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 June 30, 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 June 30, 1995 was 45,510,361.
<PAGE>
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 quarter and nine months
ended June 30, 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)
Quarter Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenue $122,726 $115,823 $358,476 $330,378
Expenses:
Operating 48,891 46,253 143,623 135,626
Depreciation 37,439 33,484 108,431 95,843
Gain on sale of property
and equipment (3,641) (1,967) (10,346) (6,755)
Selling and administrative 10,572 10,737 32,079 31,165
93,261 88,507 273,787 255,879
Earnings before interest and
income taxes 29,465 27,316 84,689 74,499
Interest income - (148) (272) (444)
Interest expense 11,655 9,960 32,735 27,432
Earnings before income taxes 17,810 17,504 52,226 47,511
Income taxes 6,577 7,054 20,211 19,432
Net earnings $ 11,233 $ 10,450 $ 32,015 $ 28,079
Earnings per share $ .25 $ .23 $ .70 $ .61
Average common shares and
equivalents outstanding (000) 45,940 46,305*
Dividends paid per common share $ .04 $ .033* $ .12 $ .10*
* Adjusted for the three-for-two common stock split distributed on
September 15, 1994.
<PAGE>
FORM 10-Q Page 3 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
June 30, September 30,
ASSETS 1995 1994
Current assets
Cash $ 16,562 $ 15,094
Accounts receivable, net of allowance for
doubtful accounts of: June-$1,579;
September-$1,770 52,889 52,031
Inventory of parts and supplies 8,015 8,558
Prepaid expenses 14,946 12,726
Refundable income taxes - 2,571
Deferred income taxes 6,042 11,472
Total current assets 98,454 102,452
Equipment on operating leases, at cost,
net of accumulated depreciation of:
June-$323,119; September-$313,582 726,657 637,768
Other property and equipment, at cost,
net of accumulated depreciation of:
June-$56,717; September-$51,122 163,960 146,618
Notes receivable - Matlack, Inc. - 6,000
Excess of cost over net assets of
businesses acquired 11,734 11,903
Other assets 5,724 4,976
Total assets $1,006,529 $909,717
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 5,790 $ 7,205
Accrued liabilities 42,351 40,114
Current maturities of long-term debt 148 146
Total current liabilities 48,289 47,465
Equipment financing obligations 564,765 498,365
Long-term debt 670 782
Other liabilities 10,230 8,898
Deferred income taxes 108,497 103,010
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value, 100,000,000 shares
authorized, issued and outstanding:
June-45,510,361; September-45,770,678 45,510 45,771
Capital in excess of par value 16,947 20,319
Retained earnings 211,621 185,107
Total shareholders' equity 274,078 251,197
Total liabilities and
shareholders' equity $1,006,529 $909,717
<PAGE>
FORM 10-Q Page 4 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Nine Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net earnings $ 32,015 $ 28,079
Reconciliation of net earnings to net
cash flows from operating activities:
Depreciation and amortization 108,600 96,015
Current and deferred income taxes 13,473 9,537
Decrease in accounts and notes receivable 5,142 207
Increase in accounts payable and
accrued liabilities 822 1,199
Net gain on sale of property and equipment (10,346) (6,755)
Other, net (1,078) (1,691)
Net cash flows from operating activities 148,628 126,591
Cash flows from investing activities:
Purchase of property and equipment (258,040) (231,753)
Proceeds from sale of property and equipment 53,724 46,389
Net cash flows used in investing activities (204,316) (185,364)
Cash flows from financing activities:
Proceeds of equipment financing obligations 225,128 151,127
Repayment of equipment financing obligations (158,728) (86,846)
Repayment of long-term debt (110) (169)
Payments of dividends (5,501) (4,567)
Common stock acquired and retired (3,990) -
Proceeds of stock options exercised 357 687
Net cash flows from financing activities 57,156 60,232
Net increase in cash 1,468 1,459
Cash beginning of period 15,094 15,081
Cash end of period $ 16,562 $ 16,540
Supplemental information:
Interest paid $ 28,323 $ 24,268
Income taxes paid $ 6,738 $ 9,895
<PAGE>
FORM 10-Q Page 5 of 8
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Nine Months Ended June 30, 1995 vs. Nine Months
Ended June 30, 1994
Revenues increased by $28,098,000 (8.5%) as full-service lease,
commercial rental and dedicated carriage service revenues all improved
over the first nine months of 1994.
Operating expenses increased by $7,997,000 (5.9%) reflecting the
increase in revenues. Operating expenses as a percentage of revenues
decreased to 40.1% in 1995 from 41.1% in 1994. Lower maintenance costs
on new equipment and continued expense control efforts accounted for the
lower operating cost ratio.
Depreciation expense increased by $12,588,000 (13.1%) 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 $3,591,000
(53.2%) principally due to the continued demand in the market for used
transportation equipment.
Selling and administrative expenses increased by $914,000 (2.9%)
mainly due to higher compensation costs and selling-related expenses
associated with the higher level of revenues. Selling and administrative
expenses decreased to 8.9% of revenues in 1995 from 9.4% of revenues in
1994.
Interest expense increased by $5,303,000 (19.3%) due to the increase
in borrowings related to the purchase of additional equipment.
The effective income tax rates for first nine months of 1995 and
1994 were 38.7% and 40.9%, respectively.
Net earnings increased by $3,936,000 (14.0%) to $32,015,000 or $.70
per share from $28,079,000 or $.61 per share in fiscal 1994. The
improvement in net earnings was due mainly to 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: Quarter Ended June 30, 1995 vs. Quarter ended
June 30, 1994
Revenues increased by $6,903,000 (6.0%) as full-service lease,
commercial rental and dedicated contract carriage revenues all improved
over the same quarter last year.
Operating expenses increased by $2,638,000 (5.7%) reflecting the
increase in revenues. Operating expenses as a percentage of revenues
were 39.8% and 39.9% in 1995 and 1994, respectively. Lower maintenance
costs on new equipment and continued expense control efforts maintained
the operating cost ratio.
FORM 10-Q Page 6 of 8
Depreciation expense increased by $3,955,000 (11.8%) 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 $1,674,000
(85.1%) principally due to the continued demand in the market for used
transportation equipment.
Selling and administrative expenses decreased by $165,000 (1.5%).
As a percent of revenues, selling and administrative expenses decreased
to 8.6% in 1995 from 9.3% in 1994.
Interest expense increased by $1,695,000 (17.0%) due to the increase
in borrowings related to the purchase of additional equipment.
The effective income tax rates for the third quarter of 1995 and
1994 were 36.9% and 40.3%, respectively. The expected effective annual
income tax rate for 1995 was favorably impacted by the resolution, during
the third quarter, of certain state income tax matters.
Net earnings increased by $783,000 (7.5%) to $11,233,000 or $.25 per
share from $10,450,000 or $.23 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 $258,040,000
during the first nine months of fiscal 1995 were financed with its cash
flow from operations, the proceeds from equipment sales and borrowings
from available equipment financing sources.
On May 15, 1995, the Company sold $50,000,000 of 7.25% Collateral
Trust Debentures, Series O, due May 15, 2005. The net proceeds were used
to reduce outstanding variable rate equipment indebtedness.
Additionally, on June 7, 1995, the Company arranged for the private
placement of $75,000,000 of 6.89% Series P Collateral Trust Debentures
due March 15, 2004. Closing will occur on March 15, 1996. The Company
has a current shelf registration statement under which it can sell an
additional $90,000,000 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.
During the quarter, the Company purchased for cash and retired
379,900 shares of its $1 par value common stock.
FORM 10-Q Page 7 of 8
Otherwise, there have been no material changes in the Company's
financial condition, 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.
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
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 4 - Instrument defining rights of security holders.
Fourteenth Supplemental Collateral Trust Indenture dated May
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, as
filed with the Company's current report on Form 8-K dated May
16, 1995, is incorporated herein by reference.
(b) Reports on Form 8-K.
On May 16, 1995, a report on Form 8-K was filed in connection
with the sale of $50,000,000 on the Company's 7.25% Collateral
Trust Debentures, Series O, due May 15, 2005, 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.
<PAGE>
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: July , 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
<PAGE>
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: July , 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 16,562
<SECURITIES> 0
<RECEIVABLES> 54,468
<ALLOWANCES> (1,579)
<INVENTORY> 8,015
<CURRENT-ASSETS> 98,454
<PP&E> 1,270,453
<DEPRECIATION> (379,836)
<TOTAL-ASSETS> 1,006,529
<CURRENT-LIABILITIES> 48,289
<BONDS> 565,435
<COMMON> 45,510
0
0
<OTHER-SE> 228,568
<TOTAL-LIABILITY-AND-EQUITY> 1,006,529
<SALES> 358,476
<TOTAL-REVENUES> 358,476
<CGS> 0
<TOTAL-COSTS> 252,054
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,735
<INCOME-PRETAX> 52,226
<INCOME-TAX> 20,211
<INCOME-CONTINUING> 32,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,015
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
