- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
|X| Amendment No. 1 to annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31,
1997 or
| | 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 its charter)
Utah 0-25506 87-0411704
---- ------- ----------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1901 West 2100 South
Salt Lake City, Utah 84119
--------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (801) 975-2500
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
--------------
Common Stock, $.001 Par Value
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 | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. | |
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on the NASDAQ
National Market System on March 24, 1998 was approximately $12,000,000. Shares
of Common Stock held by each officer and director and by each person who may be
deemed to be an affiliate have been excluded.
As of March 24, 1998, the Registrant had 4,253,527 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The Company's Annual Report on Form 10-K is hereby amended to include
Part III, Items 10 through 13 because the Company's Proxy Statement will not be
filed within the 120 day required by the instructions to Form 10- K.
PART III
Item 10. Directors and Executive Officers
The directors and executive officers of the Company are as follows:
Name Age Position
---- --- --------
Kenneth R. Norton 56 Chairman of the Board, Chief Executive Officer
Robert D. Hill 46 President, Chief Operating Officer and Director
Neil R. Vos 53 Chief Financial Officer, Secretary and Treasurer
Charles A. Lynch 70 Director
James E. Otto 63 Director
James F. Redfern 53 Director
KENNETH R. NORTON, 56, has been Chairman of the Board and Chief
Executive Officer of the Company since January 1990. Mr. Norton's current term
as a director expires in 1998. Mr. Norton has nearly 30 years of experience in
the trucking industry. From 1975 to 1984, Mr. Norton was Chairman and Chief
Executive Officer of Western Express, a truckload carrier. Mr. Norton formed
Interstate Contract Carrier Corporation and served as its Chairman and Chief
Executive Officer until 1975. In 1965, Mr. Norton formed Crete Carrier
Corporation and served as its President and Chief Executive Officer until 1971.
ROBERT D. HILL, 46, has been President and Chief Operating Officer of
the Company since August 1991. From 1989 to 1991, Mr. Hill served as President
of Cherokee Transportation Inc., a truckload carrier. From 1987 to 1989, Mr.
Hill served as Vice President/General Manager of Builders Transport, Inc., a
truckload carrier. From 1983 to 1987, Mr. Hill was Vice President of Operations
and Vice President of National Accounts, Sales and Marketing of Ryder Systems, a
truckload carrier. From 1974 to 1983, Mr. Hill was a Regional Vice President of
Interstate Contract Carrier Corporation, a truckload carrier which was acquired
by Ryder Systems in 1983. Mr. Hill has served as a director of the Company since
September 1991 and his current term ends in 1999.
NEIL R. VOS, 53, has been Chief Financial Officer, Secretary and
Treasurer of the Company since December, 1996, having previously served as Vice
President of Fuel and Maintenance from September 1995. From 1993 to 1995, Mr.
Vos served as an accounting manager for a large federal government agency. From
1989 to 1993, Mr. Vos operated his own accounting firm. From 1986 to 1989, Mr.
Vos served as Executive Vice President and Chief Operating Officer of Monchec,
Inc. a company operating a chain of retail financial services outlets. From 1978
to 1986, Mr. Vos served as Chief Financial Officer for Intermountain
Laboratories, Inc., a publicly-owned clinical laboratory company. Mr. Vos is a
certified public accountant.
CHARLES A. LYNCH, 70, has been a director of the Company since March
1995 and his current term ends in 1998. Mr. Lynch has been the Chairman of Fresh
Choice, Inc., a casual, upscale restaurant chain, since March 1995. In March
1998, Mr. Lynch also became the Chairman and Chief Executive Officer of
Arrowhead Mills, Inc., a manufacturer and supplier of natural and organic food
products. From 1989 to March, 1995, Mr. Lynch served as the Chairman of Market
Value Partners Company, a company that invests equity and management into
underperforming and emerging businesses. Mr. Lynch has also previously served as
Chairman and Chief Executive Officer of DHL Airways, Inc., an express courier,
and as a director of Southern Pacific Transportation Company, Greyhound Lines,
Inc. and Consolidated Freightways. Mr. Lynch is currently a director of
1
<PAGE>
Nordstrom, Inc., a retail department store chain, Fresh Choice, Inc., Madge
Networks, N.V., a supplier of end-to-end switched networking solutions, and
Authentic Specialty Foods, Inc., a manufacturer and distributer of
authentic-style Mexican food products.
JAMES E. OTTO, 63, has been a director of the Company since October
1997 and his current term ends in 2000. From 1960 to 1982, Mr. Otto was
President and Chief Executive Officer of Catered Living, Inc., a chain of
nursing homes which he owned and sold in 1982. Since 1982, Mr Otto has been
actively managing his personal investment portfolio.
JAMES F. REDFERN, 53, has been a litigation consultant to Sullivan &
Cromwell, a law firm, since August 1993. From 1990 to August 1993, Mr. Redfern
served as an independent consultant to various banks and corporations. From 1983
to 1990, Mr. Redfern served as Executive Vice President, Senior Credit Officer
and Chairman of the Credit Committee at Carteret Savings Bank, F.A. Mr. Redfern
has served as a director of the Company since March 1995 and his current term
ends in 1999.
Officers of the Company serve at the discretion of the Board of
Directors. Messrs. Norton and Hill were executive officers of the Company when
the Company filed for reorganization under Chapter 11 of the United States
Bankruptcy Code in June 1993. A Plan of Reorganization for the Company was
subsequently confirmed in February 1994.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers and directors are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, there was one late filing of a Form 3 by James E. Otto at the time he
was elected to the Board of Directors in October 1997.
2
<PAGE>
Item 11. Executive Compensation
Summary Compensation Table
The following table provides certain summary information concerning the
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the other executive officers whose salary
and bonus exceeded $100,000 (collectively, the "Named Executive Officers") for
the years ended December 31, 1997 , 1996 and 1995.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------- -------------------------------
Options All Other
Name and Position Year Salary Bonus(1) Granted Compensation
- --------------------------------------- ------- ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Kenneth R. Norton...................... 1997 $ 281,600 $ 40,000 50,000 0
Chairman and Chief Executive 1996 281,500 0 0 0
Officer 1995 280,400 24,375 0 0
Robert D. Hill......................... 1997 211,215 40,000 32,500 0
President and Chief Operating 1996 206,050 29,615 0 0
Officer 1995 204,231 24,375 67,500 (2) 0
0
Neil R. Vos 1997 80,461 20,000 32,500 0
Chief Financial Officer, Secretary 1996 63,933 0 0 0
and Treasurer 1995 22,208 (3) 0 0 0
</TABLE>
- ---------------------------
(1) The Company maintains an incentive bonus program for its executive
officers. Under this program, executive officers earn quarterly bonuses
based on the operating performance of the Company.
(2) Includes 42,500 Options granted March 7, 1995 and repriced on October
30, 1995.
(3) Mr. Vos became employed by the Company in September 1995.
3
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information with respect to individual
grants of stock options made by the Company to the Named Executive Officers
during the year ended December 31, 1997. The Company did not grant any stock
appreciation rights during the year ended December 31, 1997.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Percent of Total Option Term
Options Granted --------------------------
Options to Employees in Exercise Expiration
Name Granted(1) Fiscal Year Price Date 5% 10%
- ---------------------------- ---------- --------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth R. Norton........... 50,000 21.5% $3.50 07/21/07 $110,000 $279,000
Robert D. Hill.............. 32,500 14.0 3.50 07/21/07 71,500 181,350
Neil R. Vos................. 32,500 14.0 3.50 07/21/07 71,500 181,350
</TABLE>
- ---------------------------
(1) All options granted qualify as incentive stock options, under the
Internal Revenue Code. All options become exercisable in five equal
annual installments beginning one year from the date of grant. In
addition, all options become exercisable upon a change in control.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
The following table sets forth information with respect to the
aggregate value of unexercised options to acquire shares of the Common Stock
held by the Named Executive Officers on December 31, 1997. No options were
exercised by the Named Executive Officers during the year ended December 31,
1997.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options at
at FY-End(#) FY-End($)(2)
------------ ------------
Exercisable(1)/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
<S> <C> <C>
Kenneth R. Norton............................. 0/50,000 $0/$29,700
Robert D. Hill................................ 13,500/54,000 $0/$19,305
Neil R. Vos................................... 0/32,500 $0/$19,305
</TABLE>
- ---------------------------
(1) Includes options exercisable within 60 days of the end of the Company's
fiscal year.
(2) Calculated based on the difference between the exercise price and the
price of a share of the Company's Common Stock on December 31, 1997.
The closing sale price of the Common Stock of the Company on December
31, 1997 was $4.094 as reported on the NASDAQ Stock Market.
Change in Control Agreements
The Company has entered into an agreement with Robert D. Hill, the
Company's President and Chief Operating Officer, which provides that the Company
will pay Mr. Hill a severance payment equal to his current annual base salary
plus the amount of bonus paid to him in the previous year if Mr. Hill's
employment terminates following a change in control of the Company.
4
<PAGE>
Director's Compensation
Each non-employee member of the Board of Directors initially elected to
the Board of Directors prior to 1997 receives an annual fee of $25,000 and each
non-employee member of the Board of Directors initially elected to the Board of
Directors in or after 1997 receives an annual fee of $10,000. Each non-employee
director also receives $1,000 per Board meeting attended, as compensation for
his services. The Company's Incentive Plan provides for the annual grant of
options to non-employee members of the Board of Directors of 2,000 options each.
No separate compensation is paid for attendance at committee meetings. All
directors are also reimbursed for certain expenses in connection with attendance
at Board and committee meetings.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in 1997 were Charles Lynch,
James Otto and James Redfern, three non-employee directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of March 31, 1998, information with
respect to the Company's Common Stock owned beneficially by each director, by
each Named Executive Officer, by all directors and executive officers as a group
and by each person known by the Company to be a beneficial owner of more than 5%
of the outstanding Common Stock of the Company. Unless otherwise noted, each
person named has sole voting and investment power with respect to the shares
indicated.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name and Address of Beneficial Owners Beneficial Ownership Class (1)
- --------------------------------------------------------------------- ----------------------- --------------
<S> <C> <C> <C>
Kenneth R. Norton (2)................................................ 1,446,773(3) 34.0%
1901 West 2100 South
Salt Lake City, Utah 84119
The Bank of New York................................................. 774,000 18.2%
One Wall Street
New York, New York 10286
Robert D. Hill (2)................................................... 51,794(4) 1.2%
Neil R. Vos ......................................................... 2,160 *
Charles A. Lynch (2)................................................. 4,334(5) *
James F. Redfern (2)................................................. 6,334(6) *
James E. Otto (2).................................................... 5,100 *
All directors and Executive Officers as a group (6 persons) ......... 1,516,495(7) 35.3%
</TABLE>
- ----------------------
* Less than 1%.
(1) Based on total outstanding shares of 4,253,527 as of March 31, 1998.
(2) Director.
(3) Includes 7,450 shares held as Custodian for Mr. Norton's grandson and
10,000 shares owned by Mr. Norton's spouse.
5
<PAGE>
(4) Includes 35,500 shares issuable upon exercise of presently exercisable
options.
(5) Includes 2,000 shares owned by Mr. Lynch's spouse and 1,334 shares
issuable upon exercise of presently exercisable options..
(6) Includes 1,334 shares issuable upon exercise of presently exercisable
options.
(7) Includes 38,168 shares issuable upon exercise of presently exercisable
options.
Item 13. Certain Relationships and Related Transactions
The information set forth herein briefly describes transactions between
the Company and certain affiliated parties. The Company believes that the terms
of the following transactions are comparable to the terms that could be obtained
from an unaffiliated third party for similar transactions.
In connection with the Company's Plan of Reorganization, the Company
entered into a Revolving Loan Agreement (the "Loan Agreement") with The Bank of
New York, an 18% shareholder of the Company, on March 7, 1994, pursuant to which
The Bank of New York agreed to extend credit to the Company by issuing letters
of credit for the account of the Company up to the maximum aggregate principal
amount of $8.75 million. As of December 31, 1997, letters of credit totaling
$4.83 million were outstanding under the Loan Agreement. Under the terms of the
Loan Agreement, the Company must pay a 1% annual fee on the undrawn letters of
credit. During 1997, the Company paid approximately $73,821 in fees under the
Loan Agreement.
6
<PAGE>
The Company's Annual Report on Form 10-K is further amended to amend
Item 8 to correct a couple of typographical errors that occurred in the
footnotes during the Edgarizing process.
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants.....................................F-2
Balance Sheets at December 31, 1997 and 1996.................................F-3
Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995................................................................F-4
Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 1997, 1996 and 1995.............................................F-5
Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995................................................................F-6
Notes to Financial Statements................................................F-7
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To PST Vans, Inc.:
We have audited the accompanying balance sheets of PST Vans, Inc., (a
Utah corporation) as of December 31, 1997 and 1996, and the related statements
of operations, stockholders' equity and cash flows for each of the three years
in the period ended December 31, 1997. These financial statements are the
responsibility of the Company'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 financial position of PST Vans, Inc. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
February 11, 1998 (except with respect
to matters discussed in the first paragraph
of Note 4 as to which the date is
March 31, 1998.)
F-2
<PAGE>
<TABLE>
PST VANS, INC.
BALANCE SHEETS
ASSETS
<CAPTION>
December 31,
----------------------------------------
1997 1996
------------------- ------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,282,255 $ 4,098,361
Receivables, net of allowance for doubtful
accounts of $908,000 and $806,000, respectively 17,087,038 14,607,292
Deposits 343,867 353,437
Prepaid expenses and other 3,097,538 3,258,669
Inventories and operating supplies 726,853 689,875
--------------- --------------
Total current assets 22,537,551 23,007,634
--------------- --------------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and amortization of
$26,399,259 and $23,282,064, respectively 48,265,324 58,116,763
--------------- --------------
GOODWILL, net of accumulated amortization
of $3,568,297 and $3,296,334, respectively 8,340,187 8,612,150
--------------- ---------------
OTHER ASSETS, net 332,632 523,539
--------------- --------------
$ 79,475,694 $ 90,260,086
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving Line of Credit $ 4,762,493 $ ---
Current portion of long-term obligations 3,037,018 1,388,581
Current portion of capitalized lease obligations 23,599,973 18,708,614
Accounts payable 7,306,459 4,140,985
Current portion of accrued claims payable 3,990,958 5,456,316
Accrued liabilities 3,271,718 2,469,915
--------------- --------------
Total current liabilities 45,968,619 32,164,411
-------------- -------------
LONG-TERM ACCRUED CLAIMS PAYABLE,
net of current portion 1,257,429 1,429,227
---------------- --------------
LONG-TERM OBLIGATIONS, net of current portion 3,985,909 1,986,214
---------------- --------------
CAPITALIZED LEASE OBLIGATIONS, net of
current portion 10,752,721 32,907,995
--------------- --------------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, 5,000,000 shares
authorized, none issued --- ---
Common stock, $.001 par value, 20,000,000 shares
authorized, 4,239,945 and 4,217,157 shares issued,
respectively 4,240 4,217
Additional paid-in capital 49,812,539 49,759,238
Accumulated deficit (32,305,763) (27,991,216)
--------------- --------------
Total stockholders' equity 17,511,016 21,772,239
--------------- --------------
$ 79,475,694 $ 90,260,086
============== ==============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
<TABLE>
PST VANS, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------
1997 1996 1995
-------------------------------------------------------
<S> <C> <C> <C>
REVENUES $143,737,430 $147,418,904 $164,794,366
------------- -------------- --------------
COSTS AND EXPENSES:
Salaries, wages and benefits 44,360,224 43,847,942 45,208,090
Purchased transportation 25,578,176 32,393,331 41,280,895
Fuel and fuel taxes 22,532,582 20,555,431 21,245,011
Revenue equipment lease expense 7,576,456 8,021,676 12,224,340
Maintenance 8,662,947 7,491,155 8,822,454
Insurance and claims 11,384,315 11,942,008 9,315,173
General supplies and expenses 5,930,058 5,558,052 5,995,821
Taxes and licenses 2,775,614 3,309,478 3,445,040
Communications and utilities 2,801,757 3,429,699 3,561,698
Depreciation and amortization 11,910,563 13,174,606 8,803,585
(Gain) loss on sale of equipment 12,875 (1,613,842) (150,940)
Amortization of goodwill 271,963 271,963 271,963
------------- -------------- --------------
143,797,530 148,381,499 160,023,130
------------- -------------- --------------
OPERATING INCOME (LOSS) ( 60,100) (962,595) 4,771,236
------------- -------------- --------------
OTHER INCOME (EXPENSE):
Interest expense (4,359,888) (5,080,202) (4,283,463)
Other, net 105,441 182,032 147,408
------------- -------------- --------------
(4,254,447) (4,898,170) (4,136,055)
------------- -------------- --------------
Income (loss) before provision for
income taxes (4,314,547) (5,860,765) 635,181
PROVISION FOR INCOME TAXES --- --- 251,532
------------- -------------- --------------
NET INCOME (LOSS) $ (4,314,547) $ (5,860,765) $ 383,649
============== ============== ===============
NET INCOME (LOSS) PER
COMMON SHARE - BASIC AND DILUTED $ (1.02) $ (1.39) $ 0.10
============== ============== ===============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC 4,233,467 4,212,211 3,887,528
============== ============== ===============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-DILUTED 4,233,467 4,212,211 3,949,526
============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PST VANS, INC.
<TABLE>
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
----- ------- ------- ------
<S> <C> <C> <C> <C>
BALANCE,
December 31, 1994 $ 2,600 $ 27,984,629 $(22,514,100) $ 5,473,129
Sale of 1,600,000 shares
of common stock in
connection with initial
public offering, net 1,600 21,633,753 -- 21,635,353
Issuance of 9,409 shares of
common stock as satis-
faction of $112,903
general unsecured claims 9 112,894 -- 112,903
Net income -- -- 383,649 383,649
------------ ------------ ------------ ------------
BALANCE,
December 31, 1995 4,209 49,731,276 (22,130,451) 27,605,034
Sale of 7,748 shares
of common stock to
employees 8 27,962 -- 27,970
Net loss -- -- (5,860,765) (5,860,765)
------------ ------------ ------------ ------------
BALANCE,
December 31, 1996 4,217 49,759,238 (27,991,216) 21,772,239
Sale of common stock
to employees 23 53,301 -- 53,324
Net loss -- -- (4,314,547) (4,314,547)
------------ ------------ ------------ ------------
BALANCE,
December 31, 1997 $ 4,240 $ 49,812,539 $(32,305,763) $ 17,511,016
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
PST VANS, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------
1997 1996 1995
--------------- -------------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (4,314,547) $ (5,860,765) $ 383,649
--------------- -------------- ------------
Adjustments to reconcile net (loss) income to net
cash provided by operating activities -
Depreciation and amortization 11,910,563 13,174,605 8,803,585
Provision for losses on accounts receivable 936,697 1,280,634 1,097,890
Amortization of goodwill 271,963 271,963 271,963
(Gain) loss on sale of equipment 12,875 (1,613,842) (150,940)
(Increase) decrease in receivables (3,416,443) 347,648 (1,722,103)
Decrease in deposits 9,570 632,515 2,876,942
(Increase) decrease in prepaid expenses and other 161,132 830,326 (1,361,156)
Increase in inventories and operating supplies (36,978) (47,145) (77,773)
Decrease in other assets, net 190,907 17,823 2,265,931
Increase (decrease) in accounts payable 3,165,474 (368,849) (285,119)
Increase (decrease) in accrued claims payable (1,637,156) 1,148,468 717,283
Increase (decrease) in accrued liabilities 801,808 (786,981) (1,525,566)
--------------- -------------- ------------
Total adjustments 12,370,412 14,887,165 10,910,937
--------------- -------------- ------------
Net cash flows provided by operating activities 8,055,865 9,026,400 11,294,586
--------------- -------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 3,194,556 4,323,495 1,163,436
Acquisition of property and equipment (5,349,216) (988,590) (9,480,079)
--------------- -------------- ------------
Net cash flows provided by (used in) investing activities (2,154,660) 3,334,905 (8,316,643)
--------------- -------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit, net 4,762,493 -- --
Principal payments on capitalized lease obligations (11,568,432) (10,774,663) (6,478,232)
Principal payments on long-term obligations (2,039,296) (1,766,232) (2,234,107)
Proceeds from sale of common stock to employees 53,324 27,970 --
Proceeds from sale of common stock, net -- -- 21,635,353
Purchase of accounts receivable from factor -- -- (9,063,711)
Decrease in advances from factor -- -- (5,336,289)
Proceeds from long-term obligations 74,600 -- 1,983,824
--------------- -------------- ------------
Net cash flows (used in) provided by financing activities (8,717,311) (12,512,925) 506,838
--------------- -------------- ------------
NET INCREASE (DECREASE) IN CASH (2,816,106) (151,620) 3,484,781
CASH AT BEGINNING OF YEAR 4,098,361 4,249,981 765,200
--------------- -------------- ------------
CASH AT END OF YEAR $ 1,282,255 $ 4,098,361 $ 4,249,981
=============== ============== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for -
Interest $ 4,438,378 $ 5,115,442 $ 4,106,793
Income taxes 31,040 90,659 1,691,615
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through capitalized lease obligations -- -- 51,475,706
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PST VANS, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Nature of Business
PST Vans, Inc. ("PST") is a nationwide common motor carrier with 48-state
general commodity and contract operating authorities. PST provides dry van
truckload services focused on serving three markets in the United States;
transcontinental, intrawest and midwest-southeast. PST transports a wide variety
of freight, much of which is time sensitive, including paper products, retail
products, non-perishable food products, tires and electronic equipment.
Reorganization Under Chapter 11
On June 2, 1993, PST filed a voluntary petition in the United States Bankruptcy
Court for the District of Utah to reorganize under Chapter 11 of the United
States Bankruptcy Code. During the period from June 2, 1993 to March 7, 1994,
the Company operated as a debtor-in-possession under the supervision of the
Bankruptcy Court. As of December 31, 1997 and 1996, approximately $ 198,000 and
$ 334,000, respectively, of the estimated liabilities subject to compromise
remain outstanding and are included in long-term obligations. All other amounts
subject to compromise have been converted to equity, paid or forgiven.
The Plan of Reorganization (the" Plan") required the Company to pay any
remaining portion of general unsecured claims in the event of an initial public
offering (IPO) within the five year period subsequent to January 1, 1994. The
Plan allowed for each unsecured creditor to elect to: 1) receive cash equal to
the amount of the unpaid balance of its unsecured claim from the proceeds of the
IPO, or 2) use the unpaid balance of its unsecured claim to subscribe to stock
to be issued pursuant to the IPO, which stock was to be issued at a 20 percent
discount from the initial offering price. In connection with the IPO, the
Company paid approximately $1,150,000 to general unsecured creditors and issued
9,409 shares of common stock to its Chief Executive Officer and significant
stockholder.
(2) Summary of Significant Accounting Policies
Revenue Recognition
Revenue is recognized as services are performed. The Company allocates revenue
between reporting periods based on relative transit time in each reporting
period and recognizes direct expenses as incurred.
Receivables and Advances from Factor
Prior to the IPO of the Company's common stock in March 1995, PST sold and
factored a significant portion of its trade accounts receivable with a finance
company. The terms of the factoring agreement allowed for the sale of accounts
both with and without recourse depending upon the customer. Until March 31,
1995, substantially all of the Company's receivables were sold to the finance
company. The finance company also provided advances to the Company against
freight bills for which documentation was incomplete. As the Company supplied
all required documentation to the finance company, the completed freight bills
were sold.
F-7
<PAGE>
Deposits and Other Assets, net
PST is required to keep certain amounts on deposit with various companies
related to insurance, fuel purchases and certain leasing agreements. The Company
had approximately $344,000 and $303,000 in deposits with insurance carriers at
December 31, 1997 and 1996, respectively and $50,000 with lessors and fuel
vendors at December 31, 1996.
Inventories and Operating Supplies
Inventories consist primarily of tires, fuel and maintenance parts for revenue
equipment. Inventories are stated at the lower of first-in, first-out (FIFO)
cost or market value.
Property and Equipment
Property and equipment are recorded at cost and depreciated or amortized based
on the straight-line method over their estimated useful economic lives, taking
into consideration salvage values for purchased property and residual values for
equipment held under capital leases. Leasehold improvements are amortized over
the terms of the respective leases or the estimated economic useful lives of the
assets, whichever is shorter.
Expenditures for routine maintenance and repairs are charged to operating
expense as incurred. Major overhauls and betterments are capitalized and
depreciated over their estimated economic useful lives. Tires purchased as part
of revenue equipment are capitalized as a cost of equipment. Replacement tires
are expensed when placed in service. Upon the disposal of property and
equipment, the cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in the determination of income or loss.
Property and equipment consists of the following:
<TABLE>
<CAPTION>
Est. Useful
Lives (Years) 1997 1996
------------- ------------ ------------
<S> <C> <C>
Land $ 1,182,421 $ 1,182,421
Revenue equipment 2-10 66,443,716 73,453,974
Buildings and improvements 5-30 3,546,529 3,477,645
Furniture and fixtures 5-10 2,160,823 1,953,389
Other equipment 3-5 1,331,094 1,331,398
------------ ------------
74,664,583 81,398,827
Less Accumulated depreciation and amortization (26,399,259) (23,282,064)
------------ ------------
$48,265,324 $58,116,763
============ ===========
</TABLE>
Goodwill
Goodwill is being amortized on a straight line basis over forty years. The
Company continually evaluates whether events and circumstances have occurred
that indicate the remaining balance may not be recoverable. When factors
indicate goodwill should be evaluated for possible impairment, the Company uses
an estimate of the discounted future cash flows over the life of the goodwill
and comparable market information in measuring whether the amount is
recoverable.
Income Taxes
The Company recognizes a liability or asset for the deferred tax consequences of
all temporary differences between the tax bases of assets or liabilities and
their reported amounts in the financial statements. These temporary differences
will result in taxable or deductible amounts in future years when the reported
amounts of the assets or liabilities are recovered or settled. The deferred tax
assets are reviewed for recoverability and valuation allowances are provided as
necessary.
F-8
<PAGE>
Insurance Coverage and Accrued Claims Payable
The Company maintains insurance for losses related to public liability, property
damage, cargo and worker's compensation claims in amounts it considers
sufficient. Nevertheless, the Company could be adversely affected if it incurred
a liability as a result of claims in excess of its policy limits or a
significant volume of claims below its deductible limits. The Company maintains
loss prevention programs in an effort to minimize this risk.
The Company estimates and accrues a liability for its share of ultimate
settlements using all available information including the services of a third
party insurance risk claims administrator to assist in establishing reserve
levels for each occurrence based on the facts and circumstances of the
occurrence coupled with the Company's past history of such claims. The Company
accrues for worker's compensation and automobile liabilities when reported,
typically the same day as the occurrence. Additionally, the Company accrues an
estimated liability for incurred but not reported claims. Expense depends upon
actual loss experience and changes in estimates of settlement amounts for open
claims which have not been fully resolved. The Company provides for adverse loss
developments in the period when new information so dictates. The amounts the
Company will ultimately pay on its claims outstanding as of December 31, 1997
could differ materially in the near term from amounts accrued in the
accompanying December 31, 1997 balance sheet.
Based upon historical and projected trends in claims payments, the Company has
classified the claims payable in current and long term components in the
accompanying balance sheet.
Net Income (Loss) Per Common Share
Basic net income (loss) per common share ("Basic EPS") excludes dilution and is
computed by dividing net income (loss) by the weighted average number of common
shares outstanding during the year. Diluted net income (loss) per common share
("Diluted EPS") reflects the potential dilution that could occur if stock
options or other common stock equivalent were exercised or converted into common
stock. The computation of Diluted EPS does not assume exercise or conversion of
securities that would have an anti-dilutive effect on net income (loss) per
common share. In periods where losses are recorded, common stock equivalents
would decrease the net loss per common share and are therefore not considered in
the calculation of weighted average common shares outstanding for Diluted EPS.
Net income (loss) per common share amounts and share data have been restated for
all years presented in the accompanying financial statements to reflect Basic
and Diluted EPS.
The following is a reconciliation of the numerator and denominator of Basic EPS
to the numerator and denominator of Diluted EPS for all years presented in the
accompanying financial statements
<TABLE>
Net Income (Loss) Shares Per Share
(Numerator) (Denominator) Amount
------------- -------------- ----------------
<S> <C> <C> <C>
Year Ended December 31, 1997
Basic EPS $ (4,314,547) 4,233,467 $ (1.02)
Effect of Stock Options -- -- --
------------- -------------- ----------------
Diluted EPS $ (4,314,547) 4,233,467 $ (1.02)
============= ============== ================
Year Ended December 31, 1996
Basic EPS $ (5,860,765) 4,212,211 $ (1.39)
Effect of Stock Options -- -- --
------------- -------------- ----------------
Diluted EPS $ (5,860,765) 4,212,211 $ (1.39)
============= ============== ================
Year Ended December 31, 1995
Balance EPS $ 383,649 3,887,528 $ .10
Effect of Stock Options -- 61,998 --
------------- -------------- ----------------
Diluted EPS $ 383,649 3,949,526 $ .10
============= ============== ================
</TABLE>
F-9
<PAGE>
As of December 31, 1997, 1996, and 1995, there were outstanding options to
purchase 340,000, 111,000, and 99,002 shares of common stock, respectively, that
were not included in the computation of Diluted EPS because the options'
exercise prices were greater than the average market price of the common shares
or because their inclusion would have been anti-dilutive.
Pervasiveness of Estimates
The preparation of 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 period.
Actual results could differ from those estimates.
Recent Accounting Pronouncement
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments for an
Enterprise and Related Information". This statement establishes new standards
for public companies to report information about operating segments, products
and services, geographic areas and major customers. This statement is effective
for periods beginning after December 15, 1997.
(4) Revolving Loan Agreements
The Bank of New York
On March 7, 1994, the Company signed a $9,500,000 Revolving Loan Agreement (the
"Agreement") with The Bank of New York. The Agreement contains a letter of
credit facility. The maximum principal amount of outstanding advances under the
Agreement cannot exceed the lesser of (1) $9,500,000 less the aggregate amount
outstanding with respect to letters of credit (whether drawn or undrawn), or (2)
$1,000,000. On March 21, 1997, the Agreement was amended such that certain
financial covenants were deleted. Additionally, the amendment changed the
expiration date to December 31, 1997, and required that all remaining letters of
credit be terminated according to a stipulated schedule, but no later than the
expiration of the Agreement. On March 31, 1998, the agreement was extended
effective December 31, 1997, to May 15, 1998. As of December 31, 1997, letters
of credit totaling $4,830,000 were outstanding under the Agreement. As
outstanding letters of credit issued under this credit facility expire, the
maximum commitment available under this credit facility will be reduced by the
amount of the expiring letters of credit. The amended Agreement requires the
Company to maintain specified levels of tangible net worth through the
expiration of the Agreement.
Congress Financial Corporation (Northwest)
The Company has an $11,500,000 Loan and Security Agreement (the "Congress
Agreement") with Congress Financial Corporation (Northwest). The Congress
Agreement contains a letter of credit facility supporting letters of credit up
to $7,000,000 and a revolving loan facility that is secured by eligible accounts
receivable. The letter of credit facility requires the Company to maintain a
pledged certificate of deposit of $1,000,000 for letters of credit outstanding
up to $3,500,000, unless the Company allows its cash receipts to flow through a
bank account designated by the Congress Agreement. The Congress Agreement
expires August 6, 1999. As of December 31, 1997, the balance under the line of
credit was $ 4,762,493 and letters of credit totaling $5,616,000 were
outstanding, leaving a balance available to the Company of $ 1,121,507 under the
Congress Agreement. Additionally, the Congress Agreement restricts the payment
of dividends.
F-10
<PAGE>
(5) Long-Term Obligations
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Notes payable to finance companies, interest at the "1- month" commercial paper
rate plus 3.8 percent (9.29 percent at December 31, 1997), payable in monthly
installments of $134,220 through November 1999, secured by revenue equipment $ 2,899,950 $ ---
Notes payable to a finance company, interest at 9.5 percent, payable in monthly
installments of $249,849 through January 2000, secured by revenue equipment 2,250,781 ---
Notes payable to finance companies, interest rates ranging from 8 to 8.05
percent, payable in monthly installments ranging fro $10,285 to $51,218 through
December 2003, secured by revenue equipment 1,357,767 1,844,230
Payables to tax creditors, interest at applicable statutory rates, due in
monthly principle installments of $11,576 through 2000 197,916 258,910
Notes payable to a bank, interest at 9 percent, payable in monthly installments
of $3,473 through March 2000,
secured by revenue equipment 42,296 ---
Mortgage payable to a bank, paid in full in January 1997 --- 829,073
Other 274,217 442,582
----------- -----------
7,022,927 3,374,795
Less Current portion (3,037,018) (1,388,581)
----------- -----------
$ 3,985,909 $ 1,986,214
=========== ===========
</TABLE>
As of December 31, 1997, maturities of long-term obligations are as follows:
Year Ending December 31:
- ------------------------
1998 3,037,018
1999 2,793,133
2000 217,594
2001 202,303
2002 219,204
Thereafter 553,675
----------
$7,022,927
==========
F-11
<PAGE>
(6) Income Taxes
The components of deferred taxes are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 412,279 $ 319,359
Accrued claims payable 1,828,806 1,889,956
General business credit carry forward 574,147 574,147
Workers compensation accrual 290,153 204,359
Alternative minimum tax credit carry forward 456,984 456,984
Depreciation and leases --- 422,001
Net operating loss carry forward 3,385,750 654,967
Other 256,999 291,808
---------------- ---------------
Total deferred tax assets 7,205,118 4,813,581
Valuation allowance (6,218,822) (4,689,624)
---------------- ---------------
Deferred assets, net of
Valuation allowance 986,296 123,957
Deferred taxability:
Depreciation and leases (862,339) ---
---------------- ---------------
Net deferred tax assets $ 123,957 $ 123,957
================ ===============
</TABLE>
Management believes that, based upon the lack of cumulative profits in the
previous three years, sufficient uncertainty exists regarding the realizability
of the deferred tax asset such that a valuation allowance has been recorded.
Accordingly, the deferred tax assets have been reduced by an approximately
$6,219,000 valuation allowance at December 31, 1997. Realization of the net
deferred tax asset is dependent on generating sufficient taxable income in
future years to support the ability to use these deductions. Although the
realization of the net deferred tax assets are not assured, management believes
that it is more likely than not that all of the net deferred tax assets will be
realized. The amount of the net deferred tax assets considered realizable,
however, could be reduced in the near term based upon changing conditions.
The provision (benefit) for income taxes for the years ended December 31, 1997,
1996, and 1995 consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
Current:
<S> <C> <C> <C>
Federal -- $ (590,588) $ 379,203
State (16,021) (86,582) 110,182
----------- ----------- -----------
(16,021) (677,170) 489,385
----------- ----------- -----------
Deferred:
Federal (1,319,704) (1,292,515) (43,609)
State (193,473) (189,487) (12,671)
Change in valuation allowance 1,529,198 2,159,172 (181,573)
----------- ----------- -----------
$ 16,021 $ 677,170 $ (237,853)
----------- ----------- -----------
$ -- $ -- $ 251,532
=========== =========== ===========
</TABLE>
The Company's effective income tax rate for the years ended December 31, 1997,
1996, and 1995 was different from the statutory federal income tax rate for the
following reasons:
1997 1996 1995
---- ---- ----
Statutory federal income tax rate (35.0) % (35.0)% 35.0%
State income taxes, net of federal benefit (4.6) (4.6) 4.6
Nondeductible items:
Amortization of goodwill 2.5 1.8 17.0
Other 1.7 0.9 11.6
Change in valuation allowance 35.4 36.8 (28.6)
-------- ------- -------
Effective income tax rate --- % ---- % 39.6%
======== ======= =======
F-12
<PAGE>
The Company has general business credit and alternative minimum tax credit carry
forwards at December 31, 1997, of $574,147 and $456,984, respectively. For
income tax purposes, the Company had approximately $3,385,750 of net operating
loss carry forward at December 31, 1997. The net operating loss carry forward
expires in 2012.
(7) Commitments and Contingencies
Capitalized Lease Obligation
Certain revenue equipment is leased under capital lease agreements. The
following is a summary of assets held under capital lease agreements:
December 31,
---------------------------
1997 1996
------------ ------------
Revenue equipment $ 53,015,303 $ 67,438,725
Other 1,325,504 1,325,504
------------ ------------
54,340,807 68,764,229
Less Accumulated amortization (21,486,148) (18,910,825)
------------ ------------
$ 32,854,659 $ 49,853,404
============ ============
The following is a schedule by year of future minimum lease payments under the
capital leases together with the value of the net minimum lease payments at
December 31, 1997:
Year Ending December 31:
- ------------------------
1998 $ 25,488,538
1999 2,823,867
2000 2,638,099
2001 2,638,099
2002 4,827,606
---------
Total net minimum lease payments 38,416,209
Less Amount representing interest (4,063,515)
----------
Present value of net premium lease payments 34,352,694
Less Current portion (23,599,973)
-----------
$ 10,752,721
============
Operating Leases
The Company is committed under noncancellable operating leases involving revenue
equipment and facilities. Rent expense for all operating leases was
approximately $7,548,000, $ 8,022,000 and $12,224,000 for the years ended
December 31, 1997, 1996, and 1995, respectively. The following is a schedule of
future lease commitments under noncancellable operating leases at December 31,
1997:
Year Ending December 31:
- ------------------------
1998 $ 4,208,548
1999 2,883,724
2000 1,779,521
2001 992,944
------------
$ 9,864,737
============
The Company's operating lease payments are made in arrears. At December 31, 1997
and 1996, the Company classified approximately $436,000 and $461,000 of accrued
operating lease payments in "Accrued Liabilities" in the accompanying balance
sheets.
Letters of Credit
F-13
<PAGE>
The Company had outstanding letters of credit related to insurance coverage and
certain lease agreements totaling approximately $10,446,000 at December 31,
1997. These letters of credit mature at various times through June 30, 1998.
F-14
<PAGE>
Fuel Purchase Commitments
As of December 31, 1997, the Company had entered into various fuel purchase
contracts totaling approximately $3,600,000. These contracts expire at various
times through December 31, 1998. This arrangement is intended to reduce the
Company's vulnerability to rapid increases in the price of fuel. In the event
fuel prices decline, the Company will not benefit from such reduced pricing to
the extent of its commitment to purchase fuel under these contracts. If fuel
prices decline materially below contracted prices, the Company records the loss
in the period of decline. As of December 31, 1997, contracted fuel prices were
lower than market fuel prices.
Registration Rights
Pursuant to a Registration Rights Agreement, the Company's two largest
stockholders each have the right, subject to certain terms and conditions, to
require the Company to register their shares under the Securities Act of 1933
for offer to sell to the public (including by way of an underwritten offering).
These stockholders each also have the right to join in any registration of
securities of the Company (subject to certain exceptions). The Company is
obligated to pay all expenses (except the stockholders legal counsel,
underwriting discounts, commissions, and transfer taxes, if any) related to
successful offerings requested by a stockholder under this agreement.
Other
The Company is the subject of various legal actions which it considers routine
to its transportation business activities. Management believes, after discussion
with legal counsel, that the ultimate liability of the Company under these
actions will not materially affect the accompanying financial statements.
The Company is subject to various restrictive covenants related to certain
outstanding debt and lease agreements. Certain lenders have reserved the right
to demand payment if, for any reason, they deem themselves insecure. Management
does not believe that these obligations will be called in advance of their
scheduled maturities. If they were to be called, management believes that these
amounts could be refinanced with other commercial lenders without adversely
impacting the Company's results of operations or liquidity.
(8) Stockholders' Equity
Initial Public Offering of Common Stock
In connection with its initial public offering, the Company sold 1,600,000
shares of common stock. The proceeds received from the offering, net of
underwriting commissions and offering costs, totaled approximately $21,635,000.
Employee Stock Purchase Plan
During December 1995, the Company implemented an Employee Stock Purchase Plan
("ESPP") entitling eligible employees of the Company to purchase 80,000 shares
of the Company's common stock through payroll deductions in an amount not to
exceed 15 percent of an employee's base pay. The purchase price of the common
stock is the lesser of 85 percent of the market value of the common stock at the
beginning or end of each of the one year offering periods. Employees can
terminate their participation in an offering under the ESPP at any time prior to
the end of the offering period. The ESPP allows for up to 26,666 shares of
common stock (plus unissued shares from prior years) to be offered in each of
the years ending December 31, 1996, 1997 and 1998. During the year ended
December 31, 1997 and December 31, 1996, employees purchased 22,788 and 7,748
shares, respectively, of common stock under the ESPP.
F-15
<PAGE>
Stock Incentive Plan
During December 1994, the Company adopted the PST Vans, Inc., Stock Incentive
Plan ("SIP") with 170,000 shares of common stock reserved for issuance
thereunder. The number of shares reserved under the plan was subsequently
revised to 370,000 during 1996. The Compensation Committee of the Board of
Directors administers the SIP and has the discretion to determine the employees
and officers who receive awards (incentive stock options, non-qualified stock
options, stock appreciation rights or phantom stock awards) to be granted and
the term, vesting and exercise prices.
The Company accounts for this plan under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for the SIP been
determined consistent with FASB Statement No. 123, however, the Company's net
income and earnings per share would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Net Income As reported $ (4,314,547) $ (5,860,765) $ 383,649
Pro forma (4,519,433) (6,009,888) (286,372)
Basic EPS As reported $ (1.02) $ (1.39) $ 0.10
Pro forma (1.07) (1.43) (0.07)
Diluted EPS As reported $ (1.02) $ (1.39) $ 0.10
Pro forma (1.07) (1.43) (0.07)
</TABLE>
A summary of the Company's SIP at December 31, 1997, 1996 and 1995 and changes
during the years then ended is presented in the table and narrative below.
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- --------------------- ---------------------
Wtd.Avg Wtd.Avg. Wtd.Avg.
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Outstanding at beginning of year 111,000 $ 5.89 161,000 $ 6.19 --- $ ---
Granted 233,000 3.50 14,000 3.63 161,000 6.19
Forfeited (4,000) 6.19 (64,000) 6.16 --- ---
------- -------- --------
Outstanding at end of year 340,000 4.25 111,000 5.89 161,000 6.19
======= ======== ========
Exercisable at end of year 40,000 6.03 33,950 6.06 21,783 6.08
======= ======== ========
Weighted average fair value
of options granted $2.59 $4.43 $4.69
</TABLE>
The 340,000 outstanding shares at the end of 1997 have exercise prices ranging
between $3.38 and $7.38 per share, with a weighted average exercise price of
$4.25. The grants have a prorata vesting period of five years from the grant
date and an expiration date of ten years from grant date. At December 31, 1997,
40,000 options are exercisable at a weighted average exercise price of $6.03.
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1997, 1996 and 1995 respectively: risk-free
interest rates of 6.18%, 6.82% and 6.53%; 0% expected dividend yields; expected
lives of 8.5 years for1997, 1996 and 1995; expected volatility of 65.00%, 56.02%
and 55.70%.
F-16
<PAGE>
(9) Related Party Transactions
In March 1995, the Company issued 8,473 shares of common stock in satisfaction
of outstanding indebtedness in the amount of $101,680 to its Chief Executive
Officer and significant stockholder. This individual was an unsecured creditor
under the Plan and elected to take shares of common stock as payment of such
indebtedness as provided for under the Plan.
(10) Profit Sharing Plan
The Company adopted a Profit Sharing Plan (the "PSP") for the benefit of their
employees. Under the PSP, all employees who have reached the age 20 1/2 and who
have completed at least six months of service with the Company are eligible to
participate. The PSP allows participants to make contributions to the PSP from
their compensation. The Company, at its option, may make additional
contributions to the PSP on behalf of the participants. Under the PSP,
participants are fully vested in their own contributions. Participants become
100 percent vested in any contributions made by the Company after seven years of
service or upon reaching age 65. The Company did not make or accrue any
contributions to the PSP during 1997, 1996, and 1995.
F-17
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its
behalf by the undersigned thereto duly authorized.
PST Vans, Inc.
Date: March __, 1998
By: /s/ Kenneth R. Norton
-----------------------------
Kenneth R. Norton
Chief Executive Officer
Date: March __, 1998
By: /s/ Neil R. Vos
-----------------------------
Neil R. Vos
Chief Financial Officer
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To PST Vans, Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements for each of the three years in the period
ended December 31, 1997 of PST Vans, Inc. (a Utah corporation) included in this
Annual Report on Form 10-K, and have issued our report thereon dated February
11, 1998 (except with respect to matters discussed in the first paragraph of
Note 4 as to which the date is March 31, 1998). Our audit was made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. Schedule II is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
February 11, 1998
S-1
<PAGE>
PST VANS, INC.
<TABLE>
SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(in thousands)
<CAPTION>
Additions
---------------------------
Balance at Charged to Charged Balance
Beginning Costs and to other At End
Description of Period Expenses Accounts(1) Deductions(2) Of Period
----------- -------------- ------------- ------------ ----------------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997:
Allowance for doubtful accounts $ 806 $ 937 $ --- $ (835) $ 908
============== ============= ============ ================= ===========
For the year ended December 31, 1996:
Allowance for doubtful accounts $ 784 $ 1,427 $ --- $ (1,405) $ 806
============== ============ ============ ================= ===========
For the year ended December 31, 1995:
Allowance for doubtful accounts $ 1,579 $ 1,098 $ --- $ (1,893) $ 784
============== ============ ============ ================= ===========
</TABLE>
- ----------------------------
(1) Recoveries on accounts written off.
(2) Accounts written off.
S-2
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10- K, into the Company's previously filed
Registration Statements on Form S-8, File Nos. 33-98960 and 333-12489.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
March 27, 1998
7
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No.1 on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized, on April 30,
1998.
PST VANS, INC.
By: /s/ Neil R. Voss
--------------------------------
Chief Financial Officer
8
