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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 000-23095
JEVIC TRANSPORTATION, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2373402
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Creek Road, Delanco, NJ 08075
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
609-461-7111
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
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. X Yes No
-- --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Equity, no par value, 10,667,909 shares outstanding as of July 20, 1998,
consisting of two series:
Class A Common Stock, no par value, 5,739,544 shares outstanding as of July
20, 1998
Common Stock, no par value, 4,938,365 shares outstanding as of July 20, 1998
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JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
INDEX
Page
----
Part I. Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets--June 30, 1998
and December 31, 1997 1
Consolidated Statements of Income--Three
and six months ended June 30, 1998 and 1997 2
Consolidated Statements of Cash Flows--
Six months ended June 30, 1998 and 1997 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Item 1. Consolidated Financial Statements
JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
June 30, December 31,
1998 1997
---- ----
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................................................... $ 4,354 $ 7,185
Accounts receivable, less allowance for doubtful accounts of
$1,426 and $1,527 ................................................................ 22,331 21,792
Prepaid expenses and other ......................................................... 3,733 3,172
Deferred income taxes .............................................................. 2,201 1,862
--------- ---------
Total current assets ...................................................... 32,619 34,011
PROPERTY AND EQUIPMENT, net ............................................................ 86,754 77,894
OTHER ASSETS ........................................................................... 1,261 1,463
--------- ---------
$ 120,634 $ 113,368
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease
obligations ...................................................................... $ 1,883 $ 1,976
Accounts payable and accrued expenses .............................................. 13,823 12,514
Claims and insurance reserves ...................................................... 4,432 3,917
Deferred freight revenues .......................................................... 1,992 1,752
--------- ---------
Total current liabilities ................................................ 22,130 20,159
--------- ---------
LONG-TERM DEBT ......................................................................... 14,744 15,679
--------- ---------
DEFERRED INCOME TAXES .................................................................. 12,877 11,782
--------- ---------
OTHER LIABILITIES ...................................................................... 37 211
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 10,000,000 shares authorized;
none issued and outstanding ...................................................... -- --
Common stock, no par value, 40,000,000 shares authorized;
4,938,365 and 4,918,656 issued and outstanding,
respectively ..................................................................... -- --
Class A common stock, no par value, 10,000,000 shares
authorized; 5,739,544 shares issued and outstanding .............................. -- --
Additional paid-in capital ......................................................... 72,031 71,816
Accumulated deficit ................................................................ (1,185) (6,279)
--------- ---------
Total shareholders' equity ............................................... 70,846 65,537
--------- ---------
$ 120,634 $ 113,368
========= =========
The accompanying notes are an integral part of these statements.
1
JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
OPERATING REVENUES ......................................................... $ 54,580 $ 46,137 $ 109,480 $ 90,417
--------- --------- --------- ---------
OPERATING EXPENSES:
Salaries, wages and benefits ........................................... 27,637 23,845 55,366 46,583
Supplies and other expenses ............................................ 9,140 8,633 18,691 17,371
Purchased transportation ............................................... 6,475 3,953 12,835 8,595
Depreciation and amortization .......................................... 3,635 2,760 7,180 5,382
Operating taxes and licenses ........................................... 2,474 2,137 5,024 4,302
Insurance and claims ................................................... 671 1,005 2,021 1,975
(Gain) loss on sale of equipment ....................................... (422) 72 (418) 100
--------- --------- --------- ---------
49,610 42,405 100,699 84,308
--------- --------- --------- ---------
Operating income .................................................. 4,970 3,732 8,781 6,109
INTEREST EXPENSE, net ...................................................... 286 870 541 1,629
OTHER INCOME, net .......................................................... (63) (24) (92) (55)
--------- --------- --------- ---------
Income before income taxes ........................................ 4,747 2,886 8,332 4,535
INCOME TAXES ............................................................... 1,875 98 3,237 180
--------- --------- --------- ---------
NET INCOME ................................................................. $ 2,872 $ 2,788 $ 5,095 $ 4,355
========= ========= ========= =========
Basic net income per share ............................................. $ 0.27 $ 0.41 $ 0.48 $ 0.64
========= ========= ========= =========
Diluted net income per share ........................................... $ 0.27 $ 0.40 $ 0.47 $ 0.62
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
2
JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30,
------------------------
1998 1997
---- ----
OPERATING ACTIVITIES:
Net income ......................................................................................... $ 5,095 $ 4,355
Adjustments to reconcile net income to net cash provided by
operating activities --
Depreciation and amortization ................................................................ 7,180 5,382
(Gain) loss on sale of equipment ............................................................. (418) 100
Provision for bad debts ...................................................................... (2) 483
Deferred income tax provision ................................................................ 756 75
Changes in assets and liabilities--
Increase in accounts receivable .......................................................... (537) (2,053)
Increase in prepaid expenses and other ................................................... (561) (1,086)
(Increase) decrease in other assets ..................................................... 202 (103)
Increase (decrease) in accounts payable and accrued
expenses .............................................................................. 1,113 (711)
Increase in claims and insurance reserves ................................................ 514 46
Increase in accrued income taxes ......................................................... 22 60
Increase in deferred freight revenues .................................................... 240 163
-------- --------
Net cash provided by operating activities .......................................... 13,604 6,711
-------- --------
INVESTING ACTIVITIES:
Proceeds from sale of equipment .................................................................... 1,548 241
Capital expenditures ............................................................................... (17,171) (14,180)
-------- --------
Net cash used in investing activities .............................................. (15,623) (13,939)
-------- --------
FINANCING ACTIVITIES:
Payments of long-term debt ......................................................................... (1,027) (4,294)
Proceeds from issuance of long-term debt ........................................................... -- 15,539
Payments of capital lease obligations .............................................................. -- (380)
Distributions to shareholder ....................................................................... -- (1,198)
Proceeds from Employee Stock Purchase Plan ......................................................... 215 --
-------- --------
Net cash provided by (used in) financing
activities.......................................................................... (812) 9,667
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ............................................................................... (2,831) 2,439
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ................................................................................ 7,185 2,403
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ............................................................... $ 4,354 $ 4,842
======== ========
The accompanying notes are an integral part of these statements.
3
JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Jevic
Transportation, Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for fair presentation have been included.
Operating results for the three and six month periods ended June 30, 1998, are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
2. Earnings Per Share
Basic and diluted net income per share have been computed under the guidelines
of Statement of Financial Accounting Standards No. 128, "Earnings per Share."
Basic net income per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding for the period. Diluted net
income per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding for the period, adjusted for the
dilutive effect of common stock equivalents, consisting of dilutive common stock
options using the treasury stock method. The table below sets forth the
reconciliation of basic to diluted net income per share (in thousands, except
per share amounts):
Three Months Ended June 30,
-------------------------------------------------------------
1998 1997
--------------------------- -------------------------
Per Per
Net Share Net Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic net income
per share .......................... $2,872 10,672 $0.27 $2,788 6,858 $0.41
Effect of dilutive
securities .......................... -- 162 0.00 -- 175 (0.01)
------ ------ ----- ------ ----- -----
Diluted net income
per share ........................... $2,872 10,834 $0.27 $2,788 7,033 $0.40
====== ====== ===== ====== ===== =====
4
JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Six Months Ended June 30,
-------------------------------------------------------------
1998 1997
--------------------------- -------------------------
Per Per
Net Share Net Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic net income per
share .............................. $5,095 10,667 $0.48 $4,355 6,858 $0.64
Effect of dilutive
securities .......................... -- 178 (0.01) -- 166 (0.02)
------ ------ ----- ------ ----- -----
Diluted net income
per share ........................... $5,095 10,845 $0.47 $4,355 7,024 $0.62
====== ====== ===== ====== ===== =====
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Jevic was founded in 1981 after the deregulation of the trucking industry, and
has developed an operating system which combines the high revenue yield
characteristics of a typical LTL carrier with the operating flexibility and low
fixed costs of a truckload carrier. Most other motor carriers have continued to
specialize as either truckload, moving one shipment at a time, or
less-than-truckload, moving multiple small shipments through networks of up to
500 terminals.
The Company's system uses a small number of regional facilities which serve as
origination points for consolidation of both small and large shipments. The
shipments are then loaded onto line-haul trailers in a sequence which permits
direct unloading at each shipment's destination, eliminating the need to
rehandle individual shipments at one or more breakbulk terminals. Management
focuses on adjusting freight mix to maximize asset utilization. The Company
maintains a high percentage of variable costs in order to minimize the impact of
short-term swings in demand.
Because of the distinct nature of Jevic's operating system, the Company believes
that profitability measures and expense ratios traditionally used to evaluate
truckload or less-than-truckload carriers are generally not meaningful. Jevic's
results of operations have been impacted by two key trends. First, Jevic has
been increasing the percentage of its shipments transported by owner-operators,
who supply their own tractor and bear all associated expenses in return for a
contracted rate. As a result, purchased transportation has increased as a
percentage of operating revenues, offset by a reduction, as a percentage of
operating revenues, of drivers' salaries, wages and benefits, depreciation,
fuel, operating taxes and licenses and other supplies and operating expenses.
Additionally, Jevic has shifted from a policy of leasing revenue equipment to
purchasing revenue equipment. As a result, depreciation and interest expense has
increased as a percentage of operating revenues while lease expense, which is
included in supplies and other expenses, has decreased.
6
Results of Operations
The following table sets forth for the periods indicated the percentage of
operating revenues represented by certain items in the Company's statements of
income:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
Operating revenues .............................................................. 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Operating expenses:
Salaries, wages and benefits ................................................ 50.6 51.7 50.6 51.5
Supplies and other expenses ................................................. 16.7 18.7 17.1 19.2
Purchased transportation .................................................... 11.9 8.6 11.7 9.5
Depreciation and amortization ............................................... 6.7 6.0 6.6 6.0
Operating taxes and licenses ................................................ 4.5 4.6 4.6 4.8
Insurance and claims ........................................................ 1.2 2.2 1.8 2.2
(Gain) loss on sale of equipment ............................................ (0.7) 0.1 (0.4) 0.1
----- ----- ----- -----
90.9 91.9 92.0 93.3
----- ----- ----- -----
Operating income ................................................................ 9.1 8.1 8.0 6.7
Interest expense, net ........................................................... 0.5 1.9 0.5 1.8
Other income, net ............................................................... (0.1) (0.1) (0.1) (0.1)
----- ----- ----- -----
Income before income taxes ...................................................... 8.7% 6.3% 7.6% 5.0%
===== ===== ===== =====
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Operating Revenues
Operating revenues increased 18.4% for the three months ended June 30,
1998 to $54.6 million from $46.1 million for the comparable period of 1997. The
increase resulted primarily from a 14.6% increase in total shipments. In
addition, revenue per shipment increased 3.2% to $288 for the three months ended
June 30, 1998 from $279 during the three months ended June 30, 1997.
Operating Expenses
Operating expenses increased 17.0% to $49.6 million for the three
months ended June 30, 1998 from $42.4 million for the comparable period of 1997.
As a percentage of operating revenues, operating expenses decreased to 90.9% for
the three months ended June 30, 1998 from 91.9% for the comparable period of
1997. This increase in operating expenses is primarily due to increased
revenues, as the majority of the Company's operating expenses are variable in
nature. The percentage decrease was the result of the Company's increased use of
owner-operators, a reduction in fuel prices and a reduction in insurance and
claims expense.
Salaries, wages and benefits increased 16.0% to $27.6 million for the
three months ended June 30, 1998 from $23.8 million for the comparable period of
1997. As a percentage of operating revenues, salaries, wages and benefits
decreased to 50.6% for the three months ended June 30, 1998 from 51.7% for the
comparable period of 1997. This percentage decrease was primarily due to the
Company's increased use of owner-operators and outside line-haul transportation
in 1998.
7
Supplies and other expenses, which primarily consist of operating
leases, fuel, tolls, tires, parts and bad debt expense, increased 5.8% to $9.1
million for the three months ended June 30, 1998 from $8.6 million for the
comparable period of 1997. As a percentage of operating revenues, supplies and
other expenses decreased to 16.7% for the three months ended June 30, 1998 from
18.7% for the comparable period of 1997. This percentage decrease was due to the
Company's continuing shift toward the purchase of revenue equipment rather than
leasing such equipment under operating leases, lower fuel prices, the Company's
increased use of owner-operators in 1998 and a reduction in bad debt expense in
1998 as a result of improved collection procedures.
Purchased transportation increased 62.5% to $6.5 million for the three
months ended June 30, 1998 from $4.0 million for the comparable period of 1997.
As a percentage of operating revenues, purchased transportation increased to
11.9% for the three months ended June 30, 1998 from 8.6% for the comparable
period of 1997. The increase was primarily due to the increased use of
owner-operators to supplement the Company's fleet and the increased use of
outside line-haul transportation.
Depreciation and amortization expense increased 28.6% to $3.6 million
for the three months ended June 30, 1998 from $2.8 million for the comparable
period of 1997. As a percentage of operating revenues, depreciation and
amortization increased to 6.7% for the three months ended June 30, 1998 from
6.0% for the comparable period of 1997. The increase was primarily attributable
to the Company's continuing shift toward the purchase of additional and
replacement revenue equipment rather than leasing such equipment under operating
leases and the Company's purchase of computer hardware.
Operating taxes and licenses increased 19.0% to $2.5 million for the
three months ended June 30, 1998 from $2.1 million for the comparable period of
1997. As a percentage of operating revenues, operating taxes and licenses
decreased to 4.5% for the three months ended June 30, 1998 from 4.6% for the
comparable period of 1997. This percentage decrease was primarily attributable
to a decrease in fuel taxes due to the Company's increased use of outside
line-haul transportation and owner-operators, who pay for their own taxes and
licenses.
Insurance and claims decreased 30.0% to $700,000 for the three months
ended June 30, 1998 from $1.0 million for the comparable period of 1997. As a
percentage of operating revenues, insurance and claims decreased to 1.2% for the
three months ended June 30, 1998 from 2.2% for the comparable period of 1997.
The percentage decrease was attributable to favorable development of claims and
reduced premiums on renegotiated insurance coverages that were effective April
1, 1998.
Interest Expense
Interest expense decreased 66.7% to $300,000 for the three months ended
June 30, 1998 from $900,000 for the comparable period of 1997. As a percentage
of operating revenues, interest expense decreased to 0.5% for the three months
ended June 30, 1998 from 1.9% for the comparable period of 1997. Interest
expense decreased due to the Company having paid off debt with part of the
proceeds of the initial public offering in October 1997.
Income Taxes
Income taxes increased to $1.9 million for the three months ended June
30, 1998 from $98,000 for the comparable period of 1997. In the second quarter
of 1998 the Company was subject to corporate federal and state income taxes.
Prior to the Company's initial public offering in October 1997 the Company was
an S corporation, and, accordingly, was not subject to corporate income taxes,
except for certain states for certain periods.
8
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Operating Revenues
Operating revenues increased 21.1% for the three months ended June 30,
1998 to $109.5 million from $90.4 million for the comparable period of 1997. The
increase resulted primarily from a 15.2% increase in total shipments. In
addition, revenue per shipment increased 5.1% to $289 for the six months ended
June 30, 1998 from $275 during the six months ended June 30, 1997.
Operating Expenses
Operating expenses increased 19.5% to $100.7 million for the six months
ended June 30, 1998 from $84.3 million for the comparable period of 1997. As a
percentage of operating revenues, operating expenses decreased to 92.0% for the
six months ended June 30, 1998 from 93.3% for the comparable period of 1997.
This increase in operating expenses is primarily due to increased revenues, as
the majority of the Company's operating expenses are variable in nature. The
percentage decrease was the result of the Company's increased use of
owner-operators, a reduction in fuel prices and a reduction in insurance and
claims expense.
Salaries, wages and benefits increased 18.9% to $55.4 million for the
six months ended June 30, 1998 from $46.6 million for the comparable period of
1997. As a percentage of operating revenues, salaries, wages and benefits
decreased to 50.6% for the six months ended June 30, 1998 from 51.5% for the
comparable period of 1997. This percentage decrease was primarily due to the
Company's increased use of owner-operators and outside line-haul transportation
in 1998.
Supplies and other expenses, which primarily consist of operating
leases, fuel, tolls, tires, parts and bad debt expense, increased 7.5% to $18.7
million for the six months ended June 30, 1998 from $17.4 million for the
comparable period of 1997. As a percentage of operating revenues, supplies and
other expenses decreased to 17.1% for the six months ended June 30, 1998 from
19.2% for the comparable period of 1997. This percentage decrease was due to the
Company's continuing shift toward the purchase of revenue equipment rather than
leasing such equipment under operating leases, lower fuel prices, the Company's
increased use of owner-operators in 1998 and a reduction in bad debt expense in
1998 as a result of improved collection procedures.
Purchased transportation increased 48.8% to $12.8 million for the six
months ended June 30, 1998 from $8.6 million for the comparable period of 1997.
As a percentage of operating revenues, purchased transportation increased to
11.7% for the six months ended June 30, 1998 from 9.5% for the comparable period
of 1997. The increase was primarily due to the increased use of owner-operators
to supplement the Company's fleet and the increased use of outside line-haul
transportation.
Depreciation and amortization expense increased 33.3% to $7.2 million
for the six months ended June 30, 1998 from $5.4 million for the comparable
period of 1997. As a percentage of operating revenues, depreciation and
amortization increased to 6.6% for the six months ended June 30, 1998 from 6.0%
for the comparable period of 1997. The increase was primarily attributable to
the Company's continuing shift toward the purchase of additional and replacement
revenue equipment rather than leasing such equipment under operating leases and
the Company's purchase of computer hardware.
Operating taxes and licenses increased 16.3% to $5.0 million for the
six months ended June 30, 1998 from $4.3 million for the comparable period of
1997. As a percentage of operating revenues, operating taxes and licenses
decreased to 4.6% for the six months ended June 30, 1998 from 4.8% for the
comparable period of 1997. This percentage decrease was primarily attributable
to a decrease in
9
fuel taxes due to the Company's increased use of outside line-haul
transportation and owner-operators, who pay for their own taxes and licenses.
Insurance and claims remained flat at $2.0 million for the six months
ended June 30, 1998 and the comparable period of 1997. As a percentage of
operating revenues, insurance and claims decreased to 1.8% for the six months
ended June 30, 1998 from 2.2% for the comparable period of 1997. The percentage
decrease was attributable to favorable development of claims and reduced
premiums on renegotiated insurance coverages that were effective April 1, 1998.
Interest Expense
Interest expense decreased 68.8% to $500,000 for the six months ended
June 30, 1998 from $1.6 million for the comparable period of 1997. As a
percentage of operating revenues, interest expense decreased to 0.5% for the six
months ended June 30, 1998 from 1.8% for the comparable period of 1997. Interest
expense decreased due to the Company having paid off debt with part of the
proceeds of the initial public offering in October 1997.
Income Taxes
Income taxes increased to $3.2 million for the six months ended June
30, 1998 from $180,000 for the comparable period of 1997. In the first six
months of 1998 the Company was subject to corporate federal and state income
taxes. Prior to the Company's initial public offering in October 1997 the
Company was an S corporation, and, accordingly, was not subject to corporate
income taxes, except for certain states for certain periods.
Liquidity and Capital Resources
The Company's primary sources of liquidity have been funds provided by
operations, equipment leases and bank borrowings. Net cash provided by operating
activities was approximately $13.6 million for the first six months of 1998
compared to $6.7 million for the corresponding period in 1997. The increase in
cash provided by operations is primarily attributable to the Company's increased
income before depreciation and amortization expense in 1998, a smaller increase
in accounts receivable in 1998 compared to 1997, and the timing of certain
payments, resulting in increased accounts payable in 1998.
Capital expenditures, net of trade-in allowances, totaled approximately
$17.2 million during the first six months of 1998 compared to $14.2 million in
the comparable period of 1997. For the six months ended June 30, 1998, the $17.2
million of capital expenditures were comprised of $10.1 million of revenue
equipment, $6.5 million for facilities and $600,000 of other equipment.
The Company generally purchases new line-haul tractors and replaces
them after three years. Regional and local tractors are replaced after five
years, depending on levels of use. The Company generated cash proceeds from
sales of used tractors of $1.5 million in the six months ended June 30, 1998
versus $241,000 in the comparable period of the prior year.
Net cash used in financing activities was approximately $812,000 for
the six months ended June 30, 1998 compared to net cash provided of $9.7 million
for the comparable period of 1997. At June 30, 1998, total borrowings under
long-term debt totaled $16.6 million, maturing through 2007, and obligations
relating to operating leases totaled $8.6 million through 2013, of which $1.8
million related to a facility lease with the Company's founders.
10
On June 22, 1998, Jevic signed an agreement with First Union National
Bank for a $35 million credit facility. The new credit facility replaces the $25
million facility that Jevic had previously with CoreStates Bank, N.A., which was
acquired by First Union. The credit facility includes a $10 million working
capital revolving line of credit, with borrowings limited to 80% of the
Company's eligible accounts receivable, as defined, and a $25 million equipment
revolving line of credit used to purchase or refinance revenue equipment. At
June 30, 1998, there was $4.6 million outstanding under the equipment revolver
and $525,000 of outstanding standby letters of credit under the working capital
revolver. The equipment revolving line of credit is secured by a first priority,
perfected security interest in the revenue equipment purchased or refinanced.
The rate of interest on both lines of credit is, at the Company's election,
either the Bank's base rate (higher of the Federal Funds Rate plus 1/2 of 1% or
the prime commercial lending rate of First Union) or a rate based on the London
Interbank Offered Rate (LIBOR). The working capital line of credit expires in
June 2003; the equipment line of credit expires in June 2000. The agreement
allows the Company to convert outstanding amounts under the equipment revolver
to term loans if the line of credit is not renewed. The credit facility contains
covenants made by the Company which limit its ability to make business
acquisitions and pay dividends on its capital stock, including the Common Stock,
among other things.
The Company believes that its cash and cash equivalents, funds
generated from operations and available borrowings under its current or future
credit facilities will be sufficient to fund the Company's activities at least
through 1999.
While the Company intends to selectively pursue acquisitions of
companies that are complementary with its operations, the Company currently does
not have any commitments or agreements for any business acquisitions.
Inflation
The Company does not believe that inflation has had a material impact
on its results of operations for the past three years.
Seasonality
In the trucking industry, revenues generally follow a seasonal pattern
as customers reduce shipments during and after the winter holiday season. In
addition, highway transportation can be adversely affected depending upon the
severity of the weather in various sections of the country during the winter
months. The Company's operating expenses have historically been higher in winter
months, due primarily to decreased fuel efficiency and increased maintenance
costs for revenue equipment in colder weather. Accordingly, the Company's
results of operations may fluctuate to reflect such seasonality.
Year 2000 Costs
Many computer systems were not designed to handle dates beyond the year
1999, and, therefore, computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The company is in the
process of upgrading its primary computer platform in order to provide increased
enterprise computing and additional disaster recovery capabilities. This new
system was designed to be Year 2000 compliant. Management is in the process of
determining whether all of the Company's other computer systems are Year 2000
compliant. Management does not expect the costs associated with any required
conversions of such other systems to ensure Year 2000 compliance to be
significant. In the event that any of the Company's significant vendors or
customers do not successfully achieve Year 2000 compliance on a timely basis,
the Company's
11
business or operations could be adversely affected. To minimize this risk, the
Company has begun to contact all mission critical vendors to determine their
Year 2000 compliance status.
Cautionary Statement for Forward Looking Information
Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations may contain forward-looking
statements. There are a number of risks and uncertainties that could cause
actual results to differ materially from those anticipated by the statements
made above. These include, but are not limited to, general economic factors,
availability of employee drivers and owner-operators, capital requirements,
competition, acquisition of revenue equipment, unionization, fuel, seasonality,
claims exposure and insurance costs, difficulty in managing growth, regulation,
environmental hazards and dependence on key personnel. Further information on
these and other factors which could affect the Company's financial results can
be found in the Company's periodic reports on forms 10-K and 10-Q.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
On May 15, 1998, the Annual Meeting of Shareholders of Jevic Transportation,
Inc. was held. The shareholders re-elected two nominees from the existing Board
of Directors to three year terms expiring in 2001. The shareholders also
approved the designation of Arthur Andersen LLP as independent auditors.
The number of votes cast for and withheld from the election of each director is
set forth below.
Election of Directors:
For Withheld
--- --------
Gordon R. Bowker 14,606,290 500
Samuel H. Jones, Jr. 14,606,190 600
The number of votes cast for, against and abstentions relating to the
designation of Arthur Andersen LLP as independent auditors is set forth below.
For Against Abstain
--- ------- -------
Approval of designation
of Arthur Andersen LLP as
independent auditors 14,606,240 550 0
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
* Exhibit 10.21 - Amended and Restated Credit
Agreement between Jevic Transportation, Inc. and
First Union National Bank, Dated June 22, 1998
* Exhibit 27.1 - Financial Data Schedule
b. Reports on Form 8-K - None
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized, on the 14th day of
August, 1998.
JEVIC TRANSPORTATION, INC.
By:
---------------------------
Harry J. Muhlschlegel
Chief Executive Officer
By:
---------------------------
Brian J. Fitzpatrick
Senior Vice President and
Chief Financial Officer