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, 1996.
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 tha
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>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Financial Statements and Supplemental Schedules
December 31, 1996 (with comparative statement of
Net Assets Available for Plan Benefits for December 31, 1995)
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, 1996 and 1995, and the related statement of changes in
net assets available for benefits for the year ended December 31, 1996. 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, 1996
and 1995, and the changes in net assets available for plan benefits for the year
ended December 31, 1996, 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 audit 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.
COOPERS & LYBRAND L.L.P.
Knoxville, Tennessee
June 11, 1997
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Investments .............................. $3,085,296 $1,638,208
Contributions receivable:
Employer ............................... 6,045 4,910
Employees .............................. 16,721 14,602
------------ ----------
Net assets available for plan benefits ... $3,108,062 $1,657,720
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1996
<TABLE>
<S> <C>
Additions to net assets:
Dividends $ 30,461
Realized gains on investments 295,451
Contributions:
Employer 395,518
Employees 1,245,129
Total contributions 1,640,647
Total additions 1,966,559
Deductions from net assets:
Net unrealized depreciation in fair value of 86,777
investment Benefit payments 429,440
Net increase 1,450,342
Net assets available for plan benefits:
Beginning of year 1,657,720
End of year $3,108,062
</TABLE>
The accompanying notes are an integral part of these financial statements.
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.
4
<PAGE>
Notes to Financial Statements, Continued
Fund E - Covenant Transport 401(k) Unitized Stock Fund - This fund invests
in the stock of Covenant Transport, Inc.
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 year ended December 31, 1996 were
$39,885.
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, 1996 and 1995, including those
representing five percent or more of the Plan's net assets, are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
SunTrust Employee Benefit Stable Asset Fund,
32,810 and 22,278 shares, respectively 758,888 $ 484,324
STI Classic Investment Grade Bond Fund,
30,379 and 17,407 shares respectively 309,883 184,689
STI Classic Value Income Fund, 51,593 and
30,888 shares, respectively 629,637 371,897
STI Classic Capital Growth Fund, 69,717 and
33,423 shares, respectively 919,055 451,884
Covenant Transport 401(k) Unitized Stock Fund,
60,637 and 22,669 shares, respectively 467,833 145,414
------- -------
$3,085,296 $1,638,208
========== ==========
<CAPTION>
Realized gains and losses on investments for the year ended December 31,
1996, are as follows:
Aggregate Aggregate Net
Cost Proceeds Gain (Loss)
<S> <C> <C> <C>
Bonds $316,438 $ 327,669 $ 11,231
Common stock 294,710 569,898 275,188
Covenant Transport 401(k)
Unitized stock fund $ 102,279 $ 111,311 $ 9,032
-------- ---------- ---------
Total $713,427 $1,008,878 $295,451
======== ========== =========
</TABLE>
6
<PAGE>
Notes to Financial Statements, Continued
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 year ended December 31, 1996:
<TABLE>
<CAPTION>
Fund A Fund B Fund C Fund D Fund E Total
<S> <C> <C> <C> <C> <C> <C>
Net appreciation (depreciation) $ 35,200 $ (6,277)$ 71,045 $111,047 $ (2,341)$ 208,674
Dividends - 12,936 11,563 5,962 - 30,461
Contributions:
Employer 95,036 41,791 68,283 99,064 91,344 395,518
Employee 314,781 139,418 221,542 330,136 239,252 1,245,129
Benefit payments (110,351) (50,990)(121,556) (123,187) (23,356)
(429,440)
Transfers (92,268) (6,715) 18,924 57,721 22,338 -
Net increase 242,398 130,163 269,801 480,743 327,237 1,450,342
Net assets available
for plan benefits:
Beginning of year 490,810 186,993 375,902 456,345 147,670 1,657,720
End of year $733,208 $317,156 $645,703 $937,088 $474,907 $3,108,062
</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, 1996
<TABLE>
<CAPTION>
(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,
32,810 shares $ 716,832 $ 758,888
SunTrust Bank STI Classic Investment Grade Bond Fund,
30,379 shares 309,133 309,883
SunTrust Bank STI Classic Value Income Fund,
51,593 shares 633,528 629,637
SunTrust Bank STI Classic Capital Growth Fund,
69,717 shares 952,512 919,055
Covenant Transport, Inc. Covenant Transport 401(k) Unitized
Stock Fund, 60,637 shares 511,293 467,833
$3,123,298 $3,085,296
</TABLE>
See accompanying Report of Independent Accountants.
8
<PAGE>
COVENANT TRANSPORT, INC.
401(k) and PROFIT SHARING PLAN
Item 27d - Schedule of Reportable Transactions
For the year ended December 31, 1996
1. Single transactions exceeding 5% of total assets as of December 31, 1996.
<TABLE>
<CAPTION>
(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 $ - $2,189 $93,449 $96,915 $3,466
SunTrust Bank Capital Growth 13.29 - 102,823 - -
<CAPTION>
2. Series of transactions of same issue exceeding 5% of total assets as of December 31, 1996.
(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 $477,169 $ - $477,169 $ - $ -
SunTrust Bank Stable Asset Fund - 237,853 228,367 237,853 9,486
SunTrust Bank Investment Grade
Bond Fund 222,158 - 222,158 - -
SunTrust Bank Investment Grade
Bond Fund - 89,816 88,071 89,816 1,745
Covenant 401(k) Unitized
Transport Stock Fund 467,720 - 467,720 - -
Covenant 401)k) Unitized
Transport Stock Fund - 111,311 102,280 111,311 9,031
</TABLE>
See accompanying Report of Independent Accountants.
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: 6/30/97
By: /s/
__________________________________________
David R. Parker, Chairman, President, and
Chief Executive Officer
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Covenant Transport, Inc. on Form S-8 of our report dated June 11, 1997, on
our audit of the Covenant Transport, Inc. 401(k) and Profit Sharing Plan as of
December 31, 1996, which report is included in this Annual Report of Form 11-K.
/s/
________________________________________
COOPERS & LYBRAND L.L.P.
Knoxville, Tennessee
June 26, 1997
