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Quality Distribution Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 8, 2009 12:02PM
Quality Distribution Inc. (QLTY) filed Quarterly Report for the period ended 2009-03-31. Quality Distribution operates approximately tractors and trailers through three principal transportation subsidiaries: Quality Carriers TransPlastics and Quebec-based Levy Transport. The Company also provides other bulk transportation services including tank cleaning and freight brokerage. Quality Distribution Inc. has a market cap of $43 million; its shares were traded at around $2.19 with a P/E ratio of 43.8.
Highlight of Business Operations:
We project both aggregate U.S. pre-tax income as well as aggregate U.S. taxable income for the years 2009 through 2013 sufficient to absorb $83.0 million of the $98.0 million existing net operating loss carryforwards. At December 31, 2008 we had an estimated $98.0 million in federal net operating loss carryforwards, $2.3 million in alternative minimum tax credit carryforwards and $2.9 million in foreign tax credit carryforwards. The net operating loss carryforwards will expire in the years 2018 through 2027,
Assumed discount rates and expected return on plan assets have a significant effect on the amounts reported for the pension plan. At December 31, 2008, our projected benefit obligation (PBO) was $45.6 million. Our projected 2009 net periodic pension expense is $2.2 million. A 1.0% decrease in our assumed discount rate would increase our PBO to $50.3 million and increase our 2009 net periodic pension expense less than $0.1 million. A 1.0% increase in our assumed discount rate would decrease our PBO to $41.8 million and decrease our 2009 net periodic pension expense to $2.1 million. A 1.0% decrease in our assumed rate of return would not change our PBO but would increase our 2009 net periodic pension expense to $2.4 million. A 1.0% increase in our assumed rate of return would not change our PBO but would decrease our 2009 net periodic pension expense to $1.9 million.
RestructuringWe account for restructuring costs associated with one-time termination benefits, costs associated with lease and contract terminations and other related exit activities in accordance with SFAS No. 146 Accounting for Costs Associated with Exit or Disposal Activities. We have made estimates of the costs to be incurred as part of our restructuring plan. During the quarter ended June 30, 2008, we committed to a plan of restructure resulting in the termination of non-driver positions and the consolidation or closure of underperforming company terminals. We continued our plan of restructure throughout 2008 which resulted in a restructuring charge of $5.3 million of which the majority related to our trucking segment. The total restructuring charge for 2008 represents $2.0 million of severance costs, $0.6 million in contract termination costs and $2.7 million related to other exit costs. Our restructuring plan is continuing in 2009, and in the first quarter we recorded a charge of $0.6 million related to employee termination benefits and other related exit activities. As of March 31, 2009, approximately $0.7 million was accrued related to the restructuring charges, which is expected to be paid during the remainder of 2009.
For the quarter ended March 31, 2009, total revenues were $149.7 million, a decrease of $58.8 million, or 28.2%, from revenues of $208.5 million for the same period in 2008. Transportation revenue decreased by $38.2 million, or 25.6%, primarily due to a decrease in linehaul revenue due to a general weakening of the economy. We had a 26.6% decrease in the total number of miles driven and a 27.6% decrease in loads from the prior-year quarter.
Fuel, supplies and maintenance decreased $12.6 million, or 41.8%, due to lower fuel costs of $4.8 million, lower repairs and maintenance expense of $3.5 million and lower equipment rent expense of $1.9 million due to the shift of revenue from company-operated terminals to affiliates.
Selling and administrative expenses decreased by $2.1 million, or 22.7%, primarily due to a $0.8 million reduction in building rent expense for closed or converted terminals. In addition, we had a decrease of $0.4 million in professional fees and $0.5 million in travel related costs offset by an increase of $0.5 million in bad debt expense.
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