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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--- ------------------
Commission File No. 1-12070
TRANSFINANCIAL HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 46-0278762
---------------------- --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
---------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 859-0055
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 2002
---------------------- ----------------------------------
Common stock, $0.01 par value 3,288,291 shares
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------------------
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
For the Three Months Ended June 30,
(In thousands, except per share amounts)
(Unaudited)
2002 2001
----- ----
Operating Revenues (Note 6).................. $ -- $3,881
Operating Expenses........................... 960 3,453
------ ------
Operating Income (Loss)...................... (960) 428
------ ------
Nonoperating Income (Expense)
Other, net................................. 28 33
Interest income............................ 23 25
Interest expense........................... (11) (4)
------- -------
Total nonoperating income (expense)...... 40 54
------- -------
Income (Loss) Before Income Taxes............ (920) 482
Income Tax Provision (Benefit)............... (177) 15
-------- -------
Income (Loss) from Continuing Operations..... (743) 467
-------- -------
Income (Loss) from Discontinued Operations
(Note 2) -- --
-------- -------
Net Income (Loss)............................ $ (743) $ 467
======== =======
Basic Earnings (Loss) Per Share From
Continuing Operations...................... $(0.23) $ 0.14
Discontinued Operations (Note 2)........... -- --
------- -------
Total................................ $(0.23) $ 0.14
======= =======
Diluted Earnings (Loss) Per Share From
Continuing Operations...................... $(0.22) $ 0.14
Discontinued Operations (Note 2)........... -- --
------- -------
Total................................ $(0.22) $ 0.14
======= =======
Basic Average Shares Outstanding............. 3,288 3,278
======= =======
Diluted Average Shares Outstanding........... 3,438 3,286
======= =======
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
2
Item 1. Financial Statements
- -----------------------------------------
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
For the Six Months Ended June 30,
(In thousands, except per share amounts)
(Unaudited)
2002 2001
---- ----
Operating Revenues (Note 6).................. $ 4,147 $ 7,467
Operating Expenses........................... 4,477 6,660
------- -------
Operating Income (Loss)...................... (330) 807
------- -------
Nonoperating Income (Expense)
Other, net................................. 28 33
Interest income............................ 27 28
Interest expense........................... (51) (11)
------- -------
Total nonoperating income (expense)...... 4 50
------- ------
Income (Loss) Before Income Taxes............ (326) 857
Income Tax Provision (Benefit)............... (171) 25
------- ------
Income (Loss) from Continuing Operations..... (155) 832
------- ------
Income (Loss) from Discontinued Operations
(Note 2)..................................... -- (2,050)
Extraordinary Income (Loss) - Goodwill
Impairment (Note 5).......................... -- (6,697)
Net Income (Loss)............................ $(6,852) $(1,218)
======== ========
Basic Earnings (Loss) Per Share From
Continuing Operations...................... $ (0.05) $0.25
Discontinued Operations (Note 2)........... -- (0.62)
Extraordinary Loss (Note 5)................ (2.03) --
--------- --------
Total.................................. $ (2.08) $(0.37)
========== ========
Diluted Earnings (Loss) Per Share From
Continuing Operations...................... $ (0.05) $ 0.25
Discontinued Operations (Note 2)........... -- (0.62)
Extraordinary Loss (Note 5)................ (1.95) --
--------- -------
Total.................................. $ (2.00) $ (0.37)
========= ========
Basic Average Shares Outstanding............. 3,288 3,278
======== ========
Diluted Average Shares Outstanding........... 3,434 3,286
======== ========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
3
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
June 30, December 31,
2002 2001
---------- ------------
Assets (Unaudited)
------
Current Assets:
Cash and cash equivalents.................. $10,668 $ 1,343
Finance accounts receivable, less allowance
for credit losses of $ -0- and $1,541.... -- 102,028
Other current assets..................... 71 344
------- ----------
Total current assets..................... 10,739 103,715
------- ----------
Operating Property, at Cost:
Land....................................... -- 192
Structures and improvements................ -- 1,018
Other operating property................... -- 1,030
------- ----------
-- 2,240
Less accumulated depreciation............ -- (1,085)
------- ----------
Net operating property............... -- 1,155
------- ----------
Intangibles, net of accumulated amortization
and Other Assets -- 8,454
$ 10,739 $ 113,324
======== ==========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities:
Cash overdrafts............................ $ -- $ 1,776
Accounts payable........................... 64 5,204
Revolving bank loan (Note 3)............... -- 87,616
Accrued payroll and fringes................ -- 1,002
Dividends payable (Note 6)................. 9,243 --
Other accrued expenses..................... 893 1,092
------- ----------
Total current liabilities................ 10,200 96,690
------- ----------
Contingencies and Commitments (Note 4)....... -- --
Shareholders' Equity
Preferred stock with $0.01 par value, authorized
1,000,000 shares, none outstanding....... -- --
Common stock with $0.01 par value, authorized
13,000,000 shares, issued 7,633,852...... 76 76
Paid-in capital............................ 6,262 6,262
Retained earnings.......................... 29,268 45,363
Treasury stock 4,345,561 shares, at cost... (35,067) (35,067)
-------- -----------
Total shareholders' equity............... 539 16,634
-------- -----------
$10,739 $ 113,324
======== ===========
The accompanying notes to condensed consolidated balance sheets are an
integral part of these statements.
4
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30
(In thousands)
(Unaudited)
2002 2001
---- ----
Cash Flows From Operating Activities
Net Loss................................ $ (6,852) $(1,218)
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization.......... 44 395
Debt cost amortization................. 38 64
Extraordinary Loss - Goodwill Impairment 6,697 --
Provision for credit losses............ 595 1,004
Net increase (decrease) from change in other
working capital items affecting operating
activities
Accounts Receivable............... (15,260) (13,642)
Accounts Payable.................. (337) 1,836
Other............................. (524) 810
Loss from and on discontinued operations -- 2,050
-------- -------
(15,599) (8,701)
-------- -------
Cash Flows From Investing Activities
Purchase of operating property, net..... (10) (52)
Sale of Finance Company................. 13,282 --
------- -------
13,272 (52)
Cash Flows From Financing Activities
Revolving bank loan borrowings
(repayments), net 10,381 8,900
Cash overdrafts......................... 1,271 46
Other................................... -- --
------ -------
11,652 8,946
------ -------
Net Increase (Decrease) in Cash and
Cash Equivalents................. 9,325 (526)
Cash and Cash Equivalents at beginning of
period .......................... 1,343 1,076
------- -------
Cash and Cash Equivalents at end of
period .......................... $ 10,668 $ 550
======== =======
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
5
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statement Of Shareholders' Equity
(In thousands)
(Unaudited)
Total
Share-
Common Paid-In Retained Treasury holders'
Stock Capital Earnings Stock Equity
Balance at December 31, 2000.... $ 76 $ 6,254 $ 46,614 $(35,067) $17,877
Issuance of Incentive Stock..... -- 8 -- -- 8
Net Loss....................... -- -- (1,251) -- (1,251)
---- ------- -------- -------- --------
Balance at December 31, 2001... 76 6,262 45,363 (35,067) 16,634
Net Loss....................... -- -- (6,852) -- (6,852)
Liquidating Dividend Payable... -- -- (9,243) -- (9,243)
----- ------- -------- -------- --------
Balance at June 30, 2002...... $ 76 $6,262 $ 29,268 $(35,067) $ 539
===== ======= ========= ========= ========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
6
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Principles of Consolidation and Significant Accounting Policies
The unaudited condensed consolidated financial statements include
TransFinancial Holdings, Inc. ("TransFinancial") and all of its subsidiary
companies (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation. The unaudited condensed
financial statements included herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC"). The year end
condensed balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles. In the opinion of management, all adjustments necessary to fairly
present the results of operations have been made. See Note 6, Sale of Financial
Services Operations, to the financial statements for a discussion of the sale of
the financial services businesses and the dissolution of the Company.
Pursuant to SEC rules and regulations, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
from these statements unless significant changes have taken place since the end
of the most recent fiscal year. TransFinancial believes that the disclosures
contained herein, when read in conjunction with the financial statements and
notes included in TransFinancial's Annual Report on Form 10-K, filed with the
SEC on April 15, 2002, are adequate to make the information presented not
misleading. It is suggested, therefore, that these statements be read in
conjunction with the statements and notes included in the aforementioned report
on Form 10-K.
2. 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 of 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 liquidation of Crouse and
Specialized*. The proceeds of asset liquidations have allowed full payment of
secured claims and a partial distribution to priority creditors. Proceeds from
asset liquidation were insufficient to satisfy in excess of $17 million of
unsecured creditor claims*. All remaining assets (which approximate $3,000) are
reserved for 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. Financing Agreements
In December 1996, Universal Premium Acceptance Corporation ("UPAC") and
TransFinancial entered into a securitization agreement whereby undivided
interests in a designated pool of finance accounts receivable could 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 its subsidiary,
APR Funding Corporation, amended the securitization agreement with the new
financial institution increasing maximum allowable amount of receivables to be
sold under the agreement to $80 million, extending the term of the agreement by
five years with annual liquidity renewals and amending certain convenants. 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 borrow under a revolving
loan arrangement with allowable maturities from 1 to 270 days. On August 17,
2001, UPAC and APR Funding amended the Loan and Security Agreement to increase
the facility to $100 million under essentially the same terms as the prior
agreement. The loan bears interest at commercial paper rates plus bank program
fees. As
7
part of the sale of the financial services businesses (See Note 6), this
facility and all related obligations were transferred with the consummation of
that sale.
Among other things, the terms of the agreement require UPAC to maintain a
minimum tangible net worth of $10 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 require UPAC to report
any material adverse changes in its financial condition. The terms of the loan
agreement require UPAC to maintain a reserve at specific levels that served as
collateral. At March 31, 2002, $11.0 million of accounts receivable served as
collateral reserves for the loan agreement. UPAC and APR Funding's loan
agreement was transferred in conjunction with the sale of the financial services
businesses.
The Company, in settlement of joint liability with its discontinued
operations, entered into two short-term notes each in the amount of $1.25
million. The Company's corporate office building served as collateral for a note
with Crouse's primary lending bank, with interest at the bank's prime rate. The
proceeds from the sale of UPAC served as collateral for a note with UPAC's
acquirer. Interest on this note was paid monthly at 10%. These notes were paid
off with the proceeds from the sale of UPAC.
4. Contingencies and Commitments
The Company is party to certain claims and litigation arising in the
ordinary course of business. In the opinion of management, the outcome of such
claims and litigation will not materially affect the Company's results of
operations, cash flows or financial position.*
The Company and its directors have been named as defendants in a lawsuit
filed on January 12, 2000 in the Chancery Court in New Castle County, Delaware.
The suit seeks 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 seeks
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 has been filed and the Company believes this suit will not have a
material adverse effect on the financial condition, liquidity or results of
operations of the Company.*
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
filed a motion to dismiss a portion of this complaint, and intends to vigorously
defend. The Company believes this suit will not have a material adverse effect
on the financial condition, liquidity or results of operations of the Company.*
5. Goodwill Impairment
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 $6.7 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 an extraordinary loss.
8
Pro-Forma Financial Disclosure - Goodwill and Intangible Asset Adoption
of Statement 142
For the Six Months Ended
June 30,
2002 2001
---- ----
Income from Continuing Operations $ (155) $ 832
Add back: Goodwill Amortization -- 274
------- ------
Adjusted Income from Continuing Operations (155) 1,106
Loss from Discontinued Operations -- (2,050)
Extraordinary Loss - Goodwill Impairment (6,697) --
------- ------
Adjusted Net Income (Loss) $(6,852) $ (944)
======== =======
Basic Earnings (Loss) Per Share:
Continuing Operations $ (0.05) $ 0.25
Goodwill Amortization -- 0.08
Discontinued Operations -- (0.62)
Extraordinary Loss (2.03) --
--------- -------
Adjusted Net Income (Loss) $ (2.08) $ (0.29)
========= ========
Diluted Earnings (Loss) Per Share:
Continuing Operations $ (0.05) $ 0.25
Goodwill Amortization -- 0.08
Discontinued Operations -- (0.62)
Extraordinary Loss (1.95) --
-------- -------
Adjusted Net Income (Loss) $ (2.00) $ (0.29)
6. Sale of Financial Services Operations
The sale of the financial services operations, as approved by the
Company's shareholders on January 22, 2002, was consummated 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. In accordance with the plan of liquidation as approved by the
shareholders, the Company filed a certificate of dissolution with the State of
Delaware on April 29, 2002, at which time the Company's stock was delisted from
the American Stock Exchange. The transfer agent has closed its records to any
further trades. Under the plan of liquidation, the Company will sell all of its
remaining assets, and after paying off its debts and setting aside required
reserves, will distribute the remaining proceeds as one or more "liquidating
dividends". The Company accrued an estimate of all costs and expenses that are
expected to be incurred to complete the plan of liquidation. Such expenses and
accruals are reflected in the June 30, 2002 financial statement, and reduced the
amounts available for distribution under the plan of liquidation. The current
estimates of the total distribution under the plan range from $2.70 to $3.00 per
share.
9
On June 28, 2002, after setting aside the aforementioned reserves and
accruals, the Company declared a liquidating dividend of $2.70 per share, which
was paid to shareholders of record as of April 29, 2002, the date on which the
company's Stock Transfer Books were closed. Future distributions, if any, will
be dependent upon the resolution of ongoing litigation, claims and contingent
liabilities.
Item 2. Management's Discussion and Analysis of Financial Condition and
- -------------------------------------------------------------------------------
Results of Operations
- ---------------------
RESULTS OF OPERATIONS
TransFinancial operated in financial services until April 1, 2002, the
effective date for the sale of the financial services businesses. The company
discontinued its transportation operations in 2000.
Financial Services
- ------------------
For the six months of 2002, UPAC reported operating income of $1,123,000
on operating revenue of $4.1 million, as compared to operating income of
$1,081,000 on operating revenue of $7.5 million for the comparable period of
2001. The changes in operating revenue and operating income in 2002 were
primarily the result of greater amounts financed, offset by the sale of the
financial services businesses in April 2002 (see Note 6 to the Financial
Statements). A hardening in the insurance premium market has resulted in
significant increases in insurance premiums being financed.
Other
- -----
TransFinancial's effective income tax provision rate for the second
quarter of 2002 was 15.96%, as compared to 3.0% for the comparable period of
2001. In the second quarter of 2002, the Company's income tax benefit provision
was $177,000 on a pre-tax loss of $920,000. The effective income tax rates for
each period were a lower percentage than statutory rates due to the impact of
reduction in tax cushions and net operating loss carry-forwards, partially
offset by non-deductible amortization of intangibles and valuation allowances
provided against net deferred tax assets.
Forward-Looking Statement
- -------------------------
The Company believes certain statements contained in this Quarterly Report
on Form 10-Q 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-Q. These
statements can often be identified by the use in such statements of
forward-looking terminology, such as "believes," "expects," "may," "will,"
"should," "could," "intends," "plans," "estimates," or "anticipates," or the
negative thereof, or comparable terminology. Certain of such statements
contained herein are marked by an asterisk ("*") or otherwise specifically
identified herein. 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.
10
Other Matters
- -------------
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.
With respect to statements in Part II - Item 1 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.
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's businesses in
the future. Forward-looking information disseminated publicly by the Company
following the date of this Report may be subject to additional factors hereafter
published by the Company.
FINANCIAL CONDITION
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". The shareholders approved the plan of liquidation at
the Company's annual shareholder meeting on January 22, 2002.
The sale of the financial services operations was consummated 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. In accordance with the plan of liquidation as approved by the
shareholders, the Company filed a certificate of dissolution with the State of
Delaware on April 29, 2002, at which time the Company's stock was delisted from
the American Stock Exchange. The transfer agent has closed its records to any
further trades. Under the plan of liquidation, the Company will sell all of its
remaining assets, and after paying off its debts and setting aside required
reserves, will distribute the remaining proceeds as one or more "liquidating
dividends". The Company accrued an estimate of all costs and expenses that are
expected to be incurred to complete the plan of liquidation. Such expenses and
accruals are reflected in the June 30, 2002 financial statement, and reduced the
amounts available for distribution under the plan of liquidation. The current
estimates of the total distribution under the plan range from $2.70 to $3.00 per
share.
On June 28, 2002, after setting aside the aforementioned reserves and
accruals, the Company declared a liquidating dividend of $2.70 per share,
payable immediately, to shareholders of record as of April 29, 2002, the date
on which the company's Stock Transfer Books were closed. Future distributions,
if any, will be dependent upon the resolution of ongoing litigation, claims and
contingent liabilities.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -- The Company and its directors have been named as
defendants in a lawsuit filed on January 12, 2000 in the Chancery Court in New
Castle County, Delaware. The suit seeks declaratory, injunctive and
11
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 seeks 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 has been filed and the
Company believes this suit will not have a material adverse effect on the
financial condition, liquidity or results of operations of the Company.*
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
filed a motion to dismiss a portion of this complaint, and intends to vigorously
defend. 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 2. Changes in Securities - None
- ------------------------------
Item 3. Defaults Upon Senior Securities - None
- ----------------------------------------
Item 4. Submission of Matters to Vote of Security Holders - None
- ----------------------------------------------------------
Item 5. Other Information - None
- --------------------------
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(b) Reports on Form 8-K -
(1) A current report on Form 8-K, dated and filed May 3, 2002, and as
amended May 7.2002 and June 18,2002, filed to report the closing of the
sale of all of the outstanding shares of its subsidiaries Universal
Premium Acceptance Corporation (UPAC), UPAC of California, Inc., APR
Funding Corporation and American Freight System, Inc., and real estate,
formerly constituting the headquarters of the Company.
(99)* Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the SARBANES-OXLEY ACT OF 2002
* Filed herewith
12
(SIGNATURE)
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TransFinancial Holdings, Inc.
------------------------------------
Registrant
By: /s/ William D. Cox
--------------------------------
William D. Cox, President &
Chief Executive Officer
(Principal executive and
financial officer)
Date August 14, 2002
13
Exhibit 99
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of TransFinancial Holdings, Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, William
D. Cox, chief executive officer and chief financial officer of the Company,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ William D. Cox
-------------------------
William D. Cox
Chief Executive Officer and
Chief Financial Officer
August 14, 2002
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