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, 1997
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, 1997 was 41,145,927.
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, 1997 are
not necessarily indicative of the results that may be expected for the year
ending 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 Nine Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues $142,095 $130,723 $408,168 $377,936
Expenses:
Operating 57,971 53,294 169,501 157,347
Depreciation 42,449 40,139 126,183 117,153
Gain on sale of property
and equipment (3,066) (2,057) (8,715) (6,436)
Selling and administrative 12,799 11,652 36,670 36,091
110,153 103,028 323,639 304,155
Operating earnings 31,942 27,695 84,529 73,781
Interest expense 12,729 11,792 36,709 35,459
Earnings before income taxes 19,213 15,903 47,820 38,322
Income taxes 7,446 6,161 18,602 14,792
Net earnings $ 11,767 $ 9,742 $ 29,218 $ 23,530
Earnings per share $ .28 $ .22 $ .69 $ .53
Average common shares
and equivalents
outstanding (000) 42,498 44,575
Dividends paid per
common share $ .05 $ .045 $ .15 $ .135
FORM 10-Q Page 3 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
June 30, September 30,
ASSETS 1997 1996
Current assets
Cash $ 23,103 $ 31,207
Accounts receivable, net of allowance for
doubtful accounts of: June-$2,049;
September-$1,928 67,736 62,389
Inventories 8,634 9,124
Prepaid expenses 15,476 14,195
Refundable income taxes - 897
Deferred income taxes 5,960 5,960
Total current assets 120,909 123,772
Equipment on operating leases, at cost,
net of accumulated depreciation of:
June-$407,418; September-$376,018 823,596 784,346
Other property and equipment, at cost,
net of accumulated depreciation of:
June-$72,901; September-$67,930 202,689 198,681
Excess of cost over net assets of
businesses acquired 12,242 12,497
Other assets 6,252 5,916
Total assets $1,165,688 $1,125,212
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 8,593 $ 8,759
Accrued liabilities 47,484 44,733
Income taxes payable 1,373 -
Current maturities of long-term debt 131 124
Total current liabilities 57,581 53,616
Equipment financing obligations 671,625 640,854
Long-term debt 409 508
Other liabilities 13,257 11,375
Deferred income taxes 144,245 134,811
Commitments and contingent liabilities
See Part II Legal Proceedings
Shareholders' equity
Common stock, $1 par value,
100,000,000 shares authorized; issued
and outstanding: June-41,145,927;
September-43,383,935 41,146 43,384
Additional paid-in capital 9 -
Retained earnings 237,416 240,664
Total shareholders' equity 278,571 284,048
Total liabilities and shareholders' equity $1,165,688 $1,125,212
FORM 10-Q Page 4 of 8
ROLLINS TRUCK LEASING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Nine Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net earnings $ 29,218 $ 23,530
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 126,438 117,398
Net gain on sale of property and equipment (8,715) (6,436)
Changes in assets and liabilities:
Accounts receivable (5,346) (5,969)
Accounts payable and accrued liabilities 2,584 (2,284)
Current and deferred income taxes 11,704 12,524
Other, net 755 1,586
Net cash provided by operating activities 156,638 140,349
Cash flows from investing activities:
Purchase of property and equipment (215,643) (243,285)
Proceeds from sales of equipment 54,917 58,874
Excess of cost over net assets of
business acquired - (1,150)
Net cash used in investing activities (160,726) (185,561)
Cash flows from financing activities:
Proceeds of equipment financing obligations 120,553 84,596
Repayment of equipment financing obligations (89,783) (28,655)
Repayment of long-term debt (91) (112)
Payment of dividends (6,301) (6,003)
Proceeds of stock options exercised 498 418
Common stock acquired and retired (28,892) (8,796)
Net cash provided by financing activities (4,016) 41,448
Net (decrease) in cash (8,104) (3,764)
Cash beginning of period 31,207 22,708
Cash end of period $ 23,103 $ 18,944
Supplemental information:
Interest paid $ 31,667 $ 33,792
Income taxes paid $ 6,898 $ 2,268
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, 1997 vs. Nine Months
Ended June 30, 1996
Revenues increased by $30,232,000 (8.0%) as full-service lease,
guaranteed maintenance, dedicated contract carriage, and commercial rental
revenues all improved over the same period last year. The increase in
revenues was principally volume-related as industry competition continued
to limit price increases.
Operating expenses increased by $12,154,000 (7.7%) 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 $6,767,000 and vehicle
expenses increased by $3,797,000. Operating expenses as a percentage of
revenues were 41.5% and 41.6% in 1997 and 1996, respectively.
Depreciation expense increased by $9,030,000 (7.7%) 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 $2,279,000
(35.4%) principally due to higher average selling prices realized on
transportation equipment.
Selling and administrative expenses increased by $579,000 (1.6%), and
reflected decreased advertising expenses ($476,000) and bad debt expense
($444,000). Advertising expense decreased 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 9.0% in 1997 from 9.5% in 1996.
Interest expense increased by $1,250,000 (3.5%) due to the increased
level of borrowings when compared with the same period last year.
The effective income tax rates for the first nine months of 1997 and
1996 were 38.9% and 38.6%, respectively.
Net earnings increased by $5,688,000 (24.2%) to $29,218,000 or $.69 per
share from $23,530,000 or $.53 per share in fiscal 1996. The increased net
earnings resulted from higher revenues which were reduced in part by the
incremental costs associated with such revenues.
Results of Operations: Quarter Ended June 30, 1997 vs. Quarter Ended June
30, 1996
Revenues for the quarter ended June 30, 1997 were $142,095,000 compared
with $130,723,000 for the same quarter last year. The increase of
$11,372,000 (8.7%) was broad-based as full-service lease, guaranteed
maintenance, dedicated contract carriage and commercial rental revenues all
improved over last year.
FORM 10-Q Page 6 of 8
Operating expenses increased by $4,677,000 (8.8%) reflecting the
increase in revenues. Drivers' wages and vehicle expenses for dedicated
contract carriage for the quarter ended June 30, 1997 increased by
$4,212,000 compared with the same quarter last year due to a higher level
of business. Operating expenses as a percentage of revenues were 40.8% for
the quarters ended June 30, 1997 and June 30, 1996.
Depreciation expense increased by $2,310,000 (5.8%) due to the
increased investment in equipment on operating leases and related
transportation service facilities. As a percent of revenues, depreciation
expense decreased to 29.9% in 1997 from 30.7% in 1996.
Gain on the sale of property and equipment increased by $1,009,000
(49.1%) principally due to higher average selling prices realized on
transportation equipment and an increase in the number of units sold.
Selling and administrative expenses increased by $1,147,000 (9.8%)
reflecting the increased level of business. As a percent of revenues,
selling and administrative expenses increased to 9.0% in 1997 from 8.9% in
1996.
Interest expense increased by $937,000 (7.9%) due to the increased
level of borrowings compared with the same period last year.
The effective income tax rates for the third fiscal quarter of 1997 and
1996 were 38.8% and 38.7%, respectively.
Net earnings increased by $2,025,000 (20.8%) to $11,767,000 or $.28 per
share from $9,742,000 or $.22 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 $156,638,000 were generated
principally from net earnings of $29,218,000 and the noncash depreciation
and amortization expenses totaling $126,438,000. Investing activities used
$160,726,000 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 plus $120,553,000 of proceeds from equipment financing
obligations were used to pay dividends, repurchase 2,358,800 shares of the
Company's $1 par value common stock and to reduce equipment financing
obligations by $89,783,000.
On April 15, 1997, the Company redeemed $50,000,000 of outstanding
Series K, 7.75% Collateral Trust Debentures. The Company has a current
shelf registration under which it can sell an additional $155,000,000 of
Collateral Trust Debentures.
The Company's principal subsidiary, Rollins Leasing Corp., has a
$100,000,000 revolving credit facility all of which was available at June
30, 1997. This credit facility requires the maintenance of specified
financial ratios and restricts payments to the Company.
FORM 10-Q Page 7 of 8
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 the Company's 1996 Annual Report 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.
<PAGE>
FORM 10-Q Page 8 of 8
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 23, 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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