Page 1 of 8
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, 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)
(Former name of registrant)
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, 1994 was 30,468,197.
FORM 10-Q Page 2 of 8
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, 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 on 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)
Three Months Ended Six Months Ended
March 31, March 31,
1994 1993 1994 1993
Operating revenues $107,111 $97,042 $214,555 $197,137
Operating expenses 45,445 41,950 89,373 84,351
Depreciation, net of gain
on disposition of
property and equipment 28,257 26,334 57,571 53,589
Selling and administrative
expenses 10,851 9,839 20,428 19,556
Interest expense, net 8,747 8,096 17,176 16,321
93,300 86,219 184,548 173,817
Earnings before income taxes 13,811 10,823 30,007 23,320
Income taxes 5,656 4,329 12,378 9,328
Net earnings $ 8,155 $ 6,494 $ 17,629 $ 13,992
Earnings per share $ .26 $ .21 $ .57 $ .45
Average common shares
and equivalents
outstanding (000) 30,897 30,808
Dividends paid per
common share $ .05 $ .045 $ .10 $ .09
<PAGE>
FORM 10-Q Page 3 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
March 31, September 30,
ASSETS 1994 1993
Current assets
Cash $ 10,943 $ 15,081
Accounts receivable, net of allowance for doubtful
accounts of: March-$1,226; September-$1,620 51,118 48,917
Inventory of parts and supplies 8,491 8,679
Prepaid expenses 13,661 10,147
Deferred income taxes 8,357 7,331
Total current assets 92,570 90,155
Equipment on operating leases, at cost,
net of accumulated depreciation of:
March-$294,570; September-$289,836 611,458 543,396
Other property and equipment, at cost,
net of accumulated depreciation of:
March-$46,161; September-$43,674 130,483 124,170
Notes receivable - Matlack, Inc.
(including $900 due within one year) 6,000 6,000
Excess of cost over net assets of
businesses acquired 12,020 12,131
Other assets 5,515 5,309
$858,046 $781,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding
equipment financing obligations)
Accounts payable $ 6,438 $ 5,153
Accrued liabilities 34,961 38,310
Income taxes payable 938 -
Current maturities of long-term debt 166 209
Total current liabilities 42,503 43,672
Equipment financing obligations 485,614 427,307
Long-term debt 853 922
Deferred income taxes 88,771 83,352
Other liabilities 8,393 9,158
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value, 50,000,000 shares
authorized; issued and outstanding:
March-30,468,197; September-30,362,903 30,468 30,363
Capital in excess of par value 35,486 35,016
Retained earnings 165,958 151,371
Total shareholders' equity 231,912 216,750
$858,046 $781,161
<PAGE>
FORM 10-Q Page 4 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Six Months Ended
March 31,
1994 1993
Cash flows from operating activities:
Net earnings $ 17,629 $ 13,992
Reconciliation of net earnings to
net cash flows from operating activities:
Depreciation and amortization 62,470 57,287
Current and deferred income taxes 5,331 1,479
(Increase) decrease in accounts and
notes receivable (2,201) 3,995
(Decrease) in accounts payable and
accrued liabilities (2,064) (470)
Net gain on sale of property and equipment (4,788) (3,587)
Other, net (3,983) (4,016)
Net cash flows from operating activities 72,394 68,680
Cash flows from investing activities:
Purchase of property and equipment (175,563) (148,772)
Proceeds from sale of property and equipment 43,303 41,096
Net cash flows used in investing activities (132,260) (107,676)
Cash flows from financing activities:
Proceeds of equipment financing 127,499 119,999
Repayment of equipment financing (69,192) (83,549)
Repayment of long-term debt (112) (1,430)
Payment of dividends (3,042) (2,722)
Proceeds of stock options exercised 575 548
Net cash flows from financing activities 55,728 32,846
Net decrease in cash (4,138) (6,150)
Cash beginning of period 15,081 17,563
Cash end of period $ 10,943 $ 11,413
Supplemental information:
Interest paid $ 16,920 $ 16,293
Income taxes paid $ 7,047 $ 7,848
FORM 10-Q Page 5 of 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Six Months Ended March 31, 1994 vs. Six Months Ended
March 31, 1993
Revenues increased by $17,418,000 (8.8%) as full-service lease, commercial
rental and dedicated contract carriage revenues all improved over the first six
months of last year.
Operating expenses increased by $5,022,000 (6.0%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues decreased to 41.7%
in 1994 from 42.8% in 1993 as operating expenses increased at a lower rate than
revenues.
Net depreciation expense increased by $3,982,000 (7.4%) due to the
increased investment in equipment on operating leases and transportation service
facilities offset in part by higher gains on sale of equipment.
Selling and administrative expenses increased by $872,000 (4.5%) due mainly
to the higher compensation costs of an expanded sales force and continued
emphasis on sales and marketing programs. Selling and administrative expenses
were 9.5% of revenues in 1994 and 9.9% of revenues in 1993.
Interest expense increased by $855,000 (5.2%) due to the increase in
borrowings related to the purchase of additional equipment, offset in part by
the refinancing of certain higher interest rate debt.
The estimated effective income tax rates for fiscal years 1994 and 1993
were 41.25% and 40.0%, respectively.
Net earnings increased by $3,637,000 (26.0%) to $17,629,000 or $.57 per
share from $13,992,000 or $.45 per share in fiscal 1993. The increase in net
earnings was due mainly to the increased revenues and the lower operating cost
ratio offset in part by higher depreciation expense and taxes on income.
Results of Operations: Three Months Ended March 31, 1994 vs. Three Months Ended
March 31, 1993
Revenues increased by $10,069,000 (10.4%) as full-service lease, commercial
rental and dedicated contract carriage revenues all improved over the same
quarter last year.
Operating expenses increased by $3,495,000 (8.3%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues decreased to 42.4%
in 1994 from 43.2% in 1993 as operating expenses increased at a lower rate than
revenues.
Net depreciation expense increased by $1,923,000 (7.3%). Total
depreciation was higher due to the increased gross investment in equipment on
operating leases and transportation service facilities, however, the increase
was offset in part by higher gains on sale of equipment.
Selling and administrative expenses increased by $1,012,000 (10.3%) due
mainly to the higher compensation costs of an expanded sales force and continued
emphasis on sales and marketing programs. Selling and administrative expenses
were 10.1% of revenues in both 1994 and 1993.
FORM 10-Q Page 6 of 8
Interest expense increased by $651,000 (8.0%) due to the increase in
borrowings related to the purchase of additional equipment, offset in part by
the refinancing of higher interest rate debt.
Net earnings increased by $1,661,000 (25.6%) to $8,155,000 or $.26 per
share from $6,494,000 or $.21 per share in fiscal 1993. The increase in net
earnings was due mainly to the increased revenues and lower operating cost ratio
offset in part by higher depreciation, selling and administrative expense and
taxes on income.
Liquidity and Capital Resources
The Company's property and equipment purchases of $175,563,000 during the
first six 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 statement
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
satisfactory 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 business.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on January 27, 1994.
The Company's 1993 Stock Option Plan was approved as proposed by Proposal No.
2 included in the NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY
27, 1994. At the meeting 25,796,872 affirmative votes and 308,762 negative
votes were cast on Proposal No. 2 while 96,796 shares abstained.
FORM 10-Q Page 7 of 8
Item 5. Other Information
The unaudited condensed consolidated statement of earnings for the twelve
months ended March 31, 1994 shown below has been included in accordance with the
provisions of Section 11(a) of the Securities Act of 1933. This statement has
been prepared in accordance with the instructions to Form 10-Q and does 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.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Twelve Months Ended
March 31, 1994
Operating revenues $426,196
Operating expenses 172,270
Depreciation, net of gain on disposition
of property and equipment 115,987
Selling and administrative expenses 41,312
Interest expense, net 35,283
364,852
Earnings before income taxes 61,344
Income taxes 27,291
Net earnings $ 34,053
Earnings per share $ 1.11
Dividends paid per common share $ .19
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 4 - Instrument defining rights of security holders.
Twelfth Supplemental Collateral Trust Indenture dated March 15, 1994
to the Collateral Trust Indenture dated March 21, 1983 as
supplemented and amended by a Third Supplemental Indenture thereto
dated February 20, 1986 and by an Eighth Supplemental Indenture dated
as of May 15, 1990 between Rollins Truck Leasing Corp. and
Continental Bank N.A., as Trustee, as filed with the Company's
current report on Form 8-K dated March 21, 1994, is incorporated
herein by reference.
(b) Reports on Form 8-K.
On March 21, 1994, a report on Form 8-K was filed in connection with
the sale of $60,000,000 of the Company's 7% Collateral Trust
Debentures, Series M, due March 15, 2001, which were sold through
Merrill, Lynch, Pierce, Fenner & Smith Incorporated, sole underwriter
under the terms of an Underwriting Agreement which was filed as an
Exhibit to the Form 8-K and pursuant to Registration Statement No.
33-67682 filed with the Securities and Exchange Commission on August
20, 1993 and which was declared effective on September 8, 1993.
FORM 10-Q Page 8 of 8
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 25, 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
FORM 10-Q Page 8 of 8
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 25, 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
