1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1995
Commission File No 0-11300
BUILDERS TRANSPORT, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 58-1186216
- -------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 7005, 2029 WEST DEKALB STREET, CAMDEN, SOUTH CAROLINA 29020
---------------------------------------------------------------------------
(address of principal executive offices and zip code)
Registrant's telephone number, including area code (803) 432-1400
--------------
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
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 2, 1995
- --------------------------------- -------------------------------
Common Stock, par value $.01 5,094,338
per share
2
BUILDERS TRANSPORT, INCORPORATED
INDEX TO FORM 10-Q
Part I FINANCIAL INFORMATION Page No.
- ------------------------------- --------
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as of September 30, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Income for the Three
Months Ended September 30, 1995 and 1994 and the Nine Months
Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . . . . . . . 9
* No information submitted under this caption.
3
PART 1. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
September 30 December 31
1995 1994
------------ -------------
(Unaudited) (Note)
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13 $ 9
Accounts receivable, less allowances
(September 30, 1995 - $539;
December 31, 1994 - $354) 35,030 31,033
Prepaid expenses 17,414 17,501
Repair parts and operating supplies 3,328 3,073
---------- -----------
TOTAL CURRENT ASSETS 55,785 51,616
PROPERTY AND EQUIPMENT 318,094 284,755
Less accumulated depreciation
and amortization (111,229) (116,431)
---------- -----------
TOTAL PROPERTY AND EQUIPMENT 206,865 168,324
OTHER ASSETS 24,009 24,127
---------- -----------
TOTAL ASSETS $ 286,659 $ 244,067
========== ===========
-1-
4
September 30 December 31
1995 1994
------------- ------------
(Unaudited) (Note)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 9,970 $ 8,892
Other current liabilities 9,102 10,849
Current maturities of long-term debt 33,392 27,217
----------- ----------
TOTAL CURRENT LIABILITIES 52,464 46,958
LONG-TERM DEBT
Revolving credit agreement 10,436 7,393
Convertible Subordinated Debentures 46,789 50,401
Capital leases and other 113,687 78,188
----------- ----------
TOTAL LONG-TERM DEBT 170,912 135,982
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 7,393 6,951
Other 8,852 8,598
----------- ----------
TOTAL OTHER LIABILITIES 16,245 15,549
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares; no shares issued
Common stock, par value $.01 per share
Authorized 25,000,000 shares; Issued
6,217,220 shares at September 30, 1995 and
6,206,220 shares at December 31, 1994 62 62
Paid-in capital 33,273 33,178
Unearned compensation related to
ESOP receivable (4,511) (4,617)
Retained earnings 32,606 31,273
----------- ----------
61,430 59,896
Less, cost of common stock in treasury
(1,123,633 shares at September 30, 1995 and
1,117,133 shares at December 31, 1994) (14,392) (14,318)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 47,038 45,578
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 286,659 $ 244,067
=========== ==========
NOTE: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles.
See notes to condensed consolidated financial statements
-2-
5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
----------- ----------- ----------- -----------
Operating Revenue $ 73,249 $ 72,870 $ 221,210 $ 213,127
Operating Expenses:
Wages, salaries, and employee benefits 29,789 30,619 90,016 89,057
Operations and maintenance 15,483 15,406 45,325 47,608
Operating taxes and licenses 6,870 6,926 20,797 21,085
Insurance and claims 5,493 3,438 12,576 10,383
Communications and utilities 1,226 1,013 3,558 3,476
Depreciation and equipment rents 7,390 6,588 21,337 19,571
(Gain) loss on disposition of operating assets (531) (11) (690) (878)
Rents and purchased transportation 4,962 3,128 14,204 6,784
Other operating expenses 309 410 967 934
----------- ----------- ----------- ----------
Total Operating Expenses 70,991 67,517 208,090 198,020
----------- ----------- ----------- -----------
Operating Income 2,258 5,353 13,120 15,107
Other Deductions
Interest and Other Expenses 3,920 2,886 10,904 9,241
Income (Loss) Before Income Taxes (1,662) 2,467 2,216 5,866
Provision for Income Taxes (629) 837 882 2,184
----------- ----------- ----------- -----------
NET INCOME OR LOSS $ (1,033) $ 1,630 $ 1,334 $ 3,682
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE $ (0.19) $ 0.29 $ .25 $ .65
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 5,384,470 5,602,816 5,344,622 $ 5,682,011
See notes to Condensed Consolidated Financial Statements
-3-
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Nine Months ended September 30
1995 1994
------------- ------------
(Unaudited) (Note)
(Dollars in Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 20,890 $ 21,713
INVESTING ACTIVITIES
Purchases of property and equipment (5,735) (3,884)
Proceeds from disposal of property and equipment 7,777 5,246
Purchase of Applied Logistic Systems' net assets -0- (550)
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 2,042 812
FINANCING ACTIVITIES
Proceeds from lines of credit and long-term borrowings 3,044 -0-
Principal payments on lines of credit, long-term debt
and capital lease obligations (25,967) (23,188)
Proceeds from the issuance of common stock 69 663
Purchase of treasury stock (74) -0-
----------- ----------
NET CASH USED IN FINANCING ACTIVITIES (22,928) (22,525)
------------ ----------
INCREASE IN CASH AND CASH
EQUIVALENTS 4 -0-
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 9 8
----------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 13 $ 8
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 10,703 $ 9,644
Noncash investing activity:
Property and equipment acquired
through capital leases $ 61,935 $ 46,559
Noncash financing activity:
Common stock issued under employee
benefit plans $ 25 $ 249
See notes to Condensed Consolidated Financial Statements
-4-
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES
Note A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In management's
opinion, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
nine-month period ended September 30, 1995, are not necessarily indicative of
the results that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
Note B -- EARNINGS PER SHARE
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
------------- ------------- ------------- -------------
PRIMARY:
Average shares outstanding 6,214,445 6,205,257 6,210,583 6,181,213
Assumed exercise of stock options 293,658 253,059 257,227 356,298
Treasury stock (1,123,633) (855,500) (1,123,188) (855,500)
------------- ------------- ------------- -------------
Totals 5,384,470 5,602,816 5,344,622 5,682,011
============= ============= ============= =============
Net income $ (1,033,422) $ 1,630,264 $ 1,333,952 $ 3,681,509
============= ============= ============= =============
Per share amount:
Net income $ (.19) $ .29 $ .25 $ .65
============= ============= ============= =============
FULLY DILUTED:
Average shares outstanding 6,214,445 6,205,257 6,210,583 6,181,213
Assumed exercise of stock options 297,797 253,059 272,495 356,300
Assumed conversion of 8% Convertible
Subordinated Debentures issued
September 9, 1985 1,078,014 1,161,136 1,085,900 1,172,364
Assumed conversion of 61/2% Convertible
Subordinated Debentures issued
May 9, 1986 592,079 655,707 601,793 660,836
Treasury stock (1,123,633) (855,500) (1,123,188) (855,500)
------------- ------------- ------------- -------------
Totals 7,058,702 7,419,659 7,047,583 7,515,213
============= ============= ============= =============
Net income $ (1,033,422) $ 1,630,264 $ 1,333,952 $ 3,681,509
Add 8% Convertible Subordinated
Debentures interest, net of income
tax effect 324,286 373,721 972,158 1,132,721
Add 61/2% Convertible Subordinated
Debentures interest, net of income
tax effect 218,519 268,390 666,312 805,605
------------- ------------- ------------- -------------
Totals $ (490,617) $ 2,272,375 $ 2,972,422 $ 5,619,835
============= ============= ============= =============
Per share amount:
Net income $ (.07)* $ .31* $ .42* $ .75*
============= ============= ============= =============
* Anti-dilutive
-5-
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES (continued)
Note C -- LEASES
During the first nine months of 1995, the Company financed the acquisition of
853 new tractors and 335 new trailers through capital leases totaling
approximately $62 million. The terms of the leases are 60 months for tractors
and 84 months for trailers with purchase options at the end of the leases.
NOTE D -- PENDING ACCOUNTING PRONOUNCEMENT
The Financial Standards Accounting Board has recently issued Statement No. 121,
"Accounting for the Impairment of Long- Life Assets and for Long-Life Assets to
be disposed of." The statement is effective for years beginning after December
15, 1995, with earlier application encouraged. The Company has not completed
the analysis necessary to determine what effect, if any, the new standard will
have on the financial results or position of the Company, and whether it will
adopt the provisions of the statement in 1995 or 1996.
NOTE E -- SUBSEQUENT EVENT
In October 1995, the Company completed a sale and leaseback transaction
involving its corporate headquarters facility. The Company sold its
headquarters building for a purchase price of $3.5 million to Two Trees, a New
York General Partnership (Two Trees). Two Trees received a $200,000 brokerage
fee as compensation for structuring and financing the sale and leaseback
transaction. The Chairman of the Board of the Company is a general partner in
Two Trees. The Company's Board of Directors approved the sale and leaseback
transaction because the Board concluded that the transaction was fair to the
Company, was in the Company's best interest and was (acting through a quorum of
disinterested directors) the most favorable for the Company of all available
proposals. The Company has agreed to lease the headquarters site for a period
of five years at approximately $450,000 per annum, and the Company has four
successive optional lease terms of five years each. The Company has the option
to purchase the headquarters site, at fair market value at the end of each
lease term. Proceeds from the sale were used to reduce the Company's
borrowings under its revolving credit facility. The $3.5 million sale, net of
closing costs, resulted in a deferred gain of approximately $400,000 which will
be recognized over the lease term. The Company has posted a Letter of Credit
of $1.6 million to secure future lease payments.
-6-
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Operating revenues for the third quarter of 1995 were $73.2 million, compared to
$72.9 million for the third quarter of 1994, and for the first nine months of
1995 were $221.2 million, compared to $213.1 million for the first nine months
of 1994. Net loss for the third quarter was $1 million, or 19 cents per share,
compared with net income of $1.6 million, or 29 cents per share, for the third
quarter of 1994. For the nine-month period, net income was $1.3 million, or 25
cents per share, compared to $3.7 million, or 65 cents per share, during the
comparable 1994 period.
The operating ratio (operating expenses as a percentage of operating revenues)
was 96.91% and 94.07% in the third quarter and the first nine months of 1995,
respectively, compared to 92.65% and 92.91% for the same 1994 periods.
Operating income for the third quarter and the first nine months of 1995 was
$2.3 million and $13.1 million, respectively, compared to $5.4 million and $15.1
million, respectively for the same periods in 1994.
The operating results of the Company were adversely affected by an unanticipated
claim settlement that cost the Company $2.5 million and by slower than expected
revenue growth. The large claim settlement was unique in the Company's
experience in terms of its impact on results of operations. Insurance claim
expense is expected to return to more traditional levels in the future, as this
claim was fully settled during the third quarter.
During the third quarter of 1995, the Company completed its tractor replacement
program, which encompassed the purchase of 1060 new tractors, that began in late
1994. The newer and more modern fleet has enabled the Company to reduce certain
variable operating costs, but has also resulted in higher fixed costs
(depreciation and interest expenses). The slower than expected growth in
freight has made it more difficult for the Company to generate the volume it
required to achieve the variable cost reductions that had been anticipated with
newer equipment. Likewise, it was more difficult during the quarter to generate
the utilization levels needed to cover the additional fixed costs incurred as a
result of the new tractors. Pricing has also deteriorated somewhat in certain
markets, as many marginal carriers have discounted their rates in particular
areas or on certain commodities. To address these market trends, the Company is
implementing a more aggressive sales effort. The Company's ambitious marketing
efforts have already resulted in new contracts with new customers. However, the
Company has elected not to match the rate structure of some of its weaker
competitors in certain markets because it is believed those commitments would
remain unprofitable in the future.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results may be affected by a number of factors
such as: uncertainties relative to economic conditions; industry factors
including, among others, competition, rate pressure, driver availability and
fuel prices; and, the Company's ability to sell its services profitably,
successfully increase market share in its core businesses and effectively manage
expense growth relative to revenue growth in anticipation of continued pressure
on gross margins. The Company's operating results could be adversely affected
should the Company be unable to anticipate customer demand accurately or to
effectively manage the impact on the Company of changes in the trucking,
transportation and logistics industries.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results, past financial performance should not be considered
to be a reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
Recent Developments and Trends. The Company has recently experienced weakening
freight demand and is uncertain as to whether this signals the beginning of a
trend that may continue through future periods. It appears that some of the
Company's competitors have over-expanded their fleets and are discounting their
rates in order to maintain the volume needed to support their excess equipment
capacity. To the extent, if any, that the weaker freight level and equipment
over-capacity situation continues, its impact on the Company's results of
operations would be negative. In response to the weakening freight levels, the
Company has reduced non-driver payroll by approximately 5%, adopted a very
conservative future capital expenditure budget, increased marketing efforts, and
is considering other actions.
-7-
10
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
The current ratio was 1.06 at September 30, 1995, compared to 1.10 at December
31, 1994. Accounts receivable increased approximately 13%, since December 31,
1994, due to the overall growth in revenues and seasonal volume increases.
Cash provided by operating activities was $20.9 million during the first nine
months of 1995, compared to $21.7 million during the same period in 1994.
Capital expenditures of approximately $68 million during the first nine months
of 1995 related primarily to the replacement of revenue equipment. The Company
purchased 853 new tractors and 335 new trailers during the first nine months of
1995 and has disposed of 639 older tractors.
In October 1995, the Company sold its corporate headquarters under a sale and
leaseback arrangement for $3.5 million. The sale proceeds were used to reduce
the Company's borrowings under its revolving credit facility.
-8-
11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for
the quarter ended September 30, 1995.
-9-
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 thereunto duly authorized.
BUILDERS TRANSPORT, INCORPORATED
Date: November 13, 1995 By: /s/ Robert Fox
----------------- ------------------------------------------
Robert Fox
Vice President
and Chief Financial Officer
Signed in the dual capacity of a
duly authorized officer of the
Registrant and the Principal
Accounting Officer of the Registrant
-10-