. Loss per
share from continuing operations increased from $(.09)
to $(.10) in the first quarter of 1997.
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 a Form 8-A and Form 8-K filing for the
quarter ended April 4, 1997.
<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>
KLLM TRANSPORT SERVICES, INC.
(Registrant)
<S> <C>
Date May 19, 1997 s/ Steven K. Bevilaqua
Steven K. Bevilaqua
President and
Chief Executive Officer
Date May 19, 1997 s/ Steven L. Dutro
Steven L. Dutro
Vice President-Finance
and Acting Chief
Financial Officer
</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>
KLLM TRANSPORT SERVICES,INC.
(Registrant)
<S> <C>
Date May 19, 1997 /s/ Steven K. Bevilaqua
Steven K. Bevilaqua
President and
Chief Executive Officer
Date May 19, 1997 /s/ Steven L. Dutro
Steven L. Dutro
Vice President-Finance and Acting
Chief Financial Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1998
<PERIOD-END> APR-04-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 25,009
<ALLOWANCES> 554
<INVENTORY> 843
<CURRENT-ASSETS> 36,477
<PP&E> 179,443
<DEPRECIATION> 62,573
<TOTAL-ASSETS> 155,783
<CURRENT-LIABILITIES> 23,231
<BONDS> 0
0
0
<COMMON> 4,559
<OTHER-SE> 61,652
<TOTAL-LIABILITY-AND-EQUITY> 155,783
<SALES> 0
<TOTAL-REVENUES> 62,767
<CGS> 0
<TOTAL-COSTS> 62,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,056
<INCOME-PRETAX> (730)
<INCOME-TAX> (275)
<INCOME-CONTINUING> (455)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (455)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> 0.00
</TABLE>
