Page 1 of 9
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 1-5728
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, 1995 was 45,860,964.
FORM 10-Q Page 2 of 9
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 on Form 10-K for the year
ended September 30, 1994.
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,
1995 1994 1995 1994
Revenues $116,671 $107,111 $235,750 $214,555
Expenses:
Operating 48,137 45,445 94,732 89,373
Depreciation 35,569 31,104 70,992 62,359
Gain on sale of property
and equipment (3,959) (2,847) (6,705) (4,788)
Selling and administrative 10,802 10,851 21,507 20,428
90,549 84,553 180,526 167,372
Earnings before interest
and income taxes 26,122 22,558 55,224 47,183
Interest income (148) (148) (272) (296)
Interest expense 10,914 8,895 21,080 17,472
Earnings before income taxes 15,356 13,811 34,416 30,007
Income taxes 6,083 5,656 13,634 12,378
Net earnings $ 9,273 $ 8,155 $ 20,782 $ 17,629
Earnings per share $ .20 $ .17* $ .45 $ .38*
Average common shares
and equivalents
outstanding (000) 46,392 46,346*
Dividends paid per
common share $ .04 $ .033* $ .08 $ .066*
* Adjusted for the three-for-two common stock split distributed on
September 15, 1994.
FORM 10-Q Page 3 of 9
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
March 31, September 30,
ASSETS 1995 1994
Current assets
Cash $ 17,621 $ 15,094
Accounts receivable, net of allowance for
doubtful accounts of: March-$1,551;
September-$1,770 52,118 52,031
Inventory of parts and supplies 8,043 8,558
Prepaid expenses 19,090 12,726
Refundable income taxes - 2,571
Deferred income taxes 6,042 11,472
Total current assets 102,914 102,452
Equipment on operating leases, at cost,
net of accumulated depreciation of:
March-$319,206; September-$313,582 705,622 637,768
Other property and equipment, at cost,
net of accumulated depreciation of:
March-$54,307; September-$51,122 158,455 146,618
Note receivable - Matlack, Inc. - 6,000
Excess of cost over net assets of
businesses acquired 11,790 11,903
Other assets 5,383 4,976
Total assets $984,164 $909,717
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding
equipment financing obligations)
Accounts payable $ 6,959 $ 7,205
Accrued liabilities 37,215 40,114
Income taxes payable 960 -
Current maturities of long-term debt 145 146
Total current liabilities 45,279 47,465
Equipment financing obligations 557,792 498,365
Long-term debt 708 782
Other liabilities 10,222 8,898
Deferred income taxes 101,572 103,010
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value, 100,000,000 shares
authorized; issued and outstanding:
March-45,860,964; September-45,770,678 45,861 45,771
Capital in excess of par value 20,507 20,319
Retained earnings 202,223 185,107
Total shareholders' equity 268,591 251,197
Total liabilities and shareholders' equity $984,164 $909,717
FORM 10-Q Page 4 of 9
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Six Months Ended
March 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 20,782 $ 17,629
Reconciliation of net earnings to
net cash flows from operating activities:
Depreciation and amortization 71,106 62,470
Current and deferred income taxes 7,522 5,331
Decrease (increase) in accounts and
notes receivable 5,913 (2,201)
(Decrease) in accounts payable and
accrued liabilities (3,146) (2,064)
Net gain on sale of property and equipment (6,705) (4,788)
Other, net (4,932) (3,983)
Net cash flows from operating activities 90,540 72,394
Cash flows from investing activities:
Purchase of property and equipment (180,524) (175,563)
Proceeds from sale of property and equipment 36,546 43,303
Net cash flows used in investing activities (143,978) (132,260)
Cash flows from financing activities:
Proceeds of equipment financing 165,628 127,499
Repayment of equipment financing (106,201) (69,192)
Repayment of long-term debt (75) (112)
Payment of dividends (3,666) (3,042)
Proceeds of stock options exercised 279 575
Net cash flows from financing activities 55,965 55,728
Net increase (decrease) in cash 2,527 (4,138)
Cash beginning of period 15,094 15,081
Cash end of period $ 17,621 $ 10,943
Supplemental information:
Interest paid $ 20,608 $ 16,920
Income taxes paid $ 6,112 $ 7,047
FORM 10-Q Page 5 of 9
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
Revenues increased by $21,195,000 (9.9%) 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 $5,359,000 (6.0%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues decreased to 40.2%
in 1995 from 41.7% in 1994 as operating expenses increased at a lower rate than
revenues.
Depreciation expense increased by $8,633,000 (13.8%) due to the increased
investment in equipment on operating leases and related transportation service
facilities. The higher levels of investment in property and equipment reflect,
in addition to the higher level of business, increased prices for recently
acquired capital assets.
Gain on the sale of property and equipment increased by $1,917,000 (40.0%)
principally as a reflection of the continued demand in the market for used
transportation equipment.
Selling and administrative expenses increased by $1,079,000 (5.3%) due
mainly to the higher compensation costs and selling-related expenses associated
with the higher level of revenues. Selling and administrative expenses were
9.1% of revenues in 1995 and 9.5% of revenues in 1994.
Interest expense increased by $3,608,000 (20.7%) due to the increase in
borrowings related to the purchase of additional equipment and higher interest
rates on short-term variable rate debt.
The effective income tax rates for fiscal years 1995 and 1994 were 39.6%
and 41.3%, respectively.
Net earnings increased by $3,153,000 (17.9%) to $20,782,000 or $.45 per
share from $17,629,000 or $.38 per share in fiscal 1994. The increase in net
earnings was due mainly to the increased revenues, the lower operating cost
ratio and higher gains on the sale of property and equipment 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
Revenues increased by $9,560,000 (8.9%) as full-service lease, commercial
rental and dedicated contract carriage revenues all improved over the same
quarter last year.
Operating expenses increased by $2,692,000 (5.9%) reflecting the increase
in revenues. Operating expenses as a percentage of revenues decreased to 41.3%
in 1995 from 42.4% in 1994 as operating expenses increased at a lower rate than
revenues.
FORM 10-Q Page 6 of 9
Depreciation expense increased by $4,465,000 (14.4%) due to the increased
investment in equipment on operating leases and related transportation service
facilities. The higher levels of investment in property and equipment reflect,
in addition to the higher level of business, increased prices for recently
acquired capital assets.
Gain on the sale of property and equipment increased by $1,112,000 (39.1%)
principally as a reflection of the continued demand in the market for used
transportation equipment.
Selling and administrative expenses remained at about the same levels as
experienced for the second quarter of fiscal 1994. Selling and administrative
expenses were 9.2% of revenues in 1995 and 10.1% of revenues in 1994. The
decreased percentage reflects the higher level of revenues.
Interest expense increased by $2,019,000 (22.7%) due to the increase in
borrowings related to the purchase of additional equipment and higher interest
rates on short-term variable rate debt.
Net earnings increased by $1,118,000 (13.7%) to $9,273,000 or $.20 per
share from $8,155,000 or $.17 per share in fiscal 1994. The increase in net
earnings was due mainly to the increased revenues, a higher gain on the disposal
of equipment and the lower operating cost ratio offset in part by higher
depreciation and interest expense.
Liquidity and Capital Resources
The Company's property and equipment purchases of $180,524,000 during the
first six months of fiscal 1995 were financed with its cash flow from
operations, the proceeds of equipment sales and borrowings under its revolving
credit facility.
On March 15, 1995, the Company closed on its previously announced private
placement of $100,000,000 of 8.27% Collateral Trust Debentures, Series N, due
March 15, 2002. The proceeds from this sale were used to repay existing
indebtedness under its $100,000,000 revolving credit facility and to redeem
$50,000,000 of outstanding Series G, 9 7/8% Collateral Trust Debentures. On the
same date, the Company received the final payment of $6,000,000 on a note from
Matlack, Inc., a former subsidiary. 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, 1994. For
further details, see page 4 of the Company's Annual Report on Form 10-K for the
year ended September 30, 1994.
FORM 10-Q Page 7 of 9
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 26, 1995.
An amendment of the Company's Certificate of Incorporation which increased to
100,000,000 shares of Common Stock, par value $1.00 per share, that the Company
is authorized to issue was approved. The amendment was approved as proposed by
Proposal No. 2 included in the NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON JANUARY 26, 1995. At the meeting 35,268,912 affirmative votes and
814,833 negative votes were cast on Proposal No. 2 while 229,288 shares
abstained.
FORM 10-Q Page 8 of 9
Item 5. Other Information
The unaudited condensed consolidated statement of earnings for the twelve
months ended March 31, 1995 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, 1995
Revenues $472,098
Expenses:
Operating 188,581
Depreciation 139,145
Gain on sale of property
and equipment (10,447)
Selling and administrative 43,552
360,831
Earnings before interest and
income taxes 111,267
Interest income (568)
Interest expense 41,036
Earnings before income taxes 70,799
Income taxes 27,818
Net earnings $ 42,981
Earnings per share $ .93
Dividends paid per common share $ .146
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 4 - Instrument defining rights of security holders.
Thirteenth Supplemental Collateral Trust Indenture dated March 15,
1995 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 Bank of
America Illinois, as Trustee, was executed in connection with the
Company's private placement of $100,000,000 of 8.27% Series N
Collateral Trust Debentures due March 15, 2002. The Company arranged
for the private placement on September 21, 1994 as previously
disclosed on page 19 of the Company's Annual Report on Form 10-K for
the year ended September 30, 1994.
(b) Reports on Form 8-K.
None.
FORM 10-Q Page 9 of 9
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 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 9 of 9
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 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
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