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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-14474
AMERTRANZ WORLDWIDE HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware 11-3309110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2001 Marcus Avenue
Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 326-9000
Inapplicable
(Former name, former address and former fiscal year if changed
from last report.)
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
At April 30, 1997, the number of shares outstanding of the registrant's common
stock was 5,926,504.
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<PAGE>
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements:
Consolidated Balance Sheets,
March 31, 1997 and June 30, 1996 2
Consolidated Statements of Operations
for the Three Months Ended March 31,
1997 and 1996 3
Consolidated Statement of Operations
for the Nine Months Ended March 31, 1997 4
Consolidated Statement of
Cash Flows for the Nine Months Ended
March 31, 1997 5
Notes to Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 12
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
ASSETS (unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 327,026 $ 377,490
Accounts receivable, net of allowance for doubtful
accounts of $432,902 and $371,322, respectively 10,868,497 7,598,390
Prepaid expenses and other current assets 857,586 557,192
------------ ------------
Total current assets 12,053,109 8,533,072
PROPERTY AND EQUIPMENT, net 1,128,451 829,442
DEBT ISSUANCE COST, net of accumulated amortization
of $3,367,698 and $3,264,232, respectively - 103,466
OTHER ASSETS 334,817 1,373,314
GOODWILL, net of accumulated amortization of
$567,226 and $191,460, respectively 12,189,858 11,900,735
------------ ------------
Total assets $ 25,706,235 $ 22,740,029
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,914,077 $ 7,699,721
Accrued expenses 2,693,277 2,028,274
Note payable to bank 5,766,385 1,641,347
Note payable to affiliate 500,582 3,954,989
Current portion of long-term debt due to affiliate 3,280,607 3,150,000
Current portion of long-term debt 50,000 3,975,000
Lease obligation-current portion 15,979 21,034
------------ ------------
Total current liabilities 19,220,907 22,470,365
LONG-TERM DEBT DUE TO AFFILIATE 4,333,330 8,000,000
LONG TERM DEBT 100,000 -
LEASE OBLIGATION--LONG-TERM 7,810 18,315
------------ ------------
Total liabilities $ 23,662,047 $ 30,488,680
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $10 par value; 2,500,000 shares authorized,
220,000 shares issued and outstanding 2,200,000 -
Common stock, $.01 par value; 15,000,000 shares authorized,
5,926,504 and 3,626,504 shares issued and outstanding,
respectively 59,265 36,265
Paid-in capital 20,065,977 8,567,675
Accumulated deficit (20,269,804) (16,341,341)
Less: Treasury stock, 106,304 shares held at cost (11,250) (11,250)
------------ ------------
Total stockholders' equity (deficit) 2,044,188 (7,748,651)
Total liabilities and stockholders' equity (deficit) $ 25,706,235 $ 22,740,029
============ ============
</TABLE>
The accompanying notes are an integral part of this
consolidated balance sheet.
2
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Three Months Three Months Three Months
Ended Ended Ended
March 31, 1997 March 31, 1996 March 31, 1996
--------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue $18,546,423 13,492,715 15,573,287
Direct costs 13,515,324 10,079,987 11,700,465
----------- ---------- ----------
Gross profit 5,031,099 3,412,728 3,872,822
Selling, general and
administrative expenses 5,673,847 3,636,311 5,072,989
---------- ---------- ----------
Loss from operations (642,748) (223,583) (1,200,167)
Interest (expense) (307,117) (509,846) ( 629,410)
Other income (expense), net (7,170) (3,060) 9,802
---------- ---------- ----------
Loss before income taxes (957,035) (736,489) (1,819,775)
Provision for income taxes 11,817 - -
---------- ---------- ----------
Net loss $ (968,852) $( 736,489) (1,819,775)
========== ========== ==========
Net loss per share $ (0.16) $ (0.22) $ (0.33)
========== ========== ==========
Weighted average shares
outstanding 5,926,504 3,386,504 5,327,703
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
3
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Nine Months
Ended
March 31, 1997
Operating revenue $53,266,287
Direct costs 39,807,691
Gross profit 13,458,596
Selling, general and
administrative expenses 16,361,301
Loss from operations (2,902,705)
Interest (expense) (1,089,254)
Other income, net 75,313
----------
Loss before income taxes (3,916,646)
Provision for income taxes 11,817
----------
Net loss $(3,928,463)
Net loss per share $ (0.67)
===========
Weighted average shares
outstanding $ 5,901,322
===========
The accompanying notes are an integral part of this
consolidated statement.
4
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended
<S> <C> <C>
March 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,928,463)
Bad debt expense 61,580
Depreciation and amortization 636,139
Decrease in debt issuance costs 103,466
Adjustments to reconcile net loss to net cash used in operating activities-
Increase in accounts receivable (2,528,379)
Increase in prepaid expenses and other current assets (396,901)
Decrease in other assets 32,608
Decrease in accounts payable and accrued expenses (612,152)
------------
Net cash used in operating activities (6,632,102)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (395,668)
Acquisition of Consolidated Air Services, net of cash acquired 105,602
Net cash used in investing activities (290,066)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering - net of costs 12,304,696
Issuance of common stock 23,000
Net borrowings from note payable to bank 4,125,038
Repayment of short-term debt (4,444,393)
Repayment of long-term debt (1,666,670)
Repayment of note payable to affiliate (3,454,407)
Payment of lease obligations (15,560)
-----------
Net cash provided by financing activities: 6,871,704
-----------
Net decrease in cash and cash equivalents (50,464)
CASH AND CASH EQUIVALENTS, beginning of the period 377,490
-----------
CASH AND CASH EQUIVALENTS, end of the period $ 327,026
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for:
Interest 268,745
Income taxes 34,759
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
5
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Unaudited)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTMENT AND FINANCING ACTIVITIES:
<TABLE>
<S> <C>
Issuance of preferred stock as partial repayment of long-term debt $2,000,000
Issuance of preferred stock for the acquisition of Consolidated Air Services
("Consolidated") $ 200,000
Issuance of note payable to Consolidated stockholders $ 150,000
On October 10, 1996, Consolidated merged with and into Amertranz Worldwide Holding Corp. and
subsidiaries ("the Company") pursuant to the terms of a merger agreement dated as of September 30, 1996. In
conjunction with the acquisition, the resulting goodwill is as follows:
Net assets assumed $ 121,539
Purchase Price $ 786,428
----------
Goodwill $ 664,889
==========
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
6
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Notes to Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and Regulation S-X related to
interim period financial statements and, therefore, do not include all
information and footnotes required by generally accepted accounting principles.
However, in the opinion of management, all adjustments (consisting of normal
recurring adjustments and accruals) considered necessary for a fair presentation
of the consolidated financial position of the Company and its subsidiaries at
March 31, 1997 and their consolidated results of operations and cash flows for
the quarter ended March 31, 1997 have been included. The results of operations
for the interim periods are not necessarily indicative of the results that may
be expected for the entire year. Reference should be made to the annual
financial statements, including footnotes thereto, included in the Amertranz
Worldwide Holding Corp. (the "Company") Form 10-K for the six months ended June
30, 1996.
Note 2 - Earnings Per Share
Earnings per share is computed using the weighted average number of common
shares outstanding and, where applicable, common equivalent shares issuable upon
exercise of stock options calculated under the treasury stock method. In
February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128
simplifies the standards for computing earnings per share previously found in
APB Opinion No. 15, Earnings Per Share and is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods;
earlier adoption is not permitted. The Company does not expect the adoption of
SFAS No. 128 to have a significant impact to its reported results.
Note 3 - Acquisition
On October 10, 1996, Consolidated Air Services, Inc., an Arizona Corporation
("Consolidated Air") merged with and into the Company pursuant to the terms of
an Agreement of Merger dated as of September 30, 1996.
Summarized below are the unaudited pro forma results of operations of the
Company as though the acquisition of Consolidated Air had occurred at the
beginning of Fiscal 1997. Adjustments have been made for pro forma goodwill
amortization and interest expense related to the acquisition.
Pro forma
Operating revenue $54,809,464
Net Loss $(3,922,781)
Net Loss Per Share $ (0.66)
7
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Accounts Receivable Management and Security Agreement
On January 16, 1997, the Company entered into a three year $10 million Accounts
Receivable Management and Security Agreement ("BNY Facility") with BNY Financial
Corp. ("BNY") which replaced the existing facility with Fidelity Funding of
California, Inc. ("Fidelity"). Under the Agreement, the Company can borrow the
lesser of $10.0 million or 85% of eligible accounts receivable. The Company's
borrowings under the BNY Facility are secured by a first lien on all of the
Company's assets.
Upon the closing of BNY Facility, the Company borrowed $5,534,037. Of the amount
borrowed; $3,570,768 was used to pay down a note payable to TIA, Inc. $1,819,552
was used to retire the note payable to Fidelity and $143,717 was used to provide
the Company with additional working capital.
Note 5 - Pro Forma Consolidated Statement of Operations for the Three Months
Ended March 31, 1996
(a) Basis of Presentation
As a result of a February, 1996 assets exchange ("Combination"),
Amertranz Worldwide, Inc. and Subsidiaries and Caribbean Air Services, Inc.
became wholly-owned subsidiaries of the Company.
The accompanying unaudited pro forma statement of operations reflects
the combined results of The Freight Forwarding Business of TIA, Inc. and
Caribbean Freight System, Inc. and the Amertranz Worldwide, Inc. business as if
the Combination had been effective as of January 1, 1996. The pro forma results
are being presented in order to reflect comparable results for the three month
period. In management's opinion, all material adjustment necessary to reflect
the effects of the Combination have been made.
(b) Earnings Per Share
Earnings per share is computed by dividing earnings after deduction of
preferred stock divided by the weighted average number of common shares
outstanding adjusted for: (i) the required amount of shares of common stock at
the price per share sold by the Company in its June, 1996 initial public
offering, to repay certain indebtedness of the Company; (ii) the required amount
of shares of common stock at the initial public offering price to repay certain
indebtedness incurred in the Combination; and (iii) options and warrants granted
within 12 months of the initial public offering are included in the calculation,
to the extent that they are dilutive, using the treasury stock method.
Note 6 - Subsequent Event
On April 17, 1997, the Company entered into an agreement to acquire a
domestically-based freight forwarder ("Newco"). For calendar year 1996, Newco
had sales in excess of $21 million, and a loss of $154,000. Under the terms of
the merger, the Company will issue 900,000 shares of Common Stock and pay
$400,000 to Newco's stockholders. The closing of the merger is scheduled to
occur prior to the end of May 1997, and is subject to customary due diligence
contingencies.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain forward-looking statements reflecting the
Company's current expectations and there can be no assurances that the Company's
actual future performance will meet such expectations. Forward-looking
statements are preceded by an asterisk (*).
Results of Operations
The Company began its existence as the holding company for the combined
operations of Amertranz Worldwide, Inc. ("Amertranz") and the freight forwarding
business of TIA, Inc. ("TIA") and Caribbean Freight System, Inc. ("CFS") on
February 8, 1996. From and after February 8, 1996, the freight forwarding
business of TIA and CFS was operated through the Company's Caribbean Air
Services subsidiary. Prior to such date, the operations of Amertranz and the
freight forwarding business of TIA and CFS were independent of each other.
Three Months ended March 31, 1997 and 1996 (ACTUAL)
The following discussion relates to the combined actual results of the Company
for the three month periods January 1, 1997 through March 31, 1997 and January
1, 1996 through March 31, 1996. The actual results for the three months ended
March 31, 1996 reflect the results of the freight forwarding business of TIA and
CFS for the period January 1, 1996 through February 7, 1996 and the results of
the Company for the period February 8, 1996 through March 31, 1996.
Operating Revenue. Operating revenue increased to $18.5 million for the
three months ended March 31, 1997 from $13.5 million for the three months ended
March 31, 1996, a 37.5% increase. Of this 37.5% increase, 18.4% was due to the
fact that results for the Company's Amertranz subsidiary were not included for
the period January 1, 1996 through February 7, 1996, and 19.1% of this increase
is due to the Company's increased sales volume.
Cost of Transportation. Cost of transportation was 72.9% of operating
revenue for the three months ended March 31, 1997, and 74.7% of operating
revenue for the three months ended March 31, 1996.
Gross Profit. Gross profit for the three months ended March 31, 1997
was 27.1% of operating revenue, and for the three months ended March 31, 1996
was 25.3% of operating revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses was 30.6% of operating revenue for the three months
ended March 31, 1997, and 27.0% of operating revenue for the three months ended
March 31, 1996. This increase was primarily due to the inclusion of the
Amertranz subsidiary for the full three-month period of January 1, 1997 through
March 31, 1997, while the Amertranz subsidiary was only included for the period
February 8, 1996 through March 31, 1996.
Three Months ended March 31, 1997 and 1996 (PRO FORMA)
The following discussion relates to the combined actual results for the three
month period January 1, 1997 through March 31, 1997 and the combined pro forma
results for the three month period January 1, 1996 through March 31, 1996. The
pro forma statement of operations data reflects the combined results of the
freight forwarding business of TIA and CFS and the Amertranz subsidiary as if
the February, 1996 Combination had been effective as of January 1, 1996. In
Management's opinion, all material adjustments necessary to reflect the effect
of the Combination have been made.
Operating Revenue. Operating revenue increased to $18.5 million for the
three months ended March 31, 1997 from $15.6 million for the three months ended
March 31, 1996, a 19.1% increase. This increase is due to the Company's
increased sales volume.
9
<PAGE>
Cost of Transportation. Cost of transportation was 72.9% of operating
revenue for the three months ended March 31, 1997, and 75.1% of operating
revenue for the three months ended March 31, 1996.
Gross Profit. Gross profit for the three months ended March 31, 1997
was 27.1% of operating revenue, and for the three months ended March 31, 1996
was 24.9% operating revenue. The increase in the gross profit margin is the
result of the Company's efforts to maximize its utilization of transportation
providers.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 30.6% of operating revenue for the three
months ended March 31, 1997, from 32.6% for the comparable period in 1996.
Nine Months Ended March 31, 1997 and 1996 (PRO FORMA)
The following discussion relates to the combined actual results for the nine
month period July 1, 1996 through March 31, 1997 and the combined pro forma
results for the nine month period July 1, 1995 through March 31, 1996. The pro
forma statement of operations data reflects the combined results of the Company
for the period February 8, 1996 through March 31, 1996 and only the operations
of the freight forwarding business of TIA and CFS for the period July 1, 1995
through February 7, 1996.
Nine Months Ended
-----------------
March 31, 1997 March 31, 1996
----------------------------------
(Proforma)
----------
Operating Revenue $53,266,287 $33,970,050
Cost of transportation 39,807,691 25,947,510
Gross profit 13,458,596 8,022,540
Selling, general and
administrative expenses 16,361,301 5,889,408
Net income (loss) before taxes $3,916,646 $ 1,342,190
Operating Revenue. Operating revenue increased $53.3 million for the
nine months ended March 31, 1997 from $34.0 million for the nine months ended
March 31, 1996, a $19.3 million or 56.8% increase. This increase resulted almost
entirely from the Company's acquisition of its Amertranz subsidiary on February
8, 1996.
Cost of Transportation. Cost of transportation was 74.7% of operating
revenue for the nine months ended March 31, 1997, and 76.4% of operating revenue
for the nine months ended March 31, 1996.
Gross Profit. Gross profit for the nine months ended March 31, 1997
was 25.3% of operating revenue, and for the nine months ended March 31, 1996 was
23.6% of operating revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses was 30.7% of operating revenue for the nine months ended
March 31, 1997, and 17.3% of operating revenue for the nine months ended March
31, 1996. This increase is almost entirely attributable to the Company's
acquisition of its Amertranz subsidiary on February 8, 1996 and that
subsidiary's historically higher selling, general and administrative expenses as
a percentage of its sales.
LIQUIDITY AND CAPITAL RESOURCES
On July 3, 1996, the Company completed an initial public offering ("IPO") of
2,300,000 shares of common stock and redeemable common stock purchase warrants
at an initial offering price of $6.00 per share and $0.10 per warrant. The
proceeds from the IPO, net of underwriting discounts and commissions and after
deducting expenses of the IPO, were approximately $12,300,000. Of this amount,
$4,137,000 was used to repay the outstanding principal and interest balance on
earlier bridge financings, $373,000 was used to repay the outstanding principal
and interest balance on earlier interim financing, $2,000,000 was used as
partial payment on a pre-IPO obligation to TIA and CFS ("Exchange Note"), and
approximately $700,000 was used to repay overdue trade payables. The remaining
balance of the proceeds was retained by the Company for working capital
purposes. Additionally, TIA and CFS exchanged $2,000,000 principal amount of the
Exchange Note for 200,000 shares of the Company's Class A Preferred Stock.
On January 16, 1997, the Company entered into a three year $10 million revolving
Accounts Receivable Management and Security Agreement ("BNY Facility") with BNY
Financial Corp. ("BNY") which replaced the existing facility with Fidelity
Funding of California, Inc. On April 16, 1997 the Company and BNY amended
certain of the financial covenants set forth in the BNY Facility. The interest
rate of the BNY Facility is prime plus 2%. Under the Agreement, the Company can
borrow the lesser of $10.0 million or 85% of eligible accounts receivable. The
Company's borrowings under the BNY Facility are secured by a first lien on all
of the Company's assets. As of March 31, 1997, the amount available for
borrowing under the BNY Facility was approximately $648,000.
10
<PAGE>
During the nine months ended March 31, 1997, net cash used by operating
activities was $6.6 million. Cash used in investing activities was $0.3 million,
which primarily consisted of capital expenditures. Cash provided by financing
activities was $6.9 million which primarily consisted of net proceeds from the
issuance of common stock as a result of the IPO and net borrowings under the BNY
Facility.
Capital expenditures for the nine months ended March 31, 1997 were $395,668.
*Cash needs of the Company are currently met by funds generated from operations
and the BNY Facility. The Company believes that its current financial resources
will be sufficient to finance its operations and obligations for the short term.
However, the Company's actual working capital needs for the long and short terms
will depend upon numerous factors, including the Company's operating results,
the cost of increasing the Company's sales and marketing activities, changes in
law which affect doing business in Puerto Rico, and competition, none of which
can be predicted with certainty. To the extent the Company's long term working
capital needs are not met from these sources, additional financing will be
necessary. In conjunction with the acquisition of Newco (see Note 6 to unaudited
financial statements) the Company is seeking to raise additional equity. If the
Company is unable to raise the additional equity, and the availability under the
BNY Facility is not sufficient to provide the needed capital, then the Company
may not be able to close the Newco acquisition.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(Previously filed)
Exhibit No.
10.1 Accounts Receivable Management and Security Agreement, dated
January 16, 1997 by and between BNY Financial Corp., as
Lender, and Amertranz Worldwide, Inc., Caribbean Air Services,
Inc., and Consolidated Air Services, Inc., as Borrowers, and
guaranteed by Amertranz Worldwide Holding Corp. ("BNY Facility
Agreement")
10.2 Letter Amendment to BNY Facility Agreement, dated April 16,
1997 ("BNY Letter Amendment")
10.3 Shadow Warrant entered into in connection with the BNY Letter
Amendment
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 12, 1997 AMERTRANZ WORLDWIDE HOLDING CORP.
Registrant
/s/ Stuart Hettleman
---------------------------------------
President, Chief Executive Officer
C68970b.198
13
