FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended December 28, 1996
Commission file number 1-2936
SCHWERMAN TRUCKING CO.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0767397
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 1601, 611 South 28 Street, Milwaukee, WI 53201
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
414/671-1600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class January 31, 1997
----- ----------------
Common, $1 par value 422,089
<PAGE>
SCHWERMAN TRUCKING CO. AND SUBSIDIARIES
INDEX
Page No.
PART I. Financial Information:
Consolidated Condensed Balance Sheet at
December 28, 1996 and March 30, 1996 3
Consolidated Condensed Statements of Income
for the three months and nine months ended
December 28, 1996 and December 23, 1995 4
Consolidated Condensed Statements of Cash Flows
for the nine months ended December 28, 1996
and December 23, 1995 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. Other Information 9
<PAGE>
<TABLE>
SCHWERMAN TRUCKING CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
DECEMBER 28, MARCH 30,
ASSETS 1996 1996
(Unaudited)
----------- ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 63,930 $ 113,476
Accounts receivable (less allowances of
$40,000) 4,824,665 4,033,387
Other accounts and notes receivable 60,598 801,451
Operating supplies and parts 1,102,411 1,072,286
Tires in service 856,448 741,079
Prepaid expenses 356,602 620,267
Other current assets 261,131 258,661
----------- -----------
7,525,785 7,640,607
---------- -----------
Property, plant and equipment at cost 60,227,906 55,498,489
Less accumulated depreciation and amortization (37,032,052) (34,528,615)
------------ -----------
23,195,854 20,969,874
----------- -----------
Receivable from parent and affiliates 1,384,136 589,972
Other non-current assets 1,636,180 1,409,482
----------- -----------
$33,741,955 $30,609,935
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt $ 3,453,476 $ 3,042,540
Accounts payable 1,808,537 2,043,522
Accrued liabilities 3,623,239 3,600,518
Income taxes payable 393,049 31,755
Deferred income taxes - current 328,230 328,230
----------- ----------
9,606,531 9,046,565
----------- ----------
Long-term debt 11,974,654 11,098,695
Deferred income taxes 2,158,025 1,746,025
Other non-current liabilities 728,026 710,610
Stockholders' Equity
Preferred stock 1,497,470 1,497,470
Common stock 422,089 422,089
Additional paid-in capital 232,792 232,792
Retained earnings 7,122,368 5,855,689
----------- -----------
9,274,719 8,008,040
----------- -----------
$33,741,955 $30,609,935
=========== ===========
<FN>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHWERMAN TRUCKING CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
--Three Months Ended-- --Nine Months Ended--
Dec. 28, Dec. 23, Dec. 28, Dec. 23,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Operating revenues $14,333,566 $13,459,793 $45,728,634 $44,595,672
Equip. and other rentals 205,851 224,595 640,596 647,383
Other 474,966 553,749 1,568,074 1,727,616
----------- ----------- ----------- -----------
15,014,383 14,238,137 47,937,304 46,970,671
----------- ----------- ----------- -----------
Operating Expenses
Salaries, wages and fringe
benefits 7,118,005 6,591,321 21,936,353 21,179,390
Fuel and fuel taxes 1,731,214 1,333,586 5,140,308 4,409,186
Parts, repairs and tires 1,040,147 969,198 3,018,211 2,936,486
Insurance and workers'
compensation 719,088 949,159 2,808,443 3,122,120
Depreciation & amortization 981,652 930,712 3,079,167 2,733,601
Purchased transportation 1,031,166 1,215,955 3,119,921 3,955,775
Rent expense 216,962 284,696 561,169 873,957
Other operating expenses 1,643,270 1,407,338 5,111,533 4,407,756
(Gain) loss on disposal
of property, plant and
equipment, net (25,626) 10,620 (28,254) (16,132)
---------- ---------- ---------- ----------
14,455,878 13,692,585 44,746,851 43,602,139
---------- ---------- ---------- ----------
Operating income 558,505 545,552 3,190,453 3,368,532
Interest expense, net 309,731 301,409 1,021,157 976,152
---------- ---------- ---------- ----------
Income before income taxes 248,774 244,143 2,169,296 2,392,380
Federal and state income 94,000 93,000 824,000 909,000
Net Income 154,774 151,143 1,345,296 1,483,380
Dividends on preferred shares (26,205) (26,205) (78,617)
(78,617)
---------- ---------- --------- ---------
Net income applicable common
shares $ 128,569 $ 124,938 $1,266,679 $ 1,404,763
========= ========== ========== ===========
Weighted Average Number of
Common Shares Outstanding 422,089 422,089 422,089 422,089
========== ========== ========== ===========
Net Income Per Common Share $.30 $ .30 $ 3.00 $ 3.33
========== ========== ========== ===========
<FN>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHWERMAN TRUCKING CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
--Nine Months Ended--
December 28, December 23,
1996 1995
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,345,296 $ 1,483,380
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 3,079,167 2,733,601
Provision for deferred income taxes 412,000 454,500
Provision for Doubtful accounts -- 15,558
(Gain) loss on disposal of
property, plant and equipment (28,254) (16,132)
Change in assets and liabilities:
Accounts and notes receivable (50,425) 1,319,157
Operating supplies and parts (30,125) (21,728)
Tires in service, prepaid expenses
and other current assets 145,826 273,922
Receivable from parent and affiliates (794,164) 333,038
Other noncurrent assets (226,698) (239,065)
Accounts payable (234,985) (873,137)
Accrued liabilities 22,721 (471,120)
Income taxes payable 361,294 357,574
Other noncurrent liabilities 17,416 65,509
----------- -----------
Net cash provided by (used in)
operating activities 4,019,069 5,415,057
----------- -----------
Cash flows from investing activities:
Proceeds from sale of property,
plant and equipment 73,589 119,570
Payments for property, plant and equip. (1,181,098) (2,666,149)
----------- -----------
Net cash provided by (used in)
investing activities (1,107,509) (2,546,579)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 975,166 1,593,323
Payments of long-term debt (3,857,655) (4,319,237)
Preferred stock dividends (78,617) (78,617)
----------- -----------
Net cash provided by (used in)
financing activities (2,961,106) (2,804,531)
----------- -----------
Increase (decrease) in cash and cash equivalents (49,546) 63,947
Cash and cash equivalents:
Beginning of year 113,476 87,702
----------- -----------
End of quarter $ 63,930 $ 151,649
=========== ===========
Cash paid during the year for:
Interest $ 1,010,524 $ 974,637
Income taxes $ 50,706 $ 96,926
<FN>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
</TABLE>
<PAGE>
SCHWERMAN TRUCKING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. CONDENSED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the
consolidated financial position of Schwerman Trucking Co. and
Subsidiaries as of December 28, 1996 and March 30, 1996, and the
consolidated results of operations for the three months and nine months
ended December 28, 1996 and December 23, 1995 and changes in financial
position for the nine months then ended.
The results of operations for the three months and nine months ended
December 28, 1996 and December 23, 1995 are not necessarily indicative
of the results to be expected for a full year.
Certain information and financial statement disclosures normally
included in financial statements prepared in accordance with Generally
Accepted Accounting Principles have been condensed or omitted pursuant
to S.E.C. rules and regulations. The Company believes that the
disclosures made are adequate to make the information not misleading.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-
K for the year ended March 30, 1996.
2. STATEMENT OF CASH FLOWS
The Company had non-cash property, plant and equipment additions
totaling $4,169,000 and $3,603,000 for the nine months ended December
28, 1996 and December 23, 1995, respectively, which were financed
through capital leases and equipment obligations.
3. PREFERRED STOCK
On February 3, 1997, the Company announced that it will be redeeming its
preferred stock at the stated redemption price of $10.50 per share plus
accumulated dividends on the Company's May 30, 1997 dividend pay date.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Revenues for the three months ended December 28, 1996 were approximately
$776,000 or 5.5% higher than the comparable three-month period of 1995.
Revenues for the nine months ended December 28, 1996 increased
approximately $967,000 or 2.1% compared to the same period of 1995. The
increase in revenue is due to an increase in the number of miles traveled
for the quarter and year to date and an increase in the average payload
compared to the prior year. The Company opened two new terminals in March
1996, and the revenues generated at these terminals has more than offset
the softness experienced at the Company's other terminals.
The Company's customers are shippers or consignees of dry and liquid
commodities. During fiscal 1996, 65% of the Company's shipments carried
dry cement and, consequently, the Company's business is very seasonal. Dry
and liquid chemicals, fertilizers and food products account for a large
portion of the remaining commodities.
Operating expenses increased by approximately $763,000 or 5.6% in the
current quarter and increased by $1,145,000 or 2.6% for the nine months
ended year to date compared to the same periods of 1995. The increase in
operating expenses is due to an increase in volume related expenses, an
increase in depreciation expense and an increase in fuel costs.
Salaries, wages and fringe benefits increased $527,000 or 8.0% and $756,000
or 3.6% for the three months and nine months ended December 28, 1996,
respectively, compared to the same periods of 1995 as a result of the
increase in volume and higher health, welfare and pension costs.
Fuel and fuel taxes increased $398,000 or 29.8% and $731,000 or 16.6% for
the current quarter and year to date for fiscal 1996, respectively,
compared to the same periods of 1995 as a result of the increase in the
number of miles traveled and higher fuel prices.
Insurance and workers' compensation decreased $230,000 or 24.2% and
$314,000 or 10.0% for the three months and nine months ended December 28,
1996, respectively, compared to the same periods of 1995 primarily as a
result of favorable experience.
Depreciation and amortization increase $51,000 or 5.5% and $346,000 or
12.6% for the three months and nine months ended December 28, 1996,
respectively, compared to the same periods of 1995 as a result of the
purchase of 63 new tractors in April 1996.
Purchased transportation decreased $185,000 or 15.2% and $835,000 or 21.1%
for the current quarter and year to date for fiscal 1996, respectively,
compared to the same periods of 1995 as a result of the reduced number of
owner operators leased on to the Company.
Rent expense decreased $68,000 or 23.8% and $313,000 or 35.8% for the
current quarter and year to date for fiscal 1996, respectively, as compared
to the same periods of 1995 as a result of renting fewer tractors and
trailers in 1996 and as a result of lower rental rates on some equipment
rented in the current year as compared to the prior year.
Other operating expenses increased $236,000 or 16.8% and $704,000 or 16.0%
for the three months and nine months ended December 28, 1996, respectively,
compared to the same periods of 1995 as a result of the increase in volume,
the increased cost of hiring and screening drivers, an increase in
communication costs and higher toll charges.
<PAGE>
FINANCIAL CONDITION
Total current assets decreased $115,000 at December 28, 1996 as compared to
March 30, 1996 primarily as a result of the seasonal increase in accounts
receivable which was more than offset by a drop in other accounts and notes
receivable due to payments received. Property, plant and equipment
increased $2,226,000 from 1996 fiscal year end primarily as a result of the
tractors and trailers delivered in April 1996. The $794,000 increase in
the receivable from parent since March 30, 1996 is also seasonal in nature.
Accounts Payable decreased $235,000 at December 28, 1996 as compared to
March 30, 1996 primarily as a result of the seasonal nature of the
Company's business. The $361,000 and $412,000 increase in income taxes
payable and noncurrent deferred income taxes, respectively, from 1996
fiscal year is a result of the timing of tax payments and intra period tax
allocation.
Total notes payable and long-term debt was $15,428,000 and $14,141,000 at
December 28, 1996 and March 30, 1996, respectively. The $1,287,000 net
increase in debt is the result of $5,144,000 in new obligations to finance
the equipment additions and seasonal working capital needs less the
reduction resulting from making the scheduled debt payments.
CASH FLOWS
The Company had a net decrease in cash of $50,000 for the nine months ended
December 28, 1996 versus a $64,000 net increase for the nine months ended
December 23, 1995. Cash provided by operating activities decreased by
$1,396,000 for the nine months ended December 28, 1996 as compared to the
same period of 1995 primarily as a result of an increase in cash
requirements for working capital. Cash used in investing activities
decreased $1,439,000 in the current year as compared to 1995 primarily as a
result of fewer cash purchases of trailers in the current year. Cash used
in financing activities increased $157,000 for the nine months ended
December 28, 1996 as compared to the same period of 1995 primarily as a
result of higher debt service requirements in the current year. The
Company has paid $79,000 in preferred stock dividends for the nine months
ended December 28, 1996, representing the required dividends for three
quarters.
<PAGE>
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K - February 3, 1997, reporting the
redemption of the Company's
Preferred cummulative convertible
stock on May 30, 1997 for $10.50
per share.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCHWERMAN TRUCKING CO.
(Registrant)
DATE: February 5, 1997 BY: Jack F. Schwerman
Jack F. Schwerman
Chairman of the Board,
President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Mar-30-1996
<PERIOD-START> Mar-31-1996
<PERIOD-END> Dec-28-1996
<CASH> 63930
<SECURITIES> 0
<RECEIVABLES> 4864665
<ALLOWANCES> (40000)
<INVENTORY> 1102411
<CURRENT-ASSETS> 7525785
<PP&E> 60227906
<DEPRECIATION> (37032052)
<TOTAL-ASSETS> 33741955
<CURRENT-LIABILITIES> 9606531
<BONDS> 11974654
<COMMON> 422089
0
1497470
<OTHER-SE> 7122368
<TOTAL-LIABILITY-AND-EQUITY> 33741955
<SALES> 47937304
<TOTAL-REVENUES> 47937304
<CGS> 0
<TOTAL-COSTS> 44746851
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 1021157
<INCOME-PRETAX> 2169296
<INCOME-TAX> 824000
<INCOME-CONTINUING> 1345296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1345296
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 3.00
</TABLE>
