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, 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 December 31, 1996 was 42,463,451.
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, 1996 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1997. 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, 1996.
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended
December 31,
1996 1995
Revenues $133,697 $125,021
Expenses:
Operating 54,646 51,201
Depreciation 41,774 38,426
Gain on sale of property and equipment (2,429) (1,899)
Selling and administrative 11,498 11,904
105,489 99,632
Operating earning 28,208 25,389
Interest expense 12,104 11,803
Earnings before income taxes 16,104 13,586
Income taxes 6,281 5,230
Net earnings $ 9,823 $ 8,356
Earnings per share $ .23 $ .19
Average common shares and equivalents
outstanding (000) 43,110 44,818
Dividends paid per common share $ .05 $ .045
<PAGE>
FORM 10-Q Page 3 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
December 31, September 30,
ASSETS 1996 1996
Current assets
Cash $ 10,940 $ 31,207
Accounts receivable, net of allowance for
doubtful accounts of: December-$1,858;
September-$1,928 68,444 62,389
Inventories 9,618 9,124
Prepaid expenses 17,414 14,195
Refundable income taxes - 897
Deferred income taxes 5,960 5,960
Total current assets 112,376 123,772
Equipment on operating leases, at cost,
net of accumulated depreciation of:
December-$394,179; September-$376,018 779,371 784,346
Other property and equipment, at cost,
net of accumulated depreciation of:
December-$71,009; September-$67,930 200,899 198,681
Excess of cost over net assets of
businesses acquired 12,412 12,497
Other assets 5,808 5,916
Total assets $1,110,866 $1,125,212
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 8,413 $ 8,759
Accrued liabilities 48,216 44,733
Income taxes payable 2,040 -
Current maturities of long-term debt 126 124
Total current liabilities 58,795 53,616
Equipment financing obligations 620,308 640,854
Long-term debt 475 508
Other liabilities 12,358 11,375
Deferred income taxes 138,241 134,811
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-42,463,451;
September-43,383,935 42,463 43,384
Retained earnings 238,226 240,664
Total shareholders' equity 280,689 284,048
Total liabilities and shareholders' equity $1,110,866 $1,125,212
<PAGE>
FORM 10-Q Page 4 of 7
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Quarter Ended
December 31,
1996 1995
Cash flows from operating activities:
Net earnings $ 9,823 $ 8,356
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 41,859 38,501
Net gain on sale of property and equipment (2,429) (1,899)
Changes in assets and liabilities:
Accounts receivable (6,055) (4,013)
Accounts payable and accrued liabilities 3,137 1,234
Current and deferred income taxes 6,367 6,060
Other, net (2,622) (4,524)
Net cash provided by operating activities 50,080 43,715
Cash flows from investing activities:
Purchase of property and equipment (49,391) (71,211)
Proceeds from sales of equipment 12,803 16,635
Excess of cost over net assets of
business acquired - (1,150)
Net cash used in investing activities (36,588) (55,726)
Cash flows from financing activities:
Proceeds of equipment financing obligations 6,385 19,400
Repayment of equipment financing obligations (26,931) (12,388)
Repayment of long-term debt (31) (37)
Payments of dividends (2,142) (2,009)
Proceeds of stock options exercised 204 183
Common stock acquired and retired (11,244) (5,749)
Net cash used in financing activities (33,759) (600)
Net decrease in cash (20,267) (12,611)
Cash beginning of period 31,207 22,708
Cash end of period $ 10,940 $ 10,097
Supplemental information:
Interest paid $ 9,057 $ 9,259
Income taxes (recovered) $ (86) $ (830)
<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, 1996 vs. Quarter Ended
December 31, 1995
Revenues increased by $8,676,000 (6.9%) as full-service lease,
guaranteed maintenance, dedicated contract carriage and commercial rental
revenues all improved over the same quarter last year. The increase in
revenues was principally volume-related as industry competition continued
to limit price increases.
Operating expenses increased by $3,445,000 (6.7%) reflecting the
increase in revenues. The more significant operating expense increases
resulted from the continued growth in the dedicated contract carriage
business in which drivers' wages increased by $2,117,000 and vehicle
expenses increased by $1,220,000. Operating expenses as a percentage of
revenues were 40.9% and 41.0% in 1996 and 1995, respectively.
Depreciation expense increased by $3,348,000 (8.7%) due to the increased
investment in equipment on operating leases and related transportation
service facilities. The higher levels of investment in property and
equipment reflected, in addition to the higher level of business, increased
prices paid for recently acquired capital assets.
Gain on the sale of property and equipment increased by $530,000 (27.9%)
principally due to higher average prices.
Selling and administrative expenses decreased by $406,000 (3.4%) and
reflected decreased advertising expense in favor of direct marketing
through the Company's sales force which has been expanded over the past
several years. As a percent of revenues, selling and administrative
expenses decreased to 8.6% in 1996 from 9.5% in 1995.
Interest expense increased by $301,000 (2.6%) due to the increased level
of borrowings when compared with the same fiscal quarter last year. The
increase in interest expense associated with the higher borrowing level was
offset in part by lower interest rates.
The effective income tax rates for the first fiscal quarter of 1997 and
1996 were 39.0% and 38.5%, respectively.
Net earnings increased by $1,467,000 (17.6%) to $9,823,000 or $.23 per
share from $8,356,000 or $.19 per share in fiscal 1996. The increased net
earnings resulted from the higher revenues which were reduced in part by
the incremental costs associated with such revenues.
Liquidity and Capital Resources
Cash flows from operating activities of $50,082,000 were generated
principally from net earnings of $9,823,000 and the noncash depreciation
and amortization expenses totaling $41,859,000. Investing activities used
$36,588,000 of cash for the purchase of property and equipment net of the
cash proceeds received from the sale of equipment. The net cash flow from
operating activities less cash used for investing activities of $13,492,000
FORM 10-Q Page 6 of 7
and available cash balances were used to pay dividends, repurchase 967,900
shares of the Company's $1 par value common stock and to reduce equipment
financing obligations by $20,546,000.
The Company's principal subsidiary, Rollins Leasing Corp. ("Leasing"),
has a $100,000,000 revolving credit facility all of which was available at
December 31, 1996. This credit facility requires Leasing to maintain
specified financial ratios and restricts payments to the Company.
At December 31, 1996, the Company could sell an additional $30,000,000
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. Covenants in the Company's outstanding
Collateral Trust Debentures restrict the Company's dividend payments to
consolidated net earnings subsequent to September 30, 1984 subject to
certain adjustments.
Otherwise, there have been no material changes in the Company's
financial condition and its liquidity and capital resources since September
30, 1996. For further details, see pages 4 and 5 of the Company's 1996
Annual Report to Shareholders on Form 10-K for the year ended September 30,
1996.
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.
<PAGE>
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 24, 1997 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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