UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
------------------------------------
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 March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27208
Simon Transportation Services Inc.
(Exact name of registrant as specified in its charter)
Nevada 87-0545608
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
5175 West 2100 South
West Valley City, Utah 84120
(801) 924-7000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)
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 the filing
requirements for at least 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 (April 30, 2000).
Class A Common Stock, $.01 par value: 5,372,958 shares
Class B Common Stock, $.01 par value: 913,751 shares
Exhibit Index is on Page 13
SIMON TRANSPORTATION SERVICES INC.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
PAGE
NUMBER
Item 1. Financial Statements:
Condensed consolidated statements of financial position as of
March 31, 2000 and September 30, 1999 3
Condensed consolidated statements of operations for the three
and six months ended March 31, 2000 and 1999 4
Condensed consolidated statements of cash flows for the six months
ended March 31, 2000 and 1999 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial condition and results
of operations 7
Item 3. Quantitative and qualitative disclosures about market risk 11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
March 31, 2000 September 30, 1999
-------------- ------------------
(Unaudited)
Current Assets:
Cash $ 5,649,400 $ 8,658,268
Receivables, net of allowance for doubtful accounts of
$335,000 and $285,000, respectively 25,580,027 22,862,685
Operating supplies 1,804,066 1,468,216
Prepaid expenses and other 4,983,431 5,367,117
----------------------- ------------------------
Total current assets 38,016,924 38,356,286
----------------------- ------------------------
Property and Equipment, at cost:
Land 8,387,972 8,387,972
Revenue equipment 44,155,155 45,089,385
Buildings and improvements 18,551,035 18,484,326
Office furniture and equipment 9,015,195 8,889,433
----------------------- ------------------------
80,109,357 80,851,116
Less accumulated depreciation and amortization (25,855,404) (23,203,536)
----------------------- ------------------------
54,253,953 57,647,580
----------------------- ------------------------
Other Assets 602,974 726,140
----------------------- ------------------------
$ 92,873,851 $ 96,730,006
======================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 5,265,905 $ 7,459,577
Current portion of capitalized lease obligations 2,223,882 1,855,675
Accounts payable 6,146,405 6,108,118
Accrued liabilities 3,418,128 3,419,629
Accrued claims payable 2,206,554 1,970,336
----------------------- ------------------------
Total current liabilities 19,260,874 20,813,335
----------------------- ------------------------
Long-Term Debt, net of current portion 10,064,889 11,718,580
----------------------- ------------------------
Capitalized Lease Obligations, net of current portion -- 589,181
----------------------- ------------------------
Deferred Income Taxes 7,665,063 7,665,063
----------------------- ------------------------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued -- --
Class A common stock, $.01 par value, 20,000,000
shares authorized, 5,372,958 and 5,372,683
shares issued, respectively 53,730 53,727
Class B common stock, $.01 par value, 5,000,000
shares authorized, 913,751 shares issued 9,138 9,138
Treasury stock, 176,600 shares at cost (1,053,147) (1,053,147)
Additional paid-in capital 48,279,728 48,277,256
Retained earnings 8,593,576 8,656,873
----------------------- ------------------------
Total stockholders' equity 55,883,025 55,943,847
----------------------- ------------------------
$ 92,873,851 $ 96,730,006
======================= ========================
<FN>
See accompanying notes to condensed consolidated financial statements
</FN>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Six Months Ended
-----------------------------------------------------------------------------
March 31, 2000 March 31, 1999 March 31, 2000 March 31, 1999
-------------- -------------- -------------- --------------
Operating Revenue $ 55,158,876 $ 49,271,237 $ 109,019,258 $ 102,263,636
--------------------------------------------------------- -------------------
Operating Expenses:
Salaries, wages, and benefits 22,180,866 21,784,521 44,763,524 44,735,465
Fuel and fuel taxes 12,178,214 8,367,331 22,569,814 17,302,681
Operating supplies and expenses 6,471,819 7,409,815 13,244,924 14,187,729
Taxes and licenses 1,771,979 1,901,218 3,390,211 3,915,962
Insurance and claims 1,588,567 1,760,834 3,012,137 3,117,309
Communications and utilities 846,681 1,106,483 1,808,018 2,150,189
Depreciation and amortization 976,618 940,142 2,184,815 2,079,050
Rent 8,599,077 8,716,670 17,403,169 17,121,770
--------------------------------------------------------- -------------------
Total operating expenses 54,613,821 51,987,014 108,376,612 104,610,155
--------------------------------------------------------- -------------------
Operating earnings (loss) 545,055 (2,715,777) 642,646 (2,346,519)
Net interest expense 423,309 381,347 741,548 678,034
--------------------------------------------------------- -------------------
Earnings (loss) before provision for income taxes 121,746 (3,097,124) (98,902) (3,024,553)
Provision (benefit) for income taxes 43,829 (1,170,713) (35,605) (1,143,281)
--------------------------------------------------------- -------------------
Net earnings (loss) $ 77,917 $ (1,926,411) $ (63,297) $ (1,881,272)
========================================================= ===================
Net earnings (loss) per common share:
Basic $ 0.01 $ (0.32) $ (0.01) $ (0.31)
========================================================= ===================
Diluted $ 0.01 $ (0.32) $ (0.01) $ (0.31)
========================================================= ===================
Weighted average common shares outstanding:
Basic 6,110,109 6,109,834 6,110,109 6,123,834
========================================================= ===================
Diluted 6,110,109 6,109,834 6,110,109 6,123,834
========================================================= ===================
<FN>
See accompanying notes to condensed consolidated financial statements
</FN>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
---------------------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
Cash Flows From Operating Activities:
Net loss $ (63,297) $ (1,881,272)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,184,815 2,079,051
Changes in operating assets and liabilities:
Increase in receivables, net (2,717,342) (2,662,152)
(Increase) decrease in operating supplies (335,850) 148,127
Increase in prepaid expenses and other (1,205,992) (1,666,802)
Decrease (increase) in other assets 123,166 (104,947)
Increase in accounts payable 38,287 383,804
Decrease in income taxes receivable 1,589,678 --
Decrease in accrued liabilities (1,500) (122,648)
Increase in accrued claims payable 236,218 520,675
---------------------------------------------
Net cash used in operating activities (151,817) (3,306,164)
---------------------------------------------
Cash Flows From Investing Activities:
Purchase of property and equipment (10,891,743) (2,967,289)
Proceeds from the sale of property and equipment 12,100,555 5,856,145
---------------------------------------------
Net cash provided by investing activities 1,208,812 2,888,856
---------------------------------------------
Cash Flows From Financing Activities:
Principal payments on long-term debt (3,847,363) (3,752,568)
Borrowings under line-of-credit agreement -- 6,700,000
Principal payments under capitalized lease obligations (220,974) (1,817,162)
Purchase of treasury stock -- (521,600)
Net proceeds from issuance of Class A common stock 2,474 --
---------------------------------------------
Net cash (used in) provided by financing activities (4,065,863) 608,670
---------------------------------------------
Net Increase (Decrease) In Cash (3,008,868) 191,362
Cash at Beginning of Period 8,658,268 7,826,365
---------------------------------------------
Cash at End of Period $ 5,649,400 $ 8,017,727
=============================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 741,548 $ 728,481
Cash paid during the period for income taxes 41,851 29,467
<FN>
See accompanying notes to condensed consolidated financial statements
</FN>
SIMON TRANSPORTATION SERVICES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements include the
accounts of Simon Transportation Services Inc., a Nevada
holding company, and its wholly owned subsidiary, Dick Simon
Trucking, Inc. (together, the "Company"). All significant
intercompany balances and transactions have been eliminated in
consolidation.
The financial statements have been prepared, without audit, in
accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the
accompanying financial statements include all adjustments
which are necessary for a fair presentation of the results for
the interim periods presented, such adjustments being of a
normal recurring nature. Certain information and footnote
disclosures have been condensed or omitted pursuant to such
rules and regulations. The September 30, 1999 condensed
consolidated statement of financial position was derived from
the audited balance sheet of the Company for the year then
ended. It is suggested that these condensed consolidated
financial statements and notes thereto be read in conjunction
with the consolidated financial statements and notes thereto
included in the Annual Report on Form 10-K of Simon
Transportation Services Inc. for the year ended September 30,
1999. Results of operations in interim periods are not
necessarily indicative of results to be expected for a full
year.
Forward-Looking Statements
This quarterly report and statements by the Company in reports to its
stockholders and public filings, as well as oral public statements by Company
representatives may contain certain forward-looking information that is subject
to certain risks and uncertainties that could cause actual results to differ
materially from those projected. Without limitation, these risks and
uncertainties include economic recessions or downturns in customers' business
cycles, excessive increases in capacity within the truckload markets, decreased
demand for transportation services offered by the Company, rapid inflation and
fuel price increases, increases in interest rates, and the availability and
compensation of qualified drivers. Readers should review and consider the
various disclosures made by the Company in this quarterly statement and in its
reports to its stockholders and periodic reports on Forms 10-K and 10-Q.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's fiscal year ends on September 30 of each year. Thus, the
fiscal periods discussed in this report represent the Company's second fiscal
quarters and first six months of its 2000 and 1999 fiscal years, respectively.
Results of Operations
Three months ended March 31, 2000 and 1999
Operating revenue increased $5.9 million (12.0%) to $55.2 million for
the three months ended March 31, 2000, from $49.3 million for the corresponding
period of 1999. The increase in operating revenue was primarily attributable to
a 7.3% increase in weighted average tractors, to 1,712 in the 2000 period from
1,595 in the corresponding 1999 period, and an increase in average revenue per
tractor per week, to $2,471 in the 2000 period from $2,390 in the 1999 period.
The increase in average revenue per tractor is primarily attributable to a
higher per mile rate in the 2000 period.
Salaries, wages, and benefits increased $0.4 million (1.8%) to $22.2
million during the quarter ended March 31, 2000 from $21.8 million in the 1999
period. As a percentage of revenue, salaries, wages, and benefits decreased to
40.2% of revenue for the three months ended March 31, 2000, from 44.2% for the
corresponding period of 1999. The decrease was primarily attributable to a
reduction of the Company's shop and administrative personnel. In July 1999, the
Company eliminated the positions of approximately 25% of its non-driver
personnel, mostly from the shop area. In addition, the fixed costs of shop and
administrative personnel were offset by a higher per mile rate in the 2000
period.
Fuel and fuel taxes increased $3.8 million (45.2%) to $12.2 million
during the quarter ended March 31, 2000 from $8.4 million in the 1999 period. As
a percentage of revenue, fuel and fuel taxes increased to 22.1% of revenue for
the three months ended March 31, 2000, from 17.0% for the corresponding period
of 1999, principally as a result of higher fuel prices. The Company has
agreements in place with a substantial number of customers who have agreed to
pay fuel surcharges to help offset the escalation in fuel prices.(*)
Operating supplies and expenses decreased $0.9 million (12.2%) to $6.5
million during the quarter ended March 31, 2000 from $7.4 million in the 1999
period. As a percentage of revenue, operating supplies and expenses decreased to
11.7% of revenue for the three months ended March 31, 2000, from 15.0% for the
corresponding period of 1999, primarily as a result of decreased costs of
repairs not covered under vehicle warranties and the Company's efforts to reduce
the amount spent on operating supplies and expenses. In addition, improved
revenue per mile in the 2000 period reduced operating supplies and expenses
stated as a percentage of revenue.(*)
Taxes and licenses decreased $0.1 million (5.3%) to $1.8 million during
the quarter ended March 31, 2000 from $1.9 million for the corresponding period
of 1999. As a percentage of revenue, taxes and licenses decreased to 3.2% of
revenue for the three months ended March 31, 2000 from 3.9% for the
corresponding period of 1999. The decrease is primarily attributable to more
efficient licensing of the Company's fleet coupled with improved revenue per
mile in the 2000 period. The fixed licensing costs were partially offset by a
higher per mile rate during the 2000 period.
Insurance and claims decreased $0.2 million (12.5%) to $1.6 million
during the quarter ended March 31, 2000 from $1.8 million for the corresponding
period of 1999. As a percentage of revenue, insurance and claims decreased to
2.9% of revenue for the three months ended March 31, 2000, from 3.6% for the
- -----------------
(*) May contain "forward-looking" statements.
corresponding period of 1999 primarily because of a decrease in the number and
severity of accidents experienced by the Company during the 2000 quarter.
Communications and utilities decreased $0.3 million (27.3%) to $0.8
million during the quarter ended March 31, 2000 from $1.1 million for the
corresponding period of 1999. As a percentage of revenue, communications and
utilities decreased to 1.5% of revenue for the three months ended March 31,
2000, compared with 2.2% of revenue for the corresponding period of 1999. The
decrease as a percentage of revenue is primarily attributable to improved
revenue per mile in the 2000 period and more efficient use of the Company's
satellite communication and long distance services. The Company has reduced its
long distance phone rates by over 40%.(*)
Depreciation and amortization remained essentially constant at $1.0
million during the quarter ended March 31, 2000 compared to $0.9 million for the
corresponding period of 1999. As a percentage of revenue, depreciation and
amortization (adjusted for the net gain on the sale of property and equipment)
decreased to 1.8% of revenue for the three months ended March 31, 2000, from
1.9% for the corresponding period of 1999. The decrease as a percentage of
revenue is primarily attributable to improved revenue per mile in the 2000
period and the fact that the Company has financed new equipment under operating
lease agreements. The Company realized a net gain of $631,623 on the sale of
property and revenue equipment during the 2000 period compared with a $626,083
net gain during the 1999 period.
Rent decreased $0.1 million (1.1%) to $8.6 million during the quarter
ended March 31, 2000 from $8.7 million for the corresponding period of 1999. As
a percentage of revenue, rent decreased to 15.6% of revenue for the three months
ended March 31, 2000, from 17.7% for the corresponding period of 1999 as the
Company reduced its tractor to trailer ratio from the 1999 period. In addition,
the Company benefited from the timing of its equipment trades during the 2000
quarter. Many trade vehicles had lease terms which expired early in the quarter.
Because of new equipment delivery schedules, the Company was able to utilize
this equipment until replacement vehicles arrived at a reduced cost. The Company
continued to utilize operating leases to finance new equipment in the quarter
ended March 31, 2000 primarily because of more favorable terms. If the Company
continues to use operating lease financing, its operating ratio will continue to
be affected in future periods because the implied financing costs of such
equipment are included as operating expenses instead of interest expense.(*)
As a result of the foregoing, the Company's operating ratio decreased
to 99.0% for the three months ended March 31, 2000, from 105.5% for the
corresponding period of 1999.
Net interest expense increased $42,000 (11.0%) to $423,000 during the
quarter ended March 31, 2000 from $381,000 for the corresponding period of 1999.
As a percentage of revenue, net interest expense remained constant at 0.8% of
revenue for the three months ended March 31, 2000 and the corresponding period
in 1999.
The Company's effective combined federal and state income tax rates for
the three months ended March 31, 2000 and 1999 were 36.0% and 37.8%,
respectively.
As a result of the factors described above, the Company generated net
earnings of $77,917 for the three months ended March 31, 2000, compared with a
net loss of $1,926,411 for the corresponding period of 1999.
Six months ended March 31, 2000 and 1999
Operating revenue increased $6.7 million (6.5%) to $109.0 million for
the six months ended March 31, 2000, from $102.3 million for the corresponding
period of 1999. The increase in operating revenue was primarily attributable to
a 6.2% increase in weighted average tractors, to 1,696 in the 2000 period from
1,597 in the corresponding 1999 period, and an increase in the per mile rate in
- -----------------
(*) May contain "forward-looking" statements.
the 2000 period. These increases were partially offset by a decrease in average
revenue per tractor per week, to $2,467 in the 2000 period from $2,482 in the
1999 period.
Salaries, wages, and benefits increased $0.1 million (0.2%) to $44.8
million during the six months ended March 31, 2000 from $44.7 million in the
1999 period. As a percentage of revenue, salaries, wages, and benefits decreased
to 41.1% of revenue for the six months ended March 31, 2000, from 43.7% for the
corresponding period of 1999. The decrease was primarily attributable to a
reduction of the Company's shop and administrative personnel. In July 1999, the
Company eliminated the positions of approximately 25% of its non-driver
personnel, mostly from the shop area. In addition, the fixed costs of shop and
administrative personnel were offset by a higher per mile rate in the 2000
period.
Fuel and fuel taxes increased $5.3 million (30.6%) to $22.6 million
during the six months ended March 31, 2000 from $17.3 million in the 1999
period. As a percentage of revenue, fuel and fuel taxes increased to 20.7% of
revenue for the six months ended March 31, 2000, from 16.9% for the
corresponding period of 1999, principally as a result of higher fuel prices. The
Company has agreements with a substantial number of customers who have agreed to
pay fuel surcharges to help offset the escalation in fuel surcharges.(*)
Operating supplies and expenses decreased $1.0 million (7.0%) to $13.2
million during the six months ended March 31, 2000 from $14.2 million in the
1999 period. As a percentage of revenue, operating supplies and expenses
decreased to 12.1% of revenue for the six months ended March 31, 2000, from
13.9% for the corresponding period of 1999, primarily as a result of decreased
costs of repairs not covered under vehicle warranties and the Company's efforts
to reduce the amount spent on operating supplies and expenses. In addition,
improved revenue per mile in the 2000 period reduced operating supplies and
expenses stated as a percentage of revenue.(*)
Taxes and licenses decreased $0.5 million (12.8%) to $3.4 million
during the six months ended March 31, 2000 from $3.9 million for the
corresponding period of 1999. As a percentage of revenue, taxes and licenses
decreased to 3.1% of revenue for the six months ended March 31, 2000, from 3.8%
of revenue for the corresponding period of 1999. The decrease is primarily
attributable to more efficient licensing of the Company's fleet coupled with
improved revenue per mile in the 2000 period. The fixed licensing costs were
partially offset by a higher per mile rate during the 2000 period.
Insurance and claims decreased $0.1 million (3.2%) to $3.0 million
during the six months ended March 31, 2000 from $3.1 million for the
corresponding period of 1999. As a percentage of revenue, insurance and claims
decreased to 2.8% of revenue for the six months ended March 31, 2000, from 3.0%
for the corresponding period of 1999 primarily because of a decrease in the
number and severity of accidents experienced by the Company during the period.
Communications and utilities decreased $0.3 million (14.3%) to $1.8
million during the six months ended March 31, 2000 from $2.1 million for the
corresponding period of 1999. As a percentage of revenue, communications and
utilities decreased to 1.7% of revenue for the six months ended March 31, 2000,
compared with 2.1% of revenue for the corresponding period of 1999. The decrease
as a percentage of revenue is principally attributable to improved revenue per
mile in the 2000 period and more efficient use of the Company's satellite
communication and long distance services. The Company has reduced its long
distance phone rates by over 40%.(*)
Depreciation and amortization increased $0.1 million (4.8%) to $2.2
million during the six months ended March 31, 2000 from $2.1 million for the
corresponding period of 1999. As a percentage of revenue, depreciation and
amortization (adjusted for the net gain on the sale of property and equipment)
remained essentially constant at 2.0% of revenue for the six months ended March
31, 2000, and the corresponding period of 1999. The increase in total
depreciation is principally attributable to a reduced gain in the 2000 period
compared with the 1999 period. The Company realized a net gain of $1,051,282 on
- -----------------
(*) May contain "forward-looking" statements.
the sale of property and revenue equipment during the 2000 period compared with
a $1,247,649 net gain during the 1999 period.
Rent increased $0.3 million (1.8%) to $17.4 million during the six
months ended March 31, 2000 from $17.1 million for the corresponding period of
1999. As a percentage of revenue, rent decreased to 16.0% of revenue for the six
months ended March 31, 2000, from 16.7% for the corresponding period of 1999 as
the Company added new equipment and replaced equipment that had been financed
under capital lease arrangements with equipment financed under operating leases.
The Company has utilized operating leases in the most recent six months because
of more favorable terms. If the Company continues to use operating lease
financing, its operating ratio will continue to be affected in future periods
because the implied financing costs of such equipment are included as operating
expenses instead of interest expense.(*)
As a result of the foregoing, the Company's operating ratio decreased
to 99.4% for the six months ended March 31, 2000, from 102.3% for the
corresponding period of 1999.
Net interest expense remained constant at $0.7 million during the six
months ended March 31, 2000 and the corresponding period of 1999. As a
percentage of revenue, net interest expense remained constant at 0.7% of revenue
for the six months ended March 31, 2000, and the corresponding period in 1999.
The Company's effective combined federal and state income tax rates for
the six months ended March 31, 2000 and 1999 were 36.0% and 37.8%, respectively.
As a result of the factors described above, the Company experienced a
net loss of $63,297 for the six months ended March 31, 2000, compared with a net
loss of $1,881,272 for the corresponding period of 1999.
Liquidity and Capital Resources
The growth of the Company's business has required significant
investment in new revenue equipment that the Company historically has financed
with borrowings under installment notes payable to commercial lending
institutions and equipment manufacturers, equipment leases from third-party
lessors, borrowings under its line of credit, and cash flow from operations. The
Company's primary sources of liquidity currently are cash and cash equivalents,
and borrowings and leases with financial institutions and equipment
manufacturers. During the six-month periods ended March 31, 2000 and 1999, the
Company continued to finance its tractors with operating leases.
Net cash used in operating activities was $0.2 million for the six
months ended March 31, 2000. Accounts receivable increased $2.7 million, prepaid
licensing on revenue equipment increased $1.2 million, and operating supplies
and miscellaneous assets increased $0.2 million during the period. These uses of
cash were substantially offset by Federal and state income tax refunds of $1.6
million received during the period, a non-cash charge of $2.2 million in
depreciation and a $0.3 million collective increase in accounts payable, accrued
liabilities and accrued claims.
Net cash provided by investing activities was $1.2 million for the six
months ended March 31, 2000, as the Company purchased $10.9 million of new
property and revenue equipment and sold revenue equipment for $12.1 million. The
Company expects capital expenditures (primarily for revenue equipment, and
satellite communications units), net of revenue equipment sales and trade-ins,
to be approximately $29.3 million through calendar 2000. The Company expects
projected capital expenditures to be funded mostly with operating leases,
borrowings and cash flows from operations.(*)
- -----------------
(*) May contain "forward-looking" statements.
Net cash used in financing activities was $4.1 million in the 2000
period, consisting of payments of $4.1 million of principal under the Company's
long-term debt and capitalized lease agreements.
The maximum amount committed under the Company's line of credit at
March 31, 2000 was $20 million. As of March 31, 2000, the Company had drawn $10
million against the line. The interest rate on the line of credit is 1.75
percent above the 30-day London Interbank Offered Rate ("LIBOR") in effect from
time to time. At March 31, 2000, the Company had other outstanding long-term
debt and capitalized lease obligations (including current portions) of
approximately $7.6 million, most of which comprised obligations for the purchase
of revenue equipment.
The Company's working capital at March 31, 2000 was $18.8 million.
Management believes that available borrowings under the line of credit, and
future borrowings under installment notes payable or lease arrangements for
revenue equipment will allow the Company to continue to meet its working capital
requirements, anticipated capital expenditures, and obligations under debt and
capitalized and operating leases at least through fiscal year 2000.(*)
Quantitative and Qualitative Disclosures About Market Risk
The principal market risks (i.e., the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed are
fluctuation in fuel prices and interest rates on our debt financing.
We are not engaged in any fuel hedging transactions. Thus, we are
exposed to fluctuations in fuel prices but are not exposed to any market risk
involving hedging costs.
We also are exposed to interest rate risks on our debt financing. Our
variable rate debt consists of a revolving line of credit, an unsecured term
loan and an equipment finance term loan carrying interest rates tied to LIBOR or
the Eurodollar rate. These variable interest rates expose us to the risk that
interest rates may rise. At March 31, 2000, assuming borrowing equal to the
$10.0 million drawn on the line of credit and $2.3 million on other outstanding
variable rate loans, a one percentage point increase in the LIBOR and Eurodollar
rate would increase our annual interest expense by approximately $123,000. The
balance of our equipment financing carries fixed interest rates and includes
term notes payable and capitalized leases totaling approximately $5.3 million.
These fixed interest rates expose us to the risk that interest rates may fall. A
one percentage point decline in interest rates would have the effect of
increasing the premium we pay over market interest rates by one percentage point
or approximately $53,000 annually.
- -----------------
(*) May contain "forward-looking" statements.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company and certain of its officers and directors have
been named as defendants in a securities class action filed in the
United States District Court for the District of Utah, Caprin v. Simon
Transportation Services, Inc., et al., No. 2:98CV 863K (filed December
3, 1998). Plaintiffs in this action allege that defendants made
material misrepresentations and omissions during the period February
13, 1997 through April 2, 1998 in violation of Sections 11, 12(2) and
15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Company intends to vigorously defend this action.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of Simon
Transportation Services Inc. following the year ended September 30,
1999 was held February 4, 2000, at the corporate headquarters located
at 5175 West 2100 South, West Valley City, Utah. Richard D. Simon,
Chairman, President, and Chief Executive Officer, presided.
The holders of 5,983,220 shares (representing 6,896,971
votes), which is approximately 98% of the total votes outstanding as of
the record date, were represented at the annual meeting in person or by
proxy. The three candidates for election as directors were elected to
serve terms of three years. The proposal to ratify the selection of
Arthur Andersen LLP as the Company's independent public accountants for
the 2000 fiscal year was approved. The tabulation of votes is listed in
the table below.
SUMMARY OF MATTERS VOTED UPON BY STOCKHOLDERS
Number of Votes
For Against Abstain Non-Vote
--- ------- ------- --------
Election of Directors:
Sherry L. Bokovoy 6,838,037 -- 58,934 126,889
Irene Warr 6,840,337 -- 56,634 126,889
Don L. Skaggs 6,835,556 -- 61,415 126,889
Other Matters: For Against Abstain Non-Vote
--- ------- ------- --------
Ratification of selection of 6,851,530 42,356 3,085 126,889
Arthur Andersen LLP as
independent public accountants
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Number Description
3.1 * Articles of Incorporation
3.2 * Bylaws
4.1 * Articles of Incorporation
4.2 * Bylaws
10.1 * Outside Director Stock Option Plan.
10.2 * Incentive Stock Plan.
10.3 * 401(k) Plan.
10.4 # Loan Agreement (Line of Credit) dated September 29, 1999 (replaced
loan agreement dated April 29, 1996) between U.S. Bank of Utah and
Simon Transportation Services Inc.
11 Schedule of Computation of Net Income Per Share
27 Financial Data Schedule
* Incorporated by reference from the Company's Registration Statement on Form
S-1, Registration No. 33-96876, effective November 17, 1995.
# Incorporated by reference from the Company's Annual Report on Form 10-K for
the period ended September 30, 1999, Commission File No. 0-27208, dated
December 11, 1999, and incorporated herein by reference.
(b) Reports on Form 8-K.
None.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SIMON TRANSPORTATION SERVICES INC.,
a Nevada corporation
Date: May 12, 2000 By: /s/ Alban B. Lang
-------------------------------- -----------------
(Signature)
Alban B. Lang
Treasurer and
Chief Financial Officer