U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ended to
Commission File Number: 33-30123-A
GENERAL PARCEL SERVICE, INC.
(Exact name of small business issuer in its charter)
State of Florida 59-2576629
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8923 Western Way, Suite 22,
Jacksonville, FL 32256
(Address of principal executive offices)
(904) 363-0089
(Issuer's telephone number)
Check whether issuer (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities and 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
There were 3,758,671 shares of the Company's common stock outstanding as of
August 11, 1995.
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
FORM 10QSB
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1.
Consolidated Balance Sheets
as of June 30, 1995 and December 31, 1994. . . . . . . . . . . 2
Consolidated Statements of Earnings for the three
months ended June 30, 1995 and 1994, and the six
months ended June 30, 1995 and 1994 . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and 1994 .. . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . 5
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 4.
Submission of Matters to a Vote of Security Holders. . . . . . 14
Item 6.
Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 14
Exhibit 11 is located on page 16
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 5,760 $ 5,575
Accounts receivable (net of allowance for doubtful
accounts of $7,898 and $5,835 at June 30, 1995
and December 31, 1994 respectively) 1,893,707 1,544,745
Other current assets 684,160 695,583
---------- ---------
Total current assets 2,583,627 2,245,903
Equipment, at net book value 7,839,749 7,568,574
Goodwill 1,099,541
Other assets 187,169 181,843
---------- ----------
Total assets $ 11,710,086 $ 9,996,320
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term borrowings $ 400,000 $ 1,500,000
Current obligations under capital leases 914,345 994,714
Current maturities of long-term debt 663,522 457,139
Accounts payable 1,624,884 1,023,300
Accrued expenses and other current liabilities 338,575 317,339
---------- ----------
Total current liabilities 3,941,326 4,292,492
Non-current liabilities:
Long-term obligations under capital leases 1,818,429 1,869,609
Long-term debt 4,091,802 588,406
Convertible debentures 300,000 300,000
----------- ----------
Total non-current liabilities 6,210,231 2,758,015
----------- ----------
Total liabilities 10,151,557 7,050,507
----------- ----------
Stockholders' equity:
Preferred stock, $.01 par value, 200,000 shares authorized,
100,000 issued and outstanding at June 30, 1995, and
December 31, 1994, liquidation preference $2,500,000. 1,000 1,000
Common stock, $.01 par value, 10,000,000 shares authorized,
3,758,671 shares issued and outstanding at June 30, 1995,
and December 31, 1994 37,586 37,586
Additional paid-in capital 13,389,655 13,389,655
Accumulated deficit (11,869,712) (10,482,428)
----------- ----------
Total stockholders' equity 1,558,529 2,945,813
----------- ----------
Total liabilities and stockholders' equity $ 11,710,086 $ 9,996,320
============ ==========
<FN>
<F1>
See accompanying notes.
2
</FN>
</TABLE>
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC, AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three months ended June 30, Six months ended June 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue $ 4,853,489 $ 4,938,438 $ 9,916,819 $ 9,639,313
Operating expenses
Operations salaries & benefits 2,800,797 2,343,245 5,337,489 4,611,002
Contract labor 22,113 2,781 30,703 4,065
Fuel 302,760 287,925 590,319 553,686
Equipment rental 15,800 64,724 24,499 125,266
Insurance 524,980 494,016 973,980 908,644
Tires & maintenance 182,803 189,920 356,988 356,661
Depreciation & amortization 438,065 311,533 848,698 619,101
Facilities expense 306,574 301,165 638,162 581,210
Terminal expense 79,308 32,334 135,362 66,907
Purchased transportation 66,556 20,253 120,282 20,253
Other operating costs 34,402 17,230 65,062 32,262
Selling and administrative expense 940,458 734,038 1,652,306 1,408,142
---------- ---------- ---------- ---------
Total operating expense 5,714,616 4,799,164 10,773,850 9,287,199
---------- ---------- ---------- ---------
Operating income (loss) (861,127) 139,274 (857,031) 352,114
Interest expense 203,180 127,013 355,253 258,416
---------- ---------- ---------- ---------
Net income (loss) (1,064,307) 12,261 (1,212,284) 93,698
Preferred stock dividend requirement 43,750 43,750 87,500 87,500
---------- ---------- ---------- ---------
Earnings available to common shareholders $ (1,108,057) $ (31,489) $ (1,299,784) $ 6,198
========== ========== ========== ==========
Net Income (loss) per common
share (primary and fully diluted) $ (0.29) $ (0.01) $ (0.35) $ 0.00
========== =========== ========== ==========
Weighted average number of common
shares outstanding 3,758,671 4,109,911 3,758,671 4,109,911
=========== =========== ========== ==========
<FN>
<F1>
See accompanying notes
3
</FN>
</TABLE>
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(UNAUDITED)
<CAPTION>
Six Months Ended June 30,
1995 1994
---------- -----------
<S> <C> <C>
Cash flows from (for) operating activities:
Net income (loss) $ (1,212,284) $ 93,698
Adjustments to reconcile net income (loss) to cash ---------- ----------
provided by (used in) operating activities:
Loss on disposal of fixed assets 2,718
Depreciation and amortization 878,695 638,168
Changes in assets and liabilities:
Increase in accounts receivable (238,760) (299,793)
Decrease (increase) in other current assets 48,008 (71,954)
Increase in other assets (5,326) (6,774)
Increase (decrease) in accounts payable 443,765 (91,378)
Increase (decrease) in accrued expenses (28,764) 172,453
---------- ---------
Total adjustments 1,100,336 340,722
---------- ---------
Net cash provided by (used in) operating activities (111,948) 434,420
---------- ---------
Cash flows for investing activities
Business Acquisition (315,037) --
Purchase of equipment (473,573) (371,579)
--------- ---------
Net cash used in investing activities (788,610) (371,579)
--------- ---------
Cash flows from financing activities:
Dividends paid on preferred stock (175,000) --
Repayment of short-term debt (2,500,000) --
Repayment of long-term debt (346,801) (181,684)
Principal payments under capital lease obligations (525,789) (541,766)
Increase in long-term borrowings 3,000,000 --
Increase in short-term borrowings 1,400,000 --
Increase in bank overdraft 48,333 690,659
---------- ---------
Net cash provided by (used in) financing activities 900,743 (32,791)
---------- ---------
Increase in cash and cash equivalents 185 30,050
Cash and cash equivalents, beginning of period 5,575 1,069,007
---------- ---------
Cash and cash equivalents, end of period $ 5,760 $ 1,099,057
========== =========
Supplemental disclosure
Cash paid during the period for interest $ 319,825 $ 259,639
========== =========
<FN>
<F1>
Non-cash investing and financing activities:
Capital lease and notes payable obligations of $461,874 and $137,234 were inclurred when the Company
entered into lease agreements for new vehicles and communication equipment for the six months ended
June 30, 1995 and 1994, respectively.
<F2>
See accompanying notes
4
</FN>
</TABLE>
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The information presented herein as of June 30, 1995, and for the three months
and six months ended June 30, 1995 and 1994, is unaudited. The December 31,
1994, balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles.
1. Summary of Significant Accounting Policies
Management's Representation
In the opinion of management, all adjustments necessary for a fair presentation
of such consolidated financial statements are reflected in the interim periods
presented. Such adjustments consisted of normal recurring items. Interim
results are not necessarily indicative of results for a full year.
The consolidated financial statements and notes are presented as permitted by
Form 10-QSB and do not contain certain information included in the annual
financial statements and notes of General Parcel Service, Inc. (the "Company").
2. Acquisition of Assets of Transit Express of Charlotte, Inc.
On February 10, 1995, the Company through a subsidiary acquired certain assets
of Transit Express of Charlotte, Inc. ("TE"). TE was based in Charlotte, North
Carolina, and provided scheduled carrier and package delivery services to
businesses in North and South Carolina. The Company paid $75,000 in cash,
assumed certain accounts and notes payable totaling approximately $525,000 and
entered into certain employment contracts and non-competition agreements with
the principals of TE. The employment contracts are for a term of six months
beginning February 10, 1995, and call for aggregate compensation of $103,000
payable over the six month period and the non-competition agreements provide
for a payment of $590,000 payable over a sixty month period.
The acquisition of the TE assets was accounted for as a purchase and,
accordingly, the purchase price was allocated to the acquired assets and
assumed liabilities based upon their respective fair values. The excess of
the purchase price over the fair value of the net assets acquired will be
amortized over 40 years on a straight-line basis.
The unaudited pro forma statement of operations of the Company for the three
months and six months ended June 30, 1995, accounts for the acquisition as if
it had occurred on January 1, 1995, and the unaudited pro forma statement of
operations for the quarter and six months ended June 30, 1994, accounts for the
acquisition as if it had occurred on January 1, 1994. The pro forma results
give effect to the amortization of goodwill and the effects of additional
interest expense.
5
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Unaudited Pro Forma Combined Results of Operations
For the Quarter Ended June 30, 1995
<CAPTION>
Pro Forma
The Company TE Adjustments Combined
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 4,853,489 $ - $ - $ 4,853,489
=========== =========== =========== ===========
Net Earnings $(1,064,307) $ (10,426) $ (19,867) $ (1,094,600)
========== =========== =========== ===========
Net earnings per common share $ (0.29) $ (0.29)
=========== ===========
</TABLE>
<TABLE>
Unaudited Pro Forma Combined Results of Operations
For the Quarter Ended June 30, 1994
<CAPTION>
Pro Forma
The Company TE Adjustments Combined
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Sales $ 4,938,438 $ 516,048 $ - $ 5,454,486
========== ========= ============ ==========
Net Earnings $ 12,261 $ 7,428 $ (21,078) $ (1,389)
========== ========= ============ ==========
Net earnings per common share $ (0.01) $ (0.01)
========== ==========
</TABLE>
<TABLE>
Unaudited Pro Forma Combined Results of Operations
For the Six Months Ended June 30, 1995
<CAPTION>
Pro Forma
The Company TE Adjustments Combined
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Sales $ 9,916,819 $ 184,712 $ - $ 10,101,531
=========== ========= =========== ==========
Net Earnings $(1,212,284) $ (10,426) $ (19,867) $ (1,242,577)
=========== ========== =========== ==========
Net earnings per common share $ (0.35) $ (0.35)
========== ==========
6
</TABLE>
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Unaudited Pro Forma Combined Results of Operations
For the Six Months Ended June 30, 1994
<CAPTION>
Pro Forma
The Company TE Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Sales $ 9,639,313 $ 1,025,640 $ - $ 10,664,953
========== ========== =========== ==========
Net Earnings $ 93,698 $ 13,100 $ (42,156) $ 64,642
========== ========== =========== ==========
Net earnings per common share $ 0.00 $ (0.01)
========== ===========
<FN>
<F1>
The above pro forma statements do not purport to be indicative of the results
of operations which would have occurred had the acquisition been made on
January 1, 1995 or 1994.
</FN>
</TABLE>
7
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Since inception, the Company has not generated sufficient cash flows from
operations to fund its business expansion and operating losses. Expansion of
operations and operating losses since inception have been funded from seven
major sources: 1) private placements of restricted shares of common stock to
its principal shareholders, 2) proceeds from its initial public offering of
common stock in November 1989, 3) installment loans and leases from third
party lenders collateralized by equipment acquired to support business growth,
4) a bank line of credit collateralized by the Company's accounts receivable
and stock of an unrelated company owned by a major shareholder, 5) short
term borrowings from banks and shareholders, 6) private placement of preferred
stock and 7) debt issued and liabilities assumed in connection with the
acquisition of TE.
As of June 30, 1995, the Company had raised net equity capital of $8,145,052
from private placements of restricted common shares, $2,715,700 from its
initial public offering of November 2, 1989, $2,417,489 from private placements
of preferred stock, and $150,000 from the sale of unrestricted common shares.
When combined with cumulative operating losses since inception of $11,694,712
and the $175,000 dividend paid on the Company's preferred stock, the Company's
net capital surplus as of June 30, 1995 was $1,558,529. There were no
issuances of the Company's restricted common stock or preferred stock during
the first six months of 1995.
As of June 30, 1995, the Company was contractually obligated to repay
$8,188,098 of indebtedness to equipment lessors, banks and other secured and
unsecured lenders. In addition, the Company owed $1,624,884 to suppliers of
goods and services necessary for the conduct of ongoing business including
amounts represented by issued and outstanding checks, and had accrued salaries
and other expenses of $338,575, which were unpaid at the close of the period.
On June 19, 1995, the Company closed on a new $4,500,000 credit facility with
a bank. The facility includes a $3,000,000 five-year term note and a $1,500,000
revolving credit loan. The term note provides that interest only is payable
monthly during the first two years the note is outstanding and the principal
is amortized and paid monthly with interest over the final three years of the
note's term. The revolving credit loan is evidenced by a demand note with
interest payable monthly. Under both the term note and the revolving credit
loan, interest for advances of $1,000,000 or greater is calculated at the
lower of the thirty day LIBOR rate plus .60% or the Bank's prime interest rate
less .75% and for all other advances at the Bank's prime interest rate less
.75%. The loan is collateralized by the Company's accounts receivable and
certain stock certificates pledged by the Company's Chairman. At June 30, 1995,
$3,000,000 had been borrowed under the term loan and $400,000 had been borrowed
under the revolving credit loan.
8
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Cash used in operations during the first six months of 1995 was $111,948 as
compared to cash provided by operations in the first six months of 1994 of
$434,420. The net cash used in operations resulted primarily from a increase
in accounts payable and a decrease in accrued expenses and other liabilities.
These were partially offset by the non-cash expense of depreciation and
amortization and a decrease in other current assets. The increase in cash and
cash equivalents of $185 in the six months ended June 30, 1995, required
increasing bank debt by $1,900,000 for the six months ended June 30, 1995. In
response to the Company's future cash flow requirements, the Company has
received a commitment from a major shareholder to fund the Company's operations
through 1995, if necessary. Because of the Company's continuing requirement
for cash to fund operating losses and to repay existing debt, it restructured
and increased its bank debt as described above during the first six months of
1995. To the extent the Company requires additional cash for operations beyond
its available credit line during 1995, it will seek to further increase its
credit line or attempt to privately place common and/or preferred stock of the
Company with investors. Should the Company not be able to provide cash for its
operations as described above, it will rely on the commitment of one of its
major shareholders to fund losses of the Company through December 31, 1995.
Financial Condition
As of June 30, 1995, the Company's working capital deficit (current liabilities
less current assets) was $1,357,699, which was $688,890 less than the
$2,046,589 working capital deficit at December 31, 1994. Total current assets
of $2,583,627 included cash of $5,760, accounts receivable of $1,893,707,
prepaid expenses of $357,265, inventories of uniforms and supplies of $253,821
and other receivables of $73,074. Current liabilities of $3,941,326 included
current obligations under leases and otherlending agreements of $1,977,867,
amounts owed to trade creditors of $1,624,884, including amounts represented
by issued and outstanding checks, and other accrued expenses of $338,575.
Total assets as of June 30, 1995, at $11,710,086, increased by $1,713,766
(or 17.1%) during the six months ended June 30, 1995, primarily as a result of
the TE acquisition, an increase in accounts receivable and an increase in
equipment at net book value.
Accounts receivable at $1,893,707 increased by $348,962 (or 22.6%) during the
six months ended June 30, 1995. The number of weeks sales in outstanding
receivables was 5.0 at June 30, 1995, compared to 3.5 at December 31, 1994.
Other current assets at $684,160 decreased by $11,423 during the first six
months of 1995 primarily because of a decrease in prepaid expenses.
The net book value of equipment increased by $271,175 to $7,839,749 during the
six months as a result of additions of $1,143,788 in excess of depreciation of
$869,895 and disposals of $2,718.
9
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The additions included $460,733 for 12 new delivery vans, $70,403 for other
rolling stock equipment, $208,340 for equipment acquired in the TE
acquisition, $132,767 for electronic clipboards, $211,841 for conveyor and
other terminal equipment and $59,704 for computers and other office equipment.
Other assets at $187,169 increased by $5,326 because of advance rental
payments and security deposits related to new facilities lease agreements.
Total liabilities at $10,151,557 increased by $3,101,050 (or 44.0%) during the
six months ended June 30, 1995. Total debt of $5,455,324 increased by
$2,609,779 (or 91.7%). The increase was primarily due to the borrowing to fund
operating deficits, pay obligations under capital leases and debt issued and
liabilities assumed in connection with the acquisition of TE.
Capital lease obligations at $2,732.774 were decreased by $131,549 during the
six months as a result of scheduled principal payments of $525,789 in excess
of new additions of $394,240. The additions to capitalized leases were for
eight new delivery vans and assets acquired in the TE acquisition. Long term
debt at $4,091,802 increased $3,709,779 as a result of $4,056,580 of new
additions net of $346,801 of scheduled principal payments. The additional new
debt was incurred to finance the purchase of four new delivery vans and the
assets acquired in the TE acquisition. Short-term borrowings decreased by
$1,100,000 to $400,000 as a result of restructuring the bank debt to expand
the facility and enter into a $3,000,000 term loan agreement.
Accounts payable increased by $601,584 to $1,624,884 during the six months
ended June 30, 1995. Accrued expenses increased by $21,236 to $338,575.
The Company's stockholders' equity decreased by $1,387,284 for the six months
ended June 30, 1995, as a result of a net loss for the period and payment of a
$175,000 dividend on its preferred stock. Total stockholders' equity as of
June 30, 1995 was $1,578,529.
Results of Operations
The Company's net loss for the six months ended June 30, 1995 was $1,212,284
compared to a net profit of $93,698 for the same period of 1994. For the
quarter ended June 30, 1995 the loss was $1,064,307 compared to a net profit
of $12,261 for the same period of 1994. Revenue for six months ended June 30
, 1995, was $9,916,819 representing an increase of $277,506 (or 2.9%) over
revenue for the same period of 1994. Revenue for the three months ended June
30, 1995, was $4,853,489 representing a decrease of $84,949 (or 1.7%) from
revenue for the same period of 1994. The increase in revenue from existing
customers and new customers acquired in the TE acquisition was more than offset
by revenue lost from several major accounts which provided revenue to the
Company during the first six months and second quarter of 1994 but not during
the first six months and second quarter of 1995. The lack of revenues during
the first six months
10
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
of 1995 from these customers lost to UPS and the decrease in freight volume
from existing customers experienced during the second quarter of 1995 resulted
in a net loss for the first six months and second quarter of 1995, as compared
to net income for the first six months and second quarter of 1994.
Several major accounts were lost to UPS in the third quarter of 1994. In
response to the loss of these major customers, the Company filed a civil
complaint in federal district court against UPS, alleging, among other things,
that UPS has attempted to monopolize the market for ground-based business-to-
business parcel delivery service in Georgia and Florida in violation of federal
and state anti-trust laws. Additionally, the Company has redirected part of
its sales and marketing efforts to new market segments. As a result of these
efforts, during the first quarter of 1995, the Company replaced the revenue
from customer losses to UPS, however the margins on the replacement business
are not as large as the margins on the lost business.
While management believes that its redirected sales and marketing efforts will
provide positive results, there can be no assurance that such will be the case.
While maintaining high service capability to customers, it is not expected that
management can effect material reduction in cost of operations during 1995.
Accordingly, if the Company cannot continue to improve its customer base and
revenue during 1995, it will have to rely on outside sources to fund any
operating losses and repayment of indebtedness coming due in 1995. Although,
a major shareholder has indicated his intent to fund any cash losses, there
can be no guarantee that funds will be available when needed.
Total operating expenses (excluding interest expense) were $10,773,850 for the
first six months of 1995 and $5,714,616 for the second quarter of 1995. For
the first six months of 1995, total operating expenses increased $1,486,651
(or 16.0%) compared to those expenses for the first six months of 1994. For
the second quarter of 1995, total operating expenses were $5,714,616 an
increase of $915,452 (or 19.1%) over the second quarter of 1994. The operating
ratio (total operating expenses as a percentage of revenue), was 108.6% fo
r the six months ended June 30, 1995, compared to 96.3% for the six months
ended June 30, 1994, and 117.7% for the quarter ended June 30, 1995, compared
to 97.2% for the quarter ended June 30, 1994.
Operating salaries and benefits at $5,337,489 increased by $726,487 (or 15.8%)
for the first six months of 1995, and were 53.8% of revenue compared to 48.8%
for the first six months of 1994. For the second quarter of 1995, operating
salaries and benefits were $2,800,797, an increase of $457,552 (or 19.5%)
over those for the second quarter of 1994. Operating salaries and benefits
were 57.7% of revenue for the second quarter of 1995 compared to 47.4% for the
second quarter of 1994. The increase in operating salaries and benefits
occurred primarily in the Charlotte terminal because of the TE acquisition and
in Atlanta where significant new business was
11
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
generated. However, the Company has been unable to reduce salaries and benefits
at the Company's Florida terminals and still service existing package volume at
those terminals.
Fuel costs at $590,319 increased by $36,633 from the first six months of 1994
level of $553,686 and were 6.0% of revenue for the six months ended June 30,
1995, compared to 5.7% for the first six months of 1994. For the second
quarter of 1995, fuel costs were $302,760. They increased in the quarter
ended June 30, 1995, $14,835 from the second quarter 1994 level of 5.8% of
revenue to reach 6.2% of revenue.
Tires and maintenance expense at $356,988 increased by $327 from the first
six months 1994 level and represented 3.6% of revenue compared to 3.7% in the
first six months of 1994. Tires and maintenance expense at $182,803 decreased
by $7,117 from the second quarter 1994 level and represented 3.8% of revenue
in both the second quarter of 1994 and 1995.
Insurance costs increased by $65,336 to $973,980 or 9.8% of revenue in first
six months of 1995 as compared to $908,644 or 9.4% of first six months of 1994
revenue. Insurance costs increased by $30,964 to $524,980 or 10.8% of revenue
in second quarter of 1995 as compared to $494,016 or 10.0% of first quarter
1994 revenue. The increase resulted primarily from additional workman's
compensation insurance premiums.
The fixed components of operating cost (depreciation and amortization,
facilities and terminal expense) increased in first six months of 1995 over
the first six months of 1994 because of decisions made in early 1994 to
significantly increase the number of vehicles placed in service during the
last three quarters of 1994, to open new terminals during the last three
quarters of 1994 and to convert to electronic clipboards. Depreciation and
amortization was $848,698, an increase of $229,597 (or 37.1%) over the first
six months of 1995, and was 8.6% of revenue in the first six months of 1995
as compared to 6.4% in the same period of 1994. Depreciation and amortization
was $438,065, an increase of $126,532 (or 40.6%) over the second quarter of
1994, and was 9.0% of revenue in the second quarter of 1995 as compared to
6.3% in the same period of 1994.
Facilities expense (rent plus utilities) at $638,162 increased by $56,952 (or
9.8%) and was 6.4% of first six months 1995 revenue versus 6.0% in the first
six months of 1994. Facilities expense (rent plus utilities) at $306,574
increased by $5,409 (or 1.8%) and was 6.3% of second quarter 1995 revenue
versus 6.1% in the second quarter of 1994. Terminal expense increased by
$68,455 and $46,974 to $135,362 and $79,308 for the six months and quarter
ended June 30, 1995.
Purchased transportation, which includes amounts paid to trucking companies
to bring packages from customers distribution points outside the Company's
geographical operating area to the Company's terminals for delivery has
increased to $120,282 and $66,556 for the six months and
12
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
quarter ended June 30, 1995, from $20,253 for both the six months and quarter
ended June 30, 1994. The costs increased along with the associated revenues
because the packages were brought into the Company's distribution area from
outside during the entire six months of 1995 but only for a portion of the
second quarter in 1994.
Selling and administrative expense at $1,652,306 was 17.3% higher than the
first six months 1994 level and increased as a percentage of revenue from
14.6% in the 1994 first six months to 16.7% in the 1995 first six months.
For the second quarter of 1995, selling and administrative expense were
$940,458, an increase of $206,420 (or 28.1%) over those for the second
quarter 1994 and increased as a percentage of revenue from 14.9% in the 1994
second quarter to 19.4% in 1995 second quarter. The increases relate primarily
to additional personnel costs, legal expenses associated with the UPS
litigation and additional taxes and licenses.
The Company's operating loss for the six months ended June 30, 1995 was
$857,031 compared to an operating profit of $352,114 for the six months ended
June 30, 1994. Its operating loss for the quarter ended June 30, 1995 was
$861,127 compared to an operating profit of $139,274 for the quarter ended
June 30, 1994.
Interest expense at $355,254 increased $96,838 over the interest expense for
the six months ended June 30, 1994, resulting from additional amounts borrowed
under the Company's line of credit and debt issued and liabilities assumed in
the TE acquisition. Interest expense at $203,180, an increase of $76,167 over
the interest expense for the quarter ended June 30, 1994.
13
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At its Annual Meeting on May 18, 1995, the Company's Shareholders:
a) ratified the appointment by the Board of Directors of Coopers &
Lybrand as independent public accountants for the fiscal year
ending December 31, 1995, and
b) elected seven directors as follows:
T. Wayne Davis Chairman of the Board 1988
of Directors
E. Hoke Smith Director, President and 1985
Chief Executive Officer
J. Ray Gatlin Director 1986
Drue B. Linton Director 1986
Steven C. Koegler Director, Legal Counsel 1990
Terry Coleman Director 1990
Gayle Smith Director, Executive Vice 1990
President and Chief
Operating Officer
Item 6. Exhibits and Reports on Form 8-K
Exhibit 11 - Statement regarding computation of per share earnings.
14
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
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.
General Parcel Service, Inc.
Date: August 11, 1995
By: s/E. Hoke Smith, Jr.
E. Hoke Smith, Jr.
President and CEO
s/Wayne N. Nellums
Wayne N. Nellums
Vice President
Chief Financial Officer
15
<PAGE>
<TABLE>
EXHIBIT 11
GENERAL PARCEL SERVICE, INC.
COMPUTATION OF EARNINGS PER SHARE
(unaudited)
<CAPTION>
Three months ended June 30, Six months ended June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 3,758,671 3,758,671 3,758,671 3,758,671
Additional shares assuming conversion of:
Stock options, performance share
awards (1) - 351,240 - 351,240
---------- ---------- --------- ---------
Average common shares outstanding
and equivalents used in per share
calculation 3,758,671 4,109,911 3,758,671 4,109,911
========== ========== ========== ==========
<FN>
<F1>
(1) Stock options were not included except for the three months and six
months ended June 30, 1994, because inclusion in subsequent periods
calculations would have been anti-dilutive.
(2) Convertible preferred stock and convertible subordinated debentures
equivalents were not used to calculate fully diluted per share data
because the resulting earnings would have been anti-dilutive.
</FN>
</TABLE>
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Operations and Balance Sheet and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 5760
<SECURITIES> 0
<RECEIVABLES> 1901605
<ALLOWANCES> (7898)
<INVENTORY> 0
<CURRENT-ASSETS> 2583627
<PP&E> 13468256
<DEPRECIATION> (5628507)
<TOTAL-ASSETS> 11710086
<CURRENT-LIABILITIES> 3941326
<BONDS> 0
<COMMON> 37586
0
1000
<OTHER-SE> 1519943
<TOTAL-LIABILITY-AND-EQUITY> 11710086
<SALES> 9916819
<TOTAL-REVENUES> 9916819
<CGS> 0
<TOTAL-COSTS> 10773850
<OTHER-EXPENSES> 355253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 355253
<INCOME-PRETAX> (1212284)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1212284)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1212284)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
