Page 1 of 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
/___/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10105
MATLACK SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0310173
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Rollins Plaza, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
(302) 426-2700
(Registrant's telephone number, including area code)
(Former name of registrant)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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 _____
The number of shares of the registrant's common stock outstanding as
of June 30, 1995 was 8,795,832.
FORM 10-Q Page 2 of 7
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions to Form
10-Q and 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 quarter and nine months
ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year ending September 30, 1995. These statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report to Shareholders and Form
10-K for the year ended September 30, 1994.
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Quarter Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
Operating revenues $61,301 $56,129 $179,136 $160,708
Operating expenses 49,546 45,566 147,336 133,284
Depreciation 2,630 2,045 7,345 6,264
Selling and administrative
expenses 4,497 4,513 13,869 13,295
Interest expense 842 519 2,431 1,520
Other (income) (3) (27) (107) (395)
57,512 52,616 170,874 153,968
Earnings before income taxes 3,789 3,513 8,262 6,740
Income taxes 1,551 1,442 3,408 2,797
Net earnings $ 2,238 $ 2,071 $ 4,854 $ 3,943
Earnings per share $ .25 $ .23 $ .54 $ .44
Average common shares and
equivalents outstanding (000) 8,923 8,898
Dividends paid per common share None None None None
FORM 10-Q Page 3 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
June 30, September 30,
ASSETS 1995 1994
Current assets
Cash $ 2,309 $ 5,039
Accounts receivable, net of allowance
for doubtful accounts: June-$391;
September-$390 25,563 27,385
Inventory of tires, parts and supplies 6,775 7,267
Other current assets 3,469 3,073
Deferred income taxes 1,537 1,852
Total current assets 39,653 44,616
Property and equipment, at cost, net of
accumulated depreciation of:
June-$113,260; September-$131,482 92,508 77,771
Other assets 50 139
Total assets $132,211 $122,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 11,109 $ 15,748
Accrued liabilities 9,536 10,971
Income taxes payable 227 99
Current maturities of equipment financing
obligations and long-term debt 6,143 5,656
Total current liabilities 27,015 32,474
Equipment financing obligations 32,480 22,103
Long-term debt 1,953 2,697
Other liabilities 4,185 4,702
Deferred income taxes 10,820 9,824
Commitments and contingent liabilities
See Part II, Item 1. Legal Proceedings
Shareholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized; issued and
outstanding - None
Common stock, $1 par value, 24,000,000 shares
authorized; issued and outstanding:
June-8,795,832; September-8,756,326 8,796 8,757
Capital in excess of par value 10,871 10,732
Retained earnings 36,091 31,237
Total shareholders' equity 55,758 50,726
Total liabilities and
shareholders's equity $132,211 $122,526
FORM 10-Q Page 4 of 7
MATLACK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Nine Months
Ended June 30,
1995 1994
Cash flows from operating activities:
Net earnings $ 4,854 $ 3,943
Reconciliation of net earnings to net
cash flows from operating activities:
Depreciation 7,345 6,314
Current and deferred income taxes 1,669 (202)
Decrease (increase) in accounts
receivable 1,822 (1,712)
(Decrease) increase in accounts
payable and accrued liabilities (6,074) 2,455
Net (gain) on sale of equipment (107) (395)
Other, net (562) (868)
Net cash flows from operating
activities 8,947 9,535
Cash flows from investing activities:
Purchase of property and equipment (24,732) (12,779)
Proceeds from sale of equipment 2,757 826
Net cash flows used in investing
activities (21,975) (11,953)
Cash flows from financing activities:
Proceeds of equipment financing
obligations 36,752 12,710
Repayment of equipment financing
obligations (25,889) (8,946)
Proceeds of long-term debt - 1,000
Repayment of long-term debt (744) (2,829)
Proceeds of stock options exercised 179 203
Net cash flows from financing
activities 10,298 2,138
Net decrease in cash (2,730) (280)
Cash beginning of period 5,039 4,033
Cash end of period $ 2,309 $ 3,753
Supplemental information:
Interest paid $ 2,480 $ 1,383
Income taxes paid $ 1,739 $ 2,999
FORM 10-Q Page 5 of 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Nine Months Ended June 30, 1995 vs. Nine Months
Ended June 30, 1994
Operating revenues for the first nine months of 1995 increased by
$18,428,000 (11.5%). The number of loads carried increased by 6.3% while
total revenue miles increased by 10.4% in 1995. The Company's other
service revenues included in operating revenues also increased during the
first nine months of 1995.
Operating expenses increased by $14,052,000 (10.5%) due mainly to costs
associated with the increased fleet size. Operating expenses decreased
to 82.2% of revenue in 1995 compared with 82.9% in 1994.
Depreciation expense increased by $1,081,000 (17.3%) principally due
to the increase in capital expenditures associated with the Company's
recently completed tractor replacement program.
Selling and administrative expenses increased by $574,000 (4.3%)
reflecting the increased level of business. These expenses were 7.7% of
revenues in 1995 compared with 8.3% in 1994.
Interest expense increased by $911,000 (59.9%) due to the higher
borrowing levels associated with the Company's increased level of capital
expenditures.
The effective income tax rates for the nine months of 1995 and 1994
were 41.25% and 41.5%, respectively.
Net earnings increased by 23.1% to $4,854,000 or $.54 per share from
$3,943,000 or $.44 per share in 1994. The improvement in net earnings
resulted mainly from the increased revenues offset in part by higher
depreciation and interest expense.
Results of Operations: Quarter Ended June 30, 1995 vs. Quarter Ended
June 30, 1994
Operating revenues for the third quarter increased by $5,172,000 (9.2%)
over the same quarter of 1994. The number of loads carried increased by
4.7% and the revenue per load increased slightly. Other service revenues
included in operating revenues also increased during the third quarter.
On a combined basis, operating expenses and depreciation increased by
$4,565,000 (9.6%) and were 85.1% of revenues in 1995 compared with 84.8%
in 1994. The percentage increase when compared with revenues reflects
the higher levels of depreciation.
Operating expenses increased by $3,980,000 (8.7%) reflecting the
increase in revenues. Operating expenses decreased to 80.8% of revenues
in 1995 compared with 81.2% in 1994.
Depreciation expense increased by $585,000 (28.6%) due to the increase
in capital expenditures associated with the Company's recently completed
tractor replacement program.
FORM 10-Q Page 6 of 7
Selling and administrative expenses decreased by $16,000 (.4%) and
decreased as a percentage of revenue to 7.3% in 1995 from 8.0% in 1994.
Interest expense increased by $323,000 (62.2%) due to the higher level
of capital expenditures in 1995 versus 1994.
The effective income tax rates for the third quarter of 1995 and 1994
were 40.9% and 41.0%, respectively.
Net earnings increased by 8.1% to $2,238,000 or $.25 per share from
$2,071,000 or $.23 per share. The improvement in earnings resulted
mainly from the increase in revenues and lower operating costs offset in
part by increased interest and depreciation expense.
Liquidity and Capital Resources
During the first nine months of 1995, the Company financed its capital
expenditures through a combination of cash flows from operations,
proceeds from equipment sales, available cash and increased borrowings
under its revolving credit agreement. At June 30, 1995, a total of
$7,561,000 was available to the Company under its $30,000,000 revolving
credit facility.
Otherwise, there were no material changes in the Company's financial
condition, liquidity or capital resources since September 30, 1994. For
further details, see page 7 of the Company's 1994 Annual Report to
Shareholders.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are various claims and legal actions pending against the Company.
In the opinion of management, based on the advice of counsel, the outcome
of such claims and litigation will not have a material adverse effect
upon the Company's financial position or results of operations.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
FORM 10-Q Page 7 of 7
Item 6. Exhibits and Reports on Form 8-K
None.
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.
DATE: July 27, 1995 MATLACK SYSTEMS, INC.
(Registrant)
______________________________________
Gerard J. Trippitelli
President and Chief Executive Officer
______________________________________
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer
FORM 10-Q Page 7 of 7
Item 6. Exhibits and Reports on Form 8-K
None.
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.
DATE: July 27, 1995 MATLACK SYSTEMS, INC.
(Registrant)
/s/ Gerard J. Trippitelli
Gerard J. Trippitelli
President and Chief Executive Officer
/s/ Patrick J. Bagley
Patrick J. Bagley
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer