US 1 Industries Inc. (OTCBB:USOO) - 866331 - keine Infos von euch Pennystockexperten? - 500 Beiträge pro Seite

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Business Summary
US 1 Industries, Inc., through its subsidiaries, is an interstate trucking company operating in 48 states. The Company`s business consists principally of a truckload operation for which it obtains substantially all of its business through independent sales agents who then arrange with independent truckers to haul the freight to the desired destination. The Company conducts its business through a network of independent sales agents who are in regular contact with shippers at the local level. The sales agents have facilities and personnel to monitor and coordinate shipments and respond to shippers` needs in a timely manner.

Statements included within our site that are not historical in nature constitute forward-looking statements for the purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Users of our site are cautioned that any information on this contains certain such forward-looking statements that involve substantial risks and uncertainties. When used, the words "anticipate," "believe," "estimate," "expect," and similar expressions as they relate to any company or its management are intended to identify such forward-looking statements. Each company`s actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward looking statements. Further management discussion of risks and uncertainties can be found in each company`s quarterly filing with the Securities Exchange Commission and other periodic filings.


Basic Quote -- US 1 Industries Inc.
(OTCBB:USOO)

Symbol Last Price Change % Change
USOO $ 2.40 -0.02 -0.83% 10:25 AM EDT

Volume 77,700

Open $2.42

High $2.42

Low $2.40

52 Week Low $0.36

52 Week High $2.48

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13-Aug-2003

Quarterly Report


Item 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.

Results of Operations

You should read the following discussion regarding the Company along with the Company`s consolidated financial statements and related notes included in this quarterly report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. The Company`s actual results, performance and achievements in 2003 and beyond may differ materially from those expressed in, or implied by these forward-looking statements.

The financial statements and related notes contained elsewhere in this Form 10-Q as of and for the three months and six months ended June 30, 2003 and 2002 and in the Company`s Form 10-K for its fiscal year ended December 31, 2002, are essential to an understanding of the comparisons and are incorporated by reference into the discussion that follows.

Six months ended June 30, 2003 Compared to the six months ended June 30, 2002

The following table sets forth the percentage relationships of expense items to revenue for the six months ended June 30, 2003 and June 30, 2002:

2003 2002
------ ------
Revenue 100.0% 100.0%
Operating expenses:
Purchased transportation 74.1 74.4
Commissions 9.9 9.8
Insurance and claims 4.1 3.8
Salaries, wages and other 5.3 4.7
Other operating expenses 4.7 4.9
------- ------
Total operating expenses 98.1 97.6
------ ------
Operating income 1.9 2.4
The Company`s operating revenues increased to $60.3 million for the six
months ended June 30, 2003 from $47.6 million for the same period in 2002. This
is an increase of 26.7%. This increase is attributable to the continued growth
of Patriot Logistics, Inc. (f/k/a Keystone Intermodal, Inc.) and Keystone Lines,
Inc. and the opening of Harbor Bridge Transportation. The growth of these
subsidiaries is primarily attributable to the addition of new terminals.

Purchased transportation represents the amount an independent contractor is paid to haul freight and is primarily based on a contractually agreed-upon percentage of revenue generated by the haul for truck capacity provided by independent contractors. Purchased transportation is the largest component of operating expenses. Purchased transportation and commission expense increase or decrease in proportion to the revenue generated through independent contractors. Purchased transportation decreased slightly to 74.1% of revenue for the six months ended June 30, 2003 from 74.4% for the six months ended June 30, 2002. The slight decrease was partially offset by the slight increase in commissions. Many agents negotiate a combined percentage payable for purchased transportation and commission. The mix between the amounts of purchased transportation paid versus commissions paid may vary slightly based on agent negotiations with independent owner operators. However, in total, commissions and purchased transportation would typically be expected to remain relatively consistent as a percentage of revenues.
Item 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (continued)

Commissions to agents and brokers are primarily based on contractually agreed-upon percentages of revenue. Commissions increased slightly to 9.9% of revenue for the six months ended June 30, 2003 from 9.8% of revenue for the six months ended June 30, 2002. As previously described, the slight increase of 0.1% of revenue was partially offset by the decrease in purchased transportation.

Insurance and claims increased to 4.1% of revenue for the six months ended June 30, 2003 from 3.8% of revenue for the six months ended June 30, 2002. A majority of the insurance and claims expense is based on a percentage of revenue and, as a result, will increase or decrease on a consolidated basis with the Company`s revenue. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or the unfavorable development of existing claims could adversely affect the Company`s operating income. The increase of 0.3% of revenue can be attributed to the increase of certain operations` liability and cargo insurance rates due to adverse loss experience and the continued increase of insurance rates in today`s economy.

Salaries, wages, and fringe benefits were 5.3% of revenue for the six months ended June 30, 2003 compared to 4.7% of revenue for the six months ended June 30, 2002. This increase of 0.6% can primarily be attributed to an increase in officer compensation during 2003 and the Company`s hiring of three agent recruiters during the first quarter 2003. Also contributing to the increase is three newer divisions that utilize employees who are paid a salary instead of agents who would be paid commissions.

Other operating expenses as a percentage of revenue decreased slightly to 4.7% of revenue for the six months ended June 30, 2003 from 4.9% for the six months ended June 30, 2002. While not all operating expenses are directly variable with revenues, the increased revenue directly impacts several components of operating expenses such as bad debt expense. In addition, the Company has expanded by adding new terminals and operations resulting in the addition of new locations, which in turn leads to an increase in operating expenses such as rent. Other operating expenses increased $0.5 million from $2.3 million in 2002 to $2.8 million in 2003. The increase is primarily attributable to (1) a $0.40 million increase due to new operations which began in the second quarter of 2002 and (2) an overall increase in operating expenses at other locations as volume continued to grow during 2003.

Based on the changes in revenue and expenses described above, operating income increased by $36,135. Operating income for the six months ended June 30, 2003 was $1,153,623 compared to $1,117,488 for the six months ended June 30, 2002. Although operating income increased in dollar amount for the six months ended June 30, 2003 compared to the six months ended June 30, 2002, operating income as a percentage of revenue decreased by 0.5%. This decrease can be attributed to three of the Company`s operations that did not perform according to the Company`s expectations. Management has taken corrective action.

Interest expense decreased by $7,870 in 2003. Interest expense for the six months ended June 30, 2003 was $267,984 compared to interest expense of $275,854 for the six months ended June 30, 2002. This decrease in interest expense is attributable to a continued decrease in the prime rate. The rate on the Company`s loan with Firstar is currently based on certain financial covenants and may range from prime to prime plus .5%. At June 30, 2003, the interest rate charged on the loan with Firstar was prime (4.00%).

Item 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (continued)


Non-operating (income) expense, exclusive of interest expense, includes

income from rental property, storage, equipment usage, fees, discounts and legal settlement costs. Non-operating (income) expense, exclusive of interest expense, was ($203,294) for the six months ended June 30, 2003 versus $229,984 for the six months ended June 30, 2002. This is an increase of ($433,278) and is primarily attributable to a decrease in legal settlement expense. For the six months ended June 30, 2002, the Company incurred a $350,964 expense relating to a court ruling on litigation against the Company.

Minority interest expense of $61,690 and $44,838 for the six months ended June 30, 2003 and 2002, respectively, is the result of an agreement with certain key employees of Carolina National, a wholly owned subsidiary of the Company. Under the terms of this agreement, these employees will earn up to a 40% ownership interest in Carolina over a three-year period (see note 6 to condensed financial statements).

As a result of the factors described above, net income for the six months ended June 30, 2003 was $1,027,243 compared with $510,241 for the same period in 2002.

Three months ended June 30, 2003 Compared to the three months ended June 30,

The following table sets forth the percentage relationships of expense items to revenue for the three months ended June 30, 2003 and June 30, 2002:

2003 2002
------ ------
Revenue 100.0% 100.0%
Operating expenses:
Purchased transportation 73.9 74.2
Commissions 10.0 9.9
Insurance and claims 4.2 3.9
Salaries, wages and other 5.2 4.6
Other operating expenses 4.7 4.9
------- ------
Total operating expenses 98.01 97.5
------- ------
Operating income 2.0 2.5

The Company`s operating revenues increased to $31.7 million for the three months ended June 30, 2003 from $26.6 million for the same period in 2002. This is an increase of 19.0%. This increase is attributable to the continued growth of Patriot Logistics, Inc. (f/k/a Keystone Intermodal, Inc.) and Keystone Lines, Inc. and the opening of Harbor Bridge Transportation.
Purchased transportation represents the amount an independent contractor is paid to haul freight and is primarily based on a contractually agreed-upon percentage of revenue generated by the haul for truck capacity provided by independent contractors. Purchased transportation is the largest component of operating expenses. Purchased transportation and commission expense increase or decrease in proportion to the revenue generated through independent contractors. Purchased transportation decreased slightly to 73.9% of revenue for the three months ended June 30, 2003 from 74.2% for the three months ended June 30, 2002. The slight decrease is partially offset by the slight increase in commissions. Many agents negotiate a combined percentage payable for purchased transportation and commission. The mix between the amounts of purchased transportation paid versus commissions paid may vary slightly based on agent negotiations with independent owner operators. However, in total, commissions and purchased transportation would typically be expected to remain relatively consistent as a percentage of revenues.

Item 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (continued)


Commissions to agents and brokers are primarily based on contractually agreed-upon percentages of revenue. Commissions remained relatively consistent at 10.0% of revenue for the three months ended June 30, 2003 from 9.9% of revenue for the three months ended June 30, 2002. As previously described, the slight increase of 0.1% of revenue, partially offsets the decrease in purchased transportation.

Insurance and claims increased to 4.2% of revenue for the three months ended June 30, 2003 from 3.9% of revenue for the three months ended June 30, 2002. A majority of the insurance and claims expense is based on a percentage of revenue and, as a result, will increase or decrease on a consolidated basis with the Company`s revenue. Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or the unfavorable development of existing claims could adversely affect the Company`s operating income. The increase of 0.2% of revenue can be attributed to the increase of certain operations` liability and cargo insurance rates due to adverse loss experience and the continued increase of insurance rates in today`s economy.

Salaries, wages, and fringe benefits were 5.2% of revenue for the three months ended June 30, 2003 compared to 4.6% of revenue for the three months ended June 30, 2002. This increase of 0.6% can primarily be attributed to an increase in officer compensation during 2003 and the Company`s hiring of three agent recruiters during the first quarter 2003.

Other operating expenses as a percentage of revenue decreased slightly to 4.7% of revenue for the three months ended June 30, 2003 from 4.9% for the three months ended June 30, 2002. While not all operating expenses are directly variable with revenues, several components of operating expenses such as bad debt expense are directly impacted by the increased revenue. In addition, the Company has expanded by adding new terminals and operations resulting in the addition of new locations which in turn leads to an increase in operating expenses such as rent. Other operating expenses increased $0.2 million from $1.3 million in 2002 to $1.5 million in 2003. The increase is primarily attributable to new operations which began in the second quarter of 2002 and an overall increase in operating expenses at other locations as volume continued to grow during 2003.

Based on the changes in revenue and expenses described above, operating income decreased by $17,994. Operating income for the three months ended June 30, 2003 was $626,264 compared to $644,258 for the three months ended June 30, 2002. This decrease can be attributed to three of the Company`s operations that did not perform according to the Company`s expectations. Management has taken corrective action.

Interest expense decreased by $2,120 in 2003. Interest expense for the three months ended June 30, 2003 was $138,267 compared to interest expense of $140,387 for the three months ended June 30, 2002. This decrease in interest expense is attributable to a continued decrease in the prime rate. The rate on the Company`s loan with Firstar is currently based on certain financial covenants and may range from prime to prime plus .5%. At June 30, 2003, the interest rate charged on the loan with Firstar was prime (4.00%).

Item 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (continued)

Non-operating (income) expense, exclusive of interest expense, remained relatively constant. For the three months ended June 30, 2003, Non-operating (income) expense was ($83,537) versus $(85,247) for the three months ended June 30, 2002.

Minority interest expense of $31,374 and $30,485 for the three months ended June 30, 2003 and 2002, respectively, is the result of an agreement with certain key employees of Carolina National, a wholly owned subsidiary of the Company. Under the terms of this agreement, these employees will earn up to a 40% ownership interest in Carolina over a three-year period (see note 6 to condensed financial statements).

As a result of the factors described above, net income for the three months ended June 30, 2003 was $540,160 compared with $530,347 for the same period in 2002.

Liquidity and Capital Resources

Net cash provided by (used in) operating activities increased $336,368 from ($13,571) for the six months ended June 30, 2002 to $322,797 for the six months ended June 30, 2003. Net income increased to $1,027,243 for the six months ended June 30, 2003 from $566,812 for the six months ended June 30, 2002. Although the Company continues to operate profitably, a significant amount of the profits are utilized to fund the Company`s continued growth. As a result of the continued growth of existing terminals and new operations in the second half of 2002, accounts receivable increased $1,598,401 in 2003. This increase in accounts receivable was only partially offset by a corresponding increase in accounts payable of $527,646. This is due to the fact that the Company`s customers typically pay 30 - 45 days from the invoice date. However, payment terms to many agents and independent owner operators are typically less than 15 days. The Company also has $700,000 accrued relating to a court ruling against the Company on certain litigation. While the Company intends to appeal this verdict, if the appeal is unsuccessful, the funding of this amount will result in a reduction in future cash provided by operations.

Net cash used in investing activities was $112,805 for the six months ended June 30, 2003 compared to net cash used in investing activities of $171,029 for the six months ended June 30, 2002. Net cash used in investing activities for both periods related primarily to the purchase of equipment such as trailers.

Net cash used in financing activities increased $72,532 from $137,460 for the six months ended June 30, 2002 to $209,992 for the six months ended June 30, 2003. The cash used in financing activities for 2003 is primarily due to repayments of shareholder and equipment loans in the amount of $555,610. This is offset by additional borrowing on the Company`s line of credit in 2003 of $463,171. During 2003, the Company`s subsidiary Carolina National also distributed $117,553 to minority shareholders.

The Company has an $8.5 million revolving line of credit with borrowings limited to 75% of eligible accounts receivable. Based on the Company`s eligible accounts receivable at June 30, 2003, unused availability under the line of credit at June 30, 2003 was $1,918,349. The Company is dependent upon the funds available under its loan agreement for liquidity. As long as the Company can fund 25% of its accounts receivable from funds generated internally from operations or otherwise, this facility provides the Company sufficient liquidity to meet its needs on an ongoing basis. However, as the Company continues to grow, it will need to expand the facility in order to fund its growth. This facility expires on October 1, 2003 and the Company and the lender have begun discussion regarding its extension, but there can be no assurance regarding their outcome.

The Company also has two additional equipment loans used to fund equipment purchases. The outstanding balances on these loans bear interest at the prime rate in effect plus 1% per annum (5.00% at June 30, 2003). The principal balance of these equipment loans is payable based on a five-year amortization of the outstanding balances with any remaining unpaid balance due in October 2003. The outstanding balances under these equipment loans totaled $560,998 at June 30, 2003. The loans are collateralized by the related equipment funded by these borrowings. The Company intends to and believes it will be successful in extending the maturity date of these loans into fiscal 2004.

Liquidity and Capital Resources (continued)

The line of credit and equipment loans are subject to termination upon various events of default, including failure to remit timely payments of interest, fees and principal, any adverse change in the business of the Company or failure to meet certain financial covenants. Financial covenants include: minimum net worth requirements, total debt service coverage ratio, capital expenditure limitations, and prohibition of additional indebtedness without prior authorization.

The Company also has approximately $3.0 million of debt payable to the Chief Executive Officer and Chief Financial Officer or entities under their control. This debt is subordinate to the lender on the revolving credit facility and is currently being repaid at a rate of $120,000 per year. Currently, this shareholder debt matures in October 2, 2004. It is anticipated that the maturity date of this debt will eventually be extended beyond 2004 or the debt may be converted into equity.

Critical Accounting Policies and Estimates

Our financial statements reflect the selection and application of accounting policies, which require management to make significant estimates and assumptions. We believe that the following are some of the more critical judgment areas in the application of our accounting policies that currently affect our financial condition and results of operations.

Preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses and related contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenues, bad debts, income taxes and contingencies and litigation.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We record an allowance for doubtful accounts based on (1) specifically identified amounts that we believe to be uncollectible and (2) an additional allowance based on certain percentages of our aged receivables, which are determined uncollectible based on historical experience and our assessment of the general financial conditions affecting our customer base. If actual collections experience changes, revisions to our allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In addition, we review the components of other receivables, consisting primarily of advances to drivers and agents, and write off specifically identified amounts that we believe to be uncollectible. Revenue for freight is recognized upon delivery. Amounts payable for purchased transportation, commissions and insurance expense are accrued when the related revenue is recognized.

We are involved in various litigation in the normal course of business. Management evaluates the likelihood of a potential loss from various litigation on a quarterly basis. When it is probable that a loss will occur from litigation and the amount of the loss can be reasonably estimated, the loss is recognized in the Company`s financial statements. If a potential loss is not both reasonably possible and cannot be reasonably estimated, but there is at least a reasonable possibility that a loss may be incurred, the litigation is not recorded in the Company`s financial statements but this litigation is disclosed in the footnotes of the financial statements.

The Company carries insurance for public liability and property damage, and cargo loss and damage through various programs. A significant portion of the Company`s liability insurance is obtained from American Inter-Fidelity Exchange, a related party. The Company`s insurance liabilities are based upon the best information currently available and are subject to revision in future periods as additional information becomes available. Management believes it has adequately provided for insurance claims.

Critical Accounting Policies and Estimates (continued)

Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. At June 30, 2003, the Company`s deferred tax asset consists principally of net operating loss carry forwards. The Company`s deferred tax asset has been reduced by a valuation allowance to the extent such benefits are not expected to be fully utilized. The Company has based its estimate of the future utilization of the net operating loss upon its estimate of future taxable income. If actual future taxable income differs, revisions to the valuation allowance and net deferred tax asset may be required.

Quantitative and Qualitative Disclosures About Market Risk

Inflation

Changes in freight rates charged by the Company to its customers are generally reflected in the cost of purchased transportation and commissions paid by the Company to independent contractors and agents, respectively. Therefore, management believes that future-operating results of the Company will be affected primarily by changes in volume of business. However, due to the highly competitive nature of the truckload motor carrier industry, it is possible that future freight rates and cost of purchased transportation may fluctuate, affecting the Company`s profitability.

Certain Relationships and Related Transactions.

The Company leases office space for its headquarters in Gary, Indiana, for $3,000 monthly, from Michael E. Kibler, the president and Chief Executive Officer and a director of the Company, and Harold E. Antonson, the Chief Financial Officer, treasurer and a director of the Company. Messrs. Kibler and Antonson own the property as joint tenants.

One of the Company`s subsidiaries provides safety, management, and accounting services to companies controlled by the President and Chief

Certain Relationships and Related Transactions (Continued)

Financial Officer of the Company. These services are priced to cover the cost of the employees providing the services and the overhead.

The Company has approximately $32,000 of other accounts receivable due from entities that could be deemed to be under common control as of June 30, 2003.

One of the Company`s insurance providers, American Inter-Fidelity Exchange (AIFE), is managed by a Director of the Company and the Company has a deposit with the provider. In addition, the Chief Executive Officer and Chief Financial Officer of the Company are shareholders of American Inter-Fidelity Corporation ("AIFC"), which manages AIFE. AIFC is entitled to receive a management fee from AIFE. AIFE has paid no fees to AIFC in 2003 or 2002.

The Company has long-term notes payable due to its Chief Executive Officer, Chief Financial Officer, and August Investment Partnership, an entity affiliated through common ownership, totaling approximately $3.0 million. In addition, the Company has approximately $1 million of accrued interest due under these notes payable.

The Company conducts business with freight companies under the control of a director of the Company. Accounts receivable at June 30, 2003 includes $560,971 due from or guaranteed by these companies.

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