SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File No. 0-25506
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PST VANS, INC.
(Exact name of registrant as specified in this charter)
Utah 87-0411704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 West 2100 South
Salt Lake City, UT 84119
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: 801-975-2500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [ X ] NO [ ]
The number of shares outstanding of Registrant's Common Stock, par value
$0.001 per share, as of October 31, 1996, was 4,217,157 shares.
PST VANS, INC.
INDEX
PART I, FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Condensed Balance Sheets as of September 30, 1996
(unaudited) and December 31, 1995 1
Condensed Statements of Operations (unaudited) for the
Three and Nine Month periods ended September 30, 1996 and
September 30, 1995 2
Condensed Statements of Cash Flows (unaudited) for the
Nine Month periods ended September 30, 1996 and
September 30, 1995 3
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II, OTHER INFORMATION
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 12
*No Information Submitted Under This Caption
PST VANS, INC.
CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
1996 1995
(unaudited)
CURRENT ASSETS: -------------- ---------------
Cash $ 4,090,011 $ 4,249,981
Receivables, net 16,091,832 16,235,574
Prepaid expenses and other 3,524,134 4,088,996
Inventories and operating
supplies 655,502 642,730
Deposits 1,434,875 985,952
-------------- --------------
Total current assets 25,796,354 26,203,233
-------------- --------------
PROPERTY AND EQUIPMENT, net 61,707,785 73,253,423
GOODWILL, net 8,680,140 8,884,112
OTHER ASSETS, net 314,343 541,362
-------------- --------------
$ 96,498,622 $ 108,882,130
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ 1,653,901 $ 1,109,337
Current portion of capitalized lease
obligations 14,178,485 10,736,025
Accounts payable 4,638,771 4,509,834
Current portion of accrued claims payable 4,270,105 3,656,381
Accrued liabilities 2,779,412 3,256,896
-------------- --------------
Total current liabilities 27,520,674 23,268,473
-------------- --------------
LONG-TERM ACCRUED CLAIMS PAYABLE,
net of current portion 1,807,777 2,321,686
LONG-TERM OBLIGATIONS, net of current portion 2,144,516 4,031,690
CAPITALIZED LEASE OBLIGATIONS,
net of current portion 40,187,931 51,655,247
STOCKHOLDERS' EQUITY:
Common stock 4,217 4,209
Additional paid-in capital 49,759,238 49,731,276
Accumulated deficit (24,925,731) (22,130,451)
-------------- --------------
Total stockholders' equity 24,837,724 27,605,034
-------------- --------------
$ 96,498,622 $ 108,882,130
============== ==============
See accompanying notes to condensed financial statements
1
PST VANS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
REVENUES $ 36,297,413 $ 43,766,499 $110,961,630 $122,029,039
------------ ------------ ------------ ------------
COST AND EXPENSES:
Salaries, wages and benefits 10,820,348 11,464,663 32,860,728 32,872,745
Purchased transportation 7,779,282 11,072,082 24,908,947 30,627,325
Fuel and fuel taxes 5,114,328 5,606,744 15,428,120 15,590,950
Depreciation and amortization 3,263,477 2,591,349 9,950,253 5,510,987
Insurance and claims 1,894,238 3,015,806 7,110,398 6,883,163
Revenue equipment lease expense 1,837,571 2,995,899 6,064,963 9,659,468
Maintenance 2,032,899 2,242,104 5,717,257 6,671,554
General supplies and expense 1,374,371 1,522,159 4,239,349 4,542,031
Taxes and licenses 793,971 987,856 2,549,636 2,533,728
Communications and utilities 831,492 995,043 2,577,582 2,438,180
Amortization of goodwill 67,991 68,000 203,972 203,972
(Gain) Loss on disposition
of assets (329,678) (13,580) (1,585,561) 753
------------ ------------ ------------ ------------
35,480,290 42,548,125 110,025,644 117,534,856
============ ============ ============ ============
OPERATING INCOME 817,123 1,218,374 935,986 4,494,183
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES):
Interest expense (1,188,172) (1,006,246) (3,845,904) (2,788,242)
Other income (expense) 24,222 (8,484) 114,638 855
------------ ------------ ------------ ------------
(1,163,950) (1,014,730) (3,731,266) (2,787,387)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES (346,827) 203,644 (2,795,280) 1,706,796
PROVISION FOR INCOME TAXES - - - (150,315)
------------ ------------ ------------ ------------
NET INCOME (LOSS) (346,827) 203,644 (2,795,280) 1,556,481
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE (0.08) 0.05 (0.66) 0.41
------------ ------------ ------------ ------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,212,862 4,218,497 4,210,568 3,788,141
------------ ------------ ------------ ------------
See accompanying notes to condensed financial statements
2
PST VANS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,795,280) $ 1,556,481
Adjustments to reconcile net income (loss)
to net cash provided by operating activities -
Depreciation and amortization 10,154,225 5,714,959
Provision for losses on accounts
receivable 960,687 507,784
(Gain) Loss on sale of property and
equipment (1,585,561) 753
Increase in receivables (816,945) (4,126,617)
Decrease in deposits (448,923) 2,185,008
Decrease (Increase) in prepaid
and other expenses 564,862 (1,427,660)
Increase in inventories and operating
supplies (12,772) (168,132)
Decrease in other assets, net 227,019 1,783,826
Increase in accounts payable 128,937 345,391
Increase in accrued claims payable 332,506 861,640
Decrease in accrued liabilities (477,484) (907,972)
------------ -----------
Total adjustments 9,026,551 4,768,980
------------ -----------
Net cash flows provided by operating activities 6,231,271 6,325,461
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (1,149,741) (7,156,970)
Proceeds from sale of property and equipment 4,097,996 1,004,445
------------ -----------
Net cash flows provided by (used in) investing
activities 2,948,255 (6,152,525)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 405,195
Principal payments on long-term obligations (1,342,610) (1,989,975)
Principal payments on capitalized lease
obligations (8,024,856) (4,038,091)
Decrease in advances from factor - (5,336,289)
Purchase of accounts receivable from factor - (9,063,711)
Proceeds from issuance of common stock, net 27,970 21,625,824
------------ -----------
Net cash flows (used in) provided by
financing activities (9,339,496) 1,602,953
------------ -----------
NET INCREASE (DECREASE) IN CASH (159,970) 1,775,889
CASH AT BEGINNING OF PERIOD 4,249,981 765,200
------------ -----------
CASH AT END OF PERIOD $ 4,090,011 $ 2,541,089
============ ===========
See accompanying notes to condensed financial statements
3
PST VANS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1996 1995
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for -
Interest $ 3,875,478 $ 2,687,677
Income taxes 85,395 1,573,678
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through capitalized
leases obligations - 43,037,728
Common stock issued as payment of
long-term debt - 112,905
See accompanying notes to condensed financial statements
4
PST VANS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. Financial Information:
The accompanying condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes the
following disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation
have been included. Results of operations for interim periods are not
necessarily indicative of results for a full year. These condensed financial
statements and notes thereto should be read in conjunction with the Company's
financial statements and notes thereto, included in the Company's Form 10-K
for the year ended December 31, 1995.
Note 2. Income Taxes:
Income taxes for the interim periods are based upon the Company's estimated
effective annual tax rates. The Company's effective tax rate (income tax
expense divided by income before provision for income taxes) decreased to zero
for the three and nine months ended September 30, 1996, compared to
approximately 0% and 9% for the three and nine months ended September 30,
1995, respectively, as a result of the Company not recording any benefit on
its pre-tax loss in 1996.
5
PST VANS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Comparison of the Three Months Ended September 30, 1996 to the Three Months
Ended September 30, 1995
Revenues decreased by 17.1% to $36.3 million for the three months ended
September 30, 1996 compared to $43.8 million for the three months ended
September 30, 1995. The decline in revenues resulted primarily from an 16.6%
decrease in average revenue equipment to 1171 tractors for the three months
ended September 30, 1996 compared to 1404 tractors for the three months ended
September 30, 1995; and a 2.7% decline in rate per total mile for the
three months ended September 30, 1996 compared to the three months ended
September 30, 1995. Revenues were adversely affected in the third quarter of
1996 by higher than normal driver shortages. Management believes the decrease
in rate per loaded mile was a result of an overcapacity of tractors that
affected the industry generally.
Operating costs and expenses were 97.7% of revenues for the three months
ended September 30, 1996, compared to 97.2% of revenues for the three months
ended September 30, 1995.
Salaries, wages and benefits increased to 29.8% of revenues for the three
months ended September 30, 1996 compared to 26.2% of revenues for the three
months ended September 30, 1995. This was due primarily to driver pay changes
that became effective in October, 1995, a small increase in September 1996, and
an increase in the percent of total miles driven by Company drivers compared to
independent contractors during the two periods. Company miles increased to
72.4% of total miles for the three months ended September 30, 1996 compared to
67.4% of total miles for the three months ended September 30, 1995, due to
a higher ratio of company tractors to total tractors.
Purchased transportation decreased to 21.4% of revenues for the three months
ended September 30, 1996, compared to 25.3% for the three months ended
September 30, 1995, as result of a smaller percent of total miles driven by
independent contractors (see previous paragraph) and a reduction in the rate
paid to independent contractors. Independent contractors are under contract
with the Company and are responsible for their own salaries, wages and benefits,
fuel, maintenance and depreciation. Independent contractor costs are classified
as purchased transportation expenses.
Fuel and fuel taxes, net of surcharges, increased to 14.1% of revenues for the
three months ended September 30, 1996, compared to 12.8% of revenues for the
three months ended September 30, 1995, as a result of a higher percentage of
miles driven with Company tractors and an increase in the cost of fuel. In
order to reduce the Company's vulnerability to rapid increases in the price of
fuel, the Company has historically entered into purchase contracts with fuel
suppliers from time to time for a portion of its estimated fuel requirements at
guaranteed prices. The increase in cost of fuel was largely offset by fuel sur-
charges to customers and fuel purchase contracts. As these guaranteed price
contracts expire, fuel cost could increase if pump prices remain high. Manage-
ment expects the cost of fuel to remain high through the fourth quarter. The
6
Company also implemented fuel surcharges to many of its customers, but antici-
pates that the purchase contracts and fuel surcharges will help offset some of
the increase in the cost of fuel.
Revenue equipment lease expense decreased to 5.1% of revenues for the three
months ended September 30, 1996, compared to 6.8% of revenues for the three
months ended September 30, 1995, primarily as a result of the Company reducing
the percentage of its tractor fleet financed through operating leases to 22.0%
for the three months ended September 30, 1996, compared to 32.3% for the three
months ended September 30, 1995. The decrease was partially offset by an
increase in trailers financed by operating lease.
Maintenance increased to 5.6% of revenues for the three months ended September
30, 1996, compared to 5.1% of revenues for the three months ended September
30, 1995, as a result of increased tire expense partially offset by reduced
repair costs. Management believes the increased tire cost for the three months
ended September 30, 1996 was a result of a larger portion of the fleet requir-
ing tires during the quarter as a result of the normal wear cycle. Lower re-
pair costs are a result of a newer tractor fleet. The average age of Company
owned tractors decreased to 1.5 years during the three months ended September
30, 1996 compared to 1.6 years for the three months ended September 30, 1995.
Insurance and claims decreased to 5.2% of revenues for the three months ended
September 30, 1996, from 6.9% of revenues for the three months ended September
30, 1995 as a result of a decrease in the number of incidents for the three
months ended September 30, 1996. The company recently reduced its deductible
which will increase the premium, but in management's opinion will reduce overall
costs.
General supplies and expenses increased to 3.8% of revenues for the three
months ended September 30, 1996 compared to 3.4% of revenues for the three
months ended September 30, 1995 as a result of increased costs associated with
outside consultants. An outside consulting firm was brought in to review
various process at the company, including Insurance & Claims, Driver Retention,
and Budgeting. Many of their suggestions have been implemented in the company.
Taxes and licenses decreased to 2.2% of revenues for the three months ended
September 30, 1996, compared to 2.3% of revenues for the three months ended
September 30, 1995, as a result of an increase in the percent of company
equipment to total equipment.
Communications and utilities held even at 2.3% of revenues for the three
months ended September 30, 1996, compared to 2.3% of revenues for the three
months ended September 30, 1995. The Company uses the "Highway Master" on
board communication systems in its fleet of tractors. The Company began
installation of "Highway Master" systems in June, 1994. In April 1995, all of
the tractors were equipped with the on-board system. The costs associated with
the use of the on-board system have been higher than anticipated. The Company
has taken various steps in the past to try to reduce the ongoing costs of using
the on-board communication system. The use of the "Highway Master" system
generally enhances the Company's ability to track loads, service customers and
communicate with and monitor drivers.
The Company recognized a gain of $329,678, or .9% of revenues for the three
months ended September 30, 1996, compared to a gain of $13,580 for the three
months ended September 30, 1995, as a result of the Company selling 209 of its
older trailers in the third quarter of 1996.
7
Depreciation and amortization increased to 9.0% of revenues for the three
months ended September 30, 1996, compared to 5.9% of revenues for the three
months ended September 30, 1995, as a result of the majority of the Company's
new revenue equipment being financed with capital leases and the increased cost
of upgraded equipment.
Interest expense increased to 3.3% of revenues for the three months ended
September 30, 1996, compared to 2.3% of revenues for the three months ended
September 30, 1995 as a result of the majority of the Company's new revenue
equipment being financed with capitalized leases and the increased cost of
upgraded equipment.
As a consequence of the items discussed above, the Company incurred a loss
before provision for income taxes for the three months ended September 30,
1996 of $346,827 compared to income before provision for income taxes of
$203,644 for the three months ended September 30, 1995.
Comparison of the Nine Months Ended September 30, 1996 to the Nine Months
Ended September 30, 1995
Revenues decreased by 9.1% to $111.0 million for the nine months ended
September 30, 1996 compared to $122.0 million for the nine months ended
September 30, 1995. The decrease in revenues was a result of a 3.6% decrease in
the number of tractors to 1257 for the nine months ended September 30, 1996
compared to 1304 for the nine months ended September 30, 1995, a decrease in
average rates of 1.2% and a decrease in the average miles per tractor of 4.5%
between the two periods. Management believes the decrease in average revenue
per total mile and decrease in average miles per tractor was a result of slower
than anticipated economic conditions in the first nine months of 1996. Addi-
tionally, a shortage of qualified drivers increased the average unseated trac-
tors in the nine months ended September 30, 1996 compared to the nine months
ended September 30, 1995. The driver shortage problem has improved through the
end of the third quarter. However, if a shortage of qualified drivers continues
to plague the industry, we may experience future shortages.
Operating costs and expenses were 99.2% of revenues for the nine months ended
September 30, 1996 compared to 96.3% of revenues for the nine months ended
September 30, 1995. Operating costs and expenses were adversely affected by
the 1.2% reduction in earnings per total mile and the 4.5% decrease in
utilization as measured by total miles per truck for the nine months ended
September 30, 1996, as well as the factors discussed below.
Salaries, wages and benefits increased to 29.6% of revenues for the nine
months ended September 30, 1996 compared to 26.9% for the nine months ended
September 30, 1995 due primarily from driver pay changes in October 1995 and
September 1996 and an increase in the percent of total miles driven by Company
drivers compared to independent contractors during the two periods. Company
miles increased to 70.9% of total miles for the nine months ended September 30,
1996, compared to 68.0% of total miles for the nine months ended September 30,
1995 due to a higher rate of Company tractors to total tractors.
Purchased transportation decreased to 22.4% of revenue for the nine months
ended September 30, 1996 compared to 25.1% for the nine months ended September
30, 1995, as a result of a smaller percent of total miles driven by
independent contractors and a reduction in the rate paid to independent
contractors. Independent contractors are under contract with the company and
are responsible for their own salaries, wages and benefits, fuel, maintenance
and depreciation. Independent contractor costs are classified as purchased
transportation expenses.
8
Fuel and fuel taxes, net of fuel surcharges, increased to 13.9% of revenues for
the nine months ended September 30, 1996, compared to 12.8% of revenues for the
nine months ended September 30, 1995, as a result of a higher percentage of
miles driven with Company tractors and an increase in fuel costs partially
offset with fuel surcharges billed to customers and fuel purchase contracts.
Management expects the cost of fuel to remain high through the remainder of the
year.
Revenue equipment lease expense decreased to 5.5% of revenue for the nine
months ended September 30, 1996 compared to 7.9% of revenues for the nine
months ended September 30, 1995, primarily as a result of the Company reducing
the percentage of its tractor fleet financed through operating leases to 25.0%
for the nine months ended September 30, 1996 compared to 38.6% for the nine
months ended September 30, 1995.
Maintenance decreased to 5.2% of revenues for the nine months ended September
30, 1996, compared to 5.5% of revenues for the nine months ended September 30,
1995, as a result of reduced maintenance cost associated with a newer tractor
fleet. The average age of Company owned tractors decreased to 1.3 years during
the nine months ended September 30, 1996 compared to 1.7 years for the nine
months ended September 30, 1995.
Insurance and claims increased to 6.4% of revenues for the nine months ended
September 30, 1996, from 5.6% of revenues for the nine months ended September
30, 1995 as a result of an increase in the amount of average loss per accident
during the nine months ended September 30, 1996 and the volume of small losses
compared to the nine months ended September 30, 1995. On October 1, 1995,
Management increased the training requirements of new drivers and has changed
the driver pay to attract more experienced drivers which management believes
are less accident-prone. Management continues to review accidents to determine
what actions may be taken to reduce future claims costs.
General supplies and maintenance increased to 3.8% of revenue for the nine
months ended June 30, 1996 compared to 3.7% of revenues for the nine months
ended September 30, 1995 as a result of increased use of outside consultants.
Taxes and licenses increased to 2.3% of revenues for the nine months ended
September 30, 1996 compared to 2.1% of revenues for the nine months ended
September 30, 1995, primarily as a result of an increase in the percentage of
company equipment to total equipment.
Communications and utilities increased to 2.3% of revenues for the nine months
ended September 30, 1996 compared to 2.0% of revenues for the nine months
ended September 30, 1995, primarily as a result of the Company utilizing
"Highway Master" on board communication system in a larger portion of its
fleet of tractors. The Company began installation of "Highway Master" systems
in June 1994. In April 1995, all of the tractors were equipped with the
on-board system. The costs associated with the use of the on-board system have
been higher than anticipated. The Company has taken various steps, however,
that it believes will help reduce the ongoing costs of using the on-board
communication system during the remainder of 1996. The use of "Highway
Master" system generally enhances the Company's ability to track loads,
service customers and communicate with drivers and monitor drivers.
9
The Company recognized a gain of $1,585,561, or 1.4% of revenues for the nine
months ended September 30, 1996 compared to a loss of $753 for the nine
months ended September 30, 1995, as a result of the Company selling its older
trailers during the first nine months of 1996.
Depreciation and amortization increased to 9.0% of revenues for the nine
months ended September 30, 1996, compared to 4.5% of revenues for the nine
months ended September 30, 1995, as a result of the majority of the Company's
new revenue equipment being financed with capital leases.
Interest expense increased to 3.5% of revenues for the nine months ended
September 30, 1996, compared to 2.3% of revenues for the nine months ended
September 30, 1995 as a result of the majority of the Company's new revenue
equipment being financed with capital leases. This increase in interest
expense was partially offset by a .8% of revenue decrease in interest expense
compared to the nine months ended September 30, 1995, as a result of the Company
ceasing to discount its accounts receivable to a factor following its initial
public offering of its common stock in March 1995.
As a consequence of the items discussed above, the Company incurred a loss
before provision for income taxes for the nine months ended September 30, 1996
of $2,795,280, compared to income before provision for income taxes of
$1,556,481 for the nine months ended September 30, 1995.
The Company's effective tax rate ( income tax expense divided by income before
income taxes) decreased to zero for the nine months ended September 30, 1996,
compared to 9% for the nine months ended September 30, 1995, as a result of
the Company not recording any benefit on its pretax loss.
Liquidity and Capital Resources
The Company's sources of liquidity have been funds provided by operations,
leases on revenue equipment and revolving lines of credit.
The Company has a credit facility with the Bank of New York for issuance of
letters of credit up to $8.7 million. As of September 30, 1996, the Company
had used $8.7 million of this facility, principally for letters of credit in
favor of the Company's insurance carrier. As outstanding letters of credit
issued under this credit facility are not renewed, the maximum commitment
available under this credit facility will be reduced by the amount of the
letters of credit that are not renewed. In May, 1995 the Company obtained an
additional $8.0 million working capital line of credit which expired on May
12, 1996. Extensions on this $8.0 million line credit were obtained through
August 12, 1996, at which time the $8.0 million line of credit expired.
Effective August 6, 1996, the company obtained a $7.0 million line of credit.
The Company anticipates that use of the line will be primarily for insurance
related letters of credit as well as providing any short term cash
requirements. As of September 30, 1996, the Company has utilized $3.2 million
of the new $7.0 million line of credit for insurance related letters of
credit. The credit facility in place with the Bank of New York on September 30,
30, 1996 has loan covenants which obligate the Company to maintain a required
level of profitability and cash flow. The Bank of New York has amended these
covenants for periods through and including December 31, 1996.
The Company is currently in compliance with the Bank of New York covenants.
The Company may be required to seek additional amendments or waivers in the
future.
10
based on actual operating results. The new $7.0 million line of credit has no
loan covenants, but is secured by accounts receivable.
Net cash provided by operating activities totaled approximately $6.2 million
for the nine months ended September 30, 1996. Net cash provided by investing
activities (primarily selling of equipment) amounted to $2.9 million for the
nine months ended September 30, 1996. Payments on debt and capitalized lease
obligations was $9.3 million for the nine months ended September 30, 1996.
The Company expects capital expenditures for the remainder of 1996 to be
approximately $0.5 million primarily for a computer system and software
replacement and upgrade. For the first nine months of 1996, the Company
acquired $1.1 million of new fixed assets, primarily furniture and fixtures and
leasehold improvements. Future expansion of the fleet will be made as future
economic conditions dictate.
Management believes that commitments available under the Company's lines of
credit will be sufficient to meet the Company's capital requirements through
1996. The Company's business is capital intensive and will require the
Company to seek additional debt and possibly equity capital to enable the
Company to maintain a modern fleet. Whether such capital will be available on
favorable terms, or at all, will depend on the Company's future operating
results, prevailing economic and industry conditions and other factors over
which the Company has little or no control.
Fuel is one of the Company's most substantial operating expenses. In order to
reduce the Company's vulnerability to rapid increased in the price of fuel,
the Company enters into purchase contracts with fuel suppliers from time to
time for a portion of its estimated fuel requirements at guaranteed prices.
As of September 30, 1996, the Company had entered into various agreements with
fuel suppliers to purchase approximately 40% of its estimated fuel needs
through fourth quarter 1996 and 18% of its fuel needs through June 1997 at a
guaranteed price. Although this arrangement helps reduce the Company's
vulnerability to rapid increases in the price of fuel, the Company will not
benefit from a decrease in the price of fuel to the extent of its commitment to
purchase fuel under these contracts.
Seasonality
In the trucking industry, revenues generally show a seasonal pattern as
customers reduce shipments during and after the winter holiday season and its
attendant weather variations. Operating expenses also tend to be higher
during the cold weather months, primarily due to poorer fuel economy and
increased maintenance costs.
Inflation
Inflation can be expected to have an impact on the Company's operations. The
effect of inflation has been minimal over the past three years.
This quarterly report on Form 10-Q may be deemed to contain certain forward-
looking statements. These statements are subject to known and unknown risks
and uncertainties, including decreased demand for freight, slower than
anticipated economic conditions, shortages of drivers and such other risks as
are identified and discussed herein and in the Company's filings with the
Securities and Exchange Commission. These known and unknown risks and
uncertainties could cause the Company's actual results in future periods to be
materially different from any future performance suggested herein.
11
PART II, OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Loan and Security Agreement
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
12
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 thereto duly authorized.
PST VANS, INC.
Date: November 14, 1996 By: \s\ Kenneth R. Norton
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. . . . . . . . . . . . . . . . . . . . . . . . . .Kenneth R. Norton
. . . . . . . . . . . . . . . . . . . . . . . . . .Chief Executive Officer
By: \s\ Steven Orme
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. . . . . . . . . . . . . . . . . . . . . . . . . .Steven Orme
. . . . . . . . . . . . . . . . . . . . . . . . . .Controller/Treasurer