UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-12321
TRANSFINANCIAL HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 46-0278762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 859-0055
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. 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.
Class Outstanding at August 1, 1997
Common stock, $0.01 par value 6,153,110 Shares
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(In thousands, except per share amounts)
(Unaudited)
1997 1996
Operating Revenues.......................................................... $ 32,775 $ 28,345
Operating Expenses.......................................................... 31,710 27,919
Operating Income............................................................ 1,065 426
Nonoperating Income (Expense)
Interest income.......................................................... 172 217
Other.................................................................... 43 (8)
Total nonoperating income (expense).................................. 215 209
Income Before Income Taxes.................................................. 1,280 635
Income Tax Provision........................................................ 576 273
Net Income.................................................................. $ 704 $ 362
Average Common Shares Outstanding (Note 5).................................. 6,320 6,892
Net Income Per Share........................................................ $ 0.11 $ 0.05
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
(In thousands, except per share amounts)
(Unaudited)
1997 1996
Operating Revenues.......................................................... $ 64,164 $ 53,561
Operating Expenses.......................................................... 62,165 52,941
Operating Income............................................................ 1,999 620
Nonoperating Income (Expense)
Interest income.......................................................... 390 608
Other.................................................................... 40 26
Total nonoperating income (expense).................................. 430 634
Income Before Income Taxes.................................................. 2,429 1,254
Income Tax Provision........................................................ 1,093 539
Net Income.................................................................. $ 1,336 $ 715
Average Common Shares Outstanding (Note 5).................................. 6,347 7,014
Net Income Per Share........................................................ $ 0.21 $ 0.10
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
JUNE 30, DECEMBER 31,
1997 1996
ASSETS (Unaudited)
Current Assets:
Cash and temporary cash investments...................................... $ 6,097 $ 9,021
Short-term investments................................................... 6,996 9,957
Freight accounts receivable, less allowance
for doubtful accounts of $441 and $419, respectively................. 11,190 9,233
Finance accounts receivable, less allowance
for doubtful accounts of $464 and $769, respectively................. 16,199 14,554
Current deferred tax assets.............................................. 474 618
Other current assets..................................................... 2,549 1,965
AFS net assets (Note 6).................................................. 7,793 7,570
Total current assets................................................. 51,298 52,918
Operating Property, at Cost:
Revenue equipment........................................................ 26,457 24,373
Land..................................................................... 3,585 3,489
Structures and improvements.............................................. 10,301 10,087
Other operating property................................................. 6,079 5,328
46,422 43,277
Less accumulated depreciation........................................ (21,194) (19,887)
Net operating property........................................... 25,228 23,390
Intangibles, net of accumulated amortization ............................... 9,174 9,497
Other Assets................................................................ 3,289 1,007
$ 88,989 $ 86,812
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable......................................................... $ 3,006 $ 2,980
Accrued payroll and fringes.............................................. 6,810 5,533
Claims and insurance accruals............................................ 251 246
Accrued income taxes..................................................... 331 --
Other accrued expenses................................................... 1,643 2,289
Total current liabilities............................................ 12,041 11,048
Deferred Income Taxes....................................................... 1,661 1,203
Other Non-Current Liabilities............................................... 461 --
Shareholders' Equity (Note 5)
Preferred stock with $0.01 par value, authorized 1,000,000 shares,
none outstanding..................................................... -- --
Common stock with $0.01 par value, authorized 13,000,000 shares,
issued 7,614,670 and 7,605,570 shares, respectively.................. 76 76
Paid-in capital.......................................................... 5,572 5,529
Retained earnings........................................................ 80,578 79,242
Treasury stock, 1,354,712 and 1,224,661 shares, respectively, at cost.... (11,400) (10,286)
Total shareholders' equity........................................... 74,826 74,561
$ 88,989 $ 86,812
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(In thousands)
(Unaudited)
1997 1996
Cash Flows From Operating Activities
Net income.......................................................... $ 1,336 $ 715
Adjustments to reconcile net income to
cash provided by operating activities
Gain on sale of operating property, net......................... (47) (41)
Depreciation and amortization................................... 2,212 1,678
Provision for credit losses..................................... 403 364
Deferred tax provision.......................................... 602 136
Net increase (decrease) from change in other
working capital items affecting operating activities........... (1,793) (247)
2,713 2,605
Cash Flows From Investing Activities
Purchase of finance subsidiaries (Note 2)........................... -- (11,979)
Purchase of operating property...................................... (5,441) (3,998)
Origination of finance accounts receivable.......................... (63,229) (53,556)
Sale of finance accounts receivable................................. 41,263 20,885
Collection of owned finance accounts receivable..................... 19,978 32,444
Purchases of short-term investments................................. (6,868) (10,515)
Maturities of short-term investments................................ 9,829 27,298
(4,468) 579
Cash Flows From Financing Activities
Payments to acquire treasury stock.................................. (1,114) (4,385)
Borrowings (repayments) on credit agreements, net................... -- 522
Other............................................................... (55) 135
(1,169) (3,728)
Net Increase (Decrease) in Cash and Temporary Cash Investments........ (2,924) (544)
Cash and Temporary Cash Investments at beginning of period............ 9,021 6,617
Cash and Temporary Cash Investments at end of period.................. $ 6,097 $ 6,073
Cash Paid During the Period for
Interest............................................................ $ -- $ 534
Income Tax.......................................................... $ 27 $ 12
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Total
Share
Common Paid-In Retained Treasury holders'
Stock Capital Earnings Stock Equity
Balance at December 31, 1995.................. $ 76 $ 5,357 $ 78,390 $ (3,543) $ 80,280
Net income.................................... -- -- 852 -- 852
Issuance of shares under Incentive Stock Plan -- 172 -- (87) 85
Purchase of 797,341 shares of common stock.... -- -- -- (6,656) (6,656)
Balance at December 31, 1996.................. 76 5,529 79,242 (10,286) 74,561
Net income.................................... -- -- 1,336 -- 1,336
Issuance of shares under Incentive Stock Plan. -- 43 -- -- 43
Purchase of 130,051 shares of common stock.... -- -- -- (1,114) (1,114)
Balance at June 30, 1997 (unaudited).......... $ 76 $ 5,572 $ 80,578 $(11,400) $ 74,826
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include TransFinancial Holdings, Inc.
("TransFinancial") and all of its subsidiary companies (the "Company").
Pursuant to the approval of shareholders the Company changed its name from
Anuhco, Inc. to TransFinancial Holdings, Inc. effective June 30, 1997. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The condensed financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and have not been examined or reviewed by independent public
accountants. In the opinion of management, all adjustments necessary to fairly
present the results of operations have been made.
Pursuant to SEC rules and regulations, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted from these statements unless significant changes have taken place since
the end of the most recent fiscal year. TransFinancial believes that the
disclosures contained herein, when read in conjunction with the financial
statements and notes included, or incorporated by reference, in TransFinancial's
Form 10-K/A-3, filed with the SEC on May 5, 1997, are adequate to make the
information presented not misleading. It is suggested, therefore, that these
statements be read in conjunction with the statements and notes included, or
incorporated by reference, in the aforementioned report on Form 10-K/A-3.
2. ACQUISITION OF PREMIUM FINANCE SUBSIDIARIES
On March 29, 1996, TransFinancial completed the acquisition of all of the
issued and outstanding stock of Universal Premium Acceptance Corporation and
UPAC of California, Inc. (together referred to as "UPAC"). UPAC and Agency
Premium Resource, Inc. ("APR"), the Company's other finance subsidiary, offer
short-term collateralized financing of commercial and personal insurance
premiums through approved insurance agencies throughout the United States. At
March 31, 1996, UPAC had outstanding net finance receivables of approximately
$30 million. This transaction was accounted for as a purchase. TransFinancial
utilized a portion of its available cash and short-term investments to
consummate the purchase at a price of approximately $12 million. The terms of
the acquisition and the purchase price resulted from negotiations between
TransFinancial and William H. Kopman, the former sole shareholder of UPAC. In
connection with the purchase of UPAC, the Company has recorded goodwill of $6.6
million, which is being amortized on the straight-line basis over 25 years.
In addition to the Stock Purchase Agreement by which TransFinancial acquired
all of the UPAC stock, the Company entered into a consulting agreement with Mr.
Kopman. Under the consulting agreement, Anuhco is entitled to consult with Mr.
Kopman on industry developments as well as UPAC operations through December 31,
1998. In addition to retaining the services of Mr. Kopman under a consulting
agreement, certain executive management personnel of UPAC were retained under
multiyear employment agreements.
The unaudited pro forma operating results of TransFinancial for the six months
ended June 30, 1996, assuming the acquisition occurred as of the beginning of
the period, were operating revenues of $54,794,000, net income of $700,000, and
net income per share of $0.10. The pro forma results of operations are not
necessarily indicative of the actual results that would have been obtained had
the acquisition been made at the beginning of the period, or of results which
may occur in the future.
3. PROFIT SHARING
In September 1988, the employees of Crouse Cartage Company ("Crouse"), a
wholly owned subsidiary of TransFinancial, approved the establishment of a
profit sharing plan ("the Plan"). The Plan is structured to allow all employees
(union and non-union) to ratably share 50% of Crouse's income before income
taxes (excluding extraordinary items and gains or losses on the sale of assets)
in return for a 15% reduction in their wages. Plan distributions are made on a
quarterly basis. The Plan was recertified in 1991 and 1994, and shall continue
in effect through March 31, 1998, or until a replacement of the Collective
Bargaining Agreement is reached between the parties, whichever is the later.
The accompanying consolidated balance sheets as of June 30, 1997 include an
accrual for profit sharing costs of $1,047,000. The accompanying consolidated
statements of income include profit sharing costs of $1,047,000 and $724,000 for
the second quarter of 1997 and 1996, respectively, and $1,826,000 and $1,189,000
for the first six months of 1997 and 1996, respectively.
4. FINANCING AGREEMENTS
In December, 1996, TransFinancial, UPAC and APR Funding Corporation (a wholly-
owned subsidiary) entered into an extendible three year securitization agreement
whereby undivided interests in a designated pool of accounts receivable can be
sold on an ongoing basis. The maximum allowable amount of receivables to be
sold under the agreement is $50,000,000. This agreement replaced a similar
securitization agreement with another financial institution that was entered
into in October, 1995 and UPAC's secured credit agreement, dated July, 1994.
The purchaser permits principal collections to be reinvested in new financing
agreements. The Company had securitized receivables of $35.2 million at June
30, 1997. The cash flows from the sale of receivables are reported as investing
activities in the accompanying consolidated statement of cash flows. The
securitized receivables are reflected as sold in the accompanying balance sheet.
The proceeds from the initial securitization of the receivables were used to
purchase previous securitized receivables under the prior agreement and to pay
off the secured note payable under UPAC's secured credit agreement.
The terms of the agreement require UPAC to maintain a minimum tangible net
worth of $5 million and contain restrictions on the payment of dividends by UPAC
to TransFinancial without prior consent of the financial institution. The terms
of the agreement also require the Company to maintain a minimum tangible net
worth of $50 million. The Company was in compliance with all such provisions at
June 30, 1997. The terms of the securitization agreement also require that UPAC
maintain a default reserve at specified levels which serves as collateral. At
June 30, 1997, approximately $4.9 million of owned finance receivables served as
collateral under the default reserve provision.
Effective January 1, 1997, the Company adopted the requirements of Statement
of Financial Accounting Standards No. 125 ("SFAS No. 125"), "Accounting for the
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,"
for transfers occurring after December 31, 1996. The adoption of SFAS No. 125
did not have a material impact on the net income of the Company.
In September 1988, Crouse entered into a multi-year credit agreement with a
commercial bank which provided for maximum borrowings equaling the lesser of
$2,500,000 or the borrowing base, as defined in such agreement. In September,
1996 the term of this agreement was extended to June 30, 1998. There was no
outstanding balance on this revolving line of credit at June 30, 1997.
5. SHAREHOLDERS' EQUITY
Income per share is based on the average number of common shares outstanding
during each period. The average number of common shares so computed was
6,319,699 and 6,891,740 for the quarters ended June 30, 1997 and 1996,
respectively, and 6,347,201 and 7,013,878 for the first six months of 1997 and
1996, respectively.
On June 26, 1995, the Company adopted a program to repurchase up to 10% of its
outstanding shares of common stock. During the second quarter of 1996, the
Company completed this initial repurchase program and expanded the number of
shares authorized to be repurchased by an additional 10% of its then outstanding
shares. During the second quarter and first six months of 1997, the Company
repurchased an additional 105,051 shares and 130,051 shares of common stock,
respectively, bringing the total shares repurchased to 1,344,492 shares, or
17.8% of outstanding shares before initiating the program, at a total cost of
$11,314,000.
On June 26, 1997, the shareholders of the Company approved a 1-for-100 reverse
stock split followed by a 100-for-1 forward stock split. These stock splits
were effected on July 1, 1997. The result of this transaction was the
cancellation of approximately 107,000 shares of common stock held by holders of
fewer than 100 shares at a market price of $8.89 per share.
6. AFS NET ASSETS
Under the provisions of a Joint Plan of Reorganization ("the Joint Plan"), AFS
is responsible for the administration of pre-July 12, 1991 creditor claims and
conversion of assets owned before that date. As claims were allowed and cash
was available, distributions to the creditors occurred. The Joint Plan also
provided for distributions to TransFinancial as unsecured creditor distributions
occurred in excess of 50% of allowed claims. TransFinancial also will receive
the full benefit of any remaining assets of AFS through its ownership of AFS
stock, after unsecured creditors received distributions, including interest,
equivalent to 130% of their claims.
AFS has made the full payment of all its resolved claims and liabilities. The
remaining AFS net assets are estimated to have net realizable value of $9.8
million. The primary assets include approximately $6.6 million in cash and
investments. There are no material claims outstanding as of June 30, 1997. The
remaining AFS assets are recorded at their estimated net realizable value.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Second quarter and six months ended June 30, 1997 compared to the second quarter
and six months ended June 30, 1996
With the acquisition of APR on May 31, 1995, and UPAC on March 29, 1996,
TransFinancial now operates in two distinct industries; transportation, through
its subsidiary, Crouse; and financial services, through its subsidiaries, APR
and UPAC.
TRANSPORTATION
Operating Revenue - The changes in transportation operating revenue are
summarized in the following table (in thousands):
Qtr. 2 1997 Six Months 1997
vs. vs.
Qtr. 2 1996 Six Months 1996
Increase (decrease) from:
Increase in LTL tonnage........................ $3,063 $7,284
Increase in LTL revenue per hundredweight...... 968 1,233
Increase in truckload revenues................. 441 811
Net increase............................... $4,472 $9,328
Less-than-truckload ("LTL") operating revenues rose by 18.5% and 20.4% for the
second quarter and first six months of 1997, respectively, as compared to the
same periods in 1996. Crouse achieved increases of 14.1% and 17.4% in LTL tons
for the second quarter and first six months of 1997, respectively, compared to
1996. Crouse's LTL revenue yield improved approximately 3.9% and 2.5%,
respectively, from the second quarter and first six months of 1996 to the same
periods of 1997. These improvements were the result of a general rate increase
placed in effect January 1, 1997, negotiated rate increases on certain shipping
contracts and fuel surcharges to pass-through to customers the continuing high
cost of diesel fuel.
Truckload operating revenues were more than 9% higher in the periods of 1997,
on approximately 10% more shipments, offset by slight declines in revenue per
shipment.
Operating Expense - A comparative summary of transportation operating expenses
as a percent of transportation operating revenue follows:
Percent of Operating Revenue
Second Quarter Six Months
1997 1996 1997 1996
Salaries, wages and employee benefits................... 56.8% 55.7% 56.7% 55.7%
Operating supplies and expenses.......................... 12.1% 12.9% 12.6% 13.1%
Operating taxes and licenses............................. 2.7% 2.7% 2.8% 2.9%
Insurance and claims..................................... 1.9% 2.1% 1.9% 2.0%
Depreciation............................................. 3.0% 2.6% 3.0% 2.6%
Purchased transportation................................. 20.0% 21.2% 19.9% 21.3%
Total operating expenses............................. 96.5% 97.2% 96.9% 97.6%
Crouse's operating expenses as a percentage of operating revenue, or operating
ratio, improved for the second quarter and first six months of 1997 as compared
to 1996. An increase in the proportion of LTL tons and revenues of total tons
and revenues resulted in the increases in salaries, wages and employee benefits
and depreciation and the decrease in purchased transportation as a percent of
revenues. The improvement in the 1997 operating ratios was the result of
spreading the fixed component of the Company's operating expenses over increased
operating revenues.
FINANCIAL SERVICES
In the second quarter and first six months of 1997, APR and UPAC financed
$32.4 million and $63.4 million, respectively, in insurance premiums at an
average annual yield of 14.5%. These operations generated net operating income
of $288,000 and $662,000, on net finance charges, fees and other income earned
of $2.1 million and $4.3 million for the second quarter and first six months of
1997, respectively. These results compare to second quarter and first six
months of 1996 financings of $35.9 million and $50.1 million at average annual
yields of 14.6% and 14.2%, respectively, which produced operating income of
$91,000 and $87,000 on net finance charges, fees and other income earned of $2.1
million and $3.0 million for the second quarter and first six months of 1996,
respectively. The increases in premium financed, net finance charges, fees and
other income are primarily the result of the Company's acquisition of UPAC
effective March 29, 1996, operating income was positively impacted by the
integration of the administrative operations of UPAC and APR. Also,
contributing to the increased operating income was the impact of the Company's
new securitization agreement and the increase in receivables sold through that
agreement by the inclusion of UPAC receivables. See Note 4 - Financing
Agreements in the Notes to Consolidated Financial Statements.
OTHER
Primarily as a result of its utilization of cash and short-term investments
for the acquisition of UPAC and the stock repurchase program since the first
quarter of 1996, TransFinancial recorded a substantial decrease in interest
income for the periods ended June 30, 1997, from the corresponding period of
1996. TransFinancial's effective tax rate increased for the second quarter and
first six months of 1997, to 45% from 43% for the same periods of 1996.
Outlook
The following statements are forward-looking statements, within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and as such
involve risks and uncertainties which are detailed below under the caption
"Forward-Looking Statements".
The Company's three-year strategic plan includes the goal of continuing the
growth of each of its business segments, and making the financial services
segment a more equal contributor to the Company's earnings per share. In the
transportation segment, the plan calls for the Company to continue to provide
and improve upon its already superior service to its customers in its primary
operating territory, while extending its operations throughout the Midwest. As
the Company makes the strategic investments necessary to support this expansion,
the Company intends to continue to improve the efficiency and effectiveness of
its existing base of operations.
The financial services segment will also focus on increasing its market
penetration in certain states with substantial population and industrial base.
The additional volumes of premium finance contracts is expected to be handled
within the Company's existing administrative operations without incurring
significant additional fixed costs.
In addition to the expansion of its existing operations in each of its
business segments, the Company continues to consider potential acquisitions
which would complement these operations.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q which are
not statements of historical fact constitute forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
including, without limitation, the statements specifically identified as
forward-looking statements in this Form 10-Q. In addition, certain statements
in future filings by the Company with the Securities and Exchange Commission, in
the Company's press releases, and in oral statements made by or with the
approval of an authorized executive officer of the Company which are not
statements of historical fact constitute forward-looking statements within the
meaning of the Act. Examples of forward-looking statements include, but are not
limited to (i) projections of revenues, income or loss, earnings or loss per
share, capital expenditures, the payment or non-payment of dividends, capital
structure and other financial items, (ii) statements of plans and objectives of
the Company or its management or Board of Directors, including plans or
objectives relating to the products or services of the Company, (iii) statements
of future economic performance, and (iv) statements of assumptions underlying
the statements described in (i), (ii) and (iii). These forward-looking
statements involve risks and uncertainties which may cause actual results to
differ materially from those anticipated in such statements. The following
discussion identifies certain important factors that could affect the Company's
actual results and actions and could cause such results or actions to differ
materially from any forward-looking statements made by or on behalf of the
Company that related to such results or actions. Other factors, which are not
identified herein, could also have such an effect.
Transportation
Certain specific factors which may affect the Company's transportation
operation include: increasing competition from other regional and national
carriers for freight in the Company's primary operating territory; increasing
price pressure; changes in fuel prices; labor matters; including changes in
labor costs, and other labor contract issues; and, environmental matters.
Financial Services
Certain specific factors which may affect the Company's financial services
operation include: the performance of financial markets and interest rates; the
performance of the insurance industry; increasing competition from other premium
finance companies and insurance carriers for finance business in the Company's
key operating states; the successful acquisition and integration of additional
premium finance operations or receivables portfolios; and, the inability to
obtain continued financing at a competitive cost of funds.
General Factors
Certain general factors which could affect both the Company's transportation
operation and the Company's financial services operation include: changes in
general business and economic conditions; changes in governmental regulation,
and; tax changes. Expansion of these businesses into new states or markets is
substantially dependent on obtaining sufficient business volumes from existing
and new customers in these new markets at compensatory rates.
The cautionary statements made pursuant to Section 21E of the Securities
Exchange Act of 1934, as amended, are made as of the date of this Report and are
subject to change. The cautionary statements set forth in this Report are not
intended to cover all of the factors that may affect the Company's businesses in
the future. Forward-looking information disseminated publicly by the Company
following the date of this Report may be subject to additional factors hereafter
published by the Company.
FINANCIAL CONDITION
The Company's financial condition remained strong at June 30, 1997 with more
than $13 million in cash and investments at the TransFinancial level, as well as
approximately $6.6 million in cash and investments held in the discontinued
operation. In addition, during the first six months of 1997, the Company has
purchased $5.5 million of operating property and equipment, without incurring
any significant long term indebtedness.
A substantial portion of the capital required for UPAC's and APR's insurance
premium finance operations has been provided through the sale of undivided
interests in a designated pool of receivables on an ongoing basis under
receivables securitization agreements. The current securitization agreement,
which matures December 31, 1999, currently provides for the sale of a maximum of
$50 million of eligible receivables. As of June 30, 1997, $35.2 million of such
receivables had been securitized.
On June 26, 1995, the Company adopted a program to repurchase up to 10% of its
outstanding shares of common stock. During the second quarter of 1996 the
Company completed this program and expanded the program to include an additional
10% of its then outstanding shares. During the first six months of 1997, the
Company repurchased 130,051 shares of common stock bringing the total shares
repurchased to 1,344,492, or 17.8% of outstanding shares before initiating the
program, at a total cost of $11,314,000. This program is being funded from
available cash and investments.
On June 26, 1997, the shareholders of the Company approved a 1-for-100 reverse
stock split followed by a 100-for-1 forward stock split. These stock splits
were effected on July 1, 1997. The result of this transaction was the
cancellation of about 107,000 shares of common stock held by holders of fewer
than 100 shares at a market price of $8.89 per share.
Effective July 31, 1997, the Company entered into a subscription agreement with
a start-up venture, pursuant to which TransFinancial committed to a $2.9 million
capital contribution over two years in exchange for the exclusive lease and/or
sale rights to equipment produced by, and a controlling interest in, the
venture. The venture owns patent and other rights relating to a particle
reduction process. The venture intends to market equipment utilizing this
process to companies which require sub-micron materials in their manufacturing
processes. The Company does not believe this operation will have a material
impact on its consolidated results of operations or financial position during
1997.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Reference is made to Item 3 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996.
Item 2 Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to vote of Security Holders
(a) Annual Meeting of Shareholders was held on June 26, 1997.
(b) The nominees for the board of directors previously reported to the
Commission in the Company's Proxy Statement were elected.
(c) The matters voted upon at the Annual Meeting were as follows:
(1) The amendment of Article FOURTH of the Certificate of Incorporation to
effect a 1-for-100 reverse stock split followed by a 100-for-1 forward
stock split was approved with 4,477,214 shares voting for, 104,538
shares voting against, 32,077 shares abstaining and 43,075 shares
delivered by brokers not voted.
(2) The amendment of Article FIRST of the Certificate of Incorporation
changing the name of the Corporation to TransFinancial Holdings, Inc.
was approved with 4,492,009 shares voting for, 141,895 shares voting
against and 23,000 shares abstaining.
(3) All seven nominees for director were elected as follows:
Shares Voted
Nominees For Withheld
William D. Cox 4,586,239 70,665
Lawrence D. ("Larry") Crouse 4,587,914 68,990
J. Richard Devlin 4,586,721 70,183
Harold C. Hill, Jr. 4,587,297 69,607
Roy R. Laborde 4,617,033 39,871
Timothy P. O'Neil 4,567,771 89,133
Eleanor Brantley Schwartz 4,619,412 37,492
(4) The selection of Coopers & Lybrand L.L.P. as independent public
accountants was ratified with 4,614,239 shares voting for 19,821 shares
voting against, and 22,844 shares abstaining.
Item 5. Other Information
Effective July 31, 1997, the Company entered into a subscription agreement
with a start-up venture, pursuant to which TransFinancial committed to a
$2.9 million capital contribution over two years in exchange for the
exclusive lease and/or sale rights to equipment produced by, and a
controlling interest in, the venture. The venture owns patent and other
rights relating to a particle reduction process. The venture intends to
market equipment utilizing this process to companies which require sub-
micron materials in their manufacturing processes. The Company does not
believe this operation will have a material impact on its consolidated
results of operations or financial position during 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a)* 1997 Amended and Restated Certificate of Incorporation of the
Registrant.
4* Specimen Certificate of the Common Stock, $.01 par value, of the
Registrant.
19(a)* Report to Shareholders for the Second Quarter, 1997, dated July
25, 1997.
27* Financial Data Schedule.
* Filed herewith.
(b) Reports on Form 8-K None
(SIGNATURE)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TransFinancial Holdings, Inc.
Registrant
By: /s/Timothy P. O'Neil
Timothy P. O'Neil, President &
Chief Executive Officer
By: /s/Mark A. Foltz
Mark A. Foltz
Vice President, Finance and
Secretary
Date: August 5, 1997
EXHIBIT INDEX
Assigned
Exhibit
Number Description of Exhibit
3(a) 1997 Amended and Restated Certificate of Incorporation of the Registrant.
4 Specimen Certificate of the Common Stock, $.01 par value, of the
Registrant.
19(a) Report to Shareholders for the Second Quarter, 1997, dated July 25, 1997.
27 Financial Data Schedule.