<PAGE> 1
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 SECURITY
EXCHANGE ACT OF 1934.
For the quarterly period ended SEPTEMBER 30, 1999
-----------------------------------------------
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: 0-24180
-------------------------------------------------------
Quality Distribution, Inc. F/K/A MTL Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3239073
- ------------------------------------------------------------------------------
(State or other jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
- ------------------------------------------------------------------------------
(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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
( ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1999
- ------------------------------ ----------------------------------
(Common Stock, $.01 par value) 2,013,649
<PAGE> 2
QUALITY DISTRIBUTION,INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page No.
Item 1 Financial Statements
Condensed consolidated balance sheets -
September 30, 1999 (unaudited) and December 31, 1998 3-4
Condensed consolidated statements of operations -
three months and nine months ended September 30, 1999
and 1998 (unaudited) 5-6
Condensed consolidated statements of cash flows -
nine months ended September 30, 1999 and 1998 (unaudited) 7
Notes to condensed consolidated financial
statements 8-21
Item 2 Management's Discussion and Analysis
Of Financial Condition and Results
of Operations
Management's discussion and analysis of financial
condition and results of operations 22-25
Part II Other Information
Item 1 Legal proceedings 26
Item 4 Submission of matters to a vote of
security holders 26
Item 6 Exhibits
Reports on Form 8-K 26
Signatures 27
<PAGE> 3
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) *
----------- ------------
<C> <C>
<S>
ASSETS
Current Assets
Cash $ 333 $ 85
Restricted cash - 10,867
Accounts receivable 119,616 92,833
Allowance for doubtful accounts (5,405) (3,935)
Current maturities of other receivables 1,479 1,260
Notes receivable 1,224 784
Inventories 2,269 2,001
Prepaid expenses 9,414 7,751
Prepaid tires 8,386 7,364
Income tax receivable 3,809 4,940
Deferred income taxes 14,676 11,559
Other 2,198 3,793
--------- ---------
Total current assets 157,999 139,302
Property, plant and equipment 327,071 327,496
Less - accumulated depreciation and
amortization (124,464) (94,274)
--------- ----------
202,607 233,222
Intangibles, net 148,073 137,352
Insurance proceeds receivable 31,208 45,916
Other assets 36,787 27,454
-------- ---------
$576,674 $583,246
======== =========
</TABLE>
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 4
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) *
---------- ----------
<C> <C>
<S>
Current liabilities
Current maturities of indebtedness $ 2,986 $ 3,461
Accounts payable and accrued expenses 70,280 64,750
Independent contractors payable 16,256 8,339
Other current liabilities 8,233 10,362
Income tax payable 1,103 1,546
------- -------
Total Current liabilities 98,858 88,458
Long term debt, less current maturities 300,861 297,662
Capital lease obligations, less current
maturities 130 208
Subordinated debt, 140,000 140,000
Environmental liabilities 65,116 69,956
Other long term obligations 9,697 9,963
Accrued loss and damage claims 3,190 3,290
Minority interest in subsidiaries 4,433 4,825
Manditorily redeemable preferred stock 12,077 15,994
Redeemable common stock (30,239 shares) 1,210 1,210
Stockholders' equity (deficit)
Common stock 20 20
Additional paid-in-capital 105,077 104,807
Retained earnings 27,221 38,495
Stock recapitalization (189,589) (189,589)
Other stockholders' equity (349) (655)
Note receivable (1,278) (1,398)
--------- ---------
Total stockholders' (deficit) (58,898) (48,320)
--------- --------
$576,674 $583,246
========= ========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 5
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
1999 1998 1999 1998
------- -------- -------- --------
<C> <C> <C> <C>
<S>
Operating Revenues
Transportation $394,218 $238,694 $131,744 $100,927
Other 46,462 16,771 17,512 5,916
-------- -------- -------- --------
440,680 255,465 149,256 106,843
Operating Expenses
Purchased transportation 239,854 152,828 82,254 61,395
Depreciation and amortization 47,640 18,126 18,119 8,210
Compensation - options - 14,678 - 1,235
Other operating expenses 138,966 66,605 46,697 30,721
--------- -------- ------- --------
Operating income 14,220 3,228 2,186 5,282
Interest expense, net 29,487 9,907 10,031 6,602
Other (income) expense (111) (34) (24) (18)
--------- --------- -------- ---------
Income (loss) before taxes (15,156) (6,645) (7,821) (1,302)
Income taxes (5,358) (2,704) (2,669) (445)
Minority interest 21 - 12 -
---------- --------- -------- ---------
Net income (loss) before
extraordinary item (9,819) (3,941) (5,164) (857)
Extraordinary item,
net of tax - 3,078 - 2,455
--------- --------- ---------- ----------
Net income (loss) $(9,819) $(7,019) $ (5,164) $ (3,312)
Preferred stock dividends
and accretions (1,203) (85) (401) (85)
-------- --------- --------- ----------
Net income (loss) attributable
to common shareholders $(11,022) $(7,104) $ (5,565) $(3,397)
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>6
FORM 10 - Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended Three month ended
September 30, September 30,
1999 1998 1999 1998
------ ----- ------- -------
<C> <C> <C> <C>
<S>
Per Share Data:
Basic earnings per common share
Net income (loss) before
extraordinary item $(5.48) $(1.16) $(2.76) $(0.51)
Extraordiary item (0.00) (.89) 0.00 (1.33)
------ ------ ------ -------
Net earnings (loss) per share $(5.48) $(2.05) $(2.76) $(1.84)
====== ======= ======= =======
Weighted average shares outstanding 2,011 3,471 2,014 1,850
====== ======= ======= =======
Diluted earnings per common per share
Net income (loss) before
extraordinary item N/A N/A N/A N/A
Extraordinary item N/A N/A N/A N/A
------ ------- ------- -------
Net earnings per share N/A N/A N/A N/A
====== ======= ======= =======
Weighted average shares
outstanding N/A N/A N/A N/A
====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 7
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 1998
------- -------
<C> <C>
<S>
Cash provided by (used for)
Operating activities:
Net income (loss) ($ 9,819) $( 7,019)
Adjustments for non cash charges 43,079 2,181
Changes in assets and liabilities (30,676) (21,680)
--------- ---------
Net cash provided by operating
activities 2,584 (26,518)
Investing activities:
Other investments - -
Acquisition of subsidiary - (203,844)
Capital expenditures (18,205) (24,120)
Proceeds from asset dispositions 13,584 1,264
Other (270) (18,258)
-------- ----------
Net cash provided by (used for)
investing activities (4,891) (244,958)
Financing activities:
Proceeds from issuance of long
term debt 6,686 434,905
Payment of obligations (4,042) (55,051)
Issuance of common stock 227 74,335
Issuance of preferred stock - 15,500
Recapitalization expenditures - (189,590)
Other (222) 1,527
--------- ---------
Net cash provided by (used in)
financing activities 2,649 281,626
-------- ---------
Net Increase (decrease) in cash 342 10,150
Effect of exchange rate changes on cash (94) (20)
Cash, beginning of period 85 1,377
--------- ---------
Cash, end of period $ 333 $ 11,507
======== =========
Cash payments (refunds received) for:
Interest $ 27,125 $ 3,104
Income taxes $ 97 $ 1,874
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 8
FORM 10-Q
Item 1. Financial Statements
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed, consolidated financial statements of
Quality Distribution, Inc.(the "Company") or ("QDI") have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments and accruals) considered necessary for a fair presentation have
been included.
For further information, refer to the consolidated financial statements and
notes thereto for the year ended December 31, 1998, included in the Company's
Form 10-K dated March 30, 1999.
Operating results for the quarter ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
During the second quarter of 1999 the Company changed its name from MTL Inc.
to Quality Distribution, Inc.
2. RECAPITALIZATION:
On June 9, 1998, the Company completed the transactions contemplated by an
agreement with Sombrero Acquisition Corporation ("Sombrero"), an affiliate of
Apollo Management L.P.("Apollo"), pursuant to which Sombrero merged with and
into the Company. According to the terms of the merger agreement, the stock-
holders of the Company (other than certain management shareholders) received
$40.00 per share in cash. The total transaction value was approximatley
$250.0 million, including payment for outstanding stock options and payment of
approximately $51.0 million in debt.
The transaction was accounted for as a leveraged recapitalization. The effect
of the recapitalization on stockholders' equity was a charge of approximatley
$189 million.
The recapitalization was funded by a cash equity investment of approximately
$62.3 million from Apollo, members of the Company's existing management and
third party financing sources. $140.0 million of senior subordinated debt was
used to finance the acquisition along with $60.0 million dollars of senior
secured bank debt. Additionally, a $75 million revolving credit facility is
currently available to the Company for working capital and acquisition purposes.
<PAGE>9 FORM 10 - Q
ITEM 1 - Financial Statements
QUALITY DISTRIBUTION, INC AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)-(continued)
3. CHEMICAL LEAMAN ACQUISITION:
On August 28, 1998, the Company completed its agreement and plan of merger
with Chemical Leaman Corporation ("CLC") and the shareholders of CLC in a
transaction accounted for as a purchase.
The Company completed a tender offer to purchase CLC's 10 3/8 % senior notes
due 2005 at a puchase price equal to:
(i) the present value on the payment date of $1,051.88 per note (the amount
payable on June 15, 2001, which is the first date on which the notes are
redeemable)("the Earliest Redemption Date")) and all future interest payments
payable up to the Earliest Redemption Date, determined on the basis of a
yield to the Earliest Redemption Date equal to the sum of (x) the yield on
the 5 5/8 percent U.S. Treasury Notes due May 15, 2001, based on the bid
price for such security as of 2:00 p.m., New York City time, on August 19,
1998, the third business day immediately preceeding the scheduled expiration
date of the tender offer, plus (y) 75 basis points less (ii) a consent payment
of $20.00 per $1,000.00 principal amount on notes for which a valid consent to
certain matters relating to the notes is received in connection with the
tender offer.
The sources of funds to consumate the merger included additional loans of
$235.0 million, preferred equity of approximately $20.0 million and common
equity of $12.0 million.
Approximately $150 million of the purchase price, net of $8 million relating
to Leaman Logistics,has been allocated to goodwill which is being amortized
over a 40 year period.
On February 3, 1999 the Company entered into a settlement agreemeent with the
former shareholders of CLC regarding the remaining consideration owed in the
CLC acquisition. The agreement called for a payment of $3 million of restricted
cash to the former shareholders as a settlement of final payment of amounts
owed under the merger agreement and a cancellation of the 5,000 preferred
shares issued in connection with the acquisition. This agreement resulted in
the recording of additional goodwill of approximatley $3 million.
Giving effect to the CLC acquisition as of January 1, 1998 on a proforma basis
results in the following: revenue for the nine months ending September 30,
1998 $472.4 million, net loss for the nine months ending September 30, 1998
$(11.2) million, basic earnings (loss) per share for the nine months ended
September 30, 1998 $(6.17).
4. COMPREHENSIVE INCOME:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income"
("SFAS 130"). SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in the financial statements and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the stockholders' equity
section of the consolidated balance sheets for annuual financial statements.
The Company adopted SFAS 130 in 1998 and accordingly, Comprehensive Income
is as follows:
<PAGE>10
FORM 10 - Q
ITEM 1 - Financial Statements
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)-(continued)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
------- -------- ------ -------
<C> <C> <C> <C>
<S>
Net income (loss) $(9,819) $(7,019) $(5,164) $(3,312)
Other comprehensive income, net of tax:
Foreign currency translation adjustments 306 (528) (123) (286)
-------- -------- ------- ---------
Comprehensive income (loss) $(9,513) (7,547) $(5,287) $(3,598)
======== ========= ======== ========
</TABLE>
5. DERIVATIVES
The Company utilizes derivative financial instruments to reduce its exposure
to market risks from changes in interest rates and foreign exchange rates.
The instruments primarily used to mitigate these risks are interest rate
swaps and foreign exchange contracts. All derivative instruments held by the
Company are designed as hedges and accordingly, the gains and losses from
changes in derivative fair values are deferred. Gains and losses upon settle-
ment are recognized in the statement of operations or recorded as part of the
underlying asset or liability as appropriate. The Company is exposed to credit
related losses in the event of nonperformance by counterparties to these
financial instruments; however, counterparties to these agreements are major
financial institutions; and the risk of loss due to nonperformance is considered
by management to be minimal. The Company does not hold or issue interest rate
swaps or foreign exchange contracts for trading purposes.
The Company currently has appproximately $343.6 million of variable interest
debt. The Company has entered into interest rate swap agreements designed as
a partial hedge of the Company's portfolio of variable rate debt. The purpose
of these swaps is to fix interest rates on variable rate debt and reduce certain
exposures to interest rate fluctuations. At September 30, 1999 the Company had
interest rate swaps with a notional amount of $100 million. The notional
amounts do not represent a measure of exposure to the Company. The Company will
pay counterparties interest at a fixed rate ranging from 5.41% to 5.48%, and
the counter parties will pay the Company interest at a variable rate equal
to LIBOR. The LIBOR rate applicable to these agreements at September 30, 1999
was 5.52%. These agreements mature and renew every three months and expire
<PAGE>11
FORM 10 - Q
Item 1 - Financial Statements
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited) - (continued)
on September 2, 2001. A 10% fluctuation in interest rates would have a $1.9
million pre-tax impact, net of interest rate swap agreements, on future
earnings.
The Company has entered into short-term foreign currency agreements to exchange
US dollars (US $2,350) for Canadian dollars (CN $3,483). The purpose of these
agreements are to hedge against fluctuations in foreign currency exchange
rates. The Company is required to make US dollar payments at fixed exchange
rates ranging from 1.4705 to 1.4937, and as such, the market risk based upon a
10% fluctuation in the exchange rate is immaterial.
6. GUARANTOR SUBSIDIARIES:
The 10% Series B Senior Subordinated Notes issued in June 1998 and due 2006
are unconditionally guaranteed on a senior unsecured basis pursuant to
guarantees by all the Company's direct and indirect domestic subsidiaries
("The Guarantors"). In 1996, the Company acquired Levy Transport, Ltd, a
Canadian corporation, which is a non-guarantor subsidiary.
The Company conducts all of its business through and derives virtually all
its income from its subsidiaries. Therefore, the Company's ability to make
required principal and interest payments with respect to all of the Company's
debt depends on the earnings of subsidiaries and its ability to receive funds
from its subsidiaries. The subsidiary guarantors are wholly owned subsidiaries
of the Company and have fully and unconditionally guaranteed the Notes on a
joint and several basis.
The Company has not presented seperate financial statements and other
disclosures concerning subsidiary guarantors because management has determined
such information is not material to the holders of the Notes.
The following condensed consolidating financial information presents:
1. Balance Sheets as of September 30, 1999 and December 31, 1998.
2. Statements of Operations for the three months ended September 30, 1999
and 1998.
3. Statements of Operations for the nine months ended September 30,1999
and 1998.
4. Statements of Cash Flows for the nine months ended September 30,1999
and 1998.
5. The parent company and combined guarantor subsidiaries.
6. Elimination entries necessary to consolidate the parent company and all
its subsidiaries.
<PAGE> 12
FORM 10-Q
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION> Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
--------- -------- -------- ------- --------
<C> <C> <C> <C> <C>
<S>
ASSETS
Current Assets
Cash and cash equivalents $ - $ (619) $ 952 $ - $ 333
Accounts receivable, net - 105,791 8,420 - 114,211
Inventories - 2,011 258 - 2,269
Prepaid expenses and
other current assets - 40,250 936 - 41,186
-------- -------- -------- -------- ---------
Total current assets - 147,433 10,566 - 157,999
Property and equipment,net - 181,131 21,476 - 202,607
Intangibles & goodwill,net - 147,013 1,060 - 148,073
Insurance proceeds receivable - 31,208 - - 31,208
Other assets 100,000 36,552 235 (100,000) 36,787
Investment in subsidiaries 288,445 - - (288,445) -
--------- -------- -------- -------- -------
$388,445 $543,337 $33,337 $(388,445) $576,674
======== ========= ======== ========= =========
</TABLE>
<PAGE> 13
FORM 10-Q
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED BALANCE SHEETS
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited) - (In thousands, continued)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
--------- ---------- --------- ------- -------
<C> <C> <C> <C> <C>
<S>
Current liabilities
Current maturities of
indebtedness $ 2,986 $ - $ - $ - $ 2,986
Accounts payable and
accrued expenses - 66,835 3,445 - 70,280
Independent contractors
payable - 16,134 122 - 16,256
Other current liabilities - 6,442 1,791 - 8,233
Income tax payable - 659 444 - 1,103
--------- -------- -------- ------- -------
Total Current liabilities 2,986 90,070 5,802 - 98,858
Bank debt, less
current maturities 291,070 - 9,791 - 300,861
Capital lease obligations,
less current maturities - 130 - - 130
Subordinated debt, less
current maturities 140,000 100,000 - (100,000) 140,000
Environmental liabilities - 65,116 - - 65,116
Other long term liabilities - 9,697 - - 9,697
Deferred income taxes - (2,185) 2,185 - -
Accrued loss and damage claims - 3,190 - - 3,190
Commitments & contingent liab. - - - - -
Minority interest in subs - 4,433 - - 4,433
Mandatorily redeemable
preferred stock 12,077 - - - 12,077
Redeemable common stock 1,210 - - - 1,210
Stockholders' equity
Common stock and
Additional paid-in-capital 105,097 220,075 15,082 (235,157) 105,097
Retained earnings 27,221 52,811 896 (53,707) 27,221
Stock recapitalization (189,589) - (55) 55 (189,589)
Other stockholders' equity (349) - (364) 364 (349)
Note receivable (1,278) - - - (1,278)
-------- -------- --------- -------- --------
Total stockholders'
equity or (deficit) (58,898) 272,886 15,559 (288,445) (58,898)
-------- --------- -------- -------- --------
$388,445 $543,337 $33,337 ($388,445) $576,674
======== ========= ======== ========= ========
</TABLE>
* Condensed from audited financial statements.
<PAGE> 14
FORM 10-Q
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION> Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
--------- -------- --------- ------- ---------
<C> <C> <C> <C> <C>
<S>
ASSETS
Current Assets
Cash and cash equivalents $ - $ (721) $ 806 $ - $ 85
Accounts receivable, net - 85,867 3,031 - 88,898
Inventories - 1,740 261 - 2,001
Prepaid expenses and
other current assets - 46,627 1,691 - 48,318
-------- -------- -------- -------- ---------
Total Current assets - 133,513 5,789 - 139,302
Property and equipment,net - 211,905 21,317 - 233,222
Intangibles & goodwill,net - 136,276 1,076 - 137,352
Insurance proceeds receivable - 45,916 - - 45,916
Other assets 100,000 27,454 - (100,000) 27,454
Investment in Subsidiaries 301,391 - - (301,391) -
--------- -------- -------- -------- -------
$401,391 $555,064 $28,182 $(401,391) $583,246
======== ========= ======= ========= ========
</TABLE>
<PAGE> 15
FORM 10-Q
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED BALANCE SHEETS
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(Unaudited, in thousands, continued)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
--------- ---------- --------- ------- -------
<C> <C> <C> <C> <C>
<S>
Current liabilities
Current maturities of
indebtedness $ 3,153 $ 208 $ 100 $ _ $ 3,461
Accounts payable and
accrued expenses - 60,532 4,218 - 64,750
Independent contractors
payable - 8,266 73 - 8,339
Other current liabilities - 10,362 - - 10,362
Income tax payable - 1,331 215 - 1,546
--------- -------- -------- ------- -------
Total Current liabilities 3,153 80,699 4,606 - 88,458
Bank debt, less
current maturities 289,146 100,000 8,516 (100,000) 297,662
Capital lease obligations,
less current maturities 208 - - - 208
Subordinated debt, less
current maturities 140,000 - - - 140,000
Environmental liabilities - 69,956 642 - 69,956
Other long term liabilities - 9,321 - - 9,963
Deferred income taxes - - - -
Accrued loss and damage claims - 3,290 - - 3,290
Commitments & contingent liab. - - - - -
Minority interest in subs - 4,825 - - 4,825
Mandatorily redeemable
preferred stock 15,994 - - - 15,994
Redeemable common stock 1,210 - - - 1,210
Stockholders' equity
Common stock and
Additional paid-in-capital 104,827 241,381 15,082 (256,463) 104,827
Retained earnings 38,495 45,592 69 (45,661) 38,495
Stock recapitalization (189,589) (54) 54 (189,589)
Other stockholders' equity (655) - (679) 679 (655)
Note receivable (1,398) - - - (1,398)
-------- -------- --------- -------- -------
Total stockholders'
equity or (deficit) (48,320) 286,973 14,418 (301,391) (48,320)
------- ------- -------- -------- -------
$401,391 $555,064 $28,182 ($401,391) $583,246
======= ======== ======= ========= ========
</TABLE>
* Condensed from audited financial statements.
<PAGE> 16
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION,INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
------- --------- ---------- -------- --------
<C> <C> <C> <C> <C>
<S>
Operating Revenues
Transportation $ - $124,465 $ 7,279 - $131,744
Other - 17,026 486 - 17,512
-------- -------- -------- -------- -------
- 141,491 7,765 - 149,256
Operating Expenses
Purchased transportation - 80,822 1,432 - 82,254
Depreciation and amortization - 17,223 896 - 18,119
Compensation - options - - - - -
Other operating expenses - 42,098 4,599 - 46,697
--------- -------- -------- -------- -------
Operating income - 1,348 838 - 2,186
Interest expense, net 9,884 - 147 - 10,031
Other (income) expense - (24) - - (24)
Equity in earnings (loss)
of Subsidiaries 1,277 - - (1,277) -
--------- --------- -------- --------- ------
Income (loss) before taxes (8,607) 1,372 691 (1,277) (7,821)
Income taxes (3,443) 563 211 - (2,669)
Minority interest 12 12
--------- --------- -------- -------- ------
Net income (loss) before
extraordinary item (5,164) 797 480 (1,277) (5,164)
Extraordinary item,
net of tax - - - - -
--------- -------- ------- -------- -------
Net income (loss) ($5,164) $ 797 $ 480 ($1,277) ($5,164)
========= ========= ======= ======== =======
</TABLE>
<PAGE> 17
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
------- --------- ---------- -------- --------
<C> <C> <C> <C> <C>
<S>
Operating Revenues
Transportation $ - $ 94,758 $ 6,418 (249) $ 100,927
Other - 5,946 504 (534) 5,916
-------- -------- --------- -------- --------
- 100,704 6,922 (783) 106,843
Operating Expenses
Purchased transportation - 61,122 1,056 (783) 61,395
Depreciation and amortization - 7,301 909 - 8,210
Compensation - options - 1,235 - - 1,235
Other operating expenses - 26,543 4,178 - 30,721
--------- -------- --------- -------- --------
Operating income (loss) - 4,503 779 - 5,282
Interest expense, net 5,433 1,005 164 - 6,602
Other expense - (18) - - (18)
Equity in earnings (loss)
of Subsidiaries (15) - - 15 -
--------- --------- --------- --------- --------
Income (loss) before taxes (5,448) 3,516 615 15 (1,302)
Income taxes (2,136) 1,449 242 - (445)
--------- --------- -------- -------- --------
Net income (loss) before
extraordinary item (3,312) 2,067 373 15 (857)
Extraordinary item,
net of tax - 2,455 - - 2,455
--------- --------- -------- ------- --------
Net income (loss) (3,312) (388) 373 15 (3,312)
--------- --------- ------- ------- --------
Preferred stock dividends 85 - - - 85
Net income (loss)
attributable to common
shareholders $(3,397) $ (388) $ 373 15 $ (3,397)
======== ======== ======= ======= =======
</TABLE>
<PAGE> 18
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION,INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
------- --------- ---------- -------- --------
<C> <C> <C> <C> <C>
<S>
Operating Revenues
Transportation $ - $373,796 $ 20,422 - $394,218
Other - 45,974 488 - 46,462
-------- -------- -------- -------- -------
- 419,770 20,910 - 440,680
Operating Expenses
Purchased transportation - 237,163 2,691 - 239,854
Depreciation and amortization - 44,908 2,732 - 47,640
Compensation - options - - - - -
Other operating expenses - 125,538 13,428 - 138,966
--------- -------- -------- -------- -------
Operating income (loss) - 12,161 2,059 - 14,220
Interest expense, net 29,026 - 461 - 29,487
Other (income) expense - (111) - - (111)
Equity in earnings (loss)
of Subsidiaries 8,308 - - (8,308) -
--------- --------- -------- --------- ------
Income (loss) before taxes(20,718) 12,272 1,598 (8,308) (15,156)
Income taxes (10,899) 5,032 509 - (5,358)
Minority interest 21 21
--------- --------- -------- -------- ------
Net income (loss) before
extraordinary item (9,819) 7,219 1,089 (8,308) (9,819)
Extraordinary item,
net of tax - - - - -
--------- --------- ------- -------- -------
Net income (loss) ($9,819) $ 7,219 $ 1,089 ($8,308) ($9,819)
========= ========= ======= ======== =======
</TABLE>
<PAGE> 19
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
------- --------- ---------- -------- --------
<C> <C> <C> <C> <C>
<S>
Operating Revenues
Transportation $ - $220,878 $ 18,065 $ (250) $ 238,693
Other - 15,878 1,427 (534) 16,771
-------- -------- --------- -------- --------
- 236,756 19,492 (784) 255,464
Operating Expenses
Purchased transportation - 150,621 2,990 (784) 152,827
Depreciation and amortization - 15,454 2,673 - 18,127
Compensation - options - 14,678 - - 14,679
Other operating expenses - 54,442 12,161 - 66,603
--------- -------- --------- -------- --------
Operating income (loss) - 1,560 1,668 - 3,228
Interest expense, net 7,433 1,928 546 - 9,907
Other expense - (34) - - (34)
Equity in earnings (loss)
of Subsidiaries (2,604) - - 2,604 -
--------- --------- --------- --------- --------
Income (loss) before taxes (10,037) (334) 1,122 2,604 (6,645)
Income taxes (3,018) (130) 443 - (2,705)
--------- --------- -------- -------- --------
Net income (loss) before
extraordinary item (7,019) (204) 679 2,604 (3,940)
Extraordinary item,
net of tax - 3,009 70 - 3,079
--------- --------- -------- ------- --------
Net income (loss) (7,019) (3,213) 609 2,604 (7,019)
--------- --------- ------- ------- --------
Preferred stock dividends (85) - - - (85)
Net income (loss)
attributable to common
shareholders $(7,104) $ (3,213) $ 609 2,604 $ (7,104)
======== ======== ======= ======= =========
</TABLE>
<PAGE> 20 FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,1999 (Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
------- --------- ---------- ------- ----------
<C> <C> <C> <C> <C>
<S>
Cash provided by (used for)
Operating activities:
Net income (loss) $(9,819) $ 7,219 $ 1,089 ($8,308) $(9,819)
Adjustments for non
cash charges 9,819 30,438 2,822 43,079
Changes in assets/liabilities - (36,596) (2,388) 8,308 (30,676)
-------- --------- --------- -------- --------
Net cash provided by
operating activities - 1,061 1,523 - 2,584
Investing activities:
Acquisition of subsidiary - - - - -
Capital expenditures - (15,692) (2,513) - (18,205)
Proceeds from asset
dispositions - 13,103 481 - 13,584
Other - (270) - - (270)
-------- --------- --------- -------- -------
Net cash provided by (used
for)investing activities - (2,860) (2,031) - (4,891)
Financing activities:
Proceeds from issuance of
long term debt 5,870 - 816 - 6,686
Payment of obligations - (3,974) (68) - (4,042)
Issuance of common stock 227 - - - 227
Issuance of preferred stock - - - -
Recapitalization expenditures
Other (222) - - (222)
Net change in intercompany
balances (6,097) 6,097
-------- ---------- ---------- ------- --------
Net cash provided by
financing activities - 1,901 748 - 2,649
-------- ---------- ---------- ------- -------
Net increase (decrease) in
cash - 102 240 - 342
Effect of exchange rate
changes on cash - - (94) - (94)
Cash, beginning of period - (721) 806 - 85
--------- --------- --------- ------- -------
Cash, end of period - $ (619) $ 952 - $ 333
========= ========= ========== ======= =======
</TABLE>
<PAGE> 21 FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,1998 (Unaudited) - (In thousands)
<TABLE>
<CAPTION>
Guarantor Non-Guaran- Consol-
Parent Subs tor Subs Elim's idated
-------- --------- ---------- ------- ----------
<C> <C> <C> <C> <C>
<S>
Cash provided by (used for)
Operating activities:
Net income (loss) $(7,019) $ (3,213) $ 609 $ 2,604 $ (7,019)
Adjustments for non
cash charges 7,019 (4,879) 2,645 (2,604) 2,181
Changes in assets/liabilities - (21,991) 311 - (21,680)
-------- --------- -------- -------- --------
Net cash provided by
operating activities - (30,083) 3,565 - (26,518)
Investing activities:
Acquisition of subsidiary (203,844) - - - (203,844)
Capital expenditures - (16,135) (7,985) - (24,120)
Proceeds from asset
dispositions - 978 286 - 1,264
Other - (21,048) 92 2,698 (18,258)
-------- --------- ----------- ------- --------
Net cash used for investing
activities (203,844) (36,205) (7,607) 2,698 (244,958)
Financing activities:
Proceeds from issuance of
long term debt 425,000 - 9,905 - 434,905
Payment of obligations - (44,261) (10,863) 73 (55,051)
Issuance of common stock 71,567 - 6,363 (3,595) 74,335
Issuance of preferred stock 15,500 - - 15,500
Recapitalization expenditures(189,535) - (55) - (189,590)
Other 1,527 (824) 824 1,527
Net change in intercompany
balances (118,688) 118,688 - - -
--------- ---------- ---------- ------- --------
Net cash provided by
financing activities 203,844 75,954 4,526 (2,698) 281,626
--------- ---------- ---------- ------- -------
Net increase (decrease) in
cash - 9,666 484 - 10,150
Effect of exchange rate
changes on cash - - (20) - (20)
Cash, beginning of period - 703 674 - 1,377
--------- --------- ---------- ------ -------
Cash, end of period - $10,369 $1,138 - $11,507
========= ========= ========== ====== =======
</TABLE>
<PAGE>22
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER 1999 COMPARED TO THE THIRD QUARTER 1998
The Company's comparative operating results for the third quarter of 1999
were materially affected by the recapitalization accounting resulting from the
June 30, 1998 transaction with an affiliate of Apollo Management L.P. and the
acquisition of Chemical Leaman on August 28, 1998.
The Company's operating results are affected by shipments for the bulk
chemical industry. Shipments of chemical products are in turn affected by
many other industries, including consumer and industrial products, automotive,
paint and coatings, and paper, and tend to vary with changing economic
conditions. The Company also participates in the shipment of bulk food
products through its food-grade division. The volumes of food products and
certain other consumer products tend to be subject to fewer fluctuations due
to swings in economic activity.
For the quarter ended September 30, 1999, revenues totaled $149.3 million, a
39.7 % increase over revenues of $106.8 million for the same period in 1998.
The Company attributes its increased revenue to the inclusion of CLC for all
three months of the third quarter in 1999.
For the quarter ended September 30, 1999, operating income totaled $2.2
million, a decrease of $3.1 milion compared to $5.3 million for the same
period in 1998. This decrease is primarily due to the $4.7 million one time
depreciation charge taken due to an adjustment in the estimated usefull life
of certain revenue equipment, thereby comforming the depreciation policies
of QDI and CLC.
Current year operating income was also negatively impacted by the amortization
of goodwill in the amount of $1.3 million recognized with the acquisition of
Chemical Leaman and a one time charge of $2.5 million relating to the
reduction in the usefull life of acquired software, now fully written off,
used in the trucking operation.
The operating ratio (operating expense/operating revenue) declined primarily
due to the aforementioned one time earnings charges.
Net interest expense increased to $10.0 million in the quarter ended September
30, 1999, from $6.6 million in the quarter ended September 30, 1998.
This increase is the result of the debt arising from the acquisition of
Chemical Leaman being outstanding all three months of the third quarter 1999.
The pretax loss for the quarter ended September 30, 1999 totaled $7.8 million
compared to a loss of $3.3 million for the same period in 1998.
Pretax income decreased primarily due to the decrease in operating income
and the increase in interest expense both discussed above.
For the quarter ended September 30,1999, the Company's net loss, was $5.2
million compared with a loss $1.3 million for the same period last year. This
was the result of decreased pretax income previously discussed above.
Basic weighted average shares outstanding increased from 1,850,000 in the
third quarter of 1998 to 2,014,000 in the third quarter of 1999. As of
September 30, 1999, a total of 2,013,649 shares were outstanding.
<PAGE>23
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 1998
The Company's comparative operating results for the nine months ended September
30, 1999 were materially affected by the recapitalization accounting resulting
from the June 30, 1998 transaction with an affiliate of Apollo Management L.P.
and the acquisition of Chemical Leaman on August 28, 1998.
For the nine months ended September 30, 1999, revenues totaled $440.7 million,
a 72.5 % increase over revenues of $255.5 million for the same period in 1998.
The Company attributes its increased revenue to the inclusion of CLC for all
nine months of the comparable period.
For the nine months ended September 30, 1999, operating income totaled $14.2
million, an increase of $11.0 million compared to $3.2 million for the same
period in 1998. This increase is primarily due to the $14.7 million charge
to compensation expense in 1998 attributable to the Apollo acquisition.
Current year operating income was negatively impacted by the amortization
of goodwill in the amount of $3.6 million recognized with the acquisition of
Chemical Leaman.
A one time charge of $11.3 million relating to the reduction in the usefull
life of acquired software, now fully written off, used in the trucking
operation and a one time charge of $4.7 million due to a change in the
estimated usefull life of certain revenue equipment also negatively impacted
earnings.
The operating ratio (operating expense/operating revenue) improved primarily
due to the aforementioned prior year charge relating to the acquisition of
the Company by Apollo.
Net interest expense increased to $29.5 million for the nine months ended
September 30, 1999, from $9.9 million for the nine months ended September 30,
1998. This increase is the result of the increased debt arising from the
leveraged recapitalization and the acquisition of Chemical Leaman being out-
standing all nine months of 1999.
The pretax loss for the nine months ended September 30, 1999 totaled $15.2
million compared to a loss of $6.6 million for the same period in 1998.
Pretax income decreased primarily due to the increase in interest expense
less the improvement in operating income both discussed above.
For the nine months ended September 30,1999, the Company's net loss was $9.8
million compared with a loss of $7.0 million for the same period last year.
This was the result of decreased pretax income previously discussed above.
Basic weighted average shares outstanding year to date decreased from
3,471,000 in 1998 to 2,011,000 in 1999 due to the recapitalization.
<PAGE> 24
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
Liquidity and Capital Resources
The Company's primary sources of liquidity are funds provided by operations
and borrowings under various credit arrangements with financial institutions.
Net cash provided by operating activities totaled $2.6 million for the nine
months ended September 30,1999, versus $26.5 million used for the same period
in 1998. This increase is due to the additional cash charges in 1998 relating
to the Apollo recapitalization and the CLC acquisition plus the settlement of
restricted cash with the former CLC shareholders which occured in 1999.
The cash provided by financing activities totaled $2.6 million during the nine
month period ended September 30, 1999, compared to $281.6 million provided in
the the comparable period in 1998. This difference is due to the
recapitalization which occured in the second quarter of last year.
Cash used for investing activities totaled $4.9 million for the nine month
period ended September 30, 1999, compared to $245.0 million used for the
comparable 1998 period. This difference is due to the acquisitions which
occured in 1998.
The Company sold the assets of Leaman Logistics Inc.and Core Logistics
Management Inc. in the third quarter of 1999 for $9.3 million dollars cash plus
elimination of the 10% minority interest held by Leaman Logistics officers.
Goodwill in the amount of$8.1 million was allocated as a cost of the sale,
thereby eliminating any material gain on this transaction.
Capital was used primarily to acquire additional revenue equipment to expand
the Company's operations.
As a result of the leveraged recapitalization transaction and the Chemical
Leaman acquisition, the Company has significantly increased its outstanding
long term debt.
The Company obtained a $285,000,000 credit facility with a group of banks
maturing at various times from June of 2004 to 2006. Additionally, the
Company has a revolving credit facility available in the amount of $75.0
million until June 9, 2004.
As of September 30,1999, the Company has available $42.3 million under this
revolving credit facility. The Company also has $100.00 million in 10% senior
subordinated notes due in 2006 and $40.0 million in floating interest rate
subordinated term securities also due in 2006.
The Company's management believes that borrowings under these loan agreements,
together with available cash and internally generated funds, will be
sufficient to fund QDI's continued growth and meet its working capital
requirements for the foreseeable future.
<PAGE> 25
FORM 10 -Q
PART 1 - FINANCIAL INFORMATION
YEAR 2000
Some of QDI's older computer programs and systems were written using two
digits rather than four to define the applicable year. As a result, those
computer programs have time sensitive software that recognizes a date using
"00" as the year 1900 rather than 2000. This could cause a system failure
or other miscalculations causing disruptions of operations, including
among other things, a temporary inability to process transactions, send
invoices or engage in similar normal business activities.
QDI has completed a plan to ensure that its systems are compliant with the
requirements to process transactions in the year 2000. Most of QDI's combined
systems implementation effort has been directed toward the migration of the
CLC billing, settlement and financial reporting systems from mainframe based
systems which were not Year 2000 compliant. The target completion date for
changeover of the critical systems, September 30,1999 has been met, and
management believes it has done everything within its power to ensure a
smooth transition into the next year.
The estimated cost of QDI's completed and remaining replacement and
modification for the year 2000 issue is not expected to be material to QDI's
earnings or financial position. Due to cost considerations, QDI has
determined not to develop or maintain a contingency plan.
QDI has also performed an assessment of its non-IT systems. QDI has
determined that it currently owns approximatley 300 Qualcom units which are
located in its trucks and deal with the communication to the trucks, which
have embedded chips that are not Year 2000 compliant. These units are not an
integral part of the operation of QDI's business. These units have been
earmarked to be upgraded over the next three months and QDI does not expect
the costs of such upgrades to be material. In addition to assessing its own
Year 2000 compliance, QDI has had discussions with many of its major vendors
and suppliers reguarding their Year 2000 compliance. QDI has received letters of
compliance from many of its material partners and is in the process of
obtaining such letters from others.
There can be no assurance that QDI's timetable will be met, that the
programming changes required to accommodate current billing and driver
settlement requirements will be completed in this time frame, or that such
changes will not negatively impact QDI's ability to meet its customers
or its drivers requirements or that QDI's failure to maintain a contingency
plan will not have a material adverse effect on the Company.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this report discuss future expectations,
contain projections of results of operations or financial condition or state
other "forward-looking" information. Those statements are subject to known and
unknown risks, uncertainties and other factors that could cause the actual
results to differ materially from those contemplated by the statements. The
forward-looking information is based on various factors and was derived using
numerous assumptions. Important factors that could cause our actual results
to be materially different from the forward-looking statements include general
economic conditions, cost and availability of diesel fuel, adverse weather
conditions and competitive rate fluctuations. Future financial and operating
results of QDI may fluctuate as a result of these and other risk factors as
detailed from time to time in Company filings with the Securities and
Exchange Commission.
<PAGE> 26
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Reference is made to Item 3 on page 11 of the Company's Form 10-K for the
year ended December 31, 1998. There have been no material changes in the
Company's legal proceedings since this filing.
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 6. (a) Exhibits: 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K: None
<PAGE> 27
Signatures
Quality Distribution, Inc.
-------------------------------------------
October 15, 1999 /S/ CHARLES J. O'BRIEN, JR.
-------------------------------------------
CHARLES J. O'BRIEN, JR., (CEO, PRESIDENT)
(DULY AUTHORIZED OFFICER)
October 15, 1999 /S/ RICHARD J. BRANDEWIE
-------------------------------------------
RICHARD J. BRANDEWIE, (TREASURER)
(PRINCIPAL FINANCIAL OFFICER)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 333
<SECURITIES> 0
<RECEIVABLES> 119616
<ALLOWANCES> 5405
<INVENTORY> 2269
<CURRENT-ASSETS> 157999
<PP&E> 327071
<DEPRECIATION> 124464
<TOTAL-ASSETS> 576674
<CURRENT-LIABILITIES> 98858
<BONDS> 0
0
12077
<COMMON> 20
<OTHER-SE> (1278)
<TOTAL-LIABILITY-AND-EQUITY> 576674
<SALES> 440680
<TOTAL-REVENUES> 440680
<CGS> 0
<TOTAL-COSTS> 426460
<OTHER-EXPENSES> (111)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29487
<INCOME-PRETAX> (15156)
<INCOME-TAX> (5358)
<INCOME-CONTINUING> (9819)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9819)
<EPS-BASIC> (5.48)
<EPS-DILUTED> 0
</TABLE>
