OTR EXPRESS, INC.
1996 ANNUAL REPORT
(Pictured on cover OTR tractor omitted)
OTR uses technology and its proprietary
Freight Optimization System to profitably acquire and haul
freight in the full truckload industry.
OTR maximizes freight oportunities from a large base of
more than 1,000 customers, geographically dispersed
throughout the United States.
OTR implemented a marketing program in 1996 to provide total
transportation solutions to larger shippers. We now offer
QualComm satellite communications on every truck, electronic
data interchange (EDI) for load status information and 53-
foot air-ride trailers for premium capacity and safety.
In 1996, OTR began marketing its services to larger national
accounts capable of offering increased load counts at higher
rates.
OTR's unique operating strategy and its technological
leadership have enabled it to grow revenues at an annual
compound growth rate of 27% over
the past five years.
Table of Contents
Highlights 1
Report to Stockholders 3
Technology, Customer Service and Marketing 6
Driver Incentive Management System 8
Financial Review 9
Financial Statements 13
Directors and Officers 25
Quarterly Financial Data 26
Stockholder Information 28
(Graphs-five year histories of various operating statistics omitted)
Financial Highlights
(In thousands except per share data)
1996 1995 1994 1993 1992
Income Statement Data
Operating revenue $55,261 $49,211 $42,760 $30,646 $21,993
Operating income 2,195 2,029 3,648 2,452 1,780
Net income (loss) (368) (157) 1,278 744 546
Outstanding shares 1,836 1,830 1,825 1,817 1,725
Earnings (loss) per
share $ (0.20) $ (0.09)$ 0.70 $ 0.41 $ 0.32
Operating ratio (1) 96.0% 95.9% 91.5% 92.0% 91.9%
Balance Sheet Data
Current assets $ 7,681 $ 6,799 $ 6,109 $ 4,413 $ 2,990
Current liabilities 19,152 17,187 10,781 7,402 4,420
Total assets 50,576 48,883 36,720 28,508 22,291
Short-term debt 15,751 13,968 7,913 5,606 3,340
Long-term debt, less
current portion 21,019 20,844 14,595 11,995 10,090
Stockholders' equity 8,805 9,156 9,301 7,973 7,207
(1) Operating expenses as a percentage of operating revenue
Operational Highlights
1996 1995 1994 1993 1992
Total miles (in thousands) 52,330 47,197 40,279 30,644 22,195
Average number of tractors 506 450 345 262 189
Revenue per loaded mile $ 1.042 $ 1.031 $ 1.041 $ 1.013 $ 0.997
Revenue per mile $ 0.973 $ 0.963 $ 0.983 $ 0.957 $ 0.936
Miles per week per truck 1,984 2,015 2,247 2,249 2,247
Empty miles percentage 6.6% 6.6% 5.6% 5.6% 6.1%
Miles per load 1,464 1,506 1,576 1,552 1,460
Licensed tractors - end of
period 503 503 394 301 228
Licensed trailers - end of
period 608 567 449 329 244
Average equipment age (in
years)
Tractors - end of
period 1.82 1.23 1.50 1.34 1.12
Trailers - end of
period 1.88 3.05 2.92 2.81 2.60
Fuel purchases at wholesale
(% of total ) 32.1% 31.9% 36.4% 32.3% 28.2%
Blended average fuel cost
per gallon $ 1.17 $ 1.07 $ 1.04 $ 1.04 $ 1.06
To Our Stockholders:
The trucking industry was very challenging again in
1996, which included the second consecutive year of weak
freight demand, high fuel prices and a shortage of qualified
drivers. The end result was a disappointing loss of $0.20
per share accompanied by a decline in the stock price and
market capitalization.
The adversity faced by the company in the past two
years has encouraged us to continue to modify our marketing
approach to a changing industry. We began with a goal of
increasing our percentage of shipper freight with a
corresponding reduction in less profitable broker freight.
Today we have a new focus on marketing, customer service and
national account development.
During 1996, OTR implemented major programs, all of
which are significant changes designed to provide total
transportation solutions to expand our customer base. These
included on-board satellite communications; electronic data
interchange (EDI) with our customers, guaranteed equipment
and rates for customer contracts; conversion of the trailer
fleet from 48 foot to 53 foot air-ride; additional drop-
trailers for customers; and expanded brokerage services to
cover logistics packages.
Our marketing department is now three times its former
size and 400 new shippers generating 6,000 loads were added
in 1996 . We are targeting larger national accounts to
complement our freight optimization system, which maximizes
the profitability of freight acquired on the spot market.
Our 1996 shipper statistics reflect the success of our
new marketing effort. Shipper freight increased from 52% to
66% of total miles, reducing broker freight from 48% to 34%.
Revenue increased by $6.0 million or 12% from 1995 in the
midst of a weak market. We accomplished these results with
an emphasis on technological excellence and on-time
reliability for our customers.
We believe we have made the correct decisions in 1996
with our investment in customer service and marketing. The
company is now in a position to compete for freight on any
level. The future for OTR and the truckload industry
depends on technology, reliability and customer service.
(Picture of Executive Officers omitted)
1996 Results
Revenues increased by 12% to $55.2 million in 1996
from $49.1 million in 1995. Operating income improved 8% to
$2.2 million from $2.0 million. The company reported a net
loss for the year of $368,000 or $0.20 per share compared to
a loss of $157,000 or $0.09 per share in 1995.
The revenue increase was primarily related to a 12%
increase in the fleet size in 1996. Although the economy
continued to grow in 1996, freight demand was weak
throughout the year as a result of an over-capacity of
trucks nation-wide. At 1,984 miles per unit per week,
utilization was comparable with 1995.
Fuel costs were expected to trend downward during
1996. Forecasted increases in exports from Iraq and lower
crude oil costs never developed. Inventories declined to
minimum levels while refineries waited in vain for a decline
in crude oil prices to build up diesel stocks for the
winter.
As a result, diesel fuel prices trended higher
throughout the year, peaking at an average of $1.28 per
gallon in the fourth quarter. For the year, higher fuel
costs (net of recovery from fuel surcharges and fuel
hedging) reduced earnings by $0.20 per share.
Wages and benefits as a percentage of revenue
stabilized during 1996. OTR continues to pay premium wages
to attract experienced drivers. The average compensation
for a driver with OTR for all of 1996 was $39,400. Staffing
the trucks with the quality of driver we demand continues to
be a challenge in the face of a national driver shortage.
Our unmanned truck percentage was 6.0% in 1996 compared to
4.6% in 1995 and a target of 3.5%. Our demographics
remained strong with a fleet average of 17 years over-the-
road driving experience.
1997
It appears that 1997 will see a continuation of the
dramatic changes that are reshaping the truckload segment of
our industry. We have already altered the direction and
strategy at OTR to capitalize on these changes.
We expect over-capacity in the truckload market to be
reduced in 1997, improving the demand for freight services.
Only those carriers providing shippers with increasingly
reliable service and sophisticated technology will benefit
from the improvement, however. We will strive to be a
leader in providing advanced technology as well as high
quality freight services to our customers.
(Picture of OTR tractor omitted)
In August 1996, we completed the installation of on-
board satellite communications in all our trucks. We now
have continuous communication with our drivers and the
current location of any truck through satellite positioning.
This capability is required by many larger shippers who use
EDI for inventory control purposes.
Expansion plans for 1997 will add 50 units to the
fleet, bringing the total to 553 units. The expansion is
contingent on strong freight demand and fleet staffing
experience during the year.
We are proud of the creativity and hard work of our
people in management information systems (MIS) and the
strides they have made in the past two years. They have
successfully integrated our on-board satellite messaging
system with our load order system and developed new EDI
solutions for five of our larger shippers in 1996.
Our local area network now links all of our 130 computers, using
internally developed software that can be modified
continuously to
meet our changing requirements. We have made excellent
progress in positioning ourselves as a company that can
provide technological solutions for customer service
requirements.
Technology and customer focus will determine
the success of truckload carriers in the future. These
areas will receive the highest priority in the years ahead.
We expect 1997 to be a year in which our efforts to adapt to
industry changes will allow us to achieve a position of
leadership in the industry. Our size will allow us to be
flexible and innovative in an increasingly sophisticated and
competitive market.
All associates of OTR Express remain committed to
achieve our mission statement of becoming the most efficient
provider of high quality truckload service in America. We
want to thank our investors for their continuing interest
and confidence. We will strive to provide you an
interesting and profitable investment as a result of your
ownership in our company.
Very truly yours,
/S/ William P. Ward
William P. Ward
President and Chairman
(Picture of Vice Presidents omitted)
OTR Technology
OTR has utilized its leading edge technological capabilities
to be an industry leader in customer service and on time
reliability. Our historical on-time delivery percentage is
in excess of 96%.
In 1996, we made several investments in technology that will
enable OTR to maintain its customer service leadership. Our
new investments include:
o Qualcomm Omnitracs System - Each OTR truck is
equipped with a Qualcomm Omnitracs on-board satellite
communications system that provides on-demand, immediate
contact with any driver and global positioning reports for
equipment location, anywhere in the nation. The company
receives hourly position reports on all of its trucks. This
service is critical for customers with just-in-time
inventory management programs.
o Electronic Data Interchange (EDI) - Using set
protocols, OTR provides daily or on-demand transfer of load
status information to our customers by computer.
o Bar coding (October 1997) - Cartons will contain bar
coding information input by shippers. This will enable
receivers to swipe the bar codes with a "wand" and obtain
the corresponding receiving information to input into their
inventory system.
Customer Service and Marketing
In the past eighteen months, OTR's marketing strategy
has adapted to changing market conditions, primarily as a
result of our goal to achieve higher levels of shipper
freight. The company will continue to maximize the number
of customers and, therefore, freight opportunities for the
freight optimization system. In addition, we are continuing
to market OTR to larger national accounts capable of
offering increased load counts at higher revenue rates.
These larger shippers can be integrated into our existing
operating strategy effectively, providing a higher mix of
more profitable shipper freight.
In addition to the advanced technology, we are offering
customers the following services:
o Guaranteed equipment availability and rates, a
commitment to a higher level of customer service.
o Total transportation solutions, including additional
drop trailers, expanded brokerage department to cover loads
and warehousing.
o Fifty-three-foot trailers in order to market to a new
segment of shippers with requirements for higher cubic
capacity. As of December 31, 1996, more than one-third of
our trailer fleet had been converted to the 53-foot format.
o In late 1996, OTR established a new customer service
department dedicated to serving the freight needs of our
larger national account shippers. The customer service
department provides those customers with a dedicated contact
within OTR who can respond to all customer needs.
OTR Services
OTR Services is our brokerage division, which includes
a base of more than 900 quality carriers who can provide
service beyond our own equipment availability. OTR Services
enables OTR to meet all of a shippers needs in just one
phone call. In 1996, OTR Services revenues increased by
more than 50% primarily due to the increase in OTR's
customer base.
OTR Efficiency
OTR continues to be one of the most efficient carriers in
the industry due to our focus on technology and our
experienced drivers. Our tractor-to-administrative staff
ratio, a measure of operating efficiency, is 5.59 to 1 in
an industry where 3.5 to 1 is considered very good.
Freight Optimization System
OTR continues to utilize the Freight Optimization
System as the core of its dispatching and freight selection
process. The OTR operating strategy places a premium on
management information and load planning systems. The
Freight Optimization System utilizes the company's computer
network and a software system developed internally during
the past eight years. This unique system allows OTR to
maximize rates and minimize empty miles.
The Freight Optimization System consists of the
following four continuous systems:
o Rate Analysis - The company obtains the most current
market information on freight rates and destinations from
brokers. This enables the company to ensure that OTR is
obtaining market rates on all freight.
o Customer Priority Ranking - The system continually
analyzes our customers' freight history and develops a
customer priority ranking to direct our load planners to
call customers with the highest probability of giving OTR
the most profitable combinations of rates and destinations.
o Fleet Replanning - The system replans the fleet every
three minutes, and provides the load planners with a time
sensitive listing of the trucks that need to be reloaded.
o Equipment Dispersal Management - The dispersal
management system monitors the distribution of trucks across
the country to maximize freight opportunities and minimize
empty miles and downtime.
The Freight Optimization System will continue to
locate the most profitable combination of moves, working in
conjunction with the new national accounts program.
On-time reliability
OTR continues to offer customers and potential
customers on-time reliability in a manner that few can
match:
o Experienced drivers with an average of 47 years of age
and more than 15 years driving experience.
o High-quality, low mileage, reliable equipment to
minimize downtime.
o Superior service record- with a historical on-time
delivery percentage of greater than 96%.
OTR's approach also reduces the company's dependence
on any single customer. The largest customer accounted for
only 3.8% of revenues in 1996, while the top five customers
combined for only 13.1% of revenues.
The dry van segment of the domestic truckload market
is estimated by trucking analysts at $24 billion. The
largest three carriers in this market have captured
approximately 10% of the market on a combined basis. OTR
revenues for 1996 were 0.2% of the total dry van market in
the U.S.
(Picture of OTR tractor omitted)
Driver Incentive Management System
An article in the industry publication Transport
Topics characterized driving for OTR as "A thinking man's
job." Driver/managers are given a high level of
responsibility to manage the profitability of their
equipment. OTR provides financial incentives to its
equipment managers to analyze each decision based on the
impact on net income. This system results in higher
revenues and utilization with reduced fuel costs,
maintenance, accidents, insurance premiums and road
expenses.
Management has recognized from the start the
importance of quality, experienced equipment managers. The
company is committed to paying managers a premium wage and
providing them with equipment they are proud to drive. This
approach has produced a group of managers averaging 48 years
of age and 15 years of experience.
The company's Driver Incentive Management System
rewards equipment managers with mileage pay, profit center
distributions and an ESOP based on the profitability of
their equipment. All manager pay programs provide incentive
for managers to keep expenses low and equipment running efficiently.
Mileage pay at OTR is based on fuel efficiency achieved by a
manager. Above-average fuel economy is rewarded with
premium pay per mile. Managers have a large incentive to
run equipment at efficient speeds, reduce out of route
miles, idle less and maintain the equipment in peak
operating condition.
Profit Center Distributions
OTR maintains each truck as a separate profit center.
Profit center reports include the actual revenues and
expenses of the equipment and fixed expense components for
administration, taxes and depreciation. Managers earn 50%
of the net income of their profit center.
A typical monthly profit center statement for one of
our managers might look like the one shown below. This
manager would receive 50% of $1,040 for the current quarter.
OTR Express, Inc. PROFIT CENTER STATEMENT
Report Period Ended 3/31/96 Manager: JD7 Jeff Driver
Profit Center Start Date 1/1/96 Tractor: 1545
March Percent Quarter Percent
REVENUES
Mileage income $10,866 100.0 $31,490 100.0
OPERATING EXPENSES
Wages 3,002 27.6 8,483 26.9
Payroll taxes 280 2.6 848 2.7
Fuel and fuel taxes 1,945 17.9 5,826 18.5
Tractor oil 75 0.7 140 0.4
Tractor tires 380 3.5 656 2.1
Tractor additives 20 0.2 45 0.1
Tractor maintenance 278 2.6 1,016 3.2
Tractor wash 25 0.2 73 0.2
Tractor parts 42 0.4 185 0.6
Trailer expense (fixed) 500 4.6 1,500 4.8
Trailer maintenance (fixed) 185 1.7 555 1.8
Road expenses 110 1.0 314 1.0
Insurance (fixed) 400 3.7 1,200 3.8
Accidents and claims 0 0.0 0 0.0
Licensing and permits (fixed) 435 4.0 1,305 4.1
Management expenses
(% of revenue) 1,195 11.0 3,464 11.0
Total 8,872 81.7 25,610 81.3
OPERATING INCOME 1,994 18.3 5,880 18.7
Principal payment
(per mile) 1,232 11.3 3,571 11.3
Interest payment (fixed) 423 3.9 1,269 4.0
NET CASH FLOW $ 339 3.1 $ 1,040 3.3
Selected Financial Data
(In thousands except per share data)
1996 1995 1994 1993 1992
INCOME STATEMENT
Operating revenue $55,261 $49,211 $42,760 $30,646 $21,993
Operating expenses
Salaries, wages and
benefits 22,395 19,837 15,912 10,779 7,570
Purchased
transportation 2,930 2,402 2,094 825 833
Fuel 7,011 5,511 4,546 3,777 2,883
Maintenance 3,310 3,005 2,648 1,896 1,323
Depreciation 6,723 6,517 5,243 4,276 2,896
Insurance and
claims 1,639 1,594 1,738 1,624 1,060
Taxes and
licenses 6,048 5,541 4,684 3,508 2,602
Supplies and
other 3,010 2,775 2,247 1,509 1,046
Total operating
expenses 53,066 47,182 39,112 28,194 20,213
Operating income 2,195 2,029 3,648 2,452 1,780
Interest expense 2,789 2,283 1,449 1,143 913
Income (loss) before income
taxes (594) (254) 2,199 1,309 867
Income tax expense (benefit) (226) (97) 921 497 321
Income (loss) before change
in acct principle (368) (157) 1,278 812 546
Cumulative effect of change
in acct principle - - - (68) -
Net income (loss) $ (368) $ (157) $ 1,278 $ 744 $ 546
Outstanding shares 1,836 1,830 1,825 1,817 1,725
Earnings (loss) per share $ (0.20) $ (0.09) $ 0.70 $ 0.41 $ 0.32
PERCENT OF REVENUE
Operating revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and
benefits 40.5 40.3 37.2 35.2 34.4
Purchased
transportation 5.3 4.9 4.9 2.7 3.8
Fuel 12.7 11.2 10.6 12.3 13.1
Maintenance 6.0 6.1 6.2 6.2 6.0
Depreciation 12.2 13.2 12.3 14.0 13.2
Insurance and
claims 3.0 3.3 4.1 5.3 4.8
Taxes and
licenses 10.9 11.3 11.0 11.4 11.8
Supplies and
other 5.4 5.6 5.3 4.9 4.8
Total operating
expenses 96.0 95.9 91.5 92.0 91.9
Operating income 4.0 4.1 8.5 8.0 8.1
Interest expense 5.1 4.6 3.4 3.7 4.2
Income (loss) before income
taxes (1.1) (0.5) 5.1 4.3 3.9
Income tax expense (benefit) (0.4) (0.2) 2.1 1.7 1.5
Income (loss) before change
in acct principle (0.7) (0.3) 3.0 2.6 2.4
Cumulative effect of change
in acct principle - - - (0.2) -
Net income (loss) (0.7) (0.3) 3.0 2.4 2.4
Financial Review
1996 Compared to 1995
Operating Revenue. Operating revenue increased by
12% to $55.3 million in 1996 from $49.2 million in 1995.
The average number of tractors in service increased by 12%
from 450 to 506 for the year . Revenue per loaded mile
increased by 1.0% to $1.042 from $1.031. The company
continued to allocate additional resources to the brokerage
operation in 1996, resulting in a 25% increase in brokerage
revenue to $3.3 million in 1996 from $2.6 million in 1995.
Management expects the brokerage division to expand in 1997
as a result of increased marketing efforts.
Operating Expenses. The operating ratio (total
operating expenses as a percent of operating revenue)
increased to 96.0% in 1996 compared to 95.9% in 1995.
Salaries, wages and benefits increased to 40.5% of
revenue in 1996 compared to 40.3% in 1995. The company
increased wage rates for drivers twice in 1995 to attract
and retain highly qualified and experienced drivers in a
very competitive market. There were no increases in wage
rates for drivers in 1996.
Purchased transportation, which represents payments to
other trucklines for hauling loads contracted through the
company's brokerage division, was 5.3% of revenue compared
to 4.9% in 1995 because of the 25% increase in brokerage
revenue. As a percentage of brokerage revenue, purchased
transportation was 90.1% in 1996 versus 92.5% in 1995.
Fuel increased to 12.7% of revenue from 11.2% in 1995.
The increase is primarily due to an increase in the average
fuel cost per gallon ($1.17 in 1996 vs. $1.07 in 1995). The
cost in 1996 is net of $220,000 of gain on fuel hedging
contracts which were in the money as a result of higher fuel
prices.
Depreciation as a percent of revenue was 12.2% in 1996
compared to 13.2% in 1995. The increase is primarily a
result of an extended holding period for tractors. In 1996,
the company began depreciating its tractors straight line
over 40 months to an estimated salvage value versus 36
months to an estimated salvage value in 1995.
Insurance and claims decreased to 3.0% of revenue in
1996 from 3.3% in 1995. Effective January 1, 1996, the
company's liability insurance carrier reduced its premium
rate, reducing premiums by $115,000 in 1996. In addition,
the company had a more favorable loss experience per mile in
1996.
Supplies and other expenses decreased to 5.4% of
revenue from 5.6% in 1995. In 1995, the company took a one-
time charge of $171,000 to write off the cost of a stock
offering which was withdrawn in June 1995 due to market
conditions.
Interest Expense. Interest expense increased to 5.1%
of revenue in 1996 from 4.6% in 1995 as a result of higher
debt levels. In 1996, 81% of the company's capital was
interest bearing compared to 79% in 1995.
Net Income (Loss). The net loss for 1996 was $368,000
or $0.20 per share compared to net loss of $157,000 or $0.09
per share in 1995.
1995 Compared to 1994
Operating Revenue. Operating revenue increased by
15% to $49.2 million in 1995 from $42.8 million in 1994.
The average number of tractors in service increased by 30%
from 345 to 450 for the year . Revenue per loaded mile
decreased by 1.0% to $1.031 from $1.041 primarily due to an
over capacity of trucks and weaker freight demand.
Operating Expenses. The operating ratio increased to
95.9% in 1995 compared to 91.5% in 1994.
Salaries, wages and benefits increased to 40.3% of
revenue in 1995 compared to 37.2% in 1994. The company
increased wage rates for drivers twice in 1995 to attract
and retain highly qualified and experienced drivers in a
very competitive market. The increased wages, combined with
lower revenue rates per mile, caused the wages as a percent
of revenue to increase.
Fuel increased to 11.2% of revenue from 10.6% in 1994.
The increase is primarily due to an increase in the average
fuel cost per gallon ($1.07 in 1995 vs. $1.04 in 1994) and a
decrease in revenue per mile. The fleet fuel economy
improved to 5.53 miles per gallon in 1995 from 5.50 in 1994.
Depreciation as a percent of revenue was 13.2% in 1995
compared to 12.3% in 1994. The increase as a percent of
revenue in 1995 is a result of fixed expenses being spread
over lower revenue per unit in 1995.
Insurance and claims decreased to 3.3% of revenue in
1995 from 4.1% in 1994. Effective January 1, 1995, the
company's liability insurance carrier reduced its premium
rate from 0.0135% of revenue to 0.0101%, reducing premiums
by $156,000 in 1995. In addition, the company had a more
favorable loss experience per mile in 1995.
Taxes and licenses as a percent of revenue increased
to 11.3% from 11.0% in 1994, primarily as a result of lower
revenue rates per mile in 1995.
Supplies and other expenses increased to 5.6% of
revenue from 5.3% in 1994, representing an increase in
advertising for new drivers and a one-time charge of
$171,000 to write off the cost of the withdrawn stock
offering.
Interest Expense. Interest expense increased to 4.6%
of revenue in 1995 from 3.4% in 1994 as a result of lower
revenue per mile in 1995. In addition, 79% of the company's
capital was interest bearing in 1995 compared to 71% in
1994.
Net Income (Loss). The net loss for 1995 was $157,000
or $0.09 per share compared to net income of $1,278,000 or
$0.70 per share in 1994.
Seasonality
Seasonality causes variations in the operations of the
company as well as industry-wide operations. Demand for the
company's service is generally the highest during the summer
and fall months. Historically, expenses are greater during
the winter months when fuel costs are higher and fuel
efficiency is lower.
Inflation
The effect of inflation on the company has not been
significant during the last three years. An extended period
of inflation could be expected to have an impact on the
company's earnings by causing interest rates, fuel and other
operating costs to increase. Unless freight rates could be
increased on a timely basis, operating results could be
adversely affected.
Liquidity and Capital Resources
The growth of the company's business has required
significant investments in new revenue equipment acquired
primarily through secured borrowings. Net capital
expenditures, principally for revenue equipment, were $11.9
million, $18.0 million and $7.6 million for the years ended
December 31, 1994, 1995 and 1996, respectively. Included in
the 1996 figure is $1.6 million for on-board satellite
communications equipment. The company plans to expand its
fleet by 50 tractors in 1997, conditioned upon improvement
in freight market conditions. At February 28, 1997, the
company had conditional arrangements for 200 tractors (50
new units and 150 replacement units) at a cost of $16.0
million, as well as 190 new trailers (all replacement units)
at a cost of $3.9 million. The company's capital
expenditures will be financed through internally generated
funds and secured borrowings.
Historically, the company has obtained loans for its
revenue equipment which are of shorter duration (three years
for trailers, four years for tractors) than the economic
useful lives of the equipment. While such loans have
current maturities
that tend to create working capital
deficits that could adversely affect cash flows, management
believes these factors are mitigated by the more attractive
interest rates and terms available on these shorter
maturities. This financing practice has been a significant
cause of the working capital deficit which has existed since
the company's inception.
The company intends to continue to obtain loans with
shorter maturities than the useful lives of its revenue
equipment. However, beginning in 1997, the company will
finance tractors over forty months to reflect the longer
holding period. Trailers will be financed over sixty
months. This method of financing can be expected to
continue to produce working capital deficits in the future.
The company's working capital deficit at December 31, 1996
was $11.5 million. Primarily due to the company's equity
position and the potential for refinancing of both
unencumbered and encumbered assets, working capital deficits
historically have not been a barrier to the company's
ability to borrow funds for operations and expansion.
The company has a credit line of $5.5 million with its
primary lending bank that bears interest at the prime
lending rate.
Borrowings under this line were $1.4 million at December 31,
1996 and $1.5 million of the available credit line was
committed for letters of credit issued by the bank. The
current line matures May 1, 1997 and is secured by accounts
receivable. The company received commitments in December
1996 for up to $20 million of new revenue equipment
financing. Of the anticipated new financing, 85% will be
fixed rate debt. In the opinion of management, the company
has adequate liquidity for the foreseeable future based upon
funds expected to be generated from operations, the
company's equity position, the potential for refinancing of
assets owned by the company and the company's ability to
obtain secured equipment financing.
Other
This annual report contains forward-looking statements
that are based on current expectations and are subject to
risks and uncertainties. Actual results could differ
materially from current expectations due to a number of
factors, including general economic conditions, competitive
factors, pricing pressures and other risks described in the
company's SEC reports.
(Picture of OTR tractor omitted)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of OTR Express,
Inc.:
We have audited the accompanying balance sheets of
OTR Express, Inc. (a Kansas corporation) as of December
31, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. These
financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of OTR Express, Inc. as of December 31,
1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted
accounting principles.
/S/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Kansas City, Missouri
February 4, 1997
Balance Sheets OTR Express, Inc.
At December 31 1996 1995
ASSETS
CURRENT ASSETS
Cash $ 43,107 $ 36,101
Accounts receivable, less
allowance of $57,016 and $56,932 6,436,920 6,008,392
Fuel inventory 162,826 155,568
Prepaid expenses and other 1,038,207 693,401
TOTAL CURRENT ASSETS 7,681,060 6,893,462
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation 42,894,525 41,989,346
TOTAL ASSETS $50,575,585 $48,882,808
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank note payable $ 1,389,000 $ 2,522,555
Accounts payable, trade 1,396,760 1,113,192
Accrued payroll and taxes 823,811 1,036,687
Other accrued expenses 1,180,900 1,068,992
Current portion of long-term debt 14,361,651 11,445,508
TOTAL CURRENT LIABILITIES 19,152,122 17,186,934
LONG-TERM DEBT 21,019,354 20,844,188
DEFERRED INCOME TAXES 1,599,014 1,695,772
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
5,000,000 shares authorized,
1,842,209 and 1,835,209 issued 18,422 18,352
Additional paid-in capital 6,540,124 6,515,694
Retained earnings 2,283,284 2,651,604
Treasury stock, 6,690 and
5,136 shares (36,735) (29,736)
TOTAL STOCKHOLDERS' EQUITY 8,805,095 9,155,914
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $50,575,585 $48,882,808
The notes to financial statements are an integral part of
these statements.
Statements of Operations OTR Express, Inc.
For the Years Ended
December 31 1996 1995 1994
Operating revenue
Freight revenue $ 52,008,754 $ 46,615,804 $ 40,490,206
Brokerage revenue 3,251,842 2,595,318 2,269,373
Total operating revenue 55,260,596 49,211,122 42,759,579
Operating expenses
Salaries, wages and
benefits 22,394,911 19,837,132 15,911,573
Purchased transportation 2,930,271 2,401,605 2,093,512
Fuel 7,011,074 5,511,198 4,546,499
Maintenance 3,310,101 3,005,321 2,648,374
Depreciation 6,722,717 6,516,919 5,243,267
Insurance and claims 1,639,039 1,593,642 1,737,593
Taxes and licenses 6,047,748 5,541,240 4,683,752
Supplies and other 3,010,050 2,774,623 2,247,089
Total operating expenses 53,065,911 47,181,680 39,111,659
Operating income 2,194,685 2,029,442 3,647,920
Interest expense 2,788,749 2,283,107 1,449,202
Income (loss) before income
taxes (594,064) (253,665) 2,198,718
Income tax expense
(benefit) (225,744) (96,393) 920,815
Net income (loss) $ (368,320) $ (157,272) $ 1,277,903
Average common and common
equivalent shares
outstanding 1,835,650 1,830,246 1,825,118
Net income (loss) per
share $ (0.20) $ (0.09) $ 0.70
The notes to financial statements are an integral part of
these statements.
Statements of Stockholders'Equity OTR Express, Inc.
Preferred Common Additional Retained Treasury Total
Stock Stock Paid-In Earnings Stock Stockholders'
Capital Equity
Balance,
December 31,
1993 $258 $17,954 $6,417,834 $1,546,476 $(9,680) $7,972,842
Preferred
stock
converted to
common stock (258) 258 - - - -
Allocation of
common stock
held by ESOP - 70 66,430 - - 66,500
Preferred
stock
dividends - - - (15,503) - (15,503)
Repurchase of
common stock - - - - (810) (810)
Net income - - - 1,277,903 - 1,277,903
Balance,
December 31,
1994 - 18,282 6,484,264 2,808,876 (10,490) 9,300,932
Allocation of
common stock
held by ESOP - 70 31,430 - - 31,500
Repurchase of
common stock - - - - (19,246) (19,246)
Net loss - - - (157,272) - (157,272)
Balance,
December 31,
1995 - 18,352 6,515,694 2,651,604 (29,736) 9,155,914
Allocation of
common stock
held by ESOP - 70 24,430 - - 24,500
Repurchase of
common stock - - - - (6,999) (6,999)
Net loss - - - (368,320) - (368,320)
Balance,
December 31,
1996 $ - $18,422 $6,540,124 $2,283,284 $(36,735)$8,805,095
The notes to financial statements are an integral part of
these statements.
Statements of Cash Flows OTR Express, Inc.
For the Years Ended December 31 1996 1995 1994
OPERATING ACTIVITIES
Net income (loss) $ (368,320) $ (157,272) $ 1,277,903
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities
Depreciation 6,722,717 6,516,919 5,243,267
Deferred income taxes (225,744) (96,393) 920,815
ESOP expenses and other 24,500 31,500 66,500
Changes in certain working
capital items
Accounts receivable (428,528) (489,820) (1,553,553)
Other assets (223,078) (145,111) (140,068)
Accounts payable and
accrued expenses 182,600 99,866 1,080,513
Net cash provided by
operating activities 5,684,147 5,759,689 6,895,377
INVESTING ACTIVITIES
Acquisition of property and
equipment (11,335,083) (23,409,750) (13,867,295)
Disposition of property and
equipment 3,707,187 5,380,077 1,951,000
Other - - 127,870
Net cash used in investing
activities (7,627,896) (18,029,673) (11,788,425)
FINANCING ACTIVITIES
Proceeds from issuance of
long term debt 20,370,872 21,846,185 13,188,122
Repayments of long-term
debt (17,279,563) (11,331,461) (8,558,763)
Net increase (decrease)
in bank notes payable (1,133,555) 1,790,000 277,125
Other (6,999) (19,246) (16,313)
Net cash provided by
financing activities 1,950,755 12,285,478 4,890,171
Net increase (decrease)
in cash 7,006 15,494 (2,877)
Cash, beginning of year 36,101 20,607 23,484
Cash, end of year $ 43,107 $ 36,101 $ 20,607
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 2,794,254 $ 2,271,420 $ 1,445,708
Cash paid (refunded) for
income taxes, net (128,986) 250,637 16,693
The notes to financial statements are an integral part of
these statements.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The company is a long-haul, dry van, truckload carrier
headquartered in Olathe, Kansas. The company is a contract
carrier authorized by the Interstate Commerce Commission and
various state authorities to transport general commodities
through the continental United States.
Pervasiveness of Estimates
Management makes estimates and assumptions which affect the
amounts reported in the financial statements and footnotes.
Actual results could differ from those estimates.
Revenue Recognition
Operating revenue is recognized upon receipt of freight.
Related transportation expenses, including driver wages,
purchased transportation, fuel and fuel taxes, are accrued
when the revenue is recognized. Management believes the
difference between the company's method of revenue
recognition, which is acceptable for generally accepted
accounting principles, and the proportional recognition
method, which is preferred, is not material to financial
position or the results of operations.
Cash Flows
For the statements of cash flows, cash consists of cash on
hand and demand deposits with financial institutions.
Concentration of Credit
The company's primary market includes medium and large sized
full truckload shippers in the United States. Loads
encompass all types of products for dry vans, excluding
perishables. Credit is offered to all qualified customers.
There are no predominant customers.
Fuel Hedging
The company purchases six month call options on No. 2
heating oil to manage exposure to fluctuations in diesel
fuel prices. The options are carried at cost. Gains and
losses are deferred and recognized as adjustments to fuel
expense when the underlying hedged transactions (fuel
purchases) occur. At December 31, 1996, option fair values
totaled $127,000, deferred gains totaled $55,000 and
notional amounts totaled $2,794,000.
Property, Equipment and Depreciation
Property and equipment are stated at cost. When equipment
is sold, the gain or loss indicated is recognized. When
equipment is traded, the basis of the new equipment is
adjusted when necessary for any gain indicated. The cost of
tires and tubes are capitalized as part of the tractors and
trailers at the time of acquisition and depreciated as a
component of the tractors and trailers. Replacement tires
and tubes are charged to maintenance expense when installed.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Depreciation of property and equipment is computed using
straight line methods and the following estimates useful
lives:
Assets Estimated Useful Lives
Tractors 3.3 years
Trailers 10 years
Computer equipment, software
and other property 5 - 12 years
Buildings and improvements 31.5 - 40 years
The company depreciates tractors to estimated salvage
values, currently 48% to 51% of original cost. The company
depreciates trailers to estimated salvage values, currently
21% to 28% of original cost.
Stock Issued to ESOP
Stock issued to the Employee Stock Ownership Plan (ESOP) is
recorded at the estimated fair market value at the date of
issuance. When stock held by the ESOP is allocated to
participants, employee benefits expense is charged for the
fair market value of the stock at the date of allocation.
Insurance and Claims
Accrued expenses include reserves for the estimated cost of
claims for health, workers' compensation, personal injury,
property damage, and cargo loss not covered by insurance.
Reserves are established by management based on the most
current information available regarding the accident or
claim. Adjustments to previously established reserves, if
required, are included in operating results. Management
does not believe future adjustments to these reserves, if
any, will have a significant impact on financial position or
results of operations.
Net Income (Loss) Per Share
Net income (loss) per share is calculated by dividing net
income (loss) by the weighted average number of shares of
common stock and common stock equivalents outstanding during
the period. Common stock equivalents include the
outstanding convertible preferred stock which was converted
on December 30, 1994.
Reclassification
Certain amounts in the 1995 financial statements have been
reclassified to conform with the presentation in the 1996
financial statements.
2. PROPERTY AND EQUIPMENT
1996 1995
Cost
Tractors $39,261,365 $39,417,573
Trailers 10,352,234 9,134,981
Land 838,962 838,961
Buildings and improvements 2,879,459 1,573,485
Computers and onboard
communications equipment 2,140,269 396,806
Construction-in-progress 5,014 554,165
Other 1,076,794 969,838
Total cost 56,554,097 52,885,809
Less accumulated depreciation 13,659,572 10,896,463
Net property and equipment $42,894,525 $41,989,346
3. BANK NOTE PAYABLE
Bank note payable consists of lines of credit collateralized
by accounts receivable.
The company has a $5,500,000 line of credit limited to
qualified accounts receivable, as defined, At December 31,
1996, $1,501,000 of the available line was allocated to
outstanding letters of credit. The company has $2,029,000
available as of December 31, 1996. Borrowings on the line
totaled $1,389,000 at December 31, 1996. The line bears
interest at the prime rate (8.25% on December 31, 1996), and
expires May 1, 1997, at which time the principal balance
together with all accrued interest is payable. The weighted
average interest rate on the line of credit for the years
ended December 31, 1996 and 1995 was 8.5% and 8.2%,
respectively. The annual average balance borrowed on the
line of credit for the years ended December 31, 1996 and
1995 was $1,242,000 and $1,368,000, respectively.
4. LONG-TERM DEBT
1996 1995
Installment notes, 5.80% to 9.25%
payable in monthly installments
of principal and interest through
December 2001, collateralized
by tractors, trailers and computer
equipment $33,824,958 $32,093,149
Installment notes, 7% to 8.75%,
payable in monthly installments through
January 2005, collateralized by
land 1,556,047 196,547
35,381,005 32,289,696
Less current portion 14,361,651 11,445,508
Long-term debt $21,019,354 $20,844,188
Maturities of long-term debt are as follows:
1997 $14,361,651
1998 11,548,491
1999 6,657,472
2000 1,257,188
2001 1,396,318
Thereafter 159,885
$35,381,005
5. STOCKHOLDERS' EQUITY
The company's preferred stock (25,839 shares) was converted
to common stock on December 30, 1994 at the rate of one
share of preferred stock for one share of common stock.
Warrants to purchase 50,000 shares of common stock at a
price of $6.00 per share expired unexercised on January 21,
1997.
6. STOCK OPTION PLAN
The company has reserved 110,000 shares of its common stock
for issuance to key management personnel and directors of
the company under three stock option plans. The plans
permit grants of nonqualified stock options. The option
price cannot be lower than the fair market value of the
stock at the date of grant. The options are exercisable
over a period not to exceed 10 years from the date of grant
(5 years for a more than 10% shareholder).
The company applies Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, in accounting
for its plan, and accordingly has not recognized
compensation costs in its financial statements for such
plans. Had compensation costs been recognized in accordance
with Financial Accounting Standards Board Statement No. 123,
Accounting for Stock-Based Compensation, the company's
operating results would have been reported at the unaudited
pro forma amounts indicated below :
1996 1995
Net loss:
As reported $(368,320) $(157,272)
Pro Forma $(388,216) $(191,017)
Loss per share:
As reported $ (0.20) $ (0.09)
Pro Forma $ (0.21) $ (0.10)
6. STOCK OPTION PLAN (continued)
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions used for the 1996
and 1995 grants:
1996 1995
Dividend yield None None
Expected volatility 36.3% 43.7%
Risk-free interest rate 6.2% 5.4%
Expected option life 3 Years 3 Years
A summary of the company's stock option plans as of December
31, 1996 and changes during 1995 and 1996 is presented
below. There were no options outstanding at December 31,
1994.
Number of
Number of Option price shares
Shares Per Share Exercisable
Granted during 1995 and
outstanding at
December 31, 1995 50,000 $5.25 - $6.00 21,333
Granted during 1996 30,000 $4.94 - $5.00 5,000
Outstanding at December 31,
1996 80,000 26,333
1996 1995
Fair value of options granted during the year $32,091 $54,428
Average remaining contract life 10 Years 9 Years
7. EMPLOYEE STOCK OWNERSHIP PLAN
The company has a non-qualified ESOP which enables eligible
employees to acquire shares of the company's common stock.
The cost of the ESOP is borne by the company. In each of
the years 1996, 1995 and 1994, 7,000 shares of stock held by
the ESOP were allocated to participants, resulting in ESOP
expense of $24,500, $31,500 and $66,500 for the years ended
December 31, 1996, 1995 and 1994, respectively. The Board
of Directors has approved additional allocations of 7,000
shares per year through 1997. No provision has been made in
the financial statements for future contributions of stock
to the Plan or for allocation of additional shares to the
participants.
8. INCOME TAXES
Deferred income taxes reflect the impact of temporary
differences between assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws
and regulations.
Deferred tax assets and liabilities are comprised of the
following at December 31:
1996 1995
Deferred tax assets
Claims and other reserves $ 378,341 $ 309,698
Net operating loss carryforward 2,023,708 185,986
Other 182,655 286,403
2,584,704 782,087
Deferred tax liabilities
Property and equipment 3,983,038 2,269,890
Revenue 200,680 207,969
4,183,718 2,477,859
Net deferred tax liability $ 1,599,014 $ 1,695,772
A reconciliation between the provision for income taxes and
the expected taxes using the federal statutory rate of 34%
follows:
1996 1995 1994
Tax expense (benefit) at federal
statutory rate $(201,982) $(86,246) $747,564
State income tax expense
(benefit) (23,762) (10,147) 87,949
Other - - 85,302
Income tax expense
(benefit) $(225,744) $(96,393) $920,815
The provision for income taxes consists of the following:
1996 1995 1994
Deferred tax expense (benefit)
Federal $(201,981) $(86,246) $832,866
State (23,763) (10,147) 87,949
$(225,744) $(96,393) $920,815
The company has available net operating loss carryforwards
of approximately $5,326,000 for regular income tax purposes
expiring through 2011.
9. COMMITMENTS AND CONTINGENCIES
Various legal actions, claims and assessments are pending
against the company. It is the opinion of management that
these actions will have no significant impact on the
company's financial condition or its results of operations.
Under an agreement with its auto liability insurance
carrier, the company retains the first $100,000 of paid
losses for any single occurrence involving cargo, personal
injury or property damage. Liability in excess of these
amounts is generally assumed by the carrier. The agreement
with the carrier is collateralized by letters of credit
totaling $301,000 and deposits of $29,750. Prior to January
1, 1995, the company retained the first $50,000 of paid
losses and a portion of loss adjusting expense up to $50,000
for any single occurrence.
The company is self-insured for workers' compensation
through a program with the State of Kansas. All claims are
processed by a third party administrator and the company
will pay all losses and loss adjusting expense. The company
carries an excess reinsurance policy that will limit the
company's losses to $250,000 per occurrence and $10,000,000
aggregate per year.
(Picture of OTR tractor omitted)
Board of Directors Executive and Other Officers
William P. Ward William P. Ward
Chairman of the Board and President and
President Chief Executive Officer
OTR Express, Inc.
Gary J. Klusman Gary J. Klusman
Executive Vice President Executive Vice President
OTR Express, Inc.
Janice Kathryn Ward Janice Kathryn Ward
Vice President Compensation and Vice President Compensation and
Administration, Secretary Administration, Secretary
OTR Express, Inc.
Dr. James P. Anthony Steven W. Ruben
Radiologist Vice President Finance and
Carondelet Radiology Group Chief Financial Officer
Frank J. Becker Christine D. Schowengerdt
President Treasurer
Becker Investments, Inc.
Terry G. Christenberry Carolyn J. Davidson
President Administrative Vice President and
Christenberry, Collet & Co., Inc. Assistant Secretary
Charles M. Foudree Gary L. Hinkle
Executive Vice President - Finance Vice President Fleet Management
Harmon Industries, Inc.
Dean W. Graves Susan K. Raymond
Owner, Dean Graves, FAIA Vice President Dispatch Management
Architectural Firm
Dr. Ralph E. MacNaughton Marc E. Hirschmann
Physician, Retired Vice President Maintenance & Purchasing
Carondelet Radiology Group
Paul A. MacNaughton
Vice President Management
Information Systems
Chip Seitz
Vice President OTR Services
Photography by: Eric T. Janzen
Larry Andrew, Andrew Photography (p. 3)Vice President Marketing
Attig Photography Studio (p. 5)
and OTR Express Managers
QUARTERLY FINANCIAL DATA
1996
(In thousands except per share data)
Mar 31 Jun 30 Sep 30 Dec 31 Year
Unaudited
INCOME STATEMENT
Operating revenue $13,033 $13,406 $14,470 $14,352 $55,261
Operating expenses
Salaries, wages and
benefits 5,404 5,256 5,828 5,907 22,395
Purchased
transportation 647 734 702 847 2,930
Fuel 1,639 1,696 1,687 1,989 7,011
Maintenance 804 793 835 878 3,310
Depreciation 1,699 1,755 1,730 1,539 6,723
Insurance and
claims 392 361 417 469 1,639
Taxes and
licenses 1,523 1,441 1,554 1,530 6,048
Supplies and
other 623 663 810 914 3,010
Total operating
expenses 12,731 12,699 13,563 14,073 53,066
Operating income 302 707 907 279 2,195
Interest expense 692 646 721 730 2,789
Income (loss) before
income taxes (390) 61 186 (451) (594)
Income tax expense
(benefit) (168) 25 82 (165) (226)
Net income (loss) $ (222) $ 36 $ 104 $ (286) $ (368)
Outstanding shares 1,836 1,836 1,836 1,836 1,836
Earnings (loss) per share $ (0.12) $ 0.02 $ 0.06 $ (0.16) $ (0.20)
PERCENT OF REVENUE
Operating revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and
benefits 41.5 39.2 40.3 41.2 40.5
Purchased
transportation 5.0 5.5 4.8 5.9 5.3
Fuel 12.6 12.7 11.6 13.9 12.7
Maintenance 6.2 5.9 5.8 6.1 6.0
Depreciation 13.0 13.1 12.0 10.7 12.2
Insurance and
claims 3.0 2.7 2.9 3.3 3.0
Taxes and
licenses 11.7 10.7 10.7 10.7 10.9
Supplies and
other 4.7 4.9 5.6 6.3 5.4
Total operating
expenses 97.7 94.7 93.7 98.1 96.0
Operating income 2.3 5.3 6.3 1.9 4.0
Interest expense 5.3 4.8 5.0 5.0 5.1
Income (loss) before
income taxes (3.0) 0.5 1.3 (3.1) (1.1)
Income tax expense
(benefit) (1.3) 0.2 0.6 (1.1) (0.4)
Net income (loss) (1.7) 0.3 0.7 (2.0) (0.7)
QUARTERLY FINANCIAL DATA
1995
(In thousands except per share data)
Mar31 Jun 30 Sep 30 Dec 31 Year
Unaudited
INCOME STATEMENT
Operating revenue $11,595 $11,819 $12,581 $13,216 $49,211
Operating expenses
Salaries, wages and
benefits 4,560 4,671 5,186 5,420 19,837
Purchased
transportation 701 586 558 557 2,402
Fuel 1,214 1,329 1,408 1,560 5,511
Maintenance 720 778 791 716 3,005
Depreciation 1,383 1,653 1,721 1,760 6,517
Insurance and
claims 405 401 361 427 1,594
Taxes and
licenses 1,269 1,301 1,425 1,546 5,541
Supplies and
other 569 656 850 700 2,775
Total operating
expenses 10,821 11,375 12,300 12,686 47,182
Operating income 774 444 281 530 2,029
Interest expense 445 547 619 672 2,283
Income (loss) before
income taxes 329 (103) (338) (142) (254)
Income tax expense
(benefit) 130 (37) (136) (54) (97)
Net income (loss) $ 199 $ (66) $ (202) $ (88) $ (157)
Outstanding shares 1,831 1,830 1,830 1,830 1,830
Earnings (loss) per share $ 0.11 $ (0.04) $ (0.11) $ (0.05) $ (0.09)
PERCENT OF REVENUE
Operating revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and
benefits 39.3 39.5 41.2 41.0 40.3
Purchased
transportation 6.0 5.0 4.4 4.2 4.9
Fuel 10.5 11.2 11.2 11.8 11.2
Maintenance 6.2 6.6 6.3 5.4 6.1
Depreciation 11.9 14.0 13.7 13.3 13.2
Insurance and
claims 3.5 3.4 2.9 3.2 3.3
Taxes and
licenses 11.0 11.0 11.3 11.7 11.3
Supplies and
other 4.9 5.6 6.8 5.3 5.6
Total operating
expenses 93.3 96.2 97.8 96.0 95.9
Operating income 6.7 3.8 2.2 4.0 4.1
Interest expense 3.8 4.6 4.9 5.1 4.6
Income (loss) before
income taxes 2.8 (0.9) (2.7) (1.1) (0.5)
Income tax expense
(benefit) 1.1 (0.3) (1.1) (0.4) (0.2)
Net income (loss) 1.7 (0.6) (1.6) (0.7) (0.3)
Stockholder Information
At March 1, 1997, there were 179 stockholders of
record. Since many stockholders hold their certificates in
"street name," management estimates the number of individual
stockholders is approximately 1,000.
Price Range of Stock
The company's common stock is traded on The Nasdaq
Stock Market/National Market System under the symbol OTRX.
The following table sets forth for the periods indicated the
high and low sale prices of the common stock, as reported by
The Nasdaq Stock Market.
1995
Period Stock Price (Low-High)
Jan 1 to Mar 31, 1995 $7.500 - $10.250
Apr 1 to Jun 30, 1995 $6.250 - $9.250
Jul 1 to Sep 30, 1995 $4.500 - $7.500
Oct 1 to Dec 31, 1995 $4.250 - $5.500
1996-1997
Period Stock Price (Low-High)
Jan 1 to Mar 31, 1996 $4.250 - $5.000
Apr 1 to Jun 30, 1996 $4.500 - $5.750
Jul 1 to Sep 30, 1996 $4.875 - $5.875
Oct 1 to Dec 31, 1996 $3.250 - $5.375
Jan 1 to Feb 28, 1997 $3.000 - $4.000
To date, the company has not declared or paid any
dividends on its Common Stock and presently does not
anticipate paying any such dividends in the foreseeable
future. It is management's present intention to retain
future earnings, if any, for use in its business.
Stockholder Information
Corporate Offices Transfer Agent
OTR Express, Inc. UMB Bank of Kansas City, N.A.
804 N. Meadowbrook Drive Securities Tranfer Division
Olathe, Kansas 66062 P.O. Box 410064
(913) 829-1616 Kansas City, Missouri 64141-0064
Mailing address:
P.O. Box 2819 Indepedendent Auditors
Olathe, KS 66063-0819 Arthur Andersen LLP
911 Main
Suite 1500
Kansas City, Missouri 64105
Annual Meeting General Counsel
The annual meeting of the stockholders Bryan Cave LLP
will be at 7:00 p.m., Thursday, 7500 College Boulevard
May 1, 1997, at the Doubletree Hotel, Suite 1100
10100 College Boulevard, Overland Park, Overland Park, Ks. 66210
Kansas
Form 10-K Common Stock Listing
Stockholders may receive a copy of OTR Express, Inc. common stock
the company's 1996 Annual Report to is traded on the NASDAQ National
the Securities and Exchange Commission Market System under the
on Form 10-K free of charge by writing symbol: OTRX
to:
Investor Relations
804 N. Meadowbrook Dr.
P.O. Box 2819
Olathe, Kansas 66063
OTR Express, Inc.
804 N. Meadowbrook Drive Olathe, Kansas 66063-0819
1-913-829-1616 Fax 1-913-829-0622
(Back Cover picture of OTR tractor omitted)