UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
Commission file Number 0-14781
M.S. CARRIERS, INC.
(Exact name of Registrant as specified in its charter.)
Tennessee 62-1014070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3171 Directors Row, Memphis, TN 38131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 332-2500
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 practical
date:
Outstanding common shares at August 1, 1995 - 12,878,300
M.S. Carriers, Inc.
Index to Form 10-Q
Contents
Part I - Financial Information
Item I - Financial Statements (Unaudited)
Balance Sheets as of June 30, 1995 and December 31, 1994................. 3
Statement of Income for the Three Months Ended June 30, 1995
and 1994 and the Six Months Ended June 30, 1995 and 1994............... 5
Statement of Stockholders' Equity for the Six Months Ended
June 30, 1995........................................................... 6
Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994.................................................. 7
Notes to Financial Statements............................................. 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 9
Part II - Other Information
Item 1 - Legal Proceedings................................................ *
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
Signatures................................................................ 13
* No Information Submitted Under This Caption.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30 December 31
1995 1994
_________________________________________
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 15,996,585 $ 30,806,731
Accounts receivable:
Trade, net 28,187,329 33,327,599
Officers and employees 728,194 457,165
____________ ____________
28,915,523 33,784,764
Recoverable income taxes 449,047
Deferred income taxes 5,250,000 4,774,000
Prepaid expenses and other 6,467,861 4,419,081
____________ ____________
Total current assets 57,079,016 73,784,576
Property, plant and equipment:
Land and land improvements 6,221,980 6,201,674
Buildings 24,042,742 23,393,800
Revenue equipment 249,581,427 232,771,820
Service equipment and other 31,699,238 28,531,425
Construction in progress 4,764,105 2,813,438
____________ ____________
316,309,492 293,712,157
Accumulated depreciation and
amortization 99,414,857 95,019,410
____________ ____________
216,894,635 198,692,747
Other assets 3,862,070 3,595,196
____________ ____________
Total assets $277,835,721 $276,072,519
____________ ____________
____________ ____________
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
June 30 December 31
1995 1994
_________________________________________
(Unaudited)
Liabilities and stockholders'
equity
Current liabilities:
Trade accounts payable $ 6,452,877 $ 6,341,525
Accrued expenses 8,084,231 8,277,724
Claims payable 13,435,756 12,325,226
Incomes taxes payable 1,256,186
Current maturities of
long-term debt 17,120,458 16,693,512
____________ ____________
Total current liabilities 45,093,322 44,894,173
Long-term debt, less current
maturities 42,512,318 51,186,613
Deferred income taxes 34,716,045 32,068,000
Stockholders' equity:
Common stock, $.01 par value,
Authorized shares - 20,000,000 128,783 128,783
Issued and outstanding shares -
12,878,300 in 1995 and 1994
Additional paid-in capital 64,137,909 64,137,909
Retained earnings 92,630,469 84,842,041
Equity adjustment from foreign
currency translation (1,383,125) (1,185,000)
____________ ____________
Total stockholders' equity 155,514,036 147,923,733
Total liabilities and stockholders'
equity $277,835,721 $276,072,519
____________ ____________
____________ ____________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
____________________________________________________________
Operating revenues $ 84,541,100 $ 69,558,611 $166,242,470 $129,991,031
Operating expenses:
Salaries, wages and benefits 31,072,636 26,482,495 62,464,395 51,055,008
Operations and maintenance 16,798,796 15,786,300 33,865,691 31,372,304
Taxes and licenses 2,617,212 2,136,303 5,089,288 4,094,222
Insurance and claims 4,030,613 3,590,805 7,656,195 6,501,179
Communications and utilities 1,522,238 876,570 3,002,295 2,066,308
Depreciation and amortization 9,852,236 8,219,784 19,197,369 15,821,415
Rent and purchased transportation 10,825,064 4,283,171 19,771,690 6,114,328
Other 502,765 486,713 1,148,210 956,328
____________ ____________ ____________ ____________
$ 77,221,560 $ 61,862,141 $152,195,133 $117,981,092
____________ ____________ ____________ ____________
Operating income 7,319,540 7,696,470 14,047,337 12,009,939
Other expense (income):
Interest expense 1,018,854 418,894 1,933,139 729,553
Other (35,176) (42,136) (100,353) (62,263)
____________ ____________ ____________ ____________
983,678 376,758 1,832,786 667,290
____________ ____________ ____________ ____________
Income before income taxes 6,335,862 7,319,712 12,214,551 11,342,649
Income taxes 2,311,123 2,901,000 4,426,123 4,503,000
____________ ____________ ____________ ____________
Net income $ 4,024,739 $ 4,418,712 $ 7,788,428 $ 6,839,649
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Earnings per share $0.31 $0.34 $0.59 $0.52
____________ ____________ ___________ ___________
____________ ____________ ___________ ___________
See accompaning notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Unaudited)
Six Months Ended June 30, 1995
Equity
Adjustment
From
Additional Foreign
Common Stock Paid-In Retained Currency
Shares Amount Capital Earnings Translation Total
__________________________________________________________________________
Balance at January
1, 1995 12,878,300 $128,783 $64,137,909 $84,842,041 $ (1,185,000) $147,923,733
Net Income 7,788,428 7,788,428
Equity Adjustment
from Foreign
Currency
Translation (198,125) (198,125)
__________________________________________________________________________
Balance at June
30, 1995 12,878,300 $128,783 $64,137,909 $92,630,469 $ (1,383,125) $155,514,036
__________________________________________________________________________
__________________________________________________________________________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30
1995 1994
___________________________________________
Operating activities
Net income $ 7,788,428 $ 6,839,649
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 19,197,369 15,821,415
Loss on disposals of property
and equipment 97,015
Provision for losses on accounts
receivable 111,354
Other 107,874
Provision for deferred income taxes 2,172,045 2,650,000
Changes in operating assets and
liabilities:
Accounts receivable 4,869,241 (4,501,812)
Current and other assets (3,113,001) (872,817)
Trade accounts payable 111,352 1,649,621
Other current liabilities (339,149) 1,947,945
_____________ ____________
23,005,731 16,902,721
_____________ ____________
Net cash provided by operating
activities 30,794,159 23,742,370
Investing activities
Purchases of property, plant and
equipment (37,742,895) (33,486,830)
Proceeds from disposals of property
and equipment 385,939 4,623
_____________ ____________
Net cash used in investing
activities (37,356,956) (33,482,207)
Financing activities
Proceeds from revolving line of
credit and long-term debt 44,653,716
Proceeds from issuance of Common
Stock 19,183
Principal payments on revolving
line of credit and long-term debt (8,247,349) (34,840,716)
_____________ _____________
Net cash provided by (used in)
financing activities (8,247,349) 9,832,183
_____________ _____________
Increase (decrease) in cash and cash
equivalents (14,810,146) 92,346
Cash and cash equivalents at
beginning of period 30,806,731 110,080
_____________ _____________
Cash and cash equivalents at end
of period $ 15,996,585 $ 202,426
_____________ ______________
_____________ ______________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1995
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with 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 the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
month period ended June 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1995. For
further information and a listing of the Company's significant accounting
policies, refer to the financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1994.
2. Net Income Per Common Share
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
_________________________________________________________
Average common shares outstanding 12,878,300 12,878,300 12,878,300 12,877,327
Common stock equivalents 201,208 190,033 212,362 222,050
____________ ____________ ____________ ___________
Average common shares and common
stock equivalents 13,079,508 13,068,333 13,090,662 13,099,377
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income $ 4,024,739 $ 4,418,712 $ 7,788,428 $ 6,839,649
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income per common and
equivalent share $0.31 $0.34 $0.59 $0.52
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
M.S. Carriers, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 30, 1995
Results of Operations
Operating revenues for the first six months of 1995 increased 28% over the
same period in the prior year. For the quarter ended June 30, 1995, operating
revenues increased 22% over the same quarter of 1994. The Company's
increased revenues reflect additional volume from existing customers
as well as new volume from the expansion of the Company's customer base.
The operating ratio (operating expenses as a percent of operating revenues)
for the first six months of 1995 was 92% compared to 91% for the same period
in 1994 and was 91% for the second quarter of 1995 compared to 89% for the
same period in 1994. Operating expenses generally reflect increases
proportionate to the increased level of operations except as explained below.
Salaries, wages and benefits decreased from 38% and 39%, respectively, of
operating revenues for the three and six-month periods ended June 30, 1994 to
37% and 38%, respectively, for the same periods in 1995, due primarily to the
increased use of owner operators. Amounts paid to owner operators are
recorded as purchased transportation.
Operations and maintenance decreased from 23% and 24%, respectively, of
operating revenues for the three and six-month periods ended June 30,
1994 to 20% for the three and six-month periods ended June 30, 1995,
due primarily to the increased use of owner operators.
Rent and purchased transportation increased from 6% of operating revenues
for the three-month period ended June 30, 1994 to 13% for the same period
in 1995 and from 5% of operating revenues for the six-month period ended
June 30, 1994 to 12% for the same period in 1995. These increases reflect
increased expenses incurred related to the Company's logistics operations and
expenses incurred in conjunction with the increased use of owner operators.
The increase in interest expense is due to the increase in outstanding
debt during the six-months ended June 30, 1995 compared to the same
period in 1994.
The effective tax rates were 36.2% and 39.7% for the six-month period ended
June 30, 1995 and 1994, respectively. This decrease was due to reduced
state income taxes and tax benefits from leasing transactions.
Liquidity and Capital Resources
The continued growth of the Company's business has required significant
investments in new revenue equipment and office and terminal facilities,
historically financed through cash from operations, secured borrowings,
unsecured credit facilities, and capital markets. During the six-month
period ending June 30, 1995, the Company expended in excess of $37,000,000
for purchases of property, plant and equipment funded solely through
cash from operations and cash on hand at December 31, 1994. At June 30,
1995, the Company had obligations of approximately $60,000,000 related to
purchases of revenue equipment.
The Company has a bank line of credit providing for borrowings of up to
$10,000,000, with interest at the lower of the bank's corporate prime rate or
the 30-day LIBOR rate plus .45%. At June 30, 1995 there were no amounts
outstanding under this line of credit. Management expects to maintain this
line of credit for an indefinite period.
The Company expects to finance its normal operating requirements and future
revenue equipment purchases through cash from operations and secured
borrowings.
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders on May 5, 1995, Michael
S. Starnes, Carl J. Mungenast, James W. Welch, M.J. Barrow, Robert P. Hurt,
Gary S. Hardeman, Morris H. Fair and Jack H. Morris, III, were re-elected
as directors upon a vote of 9,805,188 for, 2,900 against and 99,200
abstaining. The Non-Employee Director's Stock Option Plan was approved at
the meeting upon a vote of 9,793,308 for, 93,590 against and 20,340
abstaining. No other matters were submitted to a vote of security holders
during the second quarter of 1995.
PART II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) The exhibits filed as a part of this report are listed below:
Exhibit Number Description of Exhibit
_____________________________________________________________________________
3A Restated Charter of M.S. Carriers, Inc.*
3B Articles of Amendment to Charter of
M.S. Carriers, Inc.**
3C Amended and Restated By-Laws of M.S. Carriers, Inc.**
10A Incentive Stock Option Plan*
10B Amendment to Incentive Stock Option Plan*
10C 1993 Stock Option Plan**
10D Non-Employee Directors Stock Option Plan***
10E Employment Agreements with James W. Welch, M.J.
Barrow and Robert P. Hurt*
10F Employment Agreement with Michael S. Starnes
10G Employment Agreement with Carl J. Mungenast
10H 1993 Incentive Plan for Designated Key Employees
11 Statement regarding computation of per share
earnings
27 Financial Data Schedule
* Incorporated by references from exhibits to the
Registrant's Registration Statement on Form S-1
(Registration Number 33-12070).
** Incorporated by references from exhibits to the
Registrant's Registration Statement on Form S-3
(Registration Number 33-63280).
*** Incorporated by reference from Registrant's Proxy
Statement dated March 31, 1995.
(b) The Company did not file any reports on Form 8-K during the three months
ended June 30, 1995.
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.
M.S. Carriers, Inc.
(Registrant)
August 14, 1995 Dwight Bassett
Date
Dwight Bassett, Controller
(Principal Financial Officer of the
Company)
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
__________________________________________________________________________
10F Employment Agreement with 15
Michael S. Starnes
10G Employment Agreement with 19
Carl J. Mungenast
10H 1993 Incentive Plan for 24
Designated Key Employees
11 Statement regarding computation 8
of per share earnings --
See Note 2 of the notes to
financial statements included
in Part I