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 December 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 December 31, 1995 was 8,803,218.
<PAGE>
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 quarter ended December 31, 1995 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1996. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1995.
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended
December 31,
1995 1994
Revenues $55,562 $57,085
Operating expenses 46,820 47,824
Depreciation 2,935 2,183
Selling and administrative expenses 4,540 4,645
Interest expense 790 708
Other expense (income) 8 (9)
55,093 55,351
Earnings before income taxes 469 1,734
Income taxes 195 720
Net earnings $ 274 $ 1,014
Earnings per share $ .03 $ .11
Average common shares and equivalents
outstanding (000) 8,883 8,887
Dividends paid per share None None
<PAGE>
FORM 10-Q Page 3 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
December 31, September 30,
ASSETS 1995 1994
Current assets
Cash $ 2,385 $ 2,845
Accounts receivable, net of allowance for
doubtful accounts: December-$391;
September-$391 23,677 24,688
Inventory of tires, parts and supplies 5,889 6,307
Other current assets 4,721 3,071
Deferred income taxes 1,500 1,586
Total current assets 38,172 38,497
Property and equipment, at cost, net of
accumulated depreciation of:
December-$118,128; September-$115,351 92,272 93,454
Other assets 22 23
Total assets $130,466 $131,974
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 10,106 $ 10,603
Accrued liabilities 8,325 9,146
Income taxes payable 75 53
Current maturities of equipment financing
obligations and long-term debt 6,196 6,169
Total current liabilities 24,702 25,971
Equipment financing obligations 31,107 31,065
Long-term debt 1,607 1,905
Insurance reserves 1,462 1,795
Other liabilities 2,302 2,157
Deferred income taxes 11,471 11,549
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:
December-8,803,218 and
September-8,800,050 8,803 8,800
Capital in excess of par value 10,899 10,894
Retained earnings 38,113 37,838
Total shareholders' equity 57,815 57,532
Total liabilities and shareholders' equity $130,466 $131,974
FORM 10-Q Page 4 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Quarter Ended
December 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 274 $ 1,014
Reconciliation of net earnings to net
cash flows from operating activities:
Depreciation 2,935 2,183
Changes in assets and liabilities:
Accounts receivable 1,011 432
Inventories and other assets (1,231) (2,247)
Accounts payable and accrued liabilities (1,318) (5,968)
Current and deferred income taxes 30 562
Other, net (180) 50
Net cash provided by (used in) operating activities 1,521 (3,974)
Cash flows from investing activities:
Purchase of property and equipment (1,786) (12,907)
Proceeds from sale of equipment 25 1,546
Net cash used in investing activities (1,761) (11,361)
Cash flows from financing activities:
Proceeds of equipment financing obligations 6,250 24,352
Repayment of equipment financing obligations (6,181) (10,252)
Repayment of long-term debt (298) (282)
Exercise of stock options 9 103
Net cash (used in) provided by financing activities (220) 13,921
Net (decrease) in cash (460) (1,414)
Cash beginning of period 2,845 5,039
Cash end of period $ 2,385 $ 3,625
Supplemental information:
Interest paid $ 768 $ 530
Income taxes paid $ 165 $ 157
<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: Quarter Ended December 31, 1995 vs. Quarter Ended
December 31, 1994
Revenues for the quarter ended December 31, 1995 decreased by
$1,523,000 (2.7%). The lower revenues reflects a 6% decrease in the number
of loads carried as well as a lower revenue per load. Competitive pricing
and excess industry capacity, both results of continued sluggish economic
conditions, negatively affected revenue. Improvements in the Company's
ancillary businesses were not sufficient to offset the decline in the
domestic trucking business.
Operating expenses decreased by $1,004,000 (2.1%) reflecting the
decrease in revenues. Operating expenses as a percentage of revenues
increased to 84.3% in 1995 from 83.8% in 1994.
Depreciation expense increased by $752,000 (34.4%) due to the increase
in capital expenditures associated with the tractor replacement program,
which was completed in fiscal year 1995.
Selling and administrative expenses decreased by $105,000 (2.3%) due
mainly to the lower level of business. Selling and administrative expenses
were 8.2% of revenues in 1995 and 8.1% in 1994.
Interest expense increased $82,000 (11.6%) due mainly to increased
borrowings related to the higher level of capital spending incurred
throughout fiscal year 1995.
The effective income tax rates for the quarter ended December 31, 1995
and 1994 were 41.6% and 41.5%, respectively.
Net earnings decreased to $274,000 or $.03 per share from $1,014,000
or $.11 per share in the prior year. The decrease in earnings resulted
principally from the lower revenues.
Liquidity and Capital Resources
During the first three months of fiscal 1996, the Company financed its
capital expenditures through a combination of cash flows from operations,
available cash and increased borrowings under its revolving credit
agreement. At December 31, 1995, a total of $6,124,000 was available to
the Company under its $30,000,000 revolving credit facility.
Otherwise, there were no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1995.
For further details, see pages 3 and 4 of the Company's 1995 Annual Report
to Shareholders on Form 10-K for the year ended September 30, 1995.
FORM 10-Q Page 6 of 7
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.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
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: January 23, 1996 MATLACK SYSTEMS, INC.
(Registrant)
/s/ G. J. Trippitelli
G. J. Trippitelli
President and Chief Executive Officer
/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] 3-MOS
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-END] DEC-31-1995
[CASH] 2,385
[SECURITIES] 0
[RECEIVABLES] 24,068
[ALLOWANCES] (391)
[INVENTORY] 5,889
[CURRENT-ASSETS] 38,172
[PP&E] 210,400
[DEPRECIATION] (118,128)
[TOTAL-ASSETS] 130,466
[CURRENT-LIABILITIES] 24,702
[BONDS] 32,714
[COMMON] 8,803
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 49,012
[TOTAL-LIABILITY-AND-EQUITY] 130,466
[SALES] 55,562
[TOTAL-REVENUES] 55,562
[CGS] 0
[TOTAL-COSTS] 49,755
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 790
[INCOME-PRETAX] 469
[INCOME-TAX] 195
[INCOME-CONTINUING] 274
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 274
[EPS-PRIMARY] .03
[EPS-DILUTED] .03
</TABLE>
