AGRICULTURAL EXPRESS OF AMERICA, INC.
Financial Statements
December 31, 1993 and 1992
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Stockholders and Board of Directors
Agricultural Express of America, Inc.:
We have audited the accompanying balance sheets of Agricultural Express of
America, Inc. as of December 31, 1993 and 1992, and the related statements of
earnings and retained earnings and cash flows for the years then ended.
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 audit 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 Agricultural Express of
America, Inc. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
KPMG Peat Marwick, LLP
April 15, 1994
AGRICULTURAL EXPRESS OF AMERICA, INC.
Balance Sheets
December 31, 1993 and 1992
Assets 1993 1992
Current assets:
Cash and cash equivalents $1,000,578 $1,324,657
Trade accounts receivable, less
allowance for doubtful accounts of
$34,985 in 1993 and $11,487 in 1992 1,139,262 902,123
Other receivables 234,456 73,849
Prepaid expenses 47,531 20,468
---------- ----------
Total current assets 2,421,827 2,321,097
Property and equipment, at cost:
Revenue equipment 3,568,136 2,659,660
Administrative equipment 99,024 97,780
---------- ----------
Total property and equipment 3,667,160 2,757,440
Less accumulated depreciation (982,380) (445,790)
---------- ----------
Net property and equipment 2,684,780 2,311,650
---------- ----------
Total Assets $5,106,607 $4,632,747
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 300,000 $ --
Obligation for equipment purchased -- 1,860,500
Accounts payable 1,170,342 856,390
Accrued liabilities 197,723 243,048
---------- ----------
Total current liabilities 1,668,065 2,959,938
---------- ----------
Long-term debt 700,000 --
---------- ----------
Stockholders' equity:
Common stock, $1 par value. Authorized
10,000 shares; issued and outstanding
1,188 shares 1,188 1,188
Additional paid-in capital 657,155 657,155
Retained earnings 2,502,137 1,436,404
Note receivable from officer (421,938) (421,938)
---------- ----------
Total stockholders' equity 2,738,542 1,672,809
---------- ----------
Total Liabilities and
Stockholders' Equity $5,106,607 $4,632,747
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Earnings and Retained Earnings
Years Ended December 31, 1993 and 1992
1993 1992
Revenue $13,382,657 $14,207,614
Purchased transportation services 11,114,464 12,653,098
----------- -----------
Gross margin 2,268,193 1,554,516
----------- -----------
Indirect expenses:
Salaries, wages and benefits 314,684 308,471
Selling, general and administration 153,867 181,970
Insurance 4,827 59,075
Occupancy and supplies 40,499 42,686
State income taxes 48,373 50,810
Depreciation 553,864 54,919
Professional services 21,351 17,567
Other 43,523 37,800
----------- -----------
1,180,988 753,298
----------- -----------
Operating income 1,087,205 801,218
----------- -----------
Nonoperating income (expense):
Interest income 39,228 37,639
Interest expense (29,167) (711)
Gain (loss) on disposal of equipment (15,588) 9,695
Other, net (15,945) (1)
----------- -----------
(21,472) 46,622
----------- -----------
Net income 1,065,733 847,840
Retained earnings at beginning of year 1,436,404 588,564
----------- -----------
Retained earnings at end of year $ 2,502,137 $ 1,436,404
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Cash Flows
Years Ended December 31, 1993 and 1992
1993 1992
Cash flows from operating activities:
Net income $1,065,733 $ 847,840
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 553,864 54,919
Loss (gain) on disposal of equipment 15,588 (9,695)
Decrease (increase) in receivables (377,064) 1,948
Increase in prepaid expenses (27,062) (11,743)
Increase in accounts payable and
accrued liabilities 235,945 118,746
---------- ----------
Net cash provided by
operating activities 1,467,004 1,002,015
Cash flows from investing activities:
Purchase of equipment (949,983) (2,329,743)
Proceeds from sale of equipment 7,400 12,632
---------- ----------
Net cash used in
investing activities (942,583) (2,317,111)
Cash flows from financing activities:
Proceeds from the issuance of debt 1,000,000 1,931,300
Principal payment on debt (1,848,500) (70,800)
---------- ----------
Net cash provided by
(used in) financing activities (848,500) 1,860,500
---------- ----------
Net increase (decrease) in cash
and cash equivalents (324,079) 545,404
Cash and cash equivalents at
beginning of year 1,324,657 779,253
---------- ----------
Cash and cash equivalents at end of year $1,000,578 $1,324,657
========== ==========
Supplemental disclosures of
cash flow information:
State income taxes paid $ 46,208 $ 26,600
========== ==========
Interest paid $ 25,493 $ 711
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements
Years Ended December 31, 1993 and 1992
(1) Summary of Significant Accounting Policies
Nature and Organization of Business
Agricultural Express of America, Inc. (the Company), a Delaware
corporation, is a motor carrier specializing primarily in intermodal,
long haul, and full-load shipments of perishable exempt commodities from
the West Coast to eastern destinations with railroads as the primary
source of transportation.
Equipment
Depreciation is provided for using straight-line and accelerated
methods over the estimated useful lives of the respective assets,
generally five to seven years.
Loss and Damage Claims
Estimated losses and damage claims against the Company are accrued for
when incurred.
Revenue Recognition
The Company records revenue and corresponding expenses on all freight
movements on the date the shipment moves.
Income Taxes
Federal income taxes are not reflected in the accompanying financial
statements because the revenue and expenses of the Company are
reportable in the individual Federal income tax returns of its stockho
lders, who have made an S corporation election.
State income taxes are provided for and included in operating expenses
in the financial statements for those states in which the Company is
subject to state income taxes.
Statement of Cash Flows
For the purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and short-term
certificates of deposit with original maturities of three months or
less, which are recorded at cost.
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements, Continued
(2) Related-party Transactions
Various administrative and management services are performed for the
Company by Clipper Exxpress Company (Clipper), an affiliate. Charges
for these services reported in the statements of earnings amounted to
approximately $147,000 and $167,000 in 1993 and 1992, respectively.
Rent expense payable to Clipper Exxpress Company for the office
facility was $9,000 in 1993 and in 1992.
During 1989, the Company issued 188 shares of common stock to an
officer in exchange for cash and a promissory note. The promissory note
is payable through the year 2003 and bears interest at a variable rate
(3.79% at December 31, 1993). Principal and interest on the note
receivable are payable solely from distributions attributable to the
shares of common stock owned by the officer.
(3) Benefit Plans
The Company has a defined contribution retirement benefit plan
covering eligible employees. Under the plan, the Company makes annual
contributions based upon the criteria set forth in the plan. Company
contributions reported in the statements of earnings amounted to
approximately $7,800 and $24,000 in 1993 and 1992, respectively.
(4) Equipment Purchases/Long-Term Debt
During 1992, the Company entered into an agreement to purchase 300
trailers, which previously had been leased under operating leases, at a
total cost of $2,400,000, of which $1,857,200 was unpaid at December 31,
1992. The purchase and refurbishment of the fleet was partially
financed with a $2,000,000 revolving line of credit secured in 1993, of
which $1,000,000 was outstanding at December 31, 1993. On May 31, 1994,
the Company can convert the revolving credit line to a term loan payable
in 12 equal quarterly installments. As of April 24, 1994, the Company
has borrowed $1,800,000 under the revolving credit line and intends to
convert that amount to a term loan. At December 31, 1993, $300,000,
representing payments expected to be due in 1994, have been classified
as a current liability and the remainder shown as long-term debt. The
loan agreement bears interest at a variable rate (5.75% at December 31,
1993) and is collateralized by the equipment.
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements, Continued
(5) Commitments and Contingencies
The Company leases its office facilities under lease agreements
classified as operating leases. The long-term rental obligations as of
December 31, 1993 are as follows:
Affiliate Non-Affiliate
1994 $8,652 $10,400
1995 8,652 11,000
1996 8,652 --
1997 8,652 --