SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission file number 0-20332
MAYFLOWER GROUP, INC.
Indiana 35-1692925
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9998 North Michigan Road, Carmel, Indiana 46032
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (317) 875-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
[Cover page 1 of 2 pages.]
<PAGE>
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant. The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as
of March 7, 1994.
$54,643,216 *
Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES x NO
Indicate the number of shares outstanding of each of the
Registrant's classes of Common Stock, as of March 7, 1994.
12,662,445 shares of Common Stock, no par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement, dated March 31,
1994, are incorporated in Part III (Items 10, 11, 12 and 13)
hereof.
_________________________________
* Aggregate market value of the Registrant's voting stock held
by non-affiliates on March 7, 1994, based on the average bid and
asked price for the Registrant's Common Stock on the Nasdaq
National Market on such date. For purposes of the foregoing
calculation only, required by Form 10-K, the Registrant has
included as shares owned by affiliates shares of Common Stock
beneficially owned by Executive Officers and Directors of the
Registrant and by holders of 10% or more of the Registrant's
Common Stock. Such inclusion shall not be construed as an
admission that any such person is an affiliate for any purpose.
[Cover page 2 of 2 pages.]
<PAGE>
FORM 10-K TABLE OF CONTENTS
Part I Page
Item 1 - Business 3
Item 2 - Properties 11
Item 3 - Legal Proceedings 13
Item 4 - Submission of Matters to a Vote of
Security Holders 13
Part II
Item 5 - Market for the Registrant's Common Equity
and Related Stockholder Matters 14
Item 6 - Selected Financial Data 15
Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 17
Item 8 - Financial Statements and Supplementary
Data 25
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 49
Part III
Item 10 - Directors and Executive Officers of the
Registrant 40
Item 11 - Executive Compensation 49
Item 12 - Security Ownership of Certain
Beneficial Owners and Management 49
Item 13 - Certain Relationships and Related
Transactions 49
Part IV
Item 14 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 50
Signatures 53
<PAGE>
PART I
Item 1. Business.
The business of Mayflower Group, Inc. ("Group") is conducted
entirely through its two operating subsidiaries, Mayflower
Contract Services, Inc. ("Contract Services"), and Mayflower
Transit, Inc. ("Transit") and their respective subsidiaries
(Group, with its respective subsidiaries, being referred to
collectively herein as "the Company or "the Registrant").
Group, formerly known as MG Holdings, Inc., was formed in
1986 for the purpose of acquiring another company whose name was
Mayflower Group, Inc. ("Old Mayflower"), a holding company that
owned 100% of the stock of three operating subsidiaries:
Mayflower Contract Services, Inc. ("Contract Services"),
Mayflower Transit, Inc. ("Transit"), and Mayflower Consumer
Products, Inc. ("Consumer Products"). The acquisition was
completed in December 1986 in a two-step merger: a cash tender
offer for all the 7.9 million outstanding common shares of Old
Mayflower at $31.50 per share followed by a merger of Old
Mayflower into a wholly-owned subsidiary of Group. To finance
the acquisition, Group raised approximately $330 million of debt
financing, including a $110 million senior secured credit
facility and $160 million through private placement of 12 5/8%
Senior Subordinated Debentures ("Debentures") with Warrants to
purchase common stock of Group. The remaining debt financing
consisted of a secured bank loan to a subsidiary of Contract
Services. Group sold Consumer Products in 1987 and eventually
refinanced the senior secured credit facility with secured credit
facilities at Contract Services and Transit.
Group is a holding company that relies upon the cash flow of
its two operating subsidiaries to satisfy its obligations, which
through December 1990 consisted primarily of interest payments on
the Debentures. Following Group's financial reorganization,
discussed below, it had no significant obligations remaining.
From 1987 through 1991, operating results and cash flow generated
by Group and its operating subsidiaries were not sufficient to
pay significant amounts of principal on Group's senior debt or
allow Group to remain in compliance with all financial covenants
contained in the secured credit facilities. As a result,
beginning after December 1990, Contract Services and Transit were
prohibited by terms of the secured credit facilities from making
any further cash dividend payments to Group for the purposes of
servicing interest payments on its Debentures. Consequently, the
two scheduled semiannual interest payments on the Debentures of
$10.1 million each were not made in 1991 resulting in a default
under provisions of the related indenture. After various
restructuring proposals were considered, Group's Debenture
holders, along with Group's common stock and warrant holders,
overwhelmingly approved a Prepackaged Plan of Reorganization
("Plan of Reorganization") in early 1992. The Plan of
Reorganization was confirmed by the court and became effective
March 1992. Under the Plan of Reorganization, the holders of the
Debentures received shares of newly issued common stock equal to
approximately 94% of the common stock of Group. The existing
holders of the common stock and warrants of Group received shares
of newly issued common stock equal to approximately 5% of the
common stock of Group. Two other creditors received
approximately 1% of the common stock as payment in lieu of cash
for services in connection with the Plan of Reorganization. The
Plan of Reorganization did not affect Contract Services or
Transit.
Contract Services
Contract Services was created through the acquisition of
R.W. Harmon & Sons, Inc. by Old Mayflower in October 1984. Since
that date, Contract Services has purchased 17 additional
passenger transportation companies. Contract Services provides
service in 28 states.
Contract Services derives revenues from two distinct lines
of business: student transportation and public transportation.
Student Transportation. Student transportation represents
the largest source of revenue for Contract Services. Revenues
from this segment were approximately $166.4 million in 1993,
which represents approximately 71% of Contract Services' total
revenues. Contract Services renders daily transportation services
to more than 200 school districts in 20 states. While the nature
and scope of services to school districts vary, the most typical
arrangement encompasses a multi-year contract under which
Contract Services operates owned or leased school buses driven by
its own drivers. Services rendered to school districts include
traditional daily home-to-school transportation for students, as
well as after-hours or mid-day activity charters.
Contracts are typically priced in terms of a per-day charge
for base services and a per-hour charter rate for extracurricular
transportation. In most instances, billings are rendered monthly
and remittances are collected immediately.
Public Transportation. The Federal Transit Administration
(formerly the Urban Mass Transit Administration), the Department
of Transportation, and certain legislation have, in recent years,
established additional rules and guidelines governing
participants in federally assisted transportation programs. These
rules encourage private enterprise participation, prohibit
discrimination and require programs to provide transit service to
disabled individuals. Contract Services has capitalized on these
trends by establishing public transportation operations in
several major metropolitan markets beginning in 1988. In 1993,
revenues from this segment were approximately $69.5 million,
which represents approximately 29% of Contract Services' total
revenues.
In this segment, Contract Services provides year-round local
demand-responsive service and fixed route transit service for
transportation authorities in ten major metropolitan markets. As
in its student transportation segment, these contracts are
performed through use of Contract Services-provided and/or
managed vehicles.
Marketing. Traditionally, government agencies and
municipalities have performed the bulk of student and public
transportation services. While there has been a gradual trend
toward privatizing such municipal/ government services, only
about 30% of student transportation is provided by private sector
companies today, and the figure in the public and para transit
industries is considerably lower. In this market, the competitive
challenge for Contract Services lies in persuading its potential
public sector customers to convert to a private vendor.
Contract Services believes that the key to success in both
the student and public transportation markets is demonstrated
expertise. Contract Services competes on the basis of quality,
efficiency and price. In both markets, Contract Services has
determined that a reputation as a safe provider is essential.
Complementing safety, a company must demonstrate sensitivity in
the school market and expertise in the transit market. These
attributes may induce a customer to renew or extend contracts,
foregoing the bid process. Most transit authorities award
contracts via an overall evaluation process that gives weight to
operating qualifications as well as price.
Contract Services has operating or sales management assigned
to certain geographical areas that are responsible for
maintaining contact with active and prospective customers and for
prospecting conversion leads, as well as staying alert to public
bid opportunities in adjacent geographic markets.
Competition. The private, public and student transportation
industries are highly fragmented and regionalized. Contract
Services believes it is the nation's largest provider of
paratransit services and has one of the three largest market
shares of any private contractor in the United States student
transportation industry.
Safety Program. Contract Services operates formal safety
programs centering on employee selection and training, and bus
maintenance. A prospective driver's record is screened for past
criminal and motor vehicle violations through a search of public
records (where such searches are permitted). The prospective
driver must also pass certain tests that screen for traits that
may affect the driver's performance. In addition, Contract
Services has conducted pre-employment and random drug and alcohol
tests since 1989.
Contract Services has a formal training program for its
drivers that involves at least ten hours of one-on-one, behind
the wheel instruction with a certified trainer. The driver also
receives at least ten hours of classroom training, covering
student discipline on the bus, safety rules and other bus
procedures. On an ongoing basis, drivers attend at least nine
hours per year of meetings to view films and review safety
procedures. Field safety supervisors periodically perform road
observations to assure drivers are complying with traffic laws
and safety procedures. Motor vehicle and criminal records are
also monitored on an ongoing basis for violations and accidents.
Environmental Laws. Compliance by Contract Services with
federal, state and local environmental protection laws has not in
the past had, and is not expected to have in the future, a
material effect upon its capital expenditures, liquidity,
earnings or competitive position.
Insurance. Contract Services' insurance program consists of
three principal types of coverage: auto liability (for third
party personal injury or property damage claims), general
liability and workers' compensation. Workers' compensation is
regulated by the individual states in which Contract Services
operates.
With the rising cost of liability insurance in the
mid-1980's, Contract Services moved to an "economic"
self-insurance program in 1987 whereby Contract Services retains
financial exposure for the first $2.0 million of each claim.
Though Contract Services does not purchase insurance coverage for
this exposure, Contract Services purchases a "fronted" policy
from an insurance carrier. The insurance carrier's liability
under this arrangement is to make any claim payments that are not
made by Contract Services. Contract Services indemnifies the
insurance company for any losses and collateralizes this
indemnification obligation with letters of credit.
The amounts of letter of credit collateralization are
calculated based upon expected losses for a given policy year.
Because of the nature of this liability, it takes several years
to settle fully all claims for a given policy period. As of
December 31, 1993, Contract Services had $28.1 million in letters
of credit outstanding under its primary credit facility as
collateral for its insurance related obligations.
Contract Services also maintains excess liability insurance
policies providing in total up to an additional $42 million in
limits.
Fuel Costs. The impact of additional fuel taxes, which
became effective in October 1993 following the enactment of the
1993 Omnibus Budget Reconciliation Act will not be significant as
Contract Services' student transportation system is exempt from
federal fuel taxes. Also Contract Services limits the effects of
significant increases in fuel prices by including fuel escalator
clauses in many of its contracts, a "fuel cap" which provides
price protection against such increases, and arrangements with
certain vendors to fix fuel costs within a predetermined range.
Employees. Contract Services employs approximately 11,000
people, approximately 9,000 of whom are employed as drivers and
driver aides. Most drivers are part-time employees, 60% working
fewer than 1,000 hours per year. Approximately 20% of Contract
Services' drivers belong to collective bargaining units. These
unions represent employees in major metropolitan markets or in
school districts where drivers and mechanics were formerly
employed by the school corporation. Relations with employees are
satisfactory.
Transit
Transit is involved in a number of transportation service
businesses. It provides household goods moving services and
transportation services for goods that require special handling,
such as electronic products and trade show exhibits. It also
provides warehousing services such as storage and distribution,
freight forwarding for domestic and international shipments, and
flatbed hauling of containerized shipments. In these operations,
Transit uses its network of approximately 550 independent agents
in the United States and Canada as well as more than 800
independent owner-operators who are skilled in providing
transportation services. Transit also currently owns and operates
25 moving and storage agencies located throughout the United
States. Other Transit operations sell and finance transportation
equipment to Transit's agents and owner-operators, and sell and
underwrite commercial lines of insurance coverage.
Transit operates through two lines of business: domestic household
goods moving services and special transportation services.
Domestic Household Goods Moving Services
-- Household Goods. The Household Goods division
("Household Goods") is the largest single operating division of
Transit, generating line haul revenue in 1993 equal to 42% of
Transit's total revenue. Total revenue generated by Household
Goods in 1993, including both line haul and accessorial revenue,
accounted for approximately 60% of Transit's total revenue.
-- The Household Goods division serves individual
residential customers, governmental entities and national
accounts. The national account business, which consists of
providing household goods moving services to corporations
transferring their employees, is generally the most
profitable segment of the business, due to the larger
shipment sizes and the accessorial services such as packing
and storage that are normally provided in connection with
these moves. Transit's agent/owner-operator system is used
to transport household goods shipments. See "Agent/ Owner-
Operator System."
-- Moving and Storage Division ("M&S"). This division
consists of 25 agencies owned and operated by Transit. These
agents function and provide the same services as the independent
agents included in the Transit agent/ owner-operator system. See
"Agent/ Owner-Operator System."
Special Transportation Services
-- Electronic and Trade Show ("E&TS"). This division,
which generated line haul revenue in 1993 equal to approximately
19% of Transit's total revenue, is engaged primarily in the
transportation of electronic products and trade show exhibits for
corporate customers. These items typically require special
handling and other services. The E&TS division began commercial
operations in the early 1970's and has experienced significant
growth since then. Operating revenues have increased from $71.9
million in 1991 to $92.7 million in 1993. Transit's agent/owner-
operator system is used to transport E&TS shipments.
-- International ("International"). This division
operates four business segments: commercialhousehold goods, its
largest business segment; a motor van/ sea van operation that
provides trailer service between the continental United States
and Alaska or Hawaii; international commodities and tradeshows;
and a consolidating service for household goods being shipped to
foreign locations. While Transit has provided international
services for over 25 years, it has seen its most significant
growth in the past few years. In 1993, this division generated
$29.7 million in revenues, or 6.7% of Transit's total revenue.
-- Other Transportation Operations ("Other"). Several
smaller subsidiaries and divisions of Transit engage in sales of
products and services to serve the needs of Transit's owner-
operators and agents, including: (i) sales of tractors, trailers
and other equipment, and the administration of the financing of
such equipment by independent lending institutions for Transit
owner-operators and agents; (ii) the operation of a full service
road equipment maintenance facility to service vehicles for
agents, owner-operators and nonaffiliated customers as well as
Transit's own fleet; (iii) the operation of a full service
insurance agency and captive insurance company that sell and
underwrite property, casualty and other insurance coverages,
primarily to agents and owner-operators; and (iv) sales of moving
supplies, equipment and uniforms to agents and owner-operators.
Revenues and Expenses. Transit derives its revenues
primarily from three sources. Line haul revenues consist of
revenues obtained from transporting goods. These revenues are
generally based upon the weight of the shipment, distance
traveled, type of goods transported and points of origin and
destination. The Household Goods and E&TS divisions generate
substantially all of Transit's line haul revenues. Accessorial
revenues are fees received for other services such as packing,
unpacking, storage and other related services. The majority of
accessorial revenues are related to household goods line haul
activities. The balance of Transit's revenues are generated by
the M&S, International and Other divisions.
Transit's expenses consist primarily of commissions paid to
agents and owner-operators for their services. Sales and origin
commissions are paid to agents for obtaining orders and providing
support services at point of origin. Hauler commissions are paid
primarily to agents and owner-operators for hauling the goods
from the point of origin to their destination. The total of these
line haul related expenses is historically between 82% and 83% of
line haul revenues. Additional operating expenses not related to
the services of the agent and owner-operator systems are also
incurred in connection with Transit's line haul activities and
the activities of other divisions within Transit. Overhead
expenses incurred by Transit include overhead costs directly
related to Transit operations.
Customers. The Household Goods market is made up of three
basic customer groups: individual residential customers, national
account customers and various agencies of the United States
Government. Individual residential customers arrange and pay for
their own moves and are required to pay for shipping services
upon delivery. National account customers are generally corporate
customers, or their representatives, which are billed for moves
they arrange for employees. United States Government moves are
arranged by various departments of the United States Government,
including the Military Traffic Management Command, which
coordinates the movement of household goods for military
personnel of all branches of the service.
Most individual shippers choose a mover from Yellow Pages
advertising and discuss their move, services and prices with a
local agent. National account business is generally solicited by
agent sales personnel and, to a lesser extent, by sales personnel
employed by Transit. United States Government business is
generally awarded on a shared basis among qualified carriers
meeting the lowest rate for the particular installation.
The E&TS business is solicited by agents and, to a lesser
extent, by the employees of Transit. This business is formed
almost entirely by national account customers, which include
major computer and other high technology companies, hospitals and
trade show exhibitors.
Transit provides marketing support for its agents through
field sales representatives, advertising, incentive programs and
promotional materials and services.
Agent/ Owner-Operator System. Transit has approximately 550
agents in the United States and Canada, of which 25 are owned by
Transit, with the remainder being independent business entities.
Agents operate full service moving and storage businesses in
their geographic areas. They solicit business, pack, unpack and
store goods and provide labor to assist haulers in loading and
unloading goods. Agents also provide tractor/ trailer units and
drivers for the transportation of household goods and E&TS
products.
In a typical interstate move of household goods or E&TS
products, the agent at the point of origin provides packing and
preparation services. From its Indianapolis headquarters, Transit
arranges and coordinates the transportation of the goods, which
about half of the time are hauled by one of Transit's agents with
the balance by independent owner-operators. The agent at the
destination of the shipment provides unpacking and other support
services.
In addition to arranging for and coordinating the interstate
transportation of goods, pursuant to orders booked by its agents,
Transit provides national advertising and other marketing
support, administers the settlement of damage claims, provides
certain data processing services to agents and collects and
distributes the revenues among Transit, its agents and its owner-
operators.
All United States agents enter agreements with Transit that
generally provide that the agent will represent Transit
exclusively. Agents are compensated according to commission
schedules for services rendered. Agents receive substantially all
the revenue from the packing, unpacking and storage services, a
portion of the line haul revenue for booking and origination
services and a majority of the line haul revenue if the agent
provides the equipment and driver for hauling the goods. Some
agents have their own interstate operating authority (which is
generally limited to states surrounding their locations).
Transit's operations outside the United States and Canada
are conducted through approximately 125 independent
representatives whose arrangements with Transit permit them to
represent other carriers.
For the year ended December 31, 1993, orders booked by
agents owned by Transit accounted for approximately 11% of
Transit's revenues. No other agent or group of agents under
common control accounted for as much as 5% of such revenues.
Approximately 30% of Transit's revenues were generated by the 20
largest agents or group of agents under common control, excluding
the agents owned by Transit.
Approximately 35% of Transit's agents have been with Transit
for 25 years or more; approximately 50% have been agents of
Transit for 15 years or more.
Transit does not employ drivers except for local, intrastate
and, during the peak season, interstate hauling services in
agencies owned by Transit. Transit typically uses approximately
800 independent owner-operators to haul and, generally with the
assistance of local agents, to load and unload shipments. During
the peak summer season, however, Transit may use up to 1,200
owner-operators. Each owner-operator is engaged pursuant to an
agreement with Transit that requires the owner-operator to
furnish a tractor and to pay maintenance, insurance, fuel and
other expenses incurred in hauling goods. Transit trains the
owner-operators and, for the majority of owner-operators,
provides a trailer. Owner-operators in the Household Goods
division are generally compensated by Transit through a base
commission which has traditionally averaged 56% of the line haul
revenues. While the majority of owner-operators in the E&TS
division are also compensated through a base commission that has
averaged 56% of line haul revenues, an increasing portion of
these owner-operators are being compensated on a mileage basis.
As discussed above, Transit's independent owner-operators
and independent agent drivers agree to pay for fuel costs
incurred in providing their services. Higher fuel costs hurt the
profitability of Transit's independent owner-operators, and
result in higher costs for Transit associated with driver
turnover. The impact of the additional taxes on fuel prices,
which became effective in October 1993 following the enactment of
the 1993 Omnibus Budget Reconciliation Act, is not expected to be
significant to Transit. Further, Transit does not expect changes
in fuel prices will materially affect its financial condition or
its results of operations in the foreseeable future.
Employees. Transit employs approximately 1,400 full time
employees, approximately 500 of whom are salaried employees and
the remainder of whom are hourly employees. Transit has not
experienced any material strikes or work stoppages during the
past five years and believes that its relations with employees
are satisfactory.
Insurance. Transit's insurance program consists of three
principal types of coverage: auto liability (for third party
personal injury or property damage claims), general liability and
workers' compensation. Auto liability coverage is regulated by
the Interstate Commerce Commission ("ICC") and workers'
compensation is regulated by the individual states in which
Transit operates. In order to comply with ICC regulations,
evidence of insurance must be provided to the ICC.
With the rising cost of liability insurance in the
mid-1980's, Transit moved to an "economic" self-insurance program
in 1987 whereby Transit retains financial exposure for the first
$2.0 million of each claim. Though Transit does not purchase
insurance coverage for this exposure, due to ICC regulations the
ICC must be provided evidence of insurance. This is accomplished
by Transit purchasing a "fronted" policy from an insurance
carrier. The insurance carrier's liability under this arrangement
is to make any claim payments that are not made by Transit.
Transit indemnifies the insurance company for any losses and
collateralizes this indemnification obligation with letters of
credit.
The amounts of letter of credit collateralization are
calculated based upon expected losses for a given policy year.
Because of the nature of this liability, it takes several years
to settle fully all claims for a given policy period. As of
December 31, 1993, Transit had $26.2 million in letters of credit
outstanding under its primary credit facility as collateral for
its insurance related obligations.
Transit management has received approval from the ICC to
self-insure the first $1.0 million of each auto liability claim
effective April 1, 1994, eliminating the need for Transit to
purchase a "fronted" policy from an insurance carrier for these
claims. The Company will benefit by reducing its fronting costs
and its letter of credit requirements in the future, as the ICC
only requires a $1.0 million letter of credit related to this
self-insurance liability.
Transit also maintains excess liability insurance policies
providing in total up to an additional $42 million in limits.
Competition. Transit is in direct competition in the United
States with approximately 2,000 motor common carriers having ICC
authority for the interstate transportation of household goods
and E&TS products. Based upon financial data filed with the ICC,
Transit is the fourth largest mover in the United States in terms
of intercity revenues. According to reports filed with the ICC,
1993 intercity revenues aggregated approximately $2.5 billion for
the 20 largest motor carriers of which Transit accounted for 11.1% and
the six largest carriers, including Transit accounted for 82.0%
of this amount.
Carriers compete on the basis of the number and location of
agents, perceived quality of service, price and carrier name
recognition. Transit's name recognition and its reputation for
quality service, together with Transit's agency network, are
important factors in its competitive position.
As a result of reduced government regulation, increased
price competition, principally in the form of binding estimates
and discounts, has become more significant.
Rates, Pricing and Regulation. Since 1980, a significant
reduction in statutory and administrative restrictions on entry
into surface transportation and the moving industry has increased
competition. Traditionally, in Transit's industry, pricing has
been based upon tariffs approved by the ICC for each class of
goods hauled by an interstate carrier. These tariffs are a
function of the weight of the shipment, the distance the shipment
is moved and accessorial services rendered. Most moves are now
priced below tariffs through individual discount programs filed
by each carrier with the ICC, binding estimates negotiated
between Transit and, primarily, individual residential customers
or on the basis of a contract entered between Transit and a
corporate customer.
Household goods carriers participate in rate bureaus through
which competitors jointly establish and publish tariffs and
rates. Transit is currently a member of the Household Goods
Carriers' Committee of the American Movers Conference, along with
approximately 2,000 other common carriers of household goods,
including the ten largest carriers in the industry. The
Interstate Commerce Act permits certain collective ratemaking
activities through a rate bureau by exempting such ratemaking
from the antitrust laws.
Certain members of Congress have proposed legislation that
could result in complete deregulation of rates and tariff
filings, repeal of antitrust immunity for collective ratemaking,
total elimination of the ICC over a period of time and transfer
of authority over motor carriers of property (as to unfair
competition and trade practice matters) to other governmental
agencies. Although trade association and industry leaders do not
believe that such legislation will be enacted, they have provided
comments to Congress in opposition to the legislation. Transit is
unable to assess the likelihood of passage by Congress of such
legislation.
Environmental Laws. Compliance by Transit with federal,
state and local environmental protection laws has not in the past
had, and is not expected to have in the future, a material effect
upon its capital expenditures, liquidity, earnings or competitive
position.
Operating Authority. Transit operates nationwide as an
interstate common carrier pursuant to a Certificate of Public
Convenience and Necessity granted by the ICC. This Certificate
authorizes Transit to transport various classes of goods and
products. Transit also operates as a contract carrier, pursuant
to contract authority granted by the ICC. Transit is required to
comply with ICC regulations and the failure to do so could
subject it to civil or criminal penalties, the suspension or
revocation of its operating authority or both. The suspension of
operating authority could have a material adverse impact upon
Transit's operations depending primarily upon the duration of the
suspension and the class or classes of goods or products
affected. In addition, the Department of Transportation regulates
the hours of service of Transit's drivers and other safety
aspects of operations. A failure by Transit with these
regulations could subject it to civil or criminal liabilities.
The agencies owned by Transit also hold intrastate operating
authority that subjects them to the jurisdiction of various state
regulatory commissions. Transit believes that a material
suspension or revocation of these certificates of operating
authority would not have a material adverse effect upon Transit's
operations.
Trademarks. Transit has registered trademarks on a number
of variations of the Mayflower name and corporate logo in the
United States and approximately 25 foreign countries. Depending
on the jurisdiction of registration, trademarks are generally
protected 10 to 20 years (if they are in continuous use during
that period) and are renewable. These trademarks are material to
Transit in the marketing of its services because of the name
recognition possessed by Transit in the transportation services
industry.
Executive Officers of the Registrant. The following persons
comprise the Executive Officers of the Registrant. All of the
Executive Officers have been employed by the Registrant or its
subsidiaries in one of the capacities indicated below for more
than five (5) years. Each officer serves a term of one year
expiring at the Annual Meeting of the Board of Directors.
Name Age Position
Michael L. Smith 45 Chairman, President and Chief
Executive Officer
Patrick F. Carr 42 Senior Vice President, Chief
Financial Officer and Treasurer
Robert H. Irvin 42 Senior Vice President, Secretary
and General Counsel
Michael L. Smith: Mr. Smith was originally employed at Old
Mayflower in 1974. He has been a Director of the Registrant
since October 1986, President of the Registrant since April 1989,
Chief Executive Officer of the Registrant since January 1990, and
Chairman of the Board of the Registrant since April 1992. He was
Chief Operating Officer of the Registrant between April 1989 and
January 1990. Mr. Smith was Executive Vice President of the
Registrant from January 1987 to April 1989. He has been Chief
Executive Officer of Transit since June 1989 and a director of
Transit since October 1986. He was President of Transit from
June 1989 to April 1991. He has been Chairman of the Board and
Chief Executive Officer of the subsidiaries of Transit since June
1989. He has been Chairman of the Board and Chief Executive
Officer of Contract Services since January 1987 and has been a
director of Contract Services since October 1986. He was
President of Contract Services and the subsidiaries of Contract
Services from January 1987 through December 1992. Mr. Smith also
serves as a Director of First Indiana Corporation, Somerset
Group, Inc. and Acordia, Inc.
Patrick F. Carr: Mr. Carr has been Senior Vice President
and Chief Financial Officer of the Registrant since January 1987.
He has been President of Transit and its subsidiaries since April
1991 and has been a director of Transit since January 1987.
Between January 1989 and January 1990, Mr. Carr was Executive
Vice President of Transit and Executive Vice President of the
subsidiaries of Transit. From January 1987 to January 1989, he
was the Treasurer of Transit. He has been an officer of Contract
Services since 1987 and was a director of Contract Services from
1987 to 1993.
Robert H. Irvin: Mr. Irvin has been Secretary of the
Registrant since September 1986 and Senior Vice President and
General Counsel since January 1987. He has been a director and
an officer of Transit since 1987. From 1987 to 1993, he was a
director of Contract Services. He has been an officer of
Contract Services since 1987.
Item 2. Properties.
The Company itself owns no property other than the stock of
Contract Services and Transit. All properties are owned by
Contract Services and Transit.
Contract Services Properties
Contract Services is headquartered in Overland Park, Kansas,
a suburb of Kansas City, Missouri. The Company moved to these
premises in December 1987 and occupies approximately 18,000
square feet under a multi-year lease.
Contract Services owns twelve operating terminals and leases
approximately 130 others. Contract Services' strategy is to lease
facilities on terms that approximate the length of the service
contracts at each locale. These properties typically include two
to five acres of parking space with a small office facility for
driver training and dispatch and a two to three bay maintenance
facility. In some instances, Contract Services will secure its
operating terminals from its client and negotiates its occupancy
costs as a part of its service contract.
The average age of Contract Services' fleet is approximately
6 years. The 8,447 vehicles operated by Contract Services are
primarily diesel and gas powered, although some units are propane
powered. The operating fleet includes 1,345 customer owned
vehicles. Nearly all vehicles owned by Contract Services are
encumbered by liens in favor of the Company's lenders, under its
financing agreements.
<TABLE>
<CAPTION>
The following table summarizes the fleet as of December 31, 1993:
Model Year Leased Owned Total
<S> <C> <C> <C>
Pre 1984 0 296 296
1984 0 390 390
1985 0 946 946
1986 42 1,225 1,267
1987 11 324 335
1988 612 199 811
1989 552 108 660
1990 752 148 900
1991 20 573 593
1992 272 116 388
1993 0 491 491
1994 0 25 25
----- ----- -----
Totals 2,261 4,841 7,102
Customer owned 1,345
----- ----- -----
2,261 4,841 8,447
===== ===== =====
Avg. Model Year 1989 1987 1988
</TABLE>
Contract Services' equipment is maintained under a
comprehensive preventive maintenance program emphasizing
avoidance of on-the-road failures while minimizing per mile
maintenance and tire costs. Fleet maintenance standards are
established by a corporate department located in its Overland
Park headquarters facility. This department supervises the
purchasing of equipment and establishes standards for preventive
maintenance in addition to monitoring levels of repair parts
inventories throughout the Contract Services system.
Contract Services has obtained a substantial portion of the
additions to its fleet through operating leases. As of December
31, 1993, Contract Services was a party to operating leases with
eight equipment finance entities. The Company has guaranteed the
performance of Contract Services' obligations under a portion of
these operating leases.
Transit Properties
Transit owns a 190-acre tract northwest of Indianapolis,
Indiana upon which the Company's headquarters building is
located. Located on the same tract is Transit's driver training
facility, a building used for the preparation and maintenance of
trailers, a storage building, and a warehouse and office facility
used by an agent wholly owned by Transit. This entire tract is
mortgaged to Mellon Bank, N.A. ("Mellon") as part of the security
for a $5.0 million loan to Transit.
Transit also owns a total of approximately 182,000 square
feet of office and warehouse space in Indianapolis, Indiana and
Alexandria, Virginia that is used in its local moving and storage
operations. All these properties owned by Transit are also
mortgaged to Mellon. In addition, Transit owns another 40,000
square feet which are not encumbered and leases approximately 1.3
million additional square feet at various other locations.
At December 31, 1993, Transit and its Moving & Storage
subsidiaries owned approximately 1,600 trailers, with an average
age of 11 years, which are used primarily by owner-operators in
hauling goods with the owner-operator's tractor. Transit also
owned approximately 240 tractors, straight trucks and other
vehicles at December 31, 1993. The majority of the tractors and
trailers owned by Transit are subject to a security interest
granted to the Company's lenders under its financing agreements.
Agents also provide equipment for Transit's use under
long-term and short-term contract hauling arrangements.
Approximately 400 of Transit's fleet of tractor-trailer units are
maintained pursuant to long-term contract hauling arrangements,
while approximately 1,700 additional units are available on a
short-term basis, some of which are added to the fleet during the
peak season.
Item 3. Legal Proceedings
Litigation
On October 24, 1989, two alleged shareholders of Old
Mayflower filed suit in the federal district court against
certain directors of Old Mayflower and the Company. The
plaintiffs in this lawsuit are also the plaintiffs in a suit
filed in Indiana state court on October 29, 1986. These
complaints allege that the directors breached their fiduciary
obligations to the shareholders of Old Mayflower by entering into
a leveraged buy-out transaction at a grossly inadequate price.
The suits purport to be class actions on behalf of all the
shareholders. In addition to seeking injunctive relief, the
plaintiffs are asking for compensatory and punitive damages.
The defendants in these suits believe the plaintiffs' claims
to be without merit; however, because of the costs associated
with defending these actions, the Company has joined in an
agreement to settle both lawsuits. The settlement agreement must
be approved by the federal and state courts. If approved, the
maximum amount of the settlement will be approximately $2.1
million in cash and notes. Attorneys for the settlement class
will receive approximately $725,000 in cash for fees and
litigation expenses. The Company's insurance carrier will
contribute $617,000 toward the cash payment with the balance to
be paid by the Company. The remainder of the settlement amount,
not more than approximately $1.4 million, will be paid in the
form of unsecured subordinated notes of the Company to members of
the settlement class that properly complete and submit proofs of
claim. The settlement notes (a) will mature in ten years, (b)
will be unsecured and subordinated to certain indebtedness of
the Company, (c) will pay interest semi-annually, (d) will
require no payment of principal until maturity, and (e) will not
be registered with the Securities and Exchange Commission.
The subsidiaries become involved from time to time in
various actions that are incidental to the ordinary course of
their business, including property damage and personal injury
claims. Based upon information currently available to it, the
Registrant believes that its reserves and insurance coverage with
respect to all such actions are adequate to cover liabilities
reasonably anticipated at the date of this filing. (See Note 4 to
Consolidated Financial Statements.)
The Registrant becomes involved from time to time in actions
arising from the operations of its subsidiaries. The Registrant
routinely seeks to be dismissed from such actions on the grounds
that it is not a proper party defendant.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted during the fourth quarter of 1993
to a vote of security holders of the Registrant, through the
solicitation of proxies or otherwise.
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<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Registrant's Common Stock was registered effective
August 22, 1992, under Section 12 of the Securities Exchange Act
of 1934. The Common Stock of the Registrant was listed on the
Nasdaq National Market on December 1, 1992. Prior to that date
there was no established public trading market for these
securities. As of December 31, 1993, the Registrant had 276
shareholders of record.
The high and low sales prices for the Registrant's Common
Stock during the portion of the fourth calendar quarter of 1992
following the date on which the Registrant's Common Stock began
trading on the Nasdaq National Market were $10.50 and $7.50,
respectively, as reported by Nasdaq.
The high and low sales prices reported by for the
Registrant's Common Stock reported by the Nasdaq National Market
during each calendar quarter of 1993 were as follows:
Quarter High Low
1 12 1/4 9
2 11 1/2 8 1/4
3 13 9 1/2
4 12 1/4 10 3/4
There were 278 holders of record of the Registrant's Common
Stock on March 7, 1994. The high and low sales prices reported
by the Nasdaq National Market on that date were $11 3/4 and $11
1/4.
The Registrant has not paid cash dividends in its two most
recent fiscal years. The senior bank credit agreement entered
into by the Registrant and its operating subsidiaries prohibits
the payment of dividends on its Common Stock. (For a discussion
of the Registrant's credit facilities, see Note 7 to Consolidated
Financial Statements.) Therefore, the Registrant does not
anticipate paying cash dividends on its Common Stock in the
foreseeable future.
[The remainder of this page was intentionally left blank.]
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data
Selected Historical Financial Information
The following table sets forth selected consolidated financial data regarding the Registrant. This
information should be read in conjunction with the discussion contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and with the consolidated financial statements
and notes thereto included in Item 8.
(Dollars in thousands except per share data)
Years ended December 31,
1993 1992 (b) 1991 1990 1989
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues:
Contract Services $235,918 $209,411 $193,442 $186,216 $156,063
Transit (c) 441,575 426,444 405,600 447,769 483,246
-------- -------- -------- -------- --------
Total $677,493 $635,855 $599,042 $633,985 $639,309
======== ======== ======== ======== ========
Operating Profit: (d)
Contract Services $ 7,471 (a) $ 10,840 $ 4,829 $ 10,101 $ 14,283
Transit 5,738 13,208 (58,221) 10,313 17,540
Unallocated Corporate
Overhead (1,089) (1,142) (3,774) (1,521) (887)
-------- -------- -------- -------- --------
12,120 22,906 (57,166) 18,893 30,936
Net interest expense and
purchase fee on receivables sold (6,736) (9,661) (31,306) (31,737) (33,252)
Miscellaneous, net 32 234 (161) 1,290 537
-------- -------- -------- -------- --------
Income (loss) before federal
income taxes and extraordinary
items $ 5,416 $ 13,479 $(88,633) $(11,554) $ (1,779)
======== ======== ======== ======== ========
Income (loss) before ext. items $ 2,435 $ 7,835 $(88,633) $ (9,988) $ (3,525)
Income before ext. items
per share (e) $ 0.19 $ n/a $ n/a $ n/a $ n/a
======== ======== ======== ======== ========
Pro Forma Financial Information:
(unaudited) (e):
Net Income $ n/a $ 8,336 $ 1,465 $ n/a $ n/a
Earnings Per Share $ n/a $ 0.66 $ 0.12 $ n/a $ n/a
======== ======== ======== ======== ========
Balance Sheet Data:
Working capital (deficit) (f) $ 39,197 $ 23,997 $(16,615) $(21,441) $(14,626)
Net property and equipment 114,747 104,449 101,460 85,146 97,173
Total assets (g) 322,677 302,751 298,945 328,424 353,244
Short-term debt (h) 2,276 21,078 37,015 16,125 15,756
Long-term obligations (h) 95,407 79,149 234,529 201,470 212,970
Shareholders' investment
(deficit) (a)(i)(j) $ 82,671 $ 80,771 $(88,910) $ (219) $ 9,887
======== ======== ======== ======== ========
See footnotes which follow.
- ----------------------------------
<FN>
(a) The Company is self-insured for certain risks, and, accordingly, maintains reserves for losses and
premium adjustments which are determined using case basis evaluations and other analyses. Based on a
review by management during the fourth quarter of 1993 of the calculations underlying the reserve for
self-insured claims, the Company has determined that the portion of Contract Services' reserve
attributable to claims incurred prior to 1991 was $4.9 million below an appropriate level. As a
result, the Company recognized $4.9 million in additional self-insured claims expense during 1993.
The annual expense related to the self-insurance program since January 1, 1991, excluding this
adjustment, has been sufficient to provide for anticipated losses, and this adjustment represents a
one-time nonrecurring increase to its reserve for self-insured claims.
(b) See Note 2 to Consolidated Financial Statements for discussion of the Registrant's Plan of
Reorganization which became effective March 24, 1992, and included the exchange of Group's
subordinated debentures for common stock.
(c) Transit's equipment financing subsidiary sells transportation equipment to certain of its owner-
operators and agents. Beginning in 1993, revenues associated with these installment sales is recorded
net of the related cost of goods sold as an operating expense, with the related gain on the sale being
recognized on the installment basis. Revenues for each of the years 1992 through 1989 have been
reclassified to conform with this presentation.
(d) See Note 12 to Consolidated Financial Statements for discussion of the components of operating profit.
(e) See Notes 1B and 3 to Consolidated Financial Statements for discussion of the earnings per share
computation and the pro forma financial information.
(f) The Registrant's working capital balance was negative during 1989 and 1990 because the initial
proceeds of a sale of Transit's receivables in 1988 were used to retire long-term debt. Working
capital remained negative in 1991 after this facility expired due to the accrued interest on the
Debentures, which was subsequently eliminated when the Debentures were exchanged for Common Stock
under the Registrant's Plan of Reorganization in 1992.
(g) See Note 6 to Consolidated Financial Statements for discussion of the Registrant's revaluation of
intangible assets which resulted in a $69.0 million write-down of total assets during 1991.
(h) See Note 7 to Consolidated Financial Statements for a discussion of the Registrant's refinancing of
its debt facilities.
(i) Effective April 1, 1992, the Registrant changed its method of accounting for federal income taxes from
the deferred to the liability method required by FASB Statement No. 109, "Accounting for Income Taxes"
("SFAS 109"). As permitted under the new rules, prior years' financial statements have not been
restated. In accordance with Statement of Position (SOP) 90-7, the cumulative effect of adopting SFAS
109 as of April 1, 1992 was to decrease Shareholder's Investment (deficit) by $8.9 million.
(j) Effective April 1, 1992, the Registrant adopted FASB Statement No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). In accordance with SOP 90-7, the
cumulative effect of the accounting change was recognized as a $3.0 million reduction in shareholders'
investment. In prior years, the Registrant had recognized the expense related to these benefits as
they were paid. As the effect on net income of adopting SFAS 106 was not significant, postretirement
benefit cost for prior periods has not been restated.
/TABLE
<PAGE>
Item 7. Management's Discussion and Analysis
Fiscal Year 1993 compared with fiscal year 1992
Operating revenue for 1993 totaled $677.5 million, an
increase of 6.5% over operating revenues of $635.9 million for
1992. Income before extraordinary items was $2.4 million and
$7.8 million for the years ended December 31, 1993 and December
31, 1992, respectively. Income before extraordinary items in
1993 was reduced by $3.0 million resulting from the unusual
charge increasing Contract Services' reserve for self-insured
claims, as discussed below and in Note 4 to Consolidated
Financial Statements. Additionally, the Registrant recognized a
$549,000 extraordinary loss in 1993 related to the extinguishment
of debt, and a $93.1 million extraordinary gain in 1992 related
to the conversion of its subordinated debt to common stock in
accordance with its Plan of Reorganization (See Note 2 to
Consolidated Financial Statements).
The operating results for 1992 included $1.7 million of
interest expense related to the Registrant's subordinated
debentures, which were converted to common stock through the
Registrant's Plan of Reorganization. Note 3 to Consolidated
Financial Statements presents pro forma financial information
before nonrecurring items, including this charge, and assuming
certain other events which occurred in 1992 had taken place as of
December 31, 1990. On a pro forma basis, income before
extraordinary items decreased from $8.3 million for the year
ended December 31, 1992 to $2.4 million for 1993.
Contract Services
Contract Services' revenues for 1993 were $235.9 million
versus $209.4 million during the comparable period in 1992, an
increase of 12.7%. Public transportation revenues increased
$21.2 million, or 43.8%, to $69.5 million. This growth is
attributable to new customer contracts, primarily paratransit
operations in California and Hawaii, and the acquisition of CTS
Management Company in September 1993. Student transportation
revenues increased $5.3 million, or 3.3%, to $166.4 million,
largely the result of pricing changes.
Contract Services' operating profits increased $1.6 million
to $12.4 million in 1993, excluding a $4.9 million unusual charge
to increase Contract Services' reserve for self-insured claims.
Contract Services increased its reserve for self-insured claims,
having determined that the portion of the reserve attributable to
claims incurred prior to 1991 was below an appropriate level.
(See Note 4 to Consolidated Financial Statements.) Including
this unusual charge, Contract Services' operating profits
decreased to $7.5 million in 1993 compared to $10.8 million in
1992.
Contract Services realized a $1.6 million increase in
operating profits, excluding the unusual charge previously
discussed, largely as a result of realizing additional margin of
$2.7 million from 1993's revenue growth and bus sales profits
increasing $400,000 over the prior year. Also, margin
improvements included decreased insurance costs of $1.6 million
and decreased school revenue equipment depreciation and lease
costs of $300,000. Adversely affecting profits were $800,000 of
costs in resolving an unsuccessful attempt to organize Contract
Services' labor force at a contract site in Pennsylvania, margin
reductions totalling $1.4 million at two metropolitan operations,
one in Pennsylvania and one in Colorado, additional expense
totalling $300,000 resulting from SFAS 106 ("Accounting for
Postretirement Benefits other than Pensions"), and $600,000 of
additional depreciation expense related to the adoption of SFAS
109 as discussed further below.
As a result of the adoption of SFAS 109 ("Accounting For
Income Taxes") in April 1992, Contract Services recognized
additional depreciation expense of $600,000 in 1993. On a pro
forma basis, incorporating this change and the impact of the
shorter lives over which intangible assets are being amortized
since October 1992 as though both changes had occurred prior to
1992 (see Note 3 to Consolidated Financial Statements), Contract
Services' operating profit, excluding the self-insurance
adjustment discussed earlier, increased $2.6 million to $12.4
million, or 27% over the previous year's $9.8 million.
Transit
Operating revenues for Transit for 1993 increased to $441.6
million , or by 3.6% over operating revenues during the same
period in 1992. Line haul revenues, the largest component of
Transit revenues, increased $10.0 million, or 3.8%. Also, the
Moving and Storage division increased revenues by $3.2 million
and Transit's equipment sales and financing subsidiary's revenues
rose $2.2 million versus 1992.
Line haul for the Household Goods division increased 1.5%,
resulting from a 3.2% increase in the average price per shipment,
offset by a 1.7% decline in the number of shipments handled. The
division's 3.2% increase in the average price reflects the higher
price associated with corporate account orders whose weight and
traffic characteristics favorably affect its average price. The
decrease in number of shipments was primarily affected by a
reduction in U.S. government and military orders versus last
year, which had been favorably impacted by the pent-up demand
which developed in 1991 following the Gulf War. Partially
offsetting this decrease in the number of shipments was a 4.2%
increase in the number of shipments to corporate accounts during
1993 versus 1992.
Line haul for the Electronics & Trade Show division
increased 9.3%, resulting from a 7.8% increase in the number of
shipments handled coupled with a 1.5% increase in the average
price per shipment. The increased number of shipments handled
reflects both an increase in the size of Transit's truckload
fleet and the addition to Transit's agency network in 1993 of an
agency which handles a large number of electronic and tradeshow
orders.
Operating profit for the year was $5.7 million, compared to
a $13.2 million profit in the same period in 1992. Operating
profit was unfavorably affected by additional driver costs of
$2.7 million, increased advertising and sales expenses of $1.1
million, reduced profitability in Transit's International and
Moving and Storage divisions totalling $1.4 million, a $1.7
million increase in salaries and benefits costs, and $1.0 million
of additional amortization expense. Additional gross margin from
increased line haul revenue compared to the prior year was offset
by lesser increases in other expenses.
Transit's independent contract drivers have been adversely
impacted by downward price pressures over the past few years, as
well as higher equipment, insurance and fuel costs, resulting in
Transit having incurred higher contract driver turnover. Driver
turnover results in increased recruiting and training expenses,
bad debts and other operating and administrative costs.
Transit incurred increased sales and advertising costs
primarily resulting from new programs initiated in 1993 to
increase line haul revenues, especially in the corporate account
market.
The International division's margin was unfavorably affected
by the slowdown in the European economy causing revenues to
remain constant compared to 1992, coupled with increased general
and administrative costs related to new programs which management
believes will favorably impact future revenues.
The Moving and Storage division's profitability was
unfavorably affected by start-up costs related to two agencies
opened in 1993, increased bad debt expenses and reduced margins
realized on local revenues at certain agencies.
Amortization expense increased in 1993 compared to 1992 by
$1.0 million primarily resulting from the shorter lives used to
amortize intangible assets beginning October 1992. On a pro
forma basis incorporating this change and the adoption of SFAS
109 as though they had occurred prior to 1992 (see Note 3 to
Consolidated Financial Statements), Transit's operating profit
decreased $6.0 million from $11.7 million in 1992 to $5.7 million
in 1993.
Unallocated Corporate Overhead
Unallocated corporate overhead was $1.1 million in both 1993
and 1992.
Net Interest Expense
Net interest expense decreased by $2.9 million from 1992 to
1993. Most significantly, interest on the Registrant's
subordinated debentures (the "Debentures") decreased $1.7 million
as the Debentures and their related claim to interest payments
were converted to common stock under the Registrant's Plan of
Reorganization in 1992. Last year included interest on the
Debentures through January 27, the date the Plan of
Reorganization was filed with the Bankruptcy Court. The
remaining reduction in expense resulted primarily from increased
net interest income realized by Transit's equipment sales and
financing subsidiary and a reduction in average principal
outstanding compared to 1992.
Federal Income Taxes
In August 1993, the Omnibus Budget Reconciliation Act was
enacted which, among other things, resulted in an increase in the
maximum federal income tax rate from 34% to 35%. In accordance
with SFAS 109, the Registrant recorded a one-time charge to its
federal income tax provision of $405,000 during 1993 to reflect
the impact the higher federal tax rate has on its net deferred
federal income tax liability.
At December 31, 1993, the Registrant has net operating loss
carryforwards of $4.8 million for federal income tax purposes and
alternative minimum tax credit carryforwards of $3.2 million.
The net operating loss carryforwards expire in years 2003 and
2006, while the alternative minimum tax credit carryforwards have
an indefinite carryforward period. Because management believes
these carryforwards will be used prior to expiration, no
valuation allowance has been recorded. Transit also has a
capital loss carryforward of $2.6 million which will expire in
1994. Because of the uncertainty of the ability to generate
sufficient capital gains against which to use the capital loss,
this carryforward has been fully provided for in the valuation
allowance. Due to the Registrant's change in ownership resulting
from its Plan of Reorganization (see Note 2 to Consolidated
Financial Statements), the annual aggregate utilization of the
net operating loss carryforward and the capital loss tax
carryforward will be limited to approximately $6.0 million
annually.
Fiscal Year 1992 Compared with Fiscal Year 1991
Operating revenues for 1992 totaled $635.9 million, or an
increase of 6.2% over operating revenues of $599.0 million for
1991. Income before extraordinary gain increased $96.5 million
to $7.8 million for 1992. Additionally, the Registrant
recognized a $93.1 million extraordinary gain on conversion of
its Debentures to Common Stock in 1992 as part of the
Registrant's Plan of Reorganization as described in Note 2 to
Consolidated Financial Statements. The operating results for
1991 included a $69.0 million non-cash charge related to the
revaluation of certain intangible assets and $21.6 million of
interest expense related to the Registrant's Debentures, as
described in Notes 6 and 2 to Consolidated Financial Statements,
respectively. Note 3 to Consolidated Financial Statements
presents pro forma financial information assuming these and
certain other events which occurred in 1991 and 1992 had occurred
as of December 31, 1990. On a pro forma basis, income before
extraordinary gain increased from $1.5 million in 1991 to $8.3
million in 1992.
Contract Services
Revenues for Contract Services for 1992 were $209.4 million
compared to $193.4 million for 1991, an increase of 8.3%.
Nonseasonal public transportation revenues increased $11.4
million, or 32.2%, compared to 1991. Contract Services was
awarded nine new public transportation contracts in 1992 which
contributed $9.8 million in revenues. Student transportation
revenues increased 2.9% from $158.1 million in 1991 to $162.6
million in 1992. Contractual price escalators contributed
approximately 4% of each segment's revenue increase.
Operating profits increased $6.0 million to $10.8 million in
1992. This increase was primarily attributable to a $4.9 million
margin improvement resulting from reduced accident costs,
decreases in driver wage and hiring costs of $2.3 million, a
decrease in fuel cost of $2.1 million and additional operating
profits of approximately $1.6 million resulting from the increase
in revenues discussed above. These favorable variances were
somewhat offset by increases in field administrative salaries and
benefit programs of $2.3 million, increases in miscellaneous
operating expenses of $500,000, a decrease in margin realized on
bus sales of $400,000 and $1.3 million of non-cash charges
resulting from the implementation of SFAS 109 and the reduction
in lives used to amortize excess reorganization value and
intangible assets, as discussed further below.
Transit
Transit's operating revenues for 1992 increased to $426.4
million, or by 5.1% over operating revenues for 1991. Line haul
revenues, the largest component of Transit's revenues, increased
$17.9 million, or 7.2%. The remainder of the revenue increase
was primarily due to an increase in accessorial revenues of $6.2
million, partially offset by a reduction in fuel surcharge
revenues of $2.5 million.
Line haul for Transit's Household Goods division increased
$12.1 million, or 6.8%, resulting from a 6.5% increase in the
number of shipments handled and a .3% increase in the average
price per shipment. The increase in number of shipments was
affected by a significant increase in U.S. military shipments
versus last year (which had been unfavorably impacted by the Gulf
War) and, to lesser extent, an increase in the number of COD
orders.
Line haul for Transit's Electronics & Trade Show division
increased $5.8 million, or 8.1%, resulting from a 6.7% increase
in the number of shipments handled, coupled with a 1.4% increase
in the average price per shipment primarily due to an increase in
trade show business. Average price is affected by order size and
distance, which accounts for a portion of the price increase.
Accessorial revenues, which consist of packing, unpacking,
storage and other services performed in connection with line haul
transportation, increased during the year compared to 1991 due to
the increase in the number of shipments handled.
In 1991, the Registrant collected a fuel surcharge, which
was paid in its entirety to agents and owner-operators to help
offset a sharp increase in the amount they paid for fuel costs
prior to, during and after the Gulf War. This surcharge was
discontinued in late 1991 resulting in an unfavorable revenue
variance in 1992, though it had no impact on operating profit in
either year.
Operating profit for 1992 was $13.2 million, which is an
improvement of $2.4 million compared to 1991, excluding the $69.0
million charge in 1991 related to the revaluation of intangible
assets. This improvement resulted from the following factors:
- -- Additional margin on the accessorial revenue and a reduction
in net cargo claims and casualty insurance costs improved
profits by $3.2 million. 1991 included an unusually high
provision in casualty insurance costs to increase reserves
for prior accidents.
- -- Gross margin on line haul revenue for 1992 decreased by $3.1
million as $3.3 million in additional margin contributed by
the increased line haul was more than offset by an increase
in hauling commissions paid as a percentage of the line haul
revenues, as well as increased advertising costs and driver
recruiting expenses to promote and support the increased
revenues.
Various factors caused this unfavorable commission variance
including: (i) an increase in the number of drivers with
more than one year of service and the number of drivers with
higher performance ratings, both of which cause higher
hauling commission payments to the driver under Transit's
Pay for Performance program; (ii) increased deadhead
expenses paid to Transit's drivers due to traffic
imbalances; (iii) the unfavorable impact on hauling
commissions related to U.S. government orders (the higher
discounts on government orders resulted in a higher
percentage of revenue paid to the hauler as commission);
(iv) an increase in the proportion of Transit's agent
haulers compared to Transit's independent owner-operators
(agent haulers receive a commission which is higher than
independent owner-operators' commissions); and (v) increased
expenses paid to Transit's summer "collegiate" fleet.
- -- Improved profits in the Moving and Storage division of
approximately $500,000 due to increased profit margins and
increased revenues.
- -- Overhead expenses decreased $1.0 million compared to the
same period last year, as reduced bad debt and amortization
expenses were only partially offset by increased salaries
and benefit costs.
- -- Amortization expenses decreased during 1992 compared to 1991
by $800,000 resulting from the revaluation and resulting
decreased amortization of Transit's intangible assets as of
December 31, 1991, net of an increase in amortization
expense related to financing costs, amortization resulting
from adoption of SFAS 109, and the change in amortization
periods for the Registrant's intangible assets and excess
reorganization value effective October 1, 1992, as discussed
further below.
Unallocated Corporate Overhead
Unallocated corporate overhead decreased by $2.6 million for
1992 compared to the previous year. The variance primarily
reflects a decrease in professional fees related to the
Registrant's reorganization of $2.0 million and a decrease of
$900,000 in amortization expense related to the Debentures due to
the conversion of those Debentures to Common Stock in 1992.
These favorable variances were partially offset by an increase in
administrative expenses including insurance premiums and
professional fees.
Interest and Purchase Fee
Total purchase fee and net interest expense decreased by
$21.6 million to $9.7 million. Most significantly, interest on
the Debentures decreased $19.9 million as the Debentures and
their related accrued interest were converted to Common Stock.
In 1992, interest on the Debentures is included only through
January 27, 1992, the date the Plan of Reorganization was filed
with the Bankruptcy Court. Also, lower outstanding debt and
lower interest rates had a favorable effect on net interest
expense.
Federal Income Taxes
Effective April 1, 1992, the Registrant changed its method
of accounting for income taxes from the deferred to the liability
method required by SFAS 109. As permitted under the new rules,
prior years' financial statements have not been restated. The
cumulative effect of adopting SFAS 109 as of April 1, 1992 was to
decrease shareholders' investment by $8.9 million. For the nine
months ended December 31, 1992, application of the new accounting
method decreased pre-tax income and federal income tax expense by
approximately $2.1 million.
Federal income tax expense (credit) is computed using an
annual estimated effective tax rate, adjusted quarterly. For
both 1992 and 1991, an effective rate which differs from the
statutory rate was used in recording federal tax expense. The
difference in rates is primarily the result of the amortization
of nondeductible intangible assets incurred at the time of
Group's formation in 1986, and nondeductibility of amortization
of the excess reorganization value resulting from the Plan of
Reorganization for 1992. With the adoption of SFAS 109 in April
1992, the amortization of intangible assets became deductible for
financial reporting purposes, resulting in an effective rate more
closely approximating the federal statutory rate.
Intangible Assets
Effective October 1, 1992, the Registrant changed the
amortization period for its intangible assets. Intangible assets
are now amortized over periods ranging from five to 35 years.
This change will decrease net income by $1.6 million annually in
future periods.
LIQUIDITY AND CAPITAL RESOURCES
Total cash decreased by $3.4 million from December 31, 1992
to December 31, 1993. Operating activities contributed $25.4
million, which was more than offset by the use of cash in
investing activities of $26.0 million and financing activities of
$2.8 million.
The $25.4 million in cash provided by operations was
primarily due to $26.5 million provided by net income, excluding
items not affecting cash. Cash provided by operations was
reduced by a $1.1 million change in certain working capital
items. Most significantly, cash used for an $11.0 million
increase in accounts receivables and for a $3.7 million increase
in equipment and inventory held for resale was somewhat offset by
cash provided by a $8.1 million increase in accounts payable and
a $7.6 million increase in the reserve for self-insured claims.
Other working capital items, net, represent a $2.1 million use of
cash.
The increase in accounts receivable mostly reflects an
increase in revenues at both Transit and Contract Services
compared to last year. Equipment and inventory held for resale
has grown due to an increase in the number of units held by
Transit's equipment sales and financing subsidiary largely
attributable to the higher level of driver turnover. The
increase in accounts payable largely represents a heightened
focus on cash management by the Registrant's two operating
subsidiaries. The Registrant increased its reserve for self-
insured claims largely due to the $4.9 million increase in
Contract Services' reserve related to claims which occurred prior
to 1991, as discussed earlier.
During 1993, the Registrant used $26.0 million, net, for
investing activities. The Registrant used $30.2 million for the
purchase of property and equipment, primarily the purchase of
school buses by Contract Services and, to a lesser extent,
trailers and other transportation equipment by Transit. The net
increase of $8.9 million in non-current assets and non-current
liabilities, net of non-cash items, resulted from an increase of
$4.2 million in long-term notes receivable used to finance sales
by Transit's equipment sales and financing subsidiary (prior to
these notes receivable being sold, as discussed below) and lesser
increases in deferred debt costs related to the Registrant's
refinancing in the second quarter, as well as deferred start-up
costs and security deposits related to Contract Services' new
customer contracts. The Registrant also used $3.0 million
related to a purchase acquisition by Contract Services. Proceeds
from disposal of property and equipment, less gains included in
net income, totaled $2.1 million.
In December 1993, Transit's equipment sales and financing
subsidiary received $13.9 million in proceeds from the sale of
its long-term notes receivable described above to the same
creditors it had owed notes payable collateralized by those notes
receivable. The proceeds were used to fully repay the amounts
outstanding on the notes payable.
Total debt at December 31, 1993, was $97.7 million compared
to $100.2 million at December 31, 1992, representing a $2.5
million decrease in total debt during 1993. The Registrant
received $80.0 million from a new financing agreement, which was
one of three separate agreements consummated by the Registrant in
May 1993 to refinance previously existing debt. (See Note 7 to
Consolidated Financial Statements for further discussion of these
agreements.) Using the proceeds from the refinancing discussed
above, coupled with cash provided by operations, the Registrant
repaid $81.9 million of outstanding debt, including Transit's and
Contract Services' senior bank debt facilities totalling $52.0
million, Contract Services' short-term borrowing of $9.5 million,
certain of Contract Services' equipment obligations totalling
$17.5 million, and $2.9 million of other debt.
During 1993, Transit prepaid $10.0 million of its $15.0
million mortgage note payable collateralized by certain of
Transit's properties, including its headquarters facility. Also,
as discussed above, Transit used proceeds from its sale of
installment notes receivable to repay certain notes payable
totalling $13.9 million. The Registrant repaid $700,000 of other
debt during 1993.
The Registrant received $23.7 million proceeds from its
equipment financing agreements, used to finance the purchase of
buses by Contract Services and to fund long-term notes receivable
used to finance sales by Transit's equipment sales and financing
subsidiary (prior to the sale of these notes receivable).
At December 31, 1993, the Registrant has committed to
approximately $19.4 million in capital purchases during 1994.
This includes $15.0 million, or 159 units, for school and transit
buses by Contract Services and $4.4 million for 175 trailers by
Transit.
The Registrant believes cash flow from operations combined
with existing financing resources will be adequate to meet its
short-term and long-term cash requirements. At December 31,
1993, the Registrant has a $15.7 million credit capacity
available under its revolving credit facility discussed in Note 7
to Consolidated Financial Statements.
SEASONALITY
Peak business levels for Contract Services occur during the
traditional school months of September through May. For example,
during 1993 approximately 86% of Contract Services'
transportation revenues were generated during these nine months.
At Transit, proportionately more household goods moves occur
during the summer months. During 1993, for example,
approximately 45% of the Household Goods division's revenues were
generated during the months of June through September.
Due to the seasonal impact of revenue being generated by
each of the Registrant's two operating subsidiaries as discussed
above, the Registrant historically realizes higher net income in
the second and fourth quarters than in the first and third
quarters of the year.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Following are the consolidated financial statements of the
Registrant as of December 31, 1992 and 1993, and for each of the
three years in the period ended December 31, 1993, and the
independent auditors' report on the consolidated financial
statements. A list of the report and financial statements
appears in response to Item 14 of this report:
[The remainder of this page was intentionally left blank.]
<PAGE>
REPORT OF COOPERS & LYBRAND, INDEPENDENT ACCOUNTANTS
MAYFLOWER GROUP, INC.
Board of Directors
Mayflower Group, Inc.
We have audited the accompanying consolidated balance sheet
of Mayflower Group, Inc. as of December 31, 1993, and the related
consolidated statements of operations, shareholders' investment
and cash flows for the year then ended. We have also audited the
financial statement schedules listed in Item 14(a) of this Form
10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audit.
The consolidated balance sheet of Mayflower Group, Inc. as of
December 31, 1992, the consolidated statements of operations,
shareholders' investment and cash flows for each of the two years
in the period ended December 31, 1992, and the related financial
statement schedules for such periods were audited by other auditors
whose report, dated February 1, 1993, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. 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
audit provides 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 Mayflower Group, Inc. as of December 31,
1993, and the consolidated results of its operations and its cash
flows for the year then ended, in conformity with generally
accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information
required to be included therein.
/s/ Coopers & Lybrand
Indianapolis, Indiana
March 29, 1994<PAGE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors
Mayflower Group, Inc.
We have audited the accompanying consolidated balance sheet
of Mayflower Group, Inc. as of December 31, 1992, and the related
consolidated statements of operations, shareholders' investment
and cash flows for each of the two years in the period ended
December 31, 1992. Our audits also included the financial statement
schedules listed in the Index at Item 14(a) for the years ended
December 31, 1992 and 1991. These financial statements and schedules
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. 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.
As more fully described in Note 2, the financial statements as
of and for the year ended December 31, 1992 are not comparable with
those of 1991 as a result of the reorganization.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Mayflower Group, Inc. at December 31, 1992,
and the consolidated results of its operations and its cash flows
for each of the two years in the period ended December 31, 1992,
in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the
information set forth therein.
As described in Notes 1, 9 and 10 to the financial
statements effective April 1, 1992 (date of reorganization), the
Company changed its method of accounting for income taxes and
postretirement benefits.
/s/ Ernst & Young
Indianapolis, Indiana
February 1, 1993
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
MAYFLOWER GROUP, INC.
<TABLE>
<CAPTION>
Years Ended December 31
(In thousands except per share data)
1993 1992 1991
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues:
Contract Services $ 235,918 $ 209,411 $ 193,442
Transit 441,575 426,444 405,600
--------- --------- ---------
677,493 635,855 599,042
Operating Expenses: --------- --------- ---------
Contract Services 210,949 186,189 178,022
Transit 365,144 348,658 331,175
General and administrative 84,380 78,102 77,992
--------- --------- ---------
Unusual Charges:
Self-insured claims adjustment (Note 4) 4,900 --- ---
Revaluation of intangible assets (Note 6) --- --- 69,019
--------- --------- ---------
Operating Profit (Loss) 12,120 22,906 (57,166)
Other Income and Expense:
Interest income 2,862 1,995 903
Interest expense (Note 2) (9,598) (11,656) (32,209)
Miscellaneous, net 32 234 (161)
--------- --------- ---------
Income (loss) before federal income
taxes and extraordinary items 5,416 13,479 (88,633)
--------- --------- ---------
Provision for federal income taxes (Note 9):
Current 2,966 3,679 ---
Deferred 15 1,965 ---
--------- --------- ---------
2,981 5,644 ---
--------- --------- ---------
Income (loss) before extraordinary items 2,435 7,835 (88,633)
Extraordinary items (Note 5) (549) 93,141 ---
--------- --------- ---------
Net income (loss) $ 1,886 $ 100,976 $ (88,633)
========= ========= =========
Earnings Per Share (Notes 1B and 3): Pro Forma
Weighted average shares outstanding 12,740 12,646
Earnings Per Share before ext. items $ .19 $ .66
Extraordinary items (.04) ---
Earnings Per Share $ .15 $ .66
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
MAYFLOWER GROUP, INC.
<TABLE>
<CAPTION>
December 31
(Dollars in thousands)
1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Current assets:
Cash (including cash equivalents at market value of
$5,814 in 1993 and $9,141 in 1992) $ 6,093 $ 9,449
Receivables (Note 7):
Trade receivables 74,136 72,041
Accrued unbilled accounts receivable 16,845 16,012
Other 15,814 11,260
Less allowance for possible collection losses (6,174) (6,178)
-------- -------
Total receivables 100,621 93,135
Equipment and inventory held for resale (Note 7) 8,911 5,190
Deferred income taxes (Note 9) 13,230 9,095
Prepaid expenses and deposits 8,147 8,180
-------- -------
Total current assets 137,002 125,049
-------- -------
Property and equipment (Note 7):
Land 2,175 2,155
Buildings and improvements 16,273 15,675
Revenue equipment 117,561 102,020
Other operating equipment and improvements 9,072 6,966
Less accumulated depreciation (30,334) (22,367)
-------- --------
Net property and equipment 114,747 104,449
Intangible assets (less accumulated amortization of
$6,852 in 1993 and $2,706 in 1992) (Note 1C) 53,372 55,085
Other assets 17,556 18,168
-------- --------
$322,677 $302,751
======== ========
/TABLE
<PAGE>
CONSOLIDATED BALANCE SHEETS
MAYFLOWER GROUP, INC.
<TABLE>
<CAPTION>
December 31
(Dollars in thousands)
1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Shareholders' Investment:
Current liabilities:
Current maturities of long-term debt $ 2,276 $ 11,608
Short-term borrowings (Note 7) --- 9,470
Trade accounts payable 39,141 31,112
Accrued expenses and deposits:
Liabilities on unbilled shipments 9,026 8,961
Reserve for self-insured claims (Note 4) 28,940 20,840
Salaries and withholding taxes 6,755 9,582
Other 11,667 9,479
--------- ---------
Total current liabilities 97,805 101,052
--------- ---------
Noncurrent liabilities:
Reserve for self-insured claims, less
current portion (Note 4) 11,210 9,195
Accrued postretirement benefits cost (Note 10) 5,621 4,948
Long-term debt, less current
maturities (Note 7) 95,407 79,149
Deferred income taxes (Note 9) 29,963 27,636
Commitments and contingencies (Note 11)
Shareholders' investment (Note 8):
Common shares; no par value; 30,000,000
authorized; issued and outstanding:
12,662,403 in 1993 and 12,630,344 in 1992 73,865 73,851
Retained earnings 8,806 6,920
--------- ---------
Total shareholders' investment 82,671 80,771
--------- ---------
$ 322,677 $ 302,751
========= =========
See notes to consolidated financial statements.
/TABLE
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
MAYFLOWER GROUP, INC.
<TABLE>
<CAPTION>
Additional Retained
Common Paid In Earnings
(In thousands) Stock Capital (Deficit)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1991 $ 23,346 $ 6,986 $ (30,551)
Net loss
--- --- (88,633)
Repurchase of common stock (58) --- ---
--------- --------- ---------
Balance, December 31, 1991 23,288 6,986 (119,184)
Income before extraordinary gain-
three months ended March 31, 1992 --- --- 915
--------- --------- ---------
Balance, March 31, 1992 23,288 6,986 (118,269)
Reorganization (Note 2):
Retired common stock (23,288) (6,986) 30,274
Extraordinary gain on exchange of
common stock for subordinated
debt --- --- 93,141
Capitalization of Company:
Issuance of new common stock 85,774 --- (5,146)
Cumulative effect of adopting
SFAS 109 (Note 9) (8,897) --- ---
Cumulative effect of adopting
SFAS 106 (Note 10) (3,026) --- ---
--------- --------- ---------
Balance, April 1, 1992 73,851 --- ---
Net income- nine months ended
December 31, 1992 --- --- 6,920
--------- --------- ---------
Balance, December 31, 1992 73,851 --- 6,920
Net income --- --- 1,886
Issuance of restricted shares, net of
unearned compensation (Note 8) 14 --- ---
--------- --------- ---------
Balance, December 31, 1993 $ 73,865 $ --- $ 8,806
See notes to consolidated financial statements.
/TABLE
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MAYFLOWER GROUP, INC.
<TABLE>
<CAPTION>
Years ended December 31
(In thousands)
1993 1992 1991
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash provided by (used in):
Operating activities $ 25,392 $ 34,860 $ (22,459)
Investing activities (26,008) (12,398) (31,489)
Financing activities (2,740) (18,309) 53,831
(3,356) 4,153 (117)
Cash and cash equivalents-beginning of year 9,449 5,296 5,413
Cash and cash equivalents-end of year $ 6,093 $ 9,449 $ 5,296
Operating activities:
Net income (loss) (Note 5) $ 1,886 $100,976 $ (88,633)
Add items not affecting cash:
Extraordinary items 871 (93,141) ---
Revaluation of intangible
assets (Note 6) --- --- 69,019
Depreciation 18,203 17,712 16,589
Amortization and other 5,494 4,573 5,066
Changes in certain working capital items:
Receivables (10,997) (8,200) (3,109)
Equipment and inventory held for resale (3,721) 5,722 539
Prepaid expenses and deposits (1,899) 682 (1,161)
Trade accounts payable 8,029 3,516 29
Reserve for self-insured claims 7,611 (1,426) 2,116
Other accrued expenses and deposits (85) 4,446 22,084
Repurchase of sold receivables --- --- (39,675)
Payments on receivables
purchase facility --- --- (5,323)
Net cash provided by (used in)
operating activities $ 25,392 $ 34,860 $ (22,459)
Investing activities:
Purchases of property and equipment $(30,196) (9,160) $ (27,542)
Purchase acquisitions (2,966) --- ---
Proceeds from disposal of property and
equipment, less gains included in net
income (loss) 2,096 1,837 1,441
Proceeds from sale of notes
receivable (Note 7) 13,913 --- ---
Increase in other noncurrent
assets (liabilities) (8,855) (5,075) (5,388)
Net cash used in investing activities $(26,008) $(12,398) $ (31,489)
Financing activities:
Payment of long-term debt $(96,988) $(29,288) $ (16,659)
Proceeds from long-term debt:
Term loan 80,000 --- 39,675
Equipment financing and other 23,718 12,529 19,853
Net change in revolving
credit agreements (9,470) (1,550) 11,020
Repurchase of common stock --- --- (58)
Net cash provided by (used in)
financing activities $ (2,740) $(18,309) $ 53,831
See notes to consolidated financial statements.
/TABLE
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAYFLOWER GROUP, INC.
Note 1- Summary of Significant Accounting Policies
A. Principles of Consolidation
The accompanying consolidated financial statements include
Mayflower Group, Inc. ("Group") and its subsidiaries (the
"Company"), all of which are wholly owned. The Company owns two
operating subsidiaries: Mayflower Contract Services, Inc.
("Contract Services") and Mayflower Transit, Inc. ("Transit").
All significant intercompany transactions and balances have been
eliminated.
B. Earnings Per Share
Since the historical capital structure of the Company is not
indicative of the Company's capital structure following its Plan
of Reorganization (Note 2), earnings per share is presented in
the statements of operations for the current year and pro forma
earnings per share is shown for the year ended December 31, 1992
only. The computation of earnings per share for the current year
is based upon the weighted average number of shares outstanding
and the dilutive effect of common equivalent shares issued under
the Stock Option and Restricted Stock Plans discussed in Note 8.
See Note 3 for discussion of the pro forma information.
C. Intangible Assets
Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Customer base and agency network (less accumulated
amortization of $1,679 in 1993 and $729 in 1992) $17,804 $18,754
Reorganization value in excess of amounts allocated
to assets (less accumulated amortization of
$1,228 in 1993 and $444 in 1992) (Note 2) 14,285 15,068
Other intangible assets (less accumulated amortization
of $3,945 in 1993 and $1,533 in 1992) 21,283 21,263
------- -------
$53,372 $55,085
</TABLE>
Intangible assets are amortized by the straight-line basis over
periods ranging from 5 to 35 years.
D. Federal Income Taxes
Effective April 1, 1992, the Company adopted Financial
Accounting Standards Board Statement No. 109 "Accounting for
Income Taxes" ("SFAS 109"). SFAS 109 requires a significantly
different approach to the financial accounting and reporting of
income taxes than had been previously used and, in accordance
with SFAS 109, the Company has chosen not to restate prior year
financial statements. Refer to Note 9 for further discussion of
SFAS 109. Prior to April 1, 1992, the Company computed income
taxes in accordance with Accounting Principles Board Opinion No.
11.
E. Post-retirement Benefits Other Than Pensions
Effective April 1, 1992, the Company adopted Financial
Accounting Standards Board Statement No. 106 "Employers'
Accounting for Post-retirement Benefits Other Than Pensions"
("SFAS 106"). SFAS 106 requires the Company to accrue for the
expected cost of Post-retirement benefits during the years an
employee renders service rather than the previous practice of
expensing such costs as incurred. Refer to Note 10 for further
discussion of SFAS 106.
F. Reserve for Self-insured Claims
The Company is self-insured for certain risks and is covered
by insurance policies for other risks. The Company maintains
reserves for losses and premium adjustments using case basis
evaluations and other analyses. Reserve and premium adjustment
estimates are continually reviewed and adjustments are reflected
in current operations. The Company recognizes the noncurrent
nature of the self insured claims reserves by classifying a
portion of these reserves as a noncurrent liability. See Note 4
for discussion of adjustment to self-insured claims reserves
recorded in 1993.
G. Recognition of Operating Revenues
Revenues and related direct expenses for Contract Services,
which is primarily involved in student transportation, are
recognized over the period during which the service is rendered,
which generally corresponds with the traditional nine month
school year.
Transit, which is primarily involved in the shipment of
household goods and electronic and trade show products,
recognizes revenue and associated transportation costs when the
order has been unloaded at the destination. Transit's equipment
financing subsidiary sells transportation equipment to certain of
its owner-operators and agents. Beginning in 1993, revenues
associated with these installment sales are recorded net of the
related cost of goods sold as an operating expense, with the
related gain on the sale being recognized on the installment
basis. Revenues and operating expenses for 1992 and 1991 have
been reclassified to conform with this presentation.
H. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. The carrying amount reported on the balance sheet
for cash approximates fair value.
I. Inventories
Inventories are stated at the lower of cost or market as
determined for each specific unit.
J. Property and Equipment
Property and equipment is stated on a cost basis.
Depreciation is provided primarily by the straight-line method at
annual rates considered adequate to amortize the costs over the
estimated useful lives of the assets. The lives used in
computing depreciation during the periods were:
Building and improvements 3 to 40 years
Revenue equipment 3 to 10 years
Other operating equipment
and improvements 2 to 10 years
The portion of fleet operating buses used in the operations
of Contract Services and classified as property and equipment, is
based upon the Company's requirements for fleet buses to fulfill
existing contract requirements, including an estimate of reserve
buses necessary to ensure continuity of service based on
historical maintenance records and experience. The remaining
buses are classified as equipment and inventory held for resale.
K. Reclassification
Certain amounts within the 1992 and 1991 Consolidated
Financial Statements have been reclassified to conform with the
1993 presentation.
Note 2- Corporate Reorganization
Plan of Reorganization
Group was formed in 1986 for the purpose of acquiring
another company whose name was Mayflower Group, Inc. ("Old
Mayflower"), a holding company that owned 100% of the stock of
three operating subsidiaries: Contract Services, Transit, and
Mayflower Consumer Products, Inc. ("Consumer Products"). The
acquisition was completed in December 1986 in a two-step merger
(the "Merger"): a cash tender offer for all of the 7.9 million
outstanding common shares of Old Mayflower at $31.50 per share
followed by a merger of Old Mayflower into a wholly-owned
subsidiary of Group. To finance the acquisition, Group raised
approximately $330 million of debt financing, including a $110
million senior secured credit facility and $160 million through
private placement of 12 5/8% Senior Subordinated Debentures
("Debentures") with Warrants to purchase common stock of Group.
The remaining debt financing consisted of a secured bank loan to
a subsidiary of Contract Services. Group sold Consumer Products
in 1987 and eventually refinanced the senior secured credit
facility with secured credit facilities at Transit and Contract
Services.
Group is a holding company that relies upon the cash flow of
its two operating subsidiaries to satisfy its obligations, which
through December 1990 consisted primarily of interest payments on
the Debentures. Following Group's financial reorganization,
discussed below, it had no significant obligations remaining.
From 1987 through 1991, operating results and cash flow generated
by Group and its operating subsidiaries were not sufficient to
pay significant amounts of principal on Group's senior debt or
allow Group to remain in compliance with all financial covenants
contained in the secured credit facilities. As a result,
beginning after December 1990, Contract Services and Transit
were prohibited by terms of the secured credit facilities from
making any further cash dividend payments to Group for the
purposes of servicing interest payments on its Debentures.
Consequently, the two scheduled semiannual interest payments on
the Debentures of $10.1 million each were not made in 1991
resulting in a default under the provisions of the related
indenture. After various restructuring proposals were considered
in early 1992, Group's Debenture holders, along with Group's
common stock and warrant holders, overwhelmingly approved a
Prepackaged Plan of Reorganization ("Plan of Reorganization").
The Plan of Reorganization was confirmed by the court and became
effective in March 1992. Under the Plan of Reorganization, the
holders of the Debentures received shares of newly issued common
stock equal to approximately 94% of the common stock of Group.
The existing holders of the common stock and warrants of Group
received shares of newly issued common stock equal to
approximately 5% of the common stock of Group. Two other
creditors received approximately 1% of the common stock as
payment in lieu of cash for services in connection with the Plan
of Reorganization. The Plan did not affect Contract Services or
Transit.
Basis of Presentation
Group emerged from the Plan of Reorganization on March 24,
1992, successfully completing Group's financial reorganization.
Because the results of operations from March 25, 1992 to March
31, 1992 were not significant, the Company has used March 31,
1992 as the effective date of the Reorganization for accounting
purposes. Accordingly, the Consolidated Statements of Operations
and Cash Flows for the year ended December 31, 1992 reflect the
results of operations of the Company prior to reorganization for
the three months ended March 31, 1992 and the operations of the
Company after reorganization for the nine months ended December
31, 1992. The Consolidated Balance Sheet at December 31, 1992
reflects the financial position of the Company subsequent to
reorganization. The Consolidated Statements of Operations and
Cash Flows for the year ended December 31, 1991 reflects the
financial position and results of operations of the Company prior
to reorganization. See discussion of pro forma financial
information contained in Note 3.
Accounting Treatment Using Fresh Start Reporting
The Company accounted for the Reorganization using Fresh
Start Reporting, in accordance with Statement of Position (SOP)
90-7 (Financial Reporting by Entities in Reorganization under the
Bankruptcy Code) issued by the AICPA. Accordingly, all assets
and liabilities were adjusted to reflect their estimated
reorganization value, which approximated Group's book value less
liabilities at the date of reorganization. This resulted in
reorganization value in excess of amounts allocated to assets of
$16.7 million, which is comparable to the amount of goodwill
existing prior to reorganization. The reorganization value of
Group, less liabilities, was determined to be approximately $86
million at March 31, 1992. This value was determined to fall
within an acceptable range developed by considering several
factors and relying upon various valuation methods including
discounted values of estimated future cash flows, earnings
multiples as appropriate in the two industries in which Transit
and Contract Services operate, and other recent financial
transactions. Forecasts used in earnings and cash flow
estimates assumed revenue and cost patterns similar to historical
levels in recent years.
The most significant of the reorganization adjustments
reduced Long-Term Debt by $155.1 million and Accrued Interest by
$23.6 million, and increased Shareholders' Investment by $173.8
million, including the elimination of a retained deficit totaling
$118.3 million prior to the Reorganization. The conversion of
the Debentures to common stock resulted in an extraordinary gain
totaling $93.1 million. In accordance with SOP 90-7, the
Consolidated Statement of Operations for the year ended December
31, 1992 includes $1.7 million of interest expense related to the
Debentures, representing the amount accrued in 1992 and shown as
part of a claim on the petition filed with the court.
Note 3- Pro Forma Financial Information (Unaudited)
During 1992 and 1991, certain events occurred that result in
the Consolidated Financial Statements not being comparable
between the respective fiscal periods. As presented below, the
pro forma net income excludes credits and charges relating to a)
the corporate reorganization in March 1992 as discussed in Note 2
(which resulted in the exchange of common stock for subordinated
debentures significantly increasing the equity and decreasing the
debt of the Company) and b) the write-down of Transit's
intangible assets of $69.0 million in December 1991 as discussed
in Note 6. It also includes a) additional expense relative to the
adoption of SFAS 109 and SFAS 106 (actual adoption date was April
1, 1992), and b) additional expense relative to the adoption of
shorter lives of intangible assets and excess reorganization
value to reflect the prevailing useful lives of similar assets
(actual adoption date was October 1, 1992) as if these events and
their related adjustments had occurred as of December 31, 1990.
The effects of these pro forma adjustments result in the
following pro forma operating profit, net income, and earnings
per share for the years ended December 31, 1992 and 1991:
<TABLE>
Year ended December 31
1992 1991
- -----------------------------------------------------------------
(In thousands except per share data)
<S> <C> <C>
Operating revenues $635,855 $599,042
Operating profit $ 21,066 $ 12,584
Net income $ 8,336 $ 1,465
Weighted average shares outstanding 12,646 12,646
Earnings per share $ 0.66 $ 0.12
</TABLE>
Pro forma earnings per share is based on the number of
shares issued and outstanding as a result of the Plan of
Reorganization.
The pro forma financial information should be read in
conjunction with the related historical financial statements, and
is not necessarily indicative of results of operations that would
have occurred had the events giving rise to the pro forma
adjustments actually taken place earlier.
Note 4 - Self-Insured Claims Adjustment
As discussed in Note 1F, the Company is self-insured for
certain risks and, accordingly, maintains reserves for losses and
premium adjustments which are determined using case basis
evaluations and other analyses. Based on a review by management
during the fourth quarter of 1993 of the calculations underlying
the reserve for self-insured claims, the Company has determined
that the portion of the reserve attributable to claims incurred
by Contract Services prior to 1991 was $4.9 million below an
appropriate level. As a result, the Company recognized $4.9
million, or $3.0 million net of tax, in additional self-insured
claims expense, which had the effect of reducing earnings per
share in 1993 by $.23. Management believes that the annual
expense related to risks incurred under the self-insurance
program since January 1, 1991, excluding this adjustment, has
been sufficient to provide for anticipated losses, and that the
magnitude of this expense is such that this adjustment represents
a one-time nonrecurring increase to its reserve for self-insured
claims.
Note 5- Extraordinary Items
In May 1993, the Company refinanced its primary debt
facilities which were scheduled to mature in 1994 (Note 7). Such
refinancing resulted in the write-off of $549,000 of deferred
debt costs, net of tax, which has been accounted for as an
extraordinary loss.
In 1992, the Company recognized an extraordinary gain
totaling $93.1 million, resulting from the conversion of the
Company's debentures to common stock in conjunction with its Plan
of Reorganization (Note 2).
Note 6- Revaluation of Intangible Assets
The revaluation of intangible assets in 1991 represents a
non-cash charge to operations that does not relate directly to
normal ongoing business activity and, in the opinion of
management, is nonrecurring. In 1986, the Merger (Note 2) was
accounted for as a purchase and, accordingly, the assets and
liabilities were adjusted to their estimated fair values based
upon independent appraisals and business conditions at that time.
During the final analysis and evaluation of various restructuring
proposals, which were completed in 1991, the Company determined
that the recorded value of Transit's goodwill and intangible
assets were stated in excess of current market value.
Accordingly, during 1991, goodwill and intangible assets were
adjusted to reflect a write down of $37.8 million and $31.2
million, respectively.
Note 7- Financing Agreements
Long-term debt consists of the following:
<TABLE>
<CAPTION> December 31
1993 1992
Collateralized Debt: (In thousands)
<S> <C> <C>
Senior secured term loans, interest rates and terms
vary through April 2003, as discussed below,
collateralized by substantially all of the
assets of Contract Services and Transit and
guaranteed by the Company $ 80,000 $ ---
Mortgage note payable of Transit, 11%, interest only
payable in monthly installments through 1997,
collateralized by land and buildings 5,000 14,960
Notes payable of Contract Services, interest at 7.5%,
payable in monthly installments through 1998,
collateralized by certain buses of Contract Services 11,735 ---
Senior secured term loan of Transit, interest at 7.75%,
refinanced in 1993 as discussed below --- 29,200
Senior secured term loans of Contract Services,
interest ranging from 8% to 11%, refinanced in 1993
as discussed below --- 22,301
Notes payable of Contract Services, interest varying
between 10.25% and 11.6%, refinanced in 1993 as
discussed below --- 14,330
Notes payable of Transit, interest varying between
7% and 7.5%, repaid in 1993 as discussed below --- 8,841
Uncollateralized Debt:
Other notes payable, various interest rates, payable
in installments through 2003 948 1,125
-------- --------
97,683 90,757
Less current maturities (2,276) (11,608)
-------- --------
$ 95,407 $ 79,149
======== ========
</TABLE>
Maturities on long-term debt during each of the next five
years ending December 31, are as follows (in thousands):
1994 $ 2,276
1995 2,521
1996 2,521
1997 16,807
1998 15,126
Thereafter 58,432
--------
$ 97,683
========
New Financing Agreements
Effective May 27, 1993, the Company consummated three
separate agreements for refinancing certain of its debt
facilities which were scheduled to expire in 1993 and 1994.
The first agreement was for an $80 million term loan from a
group of lenders, the proceeds of which were used both to
refinance existing obligations to secured lenders of Contract
Services and Transit, and for working capital purposes. The term
loan has two separate facilities. The first facility is for $65
million and has a ten-year maturity with interest only payments
required in the initial three years. Amortization of principal
begins in year four with equal annual installments through April
2003. Interest on this facility is to be paid quarterly, and is
fixed at 9.5% per annum. The second facility is for $15 million
and has a seven-year maturity with repayment of principal
occurring in eight equal quarterly installments during years six
and seven through April 2000. Interest on this facility is to be
paid quarterly, and is computed using LIBOR plus 2.8% per annum,
which was 6.3% at December 31, 1993.
The second financing agreement was for a $25 million loan
facility to be used by Contract Services to finance the
acquisition of new school buses over a period of approximately
two years. At December 31, 1993, $11.7 million was outstanding
under this loan facility. Periodic fundings under this agreement
convert to five-year term notes when the amount outstanding
exceeds $5 million, with no term note maturing later than
September, 1999. The term notes bear interest at the prime rate
plus 1.5% per annum, which was 7.5% at December 31, 1993.
Alternatively, the Company may elect to fix the interest rate at
the time each funding converts to a term note. The notes will be
collateralized by a lien on the purchased school buses.
Through the third agreement, a group of banks provide the
Company with a $70 million revolving credit facility. The
facility, which has a maturity date of June 1995, will be used
for letters of credit and seasonal working capital purposes. At
December 31, 1993, the Company has letters of credit totaling
$54.3 million, and no borrowings were outstanding under its line
of credit. Interest is to be paid monthly, and is computed using
the prime rate plus 1.5% per annum. The facility does not require
compensating balances but does require the payment of a
commitment fee at an annual rate of .375% of the unused portion
of the facility and a fee of 2% per annum of the amount of
letters of credit outstanding.
The first and third financing facilities discussed above are
collateralized by substantially all of the assets of Transit and
Contract Services and guaranteed by the Company.
Effective December 31, 1993, the Company entered into two
new agreements to sell $13.9 million of installment notes
receivable of Transit's equipment sales and financing subsidiary
to the same creditors which had previously financed such notes
receivable. The Company recognized no gain or loss on the sale of
the notes receivable and proceeds were used to fully repay
amounts outstanding under the related notes payable.
Financial Covenants and Restrictions
Under terms of the financing agreements with senior lenders,
the ability of Contract Services and Transit to transfer cash to
Group is limited to required income tax payments and $1.5 million
annually for on-going cash expenses. The financing agreements
also contain various restrictive financial covenants that, among
other things, prohibit cash dividend payments, restrict property
and equipment additions, restrict certain additional
indebtedness, and require the maintenance of certain financial
ratios.
Other
Interest paid during 1993, 1992 and 1991 totaled $8.3
million, $9.9 million, and $9.6 million, respectively.
The carrying value of the Company's borrowings does not
significantly differ from its fair value. The fair value of the
Company's long- term debt is estimated using discounted cash flow
analyses, based on the Company's current incremental borrowing
rates for similar types of borrowing arrangements.
Note 8- Common Stock
Stock Option Plan
In 1992, the Company established two Stock Option Plans
("Option Plans"). The Option Plans provide for the issuance of
530,000 shares of common stock, no par value, to directors of the
Company and officers and key employees of the Company and its
subsidiaries. Options granted under the Option Plans become
exercisable in 33.3% increments on the first, second and third
anniversaries of the date of grant and must be exercised within
ten years from the date of grant. As of December 31, 1993,
336,500 options are outstanding including options to acquire
159,500 shares of common stock at an exercise price of $6.875 per
share and options to acquire 177,000 shares of common stock at an
exercise price of $9.00 per share. In 1993, options to acquire
53,167 shares of the common stock at $6.875 per share became
exercisable. No options have lapsed or were exercised in 1993 or
1992.
Restricted Stock Plan
In 1993, the Company adopted a restricted stock plan whereby
key employees were granted restricted shares of the Company's
stock. Shares were granted in the name of the employee, who has
all rights of a shareholder, subject to certain restrictions or
forfeitures. Restrictions on the grants expire on the third
anniversary of the date of the grant. During 1993, 17,000 shares
were granted. As of December 31, 1993, there were 8,000 shares
available for grant.
The market value of shares granted under the plan has been
recorded as unearned compensation and is presented as a reduction
in the value of common stock. Compensation expense will be
charged to general and administrative expense over the respective
three-year vesting period. Such compensation expense was $14,000
in 1993.
Note 9- Federal Income Taxes
Effective April 1, 1992, the Company changed its method of
accounting for income taxes from the deferred to the liability
method required by SFAS 109. As provided by SFAS 109, financial
statements have not been restated. The cumulative effect of
adopting SFAS 109 as of April 1, 1992 was to decrease
shareholders' investment by $8.9 million. For the nine months
ended December 31, 1992, application of the new accounting method
decreased income before federal income taxes and federal income
tax expense by approximately $2.1 million.
Federal income taxes paid totaled $4.5 million, $4.2
million, and $.4 million in 1993, 1992 and 1991, respectively.
At December 31, 1993, the Company has net operating loss
carryforwards of $4.8 million and alternative minimum tax credit
carryforwards of $3.2 million for federal income tax purposes.
The net operating loss carryforwards expire in years 2003 and
2006, while the alternative minimum tax credit carryforwards have
an indefinite carryforward period. Because management believes
these carryforwards will be used prior to expiration, no
valuation allowance has been recorded. Transit has a capital loss
carryforward of $2.6 million. The capital loss carryforward will
expire in 1994. Because of the uncertainty of the ability to
generate sufficient capital gains against which to utilize the
capital loss, this carryforward has been fully provided for in
the valuation allowance. Due to the Company's change in ownership
resulting from its Plan of Reorganization (Note 2) the annual
aggregate utilization of the net operating loss carryforward and
the capital loss tax carryforward will be limited to
approximately $6.0 million annually.
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for federal income tax purposes. Significant components of the
Company's noncurrent and current deferred taxes as of December
31, 1993 are as follows (in thousands):
<TABLE>
<S> <C>
Net noncurrent deferred tax liabilities:
Excess tax depreciation $ 19,184
Intangible assets 14,643
Fair value of assets in excess of book value 5,340
Tax Credit carryforwards (3,468)
Noncurrent portion of reserve for self-insured claims (3,583)
Noncurrent portion of valuation allowance for deferred tax assets 341
Other, net (2,494)
--------
Total net noncurrent deferred tax liabilities 29,963
--------
Net current deferred tax assets:
Current portion of reserve for self-insured claims 7,881
Current portion of net operating loss carryforwards 1,885
Allowance for possible collection losses 2,379
Current portion of valuation allowance for deferred tax assets (659)
Other, net 1,744
--------
Total net current deferred tax assets 13,230
--------
Net deferred tax liabilities $ 16,733
========
</TABLE>
For 1991, the Company did not provide for any deferred
income taxes on timing differences in the recognition of revenues
and expenses for tax and financial statement purposes, due to the
absence of taxable income after consideration of net operating
loss carryforwards.
For 1993, 1992, and 1991, effective rates that differed from
the U.S. federal statutory rates were used in recording federal
tax expense. The primary reasons for these differences are as
follows. For 1993, the Company recorded additional income tax
expense to reflect the cumulative effect on the net deferred
income tax liability of tax rate increases, as required by SFAS
No. 109, primarily as a result of the enactment in August 1993 of
Omnibus Budget Reconciliation Act. Also in 1993, the Company
recorded additional income tax expense to eliminate a federal
income tax receivable from prior years which was determined to be
unrealizable. In 1993, 1992 and 1991, a difference in rates was
created as a result of the nondeductibility of amortization of
intangible assets. These intangible assets were created at the
time of Group's formation in 1986 and were also generated by the
excess reorganization value resulting from the Plan of
Reorganization for 1992. The following table summarizes the
differences between the statuary federal income tax rate and the
effective tax rate provided in the Consolidated Statements of
Operations.
<TABLE>
<CAPTION>
Years ended December 31
1993 1992 1991
<S> <C> <C> <C>
Statutory rate (credit) 35.0% 34.0% (34.0)%
Increase (decrease) in rate due to:
Amortization of non-deductible acquisition costs 5.2 6.3 3.1
Effect of revaluation of intangible assets --- --- 26.5
Loss not utilized in current year --- --- 3.5
Cumulative effect of tax rate increases 9.8 --- ---
Elimination of prior year federal income
tax receivable 8.2 --- ---
Other, net (3.2) 1.6 0.9
----- ----- ------
55.0% 41.9% ---%
===== ===== ======
</TABLE>
Federal income taxes currently payable are remitted to Group
in the form of dividends from Transit and Contract Services based
upon the separate liability of each segment, but limited to the
consolidated liability. The benefit of consolidation, if any,
upon the current liability is shared ratably between Transit and
Contract Services.
Note 10- Pension Plans and Other Post-retirement Benefits
Pension Plans
Transit sponsors a noncontributory defined benefit pension
plan that covers full-time Transit employees. Benefits are based
on years of service and compensation during the five highest
consecutive years of earnings before retirement. The Company's
policy is to fund actuarially determined amounts adequate to meet
future benefit payment requirements.
At December 31, 1993, plan assets consisted of U.S.
government and corporate bonds, listed stocks, and cash
equivalents.
Net pension cost for the Company's defined benefit pension
plan included the following components:
<TABLE>
<CAPTION>
1993 1992 1991
(In thousands)
<S> <C> <C> <C>
Service cost-benefits earned during the year $ 583 $ 503 $ 608
Interest cost on projected benefit obligation 1,467 1,355 1,363
Actual return on plan assets (1,521) (1,396) (3,107)
Net amortization and deferral (519) (565) 1,237
Lump-sum settlement --- --- 82
------ ------ ------
$ 10 $ (103) $ 183
======= ======= ======
</TABLE>
The funded status and amount recognized in the Consolidated
Balance Sheets at December 31, 1993 and 1992 were as follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation (including
vested benefits of $17,708 in 1993 and
$14,793 in 1992) $(18,150) $(15,154)
Effect of projected future compensation
increases (2,533) (2,159)
-------- --------
Projected benefit obligation for service rendered
through December 31 (20,683) (17,313)
Plan assets at fair value 20,553 19,912
-------- --------
Plan assets in excess of (less than)
projected benefit obligation (130) 2,599
Unrecognized net loss 2,887 208
Unrecognized net assets at December 31 (1,360) (1,632)
Unrecognized prior service cost (reduction) (306) (295)
-------- --------
Prepaid pension cost $ 1,091 $ 880
======== ========
</TABLE>
The discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.5% and 8.5% at
December 31, 1993 and 1992, respectively. The rate of future
compensation increases used was 5% and 6% at December 31, 1993
and 1992, respectively. The weighted average expected long-term
rate of return on plan assets in 1993, 1992, and 1991 was 9.0%.
Contract Services sponsors a defined contribution profit
sharing plan covering substantially all full-time employees.
Contributions to this plan are made by Contract Services based
upon a discretionary contribution formula. Contract Services
expensed $170,000 and $350,000 in connection with this plan in
1993 and 1992, respectively. No amount was expensed in 1991.
Other Postretirement Benefit Plans
Effective April 1, 1992, the Company adopted SFAS 106. In
accordance with SOP 90-7, the cumulative effect of the accounting
change was recognized as a $3.0 million reduction in
shareholders' investment ($.24 per share). In prior years, the
Company had recognized the expense related to these benefits as
they were paid. As the effect on net income of adopting SFAS 106
was not significant, postretirement benefit cost for prior
periods has not been restated.
The Company's contributory defined benefit postretirement
plans make available health and life insurance benefits to the
majority of the Company's retirees and their eligible dependents.
The postretirement plans are contributory, with retiree
contributions adjusted annually, and contain other cost-sharing
features such as deductibles and co-insurance. Eligibility for
these benefits is based upon retirement from the Company as well
as those retirees having met certain age and vesting service
requirements.
The Company provides contributions to the plan as necessary
to fund the plan's current benefits and expenses.
Net postretirement benefit expense for the Company included
the following components for the year ended December 31, 1993 and
the nine months ended December 31, 1992 (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Service cost-benefits earned
during the year $ 190 $ 110
Interest cost on accumulated post-
retirement benefit obligation 437 305
Amortization of Loss 33 ---
Amortization of Prior Service Cost (10) ---
----- -----
Net periodic postretirement benefit cost $ 650 $ 415
===== =====
</TABLE>
The funded status and amounts recognized in the Consolidated
Balance Sheets for the Company's defined benefit postretirement
plans at December 31, 1993 and 1992, were as follows (in
thousands):
<TABLE>
<CAPTION>
Accumulated postretirement benefit obligation: 1993 1992
------- -------
<S> <C> <C>
Retirees $ 4,183 $ 3,773
Fully eligible active plan participants 635 346
Other active plan participants 1,416 829
------- -------
6,234 4,948
Unrecognized net loss (613) ---
Plan assets at fair value --- ---
Accumulated postretirement benefit obligation
in excess of plan assets $ 5,621 $ 4,948
======= =======
</TABLE>
For measurement purposes, the weighted average discount rate
used in determining the accumulated postretirement benefit
obligation was 7.5% in 1993 and 8.5% in 1992. The Company's
health care cost trend rate is 11% for 1994 and is assumed to
gradually decrease to approximately 8% by the year 2000 and
remain approximately at that level thereafter. If these trend
rates were to be increased by one percent each year, the December
31, 1993, accumulated postretirement benefit obligation would
increase by $1.1 million and the aggregate of the service and
interest cost components of 1993 annual expenses would increase
by $166,000.
Note 11- Commitments and Contingencies
During 1993, the Company agreed to a settlement of two class
action lawsuits which had been filed against it in 1986 and 1989
on behalf of the shareholders of Old Mayflower. The complaints
had alleged that the directors of Old Mayflower had breached
their fiduciary obligation by entering into the Merger, discussed
in Note 2. The Company and other defendants in these suits
believe the plaintiffs' claims to be without merit. Because of
the costs associated with defending these actions, however, the
Company agreed to settle the two lawsuits. The settlement is
subject to approval by the courts. The maximum amount of the
settlement will be $1.5 million, net of approximately $600,000
contributed by the Company's insurance carrier. The Company will
pay approximately $100,000 in cash, and the remainder, not to
exceed $1.4 million, in the form of unsecured subordinated notes
which mature in ten years.
Contract Services and Transit become involved from time to
time in various actions that are incidental to the ordinary
course of their businesses, including property damage and
personal injury claims. Management believes that the disposition
of these matters will not have a material adverse effect on the
financial position of the Company.
The Company has guaranteed aggregate rental and certain
residual values under various leasing arrangements entered into
by the Company's subsidiaries. It also has guaranteed the
collection of certain installment notes receivable, which were
sold by Transit's equipment sales and financing subsidiary. The
contingent liability resulting from these guarantees totaled
approximately $44.9 million at December 31, 1993. The Company
has a right to property and equipment which serves as collateral
against these contingent obligations that, the Company believes,
would substantially offset any potential obligation.
The Company's operating subsidiaries lease certain
transportation equipment and warehouse facilities, as well as
data processing and other office equipment. Generally, these
leases require the Company's operating subsidiaries to pay
maintenance and insurance costs. There are no significant
capital leases. Total rent expense was $25.8 million, $23.9
million, and $22.7 million for 1993, 1992, and 1991,
respectively. Future minimum lease payments on noncancellable
operating leases are as follows (in thousands):
1994 $ 22,076
1995 18,562
1996 14,088
1997 5,961
1998 2,074
Thereafter 1,753
----------
$ 64,514
==========
At December 31, 1993, the Company has committed to
approximately $19.4 million in capital purchases during 1994.
This includes $15.0 million, or 159 units, for school and transit
buses by Contract Services and $4.4 million for 175 trailers by
Transit.
<PAGE>
Note 12- Segments of Business
<TABLE>
<CAPTION>
Contract
Services Transit Corporate Consolidated
(In thousands)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Operating revenues $ 235,918 $ 441,575 $ 677,493
========= ========= =========
Operating profit (loss) $ 7,471(Note 4) $ 5,738 $ (1,089) $ 12,120
========= ========= =========
Net interest expense (6,736)
Miscellaneous, net 32
---------
Income before federal income
taxes and extraordinary items 5,416
=========
Depreciation and amortization $ 15,437 $ 8,260 $ --- $ 23,697
========= ========= ========= =========
Capital expenditures $ 22,539 $ 7,657 $ --- $ 30,196
========= ========= ========= =========
Identifiable assets at December 31 $ 159,249 $ 161,369 $ 2 ,059 $ 322,677
========= ========= ========= =========
Year ended December 31, 1992
Operating revenues $ 209,411 $ 426,444 $ 635,855
========= ========= =========
Operating profit (loss) $ 10,840 $ 13,208 $ (1,142) 22,906
========= ========= =========
Net interest expense (9,661)
Miscellaneous, net 234
---------
Income before federal income
taxes and extraordinary items $ 13,479
=========
Depreciation and amortization $ 14,945 $ 7,267 $ 73 $ 22,285
========= ========= ========= =========
Capital expenditures $ 6,295 $ 2,865 $ --- $ 9,160
========= ========= ========= =========
Identifiable assets at December 31 $ 136,551 $ 164,180 $ 2,020 $ 302,751
========= ========= ========= =========
Year ended December 31, 1991
Operating revenues $ 193,442 $ 405,600 $ 599,042
========= ========= =========
Operating profit (loss) (Note 6) $ 4,829 $ (58,221) $ (3,774) $ (57,166)
========= ========= =========
Net interest expense and purchase
fee on receivables sold (31,306)
Miscellaneous, net (161)
---------
Income (loss) before federal income
taxes and extraordinary items $ (88,633)
=========
Depreciation and amortization $ 12,236 $ 8,411 $ 1,008 $ 21,655
========= ========= ========= =========
Capital expenditures $ 26,183 $ 1,359 $ --- $ 27,542
========= ========= ========= =========
Identifiable assets at December 31 $ 139,203 $ 160,903 $ (1,161) $ 298,945
========= ========= ========= =========
</TABLE>
<PAGE>
Contract Services engages in passenger transportation
service businesses, primarily contract public school busing and,
to a lesser extent, municipal transit and paratransit
contracting. Transit primarily operates as a common carrier and a
contract carrier under ICC authority, engaging in the shipment
and storage of household goods, electronic, trade show, and other
commercial products for individual and corporate customers.
Other operations sell and finance transportation equipment to
Transit's agents and owner-operators, and sell and underwrite
commercial lines of insurance coverage.
Operating profit represents operating revenue less operating
expenses. In computing operating profit, interest expense,
purchase fee on receivables sold, gains on the sale of property
and equipment (other than sales of new and used buses) and
federal income taxes have not been included.
Corporate assets primarily include deferred debt costs,
prepaid federal income taxes and cash.
Both Contract Services and Transit operate throughout the
United States with no significant geographic emphasis. No single
customer accounts for 10% or more of the consolidated operating
revenues, and export sales to foreign unaffiliated customers are
immaterial to consolidated operating revenues.
Note 13- Related Party Transactions
Four directors of the Company, prior to its reorganization,
were associated with firms that are shareholders of the Company
and which provided financial services in relation to the Merger
and Plan of Reorganization. The Company incurred fees of
$871,000 during 1991 related to services provided by those firms.
No fees were incurred in 1993 and 1992.
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
(Dollars in thousands except per share data)
December 31 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenues $677,493 $635,855 $599,042 $633,985 $639,309
Net income (loss) Notes 2, 4 and 5) 1,886 100,976 (88,633) (9,988) (1,798)
Total assets 322,677 302,751 298,945 328,424 353,244
Long-term obligations
(Notes 2 and 6) 95,407 79,149 234,529 201,470 212,970
Per share data (Notes 1b and 3):
Earnings Per Share $ .15
Pro forma Earnings Per Share $ .66 $ .12 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Quarterly Financial Data (Unaudited)
(In thousands except per share data)
Quarters ended March 31 June 30 Sept. 30 Dec. 31
- ---------------------------------------------------------------------------------------------
(Note 4)
1993
<S> <C> <C> <C> <C>
Operating revenues $152,971 $168,609 $180,772 $175,141
======== ======== ======== ========
Operating profit $ 3,276 $ 6,617 $ 1,800 $ 427
======== ======== ======== ========
Income before extraordinary loss $ 925 $ 3,348 $ (379) $ (1,459)
======== ======== ======== ========
Net income $ 925 $ 2,799 $ (379) $ (1,459)
======== ======== ======== ========
Earnings per share:
Before extraordinary loss $ .07 $ .26 $ (.03) $ (.11)
Extraordinary loss --- (.04) --- ---
-------- -------- -------- --------
Net income $ .07 $ .22 $ (.03) $ (.11)
======== ======== ======== ========
Weighted avg. shares outstanding 12,708 12,713 12,741 12,761
1992 Pro Forma (Note 3)
Operating revenues $144,975 $155,264 $172,634 $162,982
======== ======== ======== ========
Operating profit $ 4,880 $ 6,383 $ 1,102 $ 8,701
======== ======== ======== ========
Net income (loss) $ 1,604 $ 2,826 $ (347) $ 4,253
======== ======== ======== ========
Earnings (loss) per share $ .13 $ .22 $ (.03) $ .34
======== ======== ======== ========
Weighted avg. shares outstanding 12,646 12,646 12,646 12,646
<FN>
Beginning in the fourth quarter of 1993, operating revenues associated with installment sales of certain
transportation equipment by a subsidiary of Transit have been recorded net of the related cost of goods sold
as an operating expense. The related gain on the sale is being recognized on the installment basis.
Quarterly financial data for 1993 and 1992 have been restated to conform with this presentation. Operating
revenues, compared to those previously reported, have been reduced by $4,956,000, $14,373,000, and
$5,448,000 in the first, second, and third quarters, respectively, of 1993 as a result of this restatement.
Operating revenues have been reduced by $2,245,000, $7,918,000, $4,553,000, and $4,113,000 for the first,
second, third, and fourth quarters, respectively, for 1992.
/TABLE
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Commencing with fiscal year 1993, Coopers & Lybrand replaced
Ernst & Young as the Company's independent public accountant.
This change was made after management and the Audit Committee
reviewed bids for performing such service received from four
public accounting firms, including Ernst & Young. Based on the
review of the competing bids, management and the Audit Committee
believed that Coopers & Lybrand would provide the services
required by the Company at a lower cost. The appointment of
Coopers & Lybrand to examine the financial statements of the
Company for fiscal year 1993 was ratified by the shareholders of
the Company at the Company's 1993 Annual Meeting of Shareholders.
During fiscal years 1993, 1992 and 1991, the audit reports
issued with respect to the Company's financial statements did not
contain an adverse opinion or disclaimer of opinion, or a
qualification as to uncertainty, audit scope, or accounting
principles. During 1992 and 1991, the two fiscal years
immediately preceding the replacement of Ernst & Young as the
Company's independent accountant, there were no disagreements
between the Company and Ernst & Young on any matter of accounting
principles or practices, financial statement, disclosure or
auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Ernst & Young, would have caused it to
make a reference to the subject matter of the disagreement in
connection with its audit report.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Directors
The required information regarding Directors of the
Registrant is contained in the definitive Proxy Statement of the
Registrant, dated March 31, 1994 under the caption "Election of
Directors" and is incorporated herein by reference.
Executive Officers
For information regarding the executive officers of the
Registrant, see Part I, Item 1 of this report.
Compliance with Section 16(a) of the Exchange Act
The required information is contained in the definitive
Proxy Statement of the Registrant, dated March 31, 1994, under
the caption "Section 16(a) Reporting" and is incorporated herein
by reference.
Item 11. Executive Compensation.
This information is contained in the definitive Proxy
Statement of the Registrant, dated March 31, 1994, under the
caption "Management Compensation" and is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
This information is contained in the definitive Proxy
Statement of the Registrant, dated March 31, 1994, under the
caption "Principal Holders of Shares" and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions.
This information is contained in the definitive Proxy
Statement of the Registrant, dated March 31, 1994, under the
caption "Certain Relationships and Related Transactions" and is
incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
Page in
(a)(1) Financial Statements: this Filing
The following financial statements are filed as a part of
this report:
Report of Independent Auditors 25
Consolidated Statements of Operations for the
Years Ended December 31, 1991, 1992 and 1993 26
Consolidated Balance Sheets as of December 31,
1992 and 1993 27
Consolidated Statements of Shareholders'
Investment for the Years Ended
December 31, 1991, 1992 and 1993 29
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1991, 1992 and 1993 30
Notes to Consolidated Financial Statements 31
(a)(2) Financial Statement Schedules:
The following supplemental schedules for 1991, 1992 and 1993
are filed as a part of this report:
Schedule V - Property, Plant and Equipment S-1
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant and
Equipment S-2
Schedule VIII - Valuation and Qualifying Accounts S-3
Schedule IX - Short-Term Borrowings S-4
Schedule X - Supplemental Income Statement
Information S-5
All other schedules for which provision is made in the
applicable accounting regulation of the Commission have been
omitted as the schedules are not required under the related
instructions, or are inapplicable, or the information required
thereby is set forth in the financial statements or the notes
thereto.
(a)(3) Exhibits
The following exhibits are filed as a part of this Annual
Report on Form 10-K, including certain exhibits that were
previously filed as exhibits to reports or filings made pursuant
to the Securities Exchange Act of 1934, as amended, which are
incorporated herein by reference:
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page in
Number Exhibit Filed With this Filing
<S> <C> <C> <C>
2.1 Plan of Reorganization, as supplemented, Form 10 N/A
filed by the Registrant in its Chapter 11
case (Case No. 92-00846-RWV-11) in the
United States Bankruptcy Court for the
Southern District of Indiana, Indianapolis
Division) which was confirmed on March 12,
1992 and became effective on March 24, 1992
3.1 Amended and Restated Articles of Incorporation Form 10 N/A
of the Registrant
3.2 Amended and Restated By-Laws of the Registrant 1993 Form 10-K E-1
4.1 New Shareholders Agreement dated as of March 12, Form 10 N/A
1992 among Michael L. Smith, Morgan Lewis Githens
& Ahn and certain institutional shareholders
4.2 Registration Rights Agreement dated as of March 12, Form 10 N/A
1992 among the Registrant and the Unofficial
Committee of Holders of Debentures of the Registrant
10.01* Employment Agreement dated December 20, 1991 Form 10 N/A
between Michael L. Smith and Contract Services
10.02* Form of Termination Benefits Agreement dated Form 10 N/A
as of December 20, 1991, among either Transit
or Contract Services and Patrick F. Carr,
Robert H. Irvin, Donald K. Sears, Dennis C.
Norman and Kyle E. Martin
10.03 Tax Sharing Agreement dated as of July 31, 1991 Form 10 N/A
among the Registrant, Transit and Contract Services
10.04* Mayflower Group, Inc. 1992 Stock Option Plan 1992 Form 10-K N/A
10.05* Mayflower Group, Inc. 1992 Director Stock 1992 Form 10-K N/A
Option Plan 1992
10.06* Mayflower Group, Inc. 1993 Restricted Stock Plan 1993 Form 10-K E-14
10.07* Mayflower Contract Services, Inc. 1993 Form 10-K E-18
Executive Retirement Plan, as amended
11 Calculation of earnings per share 1993 Form 10-K E-33
21 Subsidiaries of the Registrant 1993 Form 10-K E-34
23 Consent of Coopers & Lybrand 1993 Form 10-K E-35
_____________________________
<FN>
* Represents a contract, plan or arrangement pursuant to which compensation or benefits
are provided to certain Executive Officers or Directors of the Registrant.
</TABLE>
<PAGE>
(b) Reports on Form 8-K:
The Registrant filed no reports on Form 8-K in the fourth
quarter of 1993.
<PAGE>
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.
MAYFLOWER GROUP, INC.
By: /s/ Michael L. Smith
Michael L. Smith, Chairman,
President and Chief
Executive Officer
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 in the capacities indicated this 30th
day of March, 1994.
Signature Title
1. Principal Executive Officer
/s/ Michael L. Smith Chairman, President, Chief
Executive Officer and Director
2. Principal Financial Officer
/s/ Patrick F. Carr Senior Vice President, Chief
Financial Officer and
Treasurer
3. Principal Accounting Officer
/s/ Ronald W. Martin Vice President and Chief
Accounting Officer
4. Non-employee Directors
/s/ Roderick M. Hills Director
/s/ Perry J. Lewis Director
/s/ Lary R. Scott Director
/s/ Sheldon M. Stone Director<PAGE>
<PAGE> S-1
<TABLE>
<CAPTION>
MAYFLOWER GROUP, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
- ---------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at Balance at
Beginning Additions End of
Classification of Period at Cost Retirements Other (A) Period
- ---------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
- ----------------------------
Land $ 2,155 $ 20 $ --- $ --- $ 2,175
Buildings and Improvements 15,675 649 51 --- 16,273
Revenue Equipment 102,020 27,239 2,738 (8,960) 117,561
Other Operating Equipment
and Improvements 6,966 2,288 329 147 9,072
-------- -------- -------- -------- --------
$126,816 $ 30,196 $ 3,118 $ (8,813) $145,081
======== ======== ======== ======== ========
Year Ended December 31, 1992
- ----------------------------
Land $ 2,155 $ --- $ --- $ --- $ 2,155
Buildings and Improvements 23,553 556 84 (8,350) 15,675
Revenue Equipment 128,179 7,400 1,671 (31,888) 102,020
Other Operating Equipment
and Improvements 18,006 1,204 397 (11,847) 6,966
-------- -------- -------- -------- --------
$171,893 $ 9,160 $ 2,152 $(52,085) $126,816
======== ======== ======== ======== ========
Year Ended December 31, 1991
- ----------------------------
Land $ 2,189 $ --- $ 34 $ --- $ 2,155
Buildings and Improvements 23,660 1,103 1,448 238 23,553
Revenue Equipment 105,475 24,964 6,770 4,510 128,179
Other Operating Equipment
and Improvements 16,720 1,475 999 810 18,006
-------- -------- -------- -------- --------
$148,044 $ 27,542 $ 9,251 $ 5,558 $171,893
======== ======== ======== ======== ========
<FN>
(A) Amounts for 1993 represent the write-off of fully depreciated valuation accounts, which had been
established in 1986 at the date of purchase of Old Mayflower in accordance with purchase accounting
requirements (see Note 2 to Consolidated Financial Statements for a discussion of the Merger).
Amounts for 1992 principally represent the elimination of accumulated depreciation against the related
asset balances as the result of a Corporate Reorganization which asset balances were adjusted to
reflect their estimated reorganization value, offset by approximately $10 million adjustments related
to the Registrant's adoption of SFAS 109 (See Note 2 to Consolidated Financial Statements for a
discussion of the Corporate Reorganization and Note 9 to Consolidated Financial Statements for
discussion of the Registrant's adoption of SFAS 109). Amounts for 1991 principally represents
adjustments as the result of retired units the asset valuation accounts established in 1986.
/TABLE
<PAGE>
<PAGE> S-2
<TABLE>
<CAPTION>
MAYFLOWER GROUP, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- ---------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Additions
Balance Charged to Balance at
Beginning Operating the End of
Classification of Period Expenses Retirement Other (A) Period
- ---------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
- ----------------------------
Buildings and Improvements $ 1,142 $ 1,540 $ 21 $ --- $ 2,661
Revenue Equipment 19,662 14,616 1,116 (8,913) 24,249
Other Operating Equipment
and Improvements 1,563 2,047 186 --- 3,424
-------- -------- -------- -------- --------
$ 22,367 $ 18,203 $ 1,323 $ (8,913) $ 30,334
======== ======== ======== ======== ========
Year Ended December 31, 1992
- ----------------------------
Buildings and Improvements $ 8,022 $ 1,531 $ 60 $ (8,351) $ 1,142
Revenue Equipment 50,843 12,510 513 (43,178) 19,662
Other Operating Equipment
and Improvements 11,568 2,134 344 (11,795) 1,563
-------- -------- -------- -------- --------
$ 70,433 $ 16,175 $ 917 $(63,324) $ 22,367
======== ======== ======== ======== ========
Year Ended December 31, 1991
- ----------------------------
Buildings and Improvements $ 6,861 $ 1,566 $ 643 $ 238 $ 8,022
Revenue Equipment 46,586 11,624 6,477 (890) 50,843
Other Operating Equipment
and Improvements 9,451 2,298 931 750 11,568
-------- -------- -------- -------- --------
$ 62,898 $ 15,488 $ 8,051 $ 98 $ 70,433
======== ======== ======== ======== ========
<FN>
(A) Amounts for 1993 represent the write-off of fully depreciated valuation accounts, which had been
established in 1986 at the date of purchase of Old Mayflower in accordance with purchase accounting
requirements (see Note 2 to Consolidated Financial Statements for a discussion of the Merger).
Amounts for 1992 principally represent the elimination of accumulated depreciation against the related
asset balances as the result of a Corporate Reorganization which asset balances were adjusted to
reflect their estimated reorganization value. See Note 2 to Consolidated Financial Statements for a
discussion of the Corporate Reorganization. Amounts for 1991 principally represents adjustments as the
result of retired units to the asset valuation accounts established in 1986.
<PAGE>
<PAGE> S-3
</TABLE>
<TABLE>
<CAPTION>
MAYFLOWER GROUP, INC.
SCHEDULE VIII- VALUATION AND QUALIFYING ACCOUNTS
- ---------------------------------------------------------------------------------------------
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions Deductions
--------- ----------
For Purposes
Balance at Charged to for which Balance at
Beginning Cost and Reserves End of
Description of Period Expenses were created Period
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve for possible
collection losses-
- ---------------------------
Year ended
December 31, 1993 $ 6,178 $ 5,920 ($ 5,924) $ 6,174
======== ======== ======== ========
Year ended
December 31, 1992 $ 5,900 $ 4,552 ($ 4,274) $ 6,178
======== ======== ======== ========
Year ended
December 31, 1991 $ 5,577 $ 5,755 ($ 5,432) $ 5,900
======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE> S-4
<TABLE>
<CAPTION>
MAYFLOWER GROUP, INC.
SCHEDULE IX- SHORT-TERM BORROWINGS
- ---------------------------------------------------------------------------------------------
(In thousands)
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Average Weighted
Weighted Maximum Amount Average
Category of Average Amount Outstanding Interest
Aggregate Balance at Interest Outstanding during the during the
Short-term End of at End of during the Period Period
Borrowings (A) Period Period Period (B) (C)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1993 $ --- --- $ 3,620 $ 1,953 8.0%
======== ======== ======== ======== ========
Year ended December 31,
1992 $ 9,470 8.0% $ 13,436 $ 6,947 8.2%
======== ======== ======== ======== ========
Year ended December 31,
1991 $ 11,020 8.5% $ 19,550 $ 6,030 9.8%
======== ======== ======== ======== ========
<FN>
(A) All short-term borrowings were payable to banks.
(B) The average amount outstanding during the period was computed by dividing the total of daily
outstanding principal balances by 360.
(C) The weighted average interest rate during the period was computed by dividing the actual interest
expense by the average short-term debt outstanding.<PAGE>
<PAGE> S-5
</TABLE>
<TABLE>
<CAPTION>
MAYFLOWER GROUP, INC.
SCHEDULE X- SUPPLEMENTAY INCOME STATEMENT INFORMATION
The amouts of maintenance and repairs included in the Consolidated Statements of Operations are as follows:
Year Ended December 31,
1993 1992 1991
(In thousands)
-----------------------------------------
<S> <C> <C> <C>
Maintenance and Repairs $ 32,565 $ 29,060 $ 27,350
======== ======== ========
<FN>
Taxes other than payroll and income taxes, royalties, and advertising are not presented because they do not
exceed one percent of consolidated revenues. Depreciation and amortization is presented in Note 12 to the
Consolidated Financial Statements.
</TABLE>
<PAGE> E-1 EXHIBIT 3.2
November 3, 1993
AMENDED AND RESTATED
CODE OF BY-LAWS
OF
MAYFLOWER GROUP, INC.
ARTICLE 1
Identification
Section 1.01. Name. The name of the Corporation is
Mayflower Group, Inc. (the "Corporation").
Section 1.02. Place of Keeping Corporate Books and Records.
The books of account, records, documents and papers of the
Corporation shall be kept at any place or places within or
without the State of Indiana as directed by the Board of
Directors. In the absence of a direction, the books of account,
records, documents and papers shall be kept at the principal
office of the Corporation.
Section 1.03. Seal. The Board of Directors of the
Corporation may designate the design and cause the Corporation to
obtain and use a corporate seal, but the failure of the Board to
designate a seal or the absence of the impression of the
corporate seal from any document shall not affect in any way the
validity or effect of such document.
Section 1.04. Fiscal Year. The fiscal year of the
Corporation shall end at such time as the Board of Directors
shall determine. In the event the Board of Directors shall not
make such a determination, the fiscal year of the Corporation
shall be the calendar year.
ARTICLE 2
Capital Stock
Section 2.01. Issue and Consideration for Shares. The
Board of Directors shall cause the Corporation to issue the
shares of the Corporation for such consideration as may be fixed
by such Board pursuant to the provisions of the Articles of
Incorporation.
Section 2.02. Subscriptions for Shares. Subscriptions for
shares of the Corporation shall be paid to the Treasurer at such
time or times, in such installments or calls, and upon such
terms, as shall be determined, from time to time, by the Board of
Directors. Any call made by the Board of Directors for payment
on subscriptions shall be uniform as to all shares of the same
class or to all shares of the same series, as the case may be.
Section 2.03. Consideration for Shares. Subject to the
provisions of the Articles of Incorporation, the Board of
Directors may authorize shares to be issued for consideration
consisting of any tangible or intangible property or benefit to
the Corporation, including cash, promissory notes, services
performed, contracts for services to be performed or other
securities of the Corporation; provided, however, that the part
of the surplus of the Corporation which is transferred to stated
capital upon the issuance of shares as a share dividend shall be
deemed to be the consideration for the issuance of such shares.
When payment of the consideration for which a share was
authorized to be issued shall have been received by the
Corporation, or when surplus shall have been transferred to
stated capital upon the issuance of a share dividend, such share
shall be declared and taken to be fully paid and not liable to
any further call or assessment, and the holder thereof shall not
be liable for any further payments thereon. The judgment of the
Board of Directors as to the value of such property, labor, or
services received as consideration or the value placed by the
Board of Directors upon the corporate assets in the event of a
share dividend, shall be conclusive.
Section 2.04. Certificates for Shares. Each Shareholder of
the Corporation shall be entitled to a certificate, signed
(either originally or by facsimile) by the Chief Executive
Officer or the President and the Secretary or an Assistant
Secretary of the Corporation stating the name of the registered
holder, the number of shares represented thereby and the kind and
class thereof, the par value of each share or a statement that
such shares have no par value, and whether such shares have been
fully paid and are nonassessable. Such certificates shall be in
such form as the Board of Directors may, from time to time, by
resolution approve.
Section 2.05. Transfer of Shares. The shares of the
Corporation shall be transferable on the books of the Corporation
only upon surrender of the certificate or certificates
representing the same, provided:
(a) Endorsement. The certificate is properly endorsed
by the registered holder or his duly authorized attorney;
(b) Witnessing. The endorsement or endorsements are
witnessed by one witness unless this requirement is waived
in writing upon the form of endorsement by the Chief
Executive Officer, the President, a Vice President, or the
Secretary of the Corporation;
(c) Adverse Claims. The Corporation has no notice of
any adverse claims or has discharged any duty to inquire
into any such claims;
(d) Collection of Taxes. All applicable laws relating
to the collection of taxes have been complied with; and
(e) Other Requirements. All other reasonable
requirements imposed by the Corporation, not inconsistent
with the relevant Indiana statutes, have been satisfied.
Section 2.06. Transfer Agent. The Board of Directors shall
have the power to appoint one or more Transfer Agents and
Registrars for the transfer and registration of certificates of
shares of any class, and may require that certificates shall be
countersigned and registered by one or more of such Transfer
Agents and Registrars.
Section 2.07. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate for shares of the
Corporation in the place of any certificate theretofore issued
where the holder of record of the certificate:
(a) Claim. Makes proof in affidavit form that the
certificate has been lost, destroyed, or wrongfully taken;
(b) Timely Request. Requests the issue of a new
certificate before the Corporation has notice that the
previously issued certificate has been acquired by a
purchaser for value in good faith and without notice of any
adverse claim;
(c) Bond. Gives a bond with open penalty in such
form, and with such surety or sureties as the Corporation
may direct, to indemnify the Corporation against any claim
that may be made on account of the alleged loss,
destruction, or theft of the certificate; and
(d) Other Requirements. Satisfies all other
reasonable requirements imposed by the Corporation.
When a certificate has been lost, apparently destroyed, or
wrongfully taken and the holder of record fails to notify the
Corporation within a reasonable time after he has notice of it,
and the Corporation registers a transfer of the shares
represented by this certificate before receiving such
notification, the holder of record is precluded from making any
claim against the Corporation for the transfer or for a new
certificate.
ARTICLE 3
Meetings of Shareholders
Section 3.01. Place of Meetings. All meetings of
Shareholders of the Corporation shall be held at such place,
within or without the State of Indiana, as may be specified in
the respective notices or waivers of notice thereof, or proxies
to represent Shareholders thereat.
Section 3.02. Annual Meeting. Unless otherwise determined
by the Board of Directors, the annual meeting of the Shareholders
for the election of Directors, and for the transaction of such
other business as may properly come before the meeting, shall be
on the last Wednesday of each April, following the close of each
fiscal year, if such day is not a legal holiday, and if a legal
holiday, then on the first following business day that is not a
legal holiday. Failure to hold the annual meeting at the
designated time shall not work any forfeiture or a dissolution of
the Corporation.
Section 3.03. Special Meetings. Special meetings of the
Shareholders may be called by the Chairman of the Board, by the
President, by a majority of the Board of Directors, or by
Shareholders holding of record not less than one-fourth of all
the shares outstanding and entitled by the Articles of
Incorporation to vote on the business proposed to be transacted
thereat; and shall be called by the President at the request in
writing of a majority of the Board of Directors or Shareholders
holding of record a majority of all the shares outstanding and
entitled by the Articles of Incorporation to vote on the business
for which the meeting is being called. Any request for a special
meeting of the Shareholders shall state the purpose or purposes
of the proposed meeting.
Section 3.04. Record Date. The Board of Directors may fix
a record date, not exceeding seventy (70) nor less than ten (10)
days prior to the date of any meeting of Shareholders, for the
purpose of determining the Shareholders entitled to notice of and
to vote at such meeting. In the absence of action by the Board
of Directors fixing a record date as herein provided, the record
date shall be the fourteenth day prior to the date of the
meeting.
Section 3.05. Notice of Meetings. A written or printed
notice, stating the place, day and hour of the meeting, and, in
the case of a special meeting or when otherwise required by any
provision of the Indiana Business Corporation Law, the Articles
of Incorporation or this Code of By-Laws, the purpose or purposes
for which the meeting is called, shall be delivered or mailed by
the Secretary or by the persons calling the meeting to each
holder of shares of the Corporation at the time entitled to vote,
at such address as appears on the records of the Corporation, at
least ten (10) days but not more than sixty (60) days before the
date of the meeting. Each Shareholder who has in the manner
provided below waived notice of a Shareholders' meeting, or who
personally attends a Shareholders' meeting, or is represented
thereat by a proxy duly authorized to appear by an instrument of
proxy complying with the requirements hereinafter set forth,
shall be conclusively presumed to have been given due notice of
such meeting.
Section 3.06. Waiver of Notice. Notice of any such meeting
may be waived in writing by any Shareholder if the waiver sets
forth in reasonable detail the purpose or purposes for which the
meeting is called, and the time and place thereof. Attendance at
any meeting, in person or by proxy, shall constitute a waiver of
notice of such meeting.
Section 3.07. Proxies. Shareholders entitled to vote at
any meeting of Shareholders may vote either in person or by proxy
executed in writing by the Shareholder or a duly authorized
attorney-in-fact of such Shareholder. For purposes of this
section, a proxy granted by telegram, telex, facsimile
transmission or other document transmitted electronically for or
by a Shareholder shall be deemed "executed in writing by the
Shareholder." The general proxy of a fiduciary shall be given
the same effect as the general proxy of any other Shareholder.
No proxy shall be valid after eleven (11) months from the date of
its execution unless a longer time is expressly provided therein.
Section 3.08. Quorum. At any meeting of Shareholders, the
holders of a majority of the outstanding shares that may be voted
on the business to be transacted at such meeting, represented
thereat in person or by proxy, shall constitute a quorum, and a
plurality of the votes cast shall be necessary for the
transaction of any business by the meeting, unless a greater
number is required by law, the Articles of Incorporation or this
Code of By-Laws. In case a quorum shall not be present at any
meeting, the holders of record of a majority of such shares so
present in person or by proxy may adjourn the meeting from time
to time, without notice, other than announcement at the meeting,
until a quorum shall be present or represented. At any such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally scheduled.
Section 3.09. Voting Lists. The Secretary of the
Corporation shall make, at least five (5) days before each
meeting of Shareholders, a complete list of the Shareholders
entitled by the Articles of Incorporation to vote at such
meeting, arranged in alphabetical order, with the address and
number of shares so entitled to vote held by each, which list
shall be on file at the principal office of the Corporation and
subject to inspection by any Shareholder at any time during usual
business hours for a period of five (5) days prior to such
meeting. Such list shall be produced and kept open at the time
and place of the meeting and subject to the inspection of any
Shareholder during the holding of such meeting. The original
stock register or transfer book, or a duplicate thereof kept in
the State of Indiana, shall be the only evidence as to who are
the Shareholders entitled to examine such list, or the stock
ledger or transfer book, or to vote at any meeting of the
Shareholders.
Section 3.10. Addresses of Shareholders. The address of
any Shareholder appearing upon the records of the Corporation
shall be deemed to be (a) the latest address of such Shareholder
appearing on the records maintained by the Transfer Agent or
Registrar, as the case may be, for the class of shares held by
such Shareholder, if the Corporation has a Transfer Agent or
Registrar for such class of shares and the Board of Directors has
provided in the resolutions appointing the Transfer Agent or
Registrar that notices of change of address shall be given to one
of such agents by Shareholders of such class; or (b) the latest
address of such Shareholder appearing on the records maintained
by the Secretary for the class of shares held by such
Shareholder, if the Corporation has no Transfer Agent or
Registrar for such class of shares or if it has a Transfer Agent
or Registrar for such class of shares but the resolutions
appointing the Transfer Agent or Registrar do not provide that
notice of change of address shall be given to one of such agents
by Shareholders of such class of shares.
Section 3.11. Voting at Meetings.
(a) Common Shares. Except as otherwise provided by
law or by the provisions of the Articles of Incorporation,
every holder of Common Stock of the Corporation shall have
the right, at every Shareholders' meeting, to one vote for
each share standing in his name on the books of the
Corporation. Cumulative voting shall not be permitted.
(b) Voting of Shares Owned by Other Corporations.
Shares of the Corporation standing in the name of another
corporation may be voted by such officer, agent or proxy as
the board of directors of such other corporation may
appoint, or as the by-laws of such other corporation may
prescribe.
(c) Voting of Shares Owned by Fiduciaries. Shares
held by fiduciaries may be voted by the fiduciaries in such
manner as the instrument or order appointing such
fiduciaries may direct. In the absence of such direction or
the inability of the fiduciaries to act in accordance
therewith, the following provisions shall apply:
(i) Joint Fiduciaries. Where shares are held
jointly by three (3) or more fiduciaries, such shares
shall be voted in accordance with the will of the
majority.
(ii) Equally Divided Fiduciaries. Where the
fiduciaries, or a majority of them, cannot agree, or
where they are equally divided, upon the questions of
voting such shares, any court of general equity
jurisdiction may, upon petition filed by any of such
fiduciaries, or by any party in interest, direct the
voting of such shares as it may deem for the best
interests of the beneficiaries, and such shares shall
be voted in accordance with such direction.
(iii) Proxy of Fiduciary. The general proxy of a
fiduciary shall be given the same weight and effect as
the general proxy of an individual or corporation.
(d) Voting of Pledged Shares. Shares that are pledged
may, unless otherwise provided in the agreement of pledge,
be voted by the Shareholder pledging the same until the
shares shall have been transferred to the pledgee on the
books of the Corporation, and thereafter they may be voted
by the pledgee.
Section 3.12. Order of Business. The order of business at
the annual meetings, and so far as practicable at all other
meetings, of the Shareholders, shall be:
Item (1). Proof of due notice of meeting.
Item (2). Determination of quorum.
Item (3). Reading and disposal of any unapproved minutes.
Item (4). Reports of Officers and Committees.
Item (5). Unfinished business.
Item (6). New business.
Item (7). Election of Directors.
Item (8). Adjournment.
Section 3.13. Action Taken without a Meeting; Consent of
Shareholders. Any action required or permitted to be taken at
any meeting of the Shareholders may be taken without a meeting if
the action is taken by all the Shareholders entitled to vote on
the action. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by all the
Shareholders entitled to vote on the action, and delivered to the
corporate records. The record date for determining Shareholders
entitled to take action without a meeting is the date the first
Shareholder signs the consent under the preceding sentence.
Action taken under this Section 3.13 is effective when the last
Shareholder signs the consent unless the consent specifies any
different prior or subsequent effective date. A consent signed
under this Section 3.13 has the effect of a meeting vote and may
be described as such in any document.
Section 3.14. Notice to Nonvoting Shareholders. If the
Indiana Business Corporation Law requires that notice of any
proposed action be given to nonvoting Shareholders and the action
is to be taken by unanimous consent of the voting Shareholders,
the Corporation must give its nonvoting Shareholders written
notice of the proposed action at least ten (10) days before the
action is taken. The notice must contain or be accompanied by
the same material that, under the Indiana Business Corporation
Law, would have been required to be sent to nonvoting
Shareholders in a notice of meeting at which the proposed action
would have been submitted to the Shareholders for action.
Section 3.15. Introduction of Business at a Shareholders'
Meeting. At an annual meeting of the Shareholders, only such
business shall be conducted as shall have been properly brought
before the meeting. To be properly brought before an annual
meeting business must be (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the
Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a Shareholder.
For business to be properly brought before an annual meeting by a
Shareholder, the Shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be
timely, a Shareholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days
prior to the meeting; provided, however, that in the even that
less than seventy (70) days' notice or prior public disclosure of
the date of the meeting is given or made to Shareholders, notice
by the Shareholder to be timely must be so received not later
than the close of business on the tenth day following the day on
which such notice of the date of the annual meeting was mailed or
such public disclosure was made. A Shareholder's notice to the
Secretary shall set forth as to each matter the Shareholder
proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on
the Corporation's books, of the Shareholder proposing such
business, (c) the class and number of shares of the Corporation
which are beneficially owned by the Shareholder, and (d) any
material interest of the Shareholder in such business.
Notwithstanding anything in this Code of By-Laws to the contrary,
no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 3.15.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 3.15, in which event such business
shall not be transacted.
ARTICLE 4
Board of Directors
Section 4.01. Duties and Number. The business and affairs
of the Corporation shall be managed under the direction of a
Board of Directors consisting of five (5) persons. Directors
shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting in which a quorum
is present and in accordance with the Articles of Incorporation.
No decrease in the number of Directors at any time shall have the
effect of shortening the term of any incumbent Director.
Section 4.02. Designation of Director Nominees.
Nominations of persons for election to the Board of Directors of
the Corporation shall be made by the Board of Directors and may
be made by any Shareholder of the Corporation entitled to vote
for the election of Directors at the meeting who complies with
the notice procedures set forth in this Section 4.02.
Nominations by a Shareholder shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To
be timely, a Shareholder's notice shall be delivered to or mailed
and received at the principal offices of the Corporation not less
than sixty (60) days nor more than ninety (90) days prior to the
meeting; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date
of the meeting is given or made to Shareholders, notice by the
Shareholder to be timely must be so received not later than the
close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public
disclosure was made.
Such Shareholder's notice shall set forth (a) as to
each person whom the Shareholder proposes to nominate for
election or reelection as a Director, (i) the name, age, business
address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and
number of shares of the Corporation which are beneficially owned
by such person and (iv) any other information relating to such
person that is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including without limitation
such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected);
and (b) as to the Shareholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such
Shareholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by such Shareholder.
Nominations of persons for election to the Board of
Directors of the Corporation shall be made by the Board of
Directors no later than at the last regular meeting of the Board
of Directors preceding each Annual Shareholders' Meeting. At
such meeting, the Chief Executive Officer of the Corporation
shall be designated for nomination and nominated for re-election
to the Board of Directors at the Annual Meeting of Shareholders
at which his term expires. At the request of the Board of
Directors any person nominated by the Board of Directors for
election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a
Shareholder's notice of nomination which pertains to the nominee.
No person shall be eligible for election as a Director
of the Corporation unless nominated in accordance with the
procedures set forth in this Section 4.02. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the
procedures prescribed by this Code of By-Laws, in which event the
defective nomination shall be disregarded.
In the event that a person is validly designated as a
nominee in accordance with the procedures set forth in this
Section 4.02 and shall thereafter become unable or unwilling to
stand for election to the Board of Directors, the Board of
Directions or the Shareholder who proposed such nominee, as the
case may be, may designate a substitute nominee.
If a Director resigns from the Board of Directors, the
resigning Director may designate a person for nomination to
succeed the resigning Director and the Board of Directors shall
nominate such person for election to fill such vacancy. In all
other cases, the Board of Directors shall designate for
nomination and nominate the person to fill a vacancy on the Board
of Directors.
Section 4.03. Powers of Directors. The Board of Directors
shall exercise all the powers of the Corporation, subject to the
restrictions imposed by law, the Articles of Incorporation and
this Code of By-Laws.
Section 4.04. Annual Meeting. Unless otherwise determined
by the President or the Board of Directors, the Board of
Directors shall meet each year as soon as practicable after the
annual meeting of the Shareholders, at the place where such
meeting of the Shareholders has been held, for the purpose of
organization, election of Officers, and consideration of any
other business that may properly be brought before the meeting.
No notice shall be necessary for the holding of this annual
meeting. If such meeting is not held as above provided, the
election of Officers may be held at any subsequent duly
constituted meeting of the Board of Directors.
Section 4.05. Other Meetings. At least six (6) regular
meetings of the Board of Directors will be held each year, with
or without notice, at such places and times as may from time to
time be fixed by resolution of the Board of Directors. Special
meetings of the Board of Directors may be called at any time by
the Chairman of the Board, and shall be called upon the written
request of any member of the Board of Directors. Notice of such
a special meeting shall be sent by the Secretary or Assistant
Secretary to each Director at his residence or usual place of
business by letter, telegram, or facsimile transmission at such
time that, in regular course, such notice would reach such place
not later than forty eight hours before such meeting; or may be
delivered by the Secretary or Assistant Secretary to a Director
by word of mouth or telephone received not later than two hours
before such meeting. At any meeting at which all Directors are
present, notice of the time, place and purpose thereof shall be
deemed waived; and notice may be waived (either before or after
the time of the meeting) by absent Directors, either by written
instrument or telegram. Such meetings may be held at any place
within or without the State of Indiana, as may be specified in
the respective notices, or waivers of notice, thereof.
Section 4.06. Meeting by Telephone, etc. Any or all of the
members of the Board of Directors or of any committee designated
by the Board of Directors may participate in a meeting of the
Board of Directors or the committee by means of conference
telephone or similar communications equipment by which all
persons participating in the meeting can communicate with each
other, and participation by these means constitutes presence in
person at the meeting.
Section 4.07. Quorum. A majority of the actual number of
Directors elected and qualified, from time to time, shall be
necessary to constitute a quorum for the transaction of any
business and the act of the majority of the Directors present at
a meeting at which a quorum is present shall be the act of the
Board of Directors unless the act of a greater number is required
by law, the Articles of Incorporation or this Code of By-Laws.
Section 4.08. Action Taken Without Meeting: Consent.
Unless the Articles of Incorporation or this Code of By-Laws
provide otherwise, any action required or permitted to be taken
at any meeting of the Board of Directors may be taken without a
meeting if the action is taken by all members of the Board. The
action must be evidenced by one (1) or more written consents
describing the action taken, signed by each Director and included
in the minutes or filed with the corporate records reflecting the
action taken. Action taken under this Section 4.08 is effective
when the last Director signs the consent, unless the consent
specifies any different, prior or subsequent effective date. A
consent signed under this Section 4.08 has the effect of a
meeting vote and may be described as such in any document.
Section 4.09. Resignations. Any Director may resign at any
time by giving written notice to the Board, the Chairman or the
Secretary. Such resignation shall take effect when delivered
unless the notice specifies a later effective date, and unless
otherwise specified in the resignation, the acceptance of the
resignation shall not be necessary to make it effective.
Section 4.10. Vacancies and Removal. Any vacancy occurring
on the Board of Directors of the Corporation shall be filled as
provided in the Articles of Incorporation. Shareholders shall be
notified of any increase in the number of Directors and the name,
principal occupation and other pertinent information about any
Director elected by the Board to fill any vacancy in the next
mailing sent to the Shareholders following any such increase or
election. Any Director, or the entire Board, may be removed from
office only as provided in the Articles of Incorporation.
Section 4.11. Compensation of Directors. The Board of
Directors is empowered and authorized to fix and determine the
compensation of Directors for attendance at meetings of the Board
of Directors and additional compensation for such additional
services any of such Directors may perform for the Corporation.
Section 4.12. Dividends. The Board of Directors shall have
power, subject to any restrictions contained in the Articles of
Incorporation or provided by law, to declare and pay dividends
upon the outstanding shares of the Corporation. Dividends may be
paid in cash, in property, or in shares of the Corporation.
ARTICLE 5
Board Committees
Section 5.01. No Executive Committee. The Board of
Directors may not appoint an Executive Committee.
Section 5.02. Other Committees. The Board of Directors
shall appoint an Audit Committee, composed of Directors who are
not members of the management of the Corporation, and a
Compensation Committee, a majority of whom shall be Directors who
are not members of the management of the Corporation, both to be
chaired by Directors who are not members of the management of the
Corporation. In addition, the Board of Directors may appoint
additional special purpose committees from time to time.
Section 5.03. Authority of Committees; Procedures. Each
committee appointed by the Board of Directors in accordance with
Section 5.02 of this Code of By-Laws may exercise the authority
of the Board of Directors with respect to the purposes for which
it was formed and subject to limitations on committee authority
expressly imposed by law, the Articles of Incorporation, this
Code of By-Laws and the Board of Directors. Sections 4.05
through 4.08 of this Code of By-Laws which govern meetings,
action without meetings, notice, and quorum and voting
requirements of the Board of Directors, apply to committees as
well.
ARTICLE 6
The Officers
Section 6.01. Officers. The Officers of the Corporation
shall consist of a Chairman of the Board, a Chief Executive
Officer, a President, a Chief Financial Officer, a Secretary and
a Treasurer and may include one or more Executive Vice Presidents
or Senior Vice Presidents, and a Chief Accounting Officer, a
Chief Operating Officer, as well as such Administrative Officers
as may be elected or appointed in accordance with Section 6.03 of
this Code of By-Laws and other Officers as the Board of Directors
may, from time to time, determine advisable.
Section 6.02. Limitation of Officer's Authority.
Notwithstanding the provisions of this Article 6, no Officer of
the Corporation shall have authority, without authorization from
the Board of Directors, (a) to effect capital expenditures by the
Corporation in an aggregate amount in excess of budgeted amounts
approved by the Board of Directors, (b) to effect any merger or
acquisition of the Corporation, (c) to take action affecting the
compensation or benefits of executive management of the
Corporation, (d) to promote any Officer, (e) to borrow any funds
except (i) borrowings in an aggregate amount not in excess of
budgeted amounts approved by the Board of Directors, or (ii)
amounts borrowed from any subsidiary of the Corporation, (f) to
make any loans or advances except to a subsidiary of the
Corporation, (g) to make any primary public offering or private
placement of securities of the Corporation, (h) to liquidate or
sell substantially all of the assets of the Corporation, or (i)
to sell shares of or substantially all of the assets of any
subsidiary of the Corporation.
Section 6.03. Election and Appointment. At each annual
meeting of the Board of Directors each of the Officers of the
Corporation shall be elected to serve until the next annual
meeting of the Board of Directors and until their successors are
elected and qualified. Whenever any vacancy shall occur in any
office by death, resignation, an increase in the number of
offices of the Corporation, or otherwise, the same shall be
filled by the Board of Directors, and the Officers who are
elected shall hold office until the next annual meeting of the
Board of Directors and until their successors are elected and
qualified. Notwithstanding the foregoing, the Chief Executive
Officer shall have the authority to appoint Administrative
Offices, and the Officers so appointed shall hold office at the
will of the Chief Executive Officer.
Section 6.04. Multiple Officers. Any person may hold two
or more offices except that no person shall hold the offices of
President and Secretary at the same time.
Section 6.05. Resignations. Any Officer may resign at any
time by giving written notice to the Board of Directors, the
Chief Executive Officer, the President or the Secretary. Such
resignation shall take effect at the time specified therein, and
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 6.06. Removal. Any Officer may be removed either
with or without cause, at any time, by the vote of two-thirds of
the number of Directors elected and qualified.
Section 6.07. Vacancies. Whenever any vacancies shall
occur in any office by death, resignation, removal, increase in
the number of offices of the Corporation, or otherwise, the same
shall be filled by the Board of Directors, and the Officer so
chosen shall hold office during the remainder of the term for
which his predecessor was chosen or as otherwise provided herein.
Section 6.08. Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the Board of Directors and
Shareholders and shall perform such other duties as the Board of
Directors may prescribe. The Chairman shall be chosen from among
the Directors.
Section 6.09. Chief Executive Officer. The Chief Executive
Officer, subject to the direction of the Board of Directors,
shall have general and active control of the affairs and business
of the Corporation and general supervision of its Officers,
officials, employees and agents. In the absence of the Chairman
of the Board or failing his election, the Chief Executive Officer
shall preside at all meetings of the Board of Directors and
Shareholders. He shall see that all orders and resolutions of
the Board of Directors are carried into effect, and in addition
he shall have all the powers and perform all the duties generally
appertaining to the office of chief executive officer. The Chief
Executive Officer shall be chosen from among the Directors.
In the case of the Chief Executive Officer's absence or
inability to act, he may appoint the President or any Executive
Vice President, Senior Vice President or Vice President to
temporarily act in his place. In the case of the death of the
Chief Executive Officer, or in the case of his absence or
inability to act without having designated an Officer to act
temporarily in his place, the Officer to perform the duties of
the Chief Executive Officer shall be designated by the Board of
Directors.
Section 6.10. President. The President, unless otherwise
directed by the Board of Directors, shall be the chief
administrative officer of the Corporation and shall manage the
operations of the Corporation, subject however, to the control of
the Board of Directors and Chief Executive Officer. He shall, in
general, perform all duties incident to the office of the
President and such other duties as, from time to time, may be
assigned to him by the Board of Directors or Chief Executive
Officer. The President shall be chosen from among the Board of
Directors.
In the case of the President's absence or inability to act,
he may appoint any Executive Vice President, Senior Vice
President or Vice President to temporarily act in his place. In
the case of the death of the President, or in the case of his
absence or inability to act without having designated an Officer
to act temporarily in his place, the Officer to perform the
duties of the President shall be designated by the Board of
Directors.
Section 6.11. Executive Vice Presidents and Senior Vice
Presidents. Executive Vice President or a Senior Vice President
shall have such powers and perform such duties as the Board of
Directors, the Chief Executive Officer or the President may from
time to time delegate to him. There may be one or more Executive
Vice Presidents and Senior Vice Presidents.
Section 6.12. Chief Financial Officer. The Chief Financial
Officer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of
its capital, assets, liabilities, receipts, disbursements, gains
and losses. The Chief Financial Officer shall send or cause to
be sent to the Shareholders of the Corporation such financial
statements and reports as are by law or this Code of By-Laws
required to be sent to them. The Chief Financial Officer shall
be responsible for all funds of the Corporation and shall deposit
all monies and other valuables in the name and to the credit of
the Corporation with such depositories as may be designated by
the Board of Directors. He shall control the disbursement of
funds of the Corporation as may be ordered by the Board of
Directors, and shall render to the Chief Executive Officer,
President and Directors, upon request, an account of all of his
transactions as Chief Financial Officer and of the financial
condition of the Corporation. The Chief Financial Officer shall,
in general, perform the duties incident to the office of the
Chief Financial Officer and such other duties as, from time to
time, may be prescribed by the Board of Directors or Chief
Executive Officer.
Section 6.13. Secretary. The Secretary shall attend all
meetings of the Shareholders and of the Board of Directors, and
shall keep or cause to be kept in a book provided for the purpose
a true and complete record of the proceedings of such meetings,
and shall perform a like duty, when required, for all committees
appointed by the Board of Directors. He shall perform such other
duties as this Code of By-Laws, the Board of Directors, the Chief
Executive Officer, the President or the Executive Vice Presidents
may prescribe. He shall give all notices of the Corporation,
provided, however, that in case of his absence, negligence or
refusal so to do, any notice may be given by a person so directed
by the President or by the requisite number of Directors or
Shareholders upon whose request the meeting is called as provided
by this Code of By-Laws.
Section 6.14. Chief Accounting Officer. At the discretion
of the Board of Directors there may be elected a Chief Accounting
Officer who shall report to and assist the Chief Financial
Officer. The Chief Accounting Officer shall also be responsible
for maintaining adequate and correct accounts of the properties
and business transactions of the Corporation, including its
capital, assets, liabilities, receipts, disbursements, gains and
losses, and shall perform such other duties as, from time to
time, may be assigned by the Board of Directors, Chief Executive
Officer, President or Chief Financial Officer.
Section 6.15. Treasurer. The Treasurer shall report to and
assist the Chief Financial Officer of the Corporation in such
duties as the Chief Financial Officer shall direct, and unless
otherwise directed, shall be responsible for depositing all
monies and other valuables in the name and to the credit of the
Corporation, disbursing funds of the Corporation, investing
excess funds of the Corporation, and assisting the Chief
Financial Officer in obtaining debt or capital financing as may
be directed by the Board of Directors. The Treasurer shall also
perform such other duties as, from time to time, may be assigned
by the Board of Directors, Chief Executive Officer, President or
Chief Financial Officer.
Section 6.16. Administrative Officers. Administrative
Officers may include Vice Presidents, Assistant Vice Presidents,
Assistant Secretaries, Assistant Treasurers, a Controller and
such other Officers as the Board of Directors or the Chief
Executive Officer may designate. An Administrative Officer shall
have such powers and perform such duties as the Board of
Directors, the Chief Executive Officer or the President shall
delegate to him, including, in the case of an Assistant Secretary
or an Assistant Treasurer, the performance of the duties of the
principal Officer when the incumbent is unable to act or it is
impractical for him to act personally, subject to any
restrictions or such authority as may be imposed by the President
or the Board. The acts of Assistant Secretaries and Assistant
Treasurers, within the scope of their authority, shall be the act
of the Corporation to the same extent as if done by the principal
Officer.
Section 6.17. Delegation of Authority. In case of the
absence of any Officer of the Corporation, or for any other
reason that the Board of Directors may deem sufficient, the Board
of Directors may delegate the powers or duties of such Officer to
any other Officer or to any Director, for the time being,
provided a majority of the entire Board of Directors concurs
therein.
ARTICLE 7
Special Corporate Acts, Negotiable
Instruments, Deeds, Contracts and Stock
Section 7.01. Execution of Negotiable Instruments. All
checks, drafts, bills of exchange and orders for the payment of
money of the Corporation shall, unless otherwise directed by the
Board of Directors, or unless otherwise required by law, be
signed by any two of the following Officers: Chief Executive
Officer, President, Executive Vice President, Chief Financial
Officer, Secretary or Treasurer. The Board of Directors may,
however, authorize any one or more of such Officers to sign
checks, drafts, bills of exchange and orders for the payment of
money by the Corporation singly and without necessity of
countersignature; and the Board of Directors may designate any
employee or employees of the Corporation, in addition to those
named above, who may, in the name of the Corporation, execute
checks, drafts, bills of exchange and orders for the payment of
money by the Corporation or in its behalf.
Section 7.02. Execution of Deeds, Contracts, Etc. All
deeds, notes, bonds and mortgages made by the Corporation and all
other written contracts and agreements, other than those executed
in the ordinary course of corporate business, to which the
Corporation shall be a party shall be executed in its name by the
Chief Executive Officer, the President, any Executive Vice
President or by any other Officer so authorized by the Board of
Directors, acting by resolution; and the Secretary or any
Assistant Secretary, when necessary or required, shall attest the
execution thereof.
Section 7.03. Ordinary Contracts and Agreements. All
written contracts and agreements into which the Corporation
enters in the ordinary course of business operations shall be
executed by any Officer of the Corporation or by any other
employee of the Corporation designated by the Chief Executive
Officer or the President to execute such contracts and
agreements.
Section 7.04. Endorsement of Certificates for Shares.
Unless otherwise directed by the Board of Directors, any share or
shares issued by any corporation and owned by the Corporation
(including reacquired shares of the Corporation) may, for sale or
transfer, be endorsed in the name of the Corporation by the Chief
Executive Officer, President and such endorsement shall be duly
attested by the Secretary or any Assistant Secretary.
Section 7.05. Voting of Shares Owned by Corporation. Unless
otherwise directed by the Board of Directors, any share or shares
issued by any other corporation and owned by the Corporation may
be voted at any shareholders' meeting of such other corporation
by the Chief Executive Officer, the President or any Executive
Vice President of the Corporation. Whenever, in the judgment of
the Chief Executive Officer, the President or any Executive
President, it is desirable for the Corporation to execute a proxy
or give a shareholders' consent in respect to any share or shares
issued by any other corporation and owned by the Corporation such
proxy or consent shall be executed in the name of the Corporation
by the Chief Executive Officer, the President or any Executive
Vice President of the Corporation. Any person or persons
designated in the manner above stated as the proxy or proxies of
the Corporation shall have the full right, power and authority to
vote the share or shares issued by such other corporation and
owned by the Corporation in the same manner as such share or
shares might be voted by the Corporation.
Section 7.06. Merger or Acquisition, Etc.; Voting
Requirements. The affirmative vote of a majority of the members
of the Board of Directors of the Corporation shall be necessary
to approve (i) any merger of the Corporation, (ii) any
liquidation of the Corporation or sale of all or substantially
all of its assets, (iii) any sale of the stock of Mayflower
Transit, Inc. or Mayflower Contract Services, Inc. owned by the
Corporation, or (iv) any liquidation or sale of all or
substantially all of the assets of, or merger involving,
Mayflower Transit, Inc. or Mayflower Contract Services, Inc.
ARTICLE 8
Amendments
Section 8.01. Amendment of By-Laws. The power to make,
alter, amend or repeal this Code of By-Laws of the Corporation is
vested in the Board of Directors.
<PAGE> E-14 EXHIBIT 10.06
MAYFLOWER GROUP, INC.
1993 RESTRICTED STOCK PLAN
1. Establishment. Mayflower Group, Inc. ("Mayflower")
hereby establishes a share incentive plan for officers and other
key employees of Mayflower and its wholly-owned subsidiaries
(individually a "Subsidiary" and collectively, the
"Subsidiaries"), as described herein, which shall be known as the
Mayflower Group, Inc. Restricted Stock Plan (the "Plan").
2. Purpose. The purpose of the Plan is to enable
Mayflower and its Subsidiaries to retain and motivate officers
and other key employees who provide valuable service to Mayflower
and its Subsidiaries, and to provide such officers and key
employees with an opportunity to acquire shares of common stock,
without par value, of Mayflower ("Common Stock"), thereby
providing them with an increased incentive to work for the
success of Mayflower and its Subsidiaries and better enabling
such entities to attract and retain capable officers and other
key employees.
3. Administration of the Plan. The Plan shall be
administered, construed and interpreted by the Compensation
Committee of the Board of Directors of Mayflower (the
"Committee"). The Committee shall consist of at least two (2)
members of the Board of Directors of Mayflower (the "Board"), who
shall be designated from time to time by the Board. No member of
the Committee shall, during the one year prior to his service at
any time as a member of the Committee, have been granted or
awarded equity securities pursuant to this Plan or any other plan
of Mayflower or any of its Subsidiaries, except:
(i) a formula plan meeting the conditions of Rule
16b-3(c)(2)(ii) promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the "1934
Act");
(ii) an ongoing securities acquisition plan meeting the
conditions of Rule 16b-3(d)(2)(i) promulgated under Section
16 of the 1934 Act; or
(iii) another plan or arrangement a grant or award
under which does not, in the opinion of Mayflower's counsel,
cause a member of the Committee to fail to qualify as a
"disinterested person" under Rule 16b-3(c)(2)(i) promulgated
under Section 16 of the 1934 Act.
The decision of a majority of the members of the Committee shall
constitute the decision of the Committee, and the Committee may
act either at a meeting at which a majority of the members of the
Committee is present or by a written consent signed by all
members of the Committee.
The Committee shall have the sole, final and conclusive
authority to determine, consistent with and subject to the
provisions of the Plan:
(a) the individuals to whom restricted share awards
shall be granted under the Plan (the "Grantees");
(b) the time when restricted shares of Common Stock
shall be granted hereunder;
(c) the number of shares of Common Stock of the
Corporation to be covered under each restricted share grant;
(d) the period of restrictions for restricted share
grants (the "Period of Restriction"), which shall in no
event be less than six (6) months; and
(e) the terms and conditions of the agreements by
which restricted shares granted shall be evidenced (the
"Restricted Share Agreements").
The Committee shall also have authority to prescribe, amend and
rescind rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable in the
administration of the Plan.
4. Eligibility. The Committee may, consistent with the
terms hereof, grant restricted shares to officers (including
officers who are members of the Board of Directors) and other key
employees of Mayflower or of a Subsidiary who in the opinion of
the Committee from time to time provide valuable service to
Mayflower or a Subsidiary.
5. Stock Subject to the Plan. The maximum number of
shares with respect to which restricted share awards may be made
under this Plan is 25,000 shares of Common Stock, which may be
authorized but unissued shares of Mayflower. Subject to Section
6 hereof, the shares of Common Stock for which awards may be
granted under the Plan shall not exceed that number. If any
restricted share grant is forfeited in whole or in part, the
unpurchased or forfeited shares subject thereto shall (unless the
Plan shall have terminated) become available for other awards
under the Plan.
6. Adjustment of Shares. In the event of any change after
the effective date of the Plan in the outstanding stock of
Mayflower by reason of any reorganization, recapitalization,
stock split, stock dividend, combination of shares, exchange of
shares, merger or consolidation, liquidation, or any other change
after the effective date of the Plan in the nature of the shares
of Common Stock of Mayflower, the Committee shall determine what
changes, if any, are appropriate in the number and kind of shares
reserved under the Plan and in the number and kind of shares
covered by outstanding awards granted under the Plan. Any
determination of the Committee hereunder shall be conclusive.
7. Restricted Share Awards. The Committee may grant
restricted share awards of Common Stock which entitle Grantees to
receive shares of Common Stock. Each restricted share award
shall be evidenced by a Restricted Share Agreement between
Mayflower and the Grantee, which Agreement shall set forth the
terms and conditions of the award to the extent not inconsistent
with the provisions of the Plan. Each restricted share award
shall provide for the distribution of the awarded shares free of
all restrictions at the end of the Period of Restriction, as
specified in the Restricted Share Agreement.
8. Duration of the Plan. Subject to the Board's right to
earlier terminate the Plan pursuant to Section 20 hereof, the
Plan shall remain in effect until all shares of Common Stock
subject to it shall have been acquired by Grantees pursuant to
the provisions hereof and shall have been released from
restrictions pursuant to Sections 9, 10, 15 or 16 hereof.
Notwithstanding the foregoing, no Shares may be granted under the
Plan after August 4, 2003.
9. Transferability. Except as contemplated by Sections
10, 15 and 16 hereof, the restricted shares granted hereunder may
not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until such conditions as were specified
by the Committee, in its sole discretion, and set forth in the
Restricted Share Agreement are satisfied.
10. Removal of Restrictions. Except as otherwise provided
in Sections 9, 15 and 16 hereof, restricted shares covered by
each restricted share grant made under this Plan shall become
freely transferable by the Grantee after the last day of the
Period of Restriction.
11. Other Restrictions. The Board shall impose such other
restrictions on any shares of Common Stock granted pursuant to
the Plan as it may deem advisable.
12. Certificate Legend. Each certificate representing
restricted shares granted pursuant to this Plan shall bear the
following legend:
"The sale or other transfer of the shares
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to
certain restrictions on transfer set forth in the
Mayflower Group, Inc. Restricted Stock Plan and a
Restricted Share Agreement dated . A copy of
the Restricted Stock Plan and such Restricted Share
Agreement may be obtained from the Secretary of the
Corporation."
Once the shares are released from the restrictions set forth in
Section 9 hereof, the Grantee shall be entitled to have the
legend required by this Section 12 removed from the
certificate(s) representing the Common Stock obtained pursuant to
a Restricted Share Agreement.
13. Voting Rights. During the Period of Restriction,
Grantees holding restricted Shares granted hereunder may exercise
full voting rights with respect to those Shares.
14. Dividends and Other Distributions. During the Period
of Restriction, Grantees holding restricted shares granted
hereunder shall be entitled to receive all dividends and other
distributions paid with respect to those shares while they are so
held. If any such dividends or distributions are paid in shares
of Common Stock, such shares of Common Stock shall be subject to
the same restrictions on transferability as the restricted shares
with respect to which they were paid.
15. Effect of Termination of Employment Due to Retirement.
In the event that a Grantee terminates his or her employment with
Mayflower or its Subsidiaries because of Retirement (as
hereinafter defined), any remaining Period of Restriction
applicable to the restricted shares pursuant to Section 9 hereof
shall automatically terminate and, except as otherwise provided
in Section 11, the shares shall thereby be free of restrictions
and freely transferable. For purposes of the Plan, "Retirement"
means termination of employment due to retirement by an employee
who has attained age 55 and has at least ten (10) years of
service with the Company.
16. Effect of Termination of Employment without Cause or
Due to Death, Disability. In the event a Grantee terminates his
or her employment with Mayflower or its Subsidiaries because of
death, Permanent and Total Disability (as hereinafter defined) or
the Grantee's employment with Mayflower or its Subsidiaries is
involuntarily terminated by Mayflower or its Subsidiaries without
Cause (as hereinafter defined) during the Period of Restriction,
any remaining Period of Restriction applicable to the restricted
shares pursuant to Section 9 hereof shall automatically terminate
and, except as otherwise provided in Section 11, the Common Stock
shall thereby be free of restrictions and freely transferable.
For purposes of the Plan, (i) "Permanent and Total Disability"
means if an employee is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months; provided, however, an
employee shall not be considered to be Permanently and Totally
Disabled unless he or she furnishes proof of the existence
thereof in such form and manner, and at such times, as the
Committee may require, and (ii) "Cause" shall mean fraud,
dishonesty, theft of corporate assets or other gross misconduct
by a Grantee.
17. Other Termination of Employment. In the event that a
Grantee's employment with Mayflower or its Subsidiaries is
terminated by Mayflower or its Subsidiaries for Cause or by the
Grantee during the Period of Restriction, then any Common Stock
still subject to restrictions at the date of such termination
shall automatically be forfeited and returned to Mayflower.
18. No Employment Rights Created. Nothing in this Plan or
in any grant of restricted shares shall interfere with or limit
in any way the right of Mayflower or its Subsidiaries to
terminate any Grantee's employment at any time, nor confer upon
any Grantee any right to continue in the employ of Mayflower or
its Subsidiaries.
19. Nontransferability of Rights or Restricted Shares. No
Common Stock granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and
distribution, until the termination of the applicable Period of
Restriction. All rights granted to a Grantee under the Plan
shall be exercisable during the Grantee's lifetime only by the
Grantee, or the guardians or legal representatives of the
Grantee. Upon the death of a Grantee, the personal
representative or beneficiary of the Grantee may exercise the
Grantee's rights under the Plan.
20. Amendment and Termination. The Board may at any time
amend, modify, alter, or terminate this Plan, except that such
amendment, modification, alteration or termination may not
adversely affect the rights of any existing Grantee, without the
consent of such Grantee, and except that approval of the
Shareholders of Mayflower must be obtained for any amendment
which would: (i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the number
of securities which may be issued under the Plan; or (iii)
materially modify the requirements as to eligibility for
participation in the Plan.
21. Tax Withholding. Mayflower or its Subsidiaries, as
appropriate, shall have the right to deduct from all payments any
Federal, state, or local taxes required by law to be withheld
with respect to such payments and, in the case of awards paid in
shares of Common Stock, the Grantee or other person receiving
such shares of Common Stock may be required to pay to Mayflower
or its Subsidiaries, as appropriate, the amount of any such taxes
which Mayflower or its Subsidiaries is required to withhold with
respect to such shares prior to delivery of any certificate or
certificates for such shares.
22. Tax Benefit. The Committee may, in its sole
discretion, include a provision in any Restricted Share Agreement
that provides for an additional cash payment from Mayflower to
the Grantee of such award equal to all or a portion of the tax
benefit to be received by Mayflower attributable to its federal
income tax deduction, if any, resulting from the vesting,
cancellation, disposition or other transaction involving the
Common Stock subject to the restricted share award.
23. Indemnification. Each person who is or shall have been
a member of the Committee shall be indemnified and held harmless
by Mayflower against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit,
or proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof with Mayflower's approval, or
paid by him or her in satisfaction of a judgment in any such
action, suit or proceeding against him or her, provided he or she
shall give Mayflower an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive or any other rights of
indemnification to which such persons may be entitled under the
Mayflower's Articles of Incorporation or Code of By-Laws, as a
matter of law, or otherwise, or any power that Mayflower may have
to indemnify them or hold them harmless.
24. Governing Law. The Plan, and all grants and other
documents delivered hereunder, shall be construed in accordance
with and governed by the laws of Indiana.
25. Expenses of Plan. The expenses of administering the
Plan shall be borne by Mayflower and its Subsidiaries.
26. Successors. This Plan shall be binding upon the
successors and assigns of Mayflower and its Subsidiaries.
27. Effective Date. The Plan shall become effective on the
date when it is approved by the Board of Mayflower.
<PAGE> E-18 EXHIBIT 10.07
MAYFLOWER CONTRACT SERVICES, INC.
EXECUTIVE RETIREMENT PLAN
APRIL 1, 1993
<PAGE>
TABLE OF CONTENTS
Article 1 Definitions ................................1,2
Article 2 Eligibility.................................2
2.1 Selection...................................2
2.2 Participation Agreement.....................2
Article 3 Normal Retirement Benefit...................3
3.1 Normal Retirement Benefit...................3
3.2 Mode of Payment.............................3
3.3 Time of Payment.............................3
3.4 Calculation of Benefit......................3,4
Article 4 Early Retirement Benefit....................4
4.1 Early Retirement Benefit....................4
4.2 Mode of Payment.............................4
4.3 Time of Payment.............................4
4.4 Calculation of Benefit......................4
Article 5 Disability Benefit..........................5
5.1 Disability Benefit..........................5
5.2 Mode of Payment.............................5
5.3 Time of Payment.............................5
5.4 Calculation of Benefit......................5
5.5 Return to Employment........................5
Article 6 Death Benefit...............................6
6.1 Death Benefit...............................6
6.2 Mode of Payment.............................6
6.3 Time of Payment.............................6
6.4 Calculation of Benefit......................6
Article 7 Beneficiary Designation.....................6
7.1 Beneficiary Designation.....................6
7.2 Change of Beneficiary Designation...........7
7.3 No Beneficiary Designation..................7
7.4 Effect of Payment...........................7
Article 8 Termination, Amendment or Modification......7
8.1 Termination.................................7
8.2 Amendment...................................7
Article 9 Miscellaneous...............................7
9.1 Unsecured General Creditor .................7
9.2 Nonassignability............................8
9.3 Not a Contract of Employment................8
9.4 Protective Provisions.......................8
9.5 Terms.......................................8
9.6 Captions....................................8
9.7 Governing Law...............................8
9.8 Validity....................................8
9.9 Notice......................................9
9.10 Successors..................................9
9.11 Payment to Legal Representatives............9
Article 10 Administration............................10
10.1 Committee Duties............................10
10.2 Agents......................................10
10.3 Binding Effect of Decisions.................10
10.4 Indemnity of Committee......................10
10.5 Employer Information........................10
10.6 Change in Payments..........................10
<PAGE>
EXECUTIVE RETIREMENT PLAN
OF
MAYFLOWER CONTRACT SERVICES, INC.
The purpose of this Plan is to provide an Employer-paid benefit
to a select group of key employees who contribute materially to
the continued growth, development and future business success of
Mayflower Contract Services, Inc.
Article 1
Definitions
For purpose hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following
indicated meanings:
1.1 "Average Final Compensation" shall mean a Participant's
average annual compensation during the five (5) calendar
years of his participation immediately preceding Retirement.
1.2 "Beneficiary" shall mean the person or persons, or the
entity designated by the Participant to receive any benefits
payable under this Plan upon the death of the Participant.
Any Beneficiary designation shall be made by written
instrument filed with the Committee and shall become
effective only when received, accepted and acknowledged in
writing by the Committee.
1.3 "Committee" shall mean the administrative committee
appointed to manage and administer the Plan in accordance
with its provisions pursuant to Article 10.
1.4 "Compensation" shall mean the gross fixed salary or wage of
a Participant in any applicable calendar year, excluding
overtime, premiums, bonuses, or other nonrecurring
compensation.
1.5 "Disability" shall mean a period of time during which a
Participant cannot perform his job with the Employer and
said Participant has been characterized as "disabled" by the
Employer's long-term disability insurance carrier.
1.6 "Early Retirement Date" shall be the date a Participant
terminates his employment on or after the Participant's 55th
birthday if said Participant has ten (10) or more
consecutive Years of Participation.
1.7 "Employer" shall mean Mayflower Contract Services, Inc.
1.8 "Normal Retirement Date" shall be the first day of the month
following the month in which the Participant attains his
sixty-fifth (65) birthday if said Participant has ten (10)
or more consecutive Years of Participation.
1.9 "Participant" shall mean a person in the regular full-time
employ of the Employer who is a key employee selected for
participation in the Plan by the Employer's Board of
Directors, and who elects to participate in the Plan by
completing and executing a Participation Agreement.
1.10 "Participation Agreement" shall mean the form of written
agreement, as amended from time to time, which is entered
into by and between the Employer and a Participant.
1.11 "Plan" shall mean the Mayflower Contract Services, Inc.
Executive Retirement Plan which shall be evidenced by each
Participation Agreement and by this instrument, as amended
from time to time.
1.12 "Plan Year" shall mean the 12 consecutive month period
commencing on April 1, and ending on the following March 31.
1.13 "Retirement" and "Retire" shall mean severance from
employment with the Employer at, or after, the Participant's
Normal or Early Retirement Date.
1.14 "Termination of Employment" shall mean the ceasing of
employment with the Employer, voluntarily or involuntarily,
for any reason.
1.15 "Years of Participation" shall mean the number of full Plan
Years the Participant has participated in the plan.
Article 2
Eligibility
2.1 Selection. The Employer's Board of Directors shall have the
sole discretion to determine the employees who are eligible
to become Participants in accordance with the purpose of the
Plan and to determine the initial classification in which a
Participant is categorized pursuant to Section 3.4 of this
Plan.
2.2 Participation Agreement. As a condition of participation,
each Participant so selected shall complete, execute and
return to the Committee a Participation Agreement and comply
with further conditions as may be established by the
Committee. An Employee shall be deemed a Participant in
this Plan upon presenting to the Committee his executed
Participation Agreement.
Article 3
Normal Retirement Benefit
3.1 Normal Retirement Benefit. A Participant shall be eligible
for a Normal Retirement Benefit if his Termination of
Employment occurs on or after his Normal Retirement Date and
if he has completed at least ten (10) consecutive Years of
Participation. A Normal Retirement benefit is an annual
amount, regardless of the mode or time of payment.
3.2 Mode of Payment. A Participant may elect to receive his
Normal Retirement Benefit, calculated pursuant to Section
3.4 of this Plan, each year for a period of fifteen (15)
years or alternatively, a Participant may elect that the
Committee calculate the present value of his anticipated
receipt of a Normal Retirement Benefit for fifteen (15)
years and pay the same to the Participant in lump sum. The
discount rate used to calculate the lump sum benefit will be
determined by the Committee and shall be representative of
rates used for similar calculations at the time the lump sum
computation is made. If a Participant elects to receive a
Normal Retirement Benefit each year for a period of fifteen
(15) years, the frequency of said payments (i.e., whether
annually, semi-annually, quarterly or monthly) will be
determined by the Committee following consultation with the
Participant.
3.3 Time of Payment. If a Participant elects to receive a
Normal Retirement Benefit each year for a period of fifteen
(15) years, payments shall commence as soon as practicable
after the Committee has determined how frequently said
payments will be made. If a Participant elects to receive a
lump sum payment, said payment will be made as soon as
practicable after the Committee has calculated the present
value of the Participant's benefit.
3.4 Calculation of Benefit. There shall be three (3)
classifications of Normal Retirement Benefit within the
Plan. A Participant shall be advised at the time he
executes a Participation Agreement in which of the three
categories he is classified. If a Participant is moved from
one classification to another during the term of his
employment, the Committee shall notify the Participant in
writing of the reclassification and the reason(s) therefor.
Any change in a Participant's classification will be subject
to approval by the Employer's Board of Directors. A
Participant is subject to movement by the Committee among
the three classifications until his Termination of
Employment or Disability. At such time, the Committee shall
advise the Participant in which of the three classifications
he is categorized for benefit purposes. The Normal
Retirement Benefit for each of the classification is as set
forth below:
Category (A) - Sixty percent (60%) of the Participant's
Average Final Compensation.
Category (B) - Fifty percent (50%) of the Participant's
Average Final Compensation.
Category (C) - Forty-Five percent (45%) of the Participant's
Average Final Compensation.
Article 4
Early Retirement Benefit
4.1 Early Retirement Benefit. A Participant shall be eligible
for an Early Retirement Benefit if his Termination of
Employment occurs on or after his 55th birthday and after he
has completed ten (10) or more consecutive Years of
Participation.
4.2 Mode of Payment. A Participant may elect to receive his
Early Retirement Benefit, calculated pursuant to Section 4.4
of this Plan, each year for a period of fifteen (15) years
or alternatively, a Participant may direct the Committee to
calculate the present value of his anticipated receipt of an
Early Retirement Benefit for fifteen (15) years and pay the
same to the Participant in lump sum. The discount rate used
to calculate the lump sum benefit will be determined by the
Committee and shall be representative of rates used for
similar calculations at the time the lump sum computation is
made. If a Participant elects to receive an Early
Retirement Benefit each year for a period of fifteen (15)
years, the frequency of said payments (i.e., whether
annually, semi-annually, quarterly or monthly) will be
determined by the Committee following consultation with the
Participant and consideration of his financial need, as well
as the administrative expense to the Plan.
4.3 Time of Payment. If a Participant elects to receive an
Early Retirement Benefit each year for a period of fifteen
(15) years, payments shall commence as soon as practicable
after the Committee has determined how frequently said
payments will be made. If a Participant elects to receive a
lump sum payment, said payment will be made as soon as
practicable after the Committee has calculated the present
value of the Participant's benefit.
4.4 Calculation of Benefit. A Participant's Early Retirement
Benefit is calculated by initially identifying the
Participant's classification, pursuant to Section 3.4 of
this Plan. Thereafter, a Participant's Normal Retirement
Benefit will be reduced by two percent (2%) for each year
that his Early Retirement Benefit commences before the year
that the Participant would reach the age of sixty-five (65).
For example, if a Participant elects to receive an Early
Retirement Benefit at age sixty (60), the Early Retirement
Benefit would be 10% less than his Normal Retirement Benefit
calculated pursuant to Section 3.4 of this Plan.
Article 5
Disability Benefit
5.1 Disability Benefit. A Participant shall be eligible for a
Disability Benefit if he has been classified as "disabled"
by the Employer's long-term disability insurance carrier,
regardless of the number of Years of Participation he has
with the Employer.
5.2 Mode of Payment. A Participant's Disability Benefit will be
calculated pursuant to Section 5.4 of this Plan. Said
benefit will be paid over a period of no longer than fifteen
(15) years beginning no earlier than the month after the
Participant attains the age of fifty-five (55). The
frequency of Disability Benefit payments (i.e., whether
annually, semi-annually, quarterly or monthly) will be
determined by the Committee following consultation with the
Participant and consideration of his financial need, as well
as the administrative expense to the Plan.
5.3 Time of Payment. Disability benefit payments shall commence
as soon as practicable after the Committee has determined
how frequently said payments will be made, or the month
after the Participant attains the age of fifty-five (55),
whichever occurs later.
5.4 Calculation of Benefit. A Participant's Disability Benefit
will be calculated in the same manner as his Normal
Retirement Benefit, pursuant to Section 3.4 of this Plan.
If a participant, at the time of disability, has not accrued
five (5) years of Participation with the Employer from which
an Average Final Compensation can be computed, his
Disability Benefit will be calculated based upon the average
Compensation received during the Participant's Year(s) of
Participation. However, a Participant's Disability Benefit
will be reduced by the amount of payments received by the
Participant through the Employer's long-term disability
insurance plan.
5.5 Return to Employment. If a Participant who is receiving a
Disability Benefit is able to return to employment with the
Employer, his Disability Benefit shall immediately cease.
The Participant's Normal or Early Retirement Benefit will be
reduced by the number of year(s) or portion of a year for
which the Participant received a Disability Benefit. Said
reduction will apply whether the Participant elects to
receive his Retirement Benefit in lump sum or periodic
payments. The term of the Participant's Disability will be
included in calculating said Participant's consecutive Years
of Participation.
Article 6
Death Benefit
6.1 Death Benefit. If a Participant dies before he has received
any of his benefit from this Plan, the Employer will pay the
Participant's beneficiary a Death Benefit calculated as set
forth in Section 6.4 below. If a Participant dies after
receiving only a portion of either his Normal Retirement
Benefit, Early Retirement Benefit or Disability Benefit, his
Beneficiary will receive the remaining benefits.
6.2 Mode of Payment. A Participant's Death Benefit shall be
paid to his designated Beneficiary in a lump sum if the
Participant dies before receiving any benefit payments from
this Plan. If a Participant had begun to receive either a
Normal Retirement Benefit, Early Retirement Benefit or
Disability Benefit at the time of his death, the
Participant's beneficiary would receive, as the
Participant's Death Benefit, the balance of the remaining
payments to which the Participant was entitled to be paid,
in the same manner and frequency enjoyed by the Participant
unless the Committee approves a request by the Beneficiary
for an alternative method of payment.
6.3 Time of Payment. If a Participant had not begun to receive
a benefit under this Plan at the time of his death, said
Participant's Death Benefit will be paid to the
Participant's beneficiary as soon as practicable after the
Committee receives required proof of death and the
Beneficiary is determined.
6.4 Calculation of Benefit. The calculation for a Participant
who dies before he has received any of his benefit from this
Plan shall utilize the classifications set forth in Section
3.4 of this Plan. Except as provided in Section 6.2 of this
Plan, (i) the Beneficiary of a Participant in Category A or
B shall receive a Death benefit in the amount of 4.5 times
the Participant's Compensation at the time of the
Participant's death; and (ii) the Beneficiary of a
Participant in Category C shall receive a Death Benefit in
the amount of 2.5 times the Compensation of that Participant
at the time of his death. Death Benefit payments to a
Beneficiary of a Participant who had not received any
benefit payments from the Plan at the time of his death,
will consist of the greater of (i) the benefit calculated
pursuant to Section 6.4; or (ii) the accrued benefit under
the Plan.
Article 7
Beneficiary Designation
7.1 Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person or persons as
his Beneficiary or Beneficiaries (both primary as well as
contingent).
7.2 Change of Beneficiary Designation. Any beneficiary
designation may be changed by a Participant at any time by
filing, in writing, such change on a form prescribed by the
Committee. The filing of a new Beneficiary designation form
will cancel all Beneficiary designations previously filed.
The Committee shall be entitled to rely on the last
designation filed by the Participant prior to his death.
7.3 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant's
benefits, then the Participant's designated Beneficiary
shall be deemed to be the Participant's surviving spouse.
If the Participant has no surviving spouse, the benefits
remaining under the Plan shall be payable to the
Participant's personal representative (executor or
administrator of the Participant's estate).
7.4 Effect of Payment. The payment of benefits under the Plan
to the deemed Beneficiary shall completely discharge the
Employer's obligations under this Plan.
Article 8
Termination, Amendment or Modification
8.1 Termination. The Employer reserves the right to terminate
the Plan at any time. Upon termination of the Plan, each
Participant shall receive his accrued benefit in lump sum or
in annual installments over a period of fifteen (15) years,
as determined by the Committee. Payments will be made as
soon as practicable after termination. However, no payment
will be made at the time of termination of this Plan if the
Employer immediately adopts a replacement Plan offering at
least equivalent Retirement Benefits for those Participants
of the terminated Plan.
8.2 Amendment. The Employer may, at any time, amend or modify
the Plan in whole or in part, provided, however, that the
amendment or modification of the Plan shall not affect any
Participant or beneficiary who has become entitled to the
payment of a benefit under the Plan as of the date of the
amendment or modification.
Article 9
Miscellaneous
9.1 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, interest or claims in any
property or assets of Employer. The Employer's obligation
under the Plan shall be merely that of an unfunded and
unsecured promise of the Employer to pay money in the
future.
9.2 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are expressly declared to be
unassignable and nontransferable. No part of the amounts
payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owned by a
Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.
9.3 Not a Contract of Employment. The terms and conditions of
this Plan shall not be deemed to constitute a contract of
employment between the Employer and the Participant, and the
Participant (or his Beneficiary) shall have no rights
against the Employer except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be
deemed to give a Participant the right to be retained in the
service of the Employer or to interfere with the right of
the Employer to discipline or discharge him at any time.
9.4 Protective Provisions. A Participant will cooperate with
the Employer by furnishing any and all information requested
by the Employer in order to facilitate the payment of
benefits hereunder and by taking such physical examinations
as the Employer may deem necessary and taking such other
action as may be requested by the Employer.
9.5 Terms. Whenever any words are used herein in the masculine,
they shall be construed as though they were used in the
feminine in all cases where they would so apply; and
whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases
where they would so apply.
9.6 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and shall
not control or affect the meaning or construction of any of
its provisions.
9.7 Governing Law. The provisions of this Plan shall be
construed and interpreted according to the laws of the State
of Kansas.
9.8 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal
and invalid provision had never been inserted herein.
9.9 Notice. Any notice or filing required or permitted to be
given to the Committee under this Plan shall be sufficient
if in writing and hand-delivered, or sent by registered or
certified mail, to:
Mayflower Contract Services, Inc.
ATTN: Chief Executive Officer
Mayflower Contract Services, Inc.
Executive Retirement Plan
5360 College Boulevard, Suite 200
Overland Park, KS 66211
with copies to:
Senior Vice President - Corporate Development
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the
postmark or the receipt for registration or certification.
9.10 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Employer and its successors and
assigns. The term successors as used herein shall include
any corporate or other business entity which shall, whether
by merger, consolidation, purchase or otherwise acquire all
or substantially all of the business and assets of the
Employer, and successors of any such corporation or other
business entity.
9.11 Payment to Legal Representatives. If any person to whom
benefit payments are due or payable under this Plan shall be
unable to care for his affairs because of illness or
accident, any such payment may be made, unless prior written
claim thereto shall have been made by a duly qualified
guardian or other legal representative, to the spouse,
parent, brother, sister or other person deemed by the
Committee to have incurred expense for such person and on
such terms as the Committee may impose. Any such payment
and any payment to a participant or to the surviving spouse
or other designated beneficiary (or estate) of a deceased
participant or to his legal representative made pursuant to
the provisions of this plan shall, to the extent thereof, be
in full satisfaction of all claims arising hereunder against
this plan, the Employer, the Committee, the Trustee and any
of their subsidiaries, and any and all of them.
Article 10
Administration
10.1 Committee Duties. This Plan shall be administered by a
Committee which shall consist of persons appointed by the
Compensation Committee of the Board of Directors of
Mayflower Group, Inc. Members of the Committee may be
Participants under this Plan. The Committee shall also have
the authority to make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of
this Plan and decide or resolve any and all questions
including interpretations of this Plan, as may arise in
connection with the Plan.
10.2 Agents. In the administration of this Plan, the Committee
may, from time to time, employee agents and delegate to them
such administrative duties as it sees fit and may from time
to time consult with counsel who may be counsel to the
Employer.
10.3 Binding Effect of Decisions. The decision or action of the
Committee with respect to any question arising out of or in
connection with the administration, interpretation and
application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
10.4 Indemnity of Committee. The Employer shall indemnify and
hold harmless the members of the Committee against any and
all claims, loss, damage, expense or liability arising from
any action or failure to act with respect to this Plan,
except in the case of willful misconduct by the Committee or
any of its members.
10.5 Employer Information. To enable the Committee to perform
its functions, the Employer shall supply full and timely
information to the Committee on all matters relating to the
salary of all Participants, the date and circumstances of
the Retirement, Disability, death or Termination of
Employment of all Participants, and such other pertinent
information as the Committee may reasonably require.
10.6 Change in Payments. The Committee shall have the power, in
its sole discretion, to change the manner and time of
payments to be made to a Participant or Beneficiary from
that which would be otherwise payable to such person, if
requested to do so by such Participant or Beneficiary.
FIRST AMENDMENT
TO
MAYFLOWER CONTRACT SERVICES, INC.
EXECUTIVE RETIREMENT PLAN
Pursuant to Section 8.2 of the Mayflower Contract Services,
Inc. Executive Retirement Plan (the "Plan"), Mayflower Contract
Services, Inc., by its Board of Directors, hereby adopts the
following amendments to the Plan as of March 17, 1994:
1. Section 3.4 of the Plan shall be amended and restated in its
entirety as follows:
3.4 Calculation of Benefit. There shall be four
classifications of Normal Retirement Benefit within the
Plan. A Participant shall be advised at the time he
executes a Participation Agreement in which of the four
categories and, if appropriate, at what level in his
category he is classified. If a Participant is moved
to another category or to a different level within his
category during the term of his employment, the
Committee shall notify the Participant in writing of
the reclassification and the reason(s) therefor. Any
change in a Participant's classification will be
subject to approval by the Employer's Board of
Directors. A Participant is subject to movement within
or among the categories until his termination of
employment or disability, at which time the Committee
shall advise the Participant in which of the four
categories and, if appropriate, at what level within
his category he is classified for benefit purposes.
The Normal Retirement Benefits for the categories are
as set forth below:
Category A - sixty percent (60%) of the Participant's
average final compensation
Category B - fifty percent (50%) of the Participant's
average final compensation
Category C - forty-five percent (45%) of the
Participant's average final compensation
Category D - a range from twenty-five percent (25%) to
thirty-five percent (35), inclusive, of the
Participant's average final compensation
2. Section 6.4 is hereby amended and restated in its entirety
as follows:
6.4 Calculation of Benefit. The calculation for a
Participant who dies before he has received any of his
benefit in this Plan shall utilize the classifications
set forth in Section 3.4 of this Plan. Except as
provided in Section 6.2 of this Plan, (i) the
Beneficiary of a Participant in Category A or B shall
receive a Death Benefit in the amount of 4.5 times the
Participant's Compensation at the time of the
Participant's death; and (ii) the Beneficiary of a
Participant in Category C or D shall receive a Death
Benefit in the amount of 2.5 times the Compensation of
that Participant at the time of his death. Death
Benefit payments to a Beneficiary of a Participant who
had not received any benefit payments from the Plan at
the time of his death will consist of the greater of
(iii) the benefit calculated pursuant to Section 6.4;
or (iv) the accrued benefit under this Plan.
3. Capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings ascribed to them in
the Plan.
<PAGE> E-33
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
YEAR ENDING DECEMBER 31, 1993
(In thousands except per share data)
Primary: (1)
Average shares outstanding 12,650
Net effect of options to purchase
common stock-based on the
treasury stock method using
estimated market price 90
------
12,740
======
Net Income:
Before extraordinary loss $ 2,435
Extraodinary loss (549)
-------
$ 1,886
=======
Earnings Per Share:
Income before extraordinary loss $ 0.19
Extraordinary loss (0.04)
-------
$ 0.15
=======
(1) Fully diluted earnings per share do not differ from primary
earnings per share.
<PAGE> E-34
EXHIBIT 21
Direct and Indirect Subsidiaries of Mayflower Group, Inc.
Direct Subsidiaries of Mayflower Group, Inc.:
Mayflower Transit, Inc.
Mayflower Contract Services, Inc.
Mayflower Group, Inc. Political Action Committee
Direct Subsidiaries of Mayflower Transit, Inc.:
Advantage Moving and Storage Co., Inc.
Affiliated Services, Inc.
American Moving & Storage Co., Inc.
American Way Acquiring Corporation
Bladensburg Development Company, Inc.
Cares Services of Indiana, Inc.
Crest-Mayflower International, Inc.
Dobson Moving & Storage, Inc.
Elder Moving & Storage Co.
Gazda Transportation System, Inc.
Gentry Insurance Agency, Inc.
Hogan Transfer and Storage Corporation
Janson Transfer, Inc.
LTC Acquiring Corporation
MacDonald Moving & Storage Co. Ltd.
Mayflower Forwarders, Inc.
Mayflower International, Inc.
Mayflower International Forwarding, Inc.
Mayflower Moving & Storage Co. of California, Inc.
Mayflower Moving and Storage, Inc.
Mayflower of Texas, Inc.
American Transfer and Storage Company
(Subsidiary of Mayflower of Texas, Inc.)
Wald Moving and Storage Services, Inc.
(Subsidiary of Mayflower of Texas, Inc.)
Corpus Christi Transfer Company
(Subsidiary of Wald Moving and
Storage Services, Inc.)
Mayflower Realty, Inc. (Del. Corporation)
Northern Michigan Moving & Storage, Inc.
Pinpoint Transportation Services, Inc.
Smith's Moving and Storage Company, Inc.
Total Insurance, Ltd.
Transit Claims Management, Inc.
Transport Service of Indiana, Inc.
Direct Subsidiaries of Mayflower Contract Services, Inc.:
Allied Bus Sales, Inc.
<PAGE> E-35 EXHIBIT 23
CONSENT OF COOPERS & LYBRAND, INDEPENDENT AUDITORS
Consent of Independent Accountants
We consent to the incorporation by reference in the
registration statements of Mayflower Group, Inc. on Form S-8
(File No's. 33-62340 and 33-62342) of our report dated March 29,
1994, on our audit of the consolidated financial statements and
financial statement schedules of Mayflower Group, Inc. as of
December 31, 1993, and for the year then ended, which report is
included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand
Indianapolis, Indiana
March 29, 1994
