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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 000-23341
MOTOR CARGO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0406479
- ------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
845 West Center Street
North Salt Lake, Utah 84054
(801) 292-1111
(Address of principal executive offices and telephone number)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On July 31, 1998, there were
6,990,000 outstanding shares of the Registrant's Common Stock, no par value.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1998 1997
---------- ------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 4,890,498 $ 8,616,702
Receivables 13,024,341 13,171,720
Prepaid expenses 1,940,497 2,409,524
Supplies inventory 418,728 503,498
Deferred income taxes 1,581,000 1,581,000
Income taxes receivable -- 683,033
----------- -----------
Total current assets 21,855,064 26,965,477
PROPERTY AND EQUIPMENT, AT COST 80,912,620 75,901,875
Less accumulated depreciation
and amortization 37,847,350 35,242,661
----------- -----------
43,065,270 40,659,214
OTHER ASSETS
Deferred charges 421,177 378,761
Unrecognized net pension obligation 65,307 65,307
----------- -----------
486,484 444,068
----------- -----------
$65,406,818 $68,068,759
=========== ===========
The accompanying notes are an integral part of these statements.
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MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1998 1997
----------- -----------
(unaudited)
CURRENT LIABILITIES
Current maturities of long-term obligations $ 95,701 $ 89,557
Accounts payable 3,433,589 4,123,703
Accrued liabilities 6,185,737 4,426,519
Accrued claims 2,148,970 2,956,911
----------- -----------
Total current liabilities 11,863,997 11,596,690
LONG-TERM OBLIGATIONS, less current
maturities 1,440,943 6,491,882
DEFERRED INCOME TAXES 6,174,000 6,529,000
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, no par value; Authorized -
25,000,000 shares - none issued -- --
Common stock, no par value; Authorized -
100,000,000 shares - issued 6,990,000 shares as
of June 30, 1998 and December 31, 1997 12,101,298 12,101,298
Retained earnings 33,826,580 31,349,889
----------- -----------
45,927,878 43,451,187
----------- -----------
$65,406,818 $68,068,759
=========== ===========
The accompanying notes are an integral part of these statements.
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MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended Six months ended
June 30, June 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
(unaudited) (unaudited)
Operating revenues $ 28,327,739 $ 26,076,459 $ 53,915,321 $ 49,284,063
------------ ------------ ------------ ------------
Operating expenses
Salaries, wages and benefits 12,592,455 10,897,606 24,634,011 21,106,254
Operating supplies and expenses 3,709,958 3,823,511 7,413,790 7,276,320
Purchased transportation 4,558,239 3,757,027 8,338,200 7,089,892
Operating taxes and licenses 950,296 932,931 1,835,101 1,821,329
Insurance and claims 985,461 1,167,612 1,919,218 2,131,215
Depreciation and amortization 1,990,380 1,716,371 3,821,160 3,429,368
Communications and utilities 474,258 496,033 921,282 944,870
Building rents 565,175 419,838 1,066,359 815,994
------------ ------------ ------------ ------------
Total operating expenses 25,826,222 23,210,929 49,949,121 44,615,242
------------ ------------ ------------ ------------
Operating income 2,501,517 2,865,530 3,966,200 4,668,821
Other income (expense)
Interest expense (31,666) (262,402) (107,020) (561,101)
Other, net 132,327 22,197 180,769 17,849
------------ ------------ ------------ ------------
100,661 (240,205) 73,749 (543,252)
------------ ------------ ------------ ------------
Earnings before income taxes 2,602,178 2,625,325 4,039,949 4,125,569
Income taxes 1,013,970 1,012,000 1,563,258 1,533,000
------------ ------------ ------------ ------------
NET EARNINGS $ 1,588,208 $ 1,613,325 $ 2,476,691 $ 2,592,569
============ ============ ============ ============
Earnings per common share - basic $ 0.23 $ 0.35
============ ============
Weighted-average shares
outstanding - basic 6,990,000 6,990,000
============= ============
Earnings per common share - diluted $ 0.23 $ 0.35
============= ============
Weighted-average shares
outstanding - diluted 6,990,000 6,998,000
============== ============
Pro forma (Note 3)
Earnings before income taxes $ 2,921,325 $ 4,421,569
Income taxes 1,104,000 1,680,000
------------ ===========
Net earnings $ 1,817,325 $ 2,741,569
============ ===========
Earnings per common share - basic $ 0.31 $ 0.47
============ ===========
Weighted-average shares
outstanding - basic 5,820,000 5,820,000
============ ===========
Earnings per common share - diluted $ 0.31 $ 0.47
============ ===========
Weighted-average shares
outstanding - diluted 5,820,000 5,820,000
============ ===========
The accompanying notes are an integral part of these statements.
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MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
June 30,
-----------------------------
1998 1997
----------- -----------
(unaudited)
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 2,476,691 $ 2,592,569
----------- -----------
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 3,821,160 3,429,368
Provision for losses on trade
and other receivables 105,000 105,000
Loss (gain) on disposition of
property and equipment (75,297) (2,946)
Pension cost -- 2,895
Deferred income taxes (355,000) 294,971
Changes in assets and liabilities
Receivables 42,379 (1,074,994)
Prepaid expenses 469,027 239,137
Supplies inventory 84,770 (123,620)
Income taxes receivable 683,033 166,983
Other assets (42,416) (35,539)
Accounts payable (690,114) (51,815)
Accrued liabilities and claims 951,277 1,285,620
----------- -----------
Total adjustments 4,993,819 4,235,060
----------- -----------
Net cash provided by operating activities 7,470,510 6,827,629
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (6,455,865) (555,555)
Proceeds from disposition of property
and equipment 303,946 13,300
----------- -----------
Net cash used in investing activities (6,151,919) (542,255)
----------- -----------
(Continued)
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MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Six months ended
June 30,
------------------------------
1998 1997
----------- ------------
(unaudited)
Cash flows from financing activities
Distributions to LLC members -- (290,003)
Proceeds from issuance of long-term
obligations -- 14,185,000
Principal payments on long-term
obligations (5,044,795) (26,458,713)
----------- ------------
Net cash used in financing activities (5,044,795) (12,563,716)
----------- ------------
Net decrease in
cash and cash equivalents (3,726,204) (6,278,342)
Cash and cash equivalents at beginning of period 8,616,702 8,771,887
----------- ------------
Cash and cash equivalents at end of period $ 4,890,498 $ 2,493,545
=========== ============
Supplemental cash flow information
Cash paid during the period for
Interest $ 116,000 $ 518,000
Income taxes 1,060,000 446,000
The accompanying notes are an integral part of these statements.
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MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The interim consolidated financial information included herein is
unaudited; however, the information reflects all adjustments (consisting
of normal recurring adjustments) that are, in the opinion of management,
necessary to the fair presentation of the consolidated financial
position, results of operations, and cash flows for the interim periods.
The consolidated financial statements should be read in conjunction with
the Notes to consolidated financial statements included in the audited
consolidated financial statements for Motor Cargo Industries, Inc. (the
"Company") for the year ended December 31, 1997 which are included in
the Company's Annual Report on Form 10-K for such year (the "1997
10-K"). Results of operations for interim periods are not necessarily
indicative of annual results of operations. The consolidated balance
sheet at December 31, 1997, was extracted from the Company's audited
consolidated financial statements contained in the 1997 10-K, and does
not include all disclosures required by generally accepted accounting
principles for annual consolidated financial statements.
2. RECLASSIFICATION
Certain prior period amounts have been reclassified to conform with the
current period's presentation.
3. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Effective August 28, 1997, the Company acquired the membership interests
of Ute Trucking and Leasing LLC, a Utah limited liability company
("Ute"). A limited liability company passes through to its members
essentially all taxable earnings and losses and pays no tax at the
company level. Accordingly, for comparative purposes, a pro forma
provision for income taxes using an effective income tax rate of 38% has
been determined assuming Ute had been taxed as a C Corporation during
the three and six month periods ended June 30, 1997.
4. EARNINGS PER SHARE
Basic earnings per common share ("EPS") are based on the weighted
average number of common shares outstanding during each such period.
Diluted earnings per common share are based on shares outstanding
(computed under basic EPS) and potentially dilutive common shares.
Potential common shares included in dilutive earnings per share
calculations include stock options granted but not exercised.
FOR THE QUARTER ENDED JUNE 30, 1998
------------------------------------
EARNINGS SHARES EARNINGS
(NUMERATOR) (DENOMINATOR) PER-SHARE
----------- ------------- ---------
BASIC EPS
Net earnings $1,588,208 6,990,000 $0.23
=====
EFFECT OF DILUTIVE
SECURITIES
Stock options -- 8,000
---------- ---------
DILUTED EPS
Net earnings $1,588,208 6,998,000 $0.23
========== ========= =====
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FOR THE QUARTER ENDED JUNE 30, 1997
---------------------------------------
EARNINGS SHARES EARNINGS
(NUMERATOR) (DENOMINATOR) PER-SHARE
----------- ------------- ---------
PRO FORMA
BASIC EPS
Net earnings $1,817,325 5,820,000 $0.31
=====
EFFECT OF DILUTIVE
SECURITIES
Stock options
-- --
---------- ---------
DILUTED EPS
Net earnings $1,817,325 5,820,000 $0.31
========== ========= =====
FOR THE SIX MONTHS ENDED JUNE 30, 1998
---------------------------------------
EARNINGS SHARES EARNINGS
(NUMERATOR) (DENOMINATOR) PER-SHARE
----------- ------------- ---------
BASIC EPS
Net earnings $2,476,691 6,990,000 $0.35
=====
EFFECT OF DILUTIVE
SECURITIES
Stock options -- 8,000
---------- ---------
DILUTED EPS
Net earnings $2,476,691 6,998,000 $0.35
========== ========= =====
FOR THE SIX MONTHS ENDED JUNE 30, 1997
---------------------------------------
EARNINGS SHARES EARNINGS
(NUMERATOR) (DENOMINATOR) PER-SHARE
----------- ------------- ---------
PRO FORMA
BASIC EPS
Net earnings $2,741,569 5,820,000 $0.47
=====
EFFECT OF DILUTIVE
SECURITIES
Stock options -- --
---------- ---------
DILUTED EPS
Net earnings $2,741,569 5,820,000 $0.47
========== ========= =====
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's
consolidated financial condition, liquidity and capital resources and results of
operations. This analysis should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K").
OVERVIEW
Motor Cargo Industries, Inc. (the "Company") is a regional
less-than-truckload ("LTL") carrier which provides transportation and logistics
services to shippers within the Company's core service region. The Company's
core service region is the western United States, including Arizona, California,
Colorado, Idaho, New Mexico, Oregon, western Texas, Utah and Washington. The
Company transports general commodities, including consumer goods, packaged
foodstuffs, electronics, computer equipment, apparel, hardware, industrial goods
and auto parts for a diversified customer base. The Company offers a broad range
of services, including expedited scheduling and full temperature-controlled
service. Through its wholly-owned subsidiary, MC Distribution Services, Inc.
("MCDS"), the Company also provides customized logistics, warehousing and
distribution management services.
In 1997, the Company initiated a program to establish market and
operations presence in several major business economic areas ("BEAs") outside of
the Company's core service region. Unlike more traditional inter-regional
expansion models, the Company intends only to solicit tonnage from these markets
moving west into its core service region. The Company intends to utilize
third-party truckload carriers to transport freight from these markets to its
core service region. The Company anticipates that this strategy of selling into
the region will improve lane, route and service center densities in its core
service region without requiring the Company to incur the costs associated with
building an inter-regional terminal network. The Company commenced operations at
its first BEA expansion facility in Dallas in October 1997. In April 1998, the
Company commenced operations at its second BEA expansion facility in Chicago.
Additional BEAs are being considered for 1999.
The Company has also initiated a strategic growth plan for MCDS. In May
1998, Starbucks Coffee Company awarded MCDS a three-year contract to provide
fulfillment and logistics management services for worldwide new store
construction. The contract extends the services already provided by MCDS to
Starbucks in the Western United States and the Pacific Rim, so that MCDS now
provides such services for Starbucks on a worldwide basis. In connection with
the new contract, MCDS opened a new facility in York, Pennsylvania to complement
its present facility in Fontana, California.
The strategic growth plan for MCDS includes the evaluation of small,
niche-oriented acquisitions. In May 1998, the Company entered into a letter of
intent regarding the acquisition of the operating assets of Las Vegas/LA
Express, Inc. ("LVLAX") of Pomona, California, for a total purchase price of
approximately $1.7 million. Before a definitive agreement relating to this
transaction could be finalized, however, a complaint was filed against LVLAX
containing certain claims unrelated to the proposed acquisition of LVLAX by the
Company. In light of this pending litigation, the Company and LVLAX have
suspended all negotiations relating to the proposed acquisition.
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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
earnings:
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 44.4 41.8 45.6 42.8
Operating supplies and expenses 13.1 14.7 13.8 14.8
Purchased transportation 16.1 14.4 15.5 14.4
Operating taxes and licenses 3.4 3.6 3.4 3.7
Insurance and claims 3.5 4.5 3.6 4.3
Depreciation and amortization 7.0 6.6 7.1 6.9
Communications and utilities 1.7 1.9 1.7 1.9
Building rents 2.0 1.6 1.9 1.7
----- ----- ----- -----
Total operating expenses 91.2 89.1 92.6 90.5
----- ----- ----- -----
Operating income 8.8 10.9 7.4 9.5
Other income (expense)
Interest expense (0.1) (1.0) (0.2) (1.1)
Other, net 0.5 0.1 0.3 0.0
----- ----- ----- -----
Earnings before income taxes 9.2 10.0 7.5 8.4
Income taxes 3.6 3.9 2.9 3.1
----- ----- ----- -----
Net earnings 5.6 6.1 4.6 5.3
===== ===== ===== =====
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Operating revenues increased 8.4% to $28.3 million for the three months
ended June 30, 1998, compared to $26.1 million for the same period in 1997. The
increase was attributable to an increased volume of freight within the Company's
core service region, as well as new freight from the Company's BEA expansion
facilities in Dallas, Texas and Chicago, Illinois. The number of shipments
during the second quarter of 1998 increased by 9.0% to 219,900 compared to
201,700 for the second quarter of 1997.
Revenues contributed by MCDS decreased to $592,000 for the second
quarter of 1998, compared to $784,000 for the second quarter of 1997. The
decrease was due primarily to the termination of a contract with one customer in
the first quarter of 1998.
As a percentage of operating revenues, salaries, wages and benefits
increased to 44.4% for the second quarter of 1998 from 41.8% for the second
quarter of 1997. This increase was due primarily to a wage increase in the
latter part of 1997 and increased staffing in expectation of greater revenue
growth.
Insurance and claims expense decreased to 3.5% of operating revenues for
the three months ended June 30, 1998 from 4.5% for the same period in 1997.
Insurance reserves were increased in 1997 to cover two claims, resulting in
higher insurance and claims expense for the second quarter of 1997.
As a percentage of operating revenues, interest expense decreased to
0.1% for the second quarter of 1998 from 1.0% for the second quarter of 1997.
This decrease resulted from the pay down of debt with proceeds from the
Company's initial public offering in the fourth quarter of 1997.
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Purchased transportation increased to 16.1% of revenues for the three
months ended June 30, 1998 as compared to 14.4% for the same period in 1997.
This increase was primarily attributable to the use of purchased transportation
providing one-way hauling of freight from the Company's new BEA expansion
facilities in Dallas and Chicago into the Company's core service region for
delivery.
Total operating expenses increased to 91.2% of operating revenues for
the three months ended June 30, 1998 from 89.1% for the same period in 1997.
This increase was primarily due to increased salaries, wages and benefits. Net
earnings decreased 1.5% to $1,588,000 for the three months ended June 30, 1998,
compared to $1,613,000 for the same period in 1997. Net earnings per share
decreased $.08 to $.23 for the second quarter of 1998, compared to pro forma net
earnings per share of $.31 for the second quarter of 1997.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Operating revenues increased 9.3% to $53.9 million for the six months
ended June 30, 1998, compared to $49.3 million for the same period in 1997. The
increase was attributable to an increased volume of freight within the Company's
core service region, as well as new freight from the Company's BEA expansion
facilities in Dallas and Chicago. The number of shipments during the six months
ended June 30, 1998 increased by 10.8% to 420,100, compared to 379,200 for the
same period in 1997.
Revenues for MCDS decreased to $1,068,000 for the six months ended June
30, 1998 from $1,374,000 for the same period in 1997. The decrease was due
primarily to the termination of a contract with one customer.
As a percentage of operating revenues, salaries, wages and benefits
increased to 45.7% for the six months ended June 30, 1998 from 42.8% for the
same period of 1997. This increase was due primarily to a wage increase in the
latter part of 1997 and increased staffing in expectation of greater revenue
growth.
Insurance and claims expense decreased to 3.6% of operating revenue for
the six months ended June 30, 1998 from 4.3% for the same period in 1997.
Insurance reserves were increased in 1997 to cover two claims resulting in
higher insurance and claim expense in 1997.
As a percentage of operating revenues, interest expense decreased to .2%
for the six months ended June 30, 1998 from 1.1% for the same period in 1997.
The decrease resulted from the pay down of debt with proceeds from the Company's
initial public offering in the fourth quarter of 1997.
Purchased transportation increased to 15.5% of revenues for the six
months ended June 30, 1998 as compared to 14.4% for the same period in 1997.
This increase was primarily attributable to the use of purchased transportation
providing one-way hauling of freight from the Company's new BEA expansion
facilities in Dallas and Chicago into the Company's core service region for
delivery.
Total operating expenses increased to 92.6% of operating revenues for
the six months ended June 30, 1998 from 90.5% for the same period in 1997. This
increase was primarily due to increased salaries, wages and benefits. Net
earnings decreased 4.5% to $2,477,000 for the six months ended June 30, 1998,
compared to $2,593,000 for the same period in 1997. Net earnings per share
decreased $0.12 to $0.35 for the six months ended June 30, 1998 compared to pro
forma net earnings per share of $0.47 for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are funds provided by
operations and bank borrowings. Net cash provided by operating activities was
approximately $7.5 million for the first six months of 1998 compared to $6.8
million for the corresponding period in 1997. Net cash provided by operating
activities is primarily attributable to the Company's earnings before
depreciation and amortization expense.
Capital expenditures totaled approximately $6.5 million during the first
six months of 1998 compared to $.6 million in the comparable period of 1997. The
increase in capital expenditures was primarily due to the timing of the delivery
of revenue equipment. During 1997, a larger percentage of the Company's capital
expenditures for
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revenue equipment related to equipment delivered in the second half of 1997. For
the six months ended June 30, 1998, $.5 million of the $6.5 million of capital
expenditures was comprised of computer equipment.
Net cash used in financing activities was $5.0 million for the six
months ended June 30, 1998 compared to $12.6 million for the comparable period
of 1997. At June 30, 1998, total borrowings under long-term obligations totaled
approximately $1.5 million.
The Company is a party to a credit agreement with Sanwa Bank California
("Sanwa Bank"). The credit agreement provides for a $5 million revolving line of
credit. Any outstanding amounts under the revolving line of credit accrue
interest at a variable rate established from time to time by Sanwa Bank;
however, the Company may elect to have an advance accrue interest at a fixed
rate quoted by Sanwa Bank subject to certain prepayment restrictions. The credit
agreement is collateralized by the Company's cash and cash equivalents,
receivables, supplies inventory, and all documents, instruments, and chattel
paper now owned or hereafter acquired by the Company. At June 30, 1998 there was
no outstanding balance under the revolving loan agreement. The Company has not
drawn on the revolving line of credit since 1989.
The Sanwa Bank credit agreement also provides for term loans
collateralized by equipment. As of June 30, 1998, the amount available for term
loans under the credit agreement was $10.2 million. This amount is reduced by
1/20th each quarter until the year 2002. As of June 30, 1998, the Company had no
term loans outstanding pursuant to the credit agreement.
INFLATION
Inflation has had a minimal effect upon the Company's profitability in
recent years. Most of the Company's operating expenses are inflation-sensitive,
with inflation generally producing increased costs of operation. Although the
Company historically has been able to pass through most increases in fuel prices
and taxes to customers in the form of fuel surcharges or higher rates, the
Company generally must wait for larger carriers to implement fuel surcharges
before the Company can effectively implement fuel surcharges. See Item 1
"Business-Fuel Availability and Cost" in the 1997 10-K. The Company expects that
inflation will affect its costs no more than it affects those of other regional
LTL carriers.
SEASONALITY
The Company experiences some seasonal fluctuations in freight volume.
Historically, the Company's shipments decrease during the winter months. In
addition, the Company's operating expenses historically have been higher in the
winter months due to decreased fuel efficiency and increased maintenance costs
for revenue equipment in colder weather.
THE YEAR 2000 ISSUE
The Company utilizes computer hardware and software in its operations.
Certain computer applications could fail or create erroneous results due to the
upcoming change in the century (the "Year 2000 Issue"). The Company has
performed an analysis and has implemented procedures to address the Year 2000
Issue. The Company regularly upgrades its computer hardware and believes that it
will not incur any additional expenses to modify computer hardware due to the
Year 2000 Issue. In addition, the Company has received commitments from software
vendors that will allow the Company to upgrade third-party software programs
with minimal expense to the Company. The Company anticipates, however, that it
will incur expenses of approximately $100,000 to upgrade and test certain
proprietary software developed for the Company. The Company expects to complete
the modification of its proprietary software by the end of 1998 and to begin
testing such software in early 1999. The Company is also contacting vendors and
customers to determine the extent to which the Company may be vulnerable to
third party year 2000 issues. Based upon current information, the Company
believes that all hardware and software modifications necessary to operate and
effectively manage the Company will be performed by the year 2000 and that
related costs will not have a material impact on the results of operations, cash
flow, or financial condition of the Company.
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CAUTIONARY STATEMENT FOR FORWARD LOOKING INFORMATION
Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Such statements are
based upon the Company's current expectations and may include information with
respect to future revenues, income or loss, capital expenditures, construction
or expansion of regional facilities, acquisitions, plans for growth and future
operations, financing needs or plans or intentions relating to acquisitions by
the Company, as well as assumptions relating to the foregoing. There are a
number of risks and uncertainties that could cause actual results to differ
materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this report. These risks include, but
are not limited to, general economic factors, changes in market or customer
demand, availability of employee drivers and independent contractors, capital
requirements, competition, labor relations, fuel price fluctuations,
environmental hazards, seasonality, claims exposure and insurance costs, risks
associated with geographic expansion, government regulation, dependence upon key
personnel, and other factors identified from time to time in the Company's press
releases and periodic reports filed with the Securities and Exchange Commission.
When used in this report, the words "estimates," "expects," "anticipates,"
"forecasts," "plans," "intends," and variations of such words or similar
expressions are intended to identify forward-looking statements that involve
risks and uncertainties. Future events and actual results could differ
materially from those set forth in, contemplated by or underlying the
forward-looking statements. The Company's forward-looking statements apply only
as of the date made. The Company undertakes no obligation to publicly release
the results of any revisions to forward-looking statements which may be made to
reflect events or circumstances after the date made or to reflect the occurrence
of unanticipated events.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on June 22, 1998.
At the meeting:
1. The following persons were elected as Directors of the Company to
serve until the next Annual Meeting or until their successors are
elected and qualified.
Name Votes For Votes Withheld
---- --------- --------------
Harold R. Tate 5,011,802 200
Marshall L. Tate 5,011,802 200
Marvin L. Friedland 5,011,802 200
Robert Anderson 5,011,802 200
James Clayburn LaForce, Jr. 5,011,802 200
2. The selection of Grant Thornton LLP as independent auditors to
audit the Consolidated Financial Statements of the Company and its
subsidiaries for the year ending December 31, 1998 was ratified by
the shareholders as follows:
Votes For: 5,010,302
Votes Against: 200
Abstentions 1,500
Broker Non-Votes 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report.
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter for which this
report is filed.
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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.
MOTOR CARGO INDUSTRIES, INC.
/s/ LYNN H. WHEELER
-----------------------------------
LYNN H. WHEELER
Vice President of Finance and Chief
Financial Officer
(Authorized Signatory and
Principal Financial and Accounting Officer)
Date: August 12, 1998
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INDEX TO EXHIBITS
Exhibits
27 Financial Data Schedule.
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