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 1-5728
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 December 31, 1995 was 44,437,093.
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.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended
December 31,
1995 1994
Revenues $125,021 $119,079
Expenses:
Operating 51,201 46,595
Depreciation 38,426 35,423
Gain on sale of property and equipment (1,899) (2,746)
Selling and administrative 11,904 10,705
99,632 89,977
Earnings before interest and income taxes 25,389 29,102
Interest income - 148
Interest expense 11,803 10,190
Earnings before income taxes 13,586 19,060
Income taxes 5,230 7,551
Net earnings $ 8,356 $ 11,509
Earnings per share $ .19 $ .25
Average common shares and equivalents
outstanding (000) 44,818 46,322
Dividends paid per common share $ .045 $ .04
<PAGE>
FORM 10-Q Page 3 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
December 31, September 30,
ASSETS 1995 1995
Current assets
Cash $ 10,097 $ 22,708
Accounts receivable, net of allowance for
doubtful accounts of: December-$1,781;
September-$1,635 60,959 56,946
Inventory of parts and supplies 9,251 8,612
Prepaid expenses 20,244 14,366
Refundable income taxes - 1,667
Deferred income taxes 6,241 6,241
Total current assets 106,792 110,540
Equipment on operating leases, at cost,
net of accumulated depreciation of:
December-$339,511; September-$330,750 732,930 727,893
Other property and equipment, at cost,
net of accumulated depreciation of:
December-$60,941; September-$58,297 184,356 171,343
Excess of cost over net assets of
businesses acquired 12,752 11,677
Other assets 5,443 5,576
Total assets $1,042,273 $1,027,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 7,220 $ 8,115
Accrued liabilities 45,296 43,167
Income taxes payable 1,203 -
Current maturities of long-term debt 144 150
Total current liabilities 53,863 51,432
Equipment financing obligations 580,566 573,554
Long-term debt 601 632
Other liabilities 11,890 10,028
Deferred income taxes 119,020 115,830
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value,
100,000,000 shares authorized; issued
and outstanding: December-44,437,093;
September-44,954,679 44,437 44,955
Capital in excess of par value 6,405 11,453
Retained earnings 225,491 219,145
Total shareholders' equity 276,333 275,553
Total liabilities and shareholders' equity $1,042,273 $1,027,029
FORM 10-Q Page 4 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Quarter Ended
December 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 8,356 $ 11,509
Reconciliation of net earnings to
net cash flows from operating activities:
Depreciation and amortization 38,501 35,480
Net gain on sale of property and equipment (1,899) (2,746)
Changes in assets and liabilities:
Notes and accounts receivable (4,013) (1,499)
Accounts payable and accrued liabilities 1,234 (757)
Current and deferred income taxes 6,060 9,029
Other, net (4,524) (3,814)
Net cash provided by operating activities 43,715 47,202
Cash flows from investing activities:
Purchase of property and equipment (71,211) (77,649)
Proceeds from sales of equipment 16,635 15,759
Excess of cost over net assets of
business acquired (1,150) -
Net cash used in investing activities (55,726) (61,890)
Cash flows from financing activities:
Proceeds of equipment financing obligations 19,400 41,795
Repayment of equipment financing obligations (12,388) (19,545)
Repayment of long-term debt (37) (39)
Payments of dividends (2,009) (1,832)
Proceeds of stock options exercised 183 167
Common stock acquired and retired (5,749) -
Net cash (used in) provided by
financing activities (600) 20,546
Net (decrease) increase in cash (12,611) 5,858
Cash beginning of period 22,708 15,094
Cash end of period $ 10,097 $ 20,952
Supplemental information:
Interest paid $ 9,259 $ 7,677
Income taxes (recovered) $ (830) $ (1,478)
<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 increased by $5,942,000 (5.0%) as full-service lease and
dedicated contract carriage revenues improved over the same quarter last
year. Principally due to the sluggish economy, commercial rental revenue
declined by 6% in the first fiscal quarter. Utilization of the commercial
rental fleet remained soft during the first quarter as contrasted to the
strong demand during last year's first quarter.
Intense industry competition continued to limit price increases which
resulted in profit margin reductions.
Operating expenses increased by $4,606,000 (9.9%) reflecting the increase
in revenues. Higher vehicle expenses and increased wages associated with
the growing dedicated contract carriage business accounted for the
operating expense increases. Operating expenses as a percentage of
revenues were 41.0% and 39.2% in 1995 and 1994, respectively.
Depreciation expense increased by $3,003,000 (8.5%) 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 decreased by $847,000 (30.8%)
principally due to the sale of transportation equipment at lower prices.
Selling and administrative expenses increased by $1,199,000 (11.2%),
reflecting the increase in revenues along with higher compensation and
related costs of an expanded sales force. As a percent of revenues,
selling and administrative expenses increased to 9.5% in 1995 from 9.0%
1994.
Interest expense increased by $1,613,000 (17.5%) due to the increase in
borrowings related to the purchase of additional facilities and equipment.
The effective income tax rates for the first fiscal quarter of 1996 and
1995 were 38.5% and 39.6%, respectively.
Net earnings decreased by $3,153,000 (27.4%) to $8,356,000 or $.19 per
share from $11,509,000 or $.25 per share in fiscal 1995. The decrease in
net earnings was due mainly to the lower gain on the disposal of equipment,
the higher operating cost ratio, higher depreciation and interest expense.
Liquidity and Capital Resources
The Company's property and equipment purchases of $71,211,000 during the
first quarter of fiscal 1996 were financed with its cash flow from
operations, the proceeds of equipment sales and borrowings under its
revolving credit facility.
FORM 10-Q Page 6 of 7
The Company's principal subsidiary, Rollins Leasing Corp., has a
$100,000,000 revolving credit facility of which $72,000,000 was available
at December 31, 1995. On June 7, 1995, the Company arranged for the
private placement of $75,000,000 of 6.89% Series O Collateral Trust
Debentures due March 15, 2004. Closing will occur on March 15, 1996.
At December 31, 1995, the Company could sell an additional $90,000,000
of Collateral Trust Debentures under its current shelf registration
statement. Based on its access to the debt markets and relationships with
current lending institutions and others who have expressed an interest in
providing financing, the Company expects to be able to obtain financing for
its equipment and facility purchases at market rates and under
satisfactory terms and conditions.
During the quarter, the Company purchased for cash and retired 588,000
shares of its $1 par value common stock.
Otherwise, there have been no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1995.
For further details, see page 4 of the Company's 1995 Annual Report to
Shareholders on Form 10-K for the year ended September 30, 1995.
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.
None.
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 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> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 10,097
<SECURITIES> 0
<RECEIVABLES> 62,740
<ALLOWANCES> (1,781)
<INVENTORY> 9,251
<CURRENT-ASSETS> 106,792
<PP&E> 1,317,738
<DEPRECIATION> (400,452)
<TOTAL-ASSETS> 1,042,273
<CURRENT-LIABILITIES> 53,863
<BONDS> 581,167
<COMMON> 44,437
0
0
<OTHER-SE> 231,896
<TOTAL-LIABILITY-AND-EQUITY> 1,042,273
<SALES> 125,021
<TOTAL-REVENUES> 125,021
<CGS> 0
<TOTAL-COSTS> 89,627
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,803
<INCOME-PRETAX> 13,586
<INCOME-TAX> 5,230
<INCOME-CONTINUING> 8,356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,356
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
