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 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 0-23210
TRISM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE (State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.) 13-3491658
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 or15(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, 5,737,337 shares of TRISM, INC.'s
common stock, par value $.01 per common share were outstanding.
Part I FINANCIAL INFORMATION Page
Item 1. Financial Statements 1
Item 2. Management's Discussion and 6
Analysis of Financial Condition
and Results of Operations
Part II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
TRISM, INC.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 515 $ 1,468
Restricted and insurance deposits 1,010 1,188
Accounts receivable, net 52,571 57,503
Materials and supplies 2,155 2,450
Prepaid expenses 17,987 18,711
Current portion of deferred income taxes 5,139 5,139
Total current assets 79,377 86,459
Property and equipment, net 116,914 123,052
Other assets 22,533 22,986
Total assets $218,824 232,497
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,371 $ 10,791
Checks issued in excess of bank balance 3,110 4,567
Claims and insurance accruals 6,352 6,012
Accrued expenses 12,749 6,551
Note payable to J.B. Hunt -- 2,500
Current maturities of long-term debt 12,028 11,845
Total current liabilities 45,610 42,266
Long-term debt, less current maturities 136,661 148,878
Claims, insurance accruals and other 6,743 6,443
Deferred income taxes 4,466 6,160
Total liabilities 193,480 203,747
Stockholders' equity (deficit):
Common stock; $.01 par; 10,000,000 shares
authorized; 5,903,337
shares issued at March 31, 1997, and 59 59
December 31, 1996
Additional paid-in capital 37,327 37,327
Loans to stockholders (368) (368)
Accumulated deficit (10,125) (6,719)
Treasury stock, at cost, 166,000 shares at
March 31, 1997 and December 31, 1996 (1,549) (1,549)
Total stockholders' equity 25,344 28,750
Total liabilities and stockholders' $218,824 $232,497
equity
See accompanying notes to the consolidated financial statements.
TRISM, INC.
Consolidated Statements of Operations
(In Thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
1997 1996
Revenues $ 77,733 $ 73,040
Operating expenses:
Salaries, wages and fringe 28,331 27,381
benefits
Operating supplies and expenses 12,099 11,134
Purchased transportation 14,717 13,916
Operating taxes and licenses 7,057 6,985
Depreciation 4,556 4,816
Amortization of prepaid leases 76 326
General supplies and expenses 4,340 4,198
Claims and insurance 2,862 2,354
Communications and utilities 1,396 1,563
Amortization of intangibles 168 197
(Gain)loss on sale of equipment 183 (80)
Restructuring charge 3,000 --
Total operating expenses 78,785 72,790
Operating income (loss) (1,052) 250
Interest expense (3,801) (3,660)
Other expense, net (13) (147)
Income (loss) before income taxes (4,866) (3,557)
Income tax benefit (1,460) (1,359)
Net income (loss) $(3,406) $(2,198)
Earnings (loss) per common share $ (.59) $ (.38)
Earnings (loss) per common share
assuming dilution $ (.59) $ (.38)
See accompanying notes to the consolidated financial statements.
TRISM, INC.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended March 31,
1997 1996
Cash flows from operating activities:
Net income (loss) $(3,406) $(2,198)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 4,556 4,816
Amortization of prepaid operating leases 76 326
Amortization of intangibles and goodwill 337 352
(Gain) loss on sale of assets 183 (80)
Restructuring charge 3,000 --
Deferred income taxes (1,460) (1,359)
Provision for uncollectible receivables 329 196
Changes in:
Accounts receivable 6,240 (4,832)
Prepaid expenses 648 (355)
Accounts payable (2,752) 2,653
Claims and insurance accruals 640 (647)
Accrued liabilities 3,770 2,961
Other 78 (6)
Net cash provided by operating 12,239 1,827
activities
Cash flows from investing activities:
Refund of restricted deposits 178 130
Proceeds from sale of property and 1,726 968
equipment
Purchases of property and equipment (563) (6,100)
Net cash provided by (used in) 1,341 (5,002)
investing activities
Cash flows from financing activities:
Net proceeds (repayment) under (11,635) 3,832
revolving credit agreement
Repayment of long-term debt (5,402) (2,355)
Proceeds from issuance of long-term 2,504 2,135
debt
Net cash provided by (used in) 14,533) 3,612
financing activities
Increase (decrease) in cash and cash (953) 437
equivalents
Cash and cash equivalents, beginning 1,468 643
of period
Cash and cash equivalents, end of $ 515 $1,080
period
Supplemental cash flow information:
Cash paid during the period for:
Interest (non-capitalized) $ 1,222 $ 1,061
Income taxes $ 21 $ 6
See accompanying notes to the consolidated financial statements.
TRISM, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Accounting Policies
The 1996 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 March 31, 1997 and December 31, 1996 and the
results of operations and cash flows for the three months ended
March 31, 1997 and 1996 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.
2. Accounting Pronouncements
In February 1997, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 128, Earnings per Share, which
the Company is required to adopt in 1997. SFAS No. 128
specifies the computation, presentation and disclosure
requirements for earnings per share in order to be
substantially similar to International Accounting Standards.
The adoption of SFAS No. 128 is not expected to have a
material impact on the Company's earnings per share or other
per share disclosures.
3. Corporate Restructuring
In February 1997, the Company announced an organizational
restructuring to consolidate certain sales, operations, and
administrative functions and reengineer business processes to
reduce overhead and increase operational efficiency. During
the first quarter of 1997, the Company recorded a $3 million
restructuring charge for the estimated costs associated with
the termination of certain employees of $1.5 million. The
closing of unproductive facilities of approximately $600,000
with remainder for outside consultant and other costs.
4. Long-Term Debt
In December 1996, the Company temporarily increased the
maximum amount of its revolving credit facility to $30
million until April 30, 1997 at which time the maximum
amount of the facility returned to $25 million. The
Company and its lender are in the process of soliciting
another lender to commit an additional $5 million to
$10 million. The facility also provides for the issuance
of standby letters of credit which reduce the availability
of cash advances. At March 31,1997, letters of credit of
$7.8 million were outstanding and an additional $12.3 million
was available under the temporary $30 million facility.
5. 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 certain legal proceedings
incidental to its business, primarily involving claims for
personal injury or property damage arising from the
transportation of freight. 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. With
regard to personal injury, property damage, workers'
compensation claims, and cargo claims, the Company is and has
been covered by insurance. Such matters may include claims
for punitive damages. It is an open question in some
jurisdictions in which the Company does business as to
whether or not punitive damages awards are covered by
insurance.
In addition to matters referred to above, the Company is a
party to several additional lawsuits, none of which is
believed to involve a significant risk of materially and
adversely affecting the Company's financial condition.
The Company is a defendant in one additional litigation
pending in the Circuit Court of Jefferson County,
Alabama which is not noteworthy except for the plaintiff's
excessive demand. The case is captioned Roy A. Reese v.
Trism Specialized Carriers, Inc. and Tri-State Motor Transit
Company. It arises from a lease, transfer and consulting
agreement between the Company and plaintiff (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 counterclaims. The case was tried in August 1996 and
plaintiff was awarded $47,000 in rental fees admitted by
TRISM to be due for the use of plaintiff's trailer equipment
after cancellation of the original contract. This portion of
the plaintiff's claim was never contested by TRISM. All
other claims for damages were found in favor of the defendant
(TRISM). The case is currently on appeal by plaintiff. The
Company is vigorously contesting the appeal and believes that
it will prevail.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward looking statements. Certain statements
in this Form 10-Q include information that is forward looking,
such as the Company's opportunities to reduce overhead costs and
increase operational efficiency, its anticipated liquidity and
capital requirements and the results of legal proceedings. The
matters referred to in forward looking statements could be
affected by the risks and uncertainties involved in the Company's
business. Subsequent written and oral forward looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary
statements in this paragraph. The following discussion and
analysis should be read in conjunction with the Company's
Consolidated Financial Statements and notes.
Results of Operations
Quarter ended March 31, 1997 compared with quarter ended
March 31, 1996
Revenues
Operating revenues were $77.7 million, up 6.4 percent from
$73.0 million in 1996. The following table presents a comparison
of revenues by market group.
The months ended March 31,
1997 1996
Operating Operating
(In thousands) Revenues Ratio Revenues Ratio
Heavy Haul $43,765 95.3% $43,278 97.0%
Secured Materials 25,910 92.5% 22,899 99.1%
Trism Transport 7,354 110.1% 7,741 106.3%
Logistics 3,175 96.5% 1,233 105.4%
Eliminations and (2,471) -- (2,111) --
other
$77,733 101.4% $73,040 99.7%
Heavy Haul revenues grew by 1.1% in the first quarter of 1997
over 1996. Revenue per total mile increased to $1.490 in 1997
from $1.439 in 1996 primarily due to an increase in the loaded
mile ratio to 84.5% in 1997 from 83.8% in 1996. Heavy Haul also
experienced approximately a 3% increase in overall freight rates
in 1997 over 1996. Additionally, miles per tractor per day
increased from 339 in 1996 to 364 in 1997.
Secured Materials revenues increased by 13% in 1997 over 1996
due to a 7% increase in overall freight rates and an increase in
the loaded mile ratio to 84.0% in 1997 from 80.0% in 1996.
Additionally, miles per tractor per day increased 12.3% from 365
in 1996 to 410 in 1997. The improvement is primarily due to
improved conditions in the munitions market, implementation of a
commercial explosives market initiative and improved pricing in
the environmental services market as a result of the 1996
acquisition of the Special Commodities division of J.B. Hunt
Transport, Inc.
Trism Transport revenues declined by 5% in 1997 from 1996 due to
a shutdown of western business and a voluntary 28% decrease in
tractors. The administrative and operations functions of Trism
Transport were consolidated into Heavy Haul in April 1997.
Logistics revenues increased in 1997 compared to 1996 as a
result of growth derived from the 1996 acquisition of the Special
Commodities division of J.B. Hunt Transport, Inc.
Operating Income
Operating loss for the three months ended 1997 was $1.1
million, including a $3 million restructuring charge, compared to
operating income of $.3 million in the first quarter of 1996.
Excluding the effect of the restructuring charge, the operating
expense ratio improved to 97.5% compared to 99.7% in 1996.
Contributing to this improvement were an increase in the loaded
mile factor to 84.2% in 1997 from 82.2% in 1996 and an increase
in revenue per loaded mile to $1.71 in 1997 from $1.65 in 1996.
Expenses
The following table sets forth operating expenses as a percent
of operating revenues and the related variance from 1997 to 1996.
THREE MONTHS ENDED INCREASE
MARCH 31, DECREASE
1997 1996
Salaries, wages and fringe 36.4% 37.5 (1.1) %
benefits
Purchased transportation 18.9% 19.1 (0.2) %
Operating supplies and 15.6% 15.2 0.4 %
expenses
Operating taxes and 9.1% 9.6 (0.5) %
licenses
General supplies and 5.6% 5.8 (0.2) %
expenses
Claims and insurance 3.7% 3.2 0.5 %
Depreciation 5.9% 6.6 (0.7) %
Amortization of prepaid 0.1% 0.4 (0.3) %
leases
Communications and 1.8% 2.1 (0.3) %
utilities
(Gain) loss on sale of 0.2% (0.1) 0.3 %
equipment
Amortization of 0.2% 0.3 (0.1) %
intangibles
Restructuring Charge 3.9% - 3.9 %
101.4% 99.7 1.7 %
Salaries, wages and fringe benefits dropped to 36.4% of revenue
in 1997 from 37.5% in 1996. This improvement was primarily due
to a $0.2 million drop in non-driver compensation and leveraging
these costs over a larger revenue base. Driver wages and related
fringe benefits remained consistent with 1996 as a percentage of
revenue and on a per-mile basis.
The reduction in depreciation expense as a percentage of
revenue in 1997 results from the financing of new tractors and
trailers with operating leases in 1996.
In February 1997, the Company announced an organizational
restructuring to consolidate certain sales, operations and
administrative functions and reengineer business processes to
reduce overhead and increase operational efficiency. During the
first quarter of 1997, the Company recorded a $3 million
restructuring charge for the estimated costs associated with the
termination of certain employees, engagement of an outside
consultant and the closing of unproductive facilities.
Interest expense for the three months ended March 31, 1997
was $3.8 million compared to $3.7 million in 1996. The increase
in expense primarily relates to higher debt levels offset by a
lower average interest rate on these borrowings.
Liquidity and Capital Resources
Net cash provided by operating activities increased by $10.4
million in the first quarter 1997 as compared to first quarter
1996. This increase is primarily due to a decrease in accounts
receivable created by an improvement in the collection cycle of
approximately seven days as compared to the fourth quarter of
1996.
In the first quarter of 1997, the Company repaid scheduled debt
obligations of $5.4 million and reduced borrowings under the
revolving credit facility by $11.6 million. The Company received
proceeds of $2.5 million under a sale-leaseback arrangement.
In December 1996, the Company temporarily increased the maximum
amount of its revolving credit facility to $30 million until
April 30, 1997 at which time the maximum amount of the facility
returned to $25 million. The Company and its lender are in the
process of soliciting another lender to commit an additional $5
million to $10 million. The facility also provides for the
issuance of standby letters of credit which reduce the
availability of cash advances. At March 31, 1997, letters of
credit of $7.8 million were outstanding and an additional $12.3
million was available under the temporary $30 million facility.
The Company estimates 1997 capital expenditures of approximately
$22 million primarily related to the replacement of tractors and
trailers. Proceeds from the sale of the replaced equipment is
expected to approximate $4.3 million. The Company has financing
commitments of approximately $13.0 million and believes it will
be able to obtain the balance of its financing needs during 1997.
The Company believes that it will be able to meet its on-going
capital requirements, scheduled principal payments and working
capital needs with cash flow from operations, availability under
its working capital facility, proceeds from the sale of equipment
and additional borrowing commitments. The Company also has
additional borrowing capacity supported by unencumbered tangible
assets.
Accounting Pronouncements
In August 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 128, Earnings per Share, which the
Company is required to adopt in 1997. SFAS No. 128 specifies
the computation, presentation and disclosure requirements for
earnings per share in order to be substantially similar to
International Accounting Standards. The adoption of SFAS No. 128
is not expected to have a material impact on the Company's
earnings per share or other per share disclosures.
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 without a corresponding freight rate
increase from customers.
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.
With regard to personal injury, property damage, workers'
compensation claims, and cargo claims, the Company is and has
been covered by insurance. Such matters may include claims for
punitive damages. It is an open question in some jurisdictions
in which the Company does business as to whether or not punitive
damages awards are covered by insurance.
In addition to matters referred to above, the Company is a
party to several additional lawsuits, none of which is believed
to involve a significant risk of materially and adversely
affecting the Company's financial condition.
The Company is a defendant in one additional litigation pending
in the Circuit Court of Jefferson County, Alabama which is not
noteworthy except for the plaintiff's excessive demand. The case
is captioned Roy A. Reese v. Trism Specialized Carriers, Inc. and
Tri-State Motor Transit Co. It arises from a lease, transfer and
consulting agreement between the Company and plaintiff (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 counterclaims. The case was tried in August
1996 and plaintiff was awarded $47,000 in rental fees admitted by
TRISM to be due for the use of plaintiff's trailer equipment after
cancellation of the original contract. This portion of the
plaintiff's claim was never contested by TRISM. All other claims for
damages were found in favor of the defendant (TRISM). The case is
currently on appeal by plaintiff. The Company is vigorously contesting
the appeal and believes it will prevail.
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
27 Financial Data Schedule
11 Computation of earnings
percommon share
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, 4 and 5 of Part II were not applicable and have
been omitted.
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.
By:/s/James M. Revie
James M. Revie
Director, Chairman of the Board and
Chief Executive Officer
By:/s/James G. Overley
James G. Overley
Senior Vice President of Finance, Chief Financial Officer and
Treasurer
Date:May 14, 1997
TRISM, INC.
Exhibit Index
Page
Exhibit Description Number
Number
11 Computation of earnings per common share 12
EXHIBIT 11
TRISM, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
1997 1996
Net income (loss) $(3,406) $ (2,198)
Weighted average number of
shares
Primary:
Average common shares 5,737 5,733
outstanding
Common share equivalents resulting
from assumed exercise of -- 1
stock options
5,737 5,734
Fully diluted:
Average common shares 5,737 5,733
outstanding
Common share equivalents resulting
from assumed exercise of stock - 1
options
5,737 5,734
Earnings (loss) per common
share:
Primary $ (.59) $ (.38)
Fully Diluted $ (.59) $ (.38)
Primary earnings (loss) per common share are computed by
dividing net income (loss), after deduction of undeclared
dividends on redeemable preferred stock, by the weighted average
number of common shares and common share equivalents outstanding
during each presented period. 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 (loss)
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 (loss) per common share.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 514,876
<SECURITIES> 0
<RECEIVABLES> 55,291,051
<ALLOWANCES> 2,720,518
<INVENTORY> 2,155,158
<CURRENT-ASSETS> 79,376,350
<PP&E> 172,355,014
<DEPRECIATION> 55,441,003
<TOTAL-ASSETS> 218,824,162
<CURRENT-LIABILITIES> 45,609,952
<BONDS> 136,661,374
0
0
<COMMON> 59,034
<OTHER-SE> 25,284,578
<TOTAL-LIABILITY-AND-EQUITY> 218,824,162
<SALES> 0
<TOTAL-REVENUES> 77,733,054
<CGS> 0
<TOTAL-COSTS> 75,455,198
<OTHER-EXPENSES> 3,000,000
<LOSS-PROVISION> 329,000
<INTEREST-EXPENSE> 3,815,285
<INCOME-PRETAX> (4,866,429)
<INCOME-TAX> (1,460,000)
<INCOME-CONTINUING> (3,406,429)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,406,429)
<EPS-PRIMARY> (0.59)
<EPS-DILUTED> (0.59)
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