Page 1 of 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10105
MATLACK SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0310173
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Rollins Plaza, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
(302) 426-2700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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 _____
The number of shares of the registrant's common stock outstanding as
of March 31, 1995 was 8,795,832.
FORM 10-Q Page 2 of 7
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and 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 months and six months ended March 31, 1995
are not necessarily indicative of the results that may be expected for the
year ending September 30, 1995. These statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report to Shareholders and Form 10-K for the year ended
September 30, 1994.
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
Operating revenues $60,750 $54,679 $117,835 $104,579
Operating expenses 49,966 45,497 97,790 87,718
Depreciation 2,532 2,103 4,715 4,219
Selling and administrative
expenses 4,727 4,459 9,372 8,782
Interest expense 881 525 1,589 1,001
Other (income) loss (95) (128) (104) (368)
58,011 52,456 113,362 101,352
Earnings before income taxes 2,739 2,223 4,473 3,227
Income taxes 1,137 934 1,857 1,355
Net earnings $ 1,602 $ 1,289 $ 2,616 $ 1,872
Earnings per share $ .18 $ .14 $ .29 $ .21
Average common shares and
equivalents outstanding (000) 8,926 8,873
Dividends paid per share None None None None
<PAGE>
FORM 10-Q Page 3 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
March 31, September 30,
ASSETS 1995 1994
Current assets
Cash $ 2,448 $ 5,039
Accounts receivable, net of allowance
for doubtful accounts: March-$391;
September-$390 28,392 27,385
Inventory of tires, parts and supplies 6,967 7,267
Other current assets 4,427 3,073
Deferred income taxes 1,697 1,852
Total current assets 43,931 44,616
Property and equipment, at cost, net of
accumulated depreciation of:
March-$112,229; September-$131,482 89,085 77,771
Other assets 78 139
Total assets $133,094 $122,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 13,309 $ 15,748
Accrued liabilities 10,482 10,971
Income taxes payable 34 99
Current maturitites of equipment financing
obligations and long-term debt 6,117 5,656
Total current liabilities 29,942 32,474
Equipment financing obligations 32,577 22,103
Long-term debt 2,350 2,697
Other liabilities 4,589 4,702
Deferred income taxes 10,115 9,824
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized; issued
and outstanding - None
Common stock, $1 par value,
24,000,000 shares authorized; issued
and outstanding: March-8,795,832;
September-8,756,326 8,796 8,757
Capital in excess of par value 10,871 10,732
Retained earnings 33,854 31,237
Total shareholders' equity 53,521 50,726
Total liabilities and shareholders'
equity $133,094 $122,526
FORM 10-Q Page 4 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Six Months
Ended March 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 2,616 $ 1,872
Reconciliation of net earnings to
net cash flows from operating
activities:
Depreciation 4,715 4,219
Current and deferred income taxes 612 (308)
(Increase) in accounts receivable (1,007) (1,017)
(Decrease) increase in accounts payable
and accrued liabilities (2,928) 1,769
Net (gain) on sale of equipment (104) (368)
Other, net (1,337) (1,044)
Net cash flows from operating activities 2,567 5,123
Cash flows from investing activities:
Purchase of property and equipment (18,441) (8,941)
Proceeds from sale of equipment 2,516 743
Net cash flows used in investing
activities (15,925) (8,198)
Cash flows from financing activities:
Proceeds of equipment financing obligations 32,353 11,710
Repayment of equipment financing obligations (21,418) (6,999)
Proceeds of long-term debt - 1,000
Repayment of long-term debt (347) (2,449)
Exercise of stock options 179 192
Net cash flows from financing activities 10,767 3,454
Net (decrease) increase in cash (2,591) 379
Cash beginning of period 5,039 4,033
Cash end of period $ 2,448 $ 4,412
Supplemental information:
Interest paid $ 1,528 $ 951
Income taxes paid $ 1,245 $ 1,663
<PAGE>
FORM 10-Q Page 5 of 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Six Months Ended March 31, 1995 vs. Six Months
Ended March 31, 1994
Operating revenues for the first six months of 1995 increased by
$13,256,000 (12.7%). The number of loads carried increased by 7.2% while
total revenue miles increased by 12.1% in 1995. The Company's other
service revenues included in operating revenues also increased during the
first six months of 1995.
Operating expenses increased by $10,072,000 (11.5%) due mainly to costs
associated with the increase in loads carried and higher revenue miles.
Operating expenses decreased to 83.0% of revenues in 1995 compared with
83.9% in 1994.
Depreciation expense increased by $496,000 (11.8%) principally due to the
increase in capital expenditures associated with the Company's tractor
replacement program which is now substantially complete.
Selling and administrative expenses increased by $590,000 (6.7%)
reflecting the increased level of business. These expenses were 8.0% of
revenues in 1995 compared with 8.4% in 1994.
Interest expense increased by $588,000 (58.7%) due to higher levels of
borrowing associated with the Company's increased level of capital spending
and higher interest rates on short-term variable rate debt.
The effective income tax rates for the first six months of fiscal years
1995 and 1994 were 41.5% and 42.0%, respectively.
Net earnings increased by 39.7% to $2,616,000 or $.29 per share from
$1,872,000 or $.21 per share in 1994. The improvement in earnings resulted
from the higher revenue levels offset in part by higher depreciation and
interest expense.
Results of Operations: Three Months Ended March 31, 1995 vs. Three Months
Ended March 31, 1994
Operating revenues for the second quarter increased by $6,071,000 (11.1%)
over the same quarter of 1994. The number of loads carried increased by
4.6% and the revenue per load increased slightly. Other services revenues
included in operating revenues also increased during the second quarter.
On a combined basis, operating expenses and depreciation increased by
$4,898,000 (10.3%) and were 86.4% of revenues in 1995 compared with 87.1%
in 1994. The percentage decrease when compared with revenues reflects the
higher revenue levels and the Company's continued cost containment efforts
offset in part by higher levels of depreciation.
Operating expenses increased by $4,469,000 (9.8%) reflecting the increase
in revenues. Operating expenses decreased to 82.2% of revenues in 1995
compared with 83.2% in 1994.
Depreciation expense increased by $429,000 (20.4%) due to the increase
in capital expenditures associated with the Company's tractor replacement
program.
Selling and administrative expenses increased by $268,000 (6.0%)
reflecting the higher level of revenues. As a percentage of revenues,
selling and administrative expenses were 7.8% of revenues in 1995 compared
with 8.2% in 1994.
FORM 10-Q Page 6 of 7
Interest expense increased by $356,000 (67.8%) due mainly to increased
borrowing related to the higher level of capital spending in 1995 versus
1994 and higher interest rates on short-term variable rate debt.
The effective income tax rates for the three months ended March 31, 1995
and 1994 were 41.5% and 42.0%, respectively.
Net earnings increased by 24.3% to $1,602,000 or $.18 per share from
$1,289,000 or $.14 per share. The increase in earnings resulted from an
improved operating margin on the higher revenue base.
Liquidity and Capital Resources
During the first six months of fiscal 1995, the Company financed its
capital additions through a combination of increased borrowings under its
revolving credit agreement, cash flows from operations, proceeds from
equipment sales and available cash. Additionally, on March 15, 1995, the
Company repaid its note payable to Rollins Truck Leasing Corp. in the
amount of $6,000,000. At March 31, 1995, a total of $8,800,000 was
available to the Company under its $30,000,000 revolving credit facility.
Otherwise, there have been no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1994.
For further details, see page 7 of the Company's 1994 Annual Report to
Shareholders.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are various claims and legal actions pending against the Company.
In the opinion of management, based on the advice of counsel, the outcome
of such claims and litigation will not have a material adverse effect upon
the Company's financial position or results of operations.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None required to be reported.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
FORM 10-Q Page 7 of 7
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.
DATE: April , 1995 MATLACK SYSTEMS, INC.
(Registrant)
________________________________
John W. Rollins, Jr.
Chairman of the Board
________________________________
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
FORM 10-Q Page 7 of 7
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.
DATE: April , 1995 MATLACK SYSTEMS, INC.
(Registrant)
/s/ John W. Rollins, Jr.
John W. Rollins, Jr.
Chairman of the Board
/s/ Patrick J. Bagley
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] MAR-31-1995
[CASH] 2,448
[SECURITIES] 0
[RECEIVABLES] 28,783
[ALLOWANCES] (391)
[INVENTORY] 6,967
[CURRENT-ASSETS] 43,931
[PP&E] 89,085
[DEPRECIATION] (112,229)
[TOTAL-ASSETS] 133,094
[CURRENT-LIABILITIES] 29,942
[BONDS] 34,927
[COMMON] 8,796
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 44,725
[TOTAL-LIABILITY-AND-EQUITY] 133,094
[SALES] 117,835
[TOTAL-REVENUES] 117,835
[CGS] 0
[TOTAL-COSTS] 102,505
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,589
[INCOME-PRETAX] 4,473
[INCOME-TAX] 1,857
[INCOME-CONTINUING] 2,616
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 2,616
[EPS-PRIMARY] .29
[EPS-DILUTED] .29
</TABLE>
