UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Quarter Ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to
Commission File Number 001-14171
Total Logistics, Inc.
(Exact name of registrant as specified in its charter.)
| Wisconsin | 39-1915787 | |
| (State of Incorporation) | (IRS Employer Identification No.) |
| 700 N. Water Street, Suite 1200, Milwaukee, Wisconsin | 53202 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (414) 291-9000
C2, Inc.
(Former name of registrant)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ¨ 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.
| Common Stock $.01 par value |
5,375,864 | |
| (Class) | (Outstanding at May 10, 2004) |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOTAL LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands except share and per share data)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS: |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 4,745 | $ | 2,225 | ||||
| Accounts receivable, net |
27,587 | 28,659 | ||||||
| Inventories |
10,367 | 9,355 | ||||||
| Prepaids and other |
3,980 | 3,203 | ||||||
| Total Current Assets |
46,679 | 43,442 | ||||||
| Long-Term Assets: |
||||||||
| Fixed assets, net |
61,531 | 62,058 | ||||||
| Goodwill |
16,202 | 16,202 | ||||||
| Other assets |
2,537 | 2,631 | ||||||
| Total Long-Term Assets |
80,270 | 80,891 | ||||||
| $ | 126,949 | $ | 124,333 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: |
||||||||
| Current Liabilities: |
||||||||
| Current maturities of long-term debt |
$ | 2,351 | $ | 2,792 | ||||
| Line of credit |
4,798 | 2,661 | ||||||
| Accounts payable |
13,563 | 15,436 | ||||||
| Accrued liabilities |
20,100 | 19,658 | ||||||
| Total Current Liabilities |
40,812 | 40,547 | ||||||
| Long-Term Liabilities: |
||||||||
| Long-term debt, less current maturities |
43,833 | 42,932 | ||||||
| Other liabilities |
3,402 | 3,376 | ||||||
| Total Long-Term Liabilities |
47,235 | 46,308 | ||||||
| Total Liabilities |
88,047 | 86,855 | ||||||
| Shareholders’ Equity: |
||||||||
| Preferred stock, par value $.01 per share, 10,000,000 shares authorized, none issued or outstanding |
— | — | ||||||
| Common stock, par value $.01 per share; 50,000,000 shares authorized, 5,375,864 and 5,275,864 issued in 2004 and 2003, respectively |
54 | 53 | ||||||
| Additional paid-in capital |
22,931 | 22,483 | ||||||
| Deferred compensation |
(94 | ) | (98 | ) | ||||
| Accumulated other comprehensive loss |
(757 | ) | (640 | ) | ||||
| Retained earnings |
16,768 | 15,680 | ||||||
| Total Shareholders’ Equity |
38,902 | 37,478 | ||||||
| $ | 126,949 | $ | 124,333 | |||||
See notes to consolidated condensed financial statements.
2
TOTAL LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except share and per share data)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues: |
||||||||
| Logistics services |
$ | 54,215 | $ | 48,475 | ||||
| Product sales |
19,484 | 16,664 | ||||||
| 73,699 | 65,139 | |||||||
| Costs and Expenses: |
||||||||
| Logistics expenses |
48,995 | 43,159 | ||||||
| Cost of product sales |
15,658 | 13,904 | ||||||
| Depreciation and amortization |
1,789 | 1,914 | ||||||
| Selling, general and administrative expenses |
4,759 | 4,386 | ||||||
| 71,201 | 63,363 | |||||||
| Earnings from Operations |
2,498 | 1,776 | ||||||
| Other Income (Expense): |
||||||||
| Interest expense, net |
(645 | ) | (756 | ) | ||||
| Other expense |
(39 | ) | — | |||||
| (684 | ) | (756 | ) | |||||
| Earnings before income taxes |
1,814 | 1,020 | ||||||
| Income tax provision |
726 | 454 | ||||||
| Net earnings |
$ | 1,088 | $ | 566 | ||||
| Basic net earnings per share |
$ | 0.21 | $ | 0.11 | ||||
| Diluted net earnings per share |
$ | 0.20 | $ | 0.10 | ||||
| Average number of shares outstanding |
5,287,537 | 5,271,864 | ||||||
| Diluted number of shares outstanding |
5,575,151 | 5,541,817 | ||||||
See notes to consolidated condensed financial statements.
3
TOTAL LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2004
(Unaudited)
(In thousands)
| Common Stock |
Additional Paid-In Capital |
Deferred Compensation |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Current Year Comprehensive Income (Loss) |
||||||||||||||||
| Balance, December 31, 2003 |
$ | 53 | $ | 22,483 | $ | (98 | ) | $ | (640 | ) | $ | 15,680 | |||||||||
| Stock Option Exercises |
1 | 448 | — | — | — | ||||||||||||||||
| Vesting of Restricted Stock |
— | — | 4 | — | — | ||||||||||||||||
| Change in Fair Value of Interest Rate Swaps, Net of Tax Benefit of $79 |
— | — | — | (117 | ) | — | $ | (117 | ) | ||||||||||||
| Net Earnings |
— | — | — | — | 1,088 | 1,088 | |||||||||||||||
| Total Comprehensive Income |
— | — | — | — | — | $ | 971 | ||||||||||||||
| Balance, March 31, 2004 |
$ | 54 | $ | 22,931 | $ | (94 | ) | $ | (757 | ) | $ | 16,768 | |||||||||
See notes to consolidated condensed financial statements.
4
TOTAL LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Three Months Ended March 30, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net earnings |
$ | 1,088 | $ | 566 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,789 | 1,914 | ||||||
| Gain on sale of fixed assets |
(33 | ) | (48 | ) | ||||
| Loss in equity investment |
39 | — | ||||||
| Payment-in-kind interest |
24 | 23 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
1,072 | (990 | ) | |||||
| Inventories |
(1,012 | ) | (845 | ) | ||||
| Other assets |
(701 | ) | (312 | ) | ||||
| Accounts payable, accrued liabilities and other liabilities |
(1,516 | ) | (119 | ) | ||||
| Net cash provided by operating activities |
750 | 189 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchase of fixed assets |
(1,257 | ) | (889 | ) | ||||
| Proceeds from sales of fixed assets |
5 | 5 | ||||||
| Net cash used in investing activities |
(1,252 | ) | (884 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Borrowings on credit lines, net |
2,137 | 721 | ||||||
| Net proceeds from (repayments of) long-term debt |
436 | (423 | ) | |||||
| Proceeds from the exercise of stock options |
449 | — | ||||||
| Net cash provided by financing activities |
3,022 | 298 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
2,520 | (397 | ) | |||||
| BEGINNING CASH AND CASH EQUIVALENTS |
2,225 | 4,483 | ||||||
| ENDING CASH AND CASH EQUIVALENTS |
$ | 4,745 | $ | 4,086 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Interest paid |
$ | 688 | $ | 837 | ||||
| Income taxes paid |
$ | 1,397 | $ | 391 | ||||
See notes to consolidated condensed financial statements.
5
TOTAL LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands except share and per share data)
NOTE 1 — BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations. These condensed statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s 2003 Annual Report on Form 10-K.
In the opinion of management, the aforementioned statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Results for the three months ended March 31, 2004, are not necessarily indicative of results that may be expected for the year ending December 31, 2004.
On April 20, 2004, the Company’s shareholders voted to change the name of the Company from C2, Inc. to Total Logistics, Inc. (“TLI” or the “Company”).
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Inventories: Inventories are carried at the lower of FIFO (first-in, first-out) cost or market value. In the Logistics Services segment, inventories consist primarily of repair parts. In the Product Sales segment, inventories include materials, food products and labor and manufacturing overhead. As of March 31, 2004 and December 31, 2003, inventories are comprised of the following:
| March 31, 2004 |
December 31, 2003 | |||||
| Repair parts |
$ | 132 | $ | 137 | ||
| Commodities and other |
1,441 | 1,755 | ||||