TROUTMAN SANDERS LLP
ATTORNEYS AT LAW
BANK OF AMERICA PLAZA
600 PEACHTREE STREET, N.E. - SUITE 5200
ATLANTA, GEORGIA 30308-2216
www.troutmansanders.com
TELEPHONE: 404-885-3000
FACSIMILE: 404-885-3900
W. Brinkley Dickerson Direct Dial: 404-885-3822
brinkley.dickerson@troutmansanders.com Direct Fax: 404-962-6743
June 29, 2005
VIA EDGAR AND UNITED PARCEL SERVICE
- -----------------------------------
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Michael Fay
Branch Chief Accountant
Re: US 1 Industries, Inc.
Form 10-K for the year ended December 31, 2004
File No. 001-08129
File March 24, 2005
Dear Mr. Fay:
The following are the responses of US 1 Industries, Inc. to the
comments of the Staff of the United States Securities and Exchange
Commission on US 1 Industries, Inc. Form 10-K for the year ended December
31, 2004, as such comments were transmitted to US 1 Industries in a letter
from the Staff dated June 7, 2005. We are submitting this letter on behalf
of US 1 Industries and the terms "we," "us," "our" and "the Company" in the
following responses refer to US 1 Industries.
In connection with responding to the comments of the Staff, the
Company acknowledges that it is responsible for the adequacy and accuracy
of the disclosure in this filing; that Staff comments or changes to
disclosure in response to Staff comments do not foreclose the Commission
from taking any action with respect to this filing; and that the Company
may not assert the Staff comments as a defense in any proceeding initiated
by the Commission under the federal securities laws of the United States.
Form 10-K for the year-ended December 31, 2004
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Liquidity and Capital Resources
Table of Contractual Obligations
Comment No. 1:
Please tell us if you are contractually obligated to pay amounts due
to transportation carriers or agents. If so, please include such amounts
in your table of contractual obligations in future filings.
Response:
The Company is contractually obligated to pay carriers and agents for
the services that they provide. These amounts generally are paid promptly
upon delivery of the freight. In future filings the balance due of these
amounts will be reflected in the table of contractual obligations.
Note 12 - Commitments and Contingencies
Comment No. 2:
Please explain to us how Cam Transport, Inc. ("CAM") will satisfy payment
of the $1.7 million verdict given the lack of sufficient net worth or
assets. Please tell us what course of action you expect to take given that
the insurer (American Inter-Fidelity Exchange) is a related party and how
you anticipate the issue to impact your liquidity.
Response:
The verdict in the litigation against Cam Transport was the byproduct of
what is fairly described as a "runaway jury" in a small community in South
Carolina with a court system that is reputed to be difficult for non-
residents. For instance, the settlement value of the case immediately prior
to trial was estimated to be well less than $100,000, and there are strong
arguments that insufficient evidence existed, nonetheless was introduced,
to support any liability on the part of Cam.
Plaintiff's counsel appears to appreciate the nature of the verdict windfall
and that Cam has minimal net worth - roughly $350,000 disregarding the
verdict - and all of its assets are pledged as part of the collateral for
the Company's revolving credit facility. Recently there have been
discussions with the plaintiff's counsel regarding settlement of the claim
for less than the amount of the verdict with AIFE paying a portion of the
settlement amount. These discussion are extremely preliminary, and it is
unclear whether there will be a settlement and if so for what amount or on
what terms.
The Company has approximately $4.5 million available under its revolving
line of credit. If there is a settlement, the Company would readily be
able to pay whatever amount it agreed to pay. If there is not a settlement,
the Company similarly is in a position to pay whatever amount it decides is
appropriate for it to pay or it might decide to allow the plaintiff to
proceed against the assets of Cam or to file for bankruptcy protection for
Cam. No decision has been made. Under no scenario does the Company expect
the verdict to have a material impact on its remaining operations.
Despite the fact that the Company and AIFE are under common control, AIFE
is managed independently, sometimes to the frustration and disappointment of
the management of the Company. Should the claim against Cam be settled and
AIFE not participate in the settlement at an appropriate level or should the
claim not be settled and AIFE not participate in the ultimate payment, the
Company intends to defend the declaratory judgment action and to pursue AIFE
for its failure to provide appropriate coverage. It is premature to predict
the outcome of that dispute.
The Company intends to update its disclosure of the verdict in its Form
10-Q for the quarter ending on June 30, 2005. In addition, in the event that
the claim is settled substantially before then, the Company would issue a
press release announcing that settlement.
* * * * *
We appreciate the assistance the Staff has provided with its comments
on US 1 Industries? Form 10-K. We will be pleased to respond promptly to any
requests for additional information or material that we may provide in order
to facilitate your review. If you have any questions please do not hesitate
to call Patrick Macken at (404) 885-3136 or me at (404) 885-3382.
Very truly yours,
W. Brinkley Dickerson, Jr.
WBD/db
Cc: Harold Antonson (CRFO)
Michael Kibler (CEO)
Sean Henegan (BDO)
Patrick Macken (Troutman)