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 March 31, 1997 Commission File No 0-11300
BUILDERS TRANSPORT, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 58-1186216
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(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
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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 April 30, 1997
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Common Stock, par value $.01 5,284,019
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 March 31, 1997
and December 31, 1996 1
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
Part II OTHER INFORMATION
ITEM 1. LEGAL *
ITEM 2. CHANGES IN SECURITIES *
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS *
ITEM 5. OTHER INFORMATION *
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
* No information submitted under this caption.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
March 31 December 31
1997 1996
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(Unaudited) (Note)
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 48 $ 50
Accounts receivable, less allowances
(March 31, 1997 - $490
December 31, 1996 - $456) 32,953 34,108
Prepaid expenses 17,463 14,921
Repair parts and operating supplies 2,426 3,538
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TOTAL CURRENT ASSETS 52,890 52,617
PROPERTY AND EQUIPMENT 314,384 309,478
Less accumulated depreciation
and amortization (123,958) (117,235)
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TOTAL PROPERTY AND EQUIPMENT 190,426 192,243
OTHER ASSETS 23,055 23,486
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TOTAL ASSETS $ 266,371 $ 268,346
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March 31 December 31
1997 1996
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(Unaudited) (Note)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 13,561 $ 15,889
Other current liabilities 11,812 11,717
Current maturities of long-term debt 186,960 38,156
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TOTAL CURRENT LIABILITIES 212,333 65,762
LONG-TERM DEBT
Credit Facility -- 13,321
Convertible Subordinated Debentures 22,281 44,632
Capital leases and other -- 111,036
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TOTAL LONG-TERM DEBT 22,281 168,989
OTHER LIABILITIES 10,251 10,273
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares; no shares issued
at March 31, 1997 or December 31, 1996
Common stock, par value $.01 per share
Authorized 25,000,000 shares; Issued
6,491,070 shares at March 31, 1997 and
6,270,600 shares at December 31, 1996 65 63
Paid-in capital 34,265 33,675
Unearned compensation related to
ESOP receivable (4,337) (4,337)
Retained earnings 6,559 8,967
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36,552 38,368
Less cost of common stock in treasury
(1,207,051 shares at March 31, 1997 and
at December 31, 1996) (15,046) (15,046)
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TOTAL STOCKHOLDERS' EQUITY 21,506 23,322
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CONTINGENT LIABILITIES
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 266,371 $ 268,346
========= =========
Note: The balance sheet at December 31, 1996, 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
March 31 March 31
1997 1996
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(Note)
(In thousands, except per
share amounts)
OPERATING REVENUE $ 70,993 $ 70,487
OPERATING EXPENSES:
Wages, salaries, and employee benefits 28,728 29,391
Operations and maintenance 17,435 14,549
Operating taxes and licenses 6,727 6,974
Insurance and claims 3,887 3,873
Communications and utilities 944 1,239
Depreciation and equipment rents 7,026 6,610
(Gain) loss on disposition of operating assets 378 (839)
Rents and purchased transportation 5,454 4,874
Other operating expenses 220 230
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Total Operating Expenses 70,799 66,901
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OPERATING INCOME 194 3,586
OTHER DEDUCTIONS:
Interest and other expenses 4,133 4,124
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LOSS BEFORE INCOME TAXES (3,939) (538)
PROVISION FOR INCOME TAXES (1,530) (210)
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NET LOSS $ (2,409) $ (328)
========= =========
NET LOSS PER SHARE $ (0.46) $ (0.06)
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 5,190,932 5,236,522
See notes to condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Three Months Ended
March 31 March 31
1997 1996
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(In thousands)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 3,539 $ (2,836)
INVESTING ACTIVITIES
Purchases of property and equipment (661) 216
Proceeds from disposal of property and equipment 91 3,436
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NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (570) 3,652
FINANCING ACTIVITIES
Proceeds from lines of credit and
long-term borrowings 5,397 7,353
Principal payments on lines of credit,
long-term debt and capital lease obligations (8,368) (8,596)
Proceeds from the issuance of common stock 0 390
Purchase of Treasury Stock 0 (19)
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NET CASH USED BY FINANCING ACTIVITIES (2,971) (872)
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DECREASE IN CASH AND CASH EQUIVALENTS (2) (56)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 50 109
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CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 48 $ 53
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 3,820 $ 4,204
Noncash investing activity:
Property and equipment acquired
through capital leases $ 5,068 $ 4,521
Noncash financing activity:
Common stock issued under employee
benefit plans $ 592 $ 357
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 March 31,
1997, are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. 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, 1996.
NOTE B - LONG-TERM DEBT
Subsequent to March 31, 1997, the Company has defaulted on the scheduled
payments under its equipment capital leases ($145.9 million), which also
constitute defaults under the Credit Facility that would permit acceleration
of that debt. The capital leases represent primarily leased revenue equipment
capitalized for approximately $210 million with accumulated amortization of
approximately $59.0 million. Further, certain of the equipment capital lease
defaults, if not cured shortly, will become events of default with respect to
the Company's two series of Convertible Subordinated Debentures ($46.8 million)
that also would permit acceleration. The Company also defaulted on the May 1,
1997 interest payment under the 61/2% convertible subordinated debentures
($22.4 million). However, the Company has thirty days from the May 1, 1997
due date to cure this default.
As a result of the above defaults, the Credit Facility, the equipment capital
leases and 61/2% convertible subordinated debentures have been reclassified as
current liabilities. Under the existing capital lease agreements the lenders
have the option to accelerate or terminate the leases or to recall and dispose
of the equipment with any deficiencies to be paid by the Company.
The Company has engaged Alex. Brown & Sons as financial advisors in order to
assist with restructuring its various equipment capital leases and convertible
subordinated debentures.
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Note C -- EARNINGS PER SHARE
Three Months Ended
March 31 March 31
1997 1996
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PRIMARY:
Average shares outstanding 6,397,983 6,234,737
Assumed exercise of stock options 0 172,313
Treasury stock (1,207,051) (1,170,528)
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Totals 5,190,932 5,236,522
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Net income (loss) $(2,409,000) $ (328,000)
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Per share amount:
Net income $ (0.46) $ (0.06)
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FULLY DILUTED:
Average shares outstanding 6,397,983 6,234,737
Assumed exercise of stock options 185,753 316,175
Assumed conversion of 8% Convertible
Subordinated Debentures issued
September 9, 1985 1,001,516 1,089,918
Assumed conversion of 6 1/2% Convertible
Subordinated Debentures issued
May 9, 1986 592,079 592,079
Treasury stock (1,207,051) (1,170,528)
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Totals 6,970,280 7,062,381
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Net income (loss) $(2,409,000) $ (328,000)
Add 8% Convertible Subordinated Debentures
interest, net of income tax effect 294,000 327,000
Add 6 1/2% Convertible Subordinated Debentures
interest, net of income tax effect 219,000 223,000
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Adjusted net income $(1,896,000) $ 222,000
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Per share amount:
Net income $ (0.27)* $ 0.03*
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* Anti-dilutive
In February 1997, The Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which will require a change, effective December
31, 1997, in the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded.
The impact of Statement 128 on the calculation of primary and fully diluted
earnings per share for these quarters is not expected to be material.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATING RESULTS
The operating ratio (operating expenses as a percentage of operating revenues)
was 99.7% during the first quarter of 1997 as compared to 94.9% in the first
quarter of 1996. Operating income for the first quarter of 1997 was $194,000,
compared to $3.6 million for the first quarter of 1996. Operating
expenses as a percentage of revenues, were generally higher in 1997 as compared
to 1996 primarily as a result of increases in fuel prices, maintenance expense,
and purchased transportation. Additionally, the first quarter of 1997
reflected a loss on disposal of operating assets compared to a gain in 1996
which resulted in an increase in operating expenses totaling $1.2 million.
Operating revenues for the first quarter of 1997 were $71.0 million, compared
to $70.5 million for the first quarter of 1996.
The Company had a net loss of $2.4 million for the first quarter of 1997, as
compared to a net loss of $328,000 for the first quarter of 1996.
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
In conjunction with the proposed restructuring of certain of the Company's debt
obligations, the Company has unilaterally suspended monthly payments on its
equipment debt for April and May, 1997. Further, the Company has not yet made
the interest payment on its 61/2% Convertible Subordinated Debentures that was
due May 1, 1997. See "Recent Developments and Trends" and Note B to Condensed
Consolidated Financial Statements.
Prepaid expenses increased by approximately 17% since December 31, 1996,
primarily due to the normal annual prepayment of licenses and taxes.
Accounts Receivable decreased by 3%, as compared to December 31, 1996,
due to seasonal increases in freight revenue volume and a decrease in other
receivables.
Even though there was lower operating income in the first
quarter of 1997, compared to the first quarter of 1996, operating cash flows
increased primarily as a result of decreased accounts receivables in 1997 as
compared to 1996. 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 the revolving portion of its Credit
Facility to smooth cyclical cash flows associated with its operations.
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RECENT DEVELOPMENTS AND TRENDS
The Company recently retained Alex. Brown & Sons Incorporated as its financial
advisor to assist in restructuring certain of the Company's debt obligations.
As noted above, the Company has suspended monthly payments on its equipment
debt for April and May, 1997 aggregating $7.0 million. The Company is
therefore in default under those agreements, and, while the Company has no
payment defaults under its general credit facility (pursuant to which
$18.7 million is currently outstanding), the equipment debt defaults constitute
defaults under the general credit facility that would permit acceleration of
that debt. Further, certain of the equipment debt defaults (if not cured
shortly) will become events of default with respect to the Company's two
series of Convertible Subordinated Debentures(pursuant to which $46.8 million
is currently outstanding) that also would permit acceleration. The Company has
not made the interest payment due May 1, 1997 with respect to its 61/2%
convertible Subordinated Debentures. If not cured within 30 days, this will
also become an event of default permitting acceleration of the $27,351,000
outstanding principal balance on those debentures. The Company has received no
demands or notices of default under its general credit agreement, nor does the
Company expect any such demands or notices so long as its restructuring
discussions are progressing satisfactorily.
The Company has, however, received notices of default from equipment creditors
representing approximately $100.0 million in outstanding equipment debt
purporting to exercise various remedies ranging from termination of leases and
return of equipment to acceleration of remaining amounts under the applicable
equipment leases or loans. The Company and its financial advisor regard this
as a customary and expected response, and they are currently engaged in
discussions with those creditors as well as representatives of holders of the
Company's Convertible Subordinated Debentures. Generally, these creditors
have expressed an initial willingness to restructure the Company's debt in
varying manners. The details of the restructurings are still being formulated.
The Company believes, based on the progress of the restructuring discussions
to date, that it will be able to achieve a successful restructuring that will
improve the Company's cash flow and better position the Company for a return
to profitability and achieving its long-term goals.
FORWARD LOOKING STATEMENTS
Statements in this document that are not historical facts are hereby identified
as "forward looking statements" for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. The Company cautions readers that such "forward
looking statements", including without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs and income, wherever they occur in this document
or in other statements attributable to the Company are necessarily estimates
reflecting the best judgment of the Company's senior management and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the "forward looking statements." Such
"forward looking statements" should, therefore, be considered in light of
various important factors including those set forth below and others set forth
from time to time in the Company's reports and registration statements filed
with the SEC.
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The foregoing discussions under "FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF
CAPITAL" and "RECENT DEVELOPMENTS AND TRENDS" are particularly susceptible to
the risks and uncertainties discussed below. Moreover, the Company through its
senior management may from time to time make such "forward looking statements"
about the matters described herein or other matters concerning the Company.
The Company disclaims any intent or obligation to update "forward looking
statements."
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.
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PART II. OTHER INFORMATION
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
For a discussion of certain defaults see "Management's Discussion and Analysis
of the Financial Condition and Results of Operations - Recent Developments and
Trends" and Note B to Condensed Consolidated Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 Amendment No. 9 dated as of March 28, 1997, to the
Amended and Restated Financing Agreement among the CIT Group/Business
Credit, Inc., National Bank of Canada and Builders Transport, Inc.
dated May 28, 1993
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended March 31, 1997.
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: May 15, 1997 By: /s/T. M. Guthrie
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T. M. Guthrie
Chief Financial Officer
and Treasurer
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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