Simon Transportation reports significant loss for fiscal year 2001
Jan 17, 2002 12:00 PM, Gary MacklinSimon Transportation Services of Salt Lake City UT has reported a loss of $41.7 million for fiscal year 2001 that ended September 30, 2001. This represents $6.82 per diluted share before a $6.4 million or $1.04 per share adjustment for an accrued loss on guaranteed lease residual values. Revenue for the year increased 20.5% to $278.8 million, up from $231.4 million in fiscal year 2000.
Chief executive officer Jon Isaacson attributed the loss to high fuel costs, increased insurance premiums and claims expenses, soft freight demand, and high driver turnover, which led to parking a large number of tractors. Driver turnover and lack of freight lowered equipment utilization and raised empty mileage, he said.
In response to these losses, Simon has started a program to consolidate terminals and reduce the total number of non-driver personnel. In addition, the company is reducing wages and benefits for those salaried personnel remaining. In addition, Simon is seeking rate increases and has raised driver wages in an attempt to stem turnover.
Operating losses have severely constrained company liquidity and Simon has deferred rent payments on leases for substantially all its tractors and trailers for several months, Isaacson said. This has placed the company in default of its leases and its line of credit. Simon is seeking to restructure the leases to extend the duration and spread the missed payments over the extended lease term. These factors “raise substantial doubt about our ability to keep operating given the losses we have incurred, particularly absent a restructuring of our financial obligations,” he said.