SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-24908
TRANSPORT CORPORATION OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1386925
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1769 YANKEE DOODLE ROAD
EAGAN, MINNESOTA 55121
(Address of principal executive offices and zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (612) 686-2500
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 for 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 ___
As of May 10, 1996, the Company had outstanding 6,421,809 shares of Common
Stock, $.01 par value.
This Form 10-Q consists of 13 pages.
TRANSPORT CORPORATION OF AMERICA, INC.
Quarterly Report on Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
<S> <C>
Condensed Balance Sheets as of
March 31, 1996 and December 31, 1995........................................... Page 3
Condensed Statements of Earnings for the
three months ended March 31, 1996 and 1995..................................... Page 4
Condensed Statements of Cash Flows for the
three months ended March 31, 1996 and 1995..................................... Page 5
Notes to Condensed Financial Statements........................................... Page 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................... Page 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................................. Page 10
Exhibit 11 Statement re: Computation of Net Earnings per Weighted
Common and Common Equivalent Share................................ Page 12
Exhibit 27 Financial Data Schedule............................................. Page 13
</TABLE>
TRANSPORT CORPORATION OF AMERICA, INC.
CONDENSED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1996 1995
------------- -------------
ASSETS: (unaudited) *
Current assets:
Cash and cash equivalents $ 171,928 $ 165,173
Trade receivables, net of allowances 13,900,893 13,040,508
Other receivables 1,681,499 3,322,095
Operating supplies 910,334 963,490
Deferred income tax benefit 2,556,000 2,538,000
Prepaid expenses and tires 3,231,272 1,891,670
------------- -------------
Total current assets 22,451,926 21,920,936
Revenue equipment, at cost 85,187,640 81,203,390
Less: accumulated depreciation (18,371,138) (16,161,324)
------------- -------------
Net revenue equipment 66,816,502 65,042,066
Property, other equipment, and improvements:
Land, buildings, and improvements 9,149,061 8,832,102
Furniture and other equipment 4,738,624 4,634,034
Less: accumulated depreciation (4,294,142) (4,051,995)
------------- -------------
Net property, other equipment,
and improvements 9,593,543 9,414,141
Other assets, net 3,238,108 3,080,043
------------- -------------
TOTAL ASSETS $ 102,100,079 $ 99,457,186
============= =============
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Note payable to bank $ 1,100,000 $ 2,230,000
Current maturities of long-term debt 10,291,907 9,314,272
Accounts payable 2,759,033 2,997,255
Checks issued in excess of cash balances 1,690,877 1,152,928
Due to independent contractors 1,646,294 980,075
Accrued expenses 11,178,613 11,544,928
------------- -------------
Total current liabilities 28,666,724 28,219,458
Long term debt, less current maturities 25,476,647 24,436,325
Deferred income taxes 10,993,000 10,494,000
Stockholders' equity:
Common stock 64,218 64,206
Additional paid-in capital 23,381,583 23,370,469
Retained earnings 13,517,907 12,872,728
------------- -------------
Total stockholders' equity 36,963,708 36,307,403
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 102,100,079 $ 99,457,186
============= =============
* Based upon audited financial statements.
<TABLE>
<CAPTION>
TRANSPORT CORPORATION OF AMERICA, INC.
CONDENSED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31,
----------------------------------------------
1996 1995
--------------------- ---------------------
AMOUNT % AMOUNT %
------------ ----- ------------ -----
<S> <C> <C> <C> <C>
(unaudited)
OPERATING REVENUES $ 38,794,178 100.0 $ 34,350,614 100.0
OPERATING EXPENSES:
Salaries, wages, and benefits 11,368,882 29.3 10,376,721 30.2
Fuel, maintenance, and 5,975,694 15.4 5,068,866 14.8
other expenses
Purchased transportation 10,636,242 27.4 8,396,642 24.4
Revenue equipment leases 1,777,492 4.6 1,842,969 5.4
Depreciation and amortization 3,307,524 8.5 2,253,402 6.6
Insurance, claims, and damage 1,360,970 3.5 1,841,871 5.4
Taxes and licenses 781,347 2.0 747,688 2.2
Communication 485,978 1.3 528,041 1.5
Other general and 1,327,620 3.4 1,355,415 3.9
administrative expenses
Gain on disposition of equipment (24,203) (0.1) (343,581) (1.0)
------------ ----- ------------ -----
Total operating expenses 36,997,546 95.3 32,068,034 93.4
------------ ----- ------------ -----
OPERATING INCOME 1,796,632 4.7 2,282,580 6.6
Interest expense 687,111 1.8 530,724 1.5
Interest income (2,658) 0.0 (84,500) (0.2)
------------ ----- ------------ -----
Interest expense, net 684,453 1.8 446,224 1.3
EARNINGS BEFORE INCOME TAXES 1,112,179 2.9 1,836,356 5.3
Provision for income taxes 467,000 1.2 790,000 2.3
------------ ----- ------------ -----
NET EARNINGS $ 645,179 1.7 $ 1,046,356 3.0
============ ===== ============ =====
Net earnings per weighted common and
common equivalent share - primary $ 0.10 $ 0.16
============ ============
Weighted average number of common and
common equivalent shares outstanding 6,708,277 6,689,425
============ ============
</TABLE>
<TABLE>
<CAPTION>
TRANSPORT CORPORATION OF AMERICA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
------------ ------------
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 645,179 $ 1,046,356
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 3,307,524 2,253,402
Gain on disposition of equipment (24,203) (343,581)
Deferred income taxes 481,000 214,000
Changes in operating assets
and liabilities:
Trade receivables (860,385) (1,541,611)
Other receivables 1,640,596 100,185
Operating supplies 53,156 4,212
Prepaid expenses and tires (1,339,602) (1,198,251)
Accounts payable (238,222) (612,917)
Due to independent contractors 666,219 494,325
Accrued expenses (366,315) 1,734,731
------------ ------------
Net cash provided by operating
activities 3,964,947 2,150,851
------------ ------------
INVESTING ACTIVITIES:
Payments for purchases of revenue equipment (5,696,303) (7,419,856)
Payments for purchases of property, other
equipment, and leasehold improvements (491,302) (263,179)
Increase in other assets 21,341 42,246
Proceeds from disposition of equipment 771,040 1,896,793
------------ ------------
Net cash used in investing
activities (5,395,224) (5,743,996)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 11,126 0
Proceeds from issuance of long-term debt 4,326,600 2,791,500
Principal payments on long-term debt (2,308,643) (1,588,979)
Proceeds from issuance of
notes payable to bank 13,260,000 0
Principal payments on notes payable to bank (14,390,000) 0
Net checks issued in excess of cash balances 537,949 536,891
------------ ------------
Net cash provided by financing
activities 1,437,032 1,739,412
------------ ------------
INCREASE (DECREASE) IN CASH 6,755 (1,853,733)
CASH AND CASH EQUIVALENTS:
AT BEGINNING OF PERIOD 165,173 7,372,042
AT END OF PERIOD $ 171,928 $ 5,518,309
============ ============
Supplemental disclosure of cashflow information:
Cash paid during the period for:
Interest, net $ 667,869 519,905
Income taxes, net 120,889 201,286
</TABLE>
TRANSPORT CORPORATION OF AMERICA, INC.
Notes to Condensed Financial Statements
1. Interim Condensed Financial Statements (unaudited)
The unaudited interim condensed financial statements
contained herein reflect all adjustments which, in the opinion
of management, are necessary to a fair statement of the
interim periods. They have been prepared in accordance with
the instructions to Form 10-Q, Article 10 of Regulation S-X
and, accordingly, do not include all the information and
footnotes required by generally accepted accounting principles
for complete financial statements.
These statements should be read in conjunction with the
financial statements and footnotes included in the Company's
most recent annual financial statements on Form 10-K for the
year ended December 31, 1995. The policies described in that
report are used in preparing quarterly reports.
The Company's business is seasonal. Operating results
for the three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1996.
2. Commitments
As of March 31, 1996 the Company had commitments for
the purchase of approximately $12.5 million of revenue
equipment and up to approximately $1.2 million to expand and
upgrade its Janesville, Wisconsin facility.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three Months Ended March 31, 1996 and 1995
Operating revenues increased 12.9% to $38.8 million for
the quarter ended March 31, 1996 from $34.4 million for the
quarter ended March 31, 1995. Greater freight volumes from
existing customers continued as the primary source of revenue
growth. Revenues per mile declined to $1.26 per mile in the
first quarter of 1996 from $1.27 per mile for the same period
of 1995. Industry overcapacity and soft demand contributed to
higher empty miles as a percentage of total miles driven and
limited opportunities for rate increases. Equipment
utilization, as measured by average revenue per tractor per
week, was $2,563 during the first quarter of 1996, compared to
$2,747 for the same period of 1995. Utilization was impaired
by poor weather conditions and soft demand for transportation
services.
Pre-tax margin (earnings before income taxes as a
percentage of operating revenues) declined to 2.9% in the
first quarter of 1996 from 5.3% for the same period of 1995.
Efficiency, as measured by average annualized revenues per
non-driver employee, improved 7.2% to $493,900 for the first
quarter of 1996, compared to $460,600 for the same period of
1995. Salaries, wages and benefits as a percentage of
operating revenues were 29.3% in the first quarter of 1996,
compared to 30.2% for the same period of 1995. Unusually
severe winter weather conditions, compared to the relatively
mild conditions a year ago, and higher fuel prices during the
first quarter of 1996 contributed to an increase of fuel,
maintenance and other expenses as a percentage of operating
revenues to 15.4% in the first quarter of 1996, compared to
14.8% for the same period of 1995. Independent contractor
miles increased 27.8% in the first quarter of 1996, compared
to the same period of 1995, as a result of the increase in the
number of contractors to 398 at March 31, 1996 from 324 a year
prior. As a consequence, purchased transportation increased as
a percentage of operating revenues to 27.4% in the first
quarter of 1996 from 24.4% for the same period of 1995.
Revenue equipment leases decreased as a percentage of
operating revenues to 4.6% in the first quarter of 1996 from
5.4% for the same period of 1995, primarily as a result of the
expanded use of debt-financed equipment in place of leased
equipment and an increase in independent contractors. For the
first quarter of 1996, depreciation and amortization increased
to 8.5% of operating revenues from 6.6% for the same period of
1995, due to new revenue equipment purchases and replacement
of leased equipment with debt-financed equipment. Insurance,
claims and damage decreased as a percentage of operating
revenues to 3.5% in the first quarter of 1996 from 5.4% for
the same period of 1995 primarily as a result of more
favorable accident experience in the first quarter of 1996,
when compared to the same period of 1995, and favorable
insurance premium costs for policies which were renewed at the
start of 1996.
In the first quarter of 1996, gain on the disposition
of equipment was $24,000, compared to $344,000 in the first
quarter of 1995, a reflection of the large number of equipment
dispositions and the favorable market for the sale of used
equipment in the first quarter of 1995.
The effective tax rate for the first quarter of 1996
was 42.0%, compared to the 43.0% effective tax rate for the
first quarter of 1995. The lower effective rate in 1996 was
primarily due to a decline in Company per diem payments, which
are not fully deductible for income tax purposes, when
compared to the first quarter of 1995. The Company pays
certain of its drivers a per-diem allowance while on the road
to cover meals and other expenses.
As a consequence of the items discussed above, net
earnings declined to $645,000 or 1.7% of operating revenues
for the quarter ended March 31, 1996 from $1.0 million or 3.0%
of operating revenues for the quarter ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $4.0
million in the first three months of 1996. The working capital
deficit as of March 31, 1996 was $6.2 million, compared to the
$6.3 million deficit which existed as of December 31, 1995.
Historically, the Company has operated effectively with
current liabilities in excess of current assets through a
combination of operating profits, collections on accounts
receivable, and other cash management strategies. Management
expects to continue to do so while meeting its obligations.
Accrued liabilities include normal provisions for accident and
workers' compensation claims associated with the Company's
self-insured retention insurance program, less claim payments
actually made. The Company believes that reserves are adequate
for expected future claim payments.
Investing activities in the first three months of 1996
consumed net cash of $5.4 million, primarily for the purchase
of new revenue equipment including 7 tractors and 220
trailers, less proceeds from the disposition of 41 used
trailers. These expenditures were financed through a
combination of cash generated by operations, long-term debt
financing and proceeds from equipment dispositions. As of
March 31, 1996 the Company had commitments for the purchase of
approximately $12.5 million of revenue equipment and up to
approximately $1.2 million to expand and upgrade its
Janesville, Wisconsin facility. The Company expects to finance
these commitments by cash flows from operating activities and
proceeds from the disposition of used revenue equipment.
Net cash provided by financing activities was $1.4
million in the first three months of 1996. Payments under the
Company's term loan agreements were $2.3 million. The primary
source of financing was the issuance of $4.3 million of
long-term debt associated with the purchase of revenue
equipment.
The Company maintains an $8 million working capital
line of credit secured primarily by its accounts receivable.
This facility is used to support letter of credit requirements
with an insurance carrier associated with the Company's
self-insured retention insurance program and to meet
short-term operating cash requirements. As of March 31, 1996,
there was $1.1 million outstanding debt under this line of
credit and $1.8 million of outstanding letters of credit which
reduced the amount available under the line of credit. This
credit facility has been renewed with expiration in May 1997.
The Company expects to continue to fund its liquidity
needs and anticipated capital expenditures with cash flows
from operations, long-term debt financing and operating
leases, equipment dispositions, and the line of credit.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description Page
------ ----------- ----
<S> <C>
11 Statement re: Computation of Net Earnings per Weighted
Common and Common Equivalent Share........... 12
27 Financial Data Schedule.................................... 13
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
</TABLE>
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.
TRANSPORT CORPORATION OF AMERICA, INC.
Date: May 10, 1996 /s/ James B. Aronson
James B. Aronson
Chief Executive Officer
/s/ Robert J. Meyers
Robert J. Meyers
Executive Vice President, Chief Financial
Officer and Chief Information Officer (Principal
Financial and Accounting Officer)
EXHIBIT 11
TRANSPORT CORPORATION OF AMERICA, INC.
Computation of Net Earnings per Weighted Common
and Common Equivalent Share
(unaudited)
Three months ended March 31,
---------------------------
1996 1995
- - --------------------------------------------------------------------------------
Weighted average number of common
shares outstanding 6,420,867 6,329,607
Dilutive effect of outstanding stock
options and warrants 287,410 359,818
Weighted average number of common and
common equivalent shares outstanding 6,708,277 6,689,425
================================================================================
Net earnings $ 645,179 $1,046,356
================================================================================
Net earnings per weighted common and
common equivalent share $ 0.10 $ 0.16
================================================================================
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 171,928
<SECURITIES> 0
<RECEIVABLES> 13,900,893
<ALLOWANCES> 0
<INVENTORY> 910,334
<CURRENT-ASSETS> 22,451,926
<PP&E> 99,075,325
<DEPRECIATION> 22,665,280
<TOTAL-ASSETS> 102,100,079
<CURRENT-LIABILITIES> 28,666,724
<BONDS> 25,476,647
0
0
<COMMON> 64,218
<OTHER-SE> 36,899,490
<TOTAL-LIABILITY-AND-EQUITY> 102,100,079
<SALES> 0
<TOTAL-REVENUES> 38,794,178
<CGS> 0
<TOTAL-COSTS> 35,669,926
<OTHER-EXPENSES> 1,327,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 684,453
<INCOME-PRETAX> 1,112,179
<INCOME-TAX> 467,000
<INCOME-CONTINUING> 645,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 645,179
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
