UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year Commission file number 0-14759
ended December 29, 1995
KLLM TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 64-0412551
State or other jurisdiction of IRS Employer Identification No.)
incorporation or organization)
3475 Lakeland Drive
Jackson, Mississippi 39208
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(601) 939-2545
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Value
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
Aggregate market value of voting stock held by nonaffiliates of the
registrant as of the close of business on February 21, 1996: $34,979,070.
The number of shares outstanding of registrant's common stock as of
February 21, 1996: 4,358,653.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference:
Document Part
Annual Report to Shareholders for year ended
December 29, 1995 II
Definitive Proxy Statement for Annual Meeting of
Shareholders to be held April 16, 1996 filed
with the Securities and Exchange Commission
pursuant to Regulation 14A III
Only the portions of KLLM Transport Services, Inc.'s 1995 Annual Report
to Shareholders and Proxy Statement which are expressly incorporated by
reference in this Annual Report on Form 10-K are deemed filed as part of
this report.
KLLM TRANSPORT SERVICES, INC.
FORM 10-K
TABLE OF CONTENTS
PART I PAGE
1. Business............................................4
2. Properties..........................................6
3. Legal Proceedings...................................7
4. Submission of Matters to a Vote of
Security Holders....................................7
PART II
5. Market for Registrant's Common
Equity and Related Stockholder Matters..............8
6. Selected Financial Data.............................8
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......8
8. Financial Statements and Supplementary Data.........8
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure..............8
PART III
10. Directors and Executive Officers
of the Registrant...................................8
11. Executive Compensation..............................9
12. Security Ownership of Certain Beneficial
Owners and Management...............................9
13. Certain Relationships and Related Transactions......9
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.........................................10
PART I
Item 1. Business.
KLLM Transport Services, Inc. (through its wholly-owned subsidiary,
KLLM, Inc., and KLLM, Inc.'s wholly-owned subsidiaries, KLLM Maintenance, Inc.,
Gulf Logistics, Inc., KLLM Contract Logistics, Inc., KLLM Trading Company, and
Fresh International Transportation Services, Inc., hereinafter referred to as
"the Company") is an irregular-route common carrier that specializes in
providing high-quality transportation service in North America. The Company
primarily serves the continental United States, Canada and Mexico.
The Company, a Delaware corporation, is the successor by merger to KLLM
Distributing, Inc. ("KLLM Distributing"), a Mississippi corporation,
incorporated in 1964. The Company owns all of the outstanding shares of KLLM,
Inc., a Texas corporation, which owns (either in fee or as lessee) and operates
substantially all of the Company's tractors and trailers and holds all of the
operating rights presently used in the Company's business.
The Company offers transportation services for both temperature-
controlled and dry commodities. It strives to provide dependable and timely
service designed to meet the specialized needs of its customers. The majority
of the Company's revenues, approximately 70%, are in the temperature-
controlled sector. Protective service is provided on commodities such as
food, medical supplies and cosmetics. Service offerings include over-the-road
long haul, regional and intermodal transportation. These services are provided
via: 1) the traditional over-the-road temperature-controlled freight operations
with both Company-operated and owner-operated equipment, 2) the intermodal, or
rail services, division, which handles movement of freight in temperature-
controlled trailers and containers on flat cars carried by the rail industry,
3) the brokerage services division, which allows the Company to contract with
other transporters for the movement of freight, when necessary, allowing the
customer to stay within the KLLM family, and 4) the dry-van over-the-road
truckload services, which began May 1, 1995 with the acquisition of
substantially all of the assets of Vernon Sawyer, Inc., a regional dry-van
truckload carrier based in Bastrop, Louisiana. At the end of 1995, the Company
discontinued that segment of the international operations aimed at maritime
containerized shipments.
The Company currently owns (or leases) and operates substantially all
of its fleet. On December 29, 1995, the Company's fleet consisted of 1,485
Company-operated tractors and 291 owner-operated tractors, 2,150 temperature-
controlled trailers and 384 dry-van trailers, and 202 temperature-
controlled rail containers. Capital expenditures, net of proceeds from
trade-ins during 1995, were approximately $8,724,000. This was much less
significant than in prior years, primarily because KLLM, Inc., in January 1995,
entered into an operating lease for the majority of its revenue equipment needs
for 1995. The payment terms of the operating lease were more favorable than
could have been obtained with financing or capital leasing. Net capital
expenditures in 1996 are expected to be approximately $25,921,000 as the
Company returns to its traditional method of investing in maintaining a
modern fleet.
Marketing and Operations
Because the Company specializes in temperature-controlled shipments,
it constantly seeks to increase the percentage of its revenue derived from
freight requiring controlled temperatures because rates on these loads are
generally higher than dry freight (non-temperature-controlled) loads and
result in higher returns on the Company's more expensive temperature-
controlled equipment. For the year ended December 29, 1995, approximately 70%
of the Company's revenues resulted from temperature-controlled loads. The
remaining 30% resulted from dry freight loads that required special service
or that positioned equipment for the next load. The Company seeks customers who
need a number of trucks per week committed to long hauls and who require
dependable service in meeting scheduling requirements.
The Company's full-time staff of ten (10) salespersons, along with
each division's executive, is responsible for developing new accounts in
assigned areas of the United States. Once a customer relationship is
established, the primary Company contact is one of eight (8) area managers.
Working from the Company's corporate headquarters in Jackson, Mississippi,
the area managers contact existing customers to solicit additional business.
The Company has driver terminal operations in Georgia, Texas,
Louisiana, California, Pennsylvania, Indiana, Mississippi, Arizona, and North
Carolina. Maintenance facilities are located in Mississippi, Georgia, and
Texas. The Company also has brokerage service operations in Mississippi,
Georgia, Texas, Florida, Pennsylvania, Louisiana, Virginia, and Washington.
The Company's largest 25, 10 and 5 customers accounted for approximately
61%, 45%, and 32%, respectively, of its revenue for the year ended December 29,
1995. During 1995, no one customer accounted for more than 10% of the
Company's revenues.
Maintenance
The Company has a comprehensive preventive maintenance program for its
tractors and trailers, which is carried out at its Jackson, Mississippi,
Dallas, Texas, and Atlanta, Georgia facilities. The Company's policy is to
purchase standardized tractors and trailers manufactured to Company
specifications.
Standardization enables the Company to control the cost of its spare parts
inventory and streamline its preventive maintenance program.
Manufacturers of tractors are required to certify that new tractors meet
federal emissions standards, and the Company receives this certification on
each new tractor it acquires. Environmental protection measures require the
Company to adhere to a fuel and oil spill prevention plan and to comply with
regulations concerning the discharge of waste oil. The Company believes it is
in compliance with all applicable provisions relating to the protection of the
environment. Management does not anticipate that compliance with these
provisions will have a material effect on the Company's capital expenditures,
earnings or competitive position.
Personnel
Drivers are recruited at all driver terminal locations. On December 29,
1995, the Company employed 1,808 drivers and had a total of 2,322 employees.
None of the Company's employees is represented by a collective bargaining unit.
Competition
The freight transportation industry has become highly competitive. The
Company competes primarily with other long-haul temperature-controlled
truckload carriers and with internal shipping conducted by existing and
potential customers. The Company also competes with other irregular-route
long-haul truckload carriers, and to a lesser extent, the railroads, for dry
freight loads. Although the increased competition resulting from deregulation
has created some pressure to reduce rates, the Company competes primarily on
the basis of its quality of service and efficiency.
Trademark
The Company's service mark, the KLLM logo, is registered with the United
States Patent and Trademark Office.
Seasonality
In the freight transportation industry generally, results of operations
show a seasonal pattern because customers reduce shipments during and after the
winter holiday season with its attendant weather variations. The Company's
operating expenses have historically been higher in the winter months primarily
due to decreased fuel efficiency and increased maintenance costs in colder
weather.
Item 2. Properties.
The Company's corporate office is situated on approximately seven acres
of land and contains approximately 20,600 square feet of office space. Most of
the Company's executive and administrative functions, except those that are
driver-related, are housed in the corporate office. The corporate office is
located in Flowood, Mississippi, a suburb of Jackson. In order to
accommodate the growth of the Company, additional space is leased in the
general vicinity of the corporate office for various executive and
administrative functions.
The Company also maintains a facility located in Richland, Mississippi,
a suburb of Jackson, which houses all driver related executive and
administrative functions, including safety, driver training, maintenance, and
driver recruiting. The Company owns a portion of the land on which this
facility is located. The remainder is owned by Benjamin C. Lee, Jr. and the
Estate of William J. Liles, Jr. The Company owns all of the improvements,
consisting of approximately 31,200 square feet of office space and
approximately 52,000 square feet of equipment repair and maintenance space.
The Company has an option to purchase the Lee and Liles part of the land
for $390,257. Mr. Lee and Mr. Liles' estate are principal shareholders
of the Company and Mr. Lee is Chairman of the Company's Board of Directors.
The Company owns and operates a maintenance and driver terminal
facility near Dallas, Texas. This facility, which consists of approximately
8,000 square feet of office space and 13,700 square feet of equipment repair
and maintenance space, is located on approximately nine acres of land.
The Company also owns and operates a maintenance and driver terminal
operation in Atlanta, Georgia. This facility, which includes two buildings
containing approximately 5,000 square feet of office space and 20,000 square
feet of maintenance space, is located on approximately eighteen acres of land.
Additionally, with the purchase of substantially all of the assets of
Vernon Sawyer, Inc., effective May 1, 1995, the Company acquired 19.715 acres
of land with all improvements thereon. The facilities located thereon include
approximately 8,054 square feet of office space and 36,484 square feet of
maintenance space.
The remaining driver terminal facilities and the Company's brokerage
operations facilities are leased by the Company pursuant to various
short-term leases.
Item 3. Legal Proceedings.
The Company is involved in various claims and routine litigation
incidental to its business. Although the amount of ultimate liability,
if any, with respect to these matters cannot be determined, management
believes that these matters will not have a materially adverse effect
on the Company's consolidated financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
"Market and Dividend Information" on page 5 of the Company's
1995 Annual Report to Shareholders is incorporated herein by reference
in response to this item.
Item 6. Selected Financial Data.
"Selected Financial and Operating Data" on page 4 of the Company's
1995 Annual Report to Shareholders is incorporated herein by reference in
response to this item.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 6-9 of the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference in response to this item.
Item 8. Financial Statements and Supplementary Data.
The Report of Independent Auditors and the consolidated financial
statements included on pages 10-19 of the Company's 1995 Annual Report to
Shareholders are incorporated herein by reference in response to this item.
"Selected Quarterly Data (Unaudited)" on page 5 of the Company's
31995 Annual Report to Shareholders is incorporated herein by reference in
response to this item.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information under the caption, "Election of Directors--Nominees
for Director," of the Company's definitive proxy statement for its scheduled
April 16, 1996 Annual Meeting of Shareholders filed with the Securities and
Exchange Commission pursuant to Regulation 14A, is incorporated herein by
reference in response to this item.
The information under the caption, "Election of Directors--
Management," of the Company's definitive proxy statement for its scheduled
April 16, 1996 Annual Meeting of Shareholders filed with the Securities and
Exchange Commission pursuant to Regulation 14A, is incorporated herein by
reference in response to this item.
The information under the caption, "Compliance with Section 16(a) of
the Securities and Exchange Act of 1934" of the Company's definitive proxy
statement for its scheduled April 16, 1996 Annual Meeting of Shareholders filed
with the Securities and Exchange Commission pursuant to Regulation 14A, is
incorporated herein by reference in response to this item.
Item 11. Executive Compensation.
The information under the captions, "Executive Compensation; Director
Compensation; Compensation Committee Report on Executive Compensation;
Compensation Committee Interlocks and Insider Participation; Stock Option Plan;
Employee Stock Purchase Plan ("ESPP") and Performance Graph" of the Company's
definitive proxy statement for its scheduled April 16, 1996 Annual Meeting of
Shareholders filed with the Securities Exchange Commission pursuant to
Regulation 14A, is incorporated herein by reference in response to this
item.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under the caption "Election of Directors--Stock
Ownership," of the Company's definitive proxy statement for its scheduled
April 16, 1996 Annual Meeting of Shareholders filed with the Securities and
Exchange Commission pursuant to Regulation 14A, is incorporated herein by
reference in response to this item.
Item 13. Certain Relationships and Related Transactions.
The information contained in the section titled "Certain Transactions"
on page 5 of the Company's definitive proxy statement for its scheduled April
16, 1996 Annual Meeting of Shareholders filed with the Securities and Exchange
Commission pursuant to Regulation 14A, is incorporated herein by reference in
response to this item.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
a. The following documents are filed, as part of this
report or incorporated by reference herein:
1. Financial Statements
The following consolidated financial statements of the Company
and its subsidiaries, included in the Company's Annual Report, are
incorporated by reference in Item 8:
Consolidated Balance Sheets--December 30, 1994 and
December 29, 1995.
Consolidated Statements of Operations--Years ended
January 2, 1994, December 30, 1994 and December 29,
1995.
Consolidated Statements of Stockholders' Equity--Years
ended January 2, 1994, December 30, 1994 and December 29, 1995.
Consolidated Statements of Cash Flows--Years ended
January 2, 1994, December 30, 1994 and December 29, 1995.
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following consolidated financial statement schedule is
included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
3. Listing of Exhibits
(i) Exhibits filed pursuant to Item 601 of Regulation S-K
Exhibit Number Description
3(a) Bylaws of Registrant
3(b) Certificate of Incorporation (as amended)
10(a) Amended and Restated Stock Option Plan
10(c) KLLM, Inc. Retirement Plan and Trust (as
amended)
10(g) 1986 Lease with Mr. Lee and Mr. Liles
Covering Corporate Headquarters
10(m) Employee Stock Purchase Plan (as
amended)
10(r) Options granted to Mr. Young and Dr.
Neely
10(z) First Amendment to Options granted to
Mr. Young and Dr. Neely
10(aa) KLLM, Inc. Cafeteria Plan
10(bb) KLLM Maintenance, Inc. Retirement Plan
and Trust Agreement
10(cc) Option to purchase real property on which
terminal facility is located from Messrs.
Liles and Lee
10(dd) Stock Purchase Agreement by and
between KLLM, Inc. and Fresh International
Corp.
10(ee) Revolving Credit Agreement by and
among KLLM, Inc., NationsBank
of Georgia, National Association,
The First National Bank of Chicago,
Deposit Guaranty National Bank,
and ABN Amro Bank, N.V.
10(ff) Employment Agreement between
KLLM Transport Services, Inc.
and Steven K. Bevilaqua
10(gg) Options granted to Steven K. Bevilaqua
10(hh) Asset Purchase Agreement by and
among Vernon Sawyer, Inc. and
Vernon and Nancy Sawyer as Sellers
and KLLM, Inc. as Purchaser (schedules
furnished upon request)
13 1995 Annual Report (only portions
incorporated by reference are deemed
filed)
21 List of Subsidiaries of the Registrant
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
(b) Reports on Form 8-K filed in the fourth quarter of 1995: None
(c) Exhibits--The response to this portion of Item 14 is submitted
as a separate section of this report.
(d) Financial Statements Schedules--The response to this portion of
Item 14 is submitted as a separate section of this report.
INFORMATION REGARDING THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
INCLUDED PURSUANT TO RULE 15d-21.
1. Full title of the Plan:
KLLM Transport Services, Inc. Employee Stock Purchase Plan
2. Name of issuer of the securities held pursuant to the Plan and
the address of its principal executive office:
KLLM Transport Services, Inc.
3475 Lakeland Drive
Jackson, Mississippi 39208
3. Financial Statements and Exhibits
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to
be signed on its behalf by the undersigned thereunto duly authorized.
KLLM TRANSPORT SERVICES, INC.
Date: March 28, 1996 By: /s/ Steven K. Bevilaqua
Steven K. Bevilaqua
President, Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 28, 1996 /s/ Benjamin C. Lee, Jr.
Benjamin C. Lee, Jr.
Chairman of the Board of Directors
Date: March 28, 1996 /s/ Steven K. Bevilaqua
Steven K. Bevilaqua
President, Chief Executive Officer and
Director
Date: March 28, 1996 /s/ James Leon Young
James Leon Young
Secretary and Director
Date: March 28, 1996 /s/ Walter P. Neely
Walter P. Neely
Director
Date: March 28, 1996 /s/ Leland R. Speed
Leland R. Speed
Director
Date:
C. Tom Clowe, Jr.
Director
Date: March 28, 1996 /s/ J. Kirby Lane
J. Kirby Lane
Executive Vice President and
Chief Financial Officer
Date: March 28, 1996 /s/ Cindy F. Bailey
Cindy F. Bailey
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Board of Directors, administrators of the KLLM Transport Services, Inc.
Employee Stock Purchase Plan, have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
KLLM TRANSPORT SERVICES, INC. EMPLOYEE
STOCK PURCHASE PLAN
Date: March 28, 1996 By: /s/ Steven K. Bevilaqua
Steven K. Bevilaqua
President, Chief Executive Officer and
Director
ITEM 14(a)(2) and (c)
FINANCIAL STATEMENT SCHEDULES
KLLM TRANSPORT SERVICES, INC. and SUBSIDIARIES
SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS
Years Ended January 2, 1994, December 30, 1994, and December 29, 1995
BALANCE AT CHARGED TO WRITE-OFF BALANCE AT
BEGINNING COST AND OF END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS OF
PERIOD
(In Thousands)
Allowance for Claims:
Year ended January 2, 1994 $145 $ 426 $426 $145
Year ended December 30, 1994 $145 $ 954 $952 $147
Year ended December 29, 1995 $147 $ 1,239 $907 $479
EXHIBIT INDEX
Exhibit Number Description Page
3(a) Bylaws of Registrant
3(b) Certificate of Incorporation
(as amended)
10(a) Amended and Restated Stock
Option Plan
10(c) KLLM, Inc. Retirement Plan and
Trust (as amended)
10(g) 1986 Lease with Mr. Lee and
Mr. Liles Covering Corporate
Headquarters
10(m) Employee Stock Purchase
Plan (as amended)
10(r) Options granted to Mr. Young
and Dr. Neely
10(z) First Amendment to Options granted
to Mr. Young and Dr. Neely
10(aa KLLM, Inc. Cafeteria Plan
10(bb KLLM Maintenance, Inc. Retirement
Plan and Trust Agreement
10(cc Option to purchase real property
on which terminal facility
is located from Messrs. Liles
and Lee
10(dd) Stock Purchase Agreement by and
between KLLM, Inc. and Fresh
International Corp.
10(ee) Revolving Credit Agreement by and
among KLLM, Inc., NationsBank
of Georgia, National Association,
The First National Bank of Chicago,
Deposit Guaranty National Bank,
and ABN Amro Bank, N. V.
10(ff) Employment Agreement between
KLLM Transport Services, Inc.
and Steven K. Bevilaqua
10(gg) Options granted to Steven K. Bevilaqua
10(hh) Asset Purchase Agreement by and among
Vernon Sawyer, Inc. and Vernon and
Nancy Sawyer as Sellers and KLLM,
Inc. as Purchaser (schedules furnished
upon request)
13 1995 Annual Report (Only portions
incorporated by reference are
deemed filed)
21 List of Subsidiaries of the Registrant
23 Consent of Ernst & Young LLP
27 Financial Data Schedule