SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File No. 0-25506
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PST VANS, INC.
(Exact name of registrant as specified in this charter)
Utah 87-0411704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 West 2100 South
Salt Lake City, UT 84119
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: 801-975-2500
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.
YES X NO
The number of shares outstanding of Registrant's Common Stock, par value $0.001
per share, as of August 5, 1996, was 4,209,409 shares.
<PAGE>
PST VANS, INC.
INDEX
PART I, FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995 1
Condensed Statements of Operations (unaudited) for the Three and
Six Months Ended June 30, 1996 and June 30, 1995 2
Condensed Statements of Cash Flows (unaudited) for the
Six Months Ended June 30, 1996 and June 30, 1995 3
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II, OTHER INFORMATION
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 13
*No Information Submitted Under This Caption
<PAGE>
PST VANS, INC.
CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
--------- ------------
CURRENT ASSETS: (unaudited)
Cash $ 3,682,153 $ 4,249,981
Receivables, net 16,490,533 16,235,574
Prepaid expenses and other 2,949,537 4,088,996
Inventories and operating supplies 688,136 642,730
Deposits 636,061 985,952
--------------- ---------------
Total current assets 24,446,420 26,203,233
--------------- ---------------
PROPERTY AND EQUIPMENT, net 66,209,887 73,253,423
--------------- ---------------
GOODWILL, net 8,748,131 8,884,112
--------------- ---------------
OTHER ASSETS, net 327,669 541,362
--------------- ---------------
$ 99,732,107 $ 108,882,130
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term
obligations $ 1,725,560 $ 1,109,337
Current portion of capitalized
lease obligations 11,861,567 10,736,025
Accounts payable 3,783,645 4,509,834
Current portion of accrued
claims payable 4,425,906 3,656,381
Accrued liabilities 3,412,699 3,256,896
-------------- ---------------
Total current liabilities 25,209,377 23,268,473
-------------- ---------------
LONG-TERM ACCRUED CLAIMS PAYABLE,
net of current portion 1,807,777 2,321,686
-------------- ---------------
LONG-TERM OBLIGATIONS, net of
current portion 2,299,604 4,031,690
-------------- ---------------
CAPITALIZED LEASE OBLIGATIONS,
net of current portion 45,258,768 51,655,247
-------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock 4,209 4,209
Additional paid-in capital 49,731,276 49,731,276
Accumulated deficit (24,578,904) (22,130,451)
-------------- ---------------
Total stockholders' equity 25,156,581 27,605,034
-------------- ---------------
$ 99,732,107 $ 108,882,130
============== ===============
See accompanying notes to condensed financial statements
<PAGE>
PST VANS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES $36,428,193 $41,970,761 $74,664,217 $78,262,540
COST AND EXPENSES:
Salaries, wages and benefits $11,026,144 $11,501,587 $22,040,380 21,408,082
Purchased transportation $ 7,998,672 $10,479,658 $17,129,665 $ 19,555,243
Fuel and fuel taxes $ 4,725,303 $ 5,431,416 $10,313,792 $ 9,984,206
Depreciation and amortization $ 3,330,819 $ 1,789,230 $ 6,686,776 $ 2,919,638
Insurance and claims $ 2,494,674 $ 2,185,385 $ 5,216,160 $ 3,867,357
Revenue equipment lease expense $ 2,073,691 $ 3,147,595 $ 4,227,392 $ 6,663,569
Maintenance $ 1,790,623 $ 2,409,928 $ 3,684,358 $ 4,429,450
General supplies and expense $ 1,552,863 $ 1,583,106 $ 2,864,978 $ 3,017,915
Taxes and licenses $ 851,716 $ 835,419 $ 1,755,665 $ 1,545,872
Communications and utilities $ 828,365 $ 786,631 $ 1,746,090 $ 1,443,137
Amortization of goodwill $ 167,990 $ 167,991 $ 135,981 $ 135,972
(Gain) Loss on disposition
of assets (246,839) (20,463) (1,255,883) 14,333
----------- ----------- ----------- ------------
36,494,021 40,197,483 74,545,354 74,984,774
----------- ----------- ----------- ------------
OPERATING INCOME (LOSS) (65,828) 1,773,278 118,863 3,277,766
----------- ---------- ----------- ------------
OTHER INCOME (EXPENSES):
Interest expense (1,293,000) (668,839) (2,657,732) (1,781,996)
Other income (expense) 47,531 (45,527) 90,416 7,383
----------- ---------- ----------- ------------
(1,245,469) (714,366) (2,567,316) (1,774,613)
----------- ---------- ----------- ------------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES $(1,311,297) $1,058,912 (2,448,453) $ 1,503,153
PROVISION FOR INCOME TAXES - (61,467) - (150,315)
----------- ---------- ---------- ------------
NET INCOME (LOSS) ($1,311,297) $ 997,445 ($2,448,453) $ 1,352,838
=========== ========== ========== ============
NET INCOME (LOSS) PER SHARE ($0.31) $0.24 ($0.58) $0.38
=========== ========== ========== ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,209,409 4,209,409 4,209,409 3,560,311
=========== ========== ========== ============
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
PST VANS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (2,448,453) $ 1,352,838
Adjustments to reconcile net (loss) income to net
cash provided by operating activities -
Depreciation and amortization 6,822,757 3,055,610
Provision for losses on accounts receivable 501,838 461,278
(Gain) Loss on sale of property and equipment (1,255,883) 14,333
Increase in receivables (756,797) (1,576,533)
Decrease in deposits 349,891 1,846,983
Decrease (Increase) in prepaid and other
expenses 1,139,459 (595,113)
Increase in inventories and operating
supplies (45,406) (152,664)
Decrease in other assets, net 213,693 2,092,053
Decrease in accounts payable (726,189) (76,009)
Increase in accrued claims payable 481,140 90,754
Increase (decrease) in accrued liabilities 155,803 (992,000)
------------- -------------
Total adjustments 6,880,306 4,168,692
------------- ------------
Net cash flows provided by operating activities 4,431,853 5,521,530
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (797,843) (6,753,875)
Proceeds from sale of property and equipment 2,184,962 264,119
------------- ------------
Net cash flows provided by (used in) investing
activities 1,387,119 (6,489,756)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 405,195
Principal payments on long-term obligations (1,115,863) (1,715,129)
Principal payments on capitalized lease obligations (5,270,937) (1,915,108)
Decrease in advances from factor - (5,336,289)
Purchase of accounts receivable from factor - (9,063,711)
Proceeds from issuance of common stock, net - 21,678,648
------------ ------------
Net cash flows (used in) provided by
financing activities (6,386,800) 4,053,606
------------ ------------
NET INCREASE (DECREASE) IN CASH (567,828) 3,085,380
CASH AT BEGINNING OF PERIOD 4,249,981 765,200
------------ ------------
CASH AT END OF PERIOD $ 3,682,153 $ 3,850,580
============= ============
See accompanying notes to condensed financial statements
<PAGE>
PST VANS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
--------------------------
1996 1995
------------ ----------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for -
Interest $ 2,683,623 $ 1,800,601
Income taxes 78,442 1,553,042
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through capitalized leases
obligations - 20,821,858
Common stock issued as payment of long-term debt - 112,905
See accompanying notes to condensed financial statements
<PAGE>
PST VANS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. Financial Information:
The accompanying condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes the following disclosures
are adequate to make the information presented not misleading. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Results of
operations for interim periods are not necessarily indicative of results for a
full year. These condensed financial statements and notes thereto should be read
in conjunction with the Company's financial statements and notes thereto,
included in the Company's Form 10-K for the year ended December 31, 1995.
Note 2. Income Taxes:
Income taxes for the interim periods are based upon the Company's estimated
effective annual tax rates. The Company's effective tax rate (income tax expense
divided by income before provision for income taxes) decreased to zero for the
three and six months ended June 30, 1996, compared to approximately 6% and 10%
for the three and six months ended June 30, 1995, respectively, as a result of
the Company not recording any benefit on its pre-tax loss.
<PAGE>
PST VANS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Comparison of the Three Months Ended June 30, 996 to the Three Months Ended June
30, 1995
Revenues decreased by 13.2% to $36.4 million for the three months ended June 30,
1996 compared to $42.0 million for the three months ended June 30, 1995. The
decline in revenues resulted primarily from an 8.0% decrease in average revenue
equipment to 1229 tractors for the three months ended June 30, 1996 compared to
1336 tractors for the three months ended June 30, 1995; and a 6.3% decline in
loaded miles per tractor for the three months ended June 30, 1996 compared to
the three months ended June 30, 1995. August 13, 1996. Management believes the
decrease in miles per tractor was a result of an overcapacity of tractors that
affected the industry generally, and a shortage of qualified drivers which
increased the average unseated tractors in the three months ended June 30, 1996
compared to the three months ended June 30, 1995. Management has implemented
various programs to recruit and retain additional drivers and believes that the
number of unseated tractors will slowly decrease during the remainder of the
year.
Operating costs and expenses were 100.2% of revenues for the three months ended
June 30, 1996, compared to 95.8% of revenues for the three months ended June 30,
1995.
Salaries, wages and benefits increased to 30.3% of revenues for the three months
ended June 30, 1996 compared to 27.4% of revenues for the three months ended
June 30, 1995. This was due primarily to driver pay changes that became
effective in October, 1995, and an increase in the percent of total miles driven
by Company drivers compared to independent contractors during the two periods.
Company miles increased due to a higher ratio of company tractors to total
tractors.
Purchased transportation decreased to 22.0% of revenues for the three months
ended June 30, 1996, compared to 25.0% for the three months ended June 30, 1995,
as result of a smaller percent of total miles driven by independent contractors
and a reduction in the rate paid to independent contractors. Independent
contractors are under contract with the Company and are responsible for their
own salaries, wages and benefits, fuel, maintenance and depreciation.
Independent contractor costs are classified as purchased transportation
expenses.
Fuel and fuel taxes increased to 13.0% of revenues for the three months ended
June 30, 1996, compared to 12.9% of revenues for the three months ended June 30,
1995, as a result of a higher percentage of miles driven with Company tractors
and an increase in the cost of fuel. The increase in cost of fuel was largely
offset by fuel surcharges to customers and fuel purchase contracts. Management
expects the cost of fuel to remain high through the third quarter. In order to
reduce the Company's vulnerability to rapid increases in the price of fuel, the
Company has historically entered into purchase contracts with fuel suppliers
from time to time for a portion of its estimated fuel requirements at guaranteed
prices. (See liquidity and capital resources). As previously stated, the Company
<PAGE>
has also implemented fuel surcharges to many of its customers. Management
anticipates that the purchase contracts and fuel surcharges will help offset
some of the increase in the cost of fuel.
Revenue equipment lease expense decreased to 5.7% of revenues for the three
months ended June 30, 1996, compared to 7.5% of revenues for the three months
ended June 30, 1995, primarily as a result of the Company reducing the
percentage of its tractor fleet financed through operating leases to 24.0% for
the three months ended June 30, 1996, compared to 57.6% for the three months
ended June 30, 1995.
Maintenance decreased to 4.9% of revenues for the three months ended June 30,
1996, compared to 5.7% of revenues for the three months ended June 30, 1995, as
a result of reduced maintenance costs associated with a newer tractor fleet. The
average age of Company owned tractors decreased to 1.3 years during the three
months ended June 30, 1996 compared to 1.6 years for the three months ended June
30, 1995.
Insurance and claims increased to 6.8% of revenues for the three months ended
June 30, 1996, from 5.2% of revenues for the three months ended June 30, 1995 as
a result of an increase in the amount of the average loss per accident during
the three months ended June 30, 1996 and the volume of small losses compared to
the three months ended June 30, 1995. On October 1, 1995, management increased
the training requirements of new drivers and has changed the driver pay to
attract more experienced drivers which management believes are less accident
prone. Management continues to review accidents to determine what actions may be
taken to reduce future claims costs.
General supplies and expenses increased to 4.3% of revenues for the three months
ended June 30, 1996 compared to 3.7% of revenues for the three months ended June
30, 1995 as a result of increased costs associated with computer lease,
professional fees and outside consultants partially.
Taxes and licenses increased to 2.3% of revenues for the three months ended June
30, 1996, compared to 2.0% of revenues for the three months ended June 30, 1995,
primarily as a result of increased costs associated with a higher trailer to
tractor ratio in addition to licensing equipment with a higher cost.
Communications and utilities increased to 2.3% of revenues for the three months
ended June 30, 1996, compared to 1.9% of revenues for the three months ended
June 30, 1995, primarily as a result of the Company utilizing "Highway Master"
on board communication systems in a larger portion of its fleet of tractors. The
Company began installation of "Highway Master" systems in June, 1994. In April
1995, all of the tractors were equipped with the on-board system. The costs
associated with the use of the on-board system have been higher than
anticipated. The Company has taken various steps, however, that it believes will
help reduce the ongoing costs of using the on-board communication system during
the second half of 1996. The use of the "Highway Master" system generally
enhances the Company's ability to track loads, service customers and communicate
with and monitor drivers.
<PAGE>
The Company recognized a gain of $246,840, or .7% of revenues for the three
months ended June 30, 1996, compared to a gain of $20,463 for the three months
ended June 30, 1995, as a result of the Company selling 100 of its older
trailers in the second quarter of 1996. The Company anticipates selling 300 more
of its older trailers during the third quarter of 1996 to reduce the trailer to
tractor ratio to attain a more efficient use of assets.
Depreciation and amortization increased to 9.1% of revenues for the three months
ended June 30, 1996, compared to 4.3% of revenues for the three months ended
June 30, 1995, as a result of the majority of the Company's new revenue
equipment being financed with capital leases.
Interest expense increased to 3.5% of revenues for the three months ended June
30, 1996, compared to 1.6% of revenues for the three months ended June 30, 1995
as a result of the majority of the Company's new revenue equipment being
financed with capitalized leases.
As a consequence of the items discussed above, the Company incurred a loss
before provision for income taxes for the three months ended June 30, 1996 of
$1,311,297 compared to income before provision for income taxes of $1,058,912
for the three months ended June 30, 1995.
The Company's effective tax rate (income tax expense divided by income before
income taxes) decreased to zero for the three months ended June 30, 1996,
compared to 6% for the three months ended June 30, 1995, as a result of the
Company not recording any benefit on its pre-tax loss.
Comparison of the Six Months Ended June 30, 1996 to the Six Months Ended
June 30, 1995
Revenues decreased by 4.6% to $74.6 million for the six months ended June 30,
1996 compared to $78.2 million for the six months ended June 30, 1995. Although
the average number of tractors increased to 1,297 for the six months ended
June 30, 1996 compared to 1265 for the six months ended June 30, 1995,
the combination of a decrease in average rates of 1.1% and a decrease in the
average miles per tractor of 8.5% between the two periods resulted in the
overall revenue decrease. Management believes the decrease in average revenue
per total mile and decrease in average miles per tractor was a result of
slower than anticipated economic conditions in the first half of 1996.
Additionally, a shortage of qualified drivers increased the average unseated
tractors in the six months ended June 30, 1996 compared to the six months ended
June 30, 1995.
Operating costs and expenses were 99.8% of revenues for the six months ended
June 30, 1996 compared to 95.8% of revenues for the six months ended June 30,
1995. Operating costs and expenses were adversely affected by the 1.1% reduction
in average revenue per total mile and the 8.5% decrease in utilization as
measured by revenue miles per truck for the six months ended June 30, 1996, as
well as the factors discussed below.
Salaries, wages and benefits increased to 29.5% of revenues for the six months
ended June 30, 1996 compared to 27.4 % for the six months ended June 30, 1995
due primarily from driver pay changes in October 1995 and an increase in the
percent of total miles driven by Company drivers compared to independent
contractors during the two periods. Company miles increased due to a higher rate
of Company tractors to total tractors.
<PAGE>
Purchased transportation decreased to 22.9% of revenue for the six months ended
June 30, 1996 compared to 25.0% for the six months ended June 30, 1995, as a
result of a smaller percent of total miles driven by independent contractors and
a reduction in the rate paid to independent contractors. Independent contractors
are under contract with the company and are responsible for their own salaries,
wages and benefits, fuel, maintenance and depreciation. Independent contractor
costs are classified as purchased transportation expenses.
Fuel and fuel taxes increased to 13.8% of revenues for the six months ended June
30, 1996, compared to 12.8% of revenues for the six months ended June 30, 1995,
as a result of a higher percentage of miles driven with Company tractors and an
increase in fuel costs partially offset with fuel surcharges billed to customers
and fuel purchase contracts. Management expects the cost of fuel to remain high
through the third quarter.
Revenue equipment lease expense decreased to 5.7% of revenue for the six months
ended June 30, 1996 compared to 8.5% of revenues for the six months ended June
30, 1995, primarily as a result of the Company reducing the percentage of its
tractor fleet financed through operating leases to 26.6% for the six months
ended June 30, 1996 compared to 60.3% for the six months ended June 30, 1995.
Maintenance decreased to 4.9% of revenues for the six months ended June 30,
1996, compared to 5.7% of revenues for the six months ended June 30, 1995, as a
result of reduced maintenance cost associated with a newer tractor fleet. The
average age of Company owned tractors decreased to 1.3 years during the six
months ended June 30, 1996 compared to 1.8 years for the six months ended June
30, 1995.
Insurance and claims increased to 7.0% of revenues for the six months ended June
30, 1996, from 4.9% of revenues for the six months ended June 30, 1995 as a
result of an increase in the amount of average loss per accident during the six
months ended June 30, 1996 and the volume of small losses compared to the six
months ended June 30, 1995. On October 1, 1995, Management increased the
training requirements of new drivers and has changed the driver pay to attract
more experienced drivers which management believes are less accident-prone.
Management continues to review accidents to determine what actions may be taken
to reduce future claims costs.
General supplies and maintenance decreased to 3.8% of revenue for the six months
ended June 30, 1996 compared to 3.9% of revenues for the six months ended June
30, 1995 as a result of overall cost savings which were partially offset by
increases in specific areas such as computer lease expense and professional
fees.
Taxes and licenses increased to 2.4% of revenues for the six months ended June
30, 1996 compared to 2.0% of revenues for the six months ended June 30, 1995,
primarily as a result of increased costs associated with a higher
trailer-to-tractor ratio in addition to licensing equipment with a higher cost.
Communications and utilities increased to 2.3% of revenues for the six months
ended June 30, 1996 compared to 1.8% of revenues for the six months ended June
30, 1995, primarily as a result of the Company utilizing "Highway Master" on
board communication system in a larger portion of its fleet of tractors. The
Company began installation of "Highway Master" systems in June 1994. In April
<PAGE>
1995, all of the tractors were equipped with the on-board system. The costs
associated with the use of the on-board system have been higher than
anticipated. The Company has taken various steps, however, that it believes will
help reduce the ongoing costs of using the on-board communication system during
the second half of 1996. The use of "Highway Master" system generally enhances
the Company's ability to track loads, service customers and communicate with
drivers and monitor drivers.
The Company recognized a gain of $1,255,883, or 1.7% of revenues for the six
months ended June 30, 1996 compared to a loss of $14,333 for the six months
ended June 30, 1995, as a result of the Company selling 294 of its older
trailers during the first six months of 1996. The Company anticipates selling
300 more of its older trailers during the third quarter of 1996 to reduce the
trailer-to-tractor ratio and attain a more efficient use of assets.
Depreciation and amortization increased to 9.0% of revenues for the six months
ended June 30, 1996, compared to 3.7% of revenues for the six months ended June
30, 1995, as a result of the majority of the Company's new revenue equipment
being financed with capital leases.
Interest expense increased to 3.6% of revenues for the six months ended June 30,
1996, compared to 2.3% of revenues for the six months ended June 30, 1995 as a
result of the majority of the Company's new revenue equipment being financed
with capital leases. This increase in interest expense was offset by a .8% of
revenue decrease in interest expense compared to the six months ended June 30,
1995, as a result of the Company ceasing to discount its accounts receivable to
a factor following its initial public offering of its common stock in March
1995.
As a consequence of the items discussed above, the Company incurred a loss
before provision for income taxes for the six months ended June 30, 1996 of
$2,448,453, compared to income before provision for income taxes of $1,503,153
for the six months ended June 30, 1995.
The Company's effective tax rate ( income tax expense divided by income before
income taxes) decreased to zero for the six months ended June 30, 1996, compared
to 10% for the six months ended June 30, 1995, as a result of the Company not
recording any benefit on its pretax loss.
Liquidity and Capital Resources
The Company's sources of liquidity have been funds provided by operations,
leases on revenue equipment and revolving lines of credit.
The Company has a credit facility with the Bank of New York for issuance of
letters of credit up to $9.3 million. As of June 30, 1996, the Company had used
$9.3 million of this facility, principally for letters of credit in favor of the
Company's insurance carrier. As outstanding letters of credit issued under this
credit facility are not renewed, the maximum commitment available under this
credit facility will be reduced by the amount of the letters of credit that are
not renewed. In May, 1995 the Company obtained an additional $8.0 million
working capital line of credit which expired on May 12, 1996. Extensions on this
$8.0 million line credit were obtained through August 12, 1996, at which time
the $8.0 million line of credit expired. Effective August 6, 1996 a new $7.0
million line of credit was obtained. The Company anticipates that use of the
line will be primarily for insurance related letters of credit as well as
providing any short term cash requirements. As of June 30, 1996 the Company had
<PAGE>
utilized $3.0 million of the $8.0 million line of credit for insurance related
letters of credit. As of August 12, 1996 the Company has utilized $3.5 million
of the new $7.0 million line of credit for insurance related letters of credit.
Both of the credit facilities in place on June 30, 1996 have loan covenants
which obligate the Company to maintain a required level of profitability and
cash flow. The Bank of New York has amended these covenants for periods through
and including December 31, 1996, and the Company's other lender waived these
requirements through the maturity of the working capital line of credit. The
Company is currently not in compliance with the Bank of New York covenants and
will be seeking additional amendments or waivers which management believes will
be granted. The Company may be required to seek additional amendments or waivers
in the future based on actual operating results. The new $7.0 million line of
credit has no loan covenants, but is secured with accounts receivable.
Net cash provided by operating activities totaled approximately $4.4 million for
the six months ended June 30, 1996. Net cash provided by investing activities
(primarily selling of equipment) amounted to $1.4 million for the six months
ended June 30, 1996. Payments on debt and capitalized lease obligations was $6.4
million for the six months ended June 30, 1996.
The Company expects capital expenditures for the remainder of 1996 to be
approximately $3.0 million primarily for a computer system and software
replacement and upgrade. For the first six months of 1996, the Company acquired
$0.8 million of new equipment. Future expansion of the fleet will be made as
future economic conditions dictate.
Management believes that commitments available under the Company's lines of
credit will be sufficient to meet the Company's capital requirements through
1996. The Company's business is capital intensive and will require the Company
to seek additional debt and possibly equity capital to enable the Company to
maintain a modern fleet. Whether such capital will be available on favorable
terms, or at all, will depend on the Company's future operating results,
prevailing economic and industry conditions and other factors over which the
Company has little or no control.
Fuel is one of the Company's most substantial operating expenses. In order to
reduce the Company's vulnerability to rapid increased in the price of fuel, the
Company enters into purchase contracts with fuel suppliers from time to time for
a portion of its estimated fuel requirements at guaranteed prices. As of June
30, 1996, the Company had entered into various agreements with fuel suppliers to
purchase approximately 48% of its estimated fuel needs through 1996 and 18% of
its fuel needs throught June 1997 at a guaranteed price. Although this
arrangement helps reduce the Company's vulnerability to rapid increases in the
price of fuel, the Company will not benefit from a decrease in the price of fuel
to the extent of its commitment to purchase fuel under these contracts.
Seasonality
In the trucking industry, revenues generally show a seasonal pattern as
customers reduce shipments during and after the winter holiday season and its
attendant weather variations. Operating expenses also tend to be higher during
the cold weather months, primarily due to poorer fuel economy and increased
maintenance costs.
<PAGE>
Inflation
Inflation can be expected to have an impact on the Company's operations. The
effect of inflation has been minimal over the past three years.
This quarterly report on Form 10-Q may be deemed to contain certain
forward-looking statements. These statements are subject to known and unknown
risks and uncertainties, including decreased demand for freight, slower than
anticipated economic conditions, shortages of drivers and such other risks as
are identified and discussed herein and in the Company's filings with the
Securities and Exchange Commission. These known and unknown risks and
uncertainties could cause the Company's actual results in future periods to be
materially different from any future performance suggested herein.
<PAGE>
PART II, OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders
The registrant held its Annual Meeting of Shareholders on May 8, 1996. The
shareholders elected Robert D. Hill and James F. Redfern to the Board of
Directors for three year terms expiring at the annual meeting in 1999. The terms
of office of directors Kenneth R. Norton, Jeffrey L. Theurer, and Charles A.
Lynch also continued after the meeting. The tabulation for each nominee for
office was:
Name Shares Voted For
Robert D. Hill 3,483,154
James. F. Redfern 3,487,154
The shareholders approved an amendment to the registrant's Stock Incentive Plan
to provide for the grant of formula awards to non-employee directors and to
increase the numbers of shares which may be issued under the Stock Incentive
Plan to 370,000 from 170,000 by a vote of 3,074,956 shares for, 435,348 shares
against, 59,300 shares abstained, and 0 broker non-votes.
The shareholders ratified the appointment of Arthur Andersen LLP as independent
public accountants of the registrant by a vote of 3,454,104 shares for, 56,400
shares against, 8,800 shares abstained, and 0 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
PST VANS, INC.
Date: August 14, 1996 By: /s/ Kenneth R. Norton
Kenneth R. Norton
Chief Executive Officer
<PAGE>
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<RECEIVABLES> 17,471,963
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