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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 ACT OF 1934 - FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
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.
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(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
incorporation or organization) Identification Number)
SUITE 200, 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)
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(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, 1998................. 7,877,547
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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
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Consolidated Balance Sheets as of March 31, 1998 and
December 31, 1997.................................................... 3
Consolidated Statements of Operations for the Three
Month Periods Ended March 31, 1998 and 1997........................... 4
Consolidated Statements of Cash Flows for the Three
Month Periods Ended March 31, 1998 and 1997........................... 5
Notes to Consolidated Financial Statements............................. 6
ITEM 2
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Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 8
PART II
OTHER INFORMATION
ITEM 6
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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
1998 1997
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(UNAUDITED)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,452 $ 10,530
Short-term investments 22,255 19,540
Receivables, net of allowance for doubtful accounts 86,986 74,881
Inventories 5,977 5,391
Deferred tax assets 17,837 17,812
Prepayments and other current assets 23,493 21,519
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Total current assets 161,000 149,673
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PROPERTY AND EQUIPMENT, NET 280,763 286,214
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OTHER ASSETS:
Goodwill, net 98,911 99,310
Notes receivable due from related parties 0 573
Other 35,990 23,169
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Total other assets 134,901 123,052
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Total assets $ 576,664 $ 558,939
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,986 $ 2,980
Trade accounts payable 33,882 36,263
Accrued liabilities 120,579 118,436
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Total current liabilities 157,447 157,679
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LONG-TERM DEBT, LESS CURRENT MATURITIES 246,272 228,003
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POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 11,321 11,355
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DEFERRED INCOME TAXES 35,348 35,062
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OTHER LONG-TERM LIABILITIES 67,824 69,512
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STOCKHOLDERS' EQUITY:
Common stock, no par value; 20,000 shares authorized, 7,878
and 7,819 shares outstanding at March 31, 1998
and December 31,1997, respectively 0 0
Additional paid-in capital 44,806 43,758
Retained earnings 17,569 16,877
Foreign currency translation adjustment, net of tax (2,439) (2,826)
Unearned compensation (1,484) (481)
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Total stockholders' equity 58,452 57,328
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Total liabilities and stockholders' equity $ 576,664 $ 558,939
========= =========
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The accompanying notes are an integral part 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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1998 1997
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REVENUES $ 253,390 $ 96,393
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OPERATING EXPENSES:
Salaries, wages and fringe benefits 143,976 51,942
Operating supplies and expenses 44,626 15,256
Purchased transportation 20,814 8,950
Insurance and claims 9,133 3,809
Operating taxes and licenses 8,663 3,858
Depreciation and amortization 12,925 6,847
Rents 3,029 1,231
Communications and utilities 1,913 770
Other operating expenses 1,524 924
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Total operating expenses 246,603 93,587
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Operating income 6,787 2,806
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OTHER INCOME (EXPENSE):
Interest expense (6,022) (2,616)
Interest income 456 152
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(5,566) (2,464)
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INCOME BEFORE INCOME TAXES 1,221 342
INCOME TAX PROVISION (531) (144)
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NET INCOME $ 690 $ 198
========= =========
NET INCOME PER COMMON SHARE-BASIC
AND DILUTED $ 0.09 $ 0.03
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,746 7,725
========= =========
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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)
(UNAUDITED)
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FOR THE THREE MONTHS ENDED
MARCH 31
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 690 $ 198
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Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 12,925 6,847
Loss (gain) on sale of property and equipment 37 (4)
Deferred income taxes 76 (505)
Change in operating assets and liabilities:
Receivables, net of allowance for doubtful accounts (11,973) (6,233)
Inventories (574) 448
Prepayments and other current assets (1,949) (2,472)
Trade accounts payable (2,431) (2,887)
Accrued liabilities 360 3,811
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Total adjustments (3,529) (995)
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Net cash used in operating activities (2,839) (797)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,396) (3,850)
Proceeds from sale of property and equipment 115 8
Investment in joint venture (11,920) 0
Increase in short-term investments (2,715) (2,004)
Increase in the cash surrender value of life insurance (620) (667)
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Net cash used in investing activities (21,536) (6,513)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 18,269 7,986
Other, net 94 117
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Net cash provided by financing activities 18,363 8,103
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (66) (81)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,078) 712
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 10,530 1,973
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,452 $ 2,685
======== ========
</TABLE>
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, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. 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 1997 Annual Report on Form
10-K.
Note 2. Long-Term Debt
On September 30, 1997, the Company issued $150 million of 8 5/8% senior
notes (the "Notes") through a private placement. Subsequently, the
Notes were registered with the Securities and Exchange Commission. The
net proceeds from the Notes were used to fund the acquisition of Ryder
Automotive Carrier Services, Inc. and RC Management Corp., pay related
fees and expenses, and reduce outstanding indebtedness. The Company's
obligations under the Notes are guaranteed by substantially all of the
subsidiaries of the Company (the "Guarantors"). Separate financial
statements of the Guarantors are not provided herein as (i) the
Guarantors are jointly and severally liable for the Company's
obligations under the Notes, (ii) the subsidiaries which are not
Guarantors are inconsequential to the consolidated operations of the
Company and its subsidiaries and (iii) the net assets and earnings of
the Guarantors are substantially equivalent to the net assets and
earnings of the consolidated entity as reflected in these consolidated
financial statements. There are no restrictions on the ability of the
Guarantors to make distributions to the Company.
Note 3. Acquisition of Ryder Automotive Carrier Services, Inc. and RC
Management Corp.
On September 30, 1997, the Company completed the acquisition of Ryder
Automotive Carrier Services, Inc. and RC Management Corp. from Ryder
System, Inc. for approximately $114.5 million in cash, subject to
post-closing adjustments. The subsidiaries of Ryder Automotive Carrier
Inc. Services are engaged in car hauling, vehicle processing and dealer
prep, rail unloading and loading services of vehicle railcars, and rail
and port yard management. RC Management Corp. is principally involved
in providing logistics services to the new retail used car superstores.
The operating results of Ryder's Automotive Carrier Group have been
included with the Company's since the date of the acquisition.
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Note 4. Investment in Axis do Brasil
In February of 1998, the Company's wholly owned subsidiary, Axis Group,
Inc. completed the formation of a 50 percent owned venture in Brazil.
The Brazilian venture, Axis do Brasil, is a partnership with Coimex
Trading Company of Vitoria, Brazil, which is one of the largest trading
companies in South America. Axis do Brasil is an equity partner in a
newly formed Brazilian firm, Axis Sinimbu Logistica ("ASL"). ASL will
provide supply chain logistics services for the automotive industry in
the Mercosur counties.
Note 5. Comprehensive Income
Comprehensive income was $1.1 million for the first quarter of 1998
versus a Loss of $0.1 million for the first quarter of 1997. The
difference between comprehensive income and net income is the foreign
currency translation adjustment, net of income taxes.
Note 6. Earnings per Share
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings per Share." This new statement did not result in
changes to the Company's earnings per share for the first quarters of
1997.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Revenues were $253.4 million for the first quarter of 1998 versus
revenues of $96.4 million for the first quarter of 1997, an increase of
163%. Net income was $0.7 million in the first quarter of 1998 versus
$0.2 million in the first quarter of 1997, or $0.09 per diluted share
in 1998, versus $0.03 per diluted share in 1997, an increase of 248 %.
The significant increase in the Company's revenues was primarily due to
the acquisition of Ryder's Automotive Carrier Group which was completed
on September 30, 1997. The operating results of Ryder's Automotive
Carrier Group have been included with Allied's since the date of the
acquisition. The combined companies had a 5 % increase in vehicles
delivered for the first quarter of 1998 versus 1997 which led to the
significant increase in net income. The increase in vehicle deliveries
was primarily due to increases in new vehicle production together with
an increase in off-rail deliveries due to rail-car shortages.
Salaries, wages and fringe benefits increased from 53.9 % of revenues
in the first quarter of 1997 to 56.8 % for the first quarter of 1998.
The increase was primarily due to annual salary and benefit increases
offset by continued productivity and efficiency improvements. In
addition, there has been an increase in the number of vehicles
delivered by company drivers versus owner-operators during the first
quarter of 1998 versus 1997. This results in an increase in salaries,
wages and fringe benefits and operating supplies and expenses and a
decrease in purchased transportation. Owner-operators are responsible
for all costs to operate their rigs and such costs are included in
purchased transporation.
Operating supplies and expenses increased from 15.8 % of revenues in
the first quarter of 1997 to 17.6 % for the first quarter of 1998. The
increase was primarily the result of the acquisition of Ryder
Automotive Carrier Group as its operating costs as a percentage of
revenues were higher than the Company's together with an increase in
the vehicles delivered by Company drivers versus owner operators.
Purchased transportation expense decreased from 9.3 % of revenues in
the first quarter of 1997 to 8.2 % for the first quarter of 1998. The
decrease was primarily due to the decrease in the mix of
owner-operators to Company drivers and the ability to haul more
vehicles with Company drivers thus reducing the number of vehicles
delivered by other carriers for the Company. All costs for
owner-operators are included in purchased transportation.
Insurance and claims expense decreased from 4.0 % of revenues in the
first quarter of 1997 to 3.6 % for the first quarter of 1998. The
decrease was primarily due to lower cargo claims costs resulting from
the continuation of quality programs instituted in 1997.
Depreciation and amortization expense decreased from 7.1 % of revenues
in the first quarter of 1997 to 5.1 % for the first quarter of 1998.
The decrease was primarily the result of depreciation expense on the
rigs acquired through the acquisition of Ryder Automotive Carrier Group
representing a lower percentage of revenues than the Company's due to
the age and useful lives of the rigs.
8
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities totaled $0.8 million in the first
quarter of 1997 versus $2.8 million for the first quarter of 1998. The
increase in cash used by operating activities was primarily due to
seasonal working capital increases due to the seasonality of the
Company's revenues.
Net cash used in investing activities totaled $6.5 million in the first
quarter of 1997 versus $21.5 million for the first quarter of 1998. The
increase was primarily due to the investment of $11.9 million in Axis
do Brasil in February 1998. Capital expenditures increased from $3.9
million in the first quarter of 1997 to $6.4 million for the first
quarter of 1998. The increase in capital expenditures was due to the
increase in the number of new tractors and trailers purchased by the
Company together with an increase in modifications to existing
tractors and trailers due to an increase in the fleet size as a result
of the Ryder Automotive Carrier Group acquisition.
Net cash provided by financing activities totaled $8.1 million versus
$18.4 million for the first quarter of 1997 versus 1998. The increase
was primarily due to borrowings to finance the Company's investment in
Axis do Brasil.
SEASONALITY AND INFLATION
The Company's revenues are seasonable, with the second and fourth
quarters generally experiencing higher revenues than the first and
third quarters. The volume of vehicles shipped during the second and
fourth quarters is generally higher due to the introduction of new
models which are shipped to dealers during those periods and the higher
spring and early summer sales of automobiles and light trucks. During
the first and third quarters, vehicle shipments typically decline due
to lower sales volume during those periods and scheduled plant shut
downs. Inflation has not significantly 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, 1998.
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.
March 13, 1998 /s/A. Mitchell Poole, Jr.
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(Date) A. Mitchell Poole, Jr.
on behalf of Registrant as
President, Chief Operating Officer,
Chief Financial Officer and
Assistant Secretary
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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 4,452
<SECURITIES> 22,255
<RECEIVABLES> 86,986
<ALLOWANCES> 0
<INVENTORY> 5,977
<CURRENT-ASSETS> 161,000
<PP&E> 280,763
<DEPRECIATION> 0
<TOTAL-ASSETS> 576,664
<CURRENT-LIABILITIES> 157,447
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 58,452
<TOTAL-LIABILITY-AND-EQUITY> 576,664
<SALES> 253,390
<TOTAL-REVENUES> 253,390
<CGS> 246,603
<TOTAL-COSTS> 246,603
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,022
<INCOME-PRETAX> 1,221
<INCOME-TAX> 531
<INCOME-CONTINUING> 690
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 690
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
