Part 1.  Financial Information.
                    Item 1.  Financial Statements.PART I - FINANCIAL INFORMATION
                        ITEM 1 - FINANCIAL STATEMENTS

                           MAYFLOWER GROUP, INC. 
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months ended Six months ended June 30, June 30, ------------------ ---------------- (In thousands, March 31, except per share data) 1994 1993 - ----------------------------------------------------------1994 1993 ------------------ ----------------- (Unaudited) Operating revenues: Contract Services $ 73,91568,317 $ 65,32959,021 $142,232 $124,350 Transit 94,783 87,642 ---------------------- 168,698 152,971117,046 109,588 211,829 197,230 -------- -------- -------- -------- 185,363 168,609 354,061 321,580 -------- -------- -------- -------- Operating expenses: Contract Services 63,172 54,22264,480 54,714 130,767 112,212 Transit 79,518 74,315 General and administrative 21,469 21,158 ----------------------114,281 107,158 211,899 199,050 Corporate expenses 176 120 430 425 -------- -------- -------- -------- Operating profit 4,539 3,2766,426 6,617 10,965 9,893 Other income (expense): Interest income 257 521241 667 498 1,188 Interest expense (2,127) (2,241)(2,274) (2,072) (4,401) (4,313) Other, net (11) (122) ----------------------(53) (57) (64) (179) -------- -------- -------- -------- Income before federal income taxes 2,658 1,434and extraordinary loss 4,340 5,155 6,998 6,589 Provision for federal income taxes 1,006 509 ----------------------1,597 1,807 2,603 2,316 -------- -------- -------- -------- Income before extraordinary loss 2,743 3,348 4,395 4,273 Extraordinary loss on early retirement of debt --- (549) --- (549) -------- -------- -------- -------- Net income $ 1,6522,743 $ 925 ======================2,799 $ 4,395 $ 3,724 ======== ======== ======== ======== Weighted average shares outstanding 12,757 12,70812,705 12,713 12,741 12,706 Earnings per shareshare: Income before extra- ordinarary loss $ .13.22 $ .07 ======================.26 $ .34 $ .33 Extraordinary loss --- (.04) --- (.04) -------- -------- -------- -------- Net income $ .22 $ .22 $ .34 $ .29 ======== ======== ======== ======== See notes to condensed consolidated financial statements.
MAYFLOWER GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
As of As of MarchJune 30, December 31, December 3 (Dollars in thousands) 1994 1993 - -------------------------------------- ---------------------------------- ------------ (Unaudited) Assets : Current assets: Cash $ 6,0527,516 $ 6,093 Receivables: Trade receivables 75,98769,502 74,136 Accrued unbilled accounts receivable 15,50826,186 16,845 Other 16,92418,504 15,814 Less allowance for possible collection losses (6,446)(6,492) (6,174) ---------------------------------- --------- Total receivables 101,973107,700 100,621 Equipment and inventory held for resale 12,13413,538 8,911 Deferred income taxes 13,23013,883 13,230 Prepaid expenses and deposits 8,7079,082 8,147 ---------------------------------- --------- Total current assets 142,096151,719 137,002 Property and equipment: Land 2,175 2,175 Buildings and improvements 16,72816,806 16,273 Revenue equipment 122,360125,731 117,561 Other operating equipment and improvements 9,85010,726 9,072 Less accumulated depreciation (35,004)(39,261) (30,334) ---------------------------------- --------- Net property and equipment 116,109116,177 114,747 Intangible assets 52,29351,534 53,372 Other assets 18,91218,891 17,556 ---------------------------------- --------- $ 329,410338,321 $ 322,677 ============= =================== ========= Liabilities and shareholders' investment: Current liabilities: Current maturities of long- termlong-term debt $ 2,6822,707 $ 2,276 Trade accounts payable 37,66538,962 39,141 Accrued expenses and deposits: Liabilities on unbilled shipments 8,63314,016 9,026 Reserve for self- insuredself-insured claims 30,35328,546 28,940 Salaries and withholding taxes 11,55111,033 6,755 Other 10,65811,288 11,667 ---------------------------------- --------- Total current liabilities 101,542106,552 97,805 Noncurrent liabilities: Long-term debt, less current maturities 96,60295,931 95,407 Deferred income taxes 29,96328,914 29,963 Reserve for self- insuredself-insured claims, less current portion 11,21014,010 11,210 Accrued postretirementpost retirement benefits cost 5,7525,815 5,621 Shareholders' investment: Common shares; no par value; 30,000,000 authorized; issued and outstanding: 12,662,52912,662,562 in 1994 and 12,662,403 in 1993 73,88373,898 73,865 Retained earnings 10,45813,201 8,806 ---------------------------------- --------- Total shareholders' investment 84,34187,099 82,671 ---------------------------------- --------- $ 329,410338,321 $ 322,677 ============= =================== ========= See notes to condensed consolidated financial statements.
MAYFLOWER GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
ThreeSix Months Ended March 31,June 30, ------------------------- (Dollars in thousands) 1994 1993 - ----------------------------------------- --------------------------------------- ---------- (Unaudited) Net cash provided by (used in): Operating activities $5,908 $8,041$ 13,375 $ 11,791 Investing activities (7,550) (1,646)(12,909) (14,536) Financing activities 1,601 (12,528) ---------------------------- (41) (6,133)957 9,893 --------- --------- 1,423 7,148 Cash and cash equivalents-beginningequivalents- beginning of quarterperiod 6,093 9,449 ------------------------------------- --------- Cash and cash equivalents- end of quarter $6,052 $3,316 ============ ============period $ 7,516 $ 16,597 ========= ========= Operating activities: Net income $1,652 $925$ 4,395 $ 3,724 Add items not affecting cash: Depreciation 4,856 4,4899,828 8,912 Amortization and other 1,204 1,6992,380 3,199 Deferred income taxes (1,703) --- Extraordinary loss --- 871 Changes in certain working capital items: Receivables (1,352) 1,280(7,079) (8,477) Equipment and inventory held for resale (3,223) (8,021)(4,627) (12,101) Prepaid expenses and deposits (560) 903(935) 130 Trade accounts payable (1,476) 6,546(180) 9,865 Reserve for self- insuredself-insured claims 1,413 1,1562,406 418 Other accrued expenses and deposits 3,394 (936) ----------------------------8,890 5,250 --------- --------- Net cash provided by operating activities $5,908 $8,041 ============ ============$ 13,375 $ 11,791 ========= ========= Investing activities: Purchases of property and equipment ($6,621) ($1,578)$ (12,680) $ (4,961) Proceeds from disposaldisposals of property and equip., less gains included in net income 402 531equipment 1,423 1,302 Increase in other noncurrent assets and noncurrent liabilities (1,331) (599) ----------------------------(1,652) (10,877) --------- --------- Net cash used in investing activities ($7,550) ($1,646) ============ ============$ (12,909) $ (14,536) ========= ========= Financing activities: Proceeds from long- termlong-term debt $2,218 $4,130$ 2,268 $ 89,440 Payment of long- termlong-term debt (617) (10,058)(1,311) (70,077) Net change in revolving credit agreeementsagreements --- (6,600) ----------------------------(9,470) --------- --------- Net cash provided by (used in) financing activities $1,601 ($12,528) ============ ============$ 957 $ 9,893 ========= ========= See notes to condensed consolidated financial statements.
MAYFLOWER GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The unaudited condensed consolidated financial statements presented herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles are condensed, incorporated by reference or omitted, as allowed by the rules and regulations. Management of the Company believes the interim financial statements include all adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial condition and results of operations for the interim periods presented. Reference is made to the Notes to Consolidated Financial Statements included in the Company's 1993 Report on Form 10- K10-K for a summary of significant accounting policies and other information, the substance of which has not changed materially as of March 31,June 30, 1994, unless otherwise noted herein. Certain amounts within the 1993 Condensed Consolidated Financial Statements are reclassified to conform with the 1994 presentation. 2. OPERATING PROFIT Operating profit by segment is as follows (dollars in thousands):
Three months ended March 31,Six months ended June 30, June 30, 1994 1993 --------------------1994 1993 ------------------ ------------------ Contract Services $ 7,628 $ 7,831$3,837 $4,307 $11,465 $12,138 Transit (2,835) (4,250)2,765 2,430 (70) (1,820) Corporate expenses (254) (305) --------------------(176) (120) (430) (425) ------ ------ ------- ------- $6,426 $6,617 $10,965 $ 4,539 $ 3,276 ====================9,893 ====== ====== ======= =======
3. COMMITMENTS AND CONTINGENCIES Contract Services and Transit are involved from time to time in various actions that are incidental to the ordinary course of their businesses, including property damage and personal injury claims. Management believes that the disposition of these matters will not have a material adverse effect on the financial position of the Company. 4. PROVISION FOR FEDERAL INCOME TAXES For 1994 andEXTRAORDINARY LOSS In May 1993, effective rates that differed from the U.S. federal statutory rates were used in recording federal tax expense. TheCompany refinanced its primary reasons for this difference are the nondeductibility of amortization of certain intangible assets and the increasedebt facilities. This refinancing resulted in the U.S. federal statutory ratewrite-off of $549,000 of deferred debt costs, net of tax, which has been accounted for as an extraordinary loss. 5. AMENDMENT TO ARTICLES OF INCORPORATION At the Company's annual meeting of shareholders in April 1994, upon the recommendation of the Board of Directors, the shareholders of the Company amended the Corporation's Articles of Incorporation (Articles) . The amendment: (1) eliminated the prohibition on the issuance of classes of capital stock without voting rights, (2) authorized a separate and single class of 5,000,000 shares of preferred stock issuable in series, and (3) granted the Board of Directors the authority to 35%determine and state the designations and relative preferences, limitations, voting rights, if any, and other rights of each such series by filing an amendment to the Articles. All shares of preferred stock of the same series must be identical with each other in all respects. As of the date of the filing of this Form 10-Q, no preferred stock has been issued. 6. STOCK PLANS 1994 from 34%Restricted Stock Plan - At the Company's annual meeting of shareholders in 1993.April 1994, the shareholders of the Company also approved the Board of Directors' (Board) decision to establish the 1994 Restricted Stock Plan (Plan). The Plan authorizes the Company to issue 500,000 shares of restricted common stock, no par value, to officers and other key employees of the Company and its subsidiaries. The Compensation Committee (Committee) of the Board will determine the individuals to whom shares will be granted and will determine the terms of the grants, including the number of shares to be awarded, the required holding period before restrictions on transferability lapse, and other restrictions the Committee deems advisable. Grantees of shares under the Plan shall be entitled to exercise full voting rights and receive all dividends and other distributions paid with respect to those shares. As of the date of the filing of this Form 10-Q, no shares have been granted under the Plan. Stock Option Plans - At the Company's annual meeting of shareholders in April 1994, the shareholders of the Company also approved an amendment to one of the Company's stock option plans. The amendment increases the number of shares of common stock issuable under the option plans to 560,000 shares. Concurrent with this approval, the Committee granted to directors of the Company and certain officers and key employees of the Company and its subsidiaries options to acquire 152,000 shares of common stock at an exercise price of $8.625 per share. 7. AMENDED FINANCING AGREEMENT In June 1994, the Company amended the financing agreement used by Contract Services to finance the acquisition of new school buses. The amended financing agreement, which now extends through December 1995, provides an additional $15 million borrowing capacity and slightly reduced interest rates. 8. INVESTMENT BANKING FIRM RETAINED The Company's Board of Directors has retained an investment banking firm to explore alternatives to enhance shareholder value. These alternatives may include the possibility of a sale, a spin-off to shareholders of one or both of the Company's principal subsidiaries, or a combination with one or more businesses complementary to the Company's existing operations. No decision has been made as to whether, when, or in what form a transaction will take place. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31,JUNE 30, 1994 COMPARED WITH THREE MONTHS ENDED MARCH 31,JUNE 30, 1993 Operating revenues for the three monthssecond quarter ended March 31,June 30, 1994 totaled $168.7were $185.4 million, or an increase of 10.3%10% over operating revenues of $153.0$168.6 million during the firstsecond quarter last year. Net income for the three months ended March 31,June 30, 1994 was $1.7$2.7 million, comparedor $.22 per share, which was comparable to $925,000the $2.8 million, or $.22 per share, recorded for the same period in 1993. Results for the second quarter of 1993 include an extraordinary charge of $549,000, or $.04 per share, for the early retirement of debt. Operating profits for the 1994 second quarter dropped slightly to $6.4 million from $6.6 million for the comparable period in 1993. Contract Services Contract ServicesServices' operating revenues for the three months ended March 31,June 30, 1994 were $73.9$68.3 million compared to $65.3versus $59 million for the same period in 1993, an increase of 13.1%15.8%. Public Transportation revenues increased $7.3$7.5 million, or 48.4%46%, to $22.4 million. This growth is attributable$23.8 million primarily due to revenues earned from new customer contracts for paratransit services and an acquisition in September 1993continued expansion of a publicthis business. School transportation company located in North Carolina. School Transportation revenues increased $1.3$1.8 million, or 2.6%4.1%, to $51.5$44.5 million due largelyprincipally as a result of improved pricing on new contracts as compared to price increases.previously expired arrangements. Operating profit for the three months ended March 31,June 30, 1994 was $7.6$3.8 million, a net decrease of $200,000$500,000 from the same period in 1993. AlthoughWhile Public Transportation gross margin increased by $1 million, a $1.2 million decrease in School Transportation gross margin increased approximately $600,000 and a $225,000 increase in general and administrative expenses were lower by $200,000, a decrease of $1.0 millionmore than offset this improvement. The increase in Public Transportation gross margin more than offset these favorable items. The School Transportation gross margin increase was due principally to increased revenues from the continued expansion of this business and reductionsreduced accident costs. Offsetting these favorable results was a reduction in insurance, fuel and driver operating costs. The decrease in gross margin contributions from PublicSchool Transportation business wasprofit due to operational difficulties in two major operations, higher start-up costs on a new contract,vehicle maintenance expenses and an increase in driver wage and related costs, vehicle maintenance expenses and insurance claims over the comparable period in 1993. Significant steps have been taken to improve results in Public Transportation throughout the remainder of this year. Increased pricing will be effective in the third quarter at one of the larger troubled operations. The other major service contract with less than desirable results is scheduled to expire in December 1994. Re-pricing of that business will be closely reviewed before a decision is made to rebid it. Management believes the profitability of the new contract will improve because start-up costs have been reduced.provision for self-insured claims. Transit Transit's operating revenues for the three months ended March 31,June 30, 1994 increased $7.5 million, or 6.8%, to $117 million. Operating profits for the 1994 second quarter were $2.8 million compared to $2.4 million in 1993. Both of Transit's key operating divisions, Household Goods and Special Transportation Services, posted improved operating revenues and margins for the second quarter. General and administrative expenses for the quarter remained flat with prior years. Household Goods' revenues for the second quarter of 1994 were $94.8$78.5 million compared to $74 million in 1993. While the volume of shipments decreased slightly from the prior year, a 6.5% increase in the average price earned per shipment resulted in an increase of $7.1 million, or 8.1%, over$700,000 in line haul and related revenues. The improvement in the comparable periodaverage price is due to both a 6% general tariff increase effective March 28, 1994 and the shift from lower priced government and military shipments to higher priced C.O.D. and corporate account business. The military and government business has declined industry wide in 1993. Line haul revenues, the largest component of Transit revenues, increased $3.2 million, or 6.1%, during the three months ended March 31, 1994 as compared to last year.1993 resulting in an overall reduction in the number of shipments. Revenues earned from line haul forMoving and Storage business, a component of the Household Goods division, increased 9.4%$3.8 million primarily as a result of the start-up of a new agency in Los Angeles and the acquisition of an existing agency located in Philadelphia. Second quarter 1994 operating revenues for the Special Transportation Services (STS) division were $33.5 million compared to $30.2 million in 1993, an increase of $3.3 million, or over 10%. Principally all of this revenue increase occurred in STS's Electronics and Trade Show business and is due to a 5.1% increase in the number of shipments and a 5.4% increase in the average price earned per shipment. While a nominal increase in shipments was realized during the first quarter of 1994, a significant change in the mix of shipments (from government and military to COD and corporate accounts) was the major factorOperating profit for the significant improvement in average line haul price earned per shipment. Line haul revenues earned for the Electronics & Trade Show division were flat in comparison to 1993. Transit's operating loss for the three monthssecond quarter ended March 31,June 30, 1994 was $2.8 million compared to an operating loss of $4.2 million foror $400,000 more than the same period in 1993. Due to the seasonal nature of Transit's business, the first quarter normally results in a loss.last year. Operating profit was favorably affectedimpacted by a $1.0 million$350,000 gross margin improvement in the Household Goods division Transit's largest operating division,due to higher revenues, reduced maintenance expenses, and an increase of approximately $300,000 in operating profits realized by Transit's insurance operations compared to the first quarter of 1993. The improvement of $1.0 million in the Household Goods division gross margin compared to the first quarter of 1993 was the result of higher revenues,a greater emphasis on fleet management and a reduction in net cargo claims and insurance expenses.management. The heightened emphasis on fleet management increased driver productivity and retention resulting in reduced driver recruiting and training costs. Despite the growth in revenues, overhead costsOperating margins for all other areas combined remained flat. General and administrative expenses during the firstsecond quarter did not vary significantly compared to the same period in 1993. Transit is experiencingcontinuing to experience favorable results from cost containment programs and organizational changes implemented in the latter part of 1993. Management anticipates these positive trends will continue. Interest Income and Interest Expense Interest income for the three months ended March 31,June 30, 1994 was $257,000$241,000 compared to $521,000$667,000 for the same period in 1993, a decrease of $264,000.$426,000. This decrease is primarily a result of a change in financing arrangements of Transit's equipment sales and financing subsidiary. In December 1993, this subsidiary began selling to various financial institutions installment notes receivable recorded from sales of equipment by this subsidiary. Previously, these notes receivable were financed directly by the Company resulting in the recording of interest income. Beginning in 1994, the positive interest margin is recorded as a component of operating profit. Interest expense for the three months ended March 31,June 30, 1994 was $2.1$2.3 million, a decreasean increase of $114,000$200,000 from the comparable period in 1993. This decreaseincrease is primarily due to increased borrowings by Contract Services for new bus acquisitions in the latter half of 1993 partially offset by a reduction in interest expense due to the change in financing arrangements of Transit's equipment sales and financing subsidiary. SIX MONTHS ENDED JUNE 30, 1994 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1993 Operating revenues for the six months ended June 30, 1994 totaled $354.1 million, an increase of 10.1% over operating revenues of $321.6 million for the first six months in 1993. Net income for the six month period ended June 30, 1994 was $4.4 million, or $.34 per share, compared to $3.7 million, or $.29 per share, for the same period in 1993. The 1993 results include an extraordinary charge of $549,000, or $.04 per share, for the early retirement of debt. Operating profits for this period improved to $11 million, up from $9.9 million in 1993. Contract Services Contract Services' operating revenues for the six months ended June 30, 1994 were $142.2 million, up from $124.4 million for the same period in 1993, an increase of 14.3%. Public Transportation revenues increased $14.8 million, or 47.1%, to $46.2 million primarily due to continued expansion of this business. Revenues from School Transportation business increased $3.1 million, or 3.3%, to $96 million, largely as a result of improved pricing on new contracts as compared to previously expired arrangements. Operating profit for the six months ended June 30, 1994 was $11.5 million, a decrease of $675,000 from the same period in 1993. Public Transportation gross margin was largely unchanged from 1993 while School Transportation gross margin decreased by $600,000. General and administrative expenses were flat with 1993 levels. The Public Transportation gross margin remained unchanged even though revenues increased. Continued business growth and reduced accident costs contributed favorably to operating margins. However, difficulties in two major operations, increased vehicle maintenance expenses and high start-up costs on a new contract, offset these favorable items. The gross margin decrease from School Transportation business was due primarily to an increase in the provision for self-insured claims and higher vehicle repairs and driver related costs. Increased revenues and reduced fuel prices offset a portion of these unfavorable decreases. Transit Transit's operating revenues for the six months ended June 30, 1994 increased by $14.6 million, or 7.4%, to $211.8 million. Operating profits for the six month period were at break-even compared to a loss of $1.8 million in 1993. Both of Transit's key operating divisions, Household Goods and Special Transportation Services, posted improved operating revenues. Household Goods' revenues for the first half of 1994 were $138.8 million, an increase of $9.9 million over the prior year. While the volume of shipments declined slightly from the prior year, a 7.3% increase in the average price earned per shipment more than offset this volume decrease. Improvement in the average price earned per shipment is due to both the 6% general tariff increase effective March 28, 1994 and the shift from lower priced government and military shipments to higher priced C.O.D. and corporate account business. The military and government business has declined industry wide in 1994 as compared to 1993 resulting in the overall decline in the number of shipments. Revenues from Transit's Moving and Storage business, a component of the Household Goods division, also increased primarily as a result of the start-up of a new agency in Los Angeles and the acquisition of an existing agency located in Philadelphia. Revenues for the first half of 1994 for the Special Transportation Services (STS) division were $63.4 million compared to $58.6 million for the same period in 1993, an increase of $4.8 million, or 8.2%. Revenues from the Electronics and Trade Show business increased $2.8 million to $48.4 million, primarily as a result of an increase in the number of shipments. Operating loss for the six months ended June 30, 1994 was only $70,000, compared to a $1.8 million loss in the same period last year. Due to the seasonal nature of Transit's business, losses are normally posted early in the year. Operating profit was favorably impacted by a $1.7 million gross margin improvement in the Household Goods division. This improvement was the result of higher revenues and greater emphasis on fleet management. The heightened emphasis on fleet management increased driver productivity and retention resulting in reduced driver recruiting and training costs. Gross margins from STS and other revenues combined were flat in comparison to prior years. General and administrative expenses in 1994 did not vary significantly compared to the same period in 1993. Transit is continuing to experience favorable results from cost containment programs and organizational changes implemented in the latter part of 1993. Interest Income and Interest Expense Interest income for the six months ended June 30, 1994 was $500,000 compared to $1.2 million for the same period in 1993, a decrease of $700,000. This decrease is primarily a result of a change in financing arrangements of Transit's equipment sales and financing subsidiary. In December 1993, this subsidiary began selling to various financial institutions installment notes receivable recorded from sales of equipment by this subsidiary. Previously, these notes receivable were financed directly by the Company resulting in the recording of interest income. Beginning in 1994, the positive interest margin is recorded as a component of operating profit. Interest expense for the six months ended June 30, 1994 was $4.4 million, an increase of $88,000 from the comparable period in 1993. Of the increase, $500,000 is due to new Contract Services debt incurred in September, 1993 for the purchase of new buses. Offsetting the increase is a reduction in interest expense of $388,000 due to the change in the financing arrangements of Transit's equipment sales and financing subsidiary as described above.explained earlier. Seasonality Peak business levels for Contract Services occur during the traditional school months of September through May. For example, during 1993 approximately 86% of Contract Services' revenues were generated during these nine months. At Transit, proportionately more household goods moves occur during the summer months. During 1993, for example, approximately 45% of the Household Goods division's revenues were generated during the months of June through September. Due to the seasonal impact of revenue being generated by each of the Company's two operating subsidiaries as discussed above, the Company historically realizes higher net income in the second and fourth quarters than in the first and third quarters of the year. Liquidity and Capital Resources Total cash decreasedincreased by $41,000$1.4 million from December 31, 1993 to March 31,June 30, 1994. Operating activities contributed $5.9$13.4 million and financing activities provided $1.6 million$957,000 during the threesix month period. This was offset by the use of cash in investing activities of $7.6$12.9 million. The $5.9$13.4 million in cash provided by operations was primarily due to $7.7$14.9 million provided by net income, after adding back items not affecting cash. Net cash of $1.8$1.5 million was used for working capital purposes. Cash was used to finance the increase of $7.1 million in accounts receivable resulting from the Company's revenue growth and $4.6 million to fund necessary inventory purchases at Contract Services which are being spread more evenly over 1994 compared to 1993, and to reduce trade accounts payable.Services. Offsetting these uses of cash, other accrued expenses hashave increased $8.9 million during the threesix month period due to increased federal tax liabilities on accrued unbilled accounts receivable and accrued payroll. For the threesix months ended March 31,June 30, 1994, the Company used $7.6$12.9 million, net, for investing activities. The Company used $6.6$12.7 million for the purchase of property and equipment, primarily the purchase of school buses by Contract Services and, to a lesser extent, trailers by Transit. The Company has working capital of $40.6$45.2 million at March 31,June 30, 1994, which is comparable to$6 million more than the working capital at December 31, 1993. This increase is primarily due to increased receivables resulting from revenue growth. The Company also has $15.1$15 million available under its revolving credit facility at March 31,June 30, 1994. Total debt at March 31,June 30, 1994, was $99.3$98.6 million compared to $97.7 million at December 31, 1993, representing a $1.6 million$900,000 increase in total debt during the threesix months ended March 31,June 30, 1994. During the quarter,first six months, the Company received $1.6 million,$900,000, net, from an equipment obligationthe facility used to financeacquire certain bus purchases ofbuses at Contract Services. At March 31,June 30, 1994, the Company has committed to approximately $30$23 million in capital expenditures during 1994. This includes $1 million for 50 trailers by Transit and $29$22 million, or 729approximately 350 units, for school and public transit buses by Contract Services. In acquiring these assets, the Company will consider various available leasing alternatives and utilize funds available under existing financing arrangements. The Company has also entered into discussions with one of its existing lenders to expand the facility for additional financing needs. The Company believes cash flow from operations combined with existing financing arrangements and other financing sources currently being negotiated will be more than adequate to fund short and long- termlong-term cash requirements. PART II- OTHER INFORMATIONII-OTHER INFORMATION. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Company's Annual Meeting of Shareholders held in April 1994, the following matters were voted on: (i) The adoption of the Mayflower Group, Inc. 1994 Restricted Stock Plan was approved by a vote of 9,060,911 for, and 10,504 against, and 3,198 abstaining. (ii) The amendment of the 1992 Director Stock Option Plan was approved by a vote of 9,052,220 for, and 18,805 against, and 3,588 abstaining. (iii) The adoption of amendments to the Articles of Incorporation of Mayflower Group, Inc. was approved by a vote of 6,619,577, and 331,027 against, and 5,138 abstaining, and 2,118,871 not voting. (iv) The appointment of Coopers & Lybrand, independent public accountants, as auditors for the Company for the fiscal year ending December 31, 1994 was ratified by a vote of 9,069,270 for, and 3,420 against, and 1,923 abstaining. (v) Members of the Board of Directors were elected as follows: For Withheld R.M. Hills 9,061,631 12,982 P.J. Lewis 9,061,631 12,982 L.R. Scott 9,061,631 12,982 M.L. Smith 9,061,257 13,323 S.M. Stone 9,060,431 14,182 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. The following exhibit is filed as a part of this Quarterly Report on Form 10-Q: Exhibit Page in Number Exhibit - ------- -------------------------this filing 11 CalculationComputation of Earnings Per Share E-1 (b) Reports on Form 8-K. The Company filed no reports on Form 8-K during the quarter. SIGNATURE The registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. MAYFLOWER GROUP, INC. Date: May 13,August 12, 1994 By: /s/ Ronald W. Martin - ------------------ ------------------------ ------------------------------ Ronald W. Martin, Vice-President FinanceVice President-Finance and Chief Accounting Officer EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE FOR THE THREE AND SIX MONTHS ENDED MARCH 31,JUNE 30, 1994 AND MARCH 31, 1993 (In thousands, except per share data):
Three months ended March 31,Six months ended June 30, June 30, 1994 1993 --------------------1994 1993 ------------------ ------------------ Primary: (1) Average shares outstanding 12,663 12,646 12,663 12,646 Net effect of options to purchase common stock - based on the treasury stock method using estimated market price 94 62 -------------------- 12,757 12,708 ====================42 67 78 60 ------ ------ ------ ------ 12,705 12,713 12,741 12,706 ====== ====== ====== ====== Net Income $1,652 $ 925 ====================2,743 $ 2,799 $ 4,395 $ 3,724 ======= ======= ======= ======= Earnings Per Share $.13 $.07 ====================
$ .22 $ .22 $ .34 $ .29 ======= ======= ======= ======= (1) Fully diluted earnings per share do not differ from primary earnings per share.