SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-Q
(Mark One)
(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.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-20793
Smithway Motor Xpress Corp.
(Exact name of registrant as specified in its charter)
Nevada 42-1433844
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Rural Route #5
Fort Dodge, Iowa 50501
(515) 576-7418
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)
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 the
filing requirements for at least the past 90 days.
YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (July 24, 1996).
Class A Common Stock, $.01 par value: 3,999,293 shares
Class B Common Stock, $.01 par value: 1,000,000 shares
Exhibit Index is on Page 15.
<PAGE>
<PAGE> 2
PART I
FINANCIAL INFORMATION
PAGE
NUMBER
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets as of December 31, 1995
and June 30, 1996 (unaudited) . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Earnings for the three
and six months ended June 30, 1995 and 1996 (unaudited) . . 5
Condensed Consolidated Statements of Non-Redeemable Common
Stockholders' Equity for the six months ended June 30,
1995 and 1996 (unaudited) . . . . . . . . . . . . . . . . . 6
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1995 and 1996 (unaudited) . . . . . . 7
Notes to Condensed Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 15
<PAGE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
SMITHWAY MOTOR XPRESS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, 1995 June 30, 1996
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . $ 2,976 $ 893
Short-term investment. . . . . . . . . 500 300
Receivables:
Trade . . . . . . . . . . . . . . . . 5,708 8,196
Other . . . . . . . . . . . . . . . . 399 580
Recoverable income taxes . . . . . . 9 -
Inventories . . . . . . . . . . . . . . 416 416
Deposits, primarily with insurers . . . 854 784
Prepaid expenses. . . . . . . . . . . . 921 1,074
Deferred income taxes . . . . . . . . . 176 176
------------- -------------
Total current assets . . . . . . . 11,959 12,419
------------- -------------
Property and equipment:
Land . . . . . . . . . . . . . . . . 481 531
Buildings and improvements . . . . . 3,626 3,755
Tractors . . . . . . . . . . . . . . 20,423 26,600
Trailers. . . . . . . . . . . . . . . 13,852 16,202
Other equipment . . . . . . . . . . . 3,049 3,209
------------- -------------
41,431 50,297
Less accumulated depreciation
and amortization . . . . . . . . . . 13,588 16,599
------------- -------------
Net property and equipment . . . . 27,843 33,698
------------- -------------
Other assets. . . . . . . . . . . . . . 900 1,264
------------- -------------
$ 40,702 $ 47,381
============= =============
See accompanying notes to financial statements.
<PAGE> 4
SMITHWAY MOTOR XPRESS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, 1995 June 30, 1996
(unaudited)
LIABILITIES AND NON-REDEEMABLE COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit . . . . . . . . . . . . $ - $ -
Current maturities of long-term debt . 4,861 5,881
Accounts payable . . . . . . . . . . . 1,972 1,818
Accrued loss reserves. . . . . . . . . 1,370 1,435
Other accrued expenses . . . . . . . . 1,240 1,047
Income taxes payable . . . . . . . . . - 592
Deferred income taxes. . . . . . . . . - -
------------- -------------
Total current liabilities. . . . . 9,443 10,773
Long-term debt, less current maturities 18,358 21,576
Deferred income taxes . . . . . . . . . 3,618 4,079
------------- -------------
Total liabilities. . . . . . . . . 31,419 36,428
------------- -------------
Redeemable Class A common stock . . . . 1,412 2,349
------------- -------------
Non-redeemable common stockholders' equity:
Preferred stock . . . . . . . . . . . -
Common stock:
Class A. . . . . . . . . . . . . . . 18 17
Class B. . . . . . . . . . . . . . . 10 10
Additional paid-in capital. . . . . . - -
Retained earnings . . . . . . . . . . 8,138 8,870
Reacquired shares, at cost. . . . . . (52) (78)
Equity reduction for Employee Stock
Ownership Plan (ESOP) debt . . . . . (243) (215)
------------- ------------
Total non-redeemable common
stockholders' equity. . . . . . . 7,871 8,604
------------- ------------
Commitments. . . . . . . . . . . . . . $ 40,702 $ 47,381
============= ============
See accompanying notes to financial statements
<PAGE>
<PAGE> 5
SMITHWAY MOTOR XPRESS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1995 1996 1995 1996
--------- ---------- ---------- ----------
Operating revenue:
Freight. . . . . . . $ 19,022 $ 23,212 $ 37,279 $ 43,048
Other. . . . . . . . 53 199 68 225
Operating revenue 19,075 23,411 37,347 43,273
Operating expenses:
Purchased
transportation 7,698 9,406 14,963 17,198
Compensation and
employee benefits 4,391 5,035 8,478 9,613
Fuel, supplies,
and maintenance . . 2,294 2,870 4,667 5,669
Insurance and claims 468 402 1,000 771
Taxes and licenses 368 401 743 794
General and
administrative. . . 973 1,005 1,829 1,914
Communications and
utilities . . . . . 158 262 314 481
Depreciation and
amortization. . . . 950 1,506 1,898 3,011
--------- ---------- ---------- -----------
Total operating
expenses . . . . . 17,300 20,887 33,892 39,451
--------- ---------- ---------- -----------
Earnings
from operations. . 1,775 2,524 3,455 3,822
Interest expense (net) (272) (552) (523) (967)
Earnings before
income taxes. . 1,503 1,972 2,932 2,855
Income taxes. . . . 650 818 1,267 1,187
Net earnings. . 853 1,154 1,665 1,668
========= ========== ========== ==========
Net earnings per share $ 0.24 $ 0.33 $ 0.47 $ 0.48
========= ========== ========== ==========
Weighted average common
shares outstanding . 3,528,485 3,499,293 3,532,068 3,500,487
========= ========== ========== ==========
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE> 6
<TABLE>
SMITHWAY MOTOR XPRESS CORP.
CONSOLIDATED STATEMENTS OF NON-REDEEMABLE
COMMON STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
<CAPTION>
Equity Total Non-
Non- reduction redeemable
redeemable Additional for common
common paid-in Retained Reacquired ESOP
stockholders'
stock capital earnings shares debt equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 28 $ - $ 5,167 $ (58) $ (348) $ 4,789
Net earnings . . . . . . . . - - 3,091 - - 3,091
Net contributions
(distributions) . . . . . . - 127 - - - 127
Net undistributed earnings of
"S" corporation and sole
proprietorship at date of
termination . . . . . . . . - 47 (47) - - -
Cancellation of reacquired
common shares . . . . . . . - (58) - 58 - -
Reduction of ESOP debt . . . - - - - 105 105
Change in price of common
shares repurchased which
was provided for in 1994. . - 203 - - - 203
Acquisition of common shares - - - (52) - (52)
Change in value and number of
redeemable common shares. . - (319) (73) - - (392)
------- ------- ------- ------ -------- --------
Balance at December 31, 1995 28 - 8,138 (52) (243) 7,871
Net earnings . . . . . . . . - - 1,668 - - 1,668
Reduction of ESOP debt . . . - - - - 28 28
Acquisition of common shares - - - (26) - (26)
Change in value and number
of redeemable common shares (1) - (936) - - (937)
------- ------- ------- ------ ------- --------
Balance at June 30, 1996 . . 27 - 8,870 (78) (215) 8,604
======= ======= ======== ====== ======= ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 7
<TABLE>
SMITHWAY MOTOR XPRESS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<CAPTION>
Six Months Ended June 30,
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . 1,665 1,668
---------- ---------
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . 1,898 3,011
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . 457 460
Changes in:
Trade receivables . . . . . . . . . . . . . . . . . . . . . . (1,199) (2,488)
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . (727) (193)
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . (420) 601
Other assets and liabilities. . . . . . . . . . . . . . . . . 61 (353)
--------- ---------
Net cash provided by (used in) operating activities . . . . 1,735 2,706
Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . . . . (2,454) (1,737)
Change in other assets . . . . . . . . . . . . . . . . . . . . - (134)
Purchase of short-term investments . . . . . . . . . . . . . . (500) (300)
Proceeds from short-term investments . . . . . . . . . . . . . 500 500
--------- --------
Net cash provided by (used in) investing activities . . . . (2,454) (1,671)
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . (1,711) (2,862)
Borrowings on line of credit agreement . . . . . . . . . . . . 37,469 41,347
Payments on line of credit agreement . . . . . . . . . . . . . (35,783) (41,347)
Payments for reacquired shares . . . . . . . . . . . . . . . . - (26)
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . (55) -
Contributions. . . . . . . . . . . . . . . . . . . . . . . . . 182 -
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (554) (230)
-------- ---------
Net cash (used in) provided by financing activities . . . . (452) (3,118)
-------- ---------
Net increase (decrease) in cash and cash equivalents. . . . (1,171) (2,083)
Cash and cash equivalents at beginning of period. . . . . . . . 1,175 2,976
-------- --------
Cash and cash equivalents at end of period. . . . . . . . . . . 4 893
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 560 1,030
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 1,344 121
======== ========
Supplemental schedules of noncash investing and financing activities:
Notes payable:
Tractors and trailers . . . . . . . . . . . . . . . . . . . . 2,388 7,129
Tires on above:
Prepaid at end of period . . . . . . . . . . . . . . . . . . 49 27
Expensed . . . . . . . . . . . . . . . . . . . . . . . . . . 66 232
Principal payments made by ESOP . . . . . . . . . . . . . . . . 50 28
Liability established for fractional shares to be acquired. . . (203) -
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 8
SMITHWAY MOTOR XPRESS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The consolidated financial statements include the accounts of
Smithway Motor Xpress Corp., a Nevada holding company, its wholly
owned subsidiaries, Smithway Motor Xpress, Inc., Smithway
Transportation Brokerage, Inc., and Wilmar Truck Leasing, Inc., and
Smith Leasing (a sole proprietorship, the net assets of which were
acquired by Smithway Motor Xpress Corp.) (together, the "Company").
All significant intercompany balances and transactions have been
eliminated in consolidation.
The financial statements have been prepared, without audit, in
accordance with generally accepted accounting principles, pursuant
to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the accompanying
financial statements include all adjustments which are necessary for
a fair presentation of the results for the interim periods
presented, such adjustments being of a normal recurring nature.
Certain information and footnote disclosures have been condensed or
omitted pursuant to such rules and regulations. Results of
operations in interim periods are not necessarily indicative of
results to be expected for a full year.
Note 2. Initial Public Offering
On July 2, 1996, the Company sold 1,500,000 shares of its Class A
common stock in an initial public offering (the "IPO"). The shares
were sold at $8.50 per share for a total consideration of
$12,750,000, before underwriting discounts and offering expenses.
In addition, certain shareholders sold 650,000 shares in the IPO.
The proceeds of approximately $11.3 million, net of underwriting
discounts and offering expenses not previously paid, were used to
repay the Company's line of credit and reduce long-term debt.
The redeemable Class A common stock and non-redeemable common
stockholders' equity at June 30, 1996, and the as adjusted balances
as if the IPO had occurred on June 30, 1996, are as follows.
Before the Offering After the Offering
(Dollars in Thousands)
-------------------------------------
Redeemable Class A common stock $2,349 -
================== ===============
Non-redeemable common stockholders'
equity:
Preferred $ - -
Common stock - Class A 17 40
Class B 10 10
Additional paid-in capital - 11,220
Retained earnings 8,870 10,813
Reacquired shares, at cost (78) (78)
Equity reduction for ESOP debt (215) -
------------------ ---------------
Total non-redeemable common $ 8,604 22,005
stockholders' equity ================== ===============<PAGE>
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's fiscal year ends on December 31 of each year. Thus, this
report discusses the second quarter and first six months of the Company's 1995
and 1996 fiscal years, respectively.
The Company closed its initial public offering of 2,150,000 shares of
Class A Common Stock on July 2, 1996. The approximately $11.3 million in net
proceeds to the Company are being used to repay the Company's line of credit
and other secured debt, along with prepayment penalties.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain
items to operating revenue for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
1995 1996 1995 1996
------- ------- ------- -------
Operating revenue. . . . . . 100.0% 100.0% 100.0% 100.0%
Purchased transportation. . 40.4 40.2 40.1 39.7
Compensation and employee
benefits. . . . . . . . . 23.0 21.5 22.7 22.2
Fuel, supplies, and
maintenance . . . . . . . 12.0 12.3 12.5 13.1
Insurance and claims. . . . 2.5 1.7 2.7 1.8
Taxes and licenses. . . . . 1.9 1.7 2.0 1.8
General and administrative. 5.1 4.3 4.9 4.4
Communications and utilities 0.8 1.1 0.8 1.1
Depreciation and amortization 5.0 6.4 5.1 7.0
-------- -------- ------- --------
Total operating expenses . 90.7 89.2 90.7 91.2
-------- -------- ------- --------
Earnings from operations . . 9.3 10.8 9.3 8.8
Interest expense (net) . . . 1.4 2.4 1.4 2.2
Earnings before income taxes 7.9 8.4 7.9 6.6
Income taxes . . . . . . . . 3.4 3.5 3.4 2.7
-------- -------- -------- --------
Net earnings . . . . . . . . 4.5% 4.9% 4.5% 3.9%
======== ======== ======== ========
Comparison of Three Months Ended June 30, 1996,
with Three Months Ended June 30, 1995
Operating revenue increased 22.7%, to $23.4 million during the 1996
quarter from $19.1 million during the 1995 quarter. The increase was
attributable to (i) a 23.5% increase in weighted average tractors, to 731
during the 1996 quarter from 592 during the 1995 quarter; (ii) a $500,000
(33%) increase in revenue from freight brokerage operations, (iii) $156,000 in
revenue from fuel surcharges during the 1996 quarter, and (iv) a decrease in
empty miles to 14.8% in the 1996 quarter from 15.0% during the 1995 quarter.
These factors were offset by a decrease in revenue per loaded mile to $1.38
from $1.39 and lower miles per tractor in the 1996 quarter. Revenue per
tractor (excluding revenue from brokerage operations) decreased 1.0%, to
$2,274 in the 1996 quarter from $2,299 in the 1995 quarter.
<PAGE>
<PAGE> 10
Purchased transportation decreased to 40.2% of revenue during the 1996
quarter from 40.4% in the 1995 quarter, as the Company operated fewer tractors
under operating leases. Additionally, tractors provided by independent
contractors declined slightly as a percentage of the Company's tractor fleet.
Compensation and employee benefits decreased to 21.5% of revenue during the
1996 quarter from 23.0% during the 1995 quarter as a result of lower workers'
compensation costs and a smaller contribution to the Company's Employee Stock
Ownership Plan and Trust.
Fuel, supplies, and maintenance increased to 12.3% of revenue during the
1996 quarter from 12.0% during the 1995 quarter, principally as a result of an
11.2% increase in the price per gallon of fuel and an increase in the
percentage of the Company's fleet being comprised of Company-owned tractors
and trailers.
Insurance and claims decreased to 1.7% of revenue during the 1996 quarter
from 2.5% during the 1995 quarter, primarily as a result of a reduction in
cargo claims and management negotiating a reduction in liability insurance
premiums.
Taxes and licenses decreased slightly to 1.7% of revenue in the 1996
quarter compared with 1.9% in the 1995 quarter, as a result of fewer loads
requiring over-dimension special permits.
General and administrative expenses decreased to 4.3% of revenue during
the 1996 quarter from 5.1% during the 1995 quarter, principally as a result of
a larger percentage of shipments being dispatched by Company employees,
resulting in lower commissions being paid to independent agents in the current
period.
Communications and utilities increased to 1.1% of revenue during the 1996
quarter from .8% during the 1995 quarter, as the Company equipped its tractors
with satellite-based tracking and communication units during the 1995 quarter
and had completed installation in 100% of Company-owned tractors by the
beginning of the 1996 quarter.
Depreciation and amortization increased to 6.4% of revenue during the 1996
quarter from 5.0% during the 1995 quarter. The increase was attributable to a
combination of (i)a newer tractor fleet and the installation of
satellite-based tracking and communication units, which increased the cost of
equipment being depreciated, (ii) an increase in the percentage of the
Company's fleet being comprised of Company-owned equipment, and (iii) a 1.0%
decrease in revenue per tractor.
As a result of the foregoing, the Company's operating ratio decreased to
89.2% during the 1996 quarter from 90.7% during the 1995 quarter.
Interest expense increased to 2.4% of revenue during the 1996 quarter from
1.4% during the 1995 quarter, as higher average debt balances ($27.7 million
in the 1996 quarter compared with $14.3 million in the 1995 quarter) more than
offset lower average interest rates (7.6% in the 1996 period compared with
8.1% in the 1995 period).
The Company's effective tax rates were 41.5% during the 1996 quarter (3.5%
of revenue) and 43.2% during the 1995 quarter (3.4% of revenue).
As a result of the factors described above, net earnings increased to $1.2
million during the 1996 quarter (4.9% of revenue) from $853,000 during the
1995 quarter (4.5% of revenue).
<PAGE>
<PAGE> 11
Comparison of Six Months Ended June 30, 1996,
with Six Months Ended June 30, 1995
Operating revenue increased 15.9%, to $43.3 million during the 1996 fiscal
period from $37.3 million during the 1995 fiscal period. The increase was
attributable to (i) a 25.8% increase in weighted average tractors, to 727
during the 1996 period from 578 during the 1995 period; (ii) a $181,000 (6.4%)
increase in revenue from brokerage operations; and (iii) $156,000 in revenue
from fuel surcharges during the 1996 quarter. These factors were offset by a
decrease in revenue per loaded mile to $1.37 from $1.38, lower miles per
tractor, and an increase in empty miles to 15.8% from 15.2% during the 1996
period. Revenue per tractor per week (excluding revenue from brokerage
operations) decreased 6.1% to $2,198 in the 1996 period from $2,342 in the
1995 period.
Purchased transportation decreased to 39.7% of revenue during the 1996
period from 40.1% in the 1995 period, as the Company operated fewer tractors
under operating leases. Additionally, tractors provided by independent
contractors declined slightly as a percentage of the Company's tractor fleet.
Compensation and employee benefits decreased to 22.2% of revenue during the
1996 period from 22.7% during the 1995 period as a result of lower workers'
compensation costs and a smaller contribution to the Company's Employee Stock
Ownership Plan and Trust.
Fuel, supplies, and maintenance increased to 13.1% of revenue during the
1996 period from 12.5% during the 1995 period, principally as a result of a
9.6% increase in the price per gallon of fuel and an increase in the
percentage of the Company's fleet being comprised of Company-owned tractors
and trailers.
Insurance and claims decreased to 1.8% of revenue during the 1996 period
from 2.7% during the 1995 period, primarily as a result of management s
negotiation of a reduction in insurance premiums.
Taxes and licenses decreased slightly to 1.8% of revenue in the 1996
period compared with 2.0% in the 1995 period. The decrease is attributable to
fewer loads requiring special permits for over-dimension loads.
General and administrative expenses decreased to 4.4% of revenue during
the 1996 period from 4.9% during the 1995 period, principally as a result of a
larger percentage of shipments being dispatched by Company employees,
resulting in lower commissions to independent agents in the current period.
Communications and utilities increased to 1.1% of revenue during the 1996
period from .8% during the 1995 period, as the Company equipped its tractors
with satellite-based tracking and communication units during the 1995 period
and had completed installation in 100% of Company-owned tractors by the
beginning of the 1996 period.
Depreciation and amortization increased to 7.0% of revenue during the 1996
period from 5.1% during the 1995 period. The increase was attributable to a
combination of a newer tractor fleet and the installation of satellite-based
tracking and communication units, which increased the cost of equipment being
depreciated, an increase in the percentage of the Company's fleet being
comprised of Company-owned equipment, and a 5.1% decrease in revenue per
tractor.
As a result of the foregoing, the Company's operating ratio increased to
91.2% during the 1996 period from 90.7% during the 1995 period.
<PAGE> 12
Interest expense increased to 2.2% of revenue during the 1996 period from
1.4% during the 1995 period, as higher average debt balances ($26.4 million in
the 1996 period compared with $13.2 million in the 1995 period) more than
offset lower average interest rates (7.5% in the 1996 period compared with
8.5% in the 1995 period).
The Company's effective tax rates were 41.6% during the 1996 period (2.7%
of revenue) and 43.2% during the 1995 period (3.4% of revenue).
As a result of the factors described above, net earnings were
approximately $1.7 million in each period.
LIQUIDITY AND CAPITAL RESOURCES
The growth of the Company's business has required significant investment
in new revenue equipment that the Company historically has financed with
borrowings under installment notes payable to commercial lending institutions
and equipment manufacturers, borrowings under a $5.75 million line of credit,
cash flow from operations, equipment leases from third-party lessors, proceeds
of the Company's initial public offering, and through the use of independent
contractors. The Company's primary sources of liquidity currently are funds
provided by operations and borrowings under credit agreements with financial
institutions and equipment manufacturers.
The Company's primary source of cash flow from operations is net income
increased by depreciation and deferred income taxes. Net cash (used in)
provided by operating activities was $2.7 million in the 1996 period. The
primary use of funds from operations was to internally finance the increase in
accounts receivable of $2.5 million attributable to the growth of the
business. Customer accounts receivable was $8.2 million for the six months
ended June 30, 1996. The average age of the Company's accounts receivable was
approximately 31.5 days for the six months ended June 30, 1996.
Net cash used in investing activities of $1.7 million in the 1996 period
related primarily to purchases, sales, and trades of revenue equipment. The
Company expects capital expenditures (primarily for revenue equipment and
satellite communications units), net of revenue equipment trade-ins, to be
approximately $2.5 million in the remaining six months of 1996. Such
projected capital expenditures will be funded with cash flow from operations,
borrowings, or operating leases. In prior periods, substantially all revenue
equipment additions were financed through borrowing or leasing transactions
and proceeds of the Company's initial public offering.
Net cash provided by financing activities of $3.1 million for the six
months ended June 30, 1996, consisted primarily of net payments of $2.9
million of principal under the Company's long-term debt agreements and no
borrowings or payments under the Company's line of credit.
The maximum amount available under the Company's primary line of credit at
June 30, 1996, was $5.75 million, on which the Company had no outstanding
balance. The interest rate on the line of credit is .5% above the bank's
prime rate. The line of credit is collateralized by accounts receivable and
inventory. At June 30, 1996, the Company had outstanding long-term debt
(including current maturities) consisting of approximately $27.5 million, most
of which was comprised of obligations for the purchase of revenue equipment.
Interest rates on this debt range from 5.3% to 10.3%, and the principal
amounts mature at various dates through December 2006.
<PAGE>
<PAGE> 13
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No reportable events or material changes occurred during the quarter
for which this report is filed.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT INDEX
NUMBER DESCRIPTION
3.1* Articles of Incorporation.
3.2* Bylaws.
4.1* Articles of Incorporation.
4.2* Bylaws.
10.1* OmniTRACS(Trademark) Contract dated January 5, 1995, between
Qualcomm, Incorporated and Smithway Motor Xpress, Inc., an Iowa
corporation, for communications equipment and services.
10.2* Outside Director Stock Option Plan dated March 1, 1995.
10.3* Incentive Stock Plan, adopted March 1, 1995.
10.4* 401(k) Plan, adopted August 14, 1992, as amended.
10.5* Employee Stock Ownership Plan and Trust adopted January 1, 1986, as
amended.<PAGE>
<PAGE> 14
NUMBER DESCRIPTION
10.6* Letter Agreement dated November 29, 1994, between Christenberry
Collet & Co. and Smithway Motor Xpress, Inc., an Iowa corporation,
for communications equipments and services.
10.7* Memorandum of arrangement between Ray Steward and Smithway Motor
Xpress, Inc., an Iowa corporation, concerning Spectrum software.
10.8* Voting Trust Agreement dated March 1, 1995, among William G. and
Marlys L. Smith and Melissa Sue Osterberg, as Trustee.
10.9* Exchange Agreement dated March 1, 1995, among William G. and Marlys
L. Smith, William G. Smith d/b/a Smith Leasing, G. Larry Owens,
Smithway Motor Xpress, Inc. Employee Stock Ownership Plan and Trust,
and Smithway Motor Xpress Corp., a Nevada corporation.
10.10* Form of Agency Agreement between Smithway Motor Xpress, Inc. and its
independent commission agents.
10.11* License Agreement dated November 29, 1993, between Smithway Motor
Xpress, Inc. and Rand McNally - TDM, Inc.
10.12* Memorandum of officer incentive compensation policy.
10.13* Offer to Buy Real Estate and Acceptance dated March 31, 1993,
between Smithway Motor Xpress, Inc. and William G. Smith.
10.14* Form of Independent Contractor Agreement between Smithway Motor
Xpress, Inc. and its independent contractor providers of tractors.
10.15* Amendment No. 1 to Exchange Agreement dated as of June 29, 1995,
among William G. and Marlys L. Smith, William G. Smith d/b/a Smith
Leasing, G. Larry Owens, Smithway Motor Xpress, Inc. Employee Stock
Ownership Plan and Trust, and Smithway Motor Xpress Corp., a Nevada
corporation.
10.16* Acquisition Agreement dated May 31, 1995, among Smithway Motor
Xpress, Inc., Van Tassel, Inc., Teresa Van Tassel, and Douglas Van
Tassel.
10.17* Acquisition Agreement dated January 10, 1996, among Smithway Motor
Xpress Inc., an Iowa Corporation, Smith Trucking Company, a Kansas
corporation, and Delmar Smith.
* Incorporated by reference from the Company's Registration Statement on
Form S-1, Registration No. 33-90356, effective June 27, 1996.
(b) Reports on Form 8-K.
None.
<PAGE>
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHWAY MOTOR XPRESS CORP., a Nevada
corporation
Date: August 5, 1996 By: /s/ G. Larry Owens
G. Larry Owens
Executive Vice President and
Chief Financial Officer
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<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 893
<SECURITIES> 300
<RECEIVABLES> 8776
<ALLOWANCES> 0
<INVENTORY> 416
<CURRENT-ASSETS> 12419
<PP&E> 50297
<DEPRECIATION> 16599
<TOTAL-ASSETS> 47381
<CURRENT-LIABILITIES> 10773
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0
0
<COMMON> 27
<OTHER-SE> 8577
<TOTAL-LIABILITY-AND-EQUITY> 47381
<SALES> 0
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<TOTAL-COSTS> 39451
<OTHER-EXPENSES> 0
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<INCOME-TAX> 1187
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<NET-INCOME> 1668
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