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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 June 30, 1994
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 1-5728
ROLLINS TRUCK LEASING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0074022
(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 June 30, 1994 was 30,497,315.
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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 and nine months ended June 30, 1994 are not necessarily indicative of
the results that may be expected for the year ending September 30, 1994. 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, 1993.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
Operating revenues $ 115,823 $ 104,589 $ 330,378 $ 301,726
Operating expenses 46,253 41,779 135,626 126,130
Depreciation, net of gain on
disposition of property
and equipment 31,517 28,965 89,088 82,554
Selling and administrative
expenses 10,737 9,821 31,165 29,377
Interest expense, net 9,812 9,262 26,988 25,583
98,319 89,827 282,867 263,644
Earnings before income taxes 17,504 14,762 47,511 38,082
Income taxes 7,054 5,905 19,432 15,233
Net earnings $ 10,450 $ 8,857 $ 28,079 $ 22,849
Earnings per share $ .34 $ .29 $ .91 $ .74
Average common shares and
equivalents outstanding (000) 30,870 30,800
Dividends paid per common share $ .05 $ .04 1/2 $ .15 $ .13 1/2
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FORM 10-Q Page 3 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
June 30, September 30,
ASSETS 1994 1993
Current assets
Cash $ 16,540 $ 15,081
Accounts receivable, net of allowance for
doubtful accounts of: June-$1,617;
September-$1,620 48,710 48,917
Inventory of parts and supplies 8,200 8,679
Prepaid expenses 11,861 10,147
Deferred income taxes 8,874 7,331
Total current assets 94,185 90,155
Equipment on operating leases, at cost,
net of accumulated depreciation of:
June-$302,932; September-$289,836 625,045 543,396
Other property and equipment, at cost,
net of accumulated depreciation of:
June-$49,282; September-$43,674 138,482 124,170
Notes receivable - Matlack, Inc.
(including $900 due within one year) 6,000 6,000
Excess of cost over net assets of
businesses acquired 11,959 12,131
Other assets 5,061 5,309
$ 880,732 $ 781,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 6,013 $ 5,153
Accrued liabilities 38,649 38,310
Current maturities of long-term debt 144 209
Total current liabilities 44,806 43,672
Equipment financing obligations 491,588 427,307
Long-term debt 818 922
Other liabilities 7,994 9,158
Deferred income taxes 94,577 83,352
Commitments and contingent liabilities
See Part II, Item 1. Legal Proceedings
Shareholders' equity
Common stock, $1 par value, 50,000,000 shares
authorized; issued and outstanding:
June-30,497,315; September-30,362,903 30,497 30,363
Capital in excess of par value 35,569 35,016
Retained earnings 174,883 151,371
Total shareholders' equity 240,949 216,750
$ 880,732 $ 781,161
FORM 10-Q
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Nine Months Ended
June 30,
1994 1993
Cash flows from operating activities:
Net earnings $ 28,079 $ 22,849
Reconciliation of net earnings to net cash flows
from operating activities:
Depreciation and amortization 96,015 87,405
Current and deferred income taxes 9,537 4,591
Decrease in notes and accounts receivable 207 6,790
Increase in accounts payable and
accrued liabilities 1,199 23
Net gain on sale of property and equipment (6,755) (4,685)
Other, net (1,691) (877)
Net cash flows from operating activities 126,591 116,096
Cash flows from investing activities:
Purchase of property and equipment (231,753) (212,819)
Proceeds from sale of property and equipment 46,389 58,927
Net cash flows used in investing activities (185,364) (153,892)
Cash flows from financing activities:
Proceeds of equipment financing obligations 151,127 140,748
Repayment of equipment financing obligations (86,846) (96,700)
Repayment of long-term debt (169) (5,842)
Payments of dividends (4,567) (4,087)
Proceeds of stock options exercised 687 585
Net cash flows from financing activities 60,232 34,704
Net increase (decrease) in cash 1,459 (3,092)
Cash beginning of period 15,081 17,563
Cash end of period $ 16,540 $ 14,471
Supplemental information:
Interest paid $ 24,268 $ 24,324
Income taxes paid $ 9,895 $ 10,040
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FORM 10-Q Page 5 of 7
Item 2.Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations: Nine Months Ended June 30, 1994 vs. Nine Months Ended
June 30, 1993
Revenues increased by $28,652,000 (9.5%) as full-service lease, commercial
rental and dedicated carriage services revenues all improved over the first nine
months of 1993.
Operating expenses increased by $9,496,000 (7.5%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues decreased to 41.1%
in 1994 from 41.8% in 1993. Lower maintenance costs on new equipment and
continued expense control efforts accounted for the lower operating cost ratio.
Net depreciation expense increased by $6,534,000 (7.9%) due to the
increased gross investment in equipment on operating leases and transportation
service facilities offset in part by higher gains on equipment sales.
Selling and administrative expenses increased by $1,788,000 (6.1%) mainly
due to higher payroll costs and continued emphasis on sales and marketing
programs. Selling and administrative expenses decreased to 9.4% of revenues in
1994 from 9.7% of revenues in 1993.
Interest expense increased by $1,405,000 (5.5%) due to the increase in
average borrowings offset in part by the refinancing of certain higher interest
rate debt.
The effective income tax rates for first nine months of 1994 and 1993 were
40.9% and 40.0%, respectively.
Net earnings increased by $5,230,000 (22.9%) to $28,079,000 or $.91 per
share from $22,849,000 or $.74 per share in fiscal 1993. The improvement in net
earnings was due mainly to increased revenues and the lower operating cost ratio
offset in part by higher depreciation, selling and administrative and interest
expenses.
Results of Operations: Quarter Ended June 30, 1994 vs. Quarter ended June 30,
1993
Revenues increased by $11,234,000 (10.7%) due in large part to higher
utilization of the expanded commercial rental fleet. Revenues from full-service
lease and dedicated carriage services also improved during the third quarter.
Operating expenses increased by $4,474,000 (10.7%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues were 39.9% in 1994
and 1993. Lower maintenance costs on new equipment and continued expense
control efforts maintained the operating cost ratio.
Net depreciation expense increased by $2,552,000 (8.8%). Total
depreciation was higher due to the increased gross investment in equipment on
operating leases, offset in part by higher gains on equipment sales.
Selling and administrative expenses increased by $916,000 (9.3%) mainly due
to higher payroll costs and continued emphasis on sales and marketing programs.
Selling and administrative expenses were 9.3% of revenues in 1994 and 9.4% of
revenues in 1993.
Interest expense increased $550,000 (5.9%) due to the increase in average
borrowings offset in part by the refinancing of certain higher interest rate
debt.
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FORM 10-Q Page 6 of 7
The effective income tax rates for the third quarters of 1994 and 1993 were
40.3% and 40.0%, respectively.
Net earnings increased by $1,593,000 (18.0%) to $10,450,000 or $.34 per
share from $8,857,000 or $.29 per share in fiscal 1993. The improvement in net
earnings was due mainly to increased revenues, offset in part by the increase
in depreciation and selling and administrative expenses.
Liquidity and Capital Resources
The Company's property and equipment purchases of $231,753,000 during the
first nine months of fiscal 1994 were financed with its cash flow from
operations, the proceeds of equipment sales and borrowings under its revolving
credit facility.
On March 21, 1994, the Company sold $60,000,000 of 7% collateral Trust
Debentures, Series M, due March 15, 2001. The proceeds from this sale were used
to repay existing indebtedness under its $100,000,000 revolving credit
facility. In addition, the Company has a current shelf registration state-
ment under which it can sell an additional $140,000,000 of Collateral Trust
Debentures. Based on its access to the public debt market and relationships
with its current lending institutions and others who have expressed an interest
in providing financing, the Company expects to continue to be able to obtain
financing for its capital asset purchases at market rates and under satis-
factory terms and conditions.
Otherwise, there have been no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1993. For
further details, see page 4 of the Company's 1993 Annual Report on Form 10-K.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Company or any of its
subsidiaries is a party. Certain subsidiaries of the Company are involved in
ordinary routine litigation incidental to the operation of its businesses.
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.
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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: July , 1994 Rollins Truck Leasing Corp.
(Registrant)
______________________________________
John W. Rollins, Jr.
President and Chief Operating Officer
______________________________________
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
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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: July , 1994 Rollins Truck Leasing Corp.
(Registrant)
/s/ John W. Rollins, Jr.
John W. Rollins, Jr.
President and Chief Operating Officer
/s/ Patrick J. Bagley
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
