EXHIBIT (C)(2)
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April 17, 2000
Joe Hardesty
Bank of America Business Credit
6060 Poplar Avenue - Suite 400
Memphis, Tennessee 38119
APPRAISAL
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As requested, an inspection and appraisal of specific assets of KLLM
TRANSPORT SERVICES has been conducted by MB Valuation Services, Inc. We
assume that all items listed are owned by and belong to KLLM TRANSPORT
SERVICES, although no investigation has been made to verify that ownership.
The purpose of this appraisal is to arrive at a conclusion of FAIR MARKET
VALUE for these items as of the effective date of inspection; we do not
intimate that there could not be any fluctuation of the values in the
future. The fee for this report is for our expressed opinion at the time
of inspection, with no warranties or guarantees of the outcome if values
are tested at any future date.
This appraisal sets forth our findings and conclusions which are based upon
an investigation of conditions affecting value and which are subject to the
Assumptions and Statement of Limiting Conditions and Definition contained
in the following report. Without reading the Assumptions and Statement of
Limiting Conditions and Definition, the report could be erroneously
interpreted.
This appraisal is in compliance with the Uniform Standards of Professional
Appraisal Practices (USPAP) as of January 1, 2000. This is a Summary
Appraisal Report.
Thank you for the opportunity to be of service in this matter. If you have
any questions regarding the method of appraisal, the value concept, or the
indicated values, contact our corporate office in Dallas, Texas.
Respectfully submitted,
MB VALUATION SERVICES, INC.
Robert L. Barber
Appraiser
RLB/jr
FAIR MARKET VALUE
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R E C A P I T U L A T I O N
KLLM TRANSPORT SERVICES
JACKSON, MISSISSIPPI
BASTROP, LOUISIANA
MARCH 30, 2000
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KLLM.................................................$ 76,761,500
VERNON SAWYER........................................ 27,103,600
TOTAL FOR REPORT
* * * $ 1 0 3, 8 6 5, 1 0 0. 0 0 * * *
(ONE HUNDRED THREE MILLION,
EIGHT HUNDRED SIXTY-FIVE THOUSAND,
ONE HUNDRED DOLLARS)
NOTE: IF THIS BUSINESS OR ANY EQUIPMENT IS LATER SOLD, CONTACT YOUR
APPRAISER FOR RECOMMENDATIONS OR GENERAL MARKET INFORMATION.
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GENERAL COMMENTS, ASSUMPTIONS AND
STATEMENT OF LIMITING CONDITIONS
In many instances, these statements include general comments for
understanding the study.
All facts and data set forth in this report are true and correct to the
best of your appraiser's knowledge and belief.
All information furnished by company personnel and others, including such
things as capacities and production rates of equipment, upon which all or
portions of this report are based, is believed to be reliable but has not
been verified in all cases. No warranties are given as to the accuracy of
such information nor does the appraiser (or MB) report to be a technical
expert on any assets as our expertise is confined to valuation.
Personal inspection of specific assets has been made.
The fee for this appraisal report is not contingent upon the values
reported. There have not been any guarantees associated with this fee and
no liability can be intimated or assumed in any manner.
As this report has been purchased by the addressee, we assume it is to be
used only by the addressee in determination of a value opinion as of the
effective date. Use of this report by others should be done so with the
understanding that no guarantees have been made by MB VALUATION SERVICES,
INC. or the appraiser to the owner of the report nor purchased through the
fee paid to the appraiser.
The physical condition of the property described herein was based upon
visual inspection by the appraiser. No responsibility is assumed for
latent defects of ANY nature whatsoever which may affect its value, nor for
any expertise required to disclose such conditions.
No consideration has been given to liens or encumbrances which may be
against the property.
No investigation of legal fee or title to the property has been made and
the claim to the property has been assumed to be valid. Title to the
subject property is assumed to be good and marketable.
Neither the appraiser nor any officer or employee of MB VALUATION SERVICES,
INC. has any financial interest in the property appraised.
Neither MB nor the signatories should be required to give testimony or
attend court or be at any governmental hearing with references to the said
property unless prior arrangements have been made. However, MB is willing
to do so for standard testimony fee and expense rates subject only to
scheduling conflicts and/or a litigation subject that is outside the
function and purpose of the report which, in the opinion of MB, would be
misleading or confusing.
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This appraisal is based upon FAIR MARKET VALUE as defined in the Definition
section of this report.
All equipment has been considered free and clear of any landlords holds
through lease agreements, and all items are listed assuming the removal of
same without any restrictions.
No additional values or appraisals have been made regarding such
intangibles as patents, rights to manufacture, trademarks, goodwill, going
concern, product line, customer lists, etc. The values made a pat of this
report are for the items listed only and are subject to the Definition of
the report itself.
An appraisal is an estimate of value. When the amount is considered a
reasonable and proper value under the concept of a definition, then it is
applied. For this reason the value is, in many cases, a rounded number.
As stated in ENGINEERING VALUATION AND DEPRECIATION, a textbook published
by Iowa State University Press of Ames, Iowa, "all values are of the nature
of forecast of events and are subject to the uncertainties of all
prophecies."
This appraiser reserves the right to recall all copies of this report to
correct any omission or error.
The valuation concept used in this report is one accepted by the client.
Concept PROBABILITY and/or feasibility is beyond the scope of the
appraisal. The user of the report is to determine the probability of
occurrence. The appraisal is purchased in order to allow an opinion of
value under an assumed set of circumstances, as mutually agreed upon by the
client and MB VALUATION SERVICES, INC. The concept is considered
reasonable for its intended use as a POSSIBLE value to be received or the
project would have been declined.
The valuation study has been made by MB VALUATION SERVICES, INC. and will
be held confidential. It has been prepared by an experienced appraiser and
is based on information, where possible, from contractors, manufacturers,
sales comparables, dealers, etc. The analysis and final conclusion is
arrived at from many years of experience in the sale and appraisal of
industrial properties. The final form for this report is made possible by
omitting many details used in estimating, yet not considered essential to
the report. Due to the complexities and variables required on the MANY
items of fixed assets, itemized values become the guidelines for
justification rather than individual summaries for each conclusion. The
total opinion of value for all assets is based upon values applied for
itemized assets of the company. A separate value "out of context" may not
be applicable for any other purpose and must not be used with or compared
to any other appraisal. However, most personal property reports under the
strictest interpretation of Standard 8 of USPAP as of January 1, 2000,
would be styled as a "word of art", A SUMMARY APPRAISAL REPORT.
Neither all nor any part of the contents of this report (especially any
conclusions a to value, the identity of the appraisers, or the firm with
which they are connected) shall be disseminated to the public through
advertising media, news media, sales media, or any other public means of
communication without prior written consent and approval of MB.
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For all areas of this study, the assigned values represent the amount a
reputable and qualified appraiser, unaffected by personal interest, bias or
prejudice, would recommend to a prospective purchaser as a proper price or
cost within the value concept and in light of prevailing conditions.
Items indicated in location codes as made a part of this report are as
observed on the effective date of the study. Codes should be considered
only a guide and not as an accurate indicator of where equipment may be in
the future. In addition, this additional feature made a part of this study
is accomplished in order to aid the reader in locating items inspected when
comparing the study and/or values as they relate to the total of the
completed report. In providing this, MB VALUATION SERVICES, INC. does not
wish this extra effort to carry with it any liabilities arising from same
as it relates to the past, present or if applied some time in the future.
Although the coded areas are believed accurate for use in location,
recapitulation or graphics analysis, there are always changes, alterations,
and unresolved input that could require correction. As a best effort, the
coding is believed correct as related to data input and the descriptive
assignment.
NO RESPONSIBILITY IS TAKEN FOR CHANGES IN MARKET CONDITIONS AND NO
OBLIGATION IS ASSUMED TO REVISE THIS REPORT WITHOUT ADEQUATE COMPENSATION,
TIME, AND PROCEDURAL REQUIREMENTS THAT ALLOW DUE DILIGENCE TO REFLECT
EVENTS OR CONDITIONS WHICH OCCUR SUBSEQUENT TO THE DATE HEREOF.
Description of items made a part of this report is believed correct to the
best ability of the appraiser. Any errors or omissions in these
descriptions were unintentional and should not affect the value assignment.
Descriptions are made with the attempt of allowing reasonable
identification although they may not allow specific item identification, in
all cases, unless company number tagging is utilized.
In many cases, an appraiser may indicate that certain equipment was
"observed in operation". This qualification is applicable only to specific
pieces of equipment and should not be construed as an implication that
other equipment was not operable or capable of operation at the time of
inspection. This note could become extremely important as a condition
comparative in the future but is considered more of note "in passing" at
the time of the on-site listing. However, if it is stated "not observed in
operation" it would be an indication that the equipment is not installed or
wired for operation or that the equipment obviously has not been in use for
some time; it would not necessarily mean the equipment was not capable of
operation.
This appraisal has been prepared in conformity with the Principles of
Appraisal Practice and Code of Ethics of the American Society of
Appraisers.
In this report, codes are not used either for appearance or actual
condition, it is understood that the description would suffice the purposes
of the appraiser arriving at a conclusion of value and that the equipment,
in appearance, would be in average condition. It is understood, for
purposes of an appraisal report, actual condition of that other than the
obvious, may be an unknown factor for all of the many items listed. It is
not practical, nor feasible to operate each and every machine, nor have it
demonstrated for tolerance accuracy, mechanical operating functions, proper
computer interface
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and/or gauge measurements due to the various limitations. Appraisers
are oriented to value and must rely on a certain amount of information
by company personnel as it related to condition and/or observations.
Company personnel cannot be available for ALL appraisers while listing
ALL items within a facility. It is for this reason that the M&E appraiser
typically relies on the appearance codes although when proper information
is available, adjustments may be made based upon indicated condition by
company personnel under an appropriate value concept. The condition coding
is used for internal communication and interpretation rather than as an
indication to the users of actual condition. It is advisable, if actual
condition of equipment is required, to consult with those parties that are
independent and qualified to offer such technical advise.
Photographs, if included in this report, are taken at random and may or
may not include all of those developed. Some photographs may be of poor
quality and/or insignificant to the study. Some photographs are used for
recall in correlation work. The selected photographs, if used, are an
additional effort when included in the formal report and unless otherwise
noted, there is no requested criteria for those selected by the MB
production department. The lack of photographs, for whatever reason,
should not create any liability for MB.
SIGNIFICANT CONTRIBUTION:
It is possible that one or more senior appraisers of our firm
assisted in the process of preparing or reviewing this
appraisal. Our research department gathers additional market
information from our sales data base and/or by making appropriate
market inquiries. The on-site senior appraiser was responsible
for personally inspecting the assets, describing them and making
initial estimates of value. He/she also gathered pertinent
information about the assets from the subject company's personnel
and company records. The on-site senior appraiser is responsible
for the final correlation work conducted unless there is more
than one signature. A senior appraiser will have reviewed all of
the information. MB Valuation Services, Inc. considers that the
appraiser(s) making the final decision on value is the
individual(s) contributing in a significant way under the
interpretation of the standards made a part of the UNIFORM
STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP). If on the
other hand, special consultants or outside expertise are
required, and he/she contributes in a significant way to the
correlation of this report, this would be noted.
Some equipment, due to location and/or quantity, may have differing values
assigned with the consideration that even though similar, condition could
be better or worse than other identical pieces. The concept of value
causes these adjustment to be made. Location requirements can cause
differences in removal or installation.
This appraisal is based upon the premise and assumption that there
is full compliance with all applicable federal, state and local
Environmental Protection Agency hazardous waste regulations and
laws. Not study, inspection or observation of any kind or
nature has been made, nor is any consideration given to the
possible presence of hazardous or toxic waste on the property appraised
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unless it has been specifically pointed out by the company or through a
supplied report. The value then reports only to the potential effect on
value of the item and not other associated costs (i.e., clean up, etc.).
This would include any toxic construction material, asbestos, waste or
product from any manufacturing process, polychlorinated biphenyls, or any
other substance or material which is regulated by law or poses a hazard
to health or the environment generally. As the environmental area
is beyond the expertise of an appraiser, you are advised to obtain an
expert in environmental hazards or emissions.
When and if applicable, the indicated value in this report gives no
consideration to any loss in value that may be attributed to the type of
refrigerant charge utilized in any of the subject's equipment including air
conditioning and/or refrigeration equipment. The user of this report is
hereby informed that the use of restricted CFC's may, in the future,
greatly affect the usefulness and value of equipment that contains any of
the EPA-restricted refrigerant gases.
During the site visit, we requested identification of any property which
may be on site but not owned, leased or rented. Our best effort was made
to identify this equipment and relied on information provided by the
company.
Highest and best use is defined as the reasonably probable and legal use of
personal property, which is physically possible, appropriately supported,
financially feasible, and results in the highest value in the appropriate
marketplace, consistent with the purpose of the appraisal. As generally
understood, the highest and best use of the subject equipment is that for
which it was designed by the manufacturer.
Although a small sampling of vehicles was observed, the values shown in the
report are primarily based on information obtained from Excel spreadsheets
provided by principals. Descriptions are those contained on the excel
disk, and it is assumed that all assets included in this study are as
described and MB Valuation Services, Inc. cannot be held responsible for
any discrepancies which may be found in the information provided.
To the best of our knowledge, no leased assets are considered in the total
value, although they may be listed.
Other limitations, if any, are clearly defined and individually set out at
that point relating to the subject.
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PERSONAL PROPERTY
GENERAL INFORMATION AND DEFINITION
FAIR MARKET VALUE APPRAISAL
PURPOSE OF APPRAISAL:
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The purpose of this appraisal is to estimate the FAIR MARKET VALUE of the
subject's personal property. In estimating this value, it has been
necessary to make a physical inspection and listing of the property
contained in this report. The results are reported in this study. The
property interest (rights) appraised is that of ownership in fee simple,
and the subject's assets are appraised as if free and clear, without liens
or encumbrances (unless otherwise noted).
FUNCTION OF APPRAISAL:
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The function of this report is to serve as a value guideline for financing
purposes of the subject property. The effective date of valuation is March
30, 2000, which was the date of inspection of the subject property.
There are proper uses for various appraisal concepts. However, a
particular individual, company or organization may determine that the
concept fits a particular need and, therefore, use it in a way that would
be typically improper. As the American Society of Appraisers has standard
definitions for concepts, each concept, as specifically defined, indicates
a conclusion of value that would be the same as performed by this company
regardless of the client or its use. It is up to the user to determine if
the concept is proper for its purpose, as it is clearly defined and should
be understood. Prudent users are not prohibited from investigating value
concepts to determine their typical and known common uses. They are also
not prohibited after their investigations to choose to adapt any concept to
their purpose as they consider reasonable by their standards. The
appraisal is performed at the behest of a client based upon a requested
concept of value. In many cases, MB Valuation Services, Inc. must perform
one or more concepts whose uses may vary. Therefore, the function of this
study is the use of the report with the knowledge of the defined concept of
value. The reader and/or user is advised to contact the appraiser with ANY
questions regarding value, typical uses, or intended uses.
SCOPE OF APPRAISAL:
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Sample inspection was done on March 30, 2000 for the purpose of arriving at
Orderly Liquidation Value of the list of assets.
INFORMATION ANALYZED:
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See "Purpose and Method of Appraised" and Research Data Sources.
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HIGHEST AND BEST USE:
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The equipment was being used for the purpose as designed unless otherwise
indicated. The only alternative use, other than that as designed, was
salvage or scrap. It is the appraiser's opinion that the equipment was
being utilized for the purpose as designed and, therefore, at its highest
and best use unless otherwise stated. Therefore, highest and best use has
been considered in the valuation of all property listed in the report and
is defined as: "The reasonably probable and legal use of personal property
that is physically possible, appropriately supported and financially
feasible, and results in the highest value in the appropriate marketplace."
The appropriate marketplace must be consistent with the concept of value.
FAIR MARKET VALUE CONCEPT:
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"The estimated amount expressed in terms of money that may
reasonably be expected for an item of property between a willing
buyer and a willing seller with equity to both, neither under
compulsion to buy or sell and both fully aware of all relevant
facts."
NOTE: It should be understood that any removal concept does not
consider product lines or their marketability unless otherwise
specified to be included. It is for this reason that product
line is not a part of this study nor are special tooling, jigs,
fixtures and devices considered other than for parts or adaptable
use.
CLIENT: Bank of American Business Credit
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SUBJECT: KLLM TRANSPORT SERVICES
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USER(S): Bank of America Business Credit
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PROPERTY: Rolling Stock
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PROPERTY CHARACTERISTICS:
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(1) Physical: Age Life or Observed Condition
(2) Functional: Contained in market of comparison to replacement
(3) Economic: Industry and/or market derived
INTEREST APPRAISED: Fee Simple
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FAIR MARKET VALUE
PURPOSE AND METHODS OF APPRAISAL
IT IS STANDARD FOR MB VALUATION SERVICES, INC. REPORTS TO BE EXTREMELY
DETAILED UNLESS OTHERWISE REQUESTED. FOR THIS REASON, THERE MAY BE SOME
ITEMS LISTED WHICH ARE CONSIDERED NOMINAL OR INSIGNIFICANT TO THE READER.
HOWEVER, WHEN THE DICTATION METHOD IS EMPLOYED, IT IS FASTER, WITH CERTAIN
EXCEPTIONS, TO LIST THESE ITEMS INDIVIDUALLY THAN TO COUNT THEM AND HAVE
ONE ENTRY. ALTHOUGH THE FILE MAY CONTAIN MORE DETAIL THAN REQUIRED, IT IS
POSSIBLE TO REQUEST THIS SAME STUDY WITH LIMITS FOR VALUE AND/OR
DESCRIPTION. WHEN THE DATA IS USED FOR ASSET CONTROL, THERE IS USUALLY AN
APPRECIATION FOR THE DETAIL BY THE MAJORITY OF CLIENTS, ALTHOUGH EACH USER
MAY HAVE A DIFFERENT REQUIREMENT FROM OTHERS. AS THESE REQUIREMENTS CANNOT
BE ANTICIPATED, UNLESS OTHERWISE SPECIFIED, THE FULL DETAIL IS USUALLY
SUPPLIED. THE SUBJECT REPORT AFTER USPAP 2000 IS CONSIDERED A SUMMARY
REPORT.
The purpose of this appraisal is to estimate the FAIR MARKET VALUE of the
subject machinery and equipment in terms of United States Dollars.
In estimating this value, the appraisers has considered the following
approaches in arriving at indicators of value.
COST APPROACH - An estimate of the present replacement cost of
the machinery and equipment less accrued depreciation.
Depreciation includes loss in value due to physical deterioration
as well as functional and economic obsolescence. Functional
obsolescence is the decreased capacity of the item to perform the
function for which it is intended in terms of current standards
and specifications. Functional obsolescence may stem either from
a deficiency within the item such as poor design or outmoded
style or may result from superadequacy or overdesign. Economic
obsolescence represents a loss in value from factors outside the
item appraised, such as a depressed market for the end product
manufactured by the item of machinery or equipment. These
factors generally are characterized as "negative external forces"
which have an impact upon the item appraised.
SALES COMPARISON APPROACH - Comparison with similar items that
have sold or are currently offered for sale in the marketplace.
By comparing the items appraised with similar items which have
recently sold or are currently offered for sale, an estimate can
be made of the Fair Market Value. Within these comparable items
there may be pertinent factors of comparison which include
capacity, age, location, and date of sale, when applicable.
These items may be considered in arriving at an adjusted value
for each subject item appraised. Marketability of each item of
machinery and equipment is also a detriment of value.
Marketability, as a measure of demand, is approximated through
recent sales in the marketplace of comparable items of machinery
and equipment. Where actual sales are not available,
Page 9
relationships are often established based upon dealer "asking
price" for comparable items.
INCOME APPROACH - Capitalization of the net income that the item
can produce. This approach, of course, is used in special cases
when no sales comparison is available for adjustment to the
subject. It would be used only on significant items and detail
is not usually made a part of the report.
Values reflected in this report are based primarily upon one or a
combination of the preceding methods with heavier emphasis on the Market
Comparison Approach, when sufficient data is available. In certain
instances, as in the case of custom machinery and equipment, a market
analysis may be undertaken to ascertain current demand/marketability and
subsequent value. Market analysis may also be undertaken if functional or
economic obsolescence is a key factor in a major machine tool or piece of
equipment.
Certain categories of machinery and equipment are subject to routine loss
in value as a result of usage (physical deterioration). In other
instances, functional obsolescence is determined through a comparison with
other items that may have a more efficient and cost effective operation.
It should be understood that the value shown does not indicate its
replacement in like kind and utility, but rather what the specific
equipment observed is worth under the scenario as defined. With all things
equal, it is possible that an exact piece of equipment, if found, could be
obtained for the value indicated under the concept. Comparison would have
to take into account adjustments for exacts such as location, installation,
condition, industry, locational economics and possible draw through all
"causes and effects" associated with the concept. Realistically, exact
comparables are not always possible, therefore, it should be applied to the
specific equipment at its location; it is not to be used, nor is it to
represented as a valuation that would be applied to replacement or
depreciated replacement for insurance purposes. However, the item
DESCRIPTION, in most cases, contains the specifics that would be needed for
determining replacement in like kind and utility, although values may be
different than those indicated by this study. It is not probable that if
ALL equipment were to be replaced within a plant, that every item would be
found; therefore, some items would be replaced at used prices higher or
lower than the value indicated, whereas others would have a requirement for
replacement or reproduction cost new due to the inability to locate this
item in the market.
An appraisal has never been considered the product of an exact science,
although measurements of accuracy may be employed. Determining the
reactions of the public to value an asset at a particular point in time is
a valuation process based upon history, whereas the actual test of an
appraisal value may vary up or down. For this reason, one sale does not
necessarily make a comparable. Although equipment may have been
observed selling at higher or lower numbers than its appraised
value, it is the appraiser's judgment and responsibility to make
adjustments in order to maintain a set of circumstances which might
be considered average under a particular value concept. For this
reason, the total number indicator is the important measurement on a
PROPER future test. Typically, the averaging method adjusts for
location, condition, time, and other factors. However, it would not
Page 10
simply indicate some high or low recovery for an asset under some
particular past sale. The appraiser strives for an average. In a tested
sale, one might find that average being exceeded in some cases, yet below
the value indicated in others. It is the existence of these variables
that requires the use of the averaging method in order to maintain greater
accuracy.
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