UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
------------------------------------
FORM 10-Q/A
(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
( ) 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 (June 30, 1998).
Class A Common Stock, $.01 par value: 5,372,683 shares
Class B Common Stock, $.01 par value: 913,751 shares
Exhibit Index is on Page 12
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
June 30, 1998 and September 30, 1997 3
Condensed consolidated statements
of earnings for the three months and nine
months ended June 30, 1998 and 1997 4
Condensed consolidated statements
of cash flows for the nine months ended
June 30, 1998 and 1997 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial
condition and results of operations 7
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 12
Item 6. Exhibits and Reports on Form 8-K 12
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
June 30, 1998 September 30, 1997
------------- ------------------
(Unaudited)
Current Assets:
Cash $ 8,840,051 $ 12,766,001
Receivables, net of allowance for doubtful accounts of
$119,000 and $62,000, respectively 18,863,005 20,712,286
Operating supplies 861,148 752,213
Prepaid expenses and other 3,992,306 2,193,950
------------------------ ------------------------
Total current assets 32,556,510 36,424,450
------------------------ ------------------------
Property and Equipment, at cost:
Land 7,646,922 7,632,711
Revenue equipment 47,120,429 59,392,072
Buildings and improvements 18,806,510 14,321,869
Office furniture and equipment 8,010,190 5,974,291
------------------------ ------------------------
81,584,051 87,320,943
Less accumulated depreciation and amortization (16,836,798) (16,166,473)
------------------------ ------------------------
64,747,253 71,154,470
------------------------ ------------------------
Other Assets 205,770 125,450
======================== ========================
$ 97,509,533 $ 107,704,370
======================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 7,579,769 $ 6,382,697
Current portion of capitalized lease obligations 2,142,265 5,346,645
Accounts payable 4,443,334 3,593,420
Accrued liabilities 2,462,240 3,957,055
Accrued claims payable 1,169,102 1,259,674
------------------------ ------------------------
Total current liabilities 17,796,710 20,539,491
------------------------ ------------------------
Long-Term Debt, net of current portion 11,009,455 14,638,389
------------------------ ------------------------
Capitalized Lease Obligations, net of current portion 2,552,648 6,423,385
------------------------ ------------------------
Deferred Income Taxes 6,254,445 6,254,445
------------------------ ------------------------
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, 5,372,683 and 5,320,313 shares issued, respectively 53,727 53,203
Class B common stock, $.01 par value, 5,000,000 shares
authorized, 913,751 and 962,661 shares issued, respectively 9,138 9,627
Additional paid-in capital 48,264,713 48,233,608
Retained earnings 11,568,697 11,552,222
------------------------ ------------------------
Total stockholders' equity 59,896,275 59,848,660
------------------------ ------------------------
$ 97,509,533 $ 107,704,370
======================== ========================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
condensed consolidated financial statements.
</FN>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
-----------------------------------------------------------------------------
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
Operating Revenue $ 50,054,991 $ 41,190,623 $ 143,210,822 $ 111,121,642
--------------------------------------------------------- -------------------
Operating Expenses:
Salaries, wages, and benefits 21,552,353 16,304,641 58,915,495 43,346,986
Fuel & fuel taxes 9,275,404 7,946,623 26,635,452 21,566,883
Operating supplies and expenses 6,656,953 4,919,653 20,237,124 13,753,234
Taxes and licenses 1,516,404 1,263,791 4,872,748 3,752,421
Insurance and claims 1,232,362 911,213 4,152,060 2,371,691
Communications and utilities 1,079,165 679,245 2,924,327 1,813,962
Depreciation and amortization 1,330,842 1,290,488 3,669,524 4,090,554
Rent 7,501,373 4,597,370 20,613,548 12,252,776
--------------------------------------------------------- -------------------
Total operating expenses 50,144,856 37,913,024 142,020,278 102,948,507
--------------------------------------------------------- -------------------
Operating earnings (loss) (89,865) 3,277,599 1,190,544 8,173,135
Gain on sale of real property -- 1,896,025 -- 1,896,025
Net interest expense (344,811) (254,435) (1,164,056) (938,356)
--------------------------------------------------------- -------------------
Earnings (loss) before income taxes (434,676) 4,919,189 26,488 9,130,804
Provision (benefit) for income taxes (164,308) 1,859,361 10,012 3,451,351
========================================================= ===================
Net earnings (loss) $ (270,368) $ 3,059,828 $ 16,476 $ 5,679,453
========================================================= ===================
Net earnings (loss) per common share
Basic $ (0.04) $ 0.49 $ 0.00 $ 1.03
========================================================= ===================
Diluted $ (0.04) $ 0.48 $ 0.00 $ 1.01
========================================================= ===================
Weighted average common shares outstanding
Basic 6,286,427 6,280,371 6,285,582 5,514,386
========================================================= ===================
Diluted 6,286,427 6,406,048 6,285,582 5,640,063
========================================================= ===================
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
condensed consolidated financial statements.
</FN>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
---------------------------------------------
June 30, 1998 June 30, 1997
Cash Flows From Operating Activities:
Net earnings $ 16,476 $ 5,679,453
Adjustments to reconcile net earnings to net cash provided by
operating activities
Depreciation and amortization 3,669,524 4,090,555
Gain on sale of real property -- (1,896,025)
Changes in operating assets and liabilities:
Decrease (increase) in receivables, net 760,781 (2,783,574)
Increase in operating supplies (108,935) (325,111)
Increase in prepaid expenses and other (1,798,356) (775,057)
(Increase) decrease in other assets (80,320) 192,195
Increase in accounts payable 849,914 1,194,477
(Decrease) increase in accrued liabilities (1,494,815) 658,934
Decrease in accrued claims payable (90,572) (239,331)
---------------------------------------------
Net cash provided by operating activities 1,723,697 5,796,516
---------------------------------------------
Cash Flows From Investing Activities:
Purchase of property and equipment (8,403,107) (27,399,088)
Proceeds from the sale of property and equipment 11,140,800 9,497,034
---------------------------------------------
Net cash provided by (used in) investing activities 2,737,693 (17,902,054)
---------------------------------------------
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 2,900,000 5,827,740
Principal payments on long-term debt (5,331,862) (2,137,092)
Principal payments under capitalized lease obligations (7,075,117) (3,792,615)
Decrease in receivable from sale of equipment 1,088,500 --
Net proceeds from issuance of Class A common stock 31,139 22,945,917
---------------------------------------------
Net cash (used in) provided by financing activities (8,387,340) 22,843,950
---------------------------------------------
Net (Decrease) Increase In Cash (3,925,950) 10,738,412
Cash at Beginning of Period 12,766,001 5,571,431
---------------------------------------------
Cash at End of Period $ 8,840,051 $ 16,309,843
=============================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 1,440,353 $ 1,375,803
Cash paid during the period for income taxes 688,868 3,345,181
Supplemental Schedule of Noncash Investing and Financing Activities:
Sale of equipment in exchange for receivable paid after
period end -- 139,142
<FN>
The accompanying notes to condensed consolidated
financial statements are an integral part of these
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, 1997 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 Form 10-K of Simon Transportation Services
Inc. for the year ended September 30, 1997. Results of
operations in interim periods are not necessarily indicative
of results to be expected for a full year.
Note 2: Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." The Statement establishes accounting and
reporting standards requiring that derivative instruments be
recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the
derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Statement
133 is effective for fiscal years beginning after June 15,
1999. Management expects that the adoption of this statement
will not have a material effect on the Company's consolidated
financial statements.
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 third fiscal
quarters and nine months of its 1998 and 1997 fiscal years, respectively.
During the quarter ended June 30, 1998, the Company experienced a net
loss. The loss was primarily attributable to an increase in driver wages and an
increase in the number of tractors without drivers over historical levels. To
assist in recruiting and retaining drivers, the Company approved a driver wage
increase of $.02 per mile effective January 1, 1998 and an additional increase
of $.02 per mile effective April 15, 1998. The Company actively sought rate
increases to cover increases in operating costs, including the driver wage
increase. Most of the proposed rate adjustments have been granted with effective
dates ranging from the last half of June through the first half of July 1998.(*)
Results of Operations
Three months ended June 30, 1998 and 1997
Operating revenue increased $8.9 million (21.6%) to $50.1 million for
the three months ended June 30, 1998, from $41.2 million for the corresponding
period of 1997. The increase in operating revenue was primarily attributable to
a 28.8% increase in weighted average tractors, to 1,552 in the 1998 period from
1,205 in the corresponding 1997 period. This increase was partially offset by a
5.6% decrease in average revenue per tractor per week, to $2,503 in the 1998
period from $2,652 in the 1997 period.
Salaries, wages, and benefits increased $5.3 million (32.5%) to $21.6
million during the quarter ended June 30, 1998 from $16.3 million in the 1997
period. As a percentage of revenue, salaries, wages, and benefits increased to
43.1% of revenue for the three months ended June 30, 1998, from 39.6% for the
corresponding period of 1997. The increase was primarily attributable to driver
wage increases. In order to remain competitive in its compensation package to
drivers, the Company raised driver base pay two cents per mile effective January
1, 1998 and an additional two cents per mile effective April 15, 1998.
Fuel and fuel taxes increased $1.4 million (17.7%) to $9.3 million
during the quarter ended June 30, 1998 from $7.9 million in the 1997 period. As
a percentage of revenue, fuel and fuel taxes decreased to 18.5% of revenue for
the three months ended June 30, 1998, from 19.3% for the corresponding period of
1997, principally as a result of lower fuel prices in the 1998 period as
compared with the 1997 period.
Operating supplies and expenses increased $1.8 million (36.7%) to $6.7
million during the quarter ended June 30, 1998 from $4.9 million in the 1997
period. As a percentage of revenue, operating supplies and expenses increased to
13.3% of revenue for the three months ended June 30, 1998, from 11.9% for the
corresponding period of 1997, primarily as a result of increased costs of
accident repairs not covered under vehicle warranties and the cost of preparing
equipment for trade. Substantially all of the Company's tractors are covered by
three-year, 500,000-mile warranties.
Taxes and licenses increased $250,000 (19.2%) to $1.5 million during
the quarter ended June 30, 1998 from $1.3 million for the corresponding period
of 1997. As a percentage of revenue, taxes and licenses remained essentially
unchanged at 3.0% of revenue for the three months ended June 30, 1998, compared
with 3.1% for the corresponding period of 1997.
__________________________________________
(*) May contain forward looking statements
Insurance and claims increased $320,000 (35.1%) to $1.2 million during
the quarter ended June 30, 1998 from $911,000 for the corresponding period of
1997. As a percentage of revenue, insurance and claims increased to 2.5% of
revenue for the three months ended June 30, 1998, from 2.2% for the
corresponding period of 1997 because of an increase in the number of accidents
experienced by the Company during the quarter.
Communications and utilities increased $400,000 (58.9%) to $1.1 million
during the quarter ended June 30, 1998 from $679,000 for the corresponding
period of 1997. As a percentage of revenue, communications and utilities
increased to 2.2% of revenue for the three months ended June 30, 1998, from 1.6%
for the corresponding period of 1997, primarily as a result of an access fee
charged to the Company by the owners of pay telephones based on phone calls to
toll free numbers. In addition, the fixed costs of utilities for the Company's
terminals and costs associated with the usage of the Company's satellite
tracking system did not remain proportionate with the decreased revenue per
tractor.
Depreciation and amortization remained essentially constant at $1.3
million during the quarters ended June 30, 1998 and 1997. As a percentage of
revenue, depreciation and amortization (adjusted for the net gain on the sale of
property and equipment) decreased to 2.7% of revenue for the three months ended
June 30, 1998, from 3.1% for the corresponding period of 1997. The decrease was
primarily attributable to the use of operating leases rather than capital leases
to acquire new equipment during the last year. The Company realized a net gain
of $384,832 on the sale of property and revenue equipment during the 1998 period
compared with a $512,244 net gain during the 1997 period.
Rent increased $2.9 million (63.0%) to $7.5 million during the quarter
ended June 30, 1998 from $4.6 million for the corresponding period of 1997. As a
percentage of revenue, rent increased to 15.0% of revenue for the three months
ended June 30, 1998, from 11.2% for the corresponding period of 1997 as the
Company added new equipment and replaced equipment that had been financed under
capital lease arrangements with equipment financed under operating leases. In
addition, the fixed monthly rental payments were not as efficiently spread over
lower revenue per tractor. The Company has utilized operating leases in the most
recent quarter 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 increased
to 100.2% for the three months ended June 30, 1998, from 92.0% for the
corresponding period of 1997.
The Company realized a gain of $1,896,025 on the sale of its former
headquarter facilities to the municipality of Murray City during the three
months ended June 30, 1997. This non-recurring transaction increased pretax
earnings by 4.6% of revenue during the 1997 period.
Net interest expense increased $91,000 (35.8%) to $345,000 during the
quarter ended June 30, 1998 from $254,000 for the corresponding period of 1997.
As a percentage of revenue, net interest expense remained essentially unchanged
at 0.7% of revenue for the three months ended June 30, 1998, compared with 0.6%
for the corresponding period in 1997.
The Company's effective combined federal and state income tax rate for
the three months ended June 30, 1998 and 1997 was 37.8%.
As a result of the factors described above, the Company experienced a
net loss of $270,368 for the three months ended June 30, 1998, compared with net
earnings of $3,059,828 ($1,880,408 excluding the gain on sale of the Company's
former headquarters) for the corresponding period of 1997.
Nine months ended June 30, 1998 and 1997
Operating revenue increased $32.1 million (28.9%) to $143.2 million for
the nine months ended June 30, 1998, from $111.1 million for the corresponding
period of 1997. The increase in operating revenue was primarily attributable to
__________________________________________
(*) May contain forward looking statements
a 35.1% increase in weighted average tractors, to 1,468 in the 1998 period from
1,087 in the 1997 period. This increase was partially offset by a 4.9% decrease
in average revenue per tractor per week, to $2,514 in the 1998 period from
$2,644 in the 1997 period.
Salaries, wages, and benefits increased $15.6 million (36.0%) to $58.9
million during the nine months ended June 30, 1998 from $43.3 million in the
1997 period. As a percentage of revenue, salaries, wages, and benefits increased
to 41.1% of revenue for the nine months ended June 30, 1998, from 39.0% for the
corresponding period of 1997. The change is primarily attributable to two
increases in the driver base pay per mile. The Company raised driver base pay
two cents per mile effective January 1, 1998 and again on April 15, 1998.
Fuel and fuel taxes increased $5.0 million (23.1%) to $26.6 million
during the nine months ended June 30, 1998 from $21.6 million in the 1997
period. As a percentage of revenue, fuel and fuel taxes decreased to 18.6% of
revenue for the nine months ended June 30, 1998, from 19.4% for the
corresponding period of 1997, principally as a result of a lower fuel prices
during the 1998 period.
Operating supplies and expenses increased $6.4 million (46.4%) to $20.2
million during the nine months ended June 30, 1998 from $13.8 million in the
1997 period. As a percentage of revenue, operating supplies and expenses
increased to 14.1% of revenue for the nine months ended June 30, 1998, from
12.4% for the corresponding period of 1997, primarily as a result of increased
costs of accident repairs not covered under vehicle warranties and the cost of
preparing equipment for trade. Substantially all of the Company's tractors are
covered by three-year, 500,000-mile warranties.
Taxes and licenses increased $1.1 million (28.9%) to $4.9 million
during the nine months ended June 30, 1998 from $3.8 million for the
corresponding period of 1997. As a percentage of revenue, taxes and licenses
remained essentially constant at 3.4% of revenue for the nine months ended June
30, 1998, and 1997.
Insurance and claims increased $1.8 million (75.0%) to $4.2 million
during the nine months ended June 30, 1998 from $2.4 million for the
corresponding period of 1997. As a percentage of revenue, insurance and claims
increased to 2.9% of revenue for the nine months ended June 30, 1998, from 2.1%
for the corresponding period of 1997, principally as a result of an increase in
the number and severity of accidents experienced by the Company during the
period. Most of the increase was attributable to the Company's accident
experience during the second fiscal quarter.
Communications and utilities increased $1.1 million (61.1%) to $2.9
million during the six months ended June 30, 1998 from $1.8 million for the
corresponding period of 1997. As a percentage of revenue, communications and
utilities increased to 2.0% of revenue for the nine months ended June 30, 1998,
compared with 1.6% for the corresponding period of 1997, primarily as a result
of an access fee charged to the Company by the owners of pay telephones based on
phone calls to toll free numbers. In addition, the fixed costs of utilities for
the Company's terminals and the cost of usage of the Company's satellite
tracking system did not remain proportionate with the decrease in revenue per
tractor.
Depreciation and amortization decreased $400,000 (9.8%) to $3.7 million
during the nine months ended June 30, 1998 from $4.1 million for the
corresponding period of 1997. As a percentage of revenue, depreciation and
amortization (adjusted for the net gain on the sale of property and equipment)
decreased to 2.6% of revenue for the nine months ended June 30, 1998, from 3.7%
for the corresponding period of 1997. The decrease was primarily attributable to
the use of operating leases rather than capital leases to acquire new equipment
during the last year. The Company realized a net gain of $1,707,327 on the sale
of property and revenue equipment during the 1998 period compared with a
$1,391,427 net gain during the 1997 period.
Rent increased $8.3 million (67.5%) to $20.6 million during the nine
months ended June 30, 1998 from $12.3 million for the corresponding period of
1997. As a percentage of revenue, rent increased to 14.4% of revenue for the
nine months ended June 30, 1998, from 11.0% for the corresponding period of 1997
as the Company added new equipment and replaced equipment that had been financed
__________________________________________
(*) May contain forward looking statements
under capital lease arrangements with equipment financed under operating leases.
In addition, the fixed monthly rental payments were not as efficiently spread
over lower revenue per tractor. The Company has utilized operating leases in the
most recent nine 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 increased
to 99.2% for the nine months ended June 30, 1998, from 92.6% for the
corresponding period of 1997.
The Company realized a gain of $1,896,025 on the sale of its former
headquarter facilities to the municipality of Murray City during the nine months
ended June 30, 1997. This non-recurring transaction increased pretax earnings by
1.7% of revenue during the 1997 period.
Net interest expense increased $226,000 (24.1%) to $1.2 million during
the nine months ended June 30, 1998 from $938,000 for the corresponding period
of 1997. As a percentage of revenue, net interest expense remained essentially
constant at 0.8% of revenue for the nine months ended June 30, 1998, and 1997.
The Company's effective combined federal and state income tax rate for
the nine months ended June 30, 1998 and 1997 was 37.8%.
As a result of the factors described above, net earnings decreased to
$16,476 for the nine months ended June 30, 1998, compared with net earnings of
$5,679,453 ($4,500,033 excluding the gain on sale of the Company's former
headquarters) for the corresponding period of 1997.
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, funds provided by its public
offerings in November 1995 and February 1997, and cash flow from operations. The
Company's primary sources of liquidity currently are cash and cash equivalents,
cash flow from operations, and borrowings and leases with financial institutions
and equipment manufacturers. Management believes the Company's sources of
liquidity are adequate to meet its current and projected needs.(*)
The Company's primary source of cash flow from operations is net
earnings adjusted for depreciation and amortization. The Company's principal
uses of cash flow from operations are to service debt or lease payments
associated with new revenue equipment and to purchase property and equipment
associated with growth in the business. Net cash provided by operating
activities was $1.7 million for the nine months ended June 30, 1998. The primary
sources of funds were net earnings of $16,500 increased by $3.7 million in
depreciation, a $761,000 decrease in accounts receivable and an $850,000
increase in accounts payable. The primary uses of funds were $1.8 million to
prepay licensing on revenue equipment, $1.5 million and $91,000 to reduce
accrued liabilities and accrued claims payable, respectively, and $109,000 and
$80,000 to increase operating supplies and other assets, respectively.
Net cash provided by investing activities was $2.7 million for the nine
months ended June 30, 1998, as the Company purchased $8.4 million of new revenue
equipment and a new facility in Atlanta, Georgia. The Company sold property and
equipment for $11.1 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 $77.2 million through fiscal
1999.
Net cash used in financing activities was $8.4 million in the 1998
period, consisting primarily of $2.9 million of new borrowings for the purchase
of the Atlanta facility, a reduction of $1.1 in receivables from the sale of
revenue equipment, and payments of $12.4 million of principal under the
Company's long-term debt and capitalized lease agreements. In addition, the
__________________________________________
(*) May contain forward looking statements
Company received $31,000 from the exercise of stock options and the issuance of
stock to individuals who participate in the Company's stock option plans.
The Company's borrowings consist of $13.8 million for revenue equipment
debt and capitalized leases, and $9.5 million for the Company's new headquarters
in Salt Lake City and the Atlanta facility. The Company maintains a $10 million,
unsecured line of credit with a financial institution. Borrowings on the line of
credit bear interest at one-half percent (.5%) above the 30-day London Interbank
Offered Rate ("LIBOR") in effect from time to time. The Company had no
outstanding draws against the line of credit at June 30, 1998.
In July 1998, the Company announced a stock repurchase program. The
Board of Directors has authorized the repurchase of up to 500,000 shares of
Class A Common Stock. The purchase may be made in the open market or otherwise
from time-to-time between July 1998 and September 1999.
.
__________________________________________
(*) May contain forward looking statements
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No reportable events or material changes occurred during the
quarter for which this report is filed.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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
10.2 * Outside Director Stock Option Plan.
10.3 * Incentive Stock Plan.
10.4 * 401(k) Plan.
10.11 # Loan Agreement (Line of Credit) dated April 29, 1996 (replaced
loan agreement dated December 1, 1995) 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 Quarterly Report
on Form 10-Q for the period ended June 30, 1996, Commission
File No. 0-27208, dated August 9, 1996.
(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: July 31, 1998 By: /s/ Alban B. Lang
--------------------- -----------------
(Signature)
Alban B. Lang
Treasurer and Chief Financial Officer