Item 1. Business.
TransFinancial Holdings, Inc. ("TransFinancial" or the "Company"), is headquartered in Lenexa, Kansas, and is a Delaware holding company formed in April 1976. At December 31, 2002, TransFinancial was no longer an operating company. On September 14, 2001, the Board of Directors unanimously approved a plan of liquidation. On January 22, 2002, shareholders approved the plan of complete liquidation of the Company and the sale of the financial services operations. The Company closed on the sale of the financial services operations on April 19, 2002, with an effective date of April 1, 2002. This sale of the financial services operations represents the disposition of the last operating enterprise of the Company. Upon closing on the sale of the financial services operations, the Company filed a Certificate of Dissolution with the State of Delaware.* The Company, after setting aside required reserves, paid a liquidating dividend in the amount of $2.70 per share on July 5, 2002 and will liquidate the remaining assets and upon final disposition of all remaining issues make a final distribution and close the estate.
DISCONTINUED OPERATIONS
TransFinancial discontinued its transportation operations in 2000. The Company's subsidiary, TFH Logistics & Transportation Services, Inc. ("TFH L&T"), which is a holding company for the Company's transportation subsidiaries, had two principal subsidiaries, Crouse Cartage Company ("Crouse"), which was acquired in 1991, and Specialized Transport, Inc. ("Specialized"), formed in 1999.
On September 16, 2000 and December 16, 2000, Crouse and Specialized, respectively, ceased operations; Crouse as a result of significant operating losses and cash flow deficiency and Specialized as a result of its insurance carrier revoking its coverage. These companies liquidated outside bankruptcy, with the advice of independent advisory committees of creditors, and followed the general processes and procedures defined under the federal bankruptcy code. The Company has essentially completed the orderly liquidations of Crouse and Specialized*. The proceeds of asset liquidations have allowed full payment of secured claims and a partial distribution to priority creditors.
Crouse, headquartered in Kansas, was a regional motor common carrier of general commodities in less-than-truckload ("LTL") quantities in 15 states in the north central and mid-west portion of the United States. LTL shipments are defined as shipments weighing less than 20,000 pounds.
Specialized, headquartered in Lenexa, Kansas offered motor common carrier service for truckload ("TL") quantities of general and perishable commodities throughout the 48 contiguous United States. TL shipments are generally transported in one movement from origin to destination.
Costs of closing the discontinued operations were $184,000 in 2002 as compared to $2.9 million for 2001.
Prior to the cessation of operations, TFH L&T and its subsidiaries employed over 1,400 persons, of whom more than 1,100 were drivers, mechanics, dockworkers or terminal office clerks. The remaining employees were engaged in managerial, sales and administrative functions. Approximately 75% of such employees, including primarily drivers, dockworkers and mechanics, were represented by the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of
America ("Teamsters Union") or other local unions. TFH L&T, through its subsidiaries Crouse and Specialized, and the Teamsters Union were parties to the National Master Freight Agreement ("NMFA"), which expired on March 31, 2003. TFH L&T achieved ratification in 1998 of new five-year pacts with the International Brotherhood of Teamsters or other local unions covering substantially all of its union employees. In 1999, after a one-day work stoppage at one of its principal terminals, the remaining locals agreed to contracts with terms comparable to the national contract. The new contracts generally provided for all of the terms of the NMFA with a separate addendum for wages. Under these new contracts, TFH L&T would have continued to maintain past work rules, practices and flexibility within its operating structure.
TFH L&T, as employer signatory to the NMFA, contributed to certain pension plans established for the benefit of employees belonging to the Teamsters Union. Amendments to the Employee Retirement Income Security Act of 1974 ("ERISA") pursuant to the MPPA Act substantially expanded the potential liabilities of employers who participate in such plans. Under ERISA as amended by the MPPA Act, an employer who contributes to a multiemployer pension plan and the members of such employer's controlled group may be jointly and severally liable for their proportionate share of the plan's unfunded liabilities in the event the employer ceases to have an obligation to contribute to the plan or substantially reduces its contributions to the plan (i.e., in the event of plan termination or withdrawal by TFH L&T from the multiemployer plans). Claims in excess of $9.75 million were filed against the Company under the MPPA Act. These claims against TFH L&T, and all other control group entities, were settled with the claimants and have been paid.
AMERICAN FREIGHT SYSTEM
American Freight System, Inc. ("AFS") was treated as a discontinued operation of TransFinancial from 1991 through 2001. The primary obligation of AFS was to administer the provisions of a Joint Plan of Reorganization ("Joint Plan"). As of December 31, 1994, all unsecured creditors were paid an amount equal to 130% of their allowed claims, which was the maximum distribution provided under the Joint Plan.
In 1992 through 1994 TransFinancial received distributions in accordance with the Joint Plan of $36 million. In addition, AFS paid cash dividends of $25.0 million, $6.8 million, $8.5 million and $9.2 million to TransFinancial on December 28, 1994, July 5, 1995, July 11, 1996 and April 30, 1998. AFS made a final distribution to TransFinancial of $715,000 in December 2000. These proceeds were the result of the settlement of the last open legal matter in the AFS estate. AFS received its "final" order from the bankruptcy court in January 2001.
All the stock of AFS was included in the sale of the financial services operations.
FINANCIAL SERVICES
The Company operated in financial services until April 1, 2002 when the business was sold, primarily through its subsidiary, Universal Premium Acceptance Corporation ("UPAC"), which was acquired on March 29, 1996 and merged operations with Agency Premium Resource, Inc. ("APR"), which was acquired May 31, 1995. On May 29, 1998, UPAC acquired Oxford Premium Finance, Inc. ("Oxford") and merged Oxford's operations with UPAC's.
UPAC, headquartered in Lenexa, Kansas, was engaged in the business of financing the payment of insurance premiums. UPAC offered financing of insurance premiums primarily to commercial purchasers of property and casualty insurance who wish to pay their insurance premiums on an installment basis. Whereas some insurance carriers require advance payment of a full year's premium, UPAC allowed the insured to spread the payment of the insurance premium over time.
Item 2.
Item 2. Properties.
TransFinancial's, TFH L&T's, and UPAC's corporate offices were located in approximately 10,000 square feet of a 24,000 square foot office building owned by the Company at 8245 Nieman Road, Lenexa, Kansas 66214. This office building was included in the sale of the financial services operations. As part of that sale TFH retains the use of approximately 300 square feet of office space.
Item 3.
Item 3. Legal Proceedings.
The Company and its directors were named as defendants in a lawsuit filed on January 12, 2000 in the Chancery Court in New Castle County, Delaware. The suit sought declaratory, injunctive and other relief relating to a proposed management buyout of the Company. The suit alleged that the directors of the Company failed to seek bidders for the Company's subsidiary, Crouse, failed to seek bidders for its subsidiary, UPAC, failed to actively solicit offers for the Company, imposed arbitrary time constraints on those making offers and favored a management buyout group's proposal and failed to obtain approval of the Company's shareholders for the sale of certain Crouse assets. The suit sought certification as a class action complaint. The proposed management buyout was terminated on February 18, 2000. The plaintiff filed an amended class action complaint on August 9, 2000, seeking damages in excess of $4.50 per share for the alleged breaches of fiduciary duties. A motion to dismiss a second amended complaint was filed. The lawsuit was dismissed on or about November 1, 2002 with stipulation that it could be re-filed in the United States District Court, District of Kansas, in Kansas City, Kansas.* The lawsuit was re-filed in 2003 (see note 10 subsequent events)
The Company and its directors have been named as defendants in a lawsuit filed on December 7, 2001 in the United States District Court, District of Kansas, in Kansas City, Kansas. The suit seeks certification as a class action complaint. The suit alleges that the transfer of the assets of Crouse Cartage Company (a subsidiary of TransFinancial Holdings, Inc.) violated Section 271 of the Delaware Code insofar as the transfer constituted a sale of substantially all the assets of the Company without shareholder approval and alleges that the Company only obtained approximately one-half the fair market value of the assets for no valid business reason, when 90% could have been achieved. The Company has been dismissed as a defendant in this lawsuit. Directors who remain defendants in this case are entitled to indemnity from the Company The Company believes this suit will not have a material adverse effect on the financial condition or liquidity of the Company.*
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the shareholders for vote during the fourth quarter of 2002.
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PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
(a) Market Information.
On April 29, 2002 the company filed a certificate of dissolution with the State of Delaware. With the filing of the certificate of dissolution on April 29,2002, Transfinancial's Common Stock was de-listed from the American Stock Exchange , the company's stock transfer books were closed and trading on the American Stock Exchange was halted.
(b) Holders. Number of Holders of Record Title of Class at April 29, 2002 -------------- -----------------
Common Stock, par value $0.01 per share 1,144
(c) Dividends.
No cash dividends were paid during 2001 on TransFinancial's Common Stock. On July 5, 2002 the company paid a liquidating dividend in the amount of $2.70 per share to share holders of record as of April 29, 2002 the date on which the stock transfer book were closed
(1) See Note 2 to the Notes to Consolidated Financial Statements.
(2) See Note 4 to the Notes to Consolidated Financial Statements.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
TransFinancial operated in the insurance premium finance industry until April 1, 2002 . The company discontinued its transportation operations during 2000.
Financial Services
The sale of the financial services operations, as approved by the shareholders on January 22, 2002, was consummated on April 19, 2002 , with an effective date of April 1, 2002.
For the first three month of 2002, UPAC reported operating income of $1.1 million on net financial service revenue of $3.3 million, as compared to operating income of $2.3 million on net revenue of $11.3 million for twelve months in 2001.
UPAC reported net income of $963,469 for the first three months of 2002, not considering the valuation allowance provided against consolidated deferred tax assets, as compared to a net income of $1,292,000 for twelve months in 2001.
Other
In 2002, Presis, an inactive industrial technology division of TransFinancial, incurred operating expenses of $28,000 as compared to operating expenses of $31,000 in 2001 and $38,000 in 2000. Presis engaged in no development activity in 2002.
TransFinancial's effective income tax provision (benefit) rates for 2002, 2001 and 2000 were (2%), 2%, and 0%. In 2002 and 2001, the Company's income tax provision (benefit) was ($171,000) and $20,000 on a pre-tax loss of $6.8 million and $1.1 million, respectively.
Forward-Looking Statements
The Company believes certain statements contained in this Annual Report on Form 10-K which are not statements of historical fact may 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-K. In addition, the Company believes 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, may 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 relate to such results or actions. Other factors, which are not identified herein, could also have such an effect.
Other Matters
With respect to statements in Item 3 regarding the outcome of claims and litigation, such statements are subject to a number of risks and uncertainties, including without limitation the difficulty of predicting the results of the discovery process and the final resolution of ongoing claims and litigation.
With respect to statements in this Report, which relate to the current intentions of the Company and its subsidiaries or of management of the Company and its subsidiaries, such statements are subject to change by management at any time without notice.
General Factors
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 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
As of December 31, 2002, the Company's net working capital was $1.1 million, of which $550,000 was reserved on the books for estimated wind down and dissolution cost.
Investing Activities - In 2002, all excess cash was invested in United States Securities.
The Company and its directors were named as defendants in a lawsuit filed on January 12, 2000 in the Chancery Court in New Castle County, Delaware. The suit sought declaratory, injunctive and other relief relating to a proposed management buyout of the Company. The suit alleges that the directors of the Company failed to seek bidders for the Company's subsidiary, Crouse, failed to seek bidders for its subsidiary, UPAC, failed to actively solicit offers for the Company, imposed arbitrary time constraints on those making offers and favored the management buyout group's proposal and failed to obtain approval of the Company's shareholders for the sale of certain Crouse assets. The suit sought certification as a class action complaint. The proposed management buyout was terminated on February 18, 2000. The plaintiff filed an amended class action complaint on August 9, 2000, seeking damages in excess of $4.50 per share for the alleged breaches of fiduciary duties. A motion to dismiss a second amended complaint was filed. The lawsuit was dismissed on or about November 1, 2002 with stipulation that it could be re-filed in the United States District Court, District of Kansas, Kansas City, Kansas. The lawsuit was re-filed in 2003 (see note 10 subsequent events)
The Company and its directors have been named as defendants in a lawsuit filed on December 7, 2001 in the United States District Court, District of Kansas, in Kansas City, Kansas. The suit seeks certification as a class action complaint. The suit alleges that the transfer of the assets of Crouse Cartage Company (a subsidiary of TransFinancial Holdings, Inc.) violated Section 271 of the Delaware Code insofar as the transfer constituted a sale of substantially all the assets of the Company without shareholder approval and alleges that the Company only obtained approximately one-half the fair market value of the assets for no valid business reason, when 90% could have been achieved. The Company was dismissed as a defendant in this lawsuit. Directors who remain defendants in this case are entitled to indemnity from the Company. The Company believes this suit will not have a material adverse effect on the financial condition, liquidity or results of operations of the Company.*
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
On April 29, 2002 the company filed a certificate of dissolution with the State of Delaware, the stock transfer books were closed , the stock delisted and trading halted on the American Stock Exchange.
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Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of TransFinancial Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of TransFinancial Holdings, Inc. as of December 31, 2002 and 2001 and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 16(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TransFinancial Holdings, Inc. as of December 31, 2002 and 2001 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has experienced significantly reduced cash flows from operating activities that raise substantial doubt in its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
WEAVER & MARTIN, LLC
Kansas City, Missouri September 15, 2002
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31 --------------------- 2002 2001 -------- -------- (In Thousands) ASSETS Current Assets Cash and cash equivalents................... $ 1,087 $ 1,343 Finance accounts receivable, ............... -- 102,028 Other current assets........................ 123 344 -------- -------- Total current assets..................... 1,210 103,715 -------- -------- Operating Property, at Cost Land........................................ -- 192 Structures and improvements................. -- 1,018 Other operating property....................... 104 1,030 -------- -------- 104 2,240 Less accumulated depreciation............... 96 (1,085) -------- -------- Net operating property......................... 8 1,155 -------- -------- Intangibles, net of accumulated amortization -- 8,355 (Note 1) Other Assets................................... -- 99 -------- -------- $ 1,218 $113,324 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Cash overdrafts............................. $ -- $ 1,776 Accounts payable............................ 76 5,204 Revolving loan and other notes (Note 4)..... -- 87,616 Accrued payroll and fringes................. -- 1,002 Other accrued expenses...................... 591 1,092 -------- -------- Total current liabilities.............. 667 96,690 -------- -------- Contingencies and Commitments (Note 7)......... -- -- Shareholders' Equity (Notes 5 and 8) Preferred stock $0.01 par value, authorized 1,000,000 shares, none outstanding......................... -- -- Common stock $0.01 par value, authorized 13,000,000 shares, issued 7,633,852 and 7,623,852 shares..................... 76 76 Paid-in capital............................. 6,262 6,254 Retained earnings........................... 29,280 45,371 Treasury stock, 4,345,561 shares, at cost... (35,067) (35,067) -------- -------- Total shareholders' equity............... 551 16,634 -------- -------- $ 1,218 $113,324 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
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. Summary of Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements include TransFinancial Holdings, Inc. and its subsidiary companies ("the Company" or "TransFinancial"). TransFinancial's subsidiaries include TFH Logistics & Transportation Services, Inc. ("TFH L&T") and its subsidiaries, Crouse Cartage Company ("Crouse") and Specialized Transport, Inc. ("Specialized")(see Note 2 for Discontinued Operations), Universal Premium Acceptance Corporation and its affiliate, UPAC of California, Inc. (together "UPAC"), and Presis, L.L.C. ("Presis"). All significant intercompany accounts and transactions have been eliminated in consolidation.
Going Concern - On September 14, 2001, the Board of Directors unanimously approved a plan of liquidation for the Company. Under the plan of liquidation, the Company will sell all of its assets, and after paying off its debts and setting aside required reserves will distribute the remaining proceeds as one or more liquidating dividends. On January 22, 2002, shareholders approved the Plan of Complete Liquidation of the Company and the sale of UPAC. The Company closed the sale of UPAC on April 19, 2002 with an effective date of April 1, 2002. The Company filed a Certificate of Dissolution with the Delaware Secretary of State on April 29, 2002 and the Company's Common Stock ceased trading on such date. The liquidation of all remaining Company assets is substantially complete. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Accounting for the Impairment of Long-Lived Assets - The Company periodically reviews its long-lived assets and associated intangible assets and has determined that the carrying amount of these assets may not be recoverable. Therefore, in conjunction with the sale of UPAC and the dissolution and liquidation of the company the entire amount has been written off.
In July 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible Assets. Statement 142, effective January 1, 2002, requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company has deemed that $7.8 million of goodwill recorded on its books related to UPAC is impaired based upon the purchase agreement with outside investors for UPAC. The goodwill impairment is shown on the Statement of Income and Statement of Cash Flows as a non-operating loss.
Pro-Forma Financial Disclosure - Goodwill and Intangible Asset Adoption of Statement 142
For the Year Ended December 31,
2002 2001 2000 ---- ---- ----
Income from Continuing Operations $ 60 $ 1,651 $ (669) Add back: Goodwill Amortization -- 548 548 -------- --------- ---------- Adjusted Income (Loss) from Continuing Operations 60 2,199 (121)
Loss from Discontinued Operation (203) (2,894) (22,000)
Extraordinary Gain on Sale 1,141 -- --
Goodwill Impairment (7,838) -- -- -------- --------- ----------
Adjusted Net Income (Loss) $ (6,840) $ (695) $ (22,121) ======== ========= ==========
Basic and Fully Diluted Earnings (Loss) Per Share:
Continuing Operations $ 0.02 $ 0.50 $ (0.20) Goodwill Amortization -- 0.17 0.16 Discontinued Operations (0.06) (0.88) (6.71) Extraordinary Gain 0.35 -- -- Goodwill Impairment (2.39) -- -- -------- --------- ----------
Adjusted Net Income (Loss) $ (2.08) $ (0.21) $ (6.75) ======== ========= ==========
Recognition of Revenue - Finance charges on premium finance receivables are recognized when earned under applicable state regulations using methods that approximate the interest method. Recognition of earned finance charges on delinquent accounts is suspended when it is determined that collectibility of principal and interest is not probable. Interest on delinquent accounts is recognized when collected. Gains on sale of receivables under the prior securitization agreement was recorded when the receivables are sold (See Note 4). Late fees and other ancillary fees are recognized when chargeable. Accounts are generally charged off when deemed uncollectible. Recoveries of charged off accounts are recognized when collected.
The Company and UPAC had entered into a securitization agreement with a financial institution whereby undivided interests in a designated pool of accounts receivable can be transferred on an ongoing basis. Under the securitization agreement UPAC recognized gains on sales of receivables. These gains are shown as service revenue on the accompanying income statement. Effective May 26, 2000, the securitization agreement was assigned to and assumed by a new financial institution. UPAC and APR Funding amended the securitization agreement that resulted in a discontinuation of the prior gain on sale treatment of receivables. This change in accounting treatment had no effect on the total earnings recognized over the term of each finance contract or the cash flow received by UPAC on each contract. The timing of earnings recognition was altered by the accounting change. The non-cash effect on operating revenue and operating income from the change in gain on sale treatment of receivables was a negative charge to earnings of $768,000 in 2000.
Special Purpose Entity - APR Funding Corporation is a 100% owned special purpose entity ("SPE") of UPAC. The sole purpose of APR Funding Corporation is to provide credit enhancement to UPAC in its loan agreement used to originate finance agreements. The SPE has been formed to provide bankruptcy remote status. Effective May 26, 2000, all receivables and debt balances related to the SPE are shown on the consolidated financial statements. Prior to this date, the receivables were accounted for as sold receivables and followed gain on sale accounting treatment under FAS 125, Accounting for Transfers and Servincing of Financial Assets and Extinguishment of Liabilities. At December 31, 1999 off balance sheet finance receivables deemed to be sold were $63.9 million.
Segment Information - The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related Information." The adoption of this statement did not require significant changes in the way the Company's segments were disclosed. TransFinancial operated in the financial services industry thru March 31, 2002. The Company discontinued its transportation operations during 2000. TransFinancial operated as an insurance premium finance company through UPAC through March 31, 2002. The Company provides short-term secured financing for commercial and personal insurance premiums through insurance agencies throughout the United States. Approximately 50% of the insurance premiums financed by UPAC are placed through insurance agencies in California, Illinois, Florida, Texas, Missouri and Minnesota. Information regarding the Company's industry segments for the years ended December 31, 2002, 2001, and 2000 is as follows (in thousands):
Depreciation - Depreciation is computed using the straight-line method and the following useful lives:
Structures and Improvements............................... 19 - 39 years Other Operating Property.................................. 2 - 10 years
Income Taxes - The Company accounts for income taxes in accordance with the liability method. Deferred income taxes are determined based upon the difference between the book and the tax basis of the Company's assets and liabilities. Deferred taxes are provided at the enacted tax rates expected to be in effect when these differences reverse.
Cash Equivalents - The Company considers all highly liquid investments purchased with maturity of three months or less to be cash equivalents. The Company maintains cash and cash equivalents with various major financial institutions. At times such amounts may exceed the F.D.I.C. limits. The Company believes that no significant concentration of credit risk exists with respect to cash and cash equivalents.
Disclosures about Fair Value of Financial Instruments - The following methods and assumptions are used to estimate the fair value of each class of financial instruments:
a. Cash Equivalents - The carrying amount approximates fair value because of the short maturity of these instruments.
b. Finance Accounts Receivable - The carrying amount approximates fair value because of the short maturity of these instruments.
c. Revolving Loan and Other Notes - The carrying amount approximates fair value as the debt bears interest at a variable market rate.
Pervasiveness of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Intangible Assets and Accumulated Amortization - Intangible assets, consisting primarily of goodwill and intangibles recorded in connection with the acquisition of insurance premium finance companies were totally written off in conjunction with the sale of the premium finance operations.
2. Discontinued Operations
On September 16, 2000, the Company ceased operations of Crouse, its less-than-truckload motor carrier subsidiary, as a result of its continuing operating losses. The Company continued to operate Specialized Transport, Inc. ("Specialized"), its truckload motor carrier subsidiary until December 16, 2000. Prior to Crouse's closure, approximately 33% of Specialized's revenues were received from Crouse for providing linehaul transportation between terminals. Specialized was in the process of securing additional freight to replace revenues previously received from Crouse when its insurance coverages were revoked and it was forced to close its operation.
The Company has substantially completed the liquidation of the Crouse and Specialized assets for distribution to its secured and unsecured creditors. An independent "Advisory Committee" of creditors was formed for each of Crouse and Specialized to provide advice and oversight to management during this liquidation process. Crouse has closed on the bulk sale of all of its tractors, trailers, other equipment and real property. The collection of accounts receivable and liquidation of the assets of Crouse and Specialized is substantially complete. The proceeds of asset liquidations have allowed the full payment of the secured claims and a partial distribution to priority creditors of Crouse and, in the case of Specialized, full payment of priority creditors. Proceeds from asset liquidation were insufficient to satisfy in excess of $17 million of the general unsecured creditors' claims.* All remaining assets (which approximate $50,000) are reserved for the administrative costs associated with the closure of these companies. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.*
3. Employee Benefit Plans
UPAC Plans
Effective June 1, 1995, the Company established a 401(k) Savings Plan and a Money Purchase Pension Plan, both of which are defined contribution plans. Employees of UPAC and TransFinancial are eligible to participate in the plans after they attain age 21 and complete one year of employment.
Participants in the 401(k) Savings Plan may defer up to 13% of annual compensation. The Company matches 50% of the first 10% deferred by each employee. Company contributions vest after five years. Company matching contributions in 2001 and 2000 were $49,000 and $52,000. Effective January 1, 2002, the Company contributions vest after three years to comply with new Federal regulations.
Under the Money Purchase Pension Plan, the Company contributes 7% of each eligible employee's annual compensation plus 5.7% of any compensation in excess of the Social Security wage base. Company contributions in 2001 and 2000 were $111,000 and $128,000.
Transfinancial's participation in the UPAC plans was terminated with the sale of the financial services business. Transfinancial did not provide any employee benefits in 2002.
Non-Union Pension Plan
TFH L&T had a defined contribution pension plan ("the Non-Union Plan") providing for a mandatory Company contribution of 5% of annual earned compensation of the non-union employees. Additional discretionary contributions may be made depending upon the profitability of TFH L&T. Any discretionary funds contributed to the Non-Union Plan were invested 100% in TransFinancial Common Stock. This plan has been terminated.
401(k) Plan
Effective January 1, 1990, TFH L&T established a salary deferral program under Section 401(k) of the Internal Revenue Code. To date, participant contributions to the 401(k) plan have not been matched with Company contributions. All
employees of TFH L&T are eligible to participate in the 401(k) plan after they attain age 21 and complete one year of qualifying employment. This plan has been terminated
Stock Option Plans
A Long-Term Incentive Plan adopted in 1998 ("1998 Plan") provides that options for shares of TransFinancial Common Stock be granted to directors, and that options and other shares may be granted to officers and other employees. All such option grants are at or above fair market value at the date of grant. Options granted generally become exercisable ratably over two to five years and remain exercisable for ten years from the date of grant. Initially, 600,000 shares were reserved for issuance pursuant to the 1998 Plan. As of December 31, 2002, 272,900 shares were available for grant pursuant to the 1998 Plan.
An Incentive Stock Plan was adopted in 1992 ("1992 Plan"), which provides that options for shares of TransFinancial Common Stock shall be granted to directors, and may be granted to officers and key employees at fair market value of the stock at the time such options are granted. Initially, 500,000 shares of TransFinancial common stock were reserved for issuance pursuant to the 1992 Plan. As of December 31, 2002, options for 126,480 shares were available for grant pursuant to the 1992 Plan. These options generally become exercisable ratably over two to five years and remain exercisable for ten years from the date of grant.
As prescribed for in the approved plan of liquidation, a liquidating dividend in the amount of $364,951 was paid to the holders of 306,650 in-the-money stock options.
4. Financing Agreements
Securitization of Receivables/Loan Agreements
In December 1996, UPAC and TransFinancial entered into a securitization agreement whereby undivided interests in a designated pool of finance accounts receivable can be sold on an ongoing basis. Effective May 26, 2000, the securitization agreement was assigned to and assumed by a new financial institution. UPAC and APR Funding amended the securitization agreement with the new financial institution increasing the maximum allowable amount of receivables to be sold under the new agreement to $80 million, extending the term of the agreement by five years with annual liquidity renewals and amending certain covenants. On August 31, 2000, UPAC and APR Funding Corporation executed a Loan and Security Agreement with the same financial institution under essentially the same terms as the securitization agreement. UPAC and APR Funding borrowed under a revolving loan arrangement with maturities from 1 to 270 days. The loan bears interest at commercial paper rates plus program fees. On August 17, 2001, UPAC amended the Loan and Security Agreement to increase the facility to $100 million under essentially the same terms as the prior agreement.
Among other things, the terms of the agreement required UPAC to maintain a minimum tangible net worth of $10.0 million plus 25% of cumulative net income, contain restrictions on the payment of dividends by UPAC to TransFinancial without prior consent of the financial institution and required the Company to report any material adverse changes in its financial condition. The terms of the loan agreement required UPAC to maintain a reserve at specified levels that serves as collateral.
Transfinancial's obligation on this securitization agreement terminated with the sale of UPAC effective April 1, 2002.
5. Common Stock and Earnings Per Share
Earnings Per Share
Because of the Company's simple capital structure, income (loss) available to common shareholders is the same for the basic and diluted earnings per share computations. Such amounts were $(6,840,000), $(1,243,000) and $(22,669,000) for 2002, 2001 and, 2000. Following is a reconciliation of basic weighted average common shares outstanding, weighted average common shares outstanding adjusted for the dilutive effects of outstanding stock options, and basic and diluted earnings per share for each of the periods presented (in thousands, except per share amounts).
6. Income Taxes
Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands): 2002 2001 ---- ---- Deferred Tax Assets: Employee benefits.............. $ -- $ 200 Claims accruals and other...... 220 927 Allowance for credit losses.... -- 710 Net operating loss carryforwards 9,128 10,476 Alternative minimum tax and other credits..................... 754 754 ------ ------- Total gross deferred tax assets... 10,112 13,067 Less valuation allowance.......... (10,136) (12,734) ------ ------- Net deferred tax assets........... (24) 333 ------ -------
Deferred Tax Liabilities: Operating property, principally due to differences in depreciation Amortization of intangibles.... 24 61 - -- (394) ------ ------- Total gross deferred tax liabilities 24 (333) ------ -------
Net deferred tax.................. $ - $ - ====== =======
In 2002 and 2001, the Company assessed the likelihood that all or a portion of its deferred tax assets would not be realized. Such assessment included consideration of positive and negative factors, including the Company's current financial position and results of operations, projected future taxable income and available tax planning strategies. As a result of such assessment, it was determined that it was more likely than not that the net deferred tax assets will not be realized. Therefore, the Company recorded a valuation allowance of $(2,598,000) and $403,000 in its deferred income tax provision in 2002 and 2001, respectively.
At December 31, 2002, the Company had approximately $22.8 million of net operating loss carryforwards that were available for Federal income tax purposes and expire in 2018 through 2022. At December 31, 2002, the Company had $754,000 of alternative minimum tax and other credit carryforwards available, which do not expire. As noted above, the carryforwards of net operating losses and alternative minimum tax credits may not be realized. The Internal Revenue Service
("IRS") has examined the Company's 1994 through 1996 tax returns. In April 1998, the Company and the IRS settled all issues for tax years 1994 through 1996 within the tax reserves that the Company made provision for in 1997. The UPAC Group was allocated $5.5 million of NOL on the sale of stock to outside investors.
The following is a reconciliation of the Federal statutory income tax rate to the effective income tax provision (benefit) rate:
2002 2001 2000 ------ ------- ------ Federal statutory income tax rate (35.0)% (35.0)% (35.0)% State income tax rate, net........ (4.5) (4.5) (4.6) Amortization of non-deductible acquisition intangibles......... 14.4 8.3 0.4 Non-deductible meals and entertainment................... -- 0.5 -- Change in valuation allowance..... 22.9 29.8 40.3 Other ........................... -- 2.8 (1.3) ------ ------- ------ Effective income tax rate......... (2.2)% 1.9% (0.2)% ====== ======= ======
The components of the income tax provision (benefit) consisted of the following (in thousands):
2002 2001 2000 ------- ------- ------- Current: Federal.......................... $ (153) $ -- $ (61) State............................ (18) 20 10 ------- ------- ------- Total......................... (171) 20 (51) ------- ------- -------
Deferred: Federal.......................... 2,078 (272) (7,308) State............................ 520 (91) (1,827) Change in valuation allowance....... (2,598) 363 9,135 ------- ------- ------- Total......................... - - -- ------- ------- -------
Total income tax provision (benefit) $ (171) $ 20 $ (51) ======= ======= =======
7. Contingencies and Commitments
The Company and its directors were named as defendants in a lawsuit filed on January 12, 2000 in the Chancery Court in New Castle County, Delaware. The suit sought declaratory, injunctive and other relief relating to a proposed management buyout of the Company. The suit alleges that the directors of the Company failed to seek bidders for the Company's subsidiary, Crouse, failed to seek bidders for its subsidiary, UPAC, failed to actively solicit offers for the Company, imposed arbitrary time constraints on those making offers and favored a management buyout group's proposal and failed to obtain approval of the Company's shareholders for the sale of certain Crouse assets. The suit sought certification as a class action complaint. The proposed management buyout was terminated on February 18, 2000. The plaintiff filed an amended class action complaint on August 9, 2000, seeking damages in excess of $4.50 per share for the alleged breaches of fiduciary duties. This lawsuit was dismissed on or about November 1, 2002 with the stipulation that it could be re-filed in Kansas. (See Note 10)
The Company and its directors have been named as defendants in a lawsuit filed on December 7, 2001 in the United States District Court, District of Kansas, in Kansas City, Kansas. The suit seeks certification as a class action complaint. The suit alleges that the transfer of the assets of Crouse Cartage Company (a subsidiary of TransFinancial Holdings, Inc.) violated Section 271 of the Delaware Code insofar as the transfer constituted a sale of substantially all the assets of the Company without shareholder approval and alleges that the Company only obtained approximately one-half the fair market value of the assets for no valid business reason, when 90% could have been achieved. The Company was dismissed as a defendant in this lawsuit. Directors who remain defendants in this case are entitled to indemnity from the Company.
8. Shareholder Rights Plan
On February 18, 1999, the Board of Directors authorized the amendment of the previously adopted Shareholder Rights Plan by which the Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right for each outstanding share of TransFinancial Common Stock.
Under the Shareholder Rights Plan, Rights were issued on July 27, 1998 to shareholders of record as of that date and will expire in ten years, unless earlier redeemed or exchanged by the Company. The distribution of Rights was not taxable to the Company or its shareholders.
The Rights become exercisable only if a person or entity is an "Acquiring Person" (as defined in the Plan) or announces a tender offer, the consummation of which would result in any person or group becoming an "Acquiring Person." Each Right initially entitles the holder to purchase one one-hundredth of a newly issued share of Series A Preferred Stock of the Company at an exercise price of $50.00. If, however, a person or group becomes an "Acquiring Person", each Right will entitle its holder, other than an Acquiring Person and its affiliates, to purchase, at the Right's then current exercise price, a number of shares of the Company's common stock having a market value of twice the Right's exercise price.
In addition, if after a person or group becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction, or sells 50% or more of its assets or earning power, each Right will entitle its holder, other than an Acquiring Person and its affiliates, to purchase, at the Right's then current exercise price, a number of shares of the acquiring company's common stock having a market value at the time of twice the Right's exercise price.
Under the Shareholder Rights Plan, an "Acquiring Person" is any person or entity which, together with any affiliates or associates, beneficially owns 15% or more of the shares of Common Stock of the Company then outstanding. The Shareholder Rights Plan contains a number of exclusions from the definition of Acquiring Person. The Shareholders Rights Plan will not apply to a Qualifying Offer, which is a cash tender offer to all shareholders satisfying certain conditions set forth in the Plan. The Company's Board of Directors may redeem the Rights at any time prior to a person or entity becoming an Acquiring Person.
9. Related Party Transactions
The Company has engaged Timothy P. O'Neil, the former president of TFH, as independent contractor to assist in the wind down of the transportation operations and such other duties as the board of TFH may assign. Mr. O'Neil earned $139,300 in compensation from TFH as an independent contractor in 2002.
10. Subsequent Events
On February 28, 2003 the lawsuit originally filed on January 12, 2000 and amended on August 9, 2000 in the Chancery Court in New Castle County, Delaware and dismissed on November 1, 2002 was re-filed in the United State District Court, District of Kansas in Kansas City, Kansas. The suit seeks relief relating to a proposed management buyout of the Company and the sale of the Crouse assets. The suit alleges that the directors of the Company failed to seek bidders for the Company's subsidiary, Crouse, failed to seek bidders for its subsidiary, UPAC, failed to actively solicit offers for the Company, imposed arbitrary time constraints on those making offers and favored a management buyout group's proposal and failed to obtain approval of the Company's shareholders for the sale of certain Crouse assets. The suit seeks certification as a class action complaint. The proposed management buyout was terminated on February 18, 2000. The Company has filed a motion to dismiss a portion of this lawsuit and intends of vigorously defend. Directors who are defendants in this case are entitled to indemnity from the Company. The Company believes this suit will not have a material adverse effect on the financial condition, liquidity or results of operations of the Company.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION December 31, 2002 and 2001
Summary of Quarterly Financial Information (Unaudited):
The following table sets forth selected unaudited financial information for each quarter of 2002 and 2001 (in thousands, except per share amounts).
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
On December 19, 2000, the Company engaged the accounting firm of Weaver & Martin to conduct the audit of the 2000 consolidated financial statements. Weaver & and Martin were not engaged to perform reviews of the second or third quarter filing on Form 10-Q for 2000 and no such reviews have been performed. Subsequently, Weaver & Martin were retained to perform an audit of the 1999 and 1998 consolidated financial statements. Weaver & Martin had no prior relationship with the Company, were not consulted on accounting or audit issues, and have not performed any consulting work for the Company subsequent to their engagement.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Directors of the Company
Director of the Name, Principal Occupation and Company other Directorships Age Since - ------------------------------ --- -------- William D. Cox 60 1991 President and Chief Executive Officer of the Company since August 2001, and Chairman of the Board of Directors since June 1997. Mr. Cox has served as President of various family-owned, commercial and residential construction and land development companies in Wichita, Kansas, currently Applewood Homes, Inc., from 1967 to the present.
Harold C. Hill, Jr. 67 1995 Retired as a partner of Arthur Andersen LLP in 1993. Mr. Hill's 35 years of service with that firm included responsibility as partner in charge of the transportation, financial services and government practices in Kansas City, and National Technical Coordinator of that firm's trucking industry practice group.
Roy R. Laborde 64 1991 Vice Chairman of the Board of Directors since June 1997. Chairman of the Board of Directors from May 1992 to June 1997. President of Amboy Grain, Inc., Amboy, Minnesota, since 1985; President and Chief Operating Officer for Rapidan Grain & Feed, Rapidan, Minnesota, from 1968 through 1988 and has continued to merchandise grain for that company.
Clark D. Stewart 63 1997 President and Chief Executive Officer of Butler National Corporation, a publicly-held company headquartered in Olathe, Kansas, with operations primarily in the manufacture and modification of aerospace switching equipment and management services for Indian gaming enterprises, since September 1989.
Executive Officers of the Company
Name Age Position - ---------------- --- -----------------------------------------------
William D. Cox 60 President, Chief Executive Officer, Secretary and Director
Information regarding Mr.Cox is provided under "Directors of the Company" above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires directors, executive officers and beneficial owners of more than ten percent of the Common Stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission (the "SEC") and the American Stock Exchange, and to provide copies to the Company. Based solely on a review of the copies of such reports provided to the Company and written
representations from the directors and executive officers, the Company believes that all applicable Section 16(a) filing requirements have been met.
Item 11.
Item 11. Executive Compensation
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists exclusively of non-employee directors appointed by resolution of the entire Board of Directors. William D. Cox served as a non-employee Chairman of the Board of Directors from the 1997 Organization Meeting of the Board of Directors until August 2001. Mr. Cox accepted the role of president of the Company in August 2001 and continues as Chairman of the Board of Directors.
Summary Compensation Table
(1) In2002 Mr. Cox was the President and Chairman of the Board of Transfinancial Holdings, Inc. companies and the only employee. Mr. Cox is an "at will" employee operating as and independent contractor at the rate of $200.00 per hour.
(2) Except as described herein, bonuses represent incentive compensation awarded on a discretionary basis based on subjective criteria.
(3) Bonus paid to Mr. Huffman on the sale of the financial services operations
(4) In 2001 Mr. Cox was employed as President of Transfinancial Holdings, Inc. and received $7,400.00 in stock as part of his compensation.
Option Grants in Last Fiscal Year
Individual Grants ---------------------------------------- Potential Realizable Number of % of Total Value at Assumed Annual Securities Options Exer- Rates of Stock Price Underlying Granted to cise Expir- Appreciation for Options Employees in Price ation Option Term --------------------- Name Granted (#) Fiscal Year ($/Sh) Date 5% $) 10% ($) - ---- ----------- -------------- ------ ---- ------ -------
Note: No grants were made in 2002.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
In connection with the approval and adoption of the Plan of Complete Liquidation at the annual Shareholders meeting held on January 22, 2002 the holders of all in the money options (totaling 306,650) received, after deductions for the option exercise price, a net distribution of $364,952.00.
EMPLOYMENT AGREEMENTS
NONE
All employees working under employment agreements were terminated in 2001.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of March 31, 2003, unless otherwise indicated, with respect to the beneficial ownership of the Company's Common Stock by (a) persons known to the Company to be beneficial owners of 5% or more of the outstanding Common Stock, (b) executive officers listed in the Summary Compensation Table, (c) directors and nominees for director and (d) all directors and executive officers of the Company as a group.
Name of Beneficial Owners Amount and (and address of beneficial owners Nature of other than executive officers, Beneficial Percent directors and nominees) Ownership(1) of Class - ------------------------------------ ------------ --------
Roy R. Laborde................................ 185,365(3) 5.15% C/o TransFinancial Holdings, Inc. 8245 Nieman Road, Suite 100 Lenexa, KS 66214
William D. Cox................................ 107,00(4) 2.98% Harold C. Hill, Jr............................ 24,500(5) .68% Clark D. Stewart.............................. 17,000(6) .47%
Directors and executive officers as a group (4 persons, including the above)..... 333,865 9.29%
Timothy P. O'Neil............................. 345,340(2) 9.6% P.O. Box 15085 Lenexa, Kansas 66285
(1) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares listed.
(2) Includes 192,000 shares subject to exercisable outstanding stock options. Does not include 9,000 shares held in various irrevocable trusts for the benefit of Mr. O'Neil's children and over which he has no voting or investment power.
(3) Includes 26,150 shares subject to exercisable outstanding stock options and 1,415 shares owned by and registered in the name of his wife, over which they share voting power but Mrs. Laborde retains sole investment power.
(4) Includes 28,000 shares subject to exercisable outstanding stock options.
(5) Includes 4,500 shares in the Francile Hill Revocable Trust. Both Mr. Hill and Francile Hill are trustees and each has shared voting and investment power. Also includes 20,000 shares subject to exercisable outstanding stock options. . (6)Includes 16,000 shares subject to exercisable outstanding stock options.
Item 13.
Item 13. Certain Relationships and Related Transactions
Item 14.
Item 14. Controls and Procedures
Based on an evaluation of disclosure controls and procedures for the period ended December 31, 2002 conducted by our Chief Executive Officer (principal executive officer and principal financial officer) with in 90 days of filing this Annual Report on form 10-K, we conclude that our disclosure controls and procedures are effective.
The company has internal controls and procedures regarding financial reporting. Because the Company has only one employee, it has some concerns regarding its segregation of duties, but does not believe such deficiencies or weakness are significant or material. The Company has not made any changes in internal controls in response to the evaluation.
Item 15.
Item 15. Principal Accountant Fees and Services
2002 2001 -------- -------- Audit Fees.................................. $ 45,561 $ 56,290 Audit Related Fees ......................... -- -- Tax Fees.................................... 9,463 7,258 All Other Fees.............................. -- --
PART IV
Item 16. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. Financial Statements
Included in Item 8, Part II of this Report -
Consolidated Balance Sheets at December 31, 2002 and 2001
Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2002, 2001 and 2000
Notes to Consolidated Financial Statements
Supplemental Financial Information (Unaudited) - Summary of Quarterly Financial Information for 2002 and 2001
(a)2. Financial Statement Schedules
Included in Item 14, Part IV of this Report -
Financial Statement Schedules for the three years ended December 31, 2002:
Schedule II - Valuation and Qualifying Accounts
Other financial statement schedules are omitted either because of the absence of the conditions under which they are required or because the required information is contained in the consolidated financial statements or notes thereto.
(a)3. Exhibits
The following exhibits have been filed as part of this report in response to Item 14(c) of Form 10-K. The management contracts or compensatory plans or arrangements required to be filed as exhibits to this form pursuant Item 14(c) are contained in Exhibits 10(a), 10(b), 10(d), 10(u), 10(v), 10(w), 10(x), 10(y) and 10(z).
Exhibit No. Exhibit Description ----------- ----------------------------------------------------------
2(a) Purchase Agreement dated November 6, 2001 between the Company and Commercial Equity Group, Ltd. Filed as Exhibit B to the proxy statement filed December 4, 2001.
2(b) Plan of Complete Liquidation. Filed as Exhibit A to the proxy statement filed December 4, 2001.
3(a) 1998 Restated Certificate of Incorporation of the Registrant. Filed as Exhibit 3(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
3(b) Restated By-Laws of the Registrant. Filed as Exhibit 3(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
4(a) Specimen Certificate of the Common Stock, $.01 par value, of the Registrant. Filed as Exhibit 4.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
4(b) Certificate of Designations of Series A Preferred Stock, dated July 15, 1998. Filed as Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
4(c) First Amended and Restated Rights Agreement, between TransFinancial Holdings, Inc. and UMB Bank, N.A., dated March 4, 1999. Filed as Exhibit 1 to Registrant's Current Report on Form 8-K dated March 5, 1999.
10(a) Form of Indemnification Agreement with Directors and Executive Officers. Filed as Exhibit 10(k) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1986.
10(b) Registrant's 1992 Incentive Stock Plan. Filed as Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
10(c) Stock Purchase Agreement by and between Universal Premium Acceptance Corporation and Oxford Bank and Trust Company, dated April 29, 1998. Filed as Exhibit 2(a) to Registrant's Current Report on Form 8-K, dated May 29, 1998.
10(d) Registrant's 1998 Long-Term Incentive Plan. Filed as Exhibit 10(d) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.
10(e) Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, Anuhco, Inc., EagleFunding Capital Corporation, The First National Bank of Boston, dated December 31, 1996. Filed as Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996.
10(f) Amendment No. 4 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated May 29, 1998. Filed as Exhibit 10(a) to Registrant's Current Report on Form 8-K, dated May 29, 1998.
10(g) Amendment No. 5 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated August 25, 1998. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter filed September 30, 1998.
10(h) Amendment No. 6 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated September 11, 1998. Filed as Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
10(i) Amendment No. 7 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated July 14, 1999. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
10(j) Amendment No. 8 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated October 8, 1999. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(k) Amendment No. 9 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated December 29, 1999.
10(l) Amendment No. 10 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated February 23, 2000.
10(m) Amendment No. 11 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc., EagleFunding Capital Corporation and BankBoston, N.A., dated April 27, 2000.
10(n) Amendment No. 12 to Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial Holdings, Inc Autobahn Funding Company LLC, DG Bank Deutsche Genossenschaftsbank AG, dated May 25, 2000.
10(o) Receivables Purchase Agreement by and among APR Funding Corporation, Universal Premium Acceptance Corporation, Autobahn Funding Company LLC, DG Bank Deutsche Genossenschaftsbank AG, dated December 31, 1996 as amended by Amendment Nos. 1 - 12 thereto.
10(p) Loan and Security Agreement, dated August 31, 2000, among APR Funding Corporation, Universal Premium Acceptance Corporation, Autobahn Funding Company LLC and DG Bank Deutsche Genossenschaftsbank AG. Filed as Exhibit 10.1 to Registrant's Quarterly Report on form 10-Q for the quarter ended September 30, 2000.
10(q) Secured Loan Agreement by and between Bankers Trust Company of Des Moines, Iowa and Crouse Cartage Company, dated January 5, 1998. Filed as Exhibit 10(k) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997.
10(r) Stock Purchase Agreement, dated August 14, 1998, by and between TransFinancial Holdings, Inc. and certain members of the Crouse family. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
10(s) Secured Loan Agreement by and between Bankers Trust of Des Moines, Iowa, TransFinancial Holdings, Inc., and Crouse Cartage Company, dated March 25, 1999. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
10(t) Amended and Restated Secured Loan Agreement, dated July 5, 2000, by and among Bankers Trust Company, N.A. of Des Moines, Iowa, TransFinancial Holdings, Inc., Crouse Cartage Company, Specialized Transport, Inc., TFH Logistics and Transportation Services, Inc., Transport Brokerage, Inc., Phoenix Computer Services, Inc., Custom Client Services, Inc. and TFH Properties, Inc. Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
10(u) Supplemental Benefit and Collateral Assignment Split-Dollar Agreement dated January 18, 1997 by and between the Company and Timothy P. O'Neil. Filed as Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(v) Employment Agreement dated July 2, 1998 by and between the Company and Timothy P. O'Neil. Filed as Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(w) Supplemental Benefit Agreement dated September 30, 1995 by and between the Company and David D. Taggart. Filed as Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(x) Employment Agreement dated April 27, 1998 by and among the Company, Crouse Cartage Company and David D. Taggart. Filed as Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(y) Agreement dated September 30, 1995 by and between the Company and David D. Taggart. Filed as Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(z) Amended and Restated Employment Agreement dated October 16, 1998 by and among the Company, Universal Premium Acceptance Corporation, Presis, L.L.C. and Kurt W. Huffman. Filed as Exhibit 10.7 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10(aa) Purchase Contract by and between R.L.R. Investments, L.L.C., an Ohio limited liability company and R.L.R. Transfer, Inc., an Ohio corporation and Crouse Cartage Company and TransFinancial Holdings, Inc. dated October 20, 2000. Filed as exhibit 10(aa) to Registrant's Annual Report 10-K for the year ended December 31, 2001.
10(ab) List of all subsidiaries of TransFinancial Holdings, Inc. the state of incorporation of each such subsidiary, and the names under which such subsidiaries do business. Filed as exhibit 21 to Registrant's Annual Report 10-K for the year ended December 31, 2001.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 2002 - --------------------
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES Schedule II - Valuation and Qualifying Accounts
(1) Deduction for purposes for which reserve was created. (2) UPAC Eliminated in Stock Sale. (3) Reclass provision from change in gain treatment on receivables.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: October 2, 2003 By /s/ William D. Cox --------------------------- William D. Cox, President, Chief Executive Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ William D. Cox President, Chief Executive Officer and - -------------------------- Secretary (Principal Financial Officer) William D. Cox
/s/ William D. Cox - -------------------------- ----------------------------------------- William D. Cox, Chairman Roy R. Laborde, Vice Chairman of of the Board of Directors the Board of Directors
/s/ Clark D. Stewart /s/ Harold C. Hill - -------------------------- ----------------------------------------- Clark D. Stewart, Director Harold C. Hill, Jr., Director
October 2, 2003 Date of all signatures
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Exhibit Index -------------
Exhibit No. Exhibit Description - ----------- -------------------
302 CERTIFICATE
I, William D. Cox, certify that:
1. I have reviewed this annual report on Form 10-K of TransFinancial Holdings, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.
4. I am are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. I am have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. I am have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: October 2, 2003 /s/ William D. Cox ---------------------------------- William D. Cox Chief Executive Officer and Chief Financial Officer October 2, 2003