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 SEPTEMBER 30, 1998
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: (651) 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 November 10, 1998, the Company had outstanding 7,912,873 shares of Common
Stock, $.01 par value.
------------------------
<PAGE>
TRANSPORT CORPORATION OF AMERICA, INC.
Quarterly Report on Form 10-Q
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1998 and December 31, 1997 ................ Page 3
Consolidated Statements of Earnings for the three and
nine months ended September 30, 1998 and 1997 ........... Page 4
Consolidated Statements of Cash Flows for the
nine months ended September 30, 1998 and 1997 ........... Page 5
Notes to Consolidated 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 2. Changes in Securities and Use of Proceeds ..................... Page 14
Item 6. Exhibits and Reports on Form 8-K .............................. Page 14
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
TRANSPORT CORPORATION OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
ASSETS: (unaudited) *
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 207 $ 1,383
Trade receivables, net of allowance for doubtful accounts 30,829 17,482
Other receivables 1,462 4,757
Operating supplies 1,250 989
Deferred income taxes 3,177 3,945
Prepaid expenses and tires 3,178 1,921
------------ ------------
Total current assets 40,103 30,477
Revenue equipment, at cost 165,584 126,886
Less: accumulated depreciation (37,793) (29,871)
------------ ------------
Net revenue equipment 127,791 97,015
Property, other equipment, and improvements:
Land, buildings, and improvements 18,456 17,120
Furniture and other equipment 9,674 7,082
Less: accumulated depreciation (7,344) (6,177)
------------ ------------
Net property, other equipment, and improvements 20,786 18,025
Goodwill, net 23,664 0
Other assets, net 2,039 2,276
------------ ------------
Total other assets 25,703 2,276
TOTAL ASSETS $ 214,383 $ 147,793
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Current maturities of long-term debt $ 13,140 $ 19,077
Accounts payable 6,545 3,557
Accrued expenses 16,890 9,563
Due to independent contractors 2,287 518
Checks issued in excess of cash balances 3,711 0
------------ ------------
Total current liabilities 42,573 32,715
Long term debt:
Long term debt, less current maturities 30,354 44,618
Long term credit facility 40,000 0
------------ ------------
Total long term debt 70,354 44,618
Deferred income taxes 22,433 19,652
Common stock with non-detachable put 20,268 0
Stockholders' equity:
Common stock 67 66
Additional paid-in capital 24,316 23,824
Retained earnings 34,372 26,918
------------ ------------
Total stockholders' equity 58,755 50,808
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 214,383 $ 147,793
============ ============
</TABLE>
* Based upon audited financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT SHARES AND EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
AMOUNT AMOUNT AMOUNT AMOUNT
----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 74,087 $ 47,100 $ 176,650 $ 136,944
OPERATING EXPENSES:
Salaries, wages, and benefits 18,497 13,489 49,662 38,677
Fuel, maintenance, and other expense 7,175 6,242 20,377 18,820
Purchased transportation 27,786 13,718 57,183 40,934
Revenue equipment leases 907 1,231 2,822 3,777
Depreciation and amortization 5,473 3,881 14,577 11,435
Insurance, claims, and damage 2,139 1,294 5,054 4,070
Taxes and licenses 1,194 778 2,944 2,433
Communication 792 554 2,057 1,620
Other general and administrative expenses 2,419 1,363 6,491 4,501
(Gain) on disposition of equipment (180) (240) (239) (599)
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 66,202 42,310 160,928 125,668
----------- ----------- ----------- -----------
OPERATING INCOME 7,885 4,790 15,722 11,276
Interest expense 1,426 808 3,616 2,227
Interest income (2) 0 (118) (58)
----------- ----------- ----------- -----------
INTEREST EXPENSE, NET 1,424 808 3,498 2,169
EARNINGS BEFORE INCOME TAXES 6,461 3,982 12,224 9,107
Provision for income taxes 2,521 1,593 4,770 3,656
----------- ----------- ----------- -----------
NET EARNINGS $ 3,940 $ 2,389 $ 7,454 $ 5,451
=========== =========== =========== ===========
Earnings per common share
Basic $ 0.50 $ 0.36 $ 1.05 $ 0.83
Diluted $ 0.48 $ 0.36 $ 1.03 $ 0.81
Average common shares outstanding
Basic 7,914,611 6,578,579 7,099,019 6,561,448
Diluted 8,225,272 6,728,489 7,259,381 6,730,917
</TABLE>
4
<PAGE>
TRANSPORT CORPORATION OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 7,454 $ 5,451
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 14,577 11,435
Gain on disposition of equipment (239) (599)
Deferred income taxes 3,549 2,559
Changes in operating assets and liabilities, net
of acquisition:
Trade receivables (4,208) (4,901)
Other receivables 3,295 (3,202)
Operating supplies (261) 9
Prepaid expenses and tires (125) (435)
Accounts payable (645) 491
Due to independent contractors 1,257 582
Accrued expenses 5,294 2,216
----------- -----------
Net cash provided by operating activities 29,948 13,606
----------- -----------
INVESTING ACTIVITIES:
Payments for purchases of revenue equipment (36,919) (32,033)
Payments for purchases of property, other equipment,
and leasehold improvements (3,230) (7,263)
Acquisition of North Star, net of cash acquired (15,555) 0
Proceeds from disposition of equipment 3,767 5,689
----------- -----------
Net cash used in investing activities (51,937) (33,607)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 559 327
Payments for repurchase and retirement of common stock (66) (958)
Proceeds from issuance of long-term debt 10,577 25,308
Principal payments on long-term debt (33,968) (12,425)
Proceeds from issuance of notes payable to bank 61,350 26,960
Principal payments on notes payable to bank (21,350) (26,400)
Net checks issued in excess of cash balances 3,711 887
----------- -----------
Net cash provided by financing activities 20,813 13,699
----------- -----------
INCREASE (DECREASE) IN CASH (1,176) (6,302)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,383 6,341
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 207 $ 39
=========== ===========
Supplemental disclosure of cashflow information:
Cash paid during the period for:
Interest, net $ 3,190 $ 2,172
Income taxes, net 254 1,297
</TABLE>
During 1998 the Company issued 1.2 million shares at $16.89 per share totaling
$20.3 million as part of its acquisition of North Star
5
<PAGE>
TRANSPORT CORPORATION OF AMERICA, INC.
Notes to Consolidated Financial Statements
1. Interim Financial Statements (unaudited)
The unaudited interim consolidated 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 financial 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, 1997 and Form 8-K/A filed on September 11, 1998,
which describes the North Star Transport, Inc. ("North Star")
acquisition. The policies described in that report are used in
preparing quarterly reports. Certain balances from prior periods have
been reclassified to conform to current presentation.
The Company's business is seasonal. Operating results for
the nine month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1998.
2. New Accounting Pronouncements
The Company adopted SFAS No. 130, REPORTING COMPREHENSIVE
INCOME, in the first quarter of 1998. There were no components of
comprehensive income which require disclosure in any of the periods
presented herein.
3. Commitments
As of September 30, 1998 the Company had commitments for the
purchase of approximately $31.2 million of revenue equipment.
6
<PAGE>
4. Acquisition of North Star
On July 1, 1998, the Company completed its acquisition of
North Star, a private truckload carrier based in Eagan, Minnesota. The
purchase price consisted of $15.8 million cash and 1.2 million shares
of the Company's common stock valued at $20.3 million, for a total
purchase price of $36.1 million. The acquisition resulted in goodwill
of $23.9 million. The Company will amortize the goodwill over 25
years, its estimated useful life. The operations of North Star have
been included in the Company's operations since July 1, 1998. The
Company has integrated the North Star operations into those of the
Company during the quarter and therefore is not tracking separate
information on the specific impacts North Star's operations are having
on the Company's results.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three Months Ended September 30, 1998 and 1997
Consolidated operating revenues, increased 57.3% to $74.1
million for the quarter ended September 30, 1998 from $47.1 million
for the quarter ended September 30, 1997. Revenue growth from existing
customers, as well as additional revenues attributable to the North
Star acquisition, which became effective July 1, 1998, were the
primary factors of the revenue increase in the third quarter of 1998,
when compared to the year-ago period. The additional North Star
drivers, who were available throughout the current quarter, provided
significantly greater capacity in the third quarter of 1998. Revenues
per mile, at $1.28 per mile, were $0.01 higher than the same period a
year ago. As measured by average revenue per tractor per week,
equipment utilization improved 2.6% to $2,894 during the third quarter
of 1998, from $2,822 in the third quarter of 1997.
North Star utilized the services of independent contractors
for substantially all of its driver workforce. Following the North
Star acquisition, independent contractors represented a significantly
higher share of the Company's total driver workforce than in prior
periods. In addition to providing their own tractors, independent
contractors are responsible for operating expenses including repairs,
fuel and other direct costs associated with their equipment. As a
result of the greater proportion of independent contractors than in
prior periods, several expense categories declined as a percentage of
revenue, in the third quarter of 1998, offsetting an increase of
purchased transportation as a percentage of revenues, when compared to
the third quarter of 1997. At September 30, 1998 there were 958
independent contractors, compared to 442 a year prior.
7
<PAGE>
Pre-tax margin (earnings before income taxes as a percentage
of operating revenues) was 8.7% in the third quarter of 1998, compared
to 8.5% for the same period of 1997. As measured by average annualized
revenues per non-driver employee, efficiency improved 18.4% to
$645,300 for the third quarter of 1998, compared to $545,100 for the
same period of 1997. Salaries, wages, and benefits as a percentage of
operating revenues decreased to 25.0% in the third quarter of 1998,
compared to 28.6% for the same period of 1997. As a result of the
greater number of independent contractors in the third quarter of
1998, miles driven by independent contractors as percentage of total
miles driven increased substantially in the third quarter of 1998 when
compared to the third quarter of 1997. Accordingly, purchased
transportation increased as a percentage of operating revenues to
37.5% in the third quarter of 1998 from 29.1% for the same period of
1997. Fuel, maintenance, and other expenses was 9.7% of operating
revenues in the third quarter of 1998, compared to 13.3% in the third
quarter of 1997, reflecting the lower proportion of miles driven by
Company drivers, and the lower fuel prices in 1998. Revenue equipment
leases decreased as a percentage of operating revenues to 1.2% in the
third quarter of 1998 from 2.6% for the same period of 1997.
Depreciation and amortization for the third quarter of 1998 was 7.4%
of operating revenues, compared to 8.2% for the same period of 1997.
Insurance, claims, and damage for the third quarter of 1998 was 2.9%
of operating revenues, compared to 2.7% for the same period of 1997.
In the third quarter of 1998, gain on the disposition of
equipment was $180,000, compared to a gain of $240,000 in the same
period of 1997, due to the fewer number of dispositions in 1998, when
compared to 1997.
The effective tax rate for the third quarter of 1998 was
39.0%, compared to the 40.0% effective tax rate for the third quarter
of 1997. The lower effective rate in 1998 was primarily due to a
continued decline in Company per diem payments, which are not fully
deductible for income tax purposes, when compared to the third quarter
of 1997. 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
increased 64.9% to $3.9 million, or 5.3% of operating revenues for the
quarter ended September 30, 1998 from $2.4 million, or 5.1% of
operating revenues for the quarter ended September 30, 1997.
8
<PAGE>
Nine Months Ended September 30, 1998 and 1997
Consolidated operating revenues increased 29.0% to $176.6
million for the nine months ended September 30, 1998 from $136.9
million for the first nine months of 1997. Increases in freight
volumes from existing customers, combined with revenues associated
with the acquisition of North Star, which became effective July 1,
1998, were the primary factors of revenue growth. Revenues per mile
were $1.27 per mile in the first nine months of 1998, compared to
$1.28 per mile for the same period of 1997. Equipment utilization, as
measured by average revenues per tractor per week, was $2,881 during
the first nine months of 1998, compared to $2,873 for the same period
of 1997.
Because North Star utilized the services of independent
contractors for substantially all of its driver workforce, independent
contractors represented a significantly higher share of the total
driver workforce in the first nine months of 1998 than in prior
periods. Accordingly, purchased transportation increased as a
percentage of revenues in the first nine months of 1998, offsetting
declines as a percentage of revenues in several other expense
categories, when compared to the year-ago period.
Pre-tax margin (earnings before income taxes as a percentage
of operating revenues) rose to 6.9% in the first nine months of 1998
from 6.7% for the same period of 1997. Efficiency, as measured by
average annualized revenues per non-driver employee, increased 8.7% to
$589,100 for the first nine months of 1998 from $541,800 for the same
period of 1997. Salaries, wages, and benefits as a percentage of
operating revenues, at 28.1% in the first nine months of 1998,
approximated the year-ago nine month period. As a result of the
increase in the average number of contractors during the first nine
months of 1998, compared to the same period of 1997, miles driven by
independent contractors increased as a percentage of all miles driven.
Correspondingly, purchased transportation increased as a percentage of
operating revenues to 32.3% in the first nine months of 1998 from
29.9% for the same period of 1997. Fuel, maintenance, and other
expenses decreased as a percentage of operating revenues to 11.5% in
the first nine months of 1998 from 13.7% for the same period of 1997,
reflecting the increase of independent contractor miles as a percent
of total miles and somewhat lower fuel prices in 1998, compared to
1997. Revenue equipment leases decreased as a percentage of operating
revenues to 1.6% in the first nine months of 1998 from 2.8% for the
same period of 1997, primarily as a result of an increase in
independent contractors and the expanded use of debt financed
equipment.
9
<PAGE>
In the first nine months of 1998, gain on the disposition of
equipment was $239,000, compared to a gain of $599,000 in the first
nine months of 1997, due to the fewer number of equipment dispositions
in 1998, when compared to 1997.
The effective tax rate for the first nine months of 1998 was 39.0%,
compared to the 40.1% effective tax rate for the first nine months of
1997. The lower effective rate in 1998 is due to a decline in Company
per diem payments, which are not fully deductible for income tax
purposes, when compared to the first nine months of 1997. 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
increased to $7.5 million, or 4.2% of operating revenues, for the nine
months ended September 30, 1998 from $5.5 million, or 4.0% of
operating revenues, for the nine months ended September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $29.9 million
in the first nine months of 1998. The working capital deficit as of
September 30, 1998 was $2.5 million, compared to the $2.2 million
deficit which existed as of December 31, 1997. The working capital
deficits at September 30, 1998 and December 31, 1997 include $13.1
million and $19.1 million, respectively, of current maturities of
long-term debt associated with revenue equipment. Revenue equipment is
treated as a non-current asset on the balance sheet. The Company has
historically operated effectively with current liabilities in excess
of current assets through a combination of operating profits,
collections on accounts receivable, proceeds from the disposition of
equipment, and other cash management strategies.
Investing activities in the first nine months of 1998
consumed net cash of $51.9 million, including $15.6 million for the
acquisition of North Star, and $36.9 million for the purchase of 109
new tractors, 175 new trailers, land for a facility in Atlanta,
Georgia, as well as other equipment and improvements, net of $3.7
million of proceeds from the disposition of used equipment. As of
September 30, 1998 the Company had commitments for the purchase of
approximately $31.2 million of revenue equipment. The Company intends
to finance the purchase commitments with a combination of cash from
operations, proceeds from equipment dispositions, and its credit
facility.
Net cash provided by financing activities was $20.8 million
in the first nine months of 1998, including net borrowings of $40.0
million under the Company's credit facilities, proceeds of $10.6
million from the issuance of long-term debt associated with the
purchase of revenue equipment, less payments totaling $34.0 million
under the Company's term loan agreements.
10
<PAGE>
In August, 1998, the Company entered into an agreement with
seven major banks for an unsecured credit facility with maximum
borrowings of $100 million as a replacement to an expiring credit
facility. The credit agreement expires on March 30, 2001. During the
third quarter of 1998, the credit facility was used to retire
approximately $16.9 million of existing long-term debt and the
outstanding balance of the previous credit facility. In the future,
the facility will be used to meet working capital needs, make
purchases of revenue equipment and other assets, satisfy letter of
credit requirements associated with the Company's self-insured
retention arrangements, and for acquisitions. At September 30, 1998,
there were outstanding borrowings of $40.0 million and letters of
credit outstanding totaling $3.6 million under this program.
The Company expects to continue to fund its liquidity needs
and anticipated capital expenditures with cash flows from operations,
equipment dispositions, and the credit facility.
YEAR 2000
General state of readiness:
Transport America has instituted a Steering Committee (the
"Committee") to assess the readiness of the Company's systems to
accommodate Year 2000 ("Y2K") issues. The Committee, consisting of
senior management representing both technical and operating
departments, is charged with developing a project plan, detailed
management and remediation plans, as well as execution of these plans.
The Company is currently dependent upon systems that are not Y2K
compliant, including the Company's operations system, which is
critical to coordinate driver movements with customer needs and which
interacts with other internal accounting and operating systems as well
as external customer information systems. Development of a replacement
operations system commenced in 1997, and the coding and testing of
this system is substantially complete. Training and implementation is
anticipated to be completed in the second quarter of 1999. The
replacement system has been designed to provide operational
capabilities and enhancements not present in the current systems, in
addition to achieving Y2K compliance.
Under the guidance of the Committee, a preliminary inventory
and assessment of all systems has been prepared. The final assessment
is expected to be completed by the end of 1998. A remediation timeline
for non-compliant systems will be established once the assessment
process is complete.
11
<PAGE>
The Company is dependent upon system-based relationships
with outside parties, including customers, banks, payroll processors,
suppliers, communication service providers, and other business
partners. The Company has outlined its core business processes and
identified customers and vendors who are critical to these processes.
The Company is implementing a series of phone and printed surveys
which are being sent to these business partners to assess their Y2K
readiness. Responses to these surveys will be collected and
assessments made to determine the degree of impact on Company
operations, should any of these outside parties fail to achieve Y2K
compliance. Remediation, actions, and alternate procedures will be
developed to overcome any significant business partner issues
discovered as a result of the surveys.
Costs to address the Company's Y2K issues:
The Company believes that the costs of addressing internal
Y2K issues will not have a material adverse effect upon its results of
operations or financial condition. The major initiative, consisting of
replacing the operations system, is primarily directed at improving
operational effectiveness, with the added benefit of replacing a
non-Y2K compliant system. The Company has estimated that internal
costs associated with Y2K compliance will be $300,000, of which
approximately $200,000 has been incurred and expensed to date. The
potential financial impact on the Company resulting from the failure
of any of the Company's business partners to be Y2K compliant cannot
be estimated until the Company has received and evaluated responses to
its surveys of its business partners.
Risks associated with the Company's Y2K issues:
The Company's failure to implement Y2K compliant systems
could disrupt daily operations, impairing, for example, the Company's
ability to receive and record customer orders, coordinate driver
movements, and invoice customers, all of which could have a material
adverse effect upon the Company's results of operations and liquidity,
if prolonged. Although the Company believes alternate manual processes
exist that could temporarily minimize the disruption caused by a Y2K
failure, such processes would not likely be effective for a extended
period of time.
The Company is dependent upon third party resources which
are outside its direct control. Among the more critical of these is
the telecommunication system, upon which the Company depends to
receive customer orders and direct driver movements. Daily activities
are very dependent upon voice-based phone systems and satellite-based
communication systems. Failure of the voice-based phone system would
pose a critical loss of capabilities, only partially offset by
satellite communication options.
12
<PAGE>
Several critical relationships exist between the Company and
its customers, particularly those who electronically initiate order
transactions with the Company or interact directly with the Company's
systems. Failure of the Company's customers to achieve Y2K compliance
could jeopardize the Company's ability to transact business
electronically with those customers. In the event of a customer's Y2K
failure, the success of manual interim processes will be largely out
of the Company's control.
Contingency plans:
The Company is in the process of developing a comprehensive
Y2K Contingency Plan. The Committee is charged with developing such
contingency plan by the second /quarter of 1999.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, The FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("Statement No. 133"). Statement No. 133
requires that an enterprise recognize all derivatives as either assets
or liabilities in the statement of financial position and measure
those instruments at fair value. Statement No. 133 is effective for
all fiscal quarters and all fiscal years beginning after June 15,
1999. The Company is currently assessing the effect, if any, of
Statement No. 133 on its financial statements.
FORWARD-LOOKING STATEMENTS
The Company has included various statements in this
Management's Discussion and Analysis and Results Of Operations which
may be considered as forward-looking statements of expected future
results of operations or events made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements, based upon management's interpretation of currently
available information, are subject to risks and uncertainties that
could cause future financial results or events to differ materially
from those which are presented. Such risks and factors include general
economic conditions, competition in the transportation industry,
governmental regulation, the used revenue equipment market, the
Company's ability to recruit, train and retain qualified drivers, the
cost of fuels, customer decisions to meet their transportation needs,
the ability of the Company to maintain a higher level of service than
its competitors, the continued integration of its acquisition of North
Star, the ultimate success of TIE, adverse weather conditions, ability
of the Company or its business partners to achieve year 2000
compliance, and other factors outside the Company's control. The
Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.
13
<PAGE>
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Effective July 1, 1998, the Company issued an aggregate of 1.2 million
shares of its Common Stock to the shareholders of North Star as a
portion of the purchase price to acquire all of the outstanding
capital stock of North Star. The Common Stock was issued in reliance
of exemptions from registration under the Securities Act pursuant to
Regulation D. See the Current Report on Form 8-K referenced in Item
6(b) below.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit
Number Description Page
------ ----------- ----
10.1 Agreement dated as of August 14, 1998 to Credit
Agreement among The Banks Party Hereto, ABN-AMRO
Bank, N.V., and the Company, including Exhibits
A-1,A-2, and B (to be filed by amendment in a
subsequent Form 10-Q/A)............................
11.1 Statement re: Computation of Net Earnings per
Common Share.......................................
27 Financial Data Schedule............................
(b) Reports on Form 8-K:
A Form 8-K was filed on July 15, 1998, pertaining to the
acquisition of North Star Transport, Inc.
A Form 8-K/A was filed on September 11, 1998, pertaining to the
audited financial statements of North Star Transport, Inc and the
pro forma financial statements in connection with the Company's
acquisition of North Star.
14
<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.
TRANSPORT CORPORATION OF AMERICA, INC.
Date: November 10, 1998 /s/ Robert J. Meyers
------------------ ----------------------------------------------------
Robert J. Meyers
President and Chief Operating Officer
/s/ Michael D. Kandris
----------------------------------------------------
Michael D. Kandris
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
15
EXHIBIT 11.1
TRANSPORT CORPORATION OF AMERICA, INC.
Computation of Earnings per Common Share
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings $ 3,940,000 $ 2,389,000 $ 7,454,000 $ 5,451,000
- ------------------------------------------------------------------------------------------------------------
Average number of common
shares outstanding 6,714,611 6,578,579 6,699,019 6,561,448
Average number of common shares outstanding,
non-detachable put 1,200,000 0 400,000 0
- ------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding,
including non-detachable put 7,914,611 6,578,579 7,099,019 6,561,448
Dilutive effect of outstanding stock
options, warrants and non-detachable put 310,661 149,910 160,362 169,469
- ------------------------------------------------------------------------------------------------------------
Average number of common and common
equivalent shares outstanding 8,225,272 6,728,489 7,259,381 6,730,917
- ------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.50 $ 0.36 $ 1.05 $ 0.83
============================================================================================================
Diluted earnings per share $ 0.48 $ 0.36 $ 1.03 $ 0.81
============================================================================================================
</TABLE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 207,000
<SECURITIES> 0
<RECEIVABLES> 30,829,000
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<INVENTORY> 1,250,000
<CURRENT-ASSETS> 40,103,000
<PP&E> 193,714,000
<DEPRECIATION> 45,137,000
<TOTAL-ASSETS> 214,383,000
<CURRENT-LIABILITIES> 42,573,000
<BONDS> 70,354,000
0
0
<COMMON> 67,000
<OTHER-SE> 58,688,000
<TOTAL-LIABILITY-AND-EQUITY> 214,383,000
<SALES> 176,650,000
<TOTAL-REVENUES> 176,650,000
<CGS> 0
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<NET-INCOME> 7,454,000
<EPS-PRIMARY> 1.05
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</TABLE>
