FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1995 .
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-24960
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
COVENANT TRANSPORT, INC. 401(K) AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Covenant Transport, Inc.
1320 E. 23rd Street
Chattanooga, Tennessee 37404
<PAGE>
REQUIRED INFORMATION
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Financial Statements and Supplemental Schedules
December 31, 1995 and 1994
with
Report of Independent Accountants
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Covenant Transport, Inc.
401(k) and Profit Sharing Plan
We have audited the accompanying statements of net assets available for plan
benefits of Covenant Transport, Inc. 401(k) and Profit Sharing Plan (the Plan)
as of December 31, 1995 and 1994, and the related statements of changes in net
assets available for benefits for the year ended December 31, 1995 and for the
period from August 4, 1994 (inception) to December 31, 1994. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Covenant Transport, Inc. 401(k) and Profit Sharing Plan as of December 31, 1995
and 1994, and the changes in net assets available for plan benefits for the year
ended December 31, 1995 and for the period from August 4, 1994 (inception) to
December 31, 1994 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Covenant Transport, Inc. 401(k) and Profit Sharing Plan are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Knoxville, Tennessee
June 14, 1996
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
Cash ........................................... $ -- $ 247
Investments .................................... 1,638,208 349,298
Contributions receivable:
Employer .................................... 4,910 7,069
Employees ................................... 14,602 24,702
---------- ----------
Net assets available for plan benefits ......... $1,657,720 $ 381,316
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
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<TABLE>
<CAPTION>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for Plan Benefits
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM AUGUST 4, 1994
(INCEPTION) TO DECEMBER 31, 1994
<S> <C> <C>
1995 1994
Additions to net assets:
Dividends .............................................. $ 18,699 $ 291
Realized gains or losses on investments ................ 57,707 --
Unrealized net appreciation in fair value of investments 64,002 --
Contributions:
Employer ............................................ 291,078 89,995
Employees ........................................... 935,092 294,514
---------- ----------
Total contributions ............................. 1,226,170 384,509
---------- ----------
Total additions ................................. 1,366,578 384,800
Deductions from net assets:
Net depreciation in fair value of investments .......... -- (3,484)
Benefit payments ....................................... 90,174 --
---------- ----------
Net increase ............................................... 1,276,404 381,316
Net assets available for plan benefits:
Beginning of year ...................................... 381,316 --
---------- ----------
End of year ............................................ $1,657,720 $ 381,316
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Notes to Financial Statements
1. DESCRIPTION OF PLAN:
The following brief description of the Covenant Transport, Inc. 401(k) and
Profit Sharing Plan is provided for general information purposes only.
Participants should refer to the Plan agreement for more complete
information.
General - The Plan is a voluntary defined contribution savings plan
covering substantially all employees of Covenant Transport, Inc. It is
subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Funding - The Plan is funded by employee and employer contributions.
Participants may contribute up to, but not in excess of, 20% of their
annual compensation. Covenant Transport, Inc. may make discretionary
contributions to the plan not to exceed 6% of an employee's compensation.
Annual additions to a participant's account during any Plan year, when
combined with the total annual additions to the accounts of the participant
under any other qualified defined contribution plan maintained by Covenant
Transport, Inc., cannot exceed certain levels established by federal tax
codes.
Vesting - Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in the remainder of
their accounts is based on years of continuous service. A participant vests
20 percent annually and is 100 percent vested after five years of credited
service.
Payment of Benefits - On retirement or termination of service, a
participant may receive a lump-sum amount equal to the value of the vested
portion of their account.
Investment of Account - The Plan has five funds in which individual
accounts may be invested. The funds are as follows:
Fund A - SunTrust Employee Benefit Stable Asset Fund - This fund
is managed by SunTrust Bank. The fund is a managed
portfolio of insurance company guaranteed investment
contracts and short-term money market instruments.
Fund B - STI Classic Investment Grade Bond Fund - This fund is
managed by SunTrust Bank. The fund is a bond fund which
invests primarily in government and corporate obligations.
Fund C - STI Classic Value Income Fund - This fund is managed by
SunTrust Bank. The fund is a stock fund which invests
primarily in equity securities.
Fund D - STI Classic Capital Growth Fund - This fund is managed
by SunTrust Bank. The fund is a managed portfolio of common
stocks, warrants, and convertible securities which in the
advisor's opinion are undervalued.
Fund E - Covenant Transport 401(k) Unitized Stock Fund - This
fund invests in the stock of Covenant Transport, Inc.
4
<PAGE>
Notes to Financial Statements, Continued
1. DESCRIPTION OF PLAN, continued:
Allocation of Benefits - The Plan instrument requires that the assets of
the Plan be accounted for separately as to participant and employer
contributions and valued annually, allocating to each participant their
share of principal, income and forfeitures. Employer voluntary
contributions are allocated to all eligible employees based on the
employees contributions for the period.
Forfeitures - Forfeiture of a terminated participant's nonvested account
occurs in plan years in which he receives a distribution of the full vested
value as defined in the Plan document. Forfeitures are used to reduce the
Company's future payments and are allocated in the same manner as matching
employer contributions. Forfeitures for the years ended December 31, 1995
and 1994 were $1,344 and $0, respectively.
Administrative Expenses - The administrative expenses paid by the Plan are
reimbursed by the sponsor of the Plan, Covenant Transport, Inc.
2. SIGNIFICANT ACCOUNTING POLICIES:
Method of Accounting - The Plan's financial statements have been prepared
using the accrual basis of accounting.
Investments - Investments are carried at fair value, as determined using
the quoted market prices.
Investment Income - The Plan presents, in the statements of changes in net
assets available for plan benefits, the realized gains or losses and the
unrealized appreciation (depreciation) in the fair value of its investments
. Realized gains (losses) are computed using the weighted average price per
share as the cost of the asset.
Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates.
3. ADMINISTRATION:
The Plan is administered by American National Bank & Trust Company, the
Plan Trustee, who has overall responsibility for the investment of assets,
accounting for financial transactions and distributions to participants.
5
<PAGE>
Notes to Financial Statements, Continued
4. INVESTMENTS:
Investments held at December 31, 1995 and 1994, including those
representing 5 percent or more of the Plan's net assets are as follows:
<TABLE>
1995 1994
<S> <C> <C>
SunTrust Employee Benefit Stable Asset Fund, 22,278 shares . $ 484,324 $ 100,677
STI Classic Investment Grade Bond Fund, 17,407 shares ...... 184,689 44,086
STI Classic Value Income Fund, 30,888 shares ............... 371,897 84,900
STI Classic Capital Growth Fund, 33,423 shares ............. 451,884 115,653
Covenant Transport 401(k) Unitized Stock Fund, 22,669 shares 145,414 3,982
---------- ----------
$1,638,208 $ 349,298
</TABLE>
Realized gains and losses on investments for the year ended December 31,
1995, are as follows:
<TABLE>
Aggregate Aggregate Net
Cost .. Proceeds Gain (Loss)
<S> <C> <C> <C>
Bonds ............................................................... $ 91,061 $ 93,490 $ 2,429
Common stock ........................................................ 97,626 155,413 57,787
Covenant Transport 401(k)
Unitized stock fund ............................................... 26,806 24,297 (2,509)
-------- -------- --------
Total ........................................................ $215,493 $273,200 $ 57,707
======== ======== ========
</TABLE>
5. PARTICIPANT FUNDS:
The participants can elect to have their accounts invested in any of five
funds, as described in Note 1. An analysis of the changes in the separate
funds is as follows for the years ended December 31, 1995 and 1994:
<TABLE>
1995 Fund A Fund B Fund C Fund D Fund E Total
<S> <C> <C> <C> <C> <C> <C>
Net appreciation (depreciation) $ 16,842 $ 10,679 $ 58,173 $ 70,159 $ (34,144) $ 121,709
Dividends - 7,008 8,048 3,643 - 18,699
Contributions:
Employer 88,111 30,355 54,862 72,246 45,504 291,078
Employee 301,874 108,994 181,395 237,489 105,340 935,092
Benefit payments (23,417) (11,636) (19,367) (28,058) (7,696) (90,174)
Transfers (4,562) (6,530) 1,049 (24,020) 34,063 -
--------- --------- -------- --------- -------- --------
Net increase 378,848 138,870 284,160 331,459 143,067 1,276,404
Net assets available for plan benefits:
Beginning of year 111,962 48,123 91,742 124,886 4,603 381,316
-------- -------- -------- -------- -------- -----------
End of year $490,810 $186,993 $375,902 $456,345 $147,670 $1,657,720
======== ======== ======== ======== ======== ==========
</TABLE>
6
<PAGE>
Notes to Financial Statements, Continued
5. PARTICIPANT FUNDS, continued:
<TABLE>
1994 Fund A Fund B Fund C Fund D Fund E Total
<S> <C> <C> <C> <C> <C> <C>
Net appreciation (depreciation) ...... $ 799 $ (96) $ (1,652) $ (2,742) $ 207 $ (3,484)
Dividends ............................ -- 186 63 42 -- 291
Contributions:
Employer ........................... 26,029 10,762 21,737 30,596 871 89,995
Employee ........................... 83,861 37,701 72,726 98,282 1,944 294,514
Transfers ............................ 1,273 (430) (1,132) (1,292) 1,581 --
--------- --------- --------- --------- --------- ---------
Net assets available for plan benefits $ 111,962 $ 48,123 $ 91,742 $ 124,886 $ 4,603 $ 381,316
========= ========= ========= ========= ========= =========
</TABLE>
6. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of plan
termination, participants will become 100 percent vested in their accounts.
7. FEDERAL INCOME TAXES:
The Plan and its trust has obtained a favorable determination letter from
the Internal Revenue Service. This letter confirms the exemption from
federal income taxes under Sections 401(a) and 501(a) of the Internal
Revenue Code.
7
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
DECEMBER 31, 1995
<TABLE>
(b) (c)
Identity of issuer, Description of investment including (e)
borrower, lessor, maturity date, rate of interest, (d) Current
or similar party collateral, par or maturity value Cost
Value
<S> <C> <C> <C>
Suntrust Bank Employee Benefit Stable Asset Fund,
22,278 shares $ 468,024 $ 484,324
SunTrust Bank STI Classic Investment Grade Bond Fund,
17,407 shares 175,046 184,689
SunTrust Bank STI Classic Value Income Fund,
30,888 shares 353,304 371,897
SunTrust Bank STI Classic Capital Growth Fund,
33,423 shares 411,419 451,884
Covenant Transport, Inc. Covenant Transport 401(k) Unitized
Stock Fund, 22,669 shares 176,853 145,414
----------- ---------
$1,584,646 $1,638,208
SEE ACCOMPANYING REPORT OF INDEPENDENT ACCOUNTANTS.
</TABLE>
8
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Item 27d - Schedule of Reportable Transactions
FOR THE YEAR ENDED DECEMBER 31, 1995
1. Single transactions exceeding 5% of total assets as of December 31, 1995.
<TABLE>
(h)
Current
(a) Value of (i)
Identity (b) (c) (d) (g) Asset on Net
of Party Description Purchase Selling Cost of Transaction Gain or
Involved of Asset Price Price Asset Date (loss)
<S> <C> <C> <C> <C> <C> <C>
SunTrust Bank Stable Asset Fund $17,621 - $17,621 $ - $ -
SunTrust Bank Value Income Fund 29,123 - 29,123 - -
</TABLE>
2. Series of transactions of same issue exceeding 5% of total assets as of
December 31, 1995.
<TABLE>
(h)
Current
(a) Value of (i)
Identity (b) (c) (d) (g) Asset on Net
of Party Description Purchase Selling Cost of Transaction Gain or
Involved of Asset Price Price Asset Date (loss)
<S> <C> <C> <C> <C> <C>
SunTrust Bank Stable Asset Fund $431,354 $ - $431,354 $ - $ -
SunTrust Bank Stable Asset Fund - 64,733 66,220 64,733 1,487
SunTrust Bank Investment Grade
Bond Fund 158,704 - 158,704 - -
SunTrust Bank Investment Grade
Bond Fund - 28,758 29,700 28,758 942
Covenant 401(k) Unitized
Transport Stock Fund 199,884 - 199,884 - -
Covenant 401)k) Unitized
Transport Stock Fund - 24,297 21,788 24,297 (2,509)
SEE ACCOMPANYING REPORT OF INDEPENDENT ACCOUNTANTS.
</TABLE>
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
COVENANT TRANSPORT, INC. 401(K) AND
PROFIT SHARING PLAN
COVENANT TRANSPORT, INC.
Date: 7/26/96
By:/s/David R. Parker
David R. Parker, Chairman,
President, and Chief Executive
Officer
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this registration statement of
Covenant Transport, Inc. on Form S-8 of our reports dated February 1, 1996, on
our audits of the consolidated financial statements and the financial statement
schedule of Covenant Transport, Inc. as of December 31, 1995 and 1994, and for
the years ended December 31, 1995, 1994 and 1993.
/s/Coopers & Lybrand
Knoxville, Tennessee
November 8, 1996
