FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] 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: 0-19582
OLD DOMINION FREIGHT LINE, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 56-0751714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1730 Westchester Drive
High Point, NC 27262
(Address of principal executive offices)
Telephone Number (910) 889-5000
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 .
---- -----
As of April 30, 1997, there were 8,308,196 shares of the registrant's
Common Stock ($.10 par value) outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------
March 31, March 31,
1997 1996
(In thousands, except share and per share data) (Unaudited) (Unaudited)
- ------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Revenue from operations $73,591 $68,262
Operating expenses:
Salaries, wages and benefits 43,421 38,216
Purchased transportation 3,397 5,556
Operating supplies and expenses 7,532 7,198
Depreciation and amortization 3,991 3,772
Building and office equipment rents 1,675 1,679
Operating taxes and licenses 3,313 3,086
Insurance and claims 2,316 2,406
Communications and utilities 1,425 1,482
General supplies and expenses 2,706 2,724
Miscellaneous expenses 601 447
------------- -----------------
Total operating expenses 70,377 66,566
------------- -----------------
Operating income 3,214 1,696
Other deductions:
Interest expense, net 868 546
Other expense, net 72 90
------------- -----------------
Total other deductions 940 636
------------- -----------------
Income before income taxes 2,274 1,060
Provision for income taxes 875 403
------------- -----------------
Net income $ 1,399 $ 657
============= =================
Income per common share:
Net income $ 0.17 $ 0.08
Weighted average number of shares outstanding 8,319,420 8,345,608
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(In thousands, except share data) (Unaudited) (Audited)
- ----------------------------------------------- --------------------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 851 $ 1,353
Customer receivables, less allowances of $5,657
and $5,699 at March 31, 1997, and December 31, 42,481 39,983
1996, respectively
Other receivables 627 890
Tires on equipment 4,243 4,514
Prepaid expenses 5,871 6,899
Deferred income taxes 2,625 2,625
------------- -------------------
Total current assets 56,698 56,264
Property and equipment:
Revenue equipment 127,415 127,443
Land and structures 37,521 36,459
Other equipment 18,043 15,718
Leasehold improvements 493 479
-------------- -------------------
Total property and equipment 183,472 180,099
Less accumulated depreciation and amortization (73,220) (70,924)
-------------- -------------------
Net property and equipment 110,252 109,175
Other assets, less insurance policy loans of $1,815 at
March 31, 1997, and December 31, 1996 5,829 5,287
-------------- -------------------
Total assets $172,779 $ 170,726
============== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(In thousands, except share data) (Unaudited) (Audited)
- ---------------------------------------------- ---------------------------- ----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,873 $ 14,860
Compensation and benefits 7,816 6,919
Claims and insurance accruals 8,720 8,918
Other accrued liabilities 2,107 1,509
Income taxes payable 503 -
Current maturities of long-term debt 4,537 3,659
--------------- -------------------
Total current liabilities 33,556 35,865
Long-term debt 40,415 39,482
Other non-current liabilities 7,645 7,074
Deferred income taxes 14,326 13,377
--------------- -------------------
Total long-term liabilities 62,386 59,933
Stockholders' equity:
Common stock - $.10 par value, 25,000,000 shares
authorized, 8,308,196 and 8,345,608 shares outstanding
at March 31, 1997, and December 31, 1996, respectively 831 835
Capital in excess of par value 23,867 23,352
Retained earnings 52,139 50,741
--------------- -------------------
Total stockholders' equity 76,837 74,928
Commitments and contingencies - -
--------------- -------------------
Total liabilities and stockholders' equity $172,779 $170,726
=============== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
(In thousands) 1997 1996
- -------------------------------------------------------------- ------------ ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,399 $ 657
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 3,991 3,772
Deferred income taxes 949 101
(Gain) Loss on sale of property and equipment (43) 60
Changes in assets and liabilities:
Receivables, net (2,235) (1,960)
Tires on equipment 271 181
Prepaid expenses and other assets 486 849
Accounts payable (4,987) 5,428
Compensation, benefits and other accrued liabilities 1,495 1,777
Estimated liability for claims (198) (36)
Income taxes payable 503 491
Other liabilities 571 (521)
------------ ----------------
Net cash provided by operating activities 2,202 10,799
------------ ----------------
Cash flows from investing activities:
Purchase of property and equipment (5,531) (11,175)
Proceeds from sale of property and equipment 505 21
------------ ----------------
Net cash used in investing activities (5,026) (11,154)
------------ ----------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5,000 -
Principal payments under debt and capital lease agreements (944) (1,852)
Net proceeds (payments) on short-term revolving line of credit (2,245) 2,450
Purchase and retirement of restricted stock 511 -
------------ ----------------
Net cash provided by financing activities 2,322 598
------------ ----------------
Increase (Decrease) in cash and cash equivalents (502) 243
Cash and cash equivalents at beginning of period 1,353 986
------------ ----------------
Cash and cash equivalents at end of period $ 851 $ 1,229
============ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of
the financial position and operating results for the interim periods.
Certain prior year amounts have been reclassified to conform with the
current year presentation. The consolidated financial statements should
be read in conjunction with the consolidated financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996. The results of operations for
the three months ended March 31, 1997, are not necessarily indicative
of the results for the entire fiscal year ending December 31, 1997.
2. Net income per share of common stock is based on the weighted average
number of shares outstanding during each period.
3. In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted
on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. The impact of Statement 128 on the
calculation of earnings per share in the current period and those
leading up to the date of adoption and thereafter is not expected to be
material.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations for the Three Months Ended March 31, 1997, Compared to
March 31, 1996
Expenses as a Percentage of Revenue from Operations
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------------------------------
<S> <C> <C>
Revenue from operations 100.0% 100.0%
-------- -------
Operating expenses:
Salaries, wages and benefits 59.0 56.0
Purchased transportation 4.6 8.1
Operating supplies and expenses 10.2 10.5
Depreciation and amortization 5.4 5.5
Building and office equipment rents 2.3 2.5
Operating taxes and licenses 4.5 4.5
Insurance and claims 3.2 3.5
Communications and utilities 1.9 2.2
General supplies and expenses 3.7 4.0
Miscellaneous expenses 0.8 0.7
------- -------
Total operating expenses 95.6 97.5
------- -------
Operating income 4.4 2.5
Interest expense, net 1.2 0.8
Other expense, net 0.1 0.1
------- ------
Income before income taxes 3.1 1.6
Provision for income taxes 1.2 0.6
------- ------
Net income 1.9% 1.0%
======= ======
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997, versus Three Months Ended March 31, 1996
Net revenue for the first quarter of 1997 was $73,591,000, an increase of 7.8%,
compared to $68,262,000 for the first quarter of 1996. Less than truckload
([fcoq]LTL[fccq]) tonnage increased 5.2% during the quarter primarily due to
efforts to increase market share and freight density in the existing service
center network. On February 20, 1997, the Company acquired certain assets of
American Central Xpress, Inc., an Illinois based LTL trucking company with
coverage primarily in Illinois and Missouri. In addition, a new service center
was opened in Houston, Texas, on March 31, 1997. These additions resulted in
less than ten percent of the increased tonnage during the quarter compared to
the previous year.
Average revenue per LTL shipment increased 5.2% to $121.21 in the current
quarter from $115.17 for the same quarter in 1996. This improvement was due
primarily to a 3.9% increase in LTL weight per shipment to 1,084 lbs. from 1,043
lbs. In addition, average LTL revenue per hundredweight increased to $11.18
compared to $11.04, an increase of 1.3%. This increase reflects a rate increase
effective January 1, 1997, on the Company's general tariffs.
Operating expenses as a percentage of net revenue (operating ratio) decreased to
95.6% for the first quarter of 1997 from 97.5% for the same period of 1996. The
decrease in the operating ratio was due to decreases in purchased
transportation, operating supplies and expenses, depreciation and amortization,
building and office equipment rents, insurance and claims, communications and
utilities and general supplies and expenses as a percent of revenue. Combined,
these costs decreased to 31.3% of revenue compared to 36.3% for the same quarter
of 1996.
Purchased transportation accounted for a significant portion of the lower
operating expenses, decreasing to 4.6% of revenue from 8.1% for the same quarter
last year. This decrease is due to the Company continuing to replace cartage
agents with Company personnel and equipment. The decrease in operating supplies
and expenses is attributed to a reduction in vehicle repair and maintenance
expenses to 2.2% of revenue from 2.4% for the same quarter of 1996 as the harsh
winter weather experienced during the first quarter of 1996 resulted in higher
than normal operating costs. Building and office equipment rents decreased to
2.3% of revenue from 2.5% primarily as a result of the Company's purchase of
service centers that were previously leased. Insurance and claims decreased to
3.2% of revenue from 3.5% due primarily to a reduction in cargo claims expense
to 1.8% percent of revenue from 2.2% for the same quarter of 1996.
Combined, depreciation and amortization, communications and utilities and
general supplies and expenses decreased to 11.0% of revenue from 11.7% for the
same quarter of 1996. These decreases can be attributed to the Company's effort
to leverage revenue growth against relatively fixed costs.
These reduced expenses as a percent of revenue were partially offset by
increases in salaries, wages and benefits to 59.0% of revenue compared to 56.0%
for the same period last year. This increase is a result of the expansion costs
in Illinois and Texas, reduced use of outside cartage agents replaced by Company
personnel and equipment and a 17% increase in the number of Company sales
personnel in conjunction with the Company's strategy of building market share in
existing markets. The increased sales force is expected to generate additional
revenue in strategic lanes as the year progresses.
Interest expense increased to 1.2% of revenue in the first quarter of the
current year from .8% for the same quarter of 1996. The increase was due
primarily to an increase in outstanding debt to $44,952,000 at March 31, 1997,
from $30,814,000 at March 31, 1996.
Net income was $1,399,000 for the quarter ended March 31, 1997, an increase of
112.9%, compared to $657,000 for the same quarter of the previous year. The
effective tax rate was 38.5% for the first quarter of 1997 compared to 38.0% for
the same period of 1996.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Expansion in both the size and number of service center facilities, as well as
the routine tractor and trailer turnover cycle, have required continued
investment in property and equipment. In order to accommodate this growth, the
Company currently anticipates capital expenditures between $33,000,000 and
$35,000,000 for 1997. This investment will be financed principally by internally
generated cash flow supplemented with borrowings. Capital expenditures during
the quarter ended March 31, 1997, were approximately $5,531,000. Long-term debt
including current maturities increased to $44,952,000 at March 31, 1997, from
$43,141,000 at December 31, 1996. As a result, the Company has internally
financed 67.3% of the first quarter capital expenditures.
The Company generally meets its working capital needs with cash generated from
operations. Working capital requirements are generally higher during the first
and fourth quarters because of seasonal declines in revenue and annual payments
of property taxes, equipment tags and licenses. The Company currently maintains
a $32,500,000 uncollateralized committed credit agreement that provides a
$15,000,000 line of credit and a $17,500,000 letter of credit facility. Interest
on the line of credit is charged at rates that can vary based upon a certain
financial performance ratio and the stated period of time the borrowings are
outstanding. The applicable interest rate is based upon LIBOR plus .75% for
periods of 30-180 days and prime minus 1% for periods less than 30 days. The
Company has also entered into a separate International Swap Dealers Association
Agreement that hedges the interest rate on a portion of the outstanding amount
on the credit line over a specified term. Pursuant to this agreement, as of
March 31, 1997, the Company had fixed $3,500,000 of the outstanding credit line
at a rate of 6.54% through June 19, 1998. A fee of .2% is charged on the unused
portion of the $32,500,000 line of credit and letter of credit facility, and a
fee of .6% is charged on the outstanding letters of credit. At March 31, 1997,
there was $3,645,000 outstanding on the line of credit and $11,275,000
outstanding on the letter of credit facility, which is required for self-insured
retention reserves for bodily injury, property damage and workers' compensation
insurance. The Company believes that there are sufficient credit lines and
capacity to meet seasonal and long-term financing needs.
INFLATION
Most of the Company's expenses are affected by inflation, which will generally
result in increased costs. During the first quarter, the effect of inflation on
the Company's results of operations was minimal.
SEASONALITY
The Company's operations are subject to seasonal trends common in the trucking
industry. Operating results in the first and fourth quarters are normally lower
due to reduced shipments during the winter months. The second and third quarters
are stronger due to increased demand for services during the spring and summer
months.
ENVIRONMENTAL
The Company is subject to federal, state and local environmental laws and
regulations, particularly relative to underground storage tanks
("UST's"). The Company is in compliance with applicable environmental
laws and regulations relating to UST's and does not believe that the cost of
future compliance would have a material adverse effect on the Company's
operations or financial condition.
FORWARD-LOOKING INFORMATION
Forward-looking statements in the Company's Quarterly Report on Form 10-Q,
Quarterly Report to Stockholders and other written and oral statements made by
or on behalf of the Company, including and without limitation, statements
relating to the Company's goals, strategies, expectations, competitive
environment, regulation and availability of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including, but not limited to, the following: (1) the Company's
9
<PAGE>
goals, strategies and expectations are subject to change at any time at the
discretion of the Company; (2) the Company's ability to maintain a nonunion,
qualified work force; (3) the competitive environment with respect to industry
capacity and pricing; (4) the availability of fuel and other significant
resources; (5) the impact of various regulatory bodies; and (6) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit No. Description
------------- --------------
27 Financial Data Schedule
b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended March 31, 1997.
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.
OLD DOMINION FREIGHT LINE, INC.
DATE: April 30, 1997 J. WES FRYE
-----------
J. Wes Frye
Treasurer (Principal Financial Officer)
DATE: April 30, 1997 JOHN P. BOOKER III
-------------------
John P. Booker III
Controller (Principal Accounting Officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 851
<SECURITIES> 0
<RECEIVABLES> 48,138
<ALLOWANCES> (5,657)
<INVENTORY> 0
<CURRENT-ASSETS> 56,698
<PP&E> 183,472
<DEPRECIATION> (73,220)
<TOTAL-ASSETS> 172,779
<CURRENT-LIABILITIES> 33,556
<BONDS> 0
0
0
<COMMON> 831
<OTHER-SE> 76,006
<TOTAL-LIABILITY-AND-EQUITY> 172,779
<SALES> 73,591
<TOTAL-REVENUES> 73,591
<CGS> 0
<TOTAL-COSTS> 70,377
<OTHER-EXPENSES> 72
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 868
<INCOME-PRETAX> 2,274
<INCOME-TAX> 875
<INCOME-CONTINUING> 1,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,399
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
<PAGE>
</TABLE>
