<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-23192
CELADON GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3361050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE CELADON DRIVE
INDIANAPOLIS, IN 46235-4207
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (317) 972-7000
Indicate by check mark whether the Registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
The number of shares outstanding of the Common Stock ($.033 par value) of
the Registrant as of the close of business on February 14, 2000 was
7,776,557.
<PAGE>
CELADON GROUP, INC.
INDEX TO
DECEMBER 31, 1999 FORM 10-Q
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at December 31, 1999
and June 30, 1999..........................................................................3
Condensed Consolidated Statements of Operations - For the three and six months
ended December 31, 1999 and 1998...........................................................4
Condensed Consolidated Statements of Cash Flows - For the three months
ended December 31, 1999 and 1998...........................................................5
Notes to Condensed Consolidated Financial Statements ......................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................11
PART II. OTHER INFORMATION
Item 5. Other..............................................................................15
Item 6. Exhibits and Reports on Form 8-K...................................................15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
CELADON GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
---- ----
(UNAUDITED)
<S> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents.................................................. $ 306 $ 695
Trade receivables, net of allowance ....................................... 55,375 3,884
Accounts receivable - other................................................ 5,942 5,336
Prepaid expenses and other current assets.................................. 8,276 6,941
Tires in service .......................................................... 4,849 4,179
Income tax recoverable..................................................... --- 29
Deferred income tax ...................................................... 4,848 4,847
--------- --------
Total current assets ................................................ 79,596 65,911
--------- --------
Property and equipment, at cost ................................................ 143,606 141,213
Less accumulated depreciation and amortization............................. 32,878 33,629
--------- --------
Net property and equipment............................................ 110,728 107,584
--------- --------
Tires in service ............................................................... 2,187 2,331
Goodwill, net of accumulated amortization....................................... 21,210 10,967
Other assets.................................................................... 2,228 1,966
--------- --------
Total assets............................................................... $ 215,949 $188,759
========= ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable........................................................... $ 9,878 $ 5,505
Accrued expenses .......................................................... 16,380 17,953
Bank borrowings and current maturities of long-term debt................... 5,224 7,239
Current maturities of capital lease obligations............................ 16,015 15,099
Income tax payable......................................................... 1,582 ---
--------- --------
Total current liabilities............................................ 49,079 45,796
--------- --------
Long-term debt, net of current maturities ...................................... 49,102 18,613
Capital lease obligations, net of current maturities............................ 47,036 52,967
Deferred income tax............................................................. 12,864 14,065
--------- --------
Total liabilities.......................................................... 158,081 131,441
--------- --------
Minority interest............................................................... 12 12
Commitments and contingencies................................................... --- ---
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 179,985 shares, issued and
outstanding zero shares.................................................. --- ---
Common stock, $.033 par value, authorized 12,000,000 shares;
issued 7,786,430 shares at December 31, 1999 and June 30, 1999 ............ 257 257
Additional paid-in capital................................................. 56,632 56,679
Retained earnings.......................................................... 1,784 1,319
Accumulated other comprehensive income..................................... (720) (605)
Treasury stock, at cost, 9,873 and 34,773 shares at December 31, 1999
and June 30, 1999, respectively ......................................... (97) (344)
--------- --------
Total stockholders' equity........................................... 57,856 57,306
--------- --------
Total liabilities and stockholders' equity........................... $ 215,949 $188,759
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue ........................ $ 86,612 $ 69,402 $ 169,277 $ 141,515
--------- --------- --------- ---------
Operating expenses:
Salaries, wages and employee benefits 23,401 18,360 46,716 37,550
Fuel ................................ 8,696 6,940 16,626 13,894
Operating costs and supplies ........ 6,544 6,998 12,597 13,586
Insurance and claims ................ 2,104 1,664 4,359 3,233
Depreciation and amortization ....... 3,444 3,631 6,687 7,130
Rent and purchased transportation ... 32,983 24,063 62,674 49,204
Professional and consulting fees .... 388 1,091 790 1,396
Communications and utilities ........ 1,132 1,003 2,287 2,007
Permits, licenses and taxes ........ 1,401 1,340 2,910 2,684
General, administrative and selling . 2,621 2,175 5,318 4,331
--------- --------- --------- ---------
Total operating expenses ........ 82,714 67,265 160,964 135,015
--------- --------- --------- ---------
Operating income ......................... 3,898 2,137 8,313 6,500
Other (income) expense:
Interest income ..................... (29) (17) (57) (112)
Interest expense .................... 2,194 1,894 4,224 3,889
Other expense, net .................. 61 4 150 10
Loss on disposition of equipment .... -- -- 3,266 --
--------- --------- --------- ---------
Income before income taxes .......... 1,672 256 730 2,713
Provision for income taxes .......... 619 98 265 1,024
--------- --------- --------- ---------
Net Income ........................ $ 1,053 $ 158 $ 465 $ 1,689
========= ========= ========= =========
Earnings per Common Share:
Diluted Earnings Per Share .......... $ 0.14 $ 0.02 $ 0.06 $ 0.22
Basic Earnings Per Share ............ $ 0.14 $ 0.02 $ 0.06 $ 0.22
Average Shares Outstanding:
Diluted ............................. 7,792 7,754 7,784 7,803
Basic ............................... 7,777 7,730 7,774 7,728
</TABLE>
4
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
DECEMBER 31,
------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..........................................................$ 465 $1,689
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................................. 6,778 7,130
Loss on disposition of equipment.......................................... 3,266 ---
Provision for deferred income taxes....................................... (1,202) (561)
Provision for doubtful accounts........................................... 279 236
Changes in assets and liabilities:
Trade receivables...................................................... (7,180) 2,259
Accounts receivable -- other........................................... (510) (294)
Income tax recoverable................................................. 67 1,938
Tires in service....................................................... (654) (906)
Prepaid expenses and other current assets.............................. (650) (263)
Other assets........................................................... 139 (4)
Accounts payable and accrued expenses.................................. (2,140) (834)
Income taxes payable................................................... 1,582 ---
------- ------
Net cash provided by operating activities.............................. 240 10,390
------- ------
Cash flows from investing activities:
Proceeds on sale of property and equipment.................................. 8,798 957
Purchase of property and equipment.......................................... (5,744) (9,154)
Purchase of business, net of cash...........................................(24,921) ---
Deposits.................................................................... (12) 131
------- ------
Net cash used for investing activities.................................(21,879) (8,066)
------- ------
Cash flows from financing activities:
Purchase of common stock held in treasury................................... --- (40)
Proceeds from issuance of common stock held in treasury..................... 200 250
Proceeds from bank borrowings and debt...................................... 35,430 7,535
Payments of bank borrowings and debt ....................................... (8,158) (3,161)
Principal payments under capital lease obligations.......................... (6,222) (8,709)
------- ------
Net cash provided by (used for) financing activities .................. 21,250 (4,125)
------- ------
Decrease in cash and cash equivalents....................................... (389) (1,801)
Cash and cash equivalents at beginning of period............................ 695 2,537
------- ------
Cash and cash equivalents at end of period..................................$ 306 $ 736
======= ======
</TABLE>
5
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial reporting and the general instructions to Form 10-Q of
Regulation S-X. Accordingly, they do not include certain information and note
disclosures required by generally accepted accounting principles for annual
financial reporting and should be read in conjunction with the consolidated
financial statements and notes thereto of Celadon Group, Inc. (the "Company") as
of and for each of the three years in the period ended June 30, 1999.
The unaudited interim financial statements reflect all adjustments (all
of a normal recurring nature) which management considers necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the interim period are not necessarily
indicative of the results that may be reported for the full year.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(2) GEOGRAPHICAL INFORMATION AND SIGNIFICANT CUSTOMERS
The Company predominately operates and provides its transportation
services in the truckload transportation segment of the transportation industry.
The Company generates revenue from its truckload operations in the United
States, Canada and Mexico.
6
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Information as to the Company's operations by geographic area is
summarized below (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue:
United States ......... $ 69,641 $ 53,394 $135,887 $110,147
Canada ................ 12,937 12,862 26,379 24,906
Mexico ................ 4,024 3,146 7,011 6,462
-------- -------- -------- --------
Total ............... $ 86,612 $ 69,402 $169,277 $141,515
======== ======== ======== ========
</TABLE>
Significant Customer:
Revenue from DaimlerChrysler accounted for 23% of the Company's total
revenue for the three months ended December 31, 1999 and 1998. The Company
transports DaimlerChrysler after-market replacement parts and accessories within
the United States and DaimlerChrysler original equipment automotive parts
primarily between the United States and the Mexican border, which accounted for
35% and 65%, respectively, of the Company's revenue from DaimlerChrysler for the
three months ended December 31, 1999 and 30% and 70%, respectively, of the
Company's revenue from Chrysler for the three months ended December 31, 1998.
DaimlerChrysler business is covered by three agreements, one of which covers the
United States-Mexican business for the Chrysler division, one of which covers
the United States-Mexican business for the Freightliner division and the last of
which covers domestic movements. The international contract, which covers the
Chrysler division, expires in December 2000. The international contract, which
covers the Freightliner division, expires in April 2001. The contract applicable
to domestic movements expires in October 2000.
7
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
(UNAUDITED)
Revenue from General Electric accounted for approximately 3% and 5% of
the Company?s total revenue for the three months ended December 31, 1999 and
December 31, 1998, respectively. General Electric business is covered by a
contract, which expires in April 2002, and that covers all loads shipped for
General Electric Industrial Control Systems ("GEICS").
(3) INCOME TAXES
The effective tax rates for operations for the six-months ended
December 31, 1999 and 1998 were 36.4% and 37.7%, respectively. The Company's
effective tax rate differs from the statutory federal tax rate of 35% due to
state income taxes and certain expenses, which are not deductible for income tax
purposes.
(4) COMPREHENSIVE INCOME
Total comprehensive income was $0.9 million and $0.3 million for the
three months ended December 31, 1999 and 1998, respectively. Total comprehensive
income was $0.4 million and $1.4 million for the six months ended December 31,
1999 and 1998, respectively. The difference between the total comprehensive loss
and net income is foreign currency translation adjustments.
(5) ACQUISITIONS
Effective July 1, 1999, the Company acquired the assets and assumed
certain liabilities of Zipp Express, Inc. for approximately $26 million. The
Company accounted for the transaction as a purchase.
Assuming the transaction described above was consummated as of the
beginning of the six month period ended December 31, 1998, and after giving
effect to certain pro forma adjustments, the pro forma consolidated results of
operations for the six months ended December 31,1998 would be as follows:
<TABLE>
<CAPTION>
For the six months
ended December 31, 1998
----------------------------------------------------
(Dollar amounts in thousands except per share data)
<S> <C>
Operating revenue.................................... $160,126
Net income........................................... $2,434
Net income per common share.......................... $0.31
</TABLE>
In addition, as a result of this acquisition, the Company disposed of a
group of its own older equipment and related items that will no longer be
required. The effect of upgrading the Company's fleet through this disposition
resulted in a non-cash charge of approximately $3.2 million in the six months
ended December 31, 1999.
8
<PAGE>
LINES OF CREDIT
In August 1999, the Company completed a new $60 million banking
facility with ING Barings. In November 1999, the Company's banking facility with
ING Barings was increased by $5 million to $65 million. The new arrangement
includes a $35 million revolving loan and a $30 million term loan. The new
banking arrangement was obtained to finance the $26 million asset purchase of
Zipp Express, Inc.
(7) HEDGING ACTIVITIES, COMMITMENTS AND CONTINGENCIES
The Company has outstanding commitments to purchase approximately $40
million of revenue equipment at December 31, 1999 which will be financed
utilizing long-term lease agreements.
Standby letters of credit, not reflected in the accompanying
consolidated financial statements, aggregated approximately $1.8 million at
December 31, 1999.
The Company, from time-to-time, has entered into arrangements to
protect against fluctuations in the price of the fuel used by its trucks. As of
December 31, 1999, the Company had contracts to purchase fuel for future
physical delivery in the months of January 2000 through March 2000. These
contracts represent approximately 6% of the anticipated fuel requirements for
those months. Additionally, the Company has periodically acquired
exchange-traded petroleum futures contracts and has engaged in various commodity
collar transactions. Gains and losses on transactions, not designated as hedges,
are recognized based on market value at the date of the financial statements.
Effective December 31, 1998, the Company liquidated all of its remaining hedge
positions. During the three months ended December 31, 1998, losses of $729,000
on futures contracts and commodity collar transactions were included in fuel
expense.
There are various claims, lawsuits and pending actions against the
Company and its subsidiaries incidental to the operation of its businesses. The
Company believes many of these proceedings are covered in whole or in part by
insurance and that none of these matters will have a material adverse effect on
its consolidated financial position.
The Company has been assessed approximately $750,000 by the State of
Texas for Interstate Motor Carrier Sales and Use Tax for the period from April
1988 through June 1992. The Company disagrees with the State of Texas over the
method used by the state in computing such taxes and intends to vigorously
pursue all of its available remedies. On October 30, 1996, the company made a
payment of $1.1 million, under protest, which includes interest to the date of
payment and enables the Company to pursue resolution of the matter with the
State of Texas Attorney General. In fiscal 1997, the Company filed its Original
Petition against representatives of the State of Texas. The state responded and
denied the Company's claims. As of December 31, 1999, the parties to the
litigation were exchanging discovery requests and documentation. The Company has
accrued an amount that management estimates is due based upon methods they
believe are appropriate. While there can be no certainty as to the outcome, the
Company believes that the ultimate resolution of this matter will not have a
material adverse effect on its consolidated financial position.
9
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
(8) SUPPLEMENTAL CASH FLOW INFORMATION
During the three months ended December 31, 1999 and 1998, lease
obligations in the amount of $1.6 million and $3.8 million, respectively, and
for the six months ended December 31, 1999 and 1998 obligations in the amount of
$4.2 million and $7.3 million, respectively were incurred in connection with the
purchase of, or option to purchase, revenue equipment and the associated tires
in service.
During the three months ended December 31, 1999 and 1998, the Company
made interest payments of $2.3 million and $1.9 million, respectively and for
the six months ended December 31, 1999 and 1998, the Company made interest
payments of $4.3 million and $3.9 million, respectively.
(9) EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the three months ended For the six months ended
December 31, December 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator for basic and
diluted earnings (loss) per share, net income $1,053,000 $158,000 $465,000 $1,689,000
========== ======== ======== ==========
Denominator:
Denominator for basic earnings per share-
weighted-average shares........................ 7,776,557 7,729,627 7,774,257 7,728,145
Effect of dilutive securities:
Employee stock options........................... 15,716 23,629 9,771 71,877
Warrants......................................... --- 767 --- 2,582
--------- --------- --------- -------
Dilutive potential common shares................. 15,716 24,396 9,771 74,459
Denominator for diluted earnings per share-
adjusted weighted-average shares and
assumed conversions......................... 7,792,273 7,754,023 7,784,028 7,802604
Basic earnings (loss) per share.................. $0.14 $0.02 $0.06 $0.22
===== ===== ===== =====
Diluted earnings (loss) per share................ $0.14 $0.02 $0.06 $0.22
===== ===== ===== =====
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such comments
are based upon information currently available to management and management's
perception thereof as of the date of this report being filed. Actual results of
the Company's operations could materially differ from those forward looking
statements. Such differences could be caused by a number of factors including,
but not limited to, potential adverse affects of regulation and litigation;
changes in competition and the effects of such changes; increased competition;
change in fuel prices; changes in economic, political or regulatory
environments; changes in the availability of a stable labor force; ability of
the Company to hire drivers meeting Company standards; changes in management
strategies; environmental or tax matters; viability to obtain and implement year
2000 ("Y2K") hardware and software; and risks described from time to time in
reports filed by the Company with the Securities and Exchange Commission.
Readers should take these factors into account in evaluating any such forward
looking statements.
ACQUISITION HISTORY
Effective July 1, 1999, the Company acquired the assets and assumed
certain liabilities of Zipp Express, Inc. for approximately $26 million. The
Company believes that Zipp will further strengthen its position in the market
between the U.S. and Mexico as well as within the Midwest region. Zipp is a
major carrier to and from Mexico and also maintains a strong base of business in
the Midwest. In calendar year 1998, Zipp had $38 million in revenue and an
operating ratio of 89.8%. Zipp operates a relatively new fleet of about 270
tractors and 800 trailers. As a result of this acquisition, the Company disposed
of a group of its own older equipment and related items that will no longer be
required. The effect of upgrading the Company's fleet through this disposition
resulted in a non-cash charge of approximately $3.2 million in the six months
ended December 31, 1999.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH THE THREE MONTHS ENDED
DECEMBER 31, 1998
Revenue. Consolidated revenue increased by $17.2 million or 24.8%, to
$86.6 million for fiscal 2000 from $69.4 million for fiscal 1999. This increase
in revenue was due to the acquired operations of Zipp, as well as an increase in
rate per mile and billings to customers for the Mexican portion of their
transportation. The increase in rates reflected price increases, fuel surcharges
and the Company's continued efforts to focus on its core routes as well as an
improvement in the Company's overall business mix. The number of tractors
operated by the Company, including 1,016 owner-operated tractors, increased to
2,649 at December 31, 1999, compared to 2,254, including 727 owner-operated
tractors, at December 31, 1998.
11
<PAGE>
Operating Income. Operating income increased by $1.8 million, or 85.7%,
to $3.9 million in fiscal 2000 from $2.1 million in fiscal 1999. The fiscal 1999
quarter included a one-time charge of $1.2 million, or $0.10 per diluted share,
related to transaction costs for the attempted Odyssey merger. The increase in
operating income, excluding the one-time charge, was primarily a result of the
Zipp acquisition offset by higher net fuel costs. The Company's operating ratio,
which expresses operating expenses as a percentage of operating revenue
decreased from 96.9% in fiscal 1999 to 95.5% in fiscal 2000.
Net Interest Expense. Net interest expense increased by $0.3 million or
15.8%, to $2.2 million in fiscal 2000 from $1.9 million in fiscal 1999. The
increase was the result of borrowings under the Company's credit facilities
partially offset by reduced borrowings under capital leases.
Income Taxes. Income taxes increased by $0.6 million, to $0.7 million
in fiscal 2000 from $0.1 million in fiscal 1999. The increase in income tax
expense reflects the Company's pre-tax income. The Company's effective tax rate
was 37.0% in fiscal 2000 and 38.3% in fiscal 1999.
SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH THE SIX MONTHS ENDED DECEMBER
31, 1998
Revenue. Consolidated revenue increased by $27.8 million or 19.6.%, to
$169.3 million for fiscal 2000 from $141.5 million for fiscal 1999. This
increase in revenue was due to the acquired operations of Zipp, as well as an
increase in rate per mile and billings to customers for the Mexican portion of
their transportation. The increase in rates reflected price increases and the
Company's continued efforts to focus on its core routes as well as an
improvement in the Company's overall business mix. The number of tractors
operated by the Company, including 1,016 owner-operated tractors, increased to
2,649 at December 31, 1999, compared to 2,254, including 727 owner-operated
tractors, at December 31, 1998.
Operating Income. Operating income increased by $1.8 million, or 27.7%,
to $8.3 million in fiscal 2000 from $6.5 million in fiscal 1999. The fiscal 1999
quarter included a one-time charge of $1.2 million, or $0.10 per diluted share,
related to transaction costs for the attempted Odyssey merger. The increase in
operating income, excluding the one-time charge, was primarily a result of the
Zipp acquisition offset by higher net fuel costs. The Company's operating ratio,
which expresses operating expenses as a percentage of operating revenue
decreased from 95.4% in fiscal 1999 to 95.1% in fiscal 2000.
Net Interest Expense. Net interest expense increased by $0.4 million or
10.5%, to $4.2 million in fiscal 2000 from $3.8 million in fiscal 1999. The
increase was the result of borrowings under the Company's credit facilities
partially offset by reduced borrowings under capital leases.
Income Taxes. Income taxes decreased by $0.7 million, to $0.3 million
in fiscal 2000 from $1.0 million in fiscal 1999. The decrease in income tax
expense reflects the Company's reduced pre-tax income. The Company's effective
tax rate was 36.3% in fiscal 2000 and 37.7% in fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements in fiscal 2000 will be for
the acquisition of revenue equipment. The Company has financed its capital
requirements by obtaining lease financing on revenue equipment. At December 31,
1999, the Company had an aggregate of $63.1 million in capital lease financing
12
<PAGE>
at interest rates ranging from 5.3% to 10.0%, maturing at various dates through
2004. Of this amount, $16.0 million is due prior to December 31, 2001. The
Company has historically met its capital investment requirements with a
combination of internally generated funds, bank financing, equipment lease
financing (both capitalized and operating) and the issuance of common stock.
As of December 31, 1999, the Company had on order revenue equipment
representing an aggregate capital commitment of approximately $40 million. A
commitment for lease financing on these units has been obtained. Management
believes that there are presently adequate sources of secured equipment
financing together with its existing credit facilities and cash flow from
operations to provide sufficient funds to meet the Company's anticipated working
capital requirements. Additional growth in the tractor and trailer fleet beyond
the Company's existing orders will require additional sources of financing.
In August 1999, the Company completed a new $60 million banking
facility with ING Barings. In November 1999, the Company's banking facility with
ING Barings was increased by $5 million to $65 million. The new arrangement
includes a $35 million revolving loan and a $30 million term loan. The new
banking arrangement was obtained to finance the $26 million asset purchase of
Zipp Express, Inc.
SEASONALITY
To date, the Company's revenues have not shown any significant seasonal
pattern. However, because the Company's primary traffic lane is between the
Midwest United States and Mexico, winter may have an unfavorable impact upon the
Company's results of operations. Also, many manufacturers close or curtail their
operations during holiday periods, and observe vacation shutdowns, which may
impact the Company's operations in any particular period.
INFLATION
Many of the Company's operating expenses, including fuel costs and
related fuel taxes, are sensitive to the effects of inflation, which could
result in higher operating costs. The effects of inflation on the Company's
business during fiscal 2000 and 1999 generally were not significant.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 2000. Because of the
Company's minimal use of derivatives, management does not anticipate that the
adoption of the new Statement will have a significant effect on earnings or the
financial position of the Company.
IMPACT OF THE YEAR 2000
An issue exists for all companies that rely on computers as the year
2000 approaches. The "Year 2000" problem is the result of the past practice in
the computer industry of using two digits rather than four to identify the
applicable year. This practice may result in incorrect results when computers
perform
13
<PAGE>
arithmetic operations, comparisons or data field sorting involving years later
than 1999. In an effort to assess its state of readiness for the technological
challenges posed by the Year 2000 problem the Company has performed a complete
inventory assessment of both its information technology ("IT") and non-IT
systems. In assessing its level of readiness the Company considered the
following to be the most important factors: (i) the level of compliance of the
Company's central computer systems; (ii) the level of compliance of the software
used in the Company's ongoing operations; (iii) the level of readiness of the
Company's largest vendors; (iv) the level of readiness of the Company's largest
customers; and (v) the level of compliance of the Company's non-IT systems. The
Company's non-IT systems are Year 2000 compliant in all material respects.
The Company's central computer systems are Year 2000 compliant, with
the exception of minimal numbers of desktop personal computers ("PC's"). These
PC's are scheduled for replacement with newer models by the Company as part of
its ongoing technology maintenance. The Company relies on prepackaged,
non-modified software systems for approximately 95% of its software needs. These
software systems have been upgraded and have been recognized as being Year 2000
compliant by the respective vendor.
The Company has taken steps to encourage its suppliers and customers to
become Year 2000 compliant in a timely manner, but there can be no assurances
that such suppliers and customers will be Year 2000 compliant. The Company has
received certifications from most of its suppliers indicating that they have
taken measures as are necessary to become Year 2000 compliant.
To date, the Company has not experienced any problems with Company IT
or non-IT systems, vendor's system or customer's systems. It does not expect any
significant future costs associated with year 2000 issues. The costs of the
Company's Year 2000 efforts are based upon management's best estimates, which
are derived using numerous assumptions regarding future events, including the
continued availability of certain resources, third-party remediation plans and
other factors. There can be no assurance that these estimates will prove to be
accurate and actual results could differ materially from those currently
anticipated. The Company currently estimates it spent $150,000 over the life of
the program. Expenses associated with addressing the Year 2000 issues were
recognized as incurred.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Celadon Group, Inc. held its regular Annual Meeting of shareholders on
November 22, 1999. Proxies representing 6,151,278 shares of Common stock or 79%
of the total outstanding shares voted as follows:
<TABLE>
<CAPTION>
Proposal I - Elections of Directors Voted For Vote Withheld
--------- -------------
<S> <C> <C>
Stephen Russell 5,638,598 512,680
Paul A. Biddelman 5,638,598 512,680
Michael Miller 5,638,579 512,699
Kilin To 5,638,579 512,699
Anthony Heyworth 5,638,579 512,699
</TABLE>
Proposal II - Ratification of an amendment to the Celadon Group, Inc. 1994 Stock
Option Plan
For 5,353,656
Against 796,268
Abstain 1,354
Proposal III - Ratification of appointment of Ernst & Young LLP as auditors
For 6,144,423
Against 5,091
Abstain 954
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
Exhibit 10.62 - $5,000,000 First Amendment Credit Agreement
dated November 5, 1999 between Celadon Group,
Inc., and Celadon Trucking Services, Inc., and
ING (U.S.) Capital LLC.
Exhibit 27 - Financial Data Schedule
(b) Form 8-K Report on Form 8-K/A dated October 25, 1999 with
respect to the Acquisition of Zipp Express,
Inc., dated July 1, 1999.
15
<PAGE>
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.
CELADON GROUP, INC.
(Registrant)
/s/ Stephen Russell
----------------------------------------
Stephen Russell, Chief Executive Officer
/s/ Paul A. Will
----------------------------------------
Paul A. Will
Chief Financial Officer
Date: February 14, 2000
16
<PAGE>
EXHIBIT 10.62
FIRST AMENDMENT TO CREDIT AGREEMENT
AMENDMENT, dated as of November 5, 1999 (this "Amendment"), to
the Credit Agreement referenced below, among CELADON GROUP, INC., a Delaware
corporation ("Group") and CELADON TRUCKING SERVICES, INC., a New Jersey
corporation ("Trucking", together with Group, each a "Borrower," collectively,
the "Borrowers") the lenders from time to time parties to the Credit Agreement
referenced below (the "Lenders"), and ING (U.S.) CAPITAL, LLC, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent").
RECITALS
Reference is made to the Credit Agreement, dated as of August
11, 1999 (as amended, supplemented or otherwise modified prior to the date
hereof, the "Credit Agreement"), among the Borrowers, the Lenders and the
Administrative Agent.
Prior to the Amendment Effective Date (as defined in this
Amendment), ING (U.S.) Capital LLC and KeyBank National Association are the sole
Lenders under the Credit Agreement (in such capacity, the "Assignors"). The
Borrowers, the Assignors and the Administrative Agent desire to amend the Credit
Agreement to provide for the assignment of certain interests in the rights of
the Assignors under the Credit Agreement and the other Loan Documents (as
defined in the Credit Agreement) to banks and other financial institutions
listed as "Assignees" on Schedule A to this Amendment (the "Assignees") and to
amend certain other provisions of the Credit Agreement, as set forth in this
Amendment and on the terms and subject to the conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrowers, the Assignors, the Assignees and the Administrative
Agent hereby agree as follows:
Defined Terms. Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined.
Assignment.
Each Assignor hereby irrevocably sells and assigns to the Assignees, without
recourse to such Assignor, and each Assignee hereby irrevocably purchases and
assumes from the Assignors without recourse to the Assignors, an interest in
and to the Assignors' rights and obligations under the Credit Agreement and the
other Loan Documents as of the date hereof such that, after giving effect to
such sale and assignment, the percentage interest owned by each of the
Assignors and Assignees of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents, the Commitment of each Assignor
and Assignee and the amount of the percentage of Loans owing to each Assignor
and Assignee, will be as set forth on Schedule A (individually, an "Assigned
Facility"; collectively, the "Assigned Facilities").
Each Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such an interest
is free and clear of any adverse claim (ii) makes no representation or
<PAGE>
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, any other Loan Documents or any other
instrument or document furnished pursuant thereto, other than that it has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of, the Borrowers or any Subsidiary or any other obligor or
the performance or observance by, the Borrowers or any Subsidiary or any obligor
of any of their respective obligations under the Credit Agreement or any other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (iv) will deliver the Notes held by such assignor to the
Administrative Agent and requests that the Administrative Agent exchange such
Notes for new Notes payable in amounts equal to the Commitment assumed by each
such Assignee pursuant hereto, and to each Assignor in amounts equal to the
Commitment retained by such Assignor pursuant hereto, in each case as specified
on Schedule A.
Each Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 8.1
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Amendment and to
assume the assignment provided hereby; (ii) agrees that it will, independently
and without reliance upon the Administrative Agent, the assignors or any other
assignee or other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (iii)
appoints and authorizes the Administrative Agent to take such action on its
behalf and to exercise such powers and discretion under the Credit Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; and
(iv) agrees that it will be bound by the provisions of the Credit Agreement and
will perform in accordance with its terms all the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Lender
including, if it is organized under the laws of a jurisdiction outside the
United States, its obligation pursuant to subsection 5.11(b) of the Credit
Agreement.
Upon the Amendment Effective Date, (i) each Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Amendment, have the
rights and obligations of a Lender thereunder and (ii) each Assignor shall, to
the extent provided in this Amendment, relinquish its rights and be released
from its obligations under the Credit Agreement.
From and after the Amendment Effective Date, the Administrative Agent shall
make all payments under the Credit Agreement and the Notes, in respect of the
Assigned Facilities assigned hereby (including all payments of principal,
interest and commitment fees with respect thereto) to the Assignees as their
interests may appear whether such amounts have accrued prior to the Amendment
Effective Date or accrue subsequent to the Amendment Effective Date. The
Assignors and Assignees shall make appropriate adjustments in payments by the
Administrative Agent for periods prior to the Amendment Effective Date or with
respect to the making of this assignment directly between themselves.
Amendments to Credit Agreement.
Schedule 1.1 to the Credit Agreement is hereby amended by deleting such Schedule
in its entirety and substituting in lieu thereof a new Schedule 1.1 attached to
this Amendment. Schedule 6.19 to the Credit Agreement is hereby amended by
adding the following words at the end of the existing schedule 6.19:
<TABLE>
<CAPTION>
"COMMERCIAL PACKAGE
<S> <C>
Insurer: Crumb and Forester
Policy No.: 503-17-62678
Policy Period: June 1999 - June 2000
Broker: Emar Group, Inc.
Premium: $54,000
Coverage: Buildings, building contents, business
interruption, nuclear disaster,
computer related losses, etc."
</TABLE>
The first paragraph of the Recitals to the Credit Agreement is hereby amended by
deleting the number "$30,000,000" from subclause (b) thereof, and by
substituting the number "$35,000,000" in lieu thereof.
<PAGE>
The definition of Borrowing Base in Section 1 of the Credit Agreement is hereby
amended by adding the words "; provided, that in no event shall the collateral
value of Eligible Canadian Accounts included in the Borrowing Base at any time
exceed $6,000,000," after the words "Eligible Canadian Accounts" in subclause
(c) of such definition.
Section 9.2 of the Credit Agreement is hereby amended by:
(i) deleting the word "and" at the end of clause (f)
thereof;
(ii) deleting the period following the number "$2,500,000" in
clause (g) thereof and adding the word "; and" in lieu
thereof;
(iii) adding the following new clause (h) immediately
following clause (g) thereof:
"(h) overdraft protection facilities for Gerth in an
aggregate amount not to exceed $400,000."
Revolving Credit Commitments: Upon the Amendment Effective Date, the aggregate
Revolving Credit Commitments shall increase to $35,000,000.
Effectiveness. This Amendment shall become effective (the date of such
effectiveness, the "Amendment Effective Date") upon:
(i) receipt by the Administrative Agent of evidence
satisfactory to the Administrative Agent that this Amendment has been executed
and delivered by each of the Borrowers, the Assignors, the Assignees and the
Administrative Agent;
(ii) the receipt by the Administrative Agent, for the ratable
account of the Assignors, of an amount equal to the aggregate principal amount
of the outstanding Loans being assigned to such Assignee hereunder as of the
Amendment Effective Date; and
(iii) the recordation by the Administrative Agent of the
assignments provided for hereunder in the Register pursuant to Section 12.6(d)
of the Credit Agreement. Additional Covenant. The Borrowers hereby agree to
deliver to the Administrative Agent immediately upon the Amendment Effective
Date all such new Notes as may be necessary to evidence the assignment of the
interests in the Credit Agreement and the other Loan Documents provided for
hereunder, duly executed on behalf of the Borrowers.
No Other Amendments. Except as expressly amended hereby, the Credit Agreement,
the Notes and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms, without any waiver, amendment or
modification of any provision thereof.
Counterparts. This Amendment may be executed by one or more of the parties
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
First Amendment to Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
CELADON GROUP, INC.
By: /s/ Stephen Russell
-------------------------
Name: Stephen Russell
Title: CEO
CELADON TRUCKING SERVICES, INC.
By: /s/ Stephen Russell
--------------------------
Name: Stephen Russell
Title: CEO
ING (U.S.) CAPITAL LLC, as Administrative Agent,
Arranger and as an Assignor
By: /s/ Bill Redmond
---------------------------
Name: Bill Redmond
Title: Vice President
KEYBANK NATIONAL ASSOCIATION,
as an Assignor
By: /s/ Joseph H. Rohs
-----------------------------
Name: Joseph H. Rohs
Title: Vice President
<PAGE>
First Amendment to Credit Agreement
NATIONAL BANK OF CANADA,
as an Assignee
By: /s/ Thomas E. Roberts
-------------------------------
Name: Thomas E. Roberts
Title: Vice President
By: /s/ James J. Fricke
-------------------------------
Name: James J. Fricke
Title: Vice President
UNION PLANTERS BANK, N.A.,
as an Assignee
By: /s/ David W. O'Neal
------------------------------
Name: David W. O'Neal
Title: Vice President
THE NORTHERN TRUST COMPANY,
as an Assignee
By: /s/Candelario Martinez
-------------------------------
Name: Candelario Martinez
Title: Vice President
FIFTH THIRD BANK, INDIANA,
as an Assignee
By: /s/Thomas C. Witt
--------------------------------
Name: Thomas C. Witt
Title: Vice President
<PAGE>
First Amendment to Credit Agreement
ACKNOWLEDGED AND CONSENTED TO:
CELADON TRUCKING SERVICES OF INDIANA, INC.
By: /s/ Stephen Russell
-----------------------------
Name: Stephen Russell
Title: CEO
CELADON TRANSPORTATION, LLP
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
CHEETAH BROKERAGE CO.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
CHEETAH TRANSPORTATION CO.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
<PAGE>
First Amendment to Credit Agreement
INTERNATIONAL FREIGHT HOLDING CORP.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
JML FREIGHT FORWARDING, INC.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
RIL GROUP, LTD.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
RIL, INC.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
CELADON LOGISTICS, INC.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
<PAGE>
First Amendment to Credit Agreement
RANDY EXPRESS, LTD.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
RIL ACQUISITION CORP.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
CELADON JACKY MAEDER CO.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
ZIPP EXPRESS, INC.
By: /s/ Stephen Russell
-------------------------------
Name: Stephen Russell
Title: CEO
<PAGE>
First Amendment to Credit Agreement
<TABLE>
<CAPTION>
SCHEDULE A
PERCENTAGE
INTEREST OWNED
AFTER GIVING
EFFECT TO THIS REVOLVING CREDIT
AMENDMENT COMMITMENT TERM LOAN COMMITMENT
<S> <C> <C> <C>
ASSIGNORS:
ING (U.S.) Capital Corporation 18.489% $ 7,226,562.50 $ 4,606,770.83
KeyBank National Association 30.729% 10,000,000.00 9,666,666.67
ASSIGNEES:
National Bank of Canada 15.625% $ 5,468,750.00 $ 4,531,250.00
Union Planters Bank, N.A. 15.625% 5,468,750.00 4,531.250.00
The Northern Trust Company 11.719% 4,101,562.50 3,398,437.50
Fifth Third Bank, Indiana 7.813% 2,734,375.00 2,265,625.00
TOTALS 100% $35,000,000.00 $29,000,000.00
0 0
============== ==============
</TABLE>
<PAGE>
First Amendment to Credit Agreement
SCHEDULE 1.1
<TABLE>
<CAPTION>
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
-------------------------------------- -------------------- --------------------
Lender and Lending Offices Term Loan Revolving Credit
Commitment Commitment
-------------------------------------- -------------------- --------------------
<S> <C> <C>
ING (U.S.) CAPITAL LLC $4,606,770.83 $7,226,562.50
Applicable Lending Offices:
Base Rate Loans and Eurodollar
Loans:
55 East 52nd Street
New York, New York 10055
Attention: Lisa H. Cummings
Telephone: 212-409-1676
Facsimile: 212-486-6341
-------------------------------------- -------------------- --------------------
KEY BANK NATIONAL ASSOCIATION $9,666,666.67 $10,000,000.00
Applicable Lending Offices:
Base Rate Loans and Eurodollar
Loans:
10 West Market Street
Suite 900
Indianapolis, Indiana 46204
Attention: Kim Parks
Telephone: 317-464-8086
Facsimile: 317-464-8277
-------------------------------------- -------------------- --------------------
NATIONAL BANK OF CANADA $4,531,250.00 $5,468,750.00
Applicable Lending Offices:
Base Rate and Loans and
Eurodollar Loans
312 Walnut Street, Suite 1900
Cincinnati, OH 45202
Attention: Lori Hart
Telephone: 513-621-1942
Facsimile: 513-621-0276
-------------------------------------- -------------------- --------------------
</TABLE>
<PAGE>
First Amendment to Credit Agreement
<TABLE>
<CAPTION>
-------------------------------------- -------------------- --------------------
Lender and Lending Offices Term Loan Revolving Credit
Commitment Commitment
-------------------------------------- -------------------- --------------------
<S> <C> <C>
UNION PLANTERS BANK, N.A. $4,531,250.00 $5,468,750.00
Applicable Lending Offices:
Base Rate and Loans and
Eurodollar
Loans:
One Indiana Square, Suite 227
Indianapolis, IN 46204
Attention: Vicki Payne
Telephone: 317-221-6077
Facsimile: 317-221-6120
-------------------------------------- -------------------- --------------------
THE NORTHERN TRUST COMPANY $3,398,437.50 $4,101,562.50
Applicable Lending Offices:
Base Rate and Loans and
Eurodollar
Loans:
50 South LaSalle Street
Chicago, IL 60675
Attention: Brent Wilk
Telephone: 312-557-1725
Facsimile: 312-630-1566
-------------------------------------- -------------------- --------------------
FIFTH THIRD BANK, INDIANA $2,265,625.00 $2,734,375.00
Applicable Lending Offices:
Base Rate Loans and Eurodollar
Loans:
251 N. Illinois Street, Suite
1000
Indianapolis, IN 46204
Attention: Jennifer Matthews
Telephone: 317-383-2304
Facsimile: 317-383-2427
-------------------------------------- -------------------- --------------------
TOTAL: $29,000,000.00 $35,000,000.00
============== ==============
-------------------------------------- -------------------- --------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet of Celadon Group, Inc. at December 31,
1999 and the condensed consolidated statement of operations of Celadon Group,
Inc. for the quarter then ended and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 306
<SECURITIES> 0
<RECEIVABLES> 56,374
<ALLOWANCES> (999)
<INVENTORY> 0
<CURRENT-ASSETS> 80,804
<PP&E> 143,606
<DEPRECIATION> (32,878)
<TOTAL-ASSETS> 217,157
<CURRENT-LIABILITIES> 49,079
<BONDS> 117,377
0
0
<COMMON> 257
<OTHER-SE> 56,632
<TOTAL-LIABILITY-AND-EQUITY> 217,157
<SALES> 0
<TOTAL-REVENUES> 86,612
<CGS> 0
<TOTAL-COSTS> 82,714
<OTHER-EXPENSES> 61
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,165
<INCOME-PRETAX> 1,672
<INCOME-TAX> 619
<INCOME-CONTINUING> 1,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,053
<EPS-BASIC> .14
<EPS-DILUTED> .14
</TABLE>
