<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
( X )QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission File No. 0-16386
CANNON EXPRESS, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0650141
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1457 Robinson
P.O. Box 364
Springdale, Arkansas 72765
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 751-9209
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 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
Number of shares of $.01 par value common stock outstanding at
February 5, 1999: 3,192,861
<PAGE>
INDEX
CANNON EXPRESS, INC. and SUBSIDIARIES
PART 1 -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements (Unaudited)
Consolidated Balance Sheets
as of December 31, 1998 and June 30, 1998...............................1
Consolidated Statements of Income and Retained Earnings
for the Three Months and Six Months Ended December 31, 1998 and 1997.....3
Consolidated Statements of Cash Flows
for the Six Months Ended December 31, 1998 and 1997......................4
Notes to Consolidated Financial Statements.................................5
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................6
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ...............................................*
ITEM 2 -- Changes in Securities............................................*
ITEM 3 -- Defaults Upon Senior Securities..................................*
ITEM 4 -- Submission of Matters to a Vote of Security-Holders.............11
ITEM 5 -- Other Information................................................*
ITEM 6 -- Exhibits and Reports on Form 8-K................................11
*No information submitted under this caption.
<PAGE>
PART 1.
ITEM 1.
Financial Statements (Unaudited)
Cannon Express, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31 June 30
1998 1998
(Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents $9,676,775 $3,817,505
Receivables, net of allowance for doubtful accounts
(December 31, 1998-$167,398; June 30, 1998-$158,656):
Trade 10,003,847 9,582,372
Other 2,054,111 1,473,937
Prepaid expenses and supplies 882,064 1,325,024
Deferred income taxes 1,725,000 1,875,000
Total current assets 24,341,797 18,073,838
Property and equipment:
Land, buildings and improvements 1,210,138 1,210,138
Revenue equipment 86,874,439 92,546,207
Service, office and other equipment 2,852,850 2,743,709
90,937,427 96,500,054
Less allowances for depreciation 39,981,197 37,193,306
50,956,230 59,306,748
Other assets:
Receivable from stockholders 23,406 23,406
Restricted cash 2,387,396 2,386,832
Marketable securities 551,745 584,322
Other 596,428 511,332
Total other assets 3,558,975 3,505,892
$78,857,002 $80,886,478
Note: The balance sheet at June 30, 1998 has been derived from the audited
consolidated balance sheet at that date but it does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to consolidated financial statements.
<PAGE>
Cannon Express, Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
December 31 June 30
1998 1998
(Unaudited) (Note)
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $1,438,482 $1,609,825
Accrued expenses:
Insurance reserves 3,059,953 3,144,259
Other 1,551,971 1,758,047
Federal and state income taxes payable 3,524,175 2,208,632
Current portion of long-term debt 23,384,257 18,794,463
Total current liabilities 32,958,838 27,515,226
Long-term debt, less current portion 24,267,537 29,768,122
Deferred income taxes 3,091,000 4,752,000
Other liabilities 59,539 100,862
Stockholders' equity:
Common stock: $.01 par value; authorized
10,000,000 shares; issued 3,252,986 shares 32,530 32,530
Additional paid-in capital 3,720,988 3,720,988
Retained earnings 15,119,066 15,197,014
Unrealized depreciation on marketable
securities, net of income taxes (192,232) -
18,680,352 18,950,532
Less treasury stock, at cost (60,125 shares) 200,264 200,264
18,480,088 18,750,268
$78,857,002 $80,886,478
Note: The balance sheet at June 30, 1998 has been derived from the audited
consolidated balance sheet at that date but it does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to consolidated financial statements.
<PAGE>
Cannon Express, Inc. and Subsidiaries
Consolidated Statements of Income and Retained Earnings
Three Months Ended Six Months Ended
December 31 December 31
1998 1997 1998 1997
(Unaudited) (Unaudited)
Operating revenue $24,091,602 $30,884,078 $48,754,019 $58,941,915
Operating expenses and costs:
Salaries, wages
and fringe benefits 9,489,795 9,613,819 18,145,892 18,963,733
Operating supplies
and expenses 7,359,623 8,348,014 15,232,271 16,886,003
Taxes and licenses 1,451,409 1,504,755 2,766,816 2,902,240
Insurance & claims 1,419,018 1,314,732 2,267,059 3,011,895
Depreciation and amort. 2,483,914 3,290,667 5,934,833 6,537,002
Rents and purchased
transportation 880,475 3,538,088 1,979,096 5,540,410
Other 546,917 604,715 1,121,557 964,117
23,631,151 28,214,790 47,447,524 54,805,400
Operating income 460,451 2,669,288 1,306,495 4,136,515
Other income(expense)
Interest expense (748,908) (863,009) (1,561,276) (1,764,779)
Other income 60,317 77,929 127,833 176,737
(688,591) (785,080) (1,433,443) (1,588,042)
Income before income taxes (228,140) 1,884,208 (126,948) 2,548,473
Federal and state income taxes
Current 820,000 328,000 1,342,000 649,000
Deferred (908,000) 326,000 (1,391,000) 48,000
(88,000) 654,000 (49,000) 697,000
Net income (loss) (140,140) 1,230,208 (77,948) 1,851,473
Retained earnings at beginning
of period 15,259,206 14,003,692 15,197,014 13,382,427
Retained earnings at end
of period $15,119,066 $15,233,900 $15,119,066 $15,233,900
Basic earnings(loss) per share ($0.04) $0.39 ($0.02) $0.59
Average shares outstanding 3,192,861 3,167,621 3,192,861 3,157,072
Diluted earnings(loss) per share ($0.04) $0.38 ($0.02) $0.57
Diluted shares outstanding 3,219,236 3,266,308 3,232,057 3,246,067
See notes to consolidated financial statements.
<PAGE>
Cannon Express, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended
December 31
1998 1997
(Unaudited)
Operating activities
Net income (loss) $ (77,948) $ 1,851,473
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 6,975,842 6,436,107
Provision for losses on accounts receivable 30,000 15,000
Provision (credit) for deferred income taxes (1,391,000) 48,000
Loss (gain) on disposal of equipment (1,041,008) 100,895
Changes in operating assets and liabilities:
Accounts receivable (1,031,649) 262,428
Prepaid expenses and supplies 540,399 525,248
Accounts payable, accrued expenses,
taxes payable, and other liabilities 854,159 1,095,864
Other assets - (11,400)
Net cash provided by operating activities 4,858,795 10,323,615
Investing activities
Purchases of property and equipment (114,290) (1,019,783)
Purchases of marketable securities (280,000) -
Net increase in restricted cash (564) (751)
Proceeds from sales of marketable securities - 50,000
Proceeds from equipment sales 2,306,120 7,150
Net cash provided by (used in) investing activities 1,911,266 (963,384)
Financing activities
Proceeds from long-term borrowing 5,500,000 -
Principal payments on long-term debt and
capital lease obligations (6,410,791) (7,454,295)
Proceeds from exercise of stock options - 52,237
Net cash used in financing activities (910,791) (7,402,058)
Increase in cash and cash equivalents 5,859,270 1,958,173
Cash and cash equivalents at beginning of period 3,817,505 3,995,626
Cash and cash equivalents at end of period $ 9,676,775 $ 5,953,799
See notes to consolidated financial statements.
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated 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 and six month periods ended December 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
June 30, 1999. For further information, refer to the Company's consolidated
financial statements and notes thereto included in its Form 10 - K for the
fiscal year ended June 30, 1998.
Note B - Net Income Per Share
Three Months Ended Six Months Ended
December 31 December 31
1998 1997 1998 1997
(Unaudited) (Unaudited)
Average shares outstanding 3,192,861 3,167,621 3,192,861 3,157,072
Net effect of dilutive stock options 26,375 98,687 39,196 88,995
Diluted shares outstanding 3,219,236 3,266,308 3,232,057 3,246,067
Net income (loss) for the period ($140,140) $1,230,208 ($77,948) $1,851,473
Basic earnings (loss) per share ($.04) $.39 ($.02) $.59
Diluted earnings (loss) per share ($.04) $.38 ($.02) $.57
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations -- Second Quarter
Operating revenue for the second quarter of fiscal 1999 (ended December 31,
1998) was $24,091,602 compared to $30,884,078 for the second quarter of
fiscal 1998, representing a decrease of $6,792,476 or 22.0% for the period.
This decrease was due to a reduction in the amount of business the Company
received from its major customer (Wal-Mart). In March of 1998 the Company
made a decision not to continue some of the freight movements at the rates
then being offered. Management of the Company believes that its longer-term
interests will be best served by diversifying its customer base. During the
second quarter of fiscal 1999, Wal-Mart revenue was $6,658,088 compared to
$17,321,639 during the same period of fiscal 1998, representing a decrease of
$10,663,554 for the period. Of this amount, approximately $1,550,000
was due to the loss of one lane which would not have been profitable at the
rates being offered. The Company has hired 3 salespersons to replace the
lost business, however, to date the shortfall in revenue has not been totally
replaced. The Company also saw a decrease in its logistics and intermodal
revenue from $3,935,231 for the second quarter of fiscal 1998 to $861,649 for
the same period of fiscal 1999. This decrease was due to the Company's not
offering the same amount of excess freight to other companies' trucks as in
the prior year. The Company believes that its sales efforts will be rewarded
in the future through higher rates and with equipment utilization returning
to historical levels. At December 31, 1998, the Company's fleet consisted of
848 trucks and 2,345 trailers, while on December 31, 1997, the Company's fleet
consisted of 904 trucks and 2,114 trailers.
Salaries, wages, and fringe benefits, made up primarily of drivers' wages,
increased as a percentage of revenue to 39.4% in the second quarter of fiscal
1999 from 31.1% in the second quarter of fiscal 1998. Company drivers were
awarded approximately $256,000 in bonuses for the three-month period ended
December 31, 1998 as compared with $234,000 awarded during the three-month
period ended December 31, 1997. Additionally, an annual safety bonus of
$337,000 was paid in December 1998, as compared to $209,000 paid in December
1997.
Operating supplies and expenses, as a percentage of revenue, increased to
30.5% in the second quarter of fiscal 1999 from 27.0% in the comparable
period of fiscal 1998. This increase was mainly attributable to increased
frequency and cost of repairs to older trucks compounding the time lost from
hauling loads while those trucks were being repaired. Operating taxes and
licenses also increased to 6.0% of revenue in fiscal 1999 from 4.9% in
fiscal 1998. Insurance and claims were 5.9% of revenue in fiscal 1999,
increasing from 4.3% of revenue in fiscal 1998. Depreciation and amortization
decreased to 10.3% of revenue in fiscal 1999 from 10.7% in the same period
of fiscal 1998. A gain on disposal of equipment of $975,670 was included in
the second quarter of fiscal 1999 as compared to a loss of $74,189 in the
second quarter of 1998. Rents and purchased transportation decreased to 3.7%
of revenue in fiscal 1999 from 11.5% in fiscal 1998 due to decreased logistics
operations. Other expenses were 2.3% of revenue in the second quarter of
fiscal 1999 and 2.0% in the comparable period of fiscal 1998.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Cont'd
Operating revenue for the second quarter of 1999 decreased by 22.0% over the
comparable period of 1998, while operating expenses decreased by $4,583,639
or 16.2%. Accordingly, the Company's operating ratio increased to 98.1% in
the second fiscal quarter of 1999 from 91.4% in the same period of fiscal
1998.
Interest expense increased to 3.1% of revenue in the second quarter of fiscal
1999 from 2.8% recorded in the second quarter of fiscal 1998.
The Company's effective income tax rate increased to 38.5% of income before
income taxes during the second quarter of fiscal 1999 from 34.7% in the
second quarter of fiscal 1998. During fiscal 1998, income tax consequences
of certain equipment leasing transactions were recorded in the financial
statements in reliance on opinion of tax counsel.
Net loss for the second quarter of fiscal 1999 ended December 31, 1998 was
($140,140) ($.04 loss per share) compared to net income of $1,230,208 ($.38
earnings per share) during the comparable period of fiscal 1998, a decrease
of $1,370,348 or 111.4% for the period.
Results of Operations - Six Month Period
Operating revenue for the first six months of fiscal 1999 ended December 31,
1998 was $48,754,019 compared to $58,941,915 for the comparable period of
fiscal 1998, representing a decrease of $10,187,896 or 17.3%. As in the
three-month period, this decrease was mainly due to a reduction in the amount
of business the Company received from its major customer (Wal-Mart). For the
six-month period ended December 31, 1998, Wal-Mart revenue was $15,135,215
compared to $30,805,526 for the same period of fiscal 1998, representing a
decrease of $15,670,311. Of this amount, approximately $3,060,000 was due to
the loss of one lane which would not have been profitable at the rates being
offered. Logistics and intermodal revenue for the six-month period of fiscal
1999 decreased by $4,624,187 over the comparable period in fiscal 1998. As in
the three-month period, a continued shortage of qualified drivers and fewer
trucks and loads to offer other companies available for contract work impaired
the Company's ability to produce revenue. Operating income decreased to
$1,306,495 in the six months ended December 31, 1998 from $4,136,515 during the
comparable period of fiscal 1998.
Salaries, wages, and fringe benefits increased to 37.2% of revenues in the
six-month period of fiscal 1999 from the 32.2% reported in the six-month
period of fiscal 1998. Operating supplies and expenses increased to 31.2% of
revenue in fiscal 1999 from 28.6% in fiscal 1998. The Company experienced an
increase in the cost of operating its trucks as maintenance costs were
incurred outside of warranty on its older fleet, although its fuel costs were
lower by 14.4%. Taxes and licenses increased to 5.7% of revenue during
fiscal 1999 from 4.9% in fiscal 1998. Insurance and claims were 4.6% of
revenue in fiscal 1999, decreasing from 5.1% of revenue in fiscal 1998.
Depreciation and amortization, as a percentage of revenue, increased to 12.2%
of revenue in fiscal 1999 from 11.1% in the same period of fiscal 1998. A
gain on disposal of equipment of $1,041,008 was included in the six-month
period of fiscal 1999 as compared to a loss of $100,895 in the same period of
1998.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Cont'd
Rents and purchased transportation decreased to 4.1% of revenue in the first
six months of fiscal 1999 from 9.4% during the comparable period of fiscal
1998. As was the case in the three-month period, this decrease was caused
primarily to the decreased logistics activities. Other expenses were 2.3% of
revenue in the six-month period of fiscal 1999 and 1.6% in the comparable
period of 1998.
Interest expense increased to 3.2% of revenue in the first six months of
fiscal 1999 from 3.0% recorded in the first six months of fiscal 1998.
The Company's effective income tax rate increased to 38.5% of income before
income taxes for the first six months of fiscal 1999 from 27.3% for the first
six months of fiscal 1998. As in the three-month period, this benefit is a
result of certain equipment leasing transactions consummated during the prior
fiscal year.
Net loss for the first six months of fiscal 1999 ended December 31, 1998 was
$77,948 ($.02 loss per share) compared to net income of $1,851,473 ($.57
earnings per share) during the comparable period of fiscal 1998, a decrease
of $1,929,421 for the six-month period.
Fuel Cost and Availability
The Company, and the motor carrier industry as a whole, is dependent upon the
availability and cost of diesel fuel. Diesel fuel costs have declined during
the first two quarters of fiscal 1999 over the same period of fiscal 1998.
Fuel costs in the quarter ended December 31, 1998 were approximately 15.9%
lower than in the same period of the prior year. For the six-month period of
fiscal 1999, fuel costs were approximately 14.4% lower than in the six-month
period of fiscal 1998. Historically, increases in fuel costs have been passed
through to the Company.s customers, either in the form of fuel surcharges, or
if deemed permanent in nature, through increased rates. Future cost
increases or shortages of fuel could affect the Company.s future
profitability.
Liquidity and Capital Resources
The Company's primary sources of liquidity have been cash flows generated
from operations and proceeds from borrowings. The Company typically extends
credit to its customers, billing freight charges after delivery.
Accordingly, the ability of the Company to generate cash to satisfactorily
meet its ongoing cash needs is substantially dependent upon timely payment by
its customers. The Company has not experienced significant uncollectible
accounts receivable.
Operating activities provided cash flows of $4.9 million for the first six
months of fiscal 1999 compared to $10.3 million for the same period of fiscal
1998. Cash flows from operations in the first two quarters of fiscal 1999
were the result of $7.0 million in depreciation and $2.1 million used in
other working capital assets and liabilities. Investing activities provided
net cash of $1.9 million during the first six months of fiscal 1999 compared
to $1.0 million net cash used in the same period of fiscal 1998. Financing
activities used net cash of $.9 million during the first two quarters of
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Cont'd
fiscal 1999 compared to $7.4 million in fiscal 1997. During the second
quarter of fiscal 1999, the Company entered into a sale/leaseback transaction
for certain of its trucks which had been purchased for cash during
the quarter ending December 31, 1996.
The Company's working capital at December 31, 1998 was a deficit of $8.7
million compared to a deficit of $9.4 million at June 30, 1998. These
deficits are largely due to the Company's current maturities of long-term
debt which includes approximately $15.5 million that will be due on final
note or lease payments for revenue equipment. Approximately $13.9 million
will be due for trucks which are planned to be traded in or sold during
fiscal 1999. Historically, the Company has received slightly more in cash
when equipment is sold than the amount paid on final note or lease payments.
The Company expects that its obligation for these final equipment payments
will be approximately offset by cash received when the equipment is sold.
Management believes that it is unlikely that the cost and availability of
financing will be adversely affected by this working capital deficit in the
near future.
Like other truckload carriers, the Company experiences significant driver
turnover. Management anticipates that competition for qualified drivers will
intensify. The Company seeks to attract drivers by advertising job openings,
encouraging referrals from existing employees and providing a training
program for applicants whose experience does not meet the Company's minimum
requirements, however, no assurance can be made that the Company will not
continue to experience a shortage of drivers in the future.
The Company was caught in a cycle of large demand for new trucks and long
lead times for new truck orders. Due to the manufacturer's lead time for new
trucks, the Company was unable to secure any replacement trucks on schedule
and was forced to make expensive non-warranty repairs to its older equipment.
The Company sold 28 trucks that were scheduled to be traded before taking
delivery of the new replacement trucks in order to minimize expenses
associated with those unmanned trucks, reducing its fleet to 848 trucks at
December 31, 1998. This sale resulted in a gain of $256,974. The Company
also sold 25 trucks in the quarter ended June 30, 1998 for the same reasons.
The Company has 700 replacement trucks on order with deliveries beginning in
February of 1999 and continuing incrementally through March of 2000 which
will increase the Company's fleet to its former size of 905 trucks, net of
trade-in units. The new truck specifications include features that afford
the driver a higher level of comfort and appeal than the older models being
traded in. Management believes that these new trucks, when placed in service,
will reduce maintenance costs and time lost for repairs. Additionally, the
Company is planning a new program to convert a portion of its drivers to
owner-operators by helping high-quality drivers to lease or purchase one of
the Company's trucks and be paid to operate it under a continuing contract
with the Company to haul freight for its customers.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Cont'd
The Company also sold 192 of its 48 foot trailers resulting in a gain of
$677,270. The Company plans to convert the majority of its trailer fleet to
53 foot trailers in the future in order to allow it to compete for freight
from the increasing number of customers who require 53 foot trailers for some
or all of their shipments. The Company currently owns and operates 900 of
the 53 foot trailers and 1445 of the 48 foot trailers.
Year 2000 Issues
The Company has completed an assessment of its internal systems with regard
to Year 2000 compliance. All of its computer hardware and internal software
is compliant. The Company will convert its EDI format to ASC X12, version
4010 which is year 2000 compliant. The Company's communication systems which
include telephones, on-board computers for trucks, voice mail, and electronic
mail (E-mail) are certified compliant, with the exception of the on-board
computers which are scheduled by the vendor to be compliant by early
1999.
The Company has assurances from its utilities providers of an implementation
plan in place. Backup power generators are certified compliant. However, the
Company's business requires that it operate in all regions of the United
States, and the Company may rely indirectly on utility providers over which it
has no control. Infrastructure failures could significantly reduce the
Company's ability to serve its customers.
The Company's trucks are certified compliant for the year 2000 by the
manufacturer. The Company has conducted a survey of other internal electronic
devices which may have embedded technology likely to be affected by the Year
2000 and believes that no critical devices will fail.
The Company will seek written assurance from its customers and vendors of
their Year 2000 compliance during the early part of 1999 to determine the
extent of any effect on the Company's operations. The Company has not
received written assurances from its significant customers and vendors that
their systems will be timely converted and would not have an adverse effect on
the Company. It is not possible at this time to quantify the amount of
business that might be lost or other costs that could be incurred by the
Company as a result of the Company's customers' and vendors' failure to
remediate their Year 2000 issues.
The Company believes that the most likely worst-case scenario which it may
face would be the inability of one or more of its major customers to
communicate electronically through EDI (Electronic Data Interchange). In that
event, the Company believes that it would be able to continue its business as
it did prior to EDI until those customers' systems return to normal.
The Company estimates that its cost of becoming Year 2000 compliant will be
less than $50,000, with the majority of the expense accounted for in the cost
of operations through June 30, 1998.
The Company subscribes to a service called Year 2000 Stocks via the internet
at www.year2000stocks.com as one of the ways to stay abreast of the Year 2000
issues.
<PAGE>
Forward-Looking Statements
This report contains forward-looking statements that are based on assumptions
made by management from information currently available to management. These
statements address future plans, expectations and events or conditions
concerning various matters such as the results of the Company's sales efforts
as set forth in the discussion of results of operations, capital expenditures,
litigation and capital resources, accounting matters, and Year 2000 readiness.
Although the Company believes that the expectations reflected in such forward-
looking statements are reasonable, actual results could differ materially from
those currently reported.
PART II OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
On November 17, 1998, the Annual Meeting of Stockholders was held in
Springdale, Arkansas. The only matter submitted to a vote of the
stockholders was the reelection of Dean G. Cannon, Rose Marie Cannon, Uvalde
R. Lindsey, and Roy E. Stanley to the Company's current Board of Directors
whose terms expired in 1998. Over 99% of the shares present or represented
by proxy were voted in favor of management.s nominees.
ITEM 6. Exhibits and Reports on Form-K
No reports on Form 8-K were filed during the three months ended December 31,
1998.
<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.
CANNON EXPRESS, INC.
(Registrant)
Date: February 16, 1999 /s/ Dean G. Cannon
President, Chairman of the Board,
Chief Executive Officer and Chief
Accounting Officer
Date: February 16, 1999 /s/ Rose Marie Cannon
Secretary, Treasurer and Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 9,676,775
<SECURITIES> 551,745
<RECEIVABLES> 10,171,245
<ALLOWANCES> 167,398
<INVENTORY> 0
<CURRENT-ASSETS> 24,341,797
<PP&E> 90,937,427
<DEPRECIATION> 39,981,197
<TOTAL-ASSETS> 78,857,002
<CURRENT-LIABILITIES> 32,958,838
<BONDS> 0
0
0
<COMMON> 32,530
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 78,857,002
<SALES> 48,754,019
<TOTAL-REVENUES> 48,754,019
<CGS> 0
<TOTAL-COSTS> 47,447,524
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,561,276
<INCOME-PRETAX> (126,948)
<INCOME-TAX> (49,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,948)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
