UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 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 0-23210
TRISM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3491658
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4174 Jiles Road, Kennesaw, Georgia 30144
(Address of principal executive offices) (Zip Code)
770-795-4600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. X Yes No
As of July 31, 1996, 5,733,137 shares of TRISM, INC.'s common stock, par
value $.01 per common share were outstanding.
<PAGE>
TRISM, INC.
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION Page
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 5
Part II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRISM, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 642 $ 643
Restricted and insurance
deposits 1,335 1,120
Accounts receivable, net 54,827 44,830
Materials and supplies 1,660 2,307
Prepaid expenses 18,820 16,282
Current portion of deferred
income taxes 3,415 3,421
------- ------
Total current assets 80,699 68,603
Property and equipment, net 117,194 119,043
Property held for sale 10,417 10,486
Other assets 20,264 20,639
------- -------
Total assets $228,574 $218,771
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,641 $ 18,901
Equipment payable -- 635
Claims and insurance accruals 5,968 5,808
Accrued liabilities 7,070 6,008
Current maturities of long-
term debt 10,406 9,230
------- -------
Total current liabilities 45,085 40,582
Long-term debt 138,322 128,417
Claims, insurance accruals
and other 5,917 6,317
Deferred income taxes 5,834 8,348
------- -------
Total liabilities 195,158 183,664
======= =======
Stockholders' equity (deficit):
Common stock; $.01 par;
10,000,000 shares authorized;
5,899,137 shares issued at
June 30, 1996, and December 31,
1995 59 59
Additional paid-in capital 37,086 37,086
Loans to stockholders (368) (368)
Accumulated deficit (1,812) (121)
Treasury stock, at cost,
166,000 shares at
June 30, 1996 and
December 31, 1995 (1,549) (1,549)
------ ------
Total stockholders' equity 33,416 35,107
------ ------
Total liabilities and
stockholders' equity $228,574 $218,771
======= =======
See accompanying notes to the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
TRISM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $79,228 $68,030 $152,268 $130,205
------ ------ ------- -------
Operating expenses:
Salaries, wages and
fringe benefits 28,701 24,813 56,082 49,221
Operating supplies
and expenses 11,964 9,180 23,098 17,722
Purchased
transportation 13,915 8,734 27,831 15,903
Operating taxes and
licenses 7,298 6,190 14,283 12,143
Depreciation 4,799 4,504 9,615 8,873
Amortization of
prepaid leases 326 481 652 1,004
General supplies
and expenses 4,442 3,660 8,640 7,185
Claims and insurance 2,524 2,202 4,878 4,492
Communications and
utilities 1,484 1,226 3,047 2,457
Amortization of
intangibles 147 198 344 388
Loss (Gain) on
sale of equipment 55 (159) (25) (190)
------ ------- ------- -------
Total operating
expenses 75,655 61,029 148,445 119,198
------ ------- ------- -------
Operating income 3,573 7,001 3,823 11,007
Interest expense (3,308) (3,641) (6,968) (7,199)
Other income
(expense), net (87) 14 (234) 112
----- ----- ----- ----
Income (loss) before
income taxes 178 3,374 (3,379) 3,920
Income tax expense
(benefit) (329) 1,150 (1,688) 1,344
----- ----- ------ -----
Net income (loss) $ 507 $ 2,224 $ (1,691) $2,576
===== ====== ====== =====
Earnings (loss) per
common share $ .09 $ .39 $ (.29) $ .44
===== ====== ===== =====
Number of shares
used in computation
of earnings (loss)
per common share 5,734 5,774 5,734 5,831
===== ===== ===== =====
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TRISM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Six Months Ended June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,691) $ 2,576
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 9,615 8,873
Amortization of prepaid
operating leases 652 1,004
Amortization and write-off of
intangibles and goodwill 657 682
Gain on sale of assets (25) (190)
Deferred income taxes (1,688) 1,344
Provision for uncollectible
receivables 398 333
Changes in:
Accounts receivable (10,337) (6,289)
Prepaid expenses (2,538) (181)
Accounts payable 2,741 2,306
Claims and insurance accruals (240) 58
Accrued liabilities 1,062 2,501
Other (664) 129
----- -----
Net cash provided by (used in)
operating activities (2,058) 13,146
----- ------
Cash flows from investing activities:
Refund (purchase) of restricted deposits 130 2,367
Proceeds from sale of property and equipment 2,709 942
Proceeds from sale of property held for sale -- 17
Purchases of property and equipment (11,015) (13,686)
Collection (issuance) of notes receivable (824) 264
Payment for purchase of companies,
net of cash acquired -- (312)
----- ------
Net cash used in investing activities (9,000) (10,408)
----- ------
Cash flows from financing activities:
Net proceeds under revolving credit agreement 9,242 (5)
Repayment of long-term debt (4,817) (11,344)
Purchase of treasury stock -- (996)
Issuance of treasury stock -- 22
Proceeds from issuance of long-term debt 6,632 3,972
----- -----
Net cash provided by (used in)
financing activities 11,057 (8,351)
------ -----
Increase (decrease) in cash and cash
equivalents (1) (5,613)
Cash and cash equivalents, beginning of period 643 6,177
----- -----
Cash and cash equivalents, end of period $ 642 $ 564
===== =====
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of $315,000
capitalized in 1996) $ 6,857 $ 7,191
===== =====
Income taxes $ 51 $ 166
===== =====
Property sold in exchange for
notes receivable $ -- $ 560
===== =====
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
TRISM, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Accounting Policies
The 1995 Annual Report on Form 10-K for TRISM, Inc. includes a summary
of significant accounting policies and should be read in conjunction with
this Form 10-Q. The statements for the periods presented are condensed and
do not contain all information required by generally accepted accounting
principles to be included in a full set of financial statements. In the
opinion of management, all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of June 30,
1996 and December 31, 1995 and the results of operations and cash flows for
the three and six months ended June 30, 1996 and 1995 have been included.
The results of operations for any interim period are not necessarily
indicative of the results of operations to be expected for the entire year.
Certain prior year data has been reclassified to conform to current year
presentation.
2. Long-Term Debt
On March 20, 1996, the Company's revolving credit agreement (Agreement)
was amended to provide for borrowings of up to $20 million and to extend its
maturity to April 1998. Subsequently, on August 13, 1996, the Agreement was
further amended to provide for borrowings up to $25 million. The Company was
not in compliance with certain financial covenants as defined in the Agreement.
The Company obtained a waiver of these covenants through June 30, 1996.
3. Contingencies
Under CERCLA and similar state laws, a transporter of hazardous substances
may be liable for the costs of responding to the release or threatened release
of hazardous substances from disposal sites if such transporter selected the
site for disposal. Because it is the Company's practice not to select the sites
where hazardous substances and wastes will be disposed, the Company does not
believe it will be subject to material liability under CERCLA and similar laws.
Although the Company has been identified as a "potentially responsible party"
(PRP), solely because of its activities as a transporter of hazardous sub-
stances, at two sites, the Company does not believe it will be subject to
material liabilities at such sites.
The EPA has designated an area of several hundred square miles of Missouri
as a potential Superfund site. The Company's Joplin, Missouri terminal is
within the boundaries of this area, however, the Company has not been
designated as a PRP. The Company believes that it has no liability with
respect to this site and that it would have strong defenses to any action
for cost recovery, as neither it nor its predecessors created the conditions
which are the cause of the environmental problems at the site.
The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injury or property damages incurred
in the transportation of freight. The Company is not aware of any claims or
threatened claims that might have a material adverse affect on the Company's
consolidated operating results, financial position, cash flow or liquidity.
4. Subsequent Events
On August 8, 1996, the Company executed a letter of intent to acquire the
business and certain assets of the Special Commodities division of J. B. Hunt
Transport, Inc. for approximately $7.2 million. The acquisition price would
include payment for certain customer lists, goodwill, a covenant not to
compete and approximately 200 trailers. The Company will also grant options
to J. B. Hunt for the purchase of 300,000 shares of TRISM, INC. stock at $6.50
per share, with a term of five years. The options will not be transferable
by J. B. Hunt and will be immediately exercisable. The transaction is expected
to close on or before August 31, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's Consolidated Financial Statements and notes.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1996 COMPARED WITH QUARTER ENDED JUNE 30, 1995
REVENUES
Operating revenues increased by $11.2 million, or 16.5 percent, compared
with 1995. Approximately $8.9 million, or 79.5%, of the increase was attri-
butable to acquisitions made during 1995. The following table presents a
comparison of revenues by market group.
1996 1995
(In thousands) Operating Operating
Revenues Ratio Revenues Ratio
Heavy Haul $47,517 91.9% $45,985 89.8%
Secured Materials 23,632 97.2% 23,145 88.0%
Trism Transport 8,895 100.1% -- --
Logistics 1,670 99.4% 1,380 101.2%
Eliminations and other (2,486) -- (2,480) --
------ ----- ------ ----
$79,228 95.5% $68,030 89.7%
====== ===== ====== =====
OPERATING INCOME
Operating income dropped to $3.6 million in 1996 from $7.0 million in 1995.
Excluding the effect of Trism Transport (acquired October 1995), revenue per
total mile dropped to $1.421 in 1996 from $1.454 in 1995. This decrease in
revenue quality caused approximately a $1.6 million drop in operating income.
Higher fuel costs accounted for $1.2 million of the change in operating income.
The remaining $.8 million decrease in operating income from 1995 to 1996 is due
to increased purchased transportation resulting from financing new and replace-
ment tractors and trailers with operating leases in 1996.
HEAVY HAUL revenues grew by 3.3% in 1996 over 1995. Revenue per total mile
decreased to $1.481 in 1996 from $1.495 in 1995, primarily due to weaker
specialized freight demand in 1996. Direct operating costs per mile increased
to $1.158 in 1996 from $1.128 in 1995, due to increased purchased transporta-
tion and fuel costs. Indirect costs per mile decreased to $.203 in 1996 from
$.212 in 1995, primarily due to leveraging these costs over a larger revenue
base.
SECURED MATERIALS revenues increased by 2.1% in 1996 over 1995. Revenue
per total mile dropped to $1.321 in 1996 from $1.388 in 1995, primarily due
to a change in freight mix in 1996. The volume of munitions, explosives and
radioactive materials shipments decreased by 11.6% in 1996, while hazardous
materials shipments increased by 13.8%. Freight rates for munitions, explosives
and radioactive materials are approximately 15% to 20% higher than hazardous
materials rates.
Secured Materials' direct operating costs increased to $1.093 per mile in
1996 from $1.022 in 1995. Fuel accounted for $.021 per mile with the cost of
carrying excess tractor capacity explaining the balance of the increase.
Indirect costs decreased to $.201 per mile in 1996 from $.206 in 1995.
Secured Materials completed a tractor reduction program in June 1996.
<PAGE>
TRISM TRANSPORT revenues relate to the acquisition of certain assets
of Eastern Flatbed as of October 1, 1995. Transport's revenue per mile,
average length of haul and cost structure is markedly different from Heavy
Haul and Trism Secured. Revenue per mile for the second quarter of
1996 was $1.166 with an average length of haul of 459 miles. Additionally,
approximately 31% of its revenues were sub-contracted to other trucking
companies, including other Trism subsidiaries. Trism Transport sustained
operating losses in the second quarter of 1996 due principally to costs
associated with replacing a substantial portion of its tractor and trailer
fleet, high driver wage and fuel costs and accident related expenses.
LOGISTICS revenues relate to the acquisition of Kavanagh and Associates
in March 1995.
EXPENSES
The following table sets forth operating expenses as a percent of
operating revenues and the related variance from 1996 to 1995.
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, INCREASE
1996 1995 (DECREASE)
<S> <C> <C> <C>
Salaries, wages and fringe benefits 36.2 % 36.5 % (0.3)%
Purchased transportation 17.6 % 12.8 % 4.8 %
Operating supplies and expenses 15.1 % 13.5 % 1.6 %
Operating taxes and licenses 9.2 % 9.1 % 0.1 %
General supplies and expenses 5.6 % 5.4 % 0.2 %
Claims and insurance 3.2 % 3.2 % --
Depreciation 6.1 % 6.6 % (0.5)%
Amortization of prepaid leases 0.4 % 0.7 % (0.3)%
Communications and utilities 1.9 % 1.8 % 0.1 %
Gain on sale of equipment -- (0.2)% 0.2 %
Amortization of intangibles 0.2 % 0.3 % (0.1)%
---- ---- ----
95.5 % 89.7 % 5.8 %
==== ==== ====
</TABLE>
Purchased transportation costs increased by $5.2 million in 1996 over
1995. This category includes the following expenditure types:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Independent contractors $5,108 $4,270
Sub-contractor carriers 5,921 3,693
Tractor and trailer lease 2,886 771
----- -----
$13,915 $8,734
====== =====
</TABLE>
Independent contractor capacity increased to an average of 216 units
in 1996 from 199 units in 1995, mostly related to acquired companies.
Sub-contractor carrier expense increased with revenues, which are
primarily attributed to Logistics and Trism Transport. The
increase in lease expense results from financing new replacement tractors
and trailers with operating leases in 1996.
For 1996, operating supplies and expenses increased on a percentage of
revenue basis by 1.6%. This increase related principally to higher fuel
costs per gallon and slightly lower miles per gallon. This variance caused
operating cost to increase by $1.2 million in 1996 over 1995. The Company
implemented fuel surcharges during the three months ended June 30, 1996,
resulting in the recovery of $.7 million to help defray the increase in fuel
prices.
The change in mix of owned versus leased tractors and trailers caused
the reduction in depreciation expense as a percentage of revenue.
<PAGE>
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
REVENUES
Operating revenues increased by $22.1 million, or 17.0 percent, compared
with 1995. Approximately $18.2 million, or 82.4%, of the increase was
attributable to acquisitions made during 1995. The following table presents
a comparison of revenues by market group.
<TABLE>
<CAPTION>
1996 1995
Operating Operating
(In thousands) Revenues Ratio Revenues Ratio
<S> <C> <C> <C> <C>
Heavy Haul $90,795 94.3% $88,773 91.4%
Secured Materials 46,531 98.2% 44,918 89.5%
Trism Transport 16,637 103.0% -- --
Logistics 2,903 102.0% 1,380 101.2%
Eliminations and other (4,598) -- (4,866) --
----- ----- ----- -----
$152,268 97.5% $130,205 91.5%
======= ===== ======= =====
</TABLE>
OPERATING INCOME
Operating income declined to $3.8 million in 1996 from $11.0 million
in 1995. Excluding the effect of Trism Transport (acquired October 1995),
revenue per total mile dropped to $1.405 in 1996 from $1.452 in 1995. This
decrease in revenue quality resulted in a $4.3 million reduction in operating
income. Higher fuel costs accounted for $1.9 million of the change in
operating income. Increased ownership costs resulting from financing new
replacement tractors and trailers with operating leases in 1996, principally
explains the remaining decrease from 1995 to 1996.
HEAVY HAUL revenues grew by 2.3% in 1996 over 1995. Revenue per total
mile decreased to $1.461 in 1996 from $1.493 in 1995, primarily due to weaker
specialized freight demand in 1996. Direct operating costs per mile increased
to $1.175 in 1996 from $1.142 in 1995, due to increased company tractor owner-
ship and fuel costs and independent contractor expense. Indirect costs per
mile decreased to $.210 in 1996 from $.225 in 1995, primarily due to leveraging
these costs over a larger revenue base.
SECURED MATERIALS revenues grew by 3.6% in 1996 over 1995. Revenue per
total mile dropped to $1.315 in 1996 from $1.385 in 1995. This negative rate
variance accounts for approximately 6% of the 9% increase in the operating
ratio. Tri-State Motor Transit Co. (TSMT), which accounts for 86% of Secured
Materials revenue, encountered a dramatic change in its freight mix in 1996
from 1995 levels. Freight rates for munitions, explosives and radioactive
materials are approximately 15% to 20% higher than hazardous materials rates.
As explained below, TSMT additionally suffered significant rate reductions
in each of its specialized commodity markets.
<TABLE>
(% of Loaded Miles) 1996 1995 CHANGE
<S> <C> <C> <C>
Munitions and explosives 30.2% 33.0% (2.8%)
Hazardous materials 25.4% 18.5% 6.9%
Radioactive materials 9.6% 9.2% .4%
Other special commodities 4.8% 4.4% .4%
Freight all kinds 30.0% 34.9% (4.9%)
----- -----
100.0% 100.0%
===== =====
</TABLE>
The munitions market was negatively impacted by reduced Department of
Defense shipments. Freight rates slipped by approximately 7% as munitions
carriers strived to maintain business volumes. TSMT targeted the commercial
explosives market to improve the productivity of its munitions capacity.
Revenue grew in the market by 15% in 1996 over 1995. TSMT expects further
growth in this market through private fleet conversions and increased for
hire market share.
<PAGE>
TSMT successfully targeted the hazardous waste market for growth in 1996.
Revenue increased by 35% as TSMT converted freight previously transported by
private carriage as well as increased its market share from commercial carriers.
Freight rates came under pressure, dropping approximately 3%, as competitors
fought to retain market share.
Freight all kinds is freight typically transported by general commodity
dry van or flatbed carriers. TSMT uses this freight for back-haul or tractor
repositioning purposes and should represent approximately 20% of loaded miles.
The increase in hazardous materials freight allowed TSMT to lessen its
dependence on the low yielding freight all kinds to 30.0% in 1996 from 34.9%
in 1995. Further growth in hazardous and commercial explosives, combined with
the reduction in capacity in the second quarter 1996 will help TSMT achieve its
goal of freight all kinds only accounting for 20% of volume.
Secured Materials' direct operating costs increased to $1.086 per mile
in 1996 from $1.033 in 1995. Fuel accounted for $.019 per mile with the cost
of carrying excess tractor capacity explaining the balance of the increase.
Indirect costs increased to $.212 per mile in 1996 from $.209 in 1995.
TRISM TRANSPORT revenues relate to the acquisition of certain assets of
Eastern Flatbed as of October 1, 1995. Transport's revenue per mile, average
length of haul and cost structure is markedly different from Heavy Specialized
and Trism Secured. Revenue per mile for the first half of 1996 was $1.114 with
an average length of haul of 469 miles. Additionally, approximately 33% of its
revenues were sub-contracted to other trucking companies, including other Trism
subsidiaries. Due to its low cost structure, in terms of driver pay, trailer
to tractor ratio and terminal network, its reliance on independent contractors
and sub-contractor carriers, the return on net employed assets for Transport
is expected to be substantially higher than the other Trism operating
companies. Trism Transport sustained operating losses in 1996 due principally
to costs associated with replacing a substantial portion of its tractor and
trailer fleet, high fuel costs and accident related expenses.
LOGISTICS revenues relate to the acquisition of Kavanagh and Associates in
March 1995. Kavanagh signed a major two year logistics contract with AETS, a
Chem-Waste subsidiary, in May 1996.
EXPENSES
The following table sets forth operating expenses as a percent of
operating revenues and the related variance from 1996 to 1995.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, INCREASE
1996 1995 (DECREASE)
<S> <C> <C> <C>
Salaries, wages and fringe
benefits 36.8% 37.8% (1.0)%
Purchased transportation 18.3% 12.2% 6.1 %
Operating supplies and
expenses 15.2% 13.6% 1.6 %
Operating taxes and licenses 9.4% 9.3% 0.1 %
General supplies and expenses 5.7% 5.5% 0.2 %
Claims and insurance 3.2% 3.4% (0.2)%
Depreciation 6.3% 6.8% (0.5)%
Amortization of prepaid leases 0.4% 0.8% (0.4)%
Communications and utilities 2.0% 1.9% 0.1 %
Gain on sale of equipment -- (0.1)% 0.1 %
Amortization of intangibles 0.2% 0.3% (0.1)%
------ ------ ------
97.5 91.5% 6.0 %
====== ====== ======
</TABLE>
<PAGE>
Salaries, wages and fringe benefits increased by $6.9 million in 1996
compared with 1995. Approximately $5.1 million of the increase was in driver
wages and fringe benefits, which related to a 15.1% increase in 1996 total
company driver miles over 1995. The increase in non-driver compensation
related to the acquisition of Kavanagh, Whitten and Eastern Flatbed, offset
by a one time charge of $.4 million in 1995 relating to the Separation and
Consulting Agreement between the Company and its former President, Chief
Executive Officer and Director of the Company.
Purchased transportation costs increased by $11.9 million in 1996 over
1995. This category includes the following expenditure types:
<TABLE>
(In thousands) 1996 1995
<S> <C> <C>
Independent contractors $10,338 $ 7,885
Sub-contractor carriers 11,988 6,764
Tractor and trailer lease 5,505 1,254
------ ------
$27,831 $15,903
====== ======
</TABLE>
Independent contractor capacity increased to an average of 244 units in
1996 from 188 units in 1995, mostly related to acquired companies. Sub-
contractor carrier expense increased with revenues, which are primarily
attributed to Kavanagh Logistics and Trism Transport. The increase in
lease expense results from financing new replacement tractors and trailers
with operating leases in 1996.
For 1996, operating supplies and expenses increased on a percentage of
revenue basis by 1.6%. This increase related principally to higher fuel costs
per gallon and lower miles per gallon due to the severe winter weather in the
first quarter 1996. This variance caused operating cost to increase by $1.9
million in 1996 over 1995. The Company implemented fuel surcharges during
April 1996, and has recovered $.7 million to help defray the increase in fuel
prices.
The change in mix of owned versus leased tractors and trailers caused the
reduction in depreciation expense as a percentage of revenue.
CONTINGENCIES
Under CERCLA and similar state laws, a transporter of hazardous substances
may be liable for the costs of responding to the release or threatened
release of hazardous substances from disposal sites if such transporter
selected the site for disposal. Because it is the Company's practice not
to select the sites where hazardous substances and wastes will be disposed,
the Company does not believe it will be subject to material liability under
CERCLA and similar laws. Although the Company has been identified as a
"potentially responsible party" (PRP), solely because of its activities
as a transporter of hazardous substances, at two sites, the Company does
not believe it will be subject to material liabilities at such sites.
The EPA has designated an area of several hundred square miles of
Missouri as a potential Superfund site. The Company's Joplin, Missouri
terminal is within the boundaries of this area, however, the Company has
not been designated as a PRP. The Company believes that it has no liability
with respect to this site and that it would have strong defenses to any action
for cost recovery, as neither it nor its predecessors created the conditions
which are the cause of the environmental problems at the site.
The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injury or property damages incurred
in the transportation of freight. The Company is not aware of any claims or
threatened claims that might have a material adverse affect on the Company's
consolidated operating results, financial position, cash flow or liquidity.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the first six months of 1996 net cash provided by operating activitie
decreased $15.2 million when compared with the first six months of 1995.
Approximately $5.8 million of the decrease is due to additional accounts
receivable related to the acquisition of Eastern Flatbed in October 1995.
The remainder is primarily attributable to the loss sustained by the Company
during 1996.
In the first half of 1996, the Company purchased $7.3 million of new
equipment, paid $3.7 million related to the construction of the new terminal
in Georgia and repaid scheduled debt obligations of $4.8 million. Approximately
$6.6 million of the revenue equipment was financed by the issuance of long-term
debt. The Company acquired an additional $22.3 million of revenue equipment
under operating leases.
On March 20, 1996, the Company's revolving credit agreement was amended
to increase available borrowings from $15 million to $20 million. The term
of the agreement was extended to April 1998. Subsequently, on August 13,
1996, the agreement was further amended to increase available borrowings to
$25 million.
Management believes that funds to be generated from future operations,
cash available under its revolving credit agreement, proceeds from equipment
financing, and proceeds from the sale of revenue equipment will be sufficient
to meet the Company's planned capital expenditures, scheduled debt payments
and working capital needs for 1996. There can be no assurance, however,
that such sources will be adequate for the Company's needs, or that any
necessary additional financing will be available, if at all, in amounts
required or on terms satisfactory to the Company.
CAPITAL EXPENDITURES
A breakdown of capital expenditures is set forth in the following table
(in thousands):
<TABLE>
<CAPTION>
Actual
Projected For the Six Months
For the Year Ending Ending
December 31, June 30,
1996 1996 1995
<S> <C> <C> <C>
Structures and improvements $ 4,450 $ 3,673 $ 127
Revenue equipment 7,109 6,209 12,636
Satellite tracking devices and
other equipment 3,155 1,133 923
------ ------ ------
14,714 11,015 13,686
------ ------ ------
Revenue equipment acquired under
operating leases 26,174 22,274 7,829
------ ------- ------
Total capital expenditures $ 40,888 $ 33,289 $21,515
====== ======= ======
Depreciation expense $ 18,459 $ 9,615 $ 8,873
</TABLE>
The Company's original capital expenditures projection for the year
ending December 31, 1996, including operating leases, was $45.7 million.
The decrease reflected above is due to the planned reduction in revenue
equipment capacity to match existing market conditions.
INFLATION AND FUEL COSTS
Inflation can be expected to have an impact on the Company's earnings;
however, the effect of inflation has been minimal over the past three years.
An extended period of inflation or increase in fuel costs would adversely
affect the Company's results of operations unless freight rates could be
increased.
<PAGE>
SUBSEQUENT EVENTS
On August 8, 1996, the Company executed a letter of intent to acquire
the business and certain assets of the Special commodities division of J. B.
Hunt Transport, Inc. for approximately $7.2 million. The acquisition price
would include payment for certain customer lists, goodwill, a covenant not to
compete and approximately 200 trailers. The Company will also grant options
to J. B. Hunt and will be immediately exercisable. The transaction is expected
to close on or before August 31, 1996.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain legal proceedings incidental to its
business, primarily involving claims for personal injury or property damage
arising from the transportation of freight.
The Company is also a party to the following:
Roy A. Reese v. Trism Specialized Carriers, Inc. and Tri-State Motor
Transit Co. is a lawsuit pending in the Circuit Court of Jefferson County,
Alabama. It arises from a lease, transfer and consulting agreement between
the Company and Mr. Reese (and his wholly owned corporation) dated August 24,
1992. Plaintiff alleges breach of contract, promissory fraud, conversion and
conspiracy claims arising from the Company's termination of the contract.
He seeks compensatory and punitive damages. The Company maintains that it
properly terminated the contract because of misrepresentations and non-
performance by plaintiff and his company, and has asserted certain counter-
claims. The case is scheduled for trial during August 1996. Discovery is
continuing.
National Council on Compensation Insurance v. McGil Specialized Carriers,
Inc. (McGil) and AAA Truck Lease and Sales, Inc. (AAA), an affiliate of McGil,
arises from agreements between AAA and two employee-leasing companies for years
prior to the Company's acquisition of McGil (now known as Trism Specialized
Carriers, Inc.) in August 1991. The plaintiff has filed suit against the
employee leasing companies, McGil, AAA and several other transportation
companies alleging violations of the Racketeer Influenced and Corrupt
Organizations Act. The Company maintains that AAA properly performed under
the terms of the agreements with the employee-leasing companies. The case
is scheduled for trial in March 1997. Discovery has just begun.
The Company does not believe that these legal proceedings, or any other
claims or threatened claims of which it is aware, are likely to materially
and adversely affect the Company's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The date of the annual meeting was May 8, 1996.
(b) Not required.
(c) The following matters were voted on at the meeting:
(1) The following persons were nominated and elected to serve as
directors of TRISM, Inc.:
<TABLE>
<CAPTION>
Affirmative Votes Broker
Name Votes Withheld Abstentions Nonvotes
<S> <C> <C> <C> <C>
J. M. Revie 4,331,066 42,281 - -
J. H. Gingold 4,357,938 15,409 - -
N. Gross 3,815,692 557,665 - -
J. F. Higgins 4,358,066 15,281 - -
J. L. Ray 4,358,066 15,281 - -
W. M. Legg 4,357,938 15,409 - -
E. V. Conway 4,357,938 15,409 - -
J. L. McKenney 3,815,564 557,783 - -
J. J. Kilcullen 4,358,066 15,281 - -
</TABLE>
<PAGE>
(2) The TRISM, Inc. Amended and Restated Stock Option Plan was approved by
the following vote:
Affirmative Negative Broker
Votes Votes Abstentions Nonvotes
3,762,774 52,704 40,945 516,924
(3) The TRISM, Inc. Non-Employee Director Stock Option Plan was approved by
the following vote:
Affirmative Negative Broker
Votes Votes Abstentions Nonvotes
3,495,347 339,630 43,246 495,124
(4) An amendment to the TRISM, Inc. Certificate of Incorporation to increase
the authorized number of shares of Common Stock to 10 million was approved
by the following vote:
Affirmative Negative Broker
Votes Votes Abstentions Nonvotes
4,294,442 66,370 12,535 800,279
(5) The appointment of Coopers & Lybrand, independent accountants, was
ratified by the following vote:
Affirmative Negative Broker
Votes Votes Abstentions Nonvotes
4,356,431 14,226 2,690 -
(d) Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The following exhibit is filed as part of this report:
Designation Nature of Exhibit
11 Computation of earnings per
common share
27 Financial Data Schedule
B. Reports on Form 8-K
During the quarter covered by this report there were no reports on
Form 8-K filed.
Items 2, 3 and 5 of Part II were not applicable and have been omitted.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TRISM, INC.
August 15, 1996 By: James M. Revie
DATE James M. Revie
Director, Chairman of the Board and
Chief Executive Officer
August 15, 1996 By: James G. Overley
DATE James G. Overley
Senior Vice President of Finance,
Chief Financial Officer
and Treasurer
<PAGE>
TRISM, INC.
EXHIBIT INDEX
Exhibit Number Description
11 Computation of earnings per common share
27 Financial Data Schedule
<PAGE>
[MULTIPLIER] 1,000
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income (loss) $ 507 $ 2,224 $ (1,691) $ 2,576
====== ======= ======== =======
Weighted average number of shares
Primary:
Average common shares
outstanding 5,733 5,732 5,733 5,781
Common share equivalents
resulting from assumed
exercise of stock options 1 42 1 50
----- ----- ----- -----
5,734 5,774 5,734 5,831
===== ===== ===== =====
Fully diluted:
Average common shares
outstanding 5,733 5,732 5,733 5,781
Common share equivalents
resulting from assumed
exercise of stock options 1 42 1 50
----- ----- ----- -----
5,734 5,774 5,734 5,831
===== ===== ===== =====
Earnings per common share:
Primary $.09 $.39 $(.29) $.44
Fully diluted .09 .39 (.29) .44
Primary earnings per common share are computed by dividing net income,
by the weighted average number of common shares and common share equivalents
outstanding. Common share equivalents are computed using the treasury stock
method. Under the treasury stock method, an average market price is used to
determine the number of common share equivalents for primary earnings per
common share. The higher of the average or the end of period market price
is used to determine the number of common share equivalents for fully diluted
earnings per common share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 642 642
<SECURITIES> 0 0
<RECEIVABLES> 54,827 54,827
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 80,699 80,699
<PP&E> 168,891 168,891
<DEPRECIATION> 51,697 51,697
<TOTAL-ASSETS> 228,574 228,574
<CURRENT-LIABILITIES> 45,085 45,085
<BONDS> 138,322 138,322
0 0
0 0
<COMMON> 59 59
<OTHER-SE> 33,357 33,357
<TOTAL-LIABILITY-AND-EQUITY> 228,574 228,574
<SALES> 79,228 152,268
<TOTAL-REVENUES> 79,228 152,268
<CGS> 0 0
<TOTAL-COSTS> 75,655 148,445
<OTHER-EXPENSES> 87 234
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,308 6,968
<INCOME-PRETAX> 178 (3,379)
<INCOME-TAX> (329) (1,688)
<INCOME-CONTINUING> 507 (1,691)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 507 (1,691)
<EPS-PRIMARY> .09 (.29)
<EPS-DILUTED> .09 (.29)
</TABLE>
