<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
-----------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to_____________
Commission File Number: 000-18601
---------
TRANSIT GROUP, INC.
------------------
(Exact name of registrant as specified in its charter)
State of Florida 59-2576629
---------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 Paces Ferry, Suite 1740, Atlanta, Georgia 30339
----------------------------------------------------
(Address of principal executive offices) - (zip code)
(770) 444-0240
--------------
(Registrant's telephone number, including area code)
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 31,925,638 shares of the Company's common stock outstanding as of
November 8, 1999.
<PAGE>
TRANSIT GROUP, INC.
FORM 10-Q/A
INDEX
-----
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page Number
-----------
<S> <C>
Item 1
------
Financial Statements
Consolidated Balance Sheets
as of September 30, 1999 (unaudited) and December 31, 1998 3
Consolidated Statements of Income (unaudited) for the three
and nine month periods ended September 30, 1999 and 1998 4
Consolidated Statement of Changes in Total Non Redeemable
Preferred Stock, Common Stock and Other Shareholders' Equity (unaudited) 5
Consolidated Statements of Cash Flows (unaudited) for the nine
months ended September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2
------
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3
------
Quantitative and Qualitative Disclosures About
Market Risk 19
PART II. OTHER INFORMATION
Item 6
------
Exhibits and Reports on Form 8-K 20
</TABLE>
This quarterly report on Form 10-Q/A is being filed as a result of the
restatement of our consolidated financial statements for the three and nine
month periods ended September 30, 1999 to reflect an overstatement of revenue in
the amount of $.1 million and an understatement of expenses in the amount of $.4
million in the three month period ended September 30, 1999. Previously, we
restated and amended our Form 10-Q for the three and six month periods ended
June 30, 1999 to reflect a change in deferred tax asset valuation allowances
arising as result of changes in tax regulations. Our Form 10-Q filed on
November 15, 1999 is hereby superseded and restated as amended in its entirety.
2
<PAGE>
TRANSIT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,250 $ 2,020
Accounts receivable (net of allowance of $1,242 and $706) 62,490 28,437
Other current assets 12,522 6,714
-------- --------
Total current assets 78,262 37,171
-------- --------
Noncurrent assets:
Property, equipment, and capitalized leases 110,239 42,818
Goodwill 94,333 50,062
Other assets 739 476
-------- --------
Total noncurrent assets 205,311 93,356
-------- --------
Total assets $283,573 $130,527
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and capital leases $ 38,659 $ 12,273
Accounts payable 13,954 6,170
Bank overdrafts 1,649 1,319
Accrued expenses and other current liabilities 16,740 10,029
Net current liabilities of discontinued operations 29 273
-------- --------
Total current liabilities 71,031 30,064
-------- --------
Noncurrent liabilities:
Long-term debt and capital lease obligations 83,357 38,963
Note payable to affiliate of Chairman 2,600 3,500
Other liabilities 1,025 4,291
Deferred income taxes 12,064 439
-------- --------
Total noncurrent liabilities 99,046 47,193
-------- --------
Total liabilities 170,077 77,257
-------- --------
Redeemable common stock 3,675 5,115
-------- --------
Redeemable preferred stock 24,795 -
-------- --------
Non Redeemable preferred stock, common stock
and other shareholders' equity:
Preferred stock, no par value, 15,000,000 and 5,000,000 shares authorized - -
Common Stock, $.01 par value, 100,000 shares
authorized, 31,825,638 and 23,610,190 shares issued and outstanding 308 222
Note receivable secured by stock (770) (729)
Additional paid-in capital 99,510 68,411
Accumulated deficit (14,022) (19,749)
-------- --------
Total non redeemable preferred stock, common stock
and other shareholders' equity 85,026 48,155
-------- --------
Total liabilities and shareholders' equity $283,573 $130,527
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 93,272 $ 56,266 $ 233,283 $ 118,013
----------- ----------- ----------- -----------
Operating expenses:
Purchased transportation 31,934 22,957 84,368 49,798
Salaries, wages and benefits 24,762 13,035 59,518 26,785
Fuel 8,696 4,280 19,889 8,814
Operating supplies and expenses 9,867 6,365 24,328 12,241
Lease expense-revenue equipment 5,634 1,152 14,245 2,260
Insurance 1,450 1,754 3,235 2,857
Depreciation and amortization expense 4,048 2,342 9,193 5,334
General and administrative expense 2,295 1,502 6,263 3,189
----------- ----------- ----------- -----------
Total operating expenses 88,686 53,387 221,039 111,278
----------- ----------- ----------- -----------
Operating income 4,586 2,879 12,244 6,735
Interest expense 1,647 1,615 4,166 3,256
----------- ----------- ----------- -----------
Income before income taxes 2,939 1,264 8,078 3,479
Income taxes 1,559 43 1,493 252
----------- ----------- ----------- -----------
Net income 1,380 1,221 6,585 3,227
Preferred stock dividends (562) - (858) -
----------- ----------- ----------- -----------
Income available to common shareholders $ 818 $ 1,221 $ 5,727 $ 3,227
=========== =========== =========== ===========
Income per common share--basic $ 0.03 $ 0.05 $ 0.21 $ 0.15
=========== =========== =========== ===========
Income per common share--diluted $ 0.03 $ 0.05 $ 0.21 $ 0.14
=========== =========== =========== ===========
Weighted average number of common shares
outstanding - basic 29,835,744 23,363,430 26,787,949 21,980,326
=========== =========== =========== ===========
Weighted average number of common shares
outstanding - diluted 30,872,274 24,545,902 27,740,263 23,300,019
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL
NON REDEEMABLE PREFERRED STOCK, COMMON STOCK
AND OTHER SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Total
Common Additional Note receivable Accumulated shareholders'
stock paid-in capital secured by stock deficit equity
------ --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $222 $68,411 $(729) $(19,749) $48,155
Issuance of preferred stock - - - - -
Stock issued for acquisitions 85 30,825 - - 30,910
Stock purchased and retired (4) (1,544) - - (1,548)
Stock returned to settle
contingencies and retired (1) (118) - - (119)
Accrued interest - - (41) - (41)
Stock issued to affiliate of
Chairman 1 230 - - 231
Stock no longer subject to
redemption 4 1,436 - - 1,440
Preferred dividends - - - - (858)
Stock options exercised 1 218 - - 219
Stock issued in connection
with stock purchase plan - 52 - - 52
Net income - - - 6,585 6,585
---- ------- ----- --------- -------
Balance September 30, 1999 $308 $99,510 $(770) $(14,022) $85,026
==== ======= ===== ========= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 6,585 $ 3,227
--------- --------
Adjustments to reconcile income to cash
(used in) provided by continuing operations:
Depreciation and amortization 9,193 5,361
Deferred taxes (2,671)
Gain on sale of equipment (246) (264)
Changes in assets and liabilities
(Increase) decrease in accounts receivable (11,768) 214
Decrease in other assets (922) (109)
Decrease in accounts payable and accrued expenses (4,138) (2,639)
Other (678) 587
--------- --------
Total adjustments (11,230) 3,150
--------- --------
Net cash (used in) provided by continuing operations (4,645) 6,377
Net cash used in discontinued operations (13) (201)
--------- --------
Net cash (used in) provided by operating activities (4,658) 6,176
--------- --------
Cash flows from investing activities:
Business combinations, net of cash acquired (13,657) (4,470)
Proceeds from disposal of equipment 21,722 3,725
Purchase of equipment (3,506) (4,827)
--------- --------
Net cash provided by (used in) investing activities 4,559 (5,572)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of preferred stock 24,795 -
Repayment of capital lease obligations and long-term debt (38,862) (15,084)
Increase in long-term debt and capital lease obligations 15,138 14,964
Increase in bank overdraft 2,445 -
Stock redeemed and retired (1,548) (75)
Dividends (858) -
Stock options exercised 219 -
--------- --------
Net cash provided by (used in) financing activities 1,329 (195)
--------- --------
Increase in cash 1,230 409
Cash, beginning of period 2,020 790
--------- --------
Cash, end of period $ 3,250 $ 1,199
========= ========
Supplemental cash flow data
Cash paid for interest $ 4,512 $ 3,643
========= ========
Business combinations
Fair value of assets acquired $ 158,719 $ 56,638
Fair value of liabilities assumed (114,216) (36,097)
Common stock issued (30,792) (15,021)
--------- --------
Net cash payments $ 13,711 $ 5,520
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
TRANSIT GROUP, INC.
Notes to Consolidated Financial Statements
The information presented herein as of September 30, 1999, and for the three and
nine month periods ended September 30, 1999 and 1998 is unaudited. The December
31, 1998 balance sheet was derived from audited financial statements, but does
not include all disclosures required by generally accepted accounting
principles.
On June 25, 1999, new consolidated return regulations were issued that changed
the rules for using the Company's operating loss carryovers by eliminating the
requirement to apply the separate return limitation loss years limitation to
situations in which a change of ownership, as defined in Section 382 of the
Internal Revenue Code, occurred within six months of an acquired company
becoming a member of a consolidated group. Prior to this change in the
consolidated return regulations, the Company limited the income tax benefit
recognized in the financial statements for certain net operating losses of
acquired companies by establishing a valuation allowance for deferred tax
assets.
The Emerging Issues Task Force addressed the accounting for decreases in
deferred tax asset valuation allowances established in a purchased business
combination as a result of a change in tax regulations and reached a consesus
that the change in the valuation amount should be recognized through operating
income. Because the consensus of the Emerging Issues Tax Force was released
after our second quarter's operating results were released, we have restated the
second quarter of 1999, to include the benefit arising from the change in the
consolidated return regulations.
In connection with the Company's annual audit it was determined in the three
month period ended September 30, 1999 revenues were overstated by $.1 million
and expenses understated by $.4 million. Because the impact on earnings per
common share was $.01, the Company restated its results for the three and nine
month periods ended September 30, 1999.
1. Basis of Presentation
---------------------
The consolidated balance sheet of Transit Group, Inc. ("Transit Group" or the
"Company") as of September 30, 1999, its consolidated statements of income for
the three and nine month periods ended September 30, 1999 and 1998, and its
consolidated statements of cash flows for the nine month periods ended September
30, 1999 and 1998 include the consolidated balance sheets of the Company and its
eighteen acquired subsidiaries, and the results of operations and cash flows for
the periods since acquisition. The Company has made the following acquisitions:
<TABLE>
<CAPTION>
Company Date Acquired
------- -------------
<S> <C>
Carolina Pacific Distributors, Inc. 07/11/97
Service Express, Inc. 08/16/97
Transit Leasing, Inc. 08/16/97
Carroll Fulmer Group, Inc. 08/30/97
Rainbow Trucking, Inc. 12/30/97
Transportation Resources and Management, Inc. 01/31/98
Certified Transport, Inc. 05/05/98
KJ Transportation, Inc. 06/17/98
Network Transportation, Inc. 07/13/98
Diversified Trucking, Inc. 08/05/98
Northstar Transportation, Inc. 08/11/98
Priority Transportation, Inc. 01/19/99
Massengill Trucking Service, Inc. 03/03/99
KAT, Inc. 03/22/99
R&M Enterprises, Inc. 07/19/99
MDR Cartage, Inc. 07/30/99
Bestway Trucking, Inc. 07/30/99
Fox/Midwest, Inc. 09/27/99
</TABLE>
Certain prior year balances have been reclassified to conform to the current
year financial statement presentation.
2. Summary of Significant Accounting Policies
-------------------------------------------
7
<PAGE>
Management's Representation
- ---------------------------
The accompanying interim consolidated financial statements have been prepared by
the Company in accordance and consistent with the accounting policies stated in
the Company's 1998 Annual Report on Form 10-KSB and should be read in
conjunction with the consolidated financial statements appearing therein. In
the opinion of management, all adjustments necessary for a fair presentation of
such consolidated financial statements are reflected in the interim periods
presented. Additionally, all adjustments are of a normal recurring nature.
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-Q and do not contain certain information included in the annual
consolidated financial statements and notes of Transit Group.
3. Business Combinations
---------------------
From July 1997 through December 1998 the Company acquired 11 truckload carriers.
In January 1999, the Company acquired Priority Transportation, Inc. an Olive
Branch, Mississippi-based truckload carrier. Total consideration for all of the
outstanding shares of Priority was funded by the issuance of approximately
890,000 shares of Transit Group common stock, the payment of $1,000,000 cash,
and a $495,000 payment on a promissory note.
The Company acquired Massengill Trucking Service, Inc. in March 1999.
Massengill was a privately held truckload carrier based in Hickory Flat,
Mississippi. The acquisition was funded by the issuance of approximately
1,070,000 shares of Transit Group common stock, a cash payment of $1.3 million
at closing, and an $850,000 8% note payable over a five year period.
Also in March 1999, the Company acquired Chesterton, Indiana-based KAT, Inc. for
consideration comprised of approximately 812,000 shares of Transit Group common
stock and $725,000 in cash.
On July 19, 1999 the Company completed the acquisition of Gretna-Nebraska based
R&M Enterprises for consideration of 1.2 million shares of common stock and the
payment of $1.4 million in cash.
On July 30, 1999 the Company completed the acquisition of Bestway Trucking, Inc.
a Jeffersonville, Indiana-based dry van carrier and MDR Cartage, Inc.
headquartered in Jonesboro, Arkansas. In connection with the acquisition of
Bestway, the Company issued 1.5 million of its common stock and paid $6.8
million in cash. MDR was purchased for $1.8 million in cash and the issuance of
2.5 million of the Company's common stock.
The Company acquired Green Bay, Wisconsin based Fox/Midwest in September 1999.
The acquisition was funded by the issuance of 510,204 shares of common stock and
a cash payment of $1.9 million.
In November 1999, the Company acquired three divisions of Rocor, Inc.: Land
Transportation, IMC and RFS. At acquisition, these companies were merged into a
newly formed wholly-owned subsidiary of Transit Group, Inc. named Land
Transportation, LLC ("Land"). Based out of Atlanta, Georgia, Land operates a
fleet of approximately 450 owner operators in addition to an intermodal division
(IMC) and a brokerage division (RFS). This non-asset based entity was acquired
for $12 million in cash, a $6 million non-interest bearing note and 100,000
shares of Transit Group common stock.
The business combinations described above will be accounted for under the
purchase method of accounting. Accordingly, the operating results of the
acquired companies have been included in the Company's consolidated financial
statements since their respective dates of acquisition. Assets acquired and
liabilities assumed were recorded at fair market value.
The unaudited pro forma financial information reflects the operations of the 5
companies acquired in 1997, the 6 companies acquired in 1998 and the 8 companies
acquired in 1999 as if they all had been acquired on January 1, 1998. The
following adjustments were made to the historical financial statements of
acquired companies prior to their acquisition by the Company:
8
<PAGE>
. Reduced depreciation expense due to changes in depreciation policies
and estimated lives;
. Amortization of goodwill recorded in connection with the acquisitions;
. Recognition of lease expense incurred in connection with certain sale-
leaseback transactions;
. Additional interest costs for the cash portion of the acquisition costs;
. Interest costs of the acquired companies have been adjusted to reflect the
Company's financing costs;
. Provision for income taxes at the Company's estimated annual tax rate; and
. Excluded the impact of the change in the valuation allowance for deferred
taxes.
No projected provision for cost reductions (such as insurance, overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1998 through the date of acquisition.
Unaudited Pro Forma Combined Results of Operations
(In thousands except share data)
<TABLE>
<CAPTION>
Three months ended Sept. 30 Nine months ended Sept. 30
--------------------------- --------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 125,217 $ 117,640 $ 366,589 $ 348,595
=========== =========== =========== ===========
Net income $ 571 $ 786 $ 4,710 $ 3,150
=========== =========== =========== ===========
Income per basic common share $ .02 $ .02 $ .15 $ .10
=========== =========== =========== ===========
Income per diluted common share $ .02 $ .02 $ .14 $ .09
=========== =========== =========== ===========
Weighted average number of
basic common shares outstanding 31,919,988 32,200,618 31,875,125 32,192,926
=========== =========== =========== ===========
Weighted average number of
diluted common shares outstanding 32,956,518 33,383,090 32,827,439 33,512,619
=========== =========== =========== ===========
</TABLE>
4. Income Taxes
------------
At December 31, 1998, the Company had $27.4 million of federal net operating
loss carryforwards potentially available to offset taxable income which expire
during the years 2007 to 2012. The Company recognized $7.5 million in benefits
for these net operating losses in the December 31, 1998 financial statements
because management believed it is more likely than not that the benefits will be
realized. The Company will be limited in the amount of net operating losses
which can be offset against taxable income in any given year because of
significant changes in ownership. Certain pre-acquisition losses of acquired
companies will be unusable because of the change of ownership provisions and a
valuation allowance remains for those losses. To the extent these losses are
utilized, any benefit will be used to reduce goodwill as the losses were
incurred by acquired subsidiaries. At September 30, 1999 the net operating loss
carryforwards are approximately $24.9 million.
The Company determines its provisions for income taxes using its best estimate
of the effective tax rate expected to be applicable for the full fiscal year.
The difference between the provision for income taxes and the amount that would
be expected using the Federal statutory income tax rate of 34% is related to
nondeductible goodwill, changes in valuation allowances for deferred taxes,
amortization expense, the meal component of per diem expenses paid to drivers
and certain other non-deductible expenses.
9
<PAGE>
On June 25, 1999, new consolidated return regulations were issued that changed
the rules for using the Company's operating loss carryovers by eliminating the
requirement to apply the separate return limitation loss years limitation to
situations in which a change of ownership, as defined in Section 382 of the
Internal Revenue Code, occurred within six months of an acquired company
becoming a member of a consolidated group. Prior to this change in the
consolidated return regulations, the Company limited the income tax benefit
recognized in the financial statements for certain net operating losses of
acquired companies by establishing a valuation allowance for deferred tax
assets.
5. Redeemable and Non Redeemable Preferred Stock
---------------------------------------------
On May 13, 1999 the Company's shareholders retired the existing 5 million shares
of authorized preferred stock and authorized 20 million new shares of preferred
stock. The rights and privileges of the new preferred shares will be determined
upon issuance. The Company issued 5 million shares of preferred stock in the
transaction described in the following paragraph.
On May 14, 1999 the Company consummated an equity financing transaction with
General Electric Capital Corporation ("GECC"). GECC invested $25 million in
exchange for 5 million shares of 9% cumulative, redeemable preferred stock,
which are convertible to common shares at any time. The proceeds were used
primarily to finance future acquisitions although initially the Company paid
down certain borrowings under its revolving credit facility and other
borrowings.
On the third anniversary of the issue date, GECC has the right to require the
Company to redeem up to one third of the outstanding preferred shares at a price
equal to $5.00 per share plus all accrued and unpaid dividends. On the fourth
anniversary, GE may require the Company to redeem up to two thirds (on a
cumulative basis) of the outstanding preferred shares plus all accrued and
unpaid dividends. GECC can require the Company to redeem all remaining
outstanding preferred shares plus accrued and unpaid dividends on the fifth
anniversary of the issue date. After the fifth anniversary of the issue date of
the preferred shares, GECC shall have no further rights to cause the Company to
redeem any shares, which may then be outstanding.
6. Credit Facility
---------------
In October 1999 the Company entered into a new $150 million credit facility
which replaced its $33 million revolving credit facility. The credit facility
is comprised of a $110 million working capital revolver, which is secured by
receivables and equipment, and a $40 million acquisition component. The
revolver is interest only with a 5-year term. The acquisition component is
interest only for one year at which time it converts to a 4-year term facility
with quarterly principle payments. Both the working capital revolver and the
acquisition component bear interest at LIBOR plus 2% through December 31 at
which time the spread over LIBOR will be determined by the Company's financial
ratios. The new facility contains covenants which require, among other things,
net worth, leverage and fixed charge coverage ratios within specified levels and
contain other covenants customary in lending transactions of this type.
10
<PAGE>
7. Common Stock
------------
On May 13, 1999 the Company's shareholders voted to increase the number of
authorized common shares from 30 million to 100 million.
8. Stock Options
-------------
The Company has granted options and warrants to acquire its common stock at
various times under various plans, contracts, and employment agreements that
approximated or exceeded fair market at the date of issue. Options and warrants
which vest over various periods may be exercised over periods ranging up to ten
years and generally expire in five to ten years.
A summary of outstanding options and warrants is as follows:
<TABLE>
<CAPTION>
<S> <C>
Outstanding January 1, 1999 3,413,058
Granted during period 883,700
Exercised/redeemed (695,517)
Forfeited or expired (129,966)
--------------
Outstanding September 30, 1999 3,471,275
==============
</TABLE>
11
<PAGE>
TRANSIT GROUP, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
This Quarterly Report contains certain forward-looking statements, as defined in
the Private Securities Litigation Reform act of 1995, including or related to
the Company's future results including certain projections and business trends.
These and other statements, which are not historical facts, are based largely on
current expectations and assumptions of management and are subject to a number
of risks and uncertainties that could cause actual results to differ materially
from those contemplated by such forward-looking statements. Assumptions and
risks related to forward-looking statements include that the Company has a
history of operating losses and is pursuing a growth strategy that relies in
part on the completion of acquisitions of companies in the trucking industry;
that it will continue to price and market its services competitively; that
competitive conditions within the Company's markets will not change materially
or adversely; that the demand for the Company's services will remain strong; and
that the Company will retain key managers, drivers and other personnel.
Assumptions relating to forward-looking statements involve judgements with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many which are beyond the Company's
control. When used in this Quarterly Report, the words "estimate", "project",
"intend", and "expect" and similar expressions are intended to identify forward-
looking statements. Although the Company believes that assumptions underlying
the forward-looking statements are reasonable, any of the assumptions could
prove inaccurate and, therefore, there can be no assurance that the results
contemplated in the forward-looking information will be realized.
Management decisions are subjective in many respects and susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause the Company to alter its business
strategy, which may in turn, affect the Company's results of operations. In
light of the significant uncertainties inherent in the forward-looking
information included herein, the inclusion of such information should not be
regarded as our representation that any strategy, objectives or other plans will
be achieved. The forward-looking statements contained in this Quarterly Report
speak only as of the date of this Quarterly Report, and the Company does not
have any obligation to publicly update or revise any of these forward-looking
statements.
Liquidity and Capital Resources
- -------------------------------
In 1999 the Company increased the capacity of its revolving line of credit with
AmSouth Bank from $30 million to $33 million. Additionally, the Company
converted $5 million of debt, which was due in 1999, to a term facility which
amortizes over seven years and had a final maturity in January 2002.
Substantially all amounts available under the $33 million credit facility were
drawn down at September 30, 1999.
In October of 1999 the Company entered into a new $150 million credit facility
which replaced the $33 million facility. The new credit facility includes a $40
million acquisition component and $110 million which is secured by accounts
receivable and equipment.
In November 1998, the Company entered into a $50 million equipment operating
lease facility with a commercial lender. The facility is available to
restructure the financing of certain existing equipment and the remainder to
support future equipment leases. At September 30, 1999 approximately $4 million
was available under this facility.
The Company's acquisition strategy and requirements for replacing its revenue
equipment require significant capital resources. For the nine months ended
September 30, 1999, cash flow from operating activities was negative $4.7
million and capital expenditures were $3.5 million for new trucks and trailers.
The deficit in cash flow from operations is related primarily to the increase in
accounts receivable. The Company's higher sales level contributed to this
increase. In addition there was some deterioration in the collection efforts of
the newly acquired companies. In October the Company modified its collection
procedures at these locations. There can be no assurance that the Company can
continue to finance its fleet through operations, leases or commercial lenders.
12
<PAGE>
On May 14, 1999 the Company consummated an equity financing transaction with
General Electric Capital Corporation ("GECC"). GECC invested $25 million in
exchange for 5 million shares of 9% cumulative preferred stock, which are
convertible to common shares at any time. The proceeds were used primarily to
finance future acquisitions although initially the Company paid down certain
borrowings under its revolving credit facility, and other borrowings.
The Company believes that the amounts available from operating cash flows, funds
available under its current facilities and its equipment lease facility will be
sufficient to meet the Company's expected operating needs and planned capital
expenditures for the foreseeable future.
Redemption Rights for Selling Shareholders in Acquisitions
- ----------------------------------------------------------
In connection with the acquisitions of Capitol Warehouse, Service Express, and
Carroll Fulmer, the Company granted the selling shareholders the right to
require the Company to redeem a portion of the shares which they received in
exchange for selling their businesses to the Company. The dollar amount of
stock subject to mandatory redemption by the Company aggregated approximately
$8.1 million upon acquisition of those companies.
At September 30, 1999, holders of redemption rights with respect to $3.7 million
of stock may require either the Company to redeem the stock or the Chairman of
the Company to acquire the stock at a price of $3.60 per share. To the extent
such redemption rights are exercised, the Company will be required to fund the
cash required to meet its obligations under the redemption rights by drawing on
bank lines which may be available to its subsidiaries, or to call upon the
Chairman to purchase the stock under his obligations and guarantees associated
with the acquisition contracts.
Results of Operations - Three and nine month periods ended September 30, 1999
- -----------------------------------------------------------------------------
compared with the three and nine month periods ended September 30, 1998
- -----------------------------------------------------------------------
The following table sets forth items in the Consolidated Statement of Income for
the three and nine month periods ended September 30, 1999 and 1998 as a
percentage of operating revenues.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Operating revenues 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Purchased transportation 34.2 41.1 36.2 42.3
Salaries, wages and benefits 26.5 22.7 25.5 22.5
Fuel 9.3 7.6 8.5 7.5
Operating supplies and expenses 10.6 10.1 10.4 9.8
Lease expense - revenue equipment 6.0 5.6 6.1 3.6
Insurance 1.6 1.9 1.4 1.8
Depreciation and amortization expense 4.3 3.7 4.0 4.3
General and administrative expense 2.5 2.3 2.7 2.5
----- ----- ----- -----
Total expenses 95.0 95.0 94.8 94.3
----- ----- ----- -----
Operating income 5.0 5.0 5.2 5.7
Interest expense 1.8 2.8 1.8 2.8
----- ----- ----- -----
Income before income taxes 3.2 2.2 3.4 2.9
Income taxes 1.7 - .6 .2
----- ----- ----- -----
Net income 1.5% 2.2% 2.8% 2.7%
===== ===== ===== =====
</TABLE>
13
<PAGE>
Results of Operations - Three months ended September 30, 1999 vs. three months
- -------------------------------------------------------------------------------
ended September 30, 1998
- ------------------------
Operating revenues increased from $56.3 million in 1998 to $93.2 million, or
65.8%, for 1999. The increase is due primarily to the acquisition of ten
companies since June 1998 through September 1999. Comparable revenues for the 8
companies acquired prior to July 1998 (excluding Rainbow Trucking whose
operations were absorbed by Bestway) increased by 10.0% for the three month
period ended September 30, 1999 compared to this same period in the prior year.
Purchased transportation as a percentage of operating revenues decreased from
41.1% in 1998 to 34.2% in 1999 due to changes in the fleet mix from brokerage
and owner-operators to Company owned trucks as a result of the acquisitions
since June 1998.
Salaries, wages and benefits as a percentage of operating revenues increased
from 22.7% in 1998 to 26.5% in 1999. The increase as a percentage of operating
revenues is attributed to the change in revenue mix discussed in the preceding
paragraph as well as continued pressure on driver wages. Should driver wages
continue to increase as a result of the industry-wide driver shortage, there can
be no assurance that these costs can be passed along through increased freight
rates.
Fuel as a percentage of operating revenues increased from 7.6% in 1998 to 9.3%
in 1999. Fuel costs as a percentage of operating revenues increased as a result
of changes in the Company's revenue mix. In addition, during the first quarter
of 1999, fuel costs began to increase over the amount paid in the fourth quarter
of 1998. Should fuel costs continue to increase, there can be no assurance that
these costs can be passed along to our customers.
Operating supplies and expenses as a percentage of operating revenues increased
from 10.1% in 1998 to 10.6% in 1999 due to changes in the revenue mix discussed
above.
Lease expense - revenue equipment, expressed as a percent of operating revenues,
increased from 5.6% in 1998 to 6.0% in 1999. This increase is related to the
utilization of the Company's $50 million equipment operating lease facility.
Insurance expense as a percentage of operating revenues declined from 1.9% in
1998 to 1.6% in 1999.
Depreciation and amortization expense as a percentage of operating revenues
increased from 3.7% in 1998 to 4.3% in 1999.
General and administrative expense as a percentage of operating revenues
increased from 2.3% in 1998 to 2.5% in 1999.
Interest expense declined from 2.8% of revenues in 1998 to 1.8% in 1999 as a
result the increased use of leased equipment.
Income taxes increased from $.04 million in 1998 to $1.6 million in 1999 as the
Company recognized the future value of net operating loss carryforwards in the
fourth quarter of 1998. Previously these benefits were recognized when realized
which lowered the effective tax rates in prior periods. The difference between
the provision for income taxes that would be expected using the Federal
statutory rate and the Company's actual rate is attributed to non-deductible
goodwill and the limitations imposed on the deductibility of the meal component
of per diem payments paid to the Company's drivers.
14
<PAGE>
Results of Operations - Nine months ended September 30, 1999 vs. nine months
- ----------------------------------------------------------------------------
ended September 30, 1998
- ------------------------
Operating revenues increased from $118.0 million in 1998 to $233.3 million, or
97.7%, for 1999. The increase is due primarily to the acquisition of 13
companies from January 1998 through September 1999.
Purchased transportation as a percentage of operating revenues decreased from
42.3% in 1998 to 36.2% in 1999. Changes in the fleet mix from brokerage and
owner-operators to company owned trucks as a result of the acquisitions resulted
in the decline in purchased transportation as a percentage of sales.
Salaries, wages and benefits as a percentage of operating revenues increased
from 22.5% in 1998 to 25.5% in 1999. The increase as a percentage of operating
revenues is attributed to the change in revenue mix discussed in the preceding
paragraph as well as continued pressure on driver wages. Should driver wages
continue to increase as a result of the industry-wide driver shortage, there can
be no assurance that these costs can be passed along through increased freight
rates.
Fuel as a percentage of operating revenues increased from 7.5% in 1998 to 8.5%
in 1999. Fuel costs as a percentage of operating revenues increased as a result
of fuel costs and the change in revenue mix. Should fuel costs continue to
increase, there can be no assurance that these costs can be passed along to our
customers.
Operating supplies and expenses as a percentage of operating revenues increased
from 9.8% in 1998 to 10.4% in 1999.
Expressed as a percent of operating revenues, Lease expense - revenue equipment
increased from 3.6% in 1998 to 6.1% in 1999. This increase is related to the
utilization of the Company's $50 million equipment operating lease facility.
Insurance expense as a percentage of operating revenues decreased from 1.8% in
1998 to 1.4% in 1999. The decrease as a percentage of operating revenues is due
to the Company's ability to negotiate more favorable insurance rates because of
its larger, more diverse insurance base.
Depreciation and amortization expense as a percentage of operating revenues
decreased from 4.3% in 1998 to 4.0% in 1999. The decrease as a percentage of
operating revenues is due to the increased use of leased equipment.
General and administrative expense as a percentage of operating revenues
increased nominally over the same period in the prior year.
Operating income increased from $6.7 million in 1998 to $12.2 million, or 81.8%,
in 1999. Operating income as a percentage of operating revenues decreased from
5.7% in 1998 to 5.2% in 1999 as a result of the factors discussed above.
Interest expense increased from $3.3 million in 1998 to $4.2 million, or 27.9%,
in 1999 as a result of increased borrowings to fund acquisitions offset by more
favorable interest rates and the increased use of leased equipment.
In 1999, as a result of changes in Federal tax laws, the Company reduced the
valuation allowance for net operating loss carryforwards and recognized a
benefit of $2.7 million. The difference between the provision for income taxes
that would be expected using the Federal statutory rate and the Company's actual
rate is attributed to non-deductible goodwill and the limitations imposed on the
deductibility of the meal component of per diem payments paid to the Company's
drivers.
Results of Operations - Unaudited Pro Forma results three and nine months ended
- -------------------------------------------------------------------------------
September 30, 1999 compared with the three and nine months ended September 30,
- ------------------------------------------------------------------------------
1998
- ----
Since July 1997, the Company has acquired 19 truckload carriers. Transit Group
has enabled these companies to reduce certain costs particularly in the areas of
insurance, interest and leasing costs, fuel, and redundant overhead. The
Company's strategy is to allow the acquired companies to focus on marketing,
customer service, and operations
15
<PAGE>
while administrative and financial costs are centralized in the Corporate
Services Division of Transit Group Transportation, LLC.
The unaudited pro forma financial information reflects the operations of the 19
acquired companies as if they all had been acquired on January 1, 1998. The
following adjustments were made to the historical financial statements of
acquired companies prior to their acquisition by the Company:
. Reduced depreciation expense due to changes in depreciation policies and
estimated lives;
. Amortization of goodwill recorded in connection with the acquisitions;
. Recognition of lease expense incurred in connection with certain sale-lease
back transactions;
. Additional interest costs for the cash portion of the acquisition costs;
. Interest costs of the acquired companies have been adjusted to reflect the
Company's financing costs;
. Provision for income taxes at the Company's estimated annual rates; and
. Excluded the impact of the change in the valuation allowance for deferred
taxes.
No projected provision for cost reductions (such as insurance, overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1998 through the date of acquisition.
Unaudited Results of Operations - Three months ended September 30, 1999 vs.
- ---------------------------------------------------------------------------
three months ended September 30, 1998
- -------------------------------------
Unaudited Pro Forma Combined Results of Operations
(In thousands except share data)
<TABLE>
<CAPTION>
Three months ended
--------------------------------------------
September 30, 1999 September 30, 1998
---------------------- --------------------
$ % $ %
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Operating revenues $ 125,217 100% $ 117,640 100%
----------- ---- ----------- ----
Operating expenses 111,696 89.2 101,620 86.4
Depreciation and amortization 5,749 4.6 6,819 5.8
General and administrative expenses 2,966 2.4 2,979 2.5
----------- ---- ----------- ----
Total operating expenses 120,411 96.2 111,418 94.7
----------- ---- ----------- ----
Operating income 4,806 3.8 6,222 5.3
Interest expense 2,691 2.1 3,841 3.3
----------- ---- ----------- ----
Income before income taxes 2,115 1.7 2,381 2.0
Income taxes 1,544 1.2 1,595 1.3
----------- ---- ----------- ----
Net income $ 571 .5 $ 786 .7
=========== ==== =========== ====
Income per basic common share $ .02 $ .02
=========== ===========
Income per diluted common share $ .02 $ .02
=========== ===========
Weighted average number of basic common
shares outstanding 31,919,988 32,200,618
=========== ===========
Weighted average number of diluted common
shares outstanding 32,956,518 33,383,090
=========== ===========
</TABLE>
16
<PAGE>
Excluding Fox Midwest (which was acquired on September 27, 1999) comparable
revenues increased by 8.1% in the three month period ended September 30 1999
compared to the same period in the prior year. The strength of the U.S. economy
and improvements in load sharing arrangements among the acquired companies
contributed to this improvement.
The Company has financed substantially all of its 1999 equipment acquisitions
with operating leases. As a consequence operating expenses have increased, as a
percent of operating revenues, over the prior year.
Expressed as a percent of operating revenues, depreciation and amortization
expense has declined in the three months ended September 30, 1999 compared to
the same period in 1998 due to the utilization of operating leases.
General and administrative expenses remained relatively flat (as a percent of
operating revenues) in both periods presented.
The increase in interest expense is related to financing costs incurred in
connection with the cash component of the third quarter 1999 acquisitions.
The impact of pro forma, non-deductible goodwill, non-deductible per diem costs
and preacquisition losses incurred by the acquired companies caused an increase
in the Company's effective income tax rate. As these companies were merged into
Transit Group, certain operational benefits (insurance, fuel, equipment costs)
were realized and the acquired companies subsequently reported profits. It is
anticipated that the actual effective income tax rate of the Company in the
future will approximate 50%.
17
<PAGE>
Unaudited Results of Operations - Nine months ended September 30, 1999 vs. nine
- -------------------------------------------------------------------------------
months ended September 30, 1998
- -------------------------------
Unaudited Pro Forma Combined Results of Operations
(In thousands except share data)
<TABLE>
<CAPTION>
Nine months ended
-------------------------------------------
September 30, 1999 September 30, 1998
------------------- -------------------
$ % $ %
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Operating revenues $ 366,589 100% $ 348,595 100%
----------- ---- ----------- ----
Operating expenses 321,064 87.6 301,033 86.4
Depreciation and amortization 17,233 4.7 19,519 5.6
General and administrative expenses 8,940 2.4 8,970 2.6
----------- ---- ----------- ----
Total operating expenses 347,237 94.7 329,522 94.6
----------- ---- ----------- ----
Operating income 19,352 5.3 19,073 5.4
Interest expense 8,509 2.3 10,588 3.0
----------- ---- ----------- ----
Income before income taxes 10,843 3.0 8,485 2.4
Income taxes 6,133 1.7 5,335 1.5
----------- ---- ----------- ----
Net income $ 4,710 1.3 $ 3,150 .9
=========== ==== =========== ====
Income per basic common share $ .15 $ .10
=========== ===========
Income per diluted common share $ .14 $ .09
=========== ===========
Weighted average number of basic common
shares outstanding 31,875,125 32,192,926
=========== ===========
Weighted average number of diluted
common shares outstanding 32,827,439 33,512,619
=========== ===========
</TABLE>
Excluding Fox/Midwest (which was acquired on September 27, 1999) comparable
revenues increased by 7.4% in the nine month period ended September 30 1999
compared to the same period in the prior year. The strength of the U.S. economy
and improvements in load sharing arrangements among the acquired companies
contributed to this improvement.
The Company has financed substantially all of its 1999 equipment acquisitions
with operating leases. As a consequence operating expenses have increased, as a
percent of operating revenues over the prior year. Expressed as a percent of
operating revenues, depreciation and amortization expensed has declined in the
three months ended September 30, 1999 compared to the same period in 1998.
General and administrative expenses remained relatively flat ( as a percent of
operating revenues) in both periods presented.
18
<PAGE>
The impact of the proforma, non-deductible goodwill, non-deductible per diem
costs caused an increase in the Company's effective income tax rate. As these
companies were merged into Transit Group, certain operational benefits
(insurance, fuel, equipment costs) were realized and the acquired companies
subsequently reported profits. It is anticipated that the actual effective
income tax rate of the Company in the future will approximate 50%.
Year 2000
- ---------
Of the Company's 19 divisions, one is not Y2K compliant and is in the process of
being converted. The anticipated completion date is December 1, 1999. The
Company is aware of the seriousness associated with the issues related to the
Year 2000 and its potential impact. In response to this unprecedented event,
management believes that it has identified, outlined and set forth actions that
will upgrade all information technology and non-information technology systems
that are not Year 2000 compliant with year 2000 compliant systems by December
1999. Currently, management estimates that the Company is 95% complete in its
efforts to be Year 2000 compliant.
Due to the contractual relationships with current software and hardware vendors,
the majority of the costs associated with Year 2000 compliance have been covered
under the annual maintenance fees that the Company normally pays. Since the
majority of expenses are spread throughout the year, management has not
specifically itemized expenses related to the Year 2000. Management estimates
that the Company has spent approximately $285,000 to date on Year 2000
compliance and estimates spending an additional $15,000 towards Year 2000
compliance during the remainder of 1999.
During its review of the Company's Year 2000 compliance plan, management
realized that as important as internal systems are to its mission of Year 2000
compliance, customers, vendors and community resources (utilities, local
telephone company, etc), represent a significant portion of the business
processes as well. To that end, the Company is asking its critical partners to
provide to the Company in writing, their own Year 2000 progress plans. Although
management cannot guarantee the Company's compliance, it will continue to
monitor its progress during the remainder of 1999 and refine plans, as
information becomes available.
The Company has identified its billing, dispatch, settlement, and fleet
monitoring system as its mission critical internal systems that could be
affected by the Year 2000. The Company began testing the Year 2000 compliant
version of this software in the third quarter of 1999.
The Company has developed a contingency plan that includes external vendor
readiness as well as the possibility of an internal system failure. All of the
Company's significant vendors have represented that they are Y2K compliant. If
internal systems were to fail, the Company will have a manual system in place to
provide the necessary business activities to its customers until the Company can
correct any such failure.
Although the possibility of failure exists, management believes that its Year
2000 efforts will be completed, and its systems tested in a production
environment in accordance with its plan by December 1999.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable
19
<PAGE>
TRANSIT GROUP, INC. AND SUBSIDIARIES
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement regarding computation of earnings per share.
27.1 Financial Data Schedule.
(b) The Company filed a Current Report on Form 8-K on July 30, 1999 to report
the acquisition of R&M Enterprises, Inc.
(c) The Company filed a Current Report on Form 8-K on August 13, 1999 to
report the acquisition of MDR Cartage, Inc and Bestway Trucking, Inc.
Signature
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.
Transit Group, Inc.
Date: April 7, 2000 By: /s/Wayne N. Nellums
--------------------
Wayne N. Nellums
Senior Vice President,
Chief Financial Officer
and Secretary
20
<PAGE>
Exhibit 11.1 Statement regarding computation of earnings per share.
The Company computes earnings per share in accordance with FAS No, 128, Earnings
Per Share. For the three and nine month periods ended September 30, 1999, the
Company paid dividends on its outstanding convertible preferred convertible
stock.
The following tables represents the reconciliation of weighted average shares
for purposes of calculating basic and diluted earnings per share for the three
and nine month periods ended December 30, 1999 and 1998.
Weighted-average shares for the three months ended September 30, 1998 is
calculated as follows:
<TABLE>
<CAPTION>
Dates Shares Fraction Weighted
----- ------ -------- --------
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
July 1-July 5 22,870,603 05/92 1,242,968
Exercise of options on July 6 15,500
----------
July 6-July 12 22,886,103 07/92 1,741,334
Issuance of common stock on July 13 191,491
----------
July 13-July 22 23,077,594 10/92 2,508,434
Exercise of options on July 23 9,900
----------
July 23-August 4 23,087,494 13/92 3,262,363
Issuance of common stock on August 5 178,519
----------
August 5-August 10 23,266,013 06/92 1,517,349
Issuance of common stock on August 11 349,091
----------
August 11-September 30 23,615,104 51/92 13,090,982
---------- ----------
Weighted average shares 23,363,430
==========
</TABLE>
21
<PAGE>
Weighted-average shares for the nine months ended September 30, 1998 is
calculated as follows:
<TABLE>
<CAPTION>
Dates Shares Fraction Weighted
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
January 1 - January 29 20,574,626 29/273 2,185,583
Issuance of common stock on January 30 365,957
----------
January 30 - April 2 20,940,583 63/273 4,832,442
Retirement of common stock on April 3 (20,833)
----------
April 3 - May 4 20,919,750 32/273 2,452,132
Issuance of common stock on May 5 1,072,165
----------
May 5 - June 16 21,991,915 43/273 3,463,928
Issuance of common stock on June 17 878,688
----------
June 17 - July 5 22,870,603 19/273 1,591,727
Exercise of options on July 6 15,500
----------
July 6 - July 12 22,886,103 07/273 586,823
Issuance of common stock on July 13 191,491
----------
July 13 - July 22 23,077,594 10/273 845,333
Exercise of options on July 23 9,900
----------
July 23 - August 4 23,087,494 13/273 1,099,404
Issuance of common stock on August 5 178,519
----------
August 5 - August 10 23,266,013 06/273 511,341
Issuance of common stock on August 11 349,091
----------
August 11 - September 30 23,615,104 51/273 4,411,613
---------- ----------
Weighted average shares 21,980,326
==========
</TABLE>
22
<PAGE>
Weighted-average shares for the three months ended September 30, 1999 is
calculated as follows:
<TABLE>
<CAPTION>
Dates Shares Fraction Weighted
----- ------ -------- --------
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
July 1 26,058,376 1/92 283,243
Exercise of options on July 2 35,307
----------
July 2-July 18 26,093,683 17/92 4,821,659
Issuance of common stock on July 19 1,215,000
----------
July 19-July 29 27,308,683 11/92 3,265,169
Issuance of common stock on July 30 3,992,501
----------
July 30-August 3 31,301,184 5/92 1,701,151
Exercise of stock options on August 4 14,250
----------
August 4-September 26 31,315,434 54/92 18,380,798
Issuance of common stock on September 27 510,204
----------
September 27-September 30 31,825,638 4/92 1,383,723
---------- ----------
Weighted average shares 29,835,744
==========
</TABLE>
23
<PAGE>
Weighted-average shares for the nine months ended September 30, 1999 is
calculated as follows:
<TABLE>
<CAPTION>
Dates Shares Fraction Weighted
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
January 1 - January 3 23,610,190 03/273 259,453
Retirement of common stock on January 4 (384,637)
----------
January 4 - January 18 23,225,553 15/273 1,276,129
Issuance of common stock on January 19 890,000
----------
January 19 - February 22 24,115,553 35/273 3,091,738
Issuance of common stock on February 23 50,130
----------
January 23 - March 2 24,165,683 08/273 708,152
Issuance of common stock on March 3 1,069,518
----------
March 3 - March 18 25,235,201 16/273 1,478,986
Exercise of options on March 19 811,500
----------
March 19 - April 4 26,046,701 17/273 1,621,956
Retirement of options on April 5 (29,229)
----------
April 5 - April 22 26,017,472 18/273 1,715,438
Issuance of common stock on April 23 20,823
----------
April 23 - June 8 26,038,295 47/273 4,482,783
Exercise of options on June 9 10,081
----------
June 9 - June 15 26,048,376 7/273 667,907
Exercise of options on June 16 10,000
----------
June 16 - July 1 26,058,376 16/273 1,527,231
Exercise of options on July 2 35,307
----------
July 2 - July 18 26,093,683 17/273 1,624,881
Issuance of common stock on July 19 1,215,000
----------
July 19 - July 29 27,308,683 11/273 1,100,350
Issuance of common stock on July 30 3,992,501
----------
July 30 - August 3 31,301,184 5/273 573,282
Exercise of options on August 4 14,250
----------
August 4 - September 26 31,315,434 54/273 6,194,262
Issuance of common stock on September 27 448,165
----------
September 27 - September 30 31,763,599 4/273 465,401
---------- ----------
Weighted average shares 26,787,949
==========
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted-average shares: 29,835,744 23,363,430 26,787,949 21,980,326
Plus: Incremental shares from
assumed conversions of warrants
and options 1,036,530 1,182,472 952,304 1,319,693
---------- ---------- ---------- ----------
Adjusted weighted average shares 30,872,274 24,545,902 27,740,263 23,300,019
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Income for EPS Computation Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
------ ------- ------ ------
<S> <C> <C> <C> <C>
Income from continuing operations $1,380 $1,221 $6,585 $3,227
Preferred stock dividend
requirement 562 -- 858 --
------ ------ ------ ------
Income available to common
shareholders $ 818 $1,221 $5,727 $3,227
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
The basic EPS computation is as follows:
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
------- ------ ------ -------
<S> <C> <C> <C> <C>
Income per common share - basic:
Total $0.03 $0.05 $0.21 $0.15
===== ===== ====== ======
</TABLE>
The diluted EPS computation is as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
------------------- -------------------
1999 1998 1999 1998
----- ----- ---- ----
<S> <C> <C> <C> <C>
Income per common share - diluted:
Total $0.03 $0.05 $0.21 $0.14
===== ===== ===== =====
</TABLE>
The equation for computing (basic and diluted) EPS is:
Income available to common stockholders
---------------------------------------
Weighted-average shares
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated Statements of Operations and Balance Sheets and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 3,250,000
<SECURITIES> 0
<RECEIVABLES> 63,732,000
<ALLOWANCES> 1,242,000
<INVENTORY> 0
<CURRENT-ASSETS> 78,262,000
<PP&E> 121,655,000
<DEPRECIATION> 11,416,000
<TOTAL-ASSETS> 283,573,000
<CURRENT-LIABILITIES> 71,031,000
<BONDS> 0
0
0
<COMMON> 308,000
<OTHER-SE> 84,718,000
<TOTAL-LIABILITY-AND-EQUITY> 283,573,000
<SALES> 233,283,000
<TOTAL-REVENUES> 233,283,000
<CGS> 0
<TOTAL-COSTS> 221,039,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,166,000
<INCOME-PRETAX> 8,078,000
<INCOME-TAX> 1,493,000
<INCOME-CONTINUING> 6,585,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,585,000
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
</TABLE>
