<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 quarterly period
ended March 31, 1996
or
[_] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from _____________________ to _____________________
Commission File Number 34-022552
RAILTEX, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Texas 74-1948121
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4040 Broadway, Suite 200
San Antonio, Texas 78209
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (210) 841-7600
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.
[X] YES [_] NO
Number of Shares
Title of Class Outstanding
-------------- ----------------
Common Stock, $0.10 Par Value 9,110,606
<PAGE>
INDEX
Part I - Financial Information
Item 1. Financial Statements: Page
----
Consolidated Statements of Income - For the Three
Months Ended March 31, 1995 and 1996............... 3
Consolidated Balance Sheets - December 31, 1995 and
March 31, 1996..................................... 4
Consolidated Statements of Cash Flows - For the
Three Months Ended March 31, 1995 and 1996......... 5
Notes to Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 9
Part II - Other Information.......................................... 15
Signatures........................................................... 20
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
RAILTEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1996
------ ------
<S> <C> <C>
OPERATING REVENUES..................... $25,143 $28,609
OPERATING EXPENSES:
Transportation........................ 8,064 9,121
General and administrative............ 4,422 5,526
Equipment............................. 4,131 3,660
Maintenance of way.................... 2,690 3,096
Depreciation and amortization......... 1,810 2,276
------- -------
Total operating expenses............. 21,117 23,679
------- -------
OPERATING INCOME....................... 4,026 4,930
INTEREST EXPENSE....................... (1,482) (1,479)
OTHER INCOME........................... 318 265
------- -------
INCOME BEFORE INCOME TAXES............. 2,862 3,716
INCOME TAXES........................... (1,134) (1,533)
------- -------
NET INCOME............................. $ 1,728 $ 2,183
======= =======
NET INCOME PER SHARE................... $ 0.22 $ 0.24
======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
STOCK AND COMMON STOCK EQUIVALENTS
OUTSTANDING........................... 7,960 9,225
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1995 1996
------ ------------ ---------
(AUDITED) (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................... $ 2,130 $ 3,069
Accounts receivable, net................................ 19,522 19,234
Prepaid expenses and inventory.......................... 2,244 1,733
Deferred tax assets, net................................ 2,027 2,027
-------- --------
Total current assets.................................. 25,923 26,063
PROPERTY AND EQUIPMENT, NET................................ 174,593 178,164
OTHER ASSETS, NET.......................................... 4,466 4,186
-------- --------
Total assets.......................................... $204,982 $208,413
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------
CURRENT LIABILITIES:
Short-term notes payable................................ $ 1,289 $ 673
Current portion of long-term debt....................... 1,718 1,315
Accounts payable........................................ 10,572 10,632
Accrued liabilities..................................... 7,302 8,637
-------- --------
Total current liabilities............................. 20,881 21,257
-------- --------
DEFERRED INCOME TAXES...................................... 11,129 11,870
-------- --------
LONG-TERM DEBT............................................. 1,208 1,094
-------- --------
SENIOR NOTES PAYABLE....................................... 50,985 51,001
-------- --------
SENIOR SUBORDINATED NOTES PAYABLE.......................... 5,000 5,000
-------- --------
OTHER LIABILITIES.......................................... 3,177 3,381
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY:
Preferred Stock; $1.00 par value; 10 million
shares authorized; no shares issued or outstanding
at December 31 and March 31............................ -- --
Common Stock; $0.10 par value; 30 million shares
authorized; issued and outstanding 1995 -
9,110,606; March 31, 1996 - 9,110,606.................. 911 911
Additional paid-in capital.............................. 83,439 83,439
Retained earnings....................................... 28,316 30,499
Cumulative translation adjustment....................... (64) (39)
-------- --------
Total shareholders' equity........................... 112,602 114,810
-------- --------
Total liabilities and shareholders' equity........... $204,982 $208,413
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------------
1995 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................. $ 1,728 $ 2,183
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 1,810 2,276
Deferred income taxes................ 579 725
Amortization of deferred financing
costs............................... 84 100
Provision for losses on accounts
receivable.......................... 125 151
Gain on sale of assets............... (258) (193)
Changes in current assets and
liabilities--
Accounts receivable................. (5,313) 137
Prepaid expenses.................... (79) 511
Accounts payable and accrued
liabilities........................ 1,764 1,424
-------- --------
Net cash provided by operating
activities.......................... 440 7,314
-------- --------
INVESTING ACTIVITIES:
Purchase of property and equipment..... (44,254) (5,388)
Proceeds from sale of property and
equipment............................. 283 210
Organization and acquisition costs..... (1,020) (9)
Increase in other assets............... -- (49)
-------- --------
Net cash used in investing activities. (44,991) (5,236)
-------- --------
FINANCING ACTIVITIES:
Short-term notes payable, net.......... (576) (616)
Sale of common stock................... 25,629 --
Proceeds from long-term debt........... 43,900 500
Deferred financing costs............... (104) --
Principal payments on long-term debt... (26,088) (1,014)
Change in other long-term liabilities.. (86) (15)
-------- --------
Net cash provided by (used for)
financing activities................. 42,675 (1,145)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH. 8 6
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS. (1,868) 939
CASH AND CASH EQUIVALENTS, beginning of
period................................. 2,167 2,130
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 299 $ 3,069
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for--
Interest.............................. $ 1,566 $ 1,870
Income taxes.......................... 1,047 177
Non-cash investing and financing
activities--
Capital leases........................ 336 --
Grants................................ 254 221
Conversion of senior subordinated
notes payable........................ 5,000 --
Tax benefit from exercise of
non-qualified stock options.......... 2,574 --
Prepaid secondary offering costs...... 247 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:
The interim consolidated financial statements presented herein include the
accounts of RailTex, Inc. and its wholly owned subsidiaries. References to
"RailTex" or the "Company" mean RailTex, Inc. and, unless the context indicates
otherwise, its consolidated subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation. These interim
consolidated financial statements have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). All adjustments have been made to the accompanying
interim consolidated financial statements which are, in the opinion of the
Company's management, necessary for a fair presentation of the Company's
operating results. All adjustments are of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is recommended
that these interim consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995. The
results of operations for any interim period are not necessarily indicative of
the results of operations for the entire year. Certain reclassifications have
been made in the prior period financial statements to conform with the current
period presentation.
2. PROPERTY AND EQUIPMENT:
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" ("FAS 121") was issued. Under FAS 121, an impairment loss must
be recognized for long-lived assets and certain identifiable intangibles to be
held and used by an entity whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. FAS 121 is
effective for financial statements issued for fiscal years beginning after
December 15, 1995 and must be adopted on a prospective basis. Restatement of
previously issued financial statements is not permitted. The Company adopted FAS
121 prospectively in the first quarter of 1996. The adoption of FAS 121 did not
have a material impact on the financial condition or results of operations of
the Company.
3. ACQUISITIONS:
On February 4, 1995, a newly formed subsidiary of the Company, New England
Central Railroad, Inc. (the "NECR") acquired certain assets of the Central
Vermont Railway, Inc. (the "Central Vermont"). The purchase price, including
related costs, was $40.2 million and was funded by borrowings under the
Company's U.S. Acquisition Facility. Unlike all of its previous acquisitions,
the Company acquired substantially all of the assets of the Central Vermont,
hired a substantial number of the Central Vermont employees to operate the NECR
and assumed certain contracts of the Central Vermont.
The following unaudited pro forma results of operations for the three
months ended March 31, 1995, assumes the acquisition occurred as of the
beginning of the respective period. Such pro forma information is not
necessarily indicative of the results of future operations (dollars in thousands
except per share amounts).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1995
------------------
<S> <C>
Operating Revenues.... $26,937
=======
Net Income............ $ 1,980
=======
Net Income Per Share.. $ 0.22
=======
</TABLE>
6
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. STOCK OPTIONS:
The Company grants non-qualified stock options to outside Directors and key
employees of the Company. In September 1993, the Board of Directors and
shareholders of the Company approved an equity incentive plan (the "93 Plan").
In January 1996, the Company granted each outside Director of the Company
options to purchase 2,000 shares of Common Stock or a total of 12,000 options
under the 93 Plan. These options are exercisable over a two year period at the
fair market value of Common Stock on the date of the grant of $21.00 per share.
In January and March 1996, the Company granted options to purchase 10,000
and 20,371 shares of Common Stock, respectively, to certain key employees under
the 93 Plan. These options are exercisable at the rate of 20.0% per year from
the date of the grant at the fair market value of Common Stock on the date of
the grant of $21.13 per share and $24.75 per share, respectively.
5. COMMITMENTS AND CONTINGENCIES:
In March 1996, one of the Company's railroads received notice from an
individual of his intent to file a citizen's suit under the Resource
Conservation and Recovery Act ("RCRA") primarily as a result of an oil spill
caused by a train derailment that occurred five years prior to the Company's
acquisition of the railroad property. The Company is unable to predict whether a
claim will be filed, the probable outcome of any such claim or the amount or
range of potential loss arising therefrom.
In October 1995 and April 1996, one of the Company's railroads received
notice of three environmental site evaluations being conducted by a state
environmental agency. The evaluations are the result of an alleged fuel spill
caused by a train derailment and alleged on-site burial of railroad ties and
unreported leaking underground storage tanks and an alleged presence of paint
and paint solvent wastes. The Company believes these evaluations relate to
events that occurred prior to the Company's acquisition of the railroad
property. The Company is cooperating with the state environmental agency to
complete these evaluations. However, the Company may be held liable for some or
all expenses associated with these evaluations and the expenses associated with
any necessary remedial actions. To the extent the Company incurs expenses in
connection with these evaluations, or remedial actions, it may seek to recover
such expenses from the prior owners of the property or other responsible
parties. The Company is unable to predict the probable outcome of these site
evaluations or the amount or range of potential loss arising therefrom.
A Class I Railroad, which interchanges traffic with one of the Company's
railroads has filed a complaint against the Company in the United States
District Court for the Western District of Missouri. In this lawsuit, the
Plaintiff seeks recovery of certain switching and joint facility charges
amounting to approximately $632,000. The Company has interposed certain
defenses, including payment of substantially all of the joint facility charges
and the inapplicability of the switching charges. Since the service for which
the switching charges have been asserted is ongoing, it is likely that
additional charges accruing through the date the lawsuit is resolved will be
asserted. Discovery is in progress and trial has been set for February 1997. The
Company believes it has meritorious defenses and is vigorously defending this
litigation. No amounts are recorded on the books of the Company in anticipation
of a loss as a result of this contingency.
The Company is also involved in other litigation and various legal matters
which are being defended and handled in the ordinary course of business. In
management's judgment, based on the opinion of the Company's legal counsel, the
ultimate liability, if any, from such legal proceedings will not have a material
effect on the Company's financial position and results of operations.
7
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT:
The Company's operations involve managing market risks related to changes
in interest rates and diesel fuel prices. Derivative financial instruments,
specifically swaps and collars are used to manage those risks. The Company does
not currently hold or issue financial instruments for trading purposes.
In April 1996, the Company entered into two commodity collar transactions
to hedge market risks of diesel fuel prices. Each collar is effective July 1,
1996 and terminates on June 30, 1997. Each collar represents a notional amount
of 1,680,000 gallons with a cap price of $0.5900 per gallon and a floor price of
$0.4920 and $0.4695 per gallon.
7. SUBSEQUENT EVENTS:
One of the Company's railroads, the Austin & Northwestern Railroad Company,
Inc. (the "Austin & Northwestern"), began operations on August 15, 1986 under a
10 year management agreement with Capital Metro, the Austin, Texas area transit
authority and the city of Austin. This agreement provided for renewal options
for three additional 10 year terms. The Austin & Northwestern decided not to
pursue further its rights unilaterally to renew the existing contract for an
additional 10 year period and to cease operations on or before the expiration of
the original contract term in August 1996. As a result, the Company, Capital
Metro and the City of Austin entered into an agreement under which the Company,
Capital Metro and the City of Austin sought a substitute operator and under
which the Company was released from certain contingent liabilities. On May 6,
1996, the Company ceased operations of the Austin & Northwestern as a new
operator commenced operations. Additionally, on May 1, 1996, the City of Austin
requested that the Austin and Northwestern perform certain additional
improvements to the facilities formerly operated by the railroad. The Austin and
Northwestern intends to decline to make such improvements and believes it has no
obligation to do so.
The remainder of this page is intentionally left blank.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Unaudited Consolidated Financial Statements and related notes included elsewhere
in this Quarterly Report on Form 10-Q.
GENERAL
The Company's growth to date has resulted primarily from implementation of
its expansion strategy. The number of miles operated by RailTex has grown to
more than 3,330 at March 31, 1996.
The Company has added railroad properties to its portfolio through purchase
of track and roadbed, lease of such assets, and contracts to operate such assets
under management agreements. These arrangements relate only to the physical
assets of the railroad property; the Company has not assumed any of the
operations or liabilities of the divesting carriers. After acquiring the right
to operate each of its railroad properties, the Company must arrange for the
purchase or lease of operating equipment and hire the work force necessary to
operate the railroad. Accordingly, for any railroad property, the historical
results of operations of the railroad property as previously operated are not
necessarily indicative of the results of operations for the property following
commencement of operations by the Company.
Because of variations in the structure, timing and size of portfolio
additions and differences in economics among the Company's portfolio railroads
resulting from the unique terms, rates and other provisions for each railroad's
operation established through negotiation between RailTex and each divesting
carrier, the Company's results of operations in any reporting period are not
directly comparable to (i) its results of operations in other reporting periods
or (ii) the results of operations of other railroad companies. Therefore, care
should be taken when using traditional measurements of railroad operating
performance, such as freight revenues per carload, operating ratio and labor
ratio, in assessing or comparing the Company's operating results.
"Comparable Railroad Properties" for each period are railroad properties
which the Company operated throughout both the full current year period and the
full prior year period. "New Railroad Properties" for each period are railroad
properties which the Company began operating after the start of the prior year
period.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995.
The Company's net income for the three months ended March 31, 1996,
increased approximately $455,000, or 26.3%, to $2.2 million from $1.7 million in
the prior year period. Net income per share increased by 9.1% to $0.24 per share
from $0.22 per share in the prior year period. Net income per share reflects a
15.9% increase in weighted average shares outstanding as a result of the
Company's completion of a public offering of 1,150,000 shares of common stock in
March 1995.
Operating Revenues. Operating revenues for the three months ended March
31, 1996 increased by $3.5 million, or 13.8%, to $28.6 million from $25.1
million in the prior year period. Operating revenues attributable to New
Railroad Properties accounted for 64.7% of this increase. Operating revenues for
Comparable Railroad Properties increased by $1.1 million, or 4.8%. Carloads
transported increased by 9,653 carloads, or 12.6%, to 86,331 carloads from
76,678 carloads in the prior year period. Carloads attributable to New Railroad
Properties accounted for 39.7% of this increase. Carloads attributable to
Comparable Railroad Properties increased by 5,820, or 8.0%, from the prior year
period.
9
<PAGE>
Freight revenues for the three months ended March 31, 1996 increased by
$2.8 million, or 12.9%, to $24.4 million from $21.6 million in the prior year
period. The following table compares freight revenues, traffic volume (in
carloads) and average freight revenues per carload by commodity group for the
three months ended March 31, 1996 and 1995.
FREIGHT REVENUES AND CARLOADS COMPARISON BY COMMODITY GROUP
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER CARLOAD AMOUNTS)
<TABLE>
<CAPTION>
FREIGHT REVENUES CARLOADS
-------------------------------- ----------------------------
1996 1995 1996 1995 AVERAGE FREIGHT
----------------- -------------- -------------- ------------- REVENUES PER
CARLOAD (1)
% OF % OF % OF % OF --------------
COMMODITY GROUP DOLLARS TOTAL DOLLARS TOTAL NUMBER TOTAL NUMBER TOTAL 1996 1995
- - ------------------------------ ------- ------- -------- ------ ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lumber and forest products.... $ 5,124 21.0% $ 4,422 20.5% 13,429 15.6% 11,646 15.2% $ 382 $ 380
Coal.......................... 3,901 16.0 3,982 18.5 19,907 23.1 18,674 24.3 196 214
Chemicals..................... 2,656 10.9 2,522 11.7 8,079 9.4 7,856 10.2 329 321
Scrap paper & paper products.. 2,432 10.0 2,161 10.0 5,840 6.8 5,334 7.0 416 405
Scrap metal & metal products.. 2,066 8.5 1,902 8.8 6,036 7.0 5,965 7.8 342 319
Farm products................. 2,052 8.4 1,672 7.8 9,002 10.4 7,160 9.4 228 232
Non-metallic ores............. 1,865 7.7 1,178 5.5 9,547 11.1 6,685 8.7 195 176
Food products................. 1,217 5.0 1,058 4.9 4,670 5.4 4,552 5.9 261 232
Petroleum products............ 1,185 4.9 992 4.6 2,895 3.4 2,332 3.0 409 425
Minerals & stone.............. 872 3.6 726 3.4 2,968 3.4 2,764 3.6 294 263
Other......................... 984 4.0 954 4.3 3,958 4.4 3,710 4.9 249 257
------- ----- ------- ----- ------ ----- ------ -----
Total.................... $24,354 100.0% $21,569 100.0% 86,331 100.0% 76,678 100.0% $ 282 $ 281
======= ===== ======= ===== ====== ===== ====== =====
</TABLE>
- - ----------
(1) Calculated as freight revenues divided by carloads.
Approximately $1.9 million of the $2.8 million increase in freight revenues
for the three months ended March 31, 1996 is attributable to a New Railroad
Property. This property added approximately 3,800 carloads consisting primarily
of scrap paper and paper products (851), scrap metal and metal products (636),
chemicals (577), non-metallic ores (434), lumber and forest products (373), and
food products (353). Freight revenues for Comparable Railroad Properties
increased by approximately $855,000, or 4.4%, while carloadings for Comparable
Railroad Properties increased by 5,820, or 8.0%.
Non-freight revenues for the three months ended March 31, 1996 increased
approximately $680,000, or 19.0%, to $4.3 million from $3.6 million in the prior
year period. Non-freight revenues include joint facilities, switching,
demurrage, car hire, car repair and lease income. These non-freight revenues
contributed 14.9% and 14.2% of operating revenues in the three months ended
March 31, 1996 and 1995, respectively. New Railroad Properties contributed
approximately $311,000, or 45.7%, of the increase, primarily as a result of
Amtrak revenues, car repair and lease income. Non-freight revenues for
Comparable Railroad Properties increased approximately $235,000, or 7.3%,
primarily as a result of increased switching and car hire income.
Operating Expenses. Operating expenses for the three months ended March
31, 1996 increased by $2.6 million, or 12.1%, to $23.7 million from $21.1
million in the prior year period. The Company's operating ratio (operating
expenses divided by operating revenues), improved for the period to 82.8%,
compared to 84.0% in the prior year period, primarily as a result of decreased
equipment rents and materials expense as discussed below.
10
<PAGE>
The following table sets forth a comparison of the Company's operating
expenses during the three month periods ended March 31, 1996 and 1995, in
dollars and as a percentage of operating revenues:
OPERATING EXPENSES COMPARISON
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
------------------- ------------------
% OF % OF
OPERATING OPERATING
DOLLARS REVENUE DOLLARS REVENUE
------- ---------- ------- ---------
<S> <C> <C> <C> <C>
Labor and benefits...................... $ 8,425 29.4% $ 7,483 29.8%
Equipment rents......................... 3,270 11.4 3,873 15.4
Diesel fuel............................. 2,402 8.4 1,910 7.6
Depreciation and amortization........... 2,276 8.0 1,810 7.2
Purchased services...................... 1,797 6.3 1,593 6.3
Casualties and insurance................ 1,597 5.6 1,320 5.2
Materials............................... 971 3.4 995 4.0
Other................................... 2,941 10.3 2,133 8.5
------- ---- ------- ----
Total.................................. $23,679 82.8% $21,117 84.0%
======= ==== ======= ====
</TABLE>
Labor and benefits for the three months ended March 31, 1996 increased
approximately $942,000, or 12.6%, to $8.4 million from $7.5 million in the prior
year period. Labor and benefits attributable to New Railroad Properties
accounted for 53.9% of this increase. Labor and benefits for Comparable Railroad
Properties increased approximately $340,000, or 6.5%, due primarily to increased
wages and overtime resulting from increased business levels. Headquarters' staff
costs also increased by approximately 5.0% as a result of the addition of key
personnel to support the Company's growth.
Equipment rents for the three months ended March 31, 1996 decreased by
approximately $603,000, or 15.6%, to $3.3 million from $3.9 million in the prior
year period. Equipment rents attributable to New Railroad Properties increased
by 44.5% due primarily to operating the New England Central Railroad for three
full months in the current year period versus two months in the prior year
period. Equipment rents for Comparable Railroad Properties decreased
approximately 17.0% due primarily to decreased car hire expense. The decrease in
car hire expense is due to certain arrangements made under which the Company
agreed to place over 1,900 freight cars on its railroads for prospective loading
by customers and, in exchange, the Company does not incur rent on these cars
when these cars are on one of its railroads. In addition, the car owners pay the
Company a portion of the rents earned when the freight cars are on railroads
other than the Company's. Additionally, the implementation of car hire reclaim
arrangements on certain types of equipment and the trackage rights arrangement
with Norfolk Southern Railroad Co. on the Company's Georgia Southwestern
Railroad contributed to the decrease in car hire expense.
Diesel fuel expense for the three months ended March 31, 1996 increased by
approximately $492,000, or 25.8%, to $2.4 million from $1.9 million in the prior
year period. New Railroad Properties accounted for 50.4% of this increase.
Diesel fuel expense for Comparable Railroad Properties increased by
approximately $244,000, or 14.2%, due to a combination of increased consumption
related to increased carloadings and higher fuel prices during the current year
period. The Company's average fuel cost per gallon increased approximately $0.05
per gallon, or 7.1%, in the current year period. The Company has taken several
steps to reduce its exposure to fuel price fluctuations, including entering into
a fuel hedging contract to cap the cost of approximately 32.0% of the Company's
estimated annual fuel consumption. Additionally, the Company has retained an
independent contractor to negotiate fuel prices for the Company's railroads on a
centralized basis. This contractor will be compensated on a percentage of cost
savings.
11
<PAGE>
Depreciation and amortization for the three months ended March 31, 1996
increased by approximately $466,000, or 25.7%, to $2.3 million from $1.8 million
in the prior year period. New Railroad Properties accounted for 57.9% of this
increase. The remainder is due to capital projects completed for Comparable
Railroad Properties in 1995 and 1996, and an increase in the size of the
Company's locomotive fleet related to the Company's two most recent
acquisitions.
Purchased services for the three months ended March 31, 1996 increased
approximately $204,000, or 12.8%, to $1.8 million from $1.6 million in the prior
year period. Purchased services attributable to New Railroad Properties
accounted for 19.1% of this increase. Purchased services for Comparable Railroad
Properties increased by approximately $77,000, or 5.2%, and was due primarily to
increased contract labor related to intermodal and warehousing operations. The
remainder is primarily due to increased headquarters expenses.
Casualties and insurance expense for the three months ended March 31, 1996
increased by approximately $277,000, or 21.0%, to $1.6 million from $1.3 million
in the prior year period. New Railroad Properties accounted for 30.3% of this
increase. Casualties and insurance expense for Comparable Railroad Properties
decreased by approximately $243,000, or 18.1%, due to lower insurance premiums
related to an increase in the Company's self insured retention offset by
increased self insured retention expense.
Materials expense for the three months ended March 31, 1996 decreased by
approximately $24,000, or 2.4%, to approximately $971,000 from approximately
$995,000 in the prior year period. Materials costs associated with New Railroad
Properties increased by approximately $180,000. Materials expense for Comparable
Railroad Properties decreased approximately $273,000, or 28.3%, primarily as a
result of decreased car repair and maintenance of way activities in the current
year period. Various maintenance of way programs were postponed until subsequent
months for weather related and other reasons.
Other expenses for the three months ended March 31, 1996, including
property and franchise taxes and joint facilities, increased approximately
$808,000, or 37.9%, to $2.9 million from $2.1 million in the prior year period.
Approximately 57.8% of this increase is attributable to New Railroad Properties.
Other expenses for Comparable Railroad Properties increased by approximately
$177,000, or 11.1%, due primarily to increased trackage rights expense and
property taxes. Trackage rights expense increased due to the track lease and
operating rights agreement with Norfolk Southern Railway Co. on the Company's
Georgia Southwestern Railroad. Property taxes increased due to higher 1995 tax
valuations. The remainder of the increase is due to increased corporate
headquarters costs associated with the Company's growth.
Other Income. Other income for the three months ended March 31, 1996
decreased by approximately $53,000, or 20.0%, to $265,000 from $318,000 in the
prior year period due primarily to fewer sales of non- operating properties.
Income Taxes. The Company's effective tax rate increased in the three
months ended March 31, 1996 to 41.3% from 39.6% in the prior year period due to
proportionally higher state income taxes in the current year period resulting
primarily from the Company's two most recent acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically relied primarily on cash generated from
operations to fund working capital and capital expenditure needs relating to
ongoing operations while relying on contributed capital and borrowed funds to
finance its acquisitions.
12
<PAGE>
During the three months ended March 31, 1996, the Company generated cash
from operations of $7.3 million, of which $5.4 million was used to fund non-
acquisition related capital expenditures and $1.0 million was used to reduce
outstanding borrowings under the Company's bank credit facilities. Cash and cash
equivalents increased by approximately $940,000 during the three months ended
March 31, 1996 resulting in a cash balance at March 31, 1996 of $3.1 million.
At March 31, 1996, the Company had long-term senior debt, capital leases
and senior subordinated debt outstanding totaling $58.4 million, which
constituted 33.7% of its total capitalization. Comparable figures at December
31, 1995 were $58.9 million and 34.3%, respectively.
The Company now anticipates that its maintenance capital expenditure
requirements in 1996 for track, locomotives and equipment on properties it
currently operates will be approximately $12.0 million. Additionally, computer
hardware, software and related capital expenditures are currently expected to be
approximately $4.0 million.
The Company believes its cash flow from operations together with available
amounts under the U.S. Working Capital Facility will allow it to meet its
liquidity and capital expenditure requirements for currently operated railroads
through the expiration of the U.S. Working Capital Facility in May 1996. The
Company and its lenders have agreed in principle on new domestic working capital
and acquisition facilities to replace the U.S. Working Capital Facility and the
U.S. Acquisition Facility which expire on May 31, 1996 and May 31, 1997,
respectively. The new facilities carry substantially the same, or improved,
terms and conditions as the current facilities. The Company and its lenders are
in the process of finalizing documentation of the new facilities. The new
facilities are contemplated to expire on April 30, 1999.
At March 31, 1996, availability under the U.S. Acquisition Facility, the
U.S. Working Capital Facility and the Canadian Revolving Credit Facility was, in
U.S. dollars, $75.0 million, $10.0 million and approximately $4.0 million,
respectively. The unused portion of the U.S. Acquisition Facility, the U.S.
Working Capital Facility and the Canadian Revolving Credit Facility are subject
to a 0.25% commitment fee. In addition, RailTex, Inc., the parent company, is a
guarantor of the Canadian Revolving Credit Facility.
Covenants contained in the agreements evidencing the Company's senior bank,
senior unsecured and senior subordinated debt prohibit the Company from paying
dividends on its capital stock and limit its ability to incur additional
indebtedness, create liens on its assets, make certain capital expenditures and
repurchase shares of its capital stock or any outstanding options or other
rights to acquire capital stock of the Company. The Company is also limited in
its ability to make loans, investments or guarantees. Additionally, the Company
is required to maintain a minimum tangible net worth and certain ratios of
leverage and cash flow to debt service. At March 31, 1996, the Company was in
compliance with all covenants pertaining to its senior bank debt, senior
unsecured notes and senior subordinated debt.
INFLATION
In recent years, inflation has not had a significant impact on the
Company's operations. The Company's contracts with connecting carriers typically
include clauses that adjust the Company's per car fees based on the ICC's cost
or inflation indices.
SEASONALITY
The Company's operating revenues from existing operations have not
historically been subject to significant seasonal changes.
13
<PAGE>
ACCOUNTING MATTERS
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") was issued. FAS 123
defines a fair value based method of accounting for employee stock options or
similar equity instruments and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. Under the fair
value based method, compensation cost is measured at the grant date based on the
value of the award and is recognized over the service period of the award, which
is usually the vesting period. However, FAS 123 also allows entities to continue
to measure compensation costs for employee stock compensation plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"). Entities electing to
remain with the accounting prescribed by APB 25 must make pro forma disclosures
of net income and earnings per share as if the fair value based method
recommended by FAS 123 had been applied. The accounting requirements of FAS 123
are effective for transactions entered into in fiscal years that begin after
December 15, 1995, though they may be adopted on issuance. The disclosure
requirements of FAS 123 are effective for financial statements for fiscal years
beginning after December 15, 1995. The Company intends to continue measuring
compensation costs using APB 25 and to provide pro forma disclosures of net
income and earnings per share as if the fair value based method of accounting
under FAS 123 had been applied. Therefore, FAS 123 is not expected to have a
material effect on the financial condition or results of operations of the
Company
The remainder of this page is intentionally left blank.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A). EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
*3(i) Restated Articles of Incorporation of the Company.
*3(ii) Bylaws of the Company.
*4.1 Specimen Common Stock Certificate.
*4.2 Note Agreement, dated as of January 1, 1993, among the Company and
Massachusetts Mutual Life Insurance Company, MassMutual
Participation Investors and MassMutual Corporate Investors.
*4.3 Purchase Agreement, dated as of August 28, 1991, among the Company
and Banc One Capital Partners Corporation, Ventex Partners Ltd.,
and First Century Partnership III.
**10.1 Credit Agreement, dated as of August 2, 1994, between the Company;
First Interstate Bank of Texas, NA; National Bank of Canada; First
Interstate Bank of Texas, NA, as Agent, and the several financial
institutions that are parties to the Loan Agreement.
**10.2 Loan Agreement, dated as of August 2, 1994, between RailTex
Canada, Inc. and National Bank of Canada.
**10.3 CDN $23,269,691.05 Promissory Note, dated August 2, 1994, between
RailTex Canada, Inc. and National Bank of Canada.
10.4 (This exhibit is intentionally left blank).
**10.5 Guaranty Agreement, dated August 2, 1994, by the Company in favor
of National Bank of Canada.
10.6 (This exhibit is intentionally left blank).
10.7 (This exhibit is intentionally left blank).
15
<PAGE>
*10.8 Contract for Rail Freight Service, dated July 31, 1986, by and between
the City of Austin, Capital Metropolitan Transportation Authority and
Austin Railroad Company, Inc.
*10.9 Indenture of Lease and Option to Purchase Agreement, dated February
28, 1990, by and between Southern Railway Company and Chesapeake and
Albermarle Railroad Company, Inc.
*10.10 Lease Agreement, dated February 9, 1992, by and between Missouri
Pacific Railroad Company and Dallas, Garland & Northeastern Railroad
Company, Inc.
*10.11 Line Sale Contract, dated February 5, 1992, by and between Missouri
Pacific Railroad Company and Dallas, Garland & Northeastern Railroad
Company, Inc.
*10.12 Smithville, GA to White Oak, AL Lease and Option to Purchase
Agreement, dated December 22, 1988, by and between Central of Georgia
Railroad Company, the South Western Rail Road Company and South
Carolina Central Railroad Company, Inc.
*10.13 Asset Purchase Agreement, dated October 29, 1990, by and between the
Goderich-Exeter Railway Company Limited and Canadian National Railway
Company.
*10.14 Operating and Marketing Agreement, dated October 29, 1990, between
Goderich-Exeter Railway Company Limited and Canadian National Railway
Company.
*10.15 Purchase and Sale Agreement, dated July 9, 1993, by and between
Central Michigan Railway Company and Grand Rapids Eastern Railroad.
*10.16 Purchase and Sale Agreement, dated March 19, 1992, by and between
Indiana Southern Railroad, Inc. and Consolidated Rail Corporation.
*10.17 Transportation Contract ICC-CR-C-4553, dated September 28, 1987, by
and between Consolidated Rail Corporation and Indianapolis Power &
Light Company and all amendments thereto.
*10.18 Lease Agreement, dated December 11, 1992, by and between Missouri
Pacific Railroad Company and Missouri & Northern Arkansas Railroad
Company, Inc.
*10.19 Line Sale Contract, dated December 11, 1992, by and between Missouri
Pacific Railroad Company and Missouri & Northern Arkansas Railroad
Company, Inc.
*10.20 Permanent Freight Railroad Operating Easement, dated March 31, 1993,
by and between the Union Pacific Railroad Company and the Salt Lake
City Southern Railroad Co., Inc.
*10.21 Administration and Coordination Agreement, dated March 31, 1993, by
and between the Salt Lake City Southern Railroad Co., Inc. and the
Utah Transit Authority.
*10.22 Agreement for Operation of Freight Service and Control Through
Management of SD&AE, dated March 8, 1984, between San Diego and
Arizona Eastern Railway Company, San Diego Metropolitan Transit
Development Board and the Company.
16
<PAGE>
*10.23 Agreement, dated July 15, 1986, between San Diego and Imperial
Valley Railroad and Ferrocarril Sonora-Baja California.
*10.24 Lease Agreement, dated March 2, 1990, between Missouri Pacific
Railroad Company and Mid-Michigan Railroad, Inc.
*10.25 Lease and Option to Purchase Agreement, dated November 10, 1988, by
and between Southern Railway Company and North Carolina & Virginia
Railroad.
*10.26 Asset Purchase Agreement, dated September 18, 1992, by and between
Cape Breton & Central Nova Scotia Railway Limited and Canadian
National Railway Company.
*10.27 Operating and Marketing Agreement, dated September 18, 1992,
between Cape Breton & Central Nova Scotia Railway Limited and
Canadian National Railway Company.
*10.28 Note Agreement, dated as of January 1, 1993, among the Company and
Massachusetts Mutual Life Insurance Company, MassMutual
Participation Investors and MassMutual Corporate Investors
(included as Exhibit 4.2).
*10.29 Purchase Agreement, dated as of August 28, 1991, among the Company
and Banc One Capital Partners Corporation, Ventex Partners Ltd.,
and First Century Partners III (included as Exhibit 4.3).
*10.30 Form of 1993 Stock Plan of the Company.
*10.31 Form of Non-Statutory Stock Option Agreement between the Company
and its officers.
*10.32 Interest Rate Swap Agreement, dated September 16, 1992, between the
Company and First Interstate Bank of Texas, NA
*10.33 Form of Indemnification Agreement between the Company and its
officers and directors.
*10.34 Form of Indemnification Agreement between RailTex Service Co., Inc.
and its officers and directors.
***10.35 First Amendment to Credit Agreement, dated as of February 3, 1995,
between the Company; First Interstate Bank of Texas, NA; National
Bank of Canada; First Interstate Bank of Texas, NA, as Agent, and
the several financial institutions that are a party to the Credit
Agreement.
*10.36 Right of First Refusal Agreement, dated October 1, 1993, between
Cape Breton & Central Nova Scotia Railway Limited and Canadian
National Railway Company.
***10.37 Sale Agreement--Siskiyou Line, Coos Bay Branch and White City
Branch, dated as of November 21, 1994, by and between Southern
Pacific Transportation Company and Central Oregon & Pacific
Railroad, Inc.
***10.38 First Amendment to Sale Agreement--Siskiyou Line, Coos Bay Branch
and White City Branch, dated as of December 31, 1994, by and
between Southern Pacific Transportation Company and Central Oregon
& Pacific Railroad, Inc.
17
<PAGE>
***10.39 Lease Agreement, dated as of December 31, 1994, by and between
Southern Pacific Transportation Company and Central Oregon &
Pacific Railroad, Inc.
***10.40 Cooperative Marketing Agreement, dated as of December 31, 1994, by
and between Southern Pacific Transportation Company and Central
Oregon & Pacific Railroad, Inc.
*****10.41 The Note Agreement, dated as of September 1, 1995, between the
Company and the Purchasers named on Schedule I on Note Agreement.
*****10.42 Second Amendment to Credit Agreement, dated as of October 9, 1995,
among First Interstate Bank of Texas, NA, individually and as
Agent, National Bank of Canada and the Company.
*****10.43 Loan Amending Agreement, dated as of October 11, 1995, between
RailTex Canada, Inc. and National Bank of Canada.
******10.44 Form of Non-Statutory Stock Option Agreement between the Company
and its outside directors.
***10.45 Letter of Intent, dated May 23, 1994, between Central Vermont
Railway, Inc. and RailTex Service Company, Inc.
****10.46 Lease and Sale Agreement, dated October 6, 1994, by and between
New England Central Railroad, Inc. and Central Vermont Railway,
Inc.
*****10.47 The Note Agreement (the "Canadian Note Agreement"), dated as of
September 1, 1995, between RailTex Canada, Inc. and the Purchasers
named on Schedule I to the Canadian Note Agreement.
*****10.48 Guaranty Agreement, dated as of September 1, 1995, by RailTex,
Inc. in favor of Purchasers named on Schedule I to the Canadian
Note Agreement.
+10.49 Interest Rate Swap Agreement, dated January 24, 1995, between
National Bank of Canada and RailTex Canada, Inc.
+10.50 Form of Split Dollar Insurance agreement between the Company and
its Executive Officers.
11.1 Statement Regarding Computation of Per Share Earnings.
27 Financial Data Schedule
- - ------------------
* These exhibits are incorporated by reference to the same Exhibit to the
Registrant's Registration Statement No. 33-68938 filed on Form S-1 with the
Securities and Exchange Commission (the "Commission") on September 16, 1993,
as amended by Amendment No. 1 to Form S-1 Registration Statement filed with
the Commission on November 1, 1993, Amendment No. 2 to Form S-1 Registration
Statement filed with the Commission on November 16, 1993 and Post-Effective
Amendment No. 1 to Form S-1 Registration Statement filed with the Commission
on November 19, 1993.
** These exhibits are incorporated by reference to the same Exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1994.
18
<PAGE>
*** These exhibits are incorporated by reference to the same Exhibit to the
Registrant's Registration Statement No. 33-80782 filed on Form S-1 with
the Commission on June 28, 1994, as amended by Amendment No. 1 to Form
S-1 Registration Statement filed with the Commission on September 1,
1994, Amendment No. 2 to Form S-1 Registration Statement filed with the
Commission on February 17, 1995 and Amendment No.3 to Form S-1
Registration Statement filed with the Commission on March 6, 1995.
**** These exhibits are incorporated by reference to the same Exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1994.
***** These exhibits are incorporated by reference to the same Exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1995.
****** This exhibit is incorporated by reference to the same Exhibit to the
Registrant's Form 10-K for the year ended December 31, 1993.
+ These exhibits are incorporated by reference to the same Exhibit to the
Registrants Annual Report on Form 10-K for the year ended December 31,
1995 filed with the Commission on March 29, 1996.
(B). Reports on Form 8-K:
-------------------
No Reports on Form 8-K were filed by the Registrant during the period
covered by this report.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in San Antonio,
Texas.
RAILTEX, INC.
Date: May 14, 1996 By: /s/ LAURA D. DAVIES
---------------------------
Name: LAURA D. DAVIES
Title: Vice President and Chief Financial
Officer
Date: May 14, 1996 By: /s/ ALLEN L. SMITH
---------------------------
Name: ALLEN L. SMITH
Title: Controller and Chief Accounting
Officer
20
<PAGE>
RAILTEX, INC. AND SUBSIDIARIES EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1996
------ ------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION:
- - ----------------------------------------
Net income.............................. $ 1,728 $2,183
========== ======
Weighted average number of common stock
and common stock equivalents
outstanding:
Weighted average number of shares of
common stock outstanding.............. 7,522 9,111
Common stock equivalents applicable
to convertible senior subordinated
notes (1)............................. 177 --
Weighted average number of common
stock equivalents applicable to stock
options............................... 261 114
--------- ------
Common stock and common stock
equivalents........................... 7,960 9,225
========== ======
Earnings per share - primary............ $ 0.22 $ 0.24
========== ======
FULLY DILUTED EARNINGS PER SHARE CALCULATION:
- - ---------------------------------------------
Net income.............................. $ 1,728 $2,183
========== ======
Weighted average number of common stock
and common stock equivalents
outstanding:
Weighted average number of shares of
common stock outstanding.............. 7,522 9,111
Common stock equivalents applicable
to convertible senior subordinated
notes (1)............................. 177 --
Weighted average number of common
stock equivalents applicable to stock
options............................... 265 129
---------- ------
Common stock assuming full dilution.... 7,964 9,240
========== ======
Earnings per share - fully diluted (2).. $ 0.22 $ 0.24
========== ======
</TABLE>
- - ------------------
(1) Convertible debt issued within one year prior to an initial public offering
with a conversion price below the estimated initial public offering price
has been included as outstanding for all periods specified by SAB No. 83
(Topic 4-D).
(2) This calculation is submitted in accordance with item 601(b)11 of
regulation S-K although it is not required by APB Opinion No. 15 because it
results in dilution of less than 3.0%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE CONSOLIDATED STATEMENT
OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 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> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,069
<SECURITIES> 0
<RECEIVABLES> 19,732
<ALLOWANCES> 498
<INVENTORY> 0
<CURRENT-ASSETS> 26,063
<PP&E> 202,396
<DEPRECIATION> 24,232
<TOTAL-ASSETS> 208,413
<CURRENT-LIABILITIES> 21,257
<BONDS> 0
0
0
<COMMON> 911
<OTHER-SE> 113,899
<TOTAL-LIABILITY-AND-EQUITY> 208,413
<SALES> 28,609
<TOTAL-REVENUES> 28,609
<CGS> 0
<TOTAL-COSTS> 23,528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 151
<INTEREST-EXPENSE> 1,479
<INCOME-PRETAX> 3,716
<INCOME-TAX> 1,533
<INCOME-CONTINUING> 2,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,183
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
