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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 ACTION OF 1934 - FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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: 0-22276
ALLIED HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-0360550
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
SUITE 510, 160 CLAIREMONT AVENUE, DECATUR, GEORGIA 30030
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(Address of principal executive offices)
(404) 373-4285
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(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
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Outstanding common stock, No par value at May 1, 1997..................7,810,000
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TOTAL NUMBER OF PAGES INCLUDED IN THIS REPORT: 11
1
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INDEX
PART I
FINANCIAL INFORMATION
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PAGE
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ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996 ................................................. 3
Consolidated Statements of Operations for the Three
Month Periods Ended March 31, 1997 and 1996 ....................... 4
Consolidated Statements of Cash Flows for the Three
Month Periods Ended March 31, 1997 and 1996 ....................... 5
Notes to Consolidated Financial Statements .......................... 6
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................... 7
PART II
OTHER INFORMATION
ITEM 6
Exhibits and Reports on Form 8-K ....................................10
Signature Page ......................................................11
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2
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PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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MARCH 31 DECEMBER 31
1997 1996
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(UNAUDITED)
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 2,685 $ 1,973
Short-term investments 10,524 8,520
Receivables, net of allowance for doubtful accounts 28,858 22,673
Inventories 3,638 4,096
Prepayments and other current assets 14,393 11,940
--------- ---------
Total current assets 60,098 49,202
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PROPERTY AND EQUIPMENT, NET 129,654 132,552
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OTHER ASSETS:
Goodwill, net 21,539 22,081
Notes receivable due from related parties 573 573
Other 7,268 6,675
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Total other assets 29,380 29,329
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Total assets $ 219,132 $ 211,083
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,170 $ 2,275
Trade accounts payable 12,957 15,872
Accrued liabilities 34,363 30,347
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Total current liabilities 52,490 48,494
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LONG-TERM DEBT, LESS CURRENT MATURITIES 98,799 93,708
--------- ---------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 3,609 3,621
--------- ---------
DEFERRED INCOME TAXES 6,788 7,487
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OTHER LONG-TERM LIABILITIES 843 1,064
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STOCKHOLDERS' EQUITY:
Common stock, no par value; 20,000 shares authorized, 7,810
shares outstanding 0 0
Additional paid-in capital 43,657 43,657
Retained earnings 14,673 14,475
Foreign currency translation adjustment, net of tax (1,081) (743)
Unearned compensation (646) (680)
--------- ---------
Total stockholders' equity 56,603 56,709
--------- ---------
Total liabilities and stockholders' equity $ 219,132 $ 211,083
========= =========
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The accompanying notes are an integral parts of these
consolidated balance sheets.
3
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ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
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FOR THE THREE MONTHS ENDED
MARCH 31
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1997 1996
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REVENUES $ 96,393 $ 93,396
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OPERATING EXPENSES:
Salaries, wages and fringe benefits 51,942 50,633
Operating supplies and expenses 15,256 14,862
Purchased transportation 8,950 7,861
Insurance and claims 3,809 3,746
Operating taxes and licenses 3,858 3,886
Depreciation and amortization 6,847 6,405
Rents 1,231 1,249
Communications and utilities 770 930
Other operating expenses 924 734
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Total operating expenses 93,587 90,306
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Operating income 2,806 3,090
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OTHER INCOME (EXPENSE):
Interest expense (2,616) (2,668)
Interest income 152 181
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(2,464) (2,487)
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INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 342 603
INCOME TAX PROVISION (144) (243)
-------- --------
INCOME BEFORE EXTRAORDINARY ITEM 198 360
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT, NET OF
INCOME TAX BENEFIT OF $573 0 (935)
-------- --------
NET INCOME (LOSS) $ 198 ($ 575)
======== ========
PER COMMON SHARE:
Income before extraordinary item $ 0.03 $ 0.05
Extraordinary loss on early extinguishment
of debt 0.00 (0.12)
-------- --------
NET INCOME (LOSS) PER COMMON SHARE $ 0.03 $ (0.07)
======== ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,725 7,725
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated statements.
4
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ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
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FOR THE THREE MONTHS ENDED
MARCH 31
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1997 1996
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(UNAUDITED) (UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 198 $ (575)
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Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating activities:
Depreciation and amortization 6,847 6,405
Gain on sale of property and equipment (4) (25)
Extraordinary loss on early extinguishment
of debt, net 0 935
Deferred income taxes (505) (12)
Change in operating assets and liabilities:
Receivables, net of allowance for doubtful accounts (6,233) (4,675)
Inventories 448 (24)
Prepayments and other current assets (2,472) (1,829)
Trade accounts payable (2,887) 2,897
Accrued liabilities 3,811 2,278
-------- --------
Total adjustments (995) 5,950
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Net cash (used in) provided by operating activities (797) 5,375
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,850) (5,470)
Proceeds from sale of property and equipment 8 119
Increase in short-term investments (2,004) 0
Increase in the cash surrender value of life insurance (667) (871)
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Net cash used in investing activities (6,513) (6,222)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt 0 (41,699)
Proceeds from issuance of long-term debt 7,986 40,000
Other, net 117 (602)
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Net cash provided by (used in) financing activities 8,103 (2,301)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (81) 44
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 712 (3,104)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,973 11,147
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,685 $ 8,043
======== ========
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The accompanying notes are an integral part of
these consolidated statements.
5
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ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
The unaudited consolidated financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. The statements contained
herein reflect all adjustments, all of which are of a normal, recurring
nature, which are, in the opinion of management, necessary to present
fairly the financial condition, results of operations and cash flows
for the periods presented. Operating results for the three month period
ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. The interim
financial statements should be read in conjunction with the financial
statements and notes thereto of Allied Holdings, Inc. and Subsidiaries,
(the "Company") included in the Company's 1996 Annual Report on Form
10-K.
Note 2. Long-Term Debt
In February 1996, the Company issued $40 million of senior subordinated
notes through a private placement. Proceeds from the senior
subordinated notes were used to reduce borrowings outstanding under the
Company's $130 million revolving credit facility. In connection with
the issuance of the notes, the Company refinanced its revolving credit
facility and recorded a $935,000 extraordinary loss, net of income
taxes, during the first quarter of 1996 related to the extinguishment
of debt.
Note 3. Acquisition
In April 1997, the Company completed the acquisition of the stock of
Kar-Tainer International Limited for $13.1 million. Kar-Tainer will
become a wholly-owned subsidiary of the Axis Group. Kar-Tainer, with
offices in the United States, Bermuda, London, and South Africa, is a
leader in the containerized shipping of vehicles. Kar-Tainer has been
involved in the containerized shipment of completely built up (CBU) and
semi knocked down (SKD) vehicles in international markets since 1983.
Kar-Tainer has worked with vehicle manufacturers and shipping lines
around the world, and is a leader in the design and manufacture of
ramps, frames, and cassettes for the shipment of CBU and SKD vehicles
in standard ISO containers.
Note 4. In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings per Share." This new statement will not result in
changes to the Company's earnings per share for the first quarter of
1997 or prior years.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Revenues were $96.4 million in the first quarter of 1997, compared to
$93.4 million for the same period in 1996, an increase of 3.2%. The
increase in revenues during 1997 versus 1996 was primarily due to an
increase in the number of vehicles delivered by the Allied Automotive
Group. An 11% increase in vehicle deliveries in Canada by the
Automotive Group more than offset a 5% decrease in vehicles delivered
in the United States. The increase in vehicle deliveries in Canada is
primarily attributable to a 13% increase in Canadian new vehicle sales
while the decrease in vehicle deliveries in the United States is
primarily because the Automotive Group ceased deliveries in January
1997 from a new vehicle manufacturing plant where it had incurred
significant losses over the past few years.
Net income was $198,000 during the first quarter of 1997, versus
$360,000 during the first quarter of 1996, or $0.03 per share in 1997,
versus $0.05 per share in 1996, (excluding a $935,000 extraordinary
loss on the early extinguishment of debt recorded during the first
quarter of 1996). However, operating earnings from the Allied
Automotive Group, the Company's largest subsidiary, were $4.1 million
in the first quarter of 1997 versus $3.6 million in the first quarter
of 1996, a 14% increase. Strong new vehicle sales, especially in
Canada, led to increased vehicle deliveries and revenues. The increased
revenues, coupled with continued emphasis on cost controls, led to
increased earnings for the Allied Automotive Group. However, that was
offset by an increase in fuel expense and, on a consolidated basis,
start-up costs for the Axis Group. Diesel fuel prices increased
approximately 4% from the first quarter of 1996 to the first quarter of
1997, reducing earnings by approximately $0.03 per share. Diesel fuel
prices have since declined and are now below comparable 1996 prices. In
addition, the Company incurred $0.09 per share of start-up costs
related to the Axis Group during the first quarter of 1997 versus $0.04
during the first quarter of 1996.
Salaries, wages and fringe benefits decreased from 54.2% of revenues
for the first three months of 1996 to 53.9% of revenues for the first
three months of 1997. The change was mainly due to an increase in the
units hauled by the Company's owner-operators and by other carriers;
such costs are included in purchased transportation. This was offset by
increased costs in the first quarter of 1997 related to the start-up of
the Axis Group.
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Purchased transportation has increased from 8.4% of revenues for the
first quarter of 1996 to 9.3% of revenues for the first quarter of
1997. This is mainly due to an increase in the number of units hauled
by owner-operators and by other carriers for the Company as part of an
exchange program to improve the backhaul ratio.
Depreciation and amortization expense increased from 6.9% of revenues
for the first quarter of 1996 to 7.1% of revenues for the first quarter
of 1997. This increase was primarily due to an increase in the number
of new rigs that were acquired, modifications of existing equipment,
and renovations and additions to terminal and maintenance facilities
during the latter part of 1996.
Interest expense for the first quarter of 1996 compared to the first
quarter of 1997 remained relatively constant. A modest rise in interest
rates was offset by reductions in long-term debt due to debt
repayments.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities totaled $797,000 for the three
months ended March 31, 1997 versus net cash provided by operating
activities of $5,375,000 for the same period in 1996. This decrease
in cash flows from operations is mainly due to changes in working
capital. Accounts receivable increased due to an increase in revenues
during March 1997. Also, the days of purchases in accounts payable
returned to a more normal level from a high level at year-end due to
a delay in payments during the holidays which resulted in excess cash
that was used to reduce outstanding long-term debt.
Net cash used in investing activities totaled $6,513,000 for the three
months ended March 31, 1997 versus $6,222,000 for the same period in
1996. During the first quarter of 1997, short-term investments held
by the Company's captive insurance company increased by approximately
$2,000,000 due to continued funding of the captive. This was offset
by a reduction in the purchases of property and equipment.
Net cash provided by financing activities totaled $8,103,000 for the
three months ended March 31, 1997 versus net cash used in financing
activities of $2,301,000 for the same period in 1996. During the first
quarter of 1997, the Company had $7,986,000 of borrowings of long-term
debt, which were mainly used to fund working capital increases. During
the first quarter of 1996, the Company issued $40,000,000 of senior
subordinated notes, the proceeds of which were used to repay long-term
debt. During the first quarter of 1996, $41,699,000 of long-term debt
was repaid.
8
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SEASONALITY AND INFLATION
The Company generally experiences its highest revenues during the
second and fourth quarters of each calendar year due to the shipment of
new models. Also, the first and third quarters are impacted by
manufacturing plant downtime. During the past three years, inflation
has not affected the Company's results of operations.
9
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K: There were no reports filed on Form 8-K for
the quarter ended March 31, 1997.
10
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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.
Allied Holdings, Inc.
May 13, 1997 s/A. Mitchell Poole, Jr.
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(Date) A. Mitchell Poole, Jr.
on behalf of Registrant as
President and Chief Operating Officer
11
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALLIED HOLDINGS, INC. FOR THE THREE MONTHS ENDED MARCH
31, 1997 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,685
<SECURITIES> 10,524
<RECEIVABLES> 28,858
<ALLOWANCES> 0
<INVENTORY> 3,638
<CURRENT-ASSETS> 60,098
<PP&E> 129,654
<DEPRECIATION> 0
<TOTAL-ASSETS> 219,132
<CURRENT-LIABILITIES> 52,490
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 56,603
<TOTAL-LIABILITY-AND-EQUITY> 219,132
<SALES> 96,393
<TOTAL-REVENUES> 96,393
<CGS> 93,587
<TOTAL-COSTS> 93,587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,616
<INCOME-PRETAX> 342
<INCOME-TAX> 144
<INCOME-CONTINUING> 198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
