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 September 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 October 1, 1995 - 12,878,300
M.S. Carriers, Inc.
Index to Form 10-Q
Contents
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Balance Sheets as of September 30, 1995 and December 31, 1994............ 3
Statements of Income for the Three Months Ended September 30, 1995
and 1994 and the Nine Months Ended September 30, 1995 and 1994......... 5
Statement of Stockholders' Equity for the Nine Months Ended
September 30, 1995...................................................... 6
Statements of Cash Flows for the Nine Months Ended
September 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................................................ 12
Item 2 - Changes in Securities............................................ 12
Item 3 - Defaults Upon Senior Securities.................................. 12
Item 4 - Submission of Matters to a Vote of Security Holders.............. 12
Item 5 - Other Information................................................ 12
Item 6 - Exhibits and Reports on Form 8-K................................. 13
Signatures................................................................ 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30 December 31
1995 1994
_________________________________________
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 3,360,502 $ 30,806,731
Accounts receivable:
Trade, net 29,848,721 33,327,599
Officers and employees 834,426 457,165
____________ ____________
30,683,147 33,784,764
Recoverable income taxes 389,481
Deferred income taxes 5,515,000 4,774,000
Prepaid expenses and other 5,481,912 4,419,081
____________ ____________
Total current assets 45,430,042 73,784,576
Property, plant and equipment:
Land and land improvements 6,221,980 6,201,674
Buildings 24,432,584 23,393,800
Revenue equipment 253,731,203 232,771,820
Service equipment and other 32,918,239 28,531,425
Construction in progress 7,416,168 2,813,438
____________ ____________
324,720,174 293,712,157
Accumulated depreciation and
amortization 96,431,237 95,019,410
____________ ____________
228,288,937 198,692,747
Other assets 4,163,333 3,595,196
____________ ____________
Total assets $277,882,312 $276,072,519
____________ ____________
____________ ____________
M.S. Carriers, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
September 30 December 31
1995 1994
_________________________________________
(Unaudited)
Liabilities and stockholders'
equity
Current liabilities:
Trade accounts payable $ 5,728,510 $ 6,341,525
Accrued expenses 8,851,296 8,277,724
Claims payable 14,113,156 12,325,226
Incomes taxes payable 1,256,186
Current maturities of
long-term debt 17,101,569 16,693,512
____________ ____________
Total current liabilities 45,794,531 44,894,173
Long-term debt, less current
maturities 38,339,181 51,186,613
Deferred income taxes 35,659,445 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 95,211,549 84,842,041
Equity adjustment from foreign
currency translation (1,389,086) (1,185,000)
____________ ____________
Total stockholders' equity 158,089,155 147,923,733
Total liabilities and stockholders'
equity $277,882,312 $276,072,519
____________ ____________
____________ ____________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____________________________________________________________
Operating revenues $ 84,326,406 $ 80,303,567 $250,568,876 $210,294,598
Operating expenses:
Salaries, wages and benefits 32,533,431 29,679,173 94,997,826 80,734,181
Operations and maintenance 17,001,491 16,101,324 50,830,687 47,473,628
Taxes and licenses 2,514,021 2,226,907 7,603,309 6,321,129
Insurance and claims 4,018,213 3,982,140 11,674,408 10,483,319
Communications and utilities 1,678,114 1,116,205 4,680,409 3,182,513
Depreciation and amortization 9,818,082 8,731,535 29,015,451 24,552,950
Rent and purchased transportation 11,215,610 8,601,915 30,987,300 14,716,243
Other 621,009 577,421 1,769,219 1,533,749
____________ ____________ ____________ ____________
$ 79,399,971 $ 71,016,620 $231,558,609 $188,997,712
____________ ____________ ____________ ____________
Operating income 4,926,435 9,286,947 19,010,267 21,296,886
Other expense (income):
Interest expense 1,008,931 487,425 2,942,070 1,216,978
Other (92,953) (13,493) (156,811) (75,756)
____________ ____________ ____________ ____________
915,978 473,932 2,785,259 1,141,222
____________ ____________ ____________ ____________
Income before income taxes 4,010,457 8,813,015 16,225,008 20,155,664
Income taxes 1,429,377 3,463,000 5,855,500 7,966,000
____________ ____________ ____________ ____________
Net income $ 2,581,080 $ 5,350,015 $ 10,369,508 $ 12,189,664
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Earnings per share $0.20 $0.41 $0.79 $0.93
____________ ____________ ___________ ___________
____________ ____________ ___________ ___________
See accompaning notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Unaudited)
Nine Months Ended September 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 10,369,508 10,369,508
Equity Adjustment
from Foreign
Currency
Translation (204,086) (204,086)
__________________________________________________________________________
Balance at September
30, 1995 12,878,300 $128,783 $64,137,909 $95,211,549 $ (1,389,086) $158,089,155
__________________________________________________________________________
__________________________________________________________________________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30
1995 1994
___________________________________________
Operating activities
Net income $ 10,369,508 $ 12,189,664
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 29,015,451 24,552,950
Loss on disposals of property
and equipment 117,008
Provision for losses on accounts
receivable 170,950
Other 161,648
Provision for deferred income taxes 2,850,445 4,696,000
Changes in operating assets and
liabilities:
Accounts receivable 3,101,617 (8,753,582)
Current and other assets (2,449,798) 1,280,754
Trade accounts payable (613,015) 1,171,140
Other current liabilities 1,105,316 4,930,043
_____________ ____________
33,171,664 28,165,263
_____________ ____________
Net cash provided by operating
activities 43,541,172 40,354,927
Investing activities
Purchases of property, plant and
equipment (59,033,026) (58,588,483)
Proceeds from disposals of property
and equipment 485,000 1,304,272
_____________ ____________
Net cash used in investing
activities (58,548,026) (57,284,211)
Financing activities
Proceeds from revolving line of
credit and long-term debt 68,257,716
Proceeds from issuance of Common
Stock 19,183
Principal payments on revolving
line of credit and long-term debt (12,439,375) (51,341,716)
_____________ _____________
Net cash provided by (used in)
financing activities (12,439,375) 16,935,183
_____________ _____________
Increase (decrease) in cash and cash
equivalents (27,446,229) 5,899
Cash and cash equivalents at
beginning of period 30,806,731 110,080
_____________ _____________
Cash and cash equivalents at end
of period $ 3,360,502 $ 115,979
_____________ ______________
_____________ ______________
See accompanying notes.
M.S. Carriers, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 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 nine
month period ended September 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 Nine Months Ended
September 30 September 30
1995 1994 1995 1994
_________________________________________________________
Average common shares outstanding 12,878,300 12,878,300 12,878,300 12,878,300
Common stock equivalents 176,828 219,691 193,660 220,651
____________ ____________ ____________ ___________
Average common shares and common
stock equivalents 13,055,128 13,097,991 13,071,960 13,098,951
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income $ 2,581,080 $ 5,350,015 $ 10,369,508 $12,189,664
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Net income per common and
equivalent share $0.20 $0.41 $0.79 $0.93
____________ ____________ ____________ ___________
____________ ____________ ____________ ___________
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following table sets forth the percentage relationship of revenue
and expense items to operating revenues for the periods indicated.
Percentage of Operating Revenues
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____________________________________________________________
Operating revenues 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits 38.6 37.0 37.9 38.4
Operations and maintenance 20.2 20.0 20.3 22.6
Taxes and licenses 3.0 2.8 3.0 3.0
Insurance and claims 4.8 5.0 4.6 5.0
Communications and utilities 2.0 1.4 1.9 1.5
Depreciation and amortization 11.6 10.8 11.6 11.7
Rent and purchased transportation 13.3 10.7 12.4 7.0
Other 0.7 0.7 0.7 0.7
____________ ____________ ____________ ____________
Total operating expenses 94.2 88.4 92.4 89.9
____________ ____________ ____________ ____________
Operating income 5.8 11.6 7.6 10.1
Interest expense (1.2) (0.6) (1.2) (0.6)
Other income 0.1 --- 0.1 0.1
____________ ____________ ____________ ____________
Income before income taxes 4.7 11.0 6.5 9.6
Income taxes 1.7 4.3 2.4 3.8
____________ ____________ ____________ ____________
Net income 3.0% 6.7% 4.1% 5.8%
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Results of Operations
Operating revenues for the first nine months of 1995 increased 19% over the
same period in the prior year. For the quarter ended September 30, 1995,
operating revenues increased 5% over the same quarter of 1994. The Company's
growth in revenues slowed during the quarter ended September 30, 1995, as a
result of softness in the markets which the Company serves as well as
increased competition from other carriers. Management expects its revenue
growth to continue to be slowed during the remaining months of 1995.
The operating ratio (operating expenses as a percent of operating revenues)
for the first nine months of 1995 was 92.4% compared to 89.9% for the same
period in 1994 and was 94.2% for the third quarter of 1995 compared to 88.4%
for the same period in 1994.
Salaries, wages and benefits increased to 38.6% of operating revenues for the
three-month period ended September 30, 1995 from 37.0% for the same period in
1994, due primarily to a wage increase for drivers which was
implemented in the fourth quarter of 1994. However, salaries, wages and
benefits as a percentage of operating revenues for the nine-month period
ended September 30, 1995 was 37.9% compared to 38.4% for the nine-month
period ended September 30, 1994. This decrease for the nine-month
period is due to the Company's increased use of owner-operators
during 1995. The utilization of owner-operators results in operating revenues
and the amounts paid to owner-operators are recorded as purchased
transportation.
Operations and maintenance decreased to 20.3% of operating revenues for the
nine-month period ended September 30, 1995 from 22.6% for the nine-month
period ended September 30, 1994, due primarily to the increased use of owner-
operators. The Company began increasing its use of owner-operators during the
third quarter of 1994.
Rent and purchased transportation increased to 12.4% and 13.3%, respectively,
for the nine-month and three-month periods ended September 30, 1995 from
7.0% and 10.7%, respectively, for the same periods ended September 30, 1994.
These increases resulted from the increased use of owner-operators and the
expansion of the Company's logistic operations.
The increase in interest expense is due to the increase in outstanding
debt during the nine-month and three-month periods ended September 30,
1995 compared to the same periods in 1994.
The effective tax rates were 36.1% and 39.5% for the nine-month period ended
September 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 nine-month
period ending September 30, 1995, the Company expended in excess of
$58,000,000 for purchases of property, plant and equipment funded solely
through cash from operations and cash on hand at December 31, 1994.
During this same period, the Company reduced its long-term debt by
approximately $12,400,000. At September 30, 1995, the Company had
obligations of approximately $55,000,000 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 September 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 1. Legal Proceedings
The Company is involved in certain ordinary routine litigation incidental
to its business. The Company does not expect that the outcome of any of
these proceedings will have a material adverse effect upon the Company's
operations or its financial position.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
third quarter of 1995.
Item 5. Other Information
None
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 - see Note 2 of the notes to financial
statements included in Part I - Financial
Information
27 Financial Data Schedule
* Incorporated by reference from exhibits to the
Registrant's Registration Statement on Form S-1
(Registration Number 33-12070).
** Incorporated by reference 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.
**** Incorporated by reference from exhibits to the
Registrant's 2nd Quarter 1995 Form 10-Q.
b) The Company did not file any reports on Form 8-K during the three months
ended September 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)
November 10, 1995 Dwight Bassett
Date
Dwight Bassett, Controller
(Chief Accounting Officer of the
Company)