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 June 30, 1996
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, 1996 was 44,219,830.
<PAGE>
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, 1996 are not necessarily indicative of the results that
may be expected for the year ending 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 Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenue $130,723 $122,726 $377,936 $358,476
Expenses:
Operating 53,294 48,891 157,347 143,623
Depreciation 40,139 37,439 117,153 108,431
Gain on sale of property
and equipment (2,057) (3,641) (6,436) (10,346)
Selling and administrative 11,652 10,572 36,091 32,079
103,028 93,261 304,155 273,787
Earnings before interest and
income taxes 27,695 29,465 73,781 84,689
Interest income - - - 272
Interest expense (11,792) (11,655) (35,459) (32,735)
Earnings before income taxes 15,903 17,810 38,322 52,226
Income taxes 6,161 6,577 14,792 20,211
Net earnings $ 9,742 $ 11,233 $ 23,530 $ 32,015
Earnings per share $ .22 $ .25 $ .53 $ .70
Average common shares and
equivalents outstanding (000) 44,575 45,940
Dividends paid per common share $ .045 $ .04 $ .135 $ .12
<PAGE>
FORM 10-Q Page 3 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
June 30, September 30,
ASSETS 1996 1995
Current assets
Cash $ 18,944 $ 22,708
Accounts receivable, net of allowance for
doubtful accounts of: June-$1,817;
September-$1,635 62,915 56,946
Inventory of parts and supplies 9,086 8,612
Prepaid expenses 14,557 14,366
Refundable income taxes - 1,667
Deferred income taxes 6,240 6,241
Total current assets 111,742 110,540
Equipment on operating leases, at cost,
net of accumulated depreciation of:
June-$356,437; September-$330,750 776,854 727,893
Other property and equipment, at cost,
net of accumulated depreciation of:
June-$65,841; September-$58,297 196,076 171,343
Excess of cost over net assets of
businesses acquired 12,582 11,677
Other assets 5,658 5,576
Total assets $1,102,912 $1,027,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 8,569 $ 8,115
Accrued liabilities 40,429 43,167
Income taxes payable 250 -
Current maturities of long-term debt 130 150
Total current liabilities 49,378 51,432
Equipment financing obligations 629,495 573,554
Long-term debt 540 632
Other liabilities 12,361 10,028
Deferred income taxes 126,436 115,830
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value, 100,000,000 shares
authorized, issued and outstanding:
June-44,219,830; September-44,954,679 44,220 44,955
Capital in excess of par value 3,810 11,453
Retained earnings 236,672 219,145
Total shareholders' equity 284,702 275,553
Total liabilities and
shareholders' equity $1,102,912 $1,027,029
<PAGE>
FORM 10-Q Page 4 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Nine Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Net earnings $ 23,530 $ 32,015
Reconciliation of net earnings to net
cash flows from operating activities:
Depreciation and amortization 117,398 108,600
Net gain on sale of property and equipment (6,436) (10,346)
Changes in assets and liabilities:
Note and accounts receivable (5,969) 5,142
Accounts payable and accrued liabilities (2,284) 822
Current and deferred income taxes 12,524 13,473
Other, net 1,586 (1,078)
Net cash provided by operating activities 140,349 148,628
Cash flows from investing activities:
Purchase of property and equipment (243,285) (258,040)
Proceeds from sale of property and equipment 58,874 53,724
Excess of cost over net assets of
business acquired (1,150) -
Net cash used in investing activities (185,561) (204,316)
Cash flows from financing activities:
Proceeds of equipment financing obligations 84,596 225,128
Repayment of equipment financing obligations (28,655) (158,728)
Repayment of long-term debt (112) (110)
Payments of dividends (6,003) (5,501)
Proceeds of stock options exercised 418 357
Common stock acquired and retired (8,796) (3,990)
Net cash provided by financing activities 41,448 57,156
Net increase in cash (3,764) 1,468
Cash beginning of period 22,708 15,094
Cash end of period $ 18,944 $ 16,562
Supplemental information:
Interest paid $ 33,792 $ 28,323
Income taxes paid $ 2,268 $ 6,738
<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: Nine Months Ended June 30, 1996 vs. Nine Months
Ended June 30, 1995
Revenues increased by $19,460,000 (5.4%) as full-service lease,
guaranteed maintenance and dedicated logistics revenues all improved over
the first nine months of 1995. The economically sensitive short-term
commercial rental business continued to be competitive causing a decline
in revenues from this portion of the Company's business.
Operating expenses increased by $13,724,000 (9.6%) reflecting the
increase in revenues. Higher vehicle expenses and increased wages
associated with the growing dedicated logistics services business
accounted for the operating expense increases. Operating expenses as a
percentage of revenues were 41.6% and 40.1% in 1996 and 1995,
respectively.
Depreciation expense increased by $8,722,000 (8.0%) 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 $3,910,000
(37.8%) principally due to the sale of fewer units of transportation
equipment and lower prices realized from such sales.
Selling and administrative expenses increased by $4,012,000 (12.5%),
reflecting the increase in revenues along with higher compensation and
related costs of an expanded sales force. In addition, office and bad
debt expenses were also higher during the first nine months of fiscal
1996. As a percentage of revenues, selling and administrative expenses
increased to 9.5% in 1996 from 8.9% in 1995.
Interest expense increased by $2,724,000 (8.3%) due to the increase
in borrowings related to the purchase of additional equipment offset in
part by lower interest rates.
The effective income tax rates for first nine months of 1996 and
1995 were 38.6% and 38.7%, respectively.
Net earnings decreased by $8,485,000 (26.5%) to $23,530,000 or $.53
per share from $32,015,000 or $.70 per share in fiscal 1995. The
decrease in net earnings was mainly due to the higher operating cost
ratio, lower gains on the sale of equipment, higher depreciation, selling
and administrative and interest expense.
Results of Operations: Quarter Ended June 30, 1996 vs. Quarter ended
June 30, 1995
Revenues increased by $7,997,000 (6.5%) as full-service lease,
guaranteed maintenance and dedicated logistics revenues all improved over
the same quarter last year. Revenues from the competitive short-term
commercial rental business declined.
FORM 10-Q Page 6 of 7
Operating expenses increased by $4,403,000 (9.0%) reflecting the
increase in revenues. Higher vehicle expenses and increased wages
associated with the growing dedicated logistics services business
accounted for the operating expense increases. Operating expenses as a
percentage of revenues were 40.8% and 39.8% in 1996 and 1995,
respectively.
Depreciation expense increased by $2,700,000 (7.2%) 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 $1,584,000
(43.5%) principally due to the sale of fewer units of transportation
equipment which had higher average carrying values at the time of sale.
Selling and administrative expenses increased by $1,080,000 (10.2%),
reflecting the increase in revenues along with higher compensation and
related costs of an expanded sales force. During the third fiscal
quarter, office, data processing and bad debt expenses were also higher
than in the previous year. As a percent of revenues, selling and
administrative expenses increased to 8.9% in 1996 from 8.6% in 1995.
Interest expense increased by $137,000 (1.2%) due to the increase in
borrowings related to the purchase of additional equipment, offset in
part by lower interest rates.
The effective income tax rates for the third quarter of 1996 and
1995 were 38.7% and 36.9%, respectively. The effective income tax rate
for the third quarter of 1995 was favorably impacted by the resolution of
certain state income tax matters.
Net earnings decreased by $1,491,000 (13.3%) to $9,742,000 or $.22
per share from $11,233,000 or $.25 per share in fiscal 1995. The
decrease in net earnings was due to the lower gain on the disposal of
equipment, the higher operating cost ratio, higher depreciation, selling
and administrative and interest expense.
Liquidity and Capital Resources
The Company's property and equipment purchases of $243,285,000
during the first nine months of fiscal 1996 were financed with its cash
flow from operations, the proceeds from equipment sales and borrowings
from available equipment financing sources.
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. The Company purchased for cash and
retired 921,600 shares of its $1 par value common stock during the first
nine months of fiscal 1996.
FORM 10-Q Page 7 of 7
Otherwise, there have been no material changes in the Company's
financial condition, its liquidity and capital resources since September
30, 1995. For further details, see page 4 of the Company's Annual Report
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.
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 , 1996 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 7 of 7
Otherwise, there have been no material changes in the Company's
financial condition, its liquidity and capital resources since September
30, 1995. For further details, see page 4 of the Company's Annual Report
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.
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 , 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
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<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,944
<SECURITIES> 0
<RECEIVABLES> 64,732
<ALLOWANCES> 1,817
<INVENTORY> 9,086
<CURRENT-ASSETS> 111,742
<PP&E> 1,395,208
<DEPRECIATION> 422,278
<TOTAL-ASSETS> 1,102,912
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<BONDS> 630,035
0
0
<COMMON> 44,220
<OTHER-SE> 240,482
<TOTAL-LIABILITY-AND-EQUITY> 1,102,912
<SALES> 377,936
<TOTAL-REVENUES> 377,936
<CGS> 0
<TOTAL-COSTS> 274,500
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