FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1996 Commission File No 0-11300
BUILDERS TRANSPORT, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 58-1186216
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 7005, 2029 WEST DEKALB STREET, CAMDEN, SOUTH CAROLINA 29020
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(address of principal executive offices and zip code)
Registrant's telephone number, including area code (803) 432-1400
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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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 2, 1996
- ---------------------------- -----------------------------
Common Stock, par value $.01 5,100,017
per share
BUILDERS TRANSPORT, INCORPORATED
INDEX TO FORM 10-Q
Part I FINANCIAL INFORMATION Page No.
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ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 1
Condensed Consolidated Statements of Income for the Three
Months Ended June 30, 1996 and 1995 and the Six Months
Ended June 30, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6,7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
Part II OTHER INFORMATION
ITEM 1. LEGAL *
ITEM 2. CHANGES IN SECURITIES *
ITEM 3. DEFAULTS UPON SENIOR SECURITIES *
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION *
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
* No information submitted under this caption.
PART 1. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
June 30 December 31
1996 1995
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(Unaudited) (Note)
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 82 $ 109
Accounts receivable, less allowances
(June 30, 1996 - $633
December 31, 1995 - $511) 37,284 28,815
Prepaid expenses 16,852 17,171
Repair parts and operating supplies 2,907 3,233
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TOTAL CURRENT ASSETS 57,125 49,328
PROPERTY AND EQUIPMENT 301,536 301,924
Less accumulated depreciation
and amortization (105,231) (102,662)
--------- ---------
TOTAL PROPERTY AND EQUIPMENT 196,305 199,262
OTHER ASSETS 23,810 23,471
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TOTAL ASSETS $ 277,240 $ 272,061
========= =========
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June 30 December 31
1996 1995
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(Unaudited) (Note)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 9,356 $ 9,551
Other current liabilities 11,713 12,572
Current maturities of long-term debt 34,191 36,366
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TOTAL CURRENT LIABILITIES 55,260 58,489
LONG-TERM DEBT
Revolving credit agreement 13,642 3,469
Convertible Subordinated Debentures 46,789 46,789
Capital leases and other 112,520 114,504
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TOTAL LONG-TERM DEBT 172,951 164,762
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 2,013 2,013
Other 8,292 8,508
--------- ---------
TOTAL OTHER LIABILITIES 10,305 10,521
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares; no shares issued
at June 30, 1996 or December 31, 1995
Common stock, par value $.01 per share
Authorized 25,000,000 shares; Issued
6,270,600 shares at June 30, 1996 and
6,218,347 shares at December 31, 1995 63 62
Paid-in capital 33,671 33,281
Unearned compensation related to
ESOP receivable (4,442) (4,477)
Retained earnings 24,229 24,201
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53,521 53,067
Less cost of common stock in treasury
(1,170,583 shares at June 30, 1996 and
1,168,083 shares at December 31, 1995) (14,797) (14,778)
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TOTAL STOCKHOLDERS' EQUITY 38,724 38,289
--------- ---------
CONTINGENT LIABILITIES
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 277,240 $ 272,061
========= =========
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles.
See notes to condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1996 1995 1996 1995
--------- --------- --------- ---------
(In thousands, except (In thousands, except
per share amounts) per share amounts)
OPERATING REVENUE $ 73,442 $ 74,847 $ 143,929 $ 147,961
OPERATING EXPENSES:
Wages, salaries, and employee
benefits 29,922 29,952 59,312 60,227
Operations and maintenance 14,980 15,009 29,529 29,842
Operating taxes and licenses 6,850 6,937 13,823 13,927
Insurance and claims 3,689 3,710 7,562 7,083
Communications and utilities 1,198 1,056 2,437 2,332
Depreciation and equipment rents 6,767 6,168 13,377 12,130
(Gain) on disposition of
operating assets (483) (180) (1,322) (320)
Rents and purchased transportation 5,524 4,848 10,397 9,242
Other operating expenses 375 321 608 659
--------- --------- --------- ---------
Total Operating Expenses 68,822 67,821 135,723 135,122
--------- --------- --------- ---------
OPERATING INCOME 4,620 7,026 8,206 12,839
OTHER DEDUCTIONS:
Interest and other expenses 4,036 3,510 8,160 6,984
INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 584 3,516 46 5,855
PROVISION FOR INCOME TAXES 227 1,371 17 2,283
-------- --------- --------- ---------
NET INCOME BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 357 2,145 29 3,572
--------- --------- --------- ---------
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE -- -- -- (7,291)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 357 $ 2,145 $ $29 $ (3,719)
========= ========= ========= =========
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PRIMARY INCOME (LOSS) PER SHARE:
NET INCOME PER SHARE BEFORE
CUMULATIVE EFFECT $ .07 $ .40 $ .01 $ 0.67
--------- -------- --------- ---------
CUMULATIVE EFFECT $ -- $ -- $ -- $ (1.36)
--------- ---------- --------- ---------
EARNINGS PER SHARE $ .07 $ .40 $ .01 $ (.69)
========= ========= ========= =========
FULLY DILUTED INCOME (LOSS) PER SHARE:
NET INCOME PER SHARE BEFORE
CUMULATIVE EFFECT $ .07 $ .38 $ .01 $ 0.67
--------- -------- --------- ---------
CUMULATIVE EFFECT $ -- $ -- $ -- $ (1.36)
--------- ---------- --------- ---------
EARNINGS PER SHARE $ .07 $ .38 $ .01 $ (.69)
========= ========= ========= =========
See notes to condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Six Months Ended
June 30 June 30
1996 1995
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(In thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 5,240 $ 18,806
INVESTING ACTIVITIES
Purchases of property and equipment (1,475) (4,139)
Proceeds from disposal of property and equipment 5,492 3,628
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 4,017 (511)
FINANCING ACTIVITIES
Proceeds from lines of credit and
long-term borrowings 14,468 --
Principal payments on lines of credit,
long-term debt and capital lease obligations (23,732) (18,188)
Proceeds from the issuance of common stock -- 12
Purchase of Treasury Stock (19) (74)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (9,283) (18,250)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (26) 45
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 108 9
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 82 $ 54
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 7,966 $ 6,604
Noncash investing activity:
Property and equipment acquired
through capital leases $ 15,278 $ 49,501
Noncash financing activity:
Common stock issued under employee
benefit plans $ -- $ 25
See notes to Condensed Consolidated Financial Statements
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Note A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended June 30,
1996, are not necessarily indicative of the results that may be expected for
the year ended December 31, 1996. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
Note B -- EARNINGS PER SHARE
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1996 1995 1996 1995
----------- ----------- ----------- -----------
PRIMARY:
Average shares outstanding 6,270,100 6,210,113 6,252,418 6,208,621
Assumed exercise of stock
options 225,147 241,060 198,730 276,941
Treasury stock (1,170,583) (1,114,333) (1,170,556) (1,113,662)
----------- ----------- ----------- -----------
Totals 5,324,664 5,336,840 5,280,592 5,371,900
=========== =========== =========== ===========
Net income (loss) $ 357,113 $ 2,145,374 $ 28,723 $(3,719,490)
=========== =========== =========== ===========
Per share amount:
Net income $ .07 $ .40 $ .01 $ (.69)
=========== =========== =========== ===========
FULLY DILUTED:
Average shares outstanding 6,270,100 6,210,113 6,252,418 6,208,621
Assumed exercise of stock
options 225,147 250,179 270,661 297,774
Assumed conversion of 8%
Convertible Subordinated
Debentures issued
September 9, 1985 1,060,775 1,104,508 1,075,346 1,104,508
Assumed conversion of
6 1/2% Convertible
Subordinated Debentures
issued May 9, 1986 592,079 592,079 592,079 606,649
Treasury stock (1,170,583) (1,114,333) (1,170,556) (1,113,662)
----------- ----------- ----------- -----------
Totals 6,977,518 7,042,546 7,019,948 7,103,890
=========== =========== =========== ===========
Net income (loss) $ 357,113 $ 2,145,374 $ 28,723 $(3,719,490)
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Add 8% Convertible
Subordinated Debentures
interest, net of
income tax effect 314,906 324,286 642,019 648,572
Add 6 1/2% Convertible
Subordinated Debentures
interest, net of
income tax effect 220,947 218,519 444,322 447,793
----------- ----------- ----------- -----------
Adjusted net income $ 892,966 $ 2,688,179 $ 1,115,064 $(2,623,125)
=========== =========== =========== ===========
Per share amount:
Net income $ .13* $ .38 $ .16* $ (.37)*
=========== =========== =========== ===========
* Anti-dilutive
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES (continued)
Note C -- CREDIT AGREEMENT
During the second quarter the Company and its lenders amended the revolving
credit facility to provide to the Company, among other things, lower rates and
fees, increased borrowing capacity and an extension of the scheduled
expiration date of the credit agreement.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Operating revenues for the second quarter of 1996 were $73.4 million, compared
to $74.8 million for the second quarter of 1995, and for the first six months
of 1996, were $143.9 million, compared to $148.0 million for the first six
months of 1995.
Net income for the second quarter of 1996 was $357,000, compared to $2,145,000
for the second quarter of 1995, and net income for the first six months of
1996 was $29,000 compared to a net loss of $3,719,000 (including the
cumulative effect of the accounting change resulting from the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and For Long-Lived Assets To Be Disposed Of"
as of January 1, 1995).
The operating ratio (operating expenses as a percentage of operating revenues)
was 93.71% and 94.3% for the second quarter and first six months of 1996,
respectively, compared to 90.61% and 91.32% for the same periods in 1995.
Operating income during the second quarter was $4.6 million, compared to $7.0
million in the second quarter of 1995 and for the first six months of 1996 was
$8.2 million, compared to $12.8 million for the first six months of 1995. The
increase in operating expenses as a percentage of revenues, was primarily
attributable to a very substantial increase in fuel prices in 1996. Operating
profitability in the second quarter of 1996 was negatively impacted by
approximately $1,000,000 as a result of the significantly higher fuel costs.
A shortage of truck drivers negatively impacted operating profitability,
resulting in approximately 5% of the tractor fleet going unmanned. The
Company experienced a revenue shortfall of $3-$4 million as a result of the
driver shortage. In response to the driver situation, the Company brought in
a new recruiting team during April. This team has initiated a company-wide
approach to keeping tractors manned and to growing the Company's owner-
operator fleet aggressively. The Company has already made substantial
progress in manning its equipment since changing its recruiting staff and its
approach to manning equipment.
The Company increased its use of owner-operators to 212 contractors, on
average, during the second quarter of 1996, compared to an average of 188
owner-operators during the corresponding period in 1995. This caused an
increase in the Company's rents and purchased transportation expenses during
the second quarter of 1996, as compared to the second quarter of 1995.
The Company's freight volume was relatively strong throughout the second
quarter. The Company's management is cautiously optimistic that the freight
market will continue to improve and that increased demand, along with some of
the new business that has been recently added, will result in long-term
revenue growth. If freight demand continues to be solid and the Company can
get its equipment fully manned, operations and profitability should continue
to improve.
-8-
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results may be affected by a number of factors
such as: uncertainties relative to economic conditions; industry factors
including, among others, competition, rate pressure, driver availability and
fuel prices; and, the Company's ability to sell its services profitably,
successfully increase market share in its core businesses and effectively
manage expense growth relative to revenue growth in anticipation of continued
pressure on gross margins. The Company's operating results could be adversely
affected should the Company be unable to anticipate customer demand accurately
or to effectively manage the impact on the Company of changes in the trucking,
transportation and logistics industries.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results, past financial performances should not be
considered to be a reliable indicator of future performance, and investors
should not use historical trends to anticipate results or trends in future
periods.
RECENT DEVELOPMENTS AND TRENDS. Over the past year or so, the Company
experienced weakened freight demand. However, this situation is continuing to
improve and the Company's freight volume has been relatively strong recently.
While the Company is more optimistic about future business levels, the Company
cannot predict whether this positive trend will continue or when it can obtain
meaningful rate increases from the majority of its customers.
Fuel prices were sharply higher during the second quarter of 1996. Among
other actions, the Company has passed some of the additional costs along to
its customers by collecting fuel surcharges. Fuel prices have decreased some
recently, but the Company cannot predict if fuel prices will return to a more
nearly normal level.
The Company experienced a shortage of qualified drivers during the second
quarter, resulting in approximately 5% of its tractor fleet going unmanned.
Recently, the Company has improved its driver situation as a result of changes
in driver recruiting personnel and in its approach to manning equipment. The
Company believes that it has improved its ability to recruit and retain
quality drivers by these initiatives and anticipates moving toward full
capacity over the coming months. However, driver availability and retention
are industry-wide issues, and the Company expects that finding and keeping
high quality drivers will continue to be a significant challenge for the
Company.
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
The current ratio was 1.03 at June 30, 1996, compared to .84 at December 31,
1995. Accounts Receivable increased by 29%, as compared to December 31, 1995,
due to seasonal increases in volume, receivable collections delays resulting
from problems associated with the conversion to new computer software and an
increase in other receivables.
Cash provided by operations was $5.2 million for the first six months of 1996,
as compared to $18.8 million for the first six months of 1995. Lower
operating income and increased accounts receivable caused operating cash flows
to decline in 1996 as compared to 1995. Management expects that cash
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generated from operations will increase as the Company collects its
receivables and continues to improve its operating profitability. The
Company's cash flow and cash requirements tend to fluctuate during the year.
Generally more cash is required during the first part of the year, primarily
to fund the Company's annual prepayments of operating taxes and licenses and
less profitable operations. Cash flow from operations generally increases
consistently beginning in the second quarter through year end. The Company
uses its revolving credit facility to smooth cyclical cash flows associated
with its operations.
During the quarter the Company and its lenders amended the revolving credit
facility. This agreement benefits the Company in several ways. It provides
to the Company, among other things, lower rates and fees, increased borrowing
capacity and an extension of the scheduled expiration date of the credit
agreement to December 31, 1999. The credit agreement fits the Company's
current credit needs. The Company also believes that it is very advantageous
to continue the long-standing banking relationship with the Company's current
lenders. They have a proven track record for responding quickly to the
Company's evolving credit requirements.
The Company has, essentially, completed its program to reduce the
average age of its fleet. The Company may replace up to 200 older tractors
during the latter part of 1996. Thus far in 1996, the Company has replaced
500 older 48-foot van trailers with new 53-foot trailers. As a result of
acquiring this new equipment, the Company's van division's trailer pool has
been converted to almost entirely 53-foot trailers. The Company is currently
replacing 220 flatbed trailers and may replace some older tractors during the
latter part of 1996.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Builders Transport, Incorporated's Annual Meeting of Stockholders was
held on June 4, 1996.
(b) Proxies for the meeting were solicited pursuant to Regulation 14 under
the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's nominees as listed in the proxy statement,
all of whom were elected.
(c) Set forth below are the number of votes cast for, against or withheld,
as well as the number of abstentions and broker non-votes as to each
such matter, including a separate tabulation with respect to each
nominee for office.
(i) Nominees Votes Against Broker
for Directors Votes For or Withheld Abstentions Non-Votes
-------------------- --------- ----------- ----------- ---------
David C. Walentas 4,596,223 282,537 --- ---
Stanford M. Dinstein 4,591,812 286,948 --- ---
John R. Morris 4,597,284 281,476 --- ---
Arthur C. Baxter 4,596,414 282,346 --- ---
Frederick S. Morton 4,591,125 287,635 --- ---
Pierson G. Mapes 4,586,142 292,618 --- ---
(ii) Ratification of the Board of Directors reappointment of Ernst &
Young as the Company s independent auditors to audit the financial
statements of the Company for the current fiscal year.
Votes Against Broker
Votes For or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
4,852,730 8,583 17,447 ---
(iii) To approve the Amended and Restated Builders Transport, Incorporated
Non-Employee Director s Stock Option Plan and reserve 100,000 of the
Company s Common Stock to be used by this plan.
Votes Against Broker
Votes For or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
4,246,100 594,863 35,320 2,477
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 Amendment and Waiver to the Amended and Restated Financing
Agreement, dated as of May 28, 1993.
Exhibit 27 Financial Date Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUILDERS TRANSPORT, INCORPORATED
Date: August 14, 1996 By: /S/ ROBERT Y. FOX
----------------------- -----------------------------
Robert Fox
Vice President and
Chief Financial Officer
Signed in the dual capacity
of a duly authorized officer
of the Registrant and the
Principal Accounting Officer
of the Registrant
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