UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-- -----------------
Commission File No. 0-12321
ANUHCO, INC.
-----------
(Exact name of Registrant as specified in its charter)
Delaware 46-0278762
-------------------------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
-------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 859-0055
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at November 8, 1996
-------------------------- -------------------------------
Common stock, $0.01 par value 6,541,750 Shares
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
- ---------
1996 1995
---------- --------
<S> <C> <C>
Operating Revenues.......................................................... $ 30,041 $ 24,651
Operating Expenses.......................................................... 29,332 23,967
--------- --------
Operating Income............................................................ 709 684
--------- --------
Nonoperating Income (Expense)
Interest Income.......................................................... 278 497
Interest Expense......................................................... (5) (6)
Gain on sale of operating property, net.................................. 24 9
Other, net............................................................... -- --
--------- --------
Total nonoperating income (expense).................................. 297 500
--------- --------
Income from Continuing Operations
before Income Taxes...................................................... 1,006 1,184
Income Tax Provision........................................................ 501 509
--------- --------
Income from Continuing Operations........................................... 505 675
Income from Discontinued Operations (Note 6)................................ -- 272
--------- --------
Net Income ................................................................. $ 505 $ 947
========= ========
Average Common Shares Outstanding (Note 5).................................. 6,609 7,392
========= ========
Net Income Per Share from Continuing Operations............................. $ 0.08 $ 0.09
========= ========
Net Income Per Share from Discontinued Operations........................... $ 0.00 $ 0.04
========= ========
Net Income Per Share $ 0.08 $ 0.13
========= ========
<FN>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
- ---------
1996 1995
--------- --------
<S> <C> <C>
Operating Revenues.......................................................... $83,604 $ 73,851
Operating Expenses.......................................................... 82,275 71,716
--------- --------
Operating Income............................................................ 1,329 2,135
--------- --------
Nonoperating Income (Expense)
Interest Income.......................................................... 886 1,655
Interest Expense......................................................... (23) (72)
Gain on sale of operating property, net.................................. 64 52
Other, net............................................................... 4 --
--------- --------
Total nonoperating income (expense).................................. 931 1,635
--------- --------
Income from Continuing Operations
before Income Taxes...................................................... 2,260 3,770
Income Tax Provision........................................................ 1,040 1,621
--------- --------
Income from Continuing Operations........................................... 1,220 2,149
Income from Discontinued Operations (Note 6)................................ -- 867
--------- --------
Net Income ................................................................. $ 1,220 $ 3,016
========= ========
Average Common Shares Outstanding (Note 5).................................. 6,878 7,500
===== =====
Net Income Per Share from Continuing Operations............................. $ 0.18 $ 0.29
========= ========
Net Income Per Share from Discontinued Operations........................... $ 0.00 $ 0.11
========= ========
Net Income Per Share........................................................ $ 0.18 $ 0.40
========= ========
<FN>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
SEPTEMBER 30, 1996 DEC. 31, 1995
--------------------------------
ASSETS (Unaudited)
-------
<S> <C> <C>
Current Assets:
Cash and temporary cash investments...................................... $ 10,925 $ 6,617
Short-term investments 13,680 27,366
Freight accounts receivable, less allowance
for doubtful accounts of $443 and $409, respectively................. 9,859 7,952
Finance accounts receivable, less allowance
for doubtful accounts of $661 and $351, respectively................. 36,476 8,290
Current deferred tax assets.............................................. 270 177
Other current assets..................................................... 1,682 1,291
AFS net assets (Note 6).................................................. 7,990 16,840
---------- --------
Total current assets................................................. 80,882 68,533
---------- --------
Operating Property, at Cost
Revenue equipment........................................................ 21,809 18,944
Land..................................................................... 3,290 2,826
Structures and improvements.............................................. 9,532 7,534
Other operating property................................................. 5,262 4,643
---------- --------
11
39,893 33,947
Less accumulated depreciation........................................ (19,346) (17,724)
---------- --------
Net operating property........................................... 20,547 16,223
---------- --------
Intangibles and Other Assets (Note 2)....................................... 10,286 3,670
---------- --------
$ 111,715 $ 88,426
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Secured notes payable (Note 4)........................................... $ 23,440 $ --
Accounts payable......................................................... 3,114 1,041
Accrued payroll and fringes.............................................. 5,819 5,203
Claims and insurance accruals............................................ 257 224
Accrued and current deferred income taxes................................ 653 288
Other accrued expenses................................................... 1,206 847
---------- --------
Total current liabilities............................................ 34,489 7,603
---------- --------
Deferred Income Taxes....................................................... 637 543
Shareholders' Equity (Note 5)
Preferred stock with $0.01 par value, authorized
1,000,000 shares, none outstanding................................... -- --
Common stock with $0.01 par value, authorized
13,000,000 shares, outstanding 6,578,650 and
7,139,970 shares, respectively....................................... 76 76
Paid-in capital.......................................................... 5,514 5,357
Retained earnings........................................................ 79,610 78,390
Treasury stock, 1,023,720 and 417,100 shares, respectively, at cost...... (8,611) (3,543)
--------- --------
Total shareholders' equity........................................... 76,589 80,280
--------- --------
$ 111,715 $ 88,426
========== ========
<FN>
The accompanying notes to consolidated financial statements are an integral
part of this statement.
</TABLE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands)
(Unaudited)
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income.......................................................... $ 1,220 $ 3,016
Adjustments to reconcile net income to
cash provided by operating activities
Gain on sale of operating property, net......................... (64) (50)
Depreciation and amortization................................... 2,616 2,107
Provision for uncollectible accounts............................ 611 250
Deferred tax provision.......................................... 697 435
Net increase (decrease) from change in other
working capital items affecting operating activities........... (644) (14)
Income from discontinued operations............................. -- (867)
--------- ----------
4,436 4,877
--------- ----------
Cash Flows From Investing Activities
Purchase of finance subsidiaries (Note 2)........................... (11,979) (11,216)
Purchase of operating property...................................... (6,370) (4,008)
Origination of finance accounts receivables......................... (88,206) (22,497)
Sale of finance accounts receivables................................ 30,140 15,336
Collection of owned finance accounts receivables.................... 59,711 8,018
Collection of long-term receivable.................................. -- 1,270
Purchases of short-term investments................................. (17,454) (52,582)
Maturities of short-term investments................................ 39,628 58,230
--------- ----------
5,470 (7,449)
--------- ----------
Cash Flows From Financing Activities
Payments to acquire treasury stock.................................. (4,982) (3,543)
Borrowings (repayments) on credit agreements, net................... (335) --
Other............................................................... (281) (26)
--------- ----------
(5,598) (3,569)
--------- ----------
Net Increase (Decrease) in Cash and Temporary Cash Investments........ 4,308 (6,141)
Cash and Temporary Cash Investments at beginning of period............ 6,617 11,365
--------- ----------
Cash and Temporary Cash Investments at end of period.................. $ 10,925 $ 5,224
========= ==========
Cash Paid During the Period for
Interest............................................................ $ 854 $ --
Income Tax.......................................................... $ 92 $ 1,153
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
<CAPTION>
Total
Share
Common Paid-In Retained Treasury holders'
Stock Capital Earnings Stock Equity
----- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994.................. $ 76 $ 5,339 $ 72,004 $ -- $ 77,419
Income from continuing operations............. -- -- 2,810 -- 2,810
Income from discontinued operations........... -- -- 3,576 -- 3,576
Issuance of shares under Incentive Stock Plan -- 18 -- -- 18
Purchase of 417,100 shares of common stock.... -- -- -- (3,543) (3,543)
------ ------- --------- -------- --------
Balance at December 31, 1995.................. 76 5,357 78,390 (3,543) 80,280
Income from continuing operations............. -- -- 1,220 -- 1,220
Income from discontinued operations........... -- -- -- -- --
Issuance of shares under Incentive Stock Plan. -- 157 -- (87) 70
Purchase of 596,400 shares of common stock.... -- -- -- (4,981) (4,981)
------ ------- --------- -------- --------
Balance at September 30, 1996 (unaudited)..... $ 76 $ 5,514 $ 79,610 $ (8,611) $ 76,589
====== ======= ========= ======== ========
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
ANUHCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include Anuhco and all of its subsidiary
companies (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation. The condensed financial
statements included herein have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and have not been
examined or reviewed by independent public accountants. In the opinion of
management, all adjustments necessary to fairly present the results of
operations have been made.
Pursuant to SEC rules and regulations, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
from these statements unless significant changes have taken place since the end
of the most recent fiscal year. Anuhco believes that the disclosures contained
herein, when read in conjunction with the financial statements and notes
included, or incorporated by reference, in Anuhco's Form 10-K, filed with the
SEC on March 11, 1996, are adequate to make the information presented not
misleading. It is suggested, therefore, that these statements be read in
conjunction with the statements and notes included, or incorporated by
reference, in the aforementioned report on Form 10-K.
2. ACQUISITION OF PREMIUM FINANCE SUBSIDIARIES
On May 31, 1995, Anuhco completed the acquisition of all of the issued and
outstanding stock of Agency Premium Resource, Inc. and subsidiary ("APR"). The
purchase price, together with payments for certain services to be rendered by
the sellers after closing, was approximately $11.3 million. In addition to the
Stock Purchase Agreement by which Anuhco acquired all of the APR stock, Anuhco
entered into a consulting agreement with a former shareholder of APR, and an
employment agreement with APR's president and chief executive officer. Under
the former, Anuhco is entitled to consult with the former majority shareholder
regarding APR for three years. Under the latter, APR is entitled to the
continuation of the services of the president and chief executive officer for
five years. This transaction was accounted for as a purchase. Anuhco utilized
a portion of its available cash and investments to consummate the purchase. The
terms of the acquisition and the purchase price resulted from negotiations
between Anuhco and the APR shareholders.
APR offers insurance premium financing and related services through approved
insurance agencies, primarily throughout the midwestern United States. Its
wholly owned subsidiary, Agency Services, Inc., provides motor vehicle report
services throughout the same geographic area.
In connection with the purchase of APR, Anuhco recorded goodwill of $2.4
million, which will be amortized on the straight-line basis over 15 years, and a
software and service agreement of $1.0 million, which will be amortized over 5
years.
On March 29, 1996, Anuhco completed the acquisition of all of the issued and
outstanding stock of Universal Premium Acceptance Corporation and UPAC of
California, Inc. (together referred to as "UPAC"). UPAC offers short-term
collateralized financing of commercial and personal insurance premiums through
approved insurance agencies in over 30 states throughout the United States. At
March 31, 1996, UPAC had outstanding net finance receivables of approximately
$30 million. This transaction was accounted for as a purchase. Anuhco utilized
a portion of its available cash and short-term investments to consummate the
purchase at a price of approximately $12 million. The terms of the acquisition
and the purchase price resulted from negotiations between Anuhco and William H.
Kopman, the former sole shareholder of UPAC. In connection with the purchase of
UPAC, based on a preliminary allocation of the purchase price, Anuhco has
recorded goodwill of $6.3 million, which will be amortized on the straight-line
basis over 25 years.
In addition to the Stock Purchase Agreement by which Anuhco acquired all of
the UPAC stock, Anuhco entered into a consulting agreement with Mr. Kopman.
Under the consulting agreement, Anuhco is entitled to consult with Mr. Kopman on
industry developments as well as UPAC operations through December 31, 1998. In
addition to retaining the services of Mr. Kopman under a consulting agreement,
existing executive management personnel of UPAC have been retained under
multiyear employment agreements. Anuhco's acquisition of UPAC, in combination
with its earlier acquisition, gives the Company a nationwide presence in this
financial services industry.
The following reflects the pro forma operating results of Anuhco for the third
quarter ended September 30, 1995 and the nine months ended September 30, 1996
and 1995, assuming the acquisitions occurred as of the beginning of each of the
respective periods:
<TABLE>
Pro Forma Operating Results
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Third
Quarter Nine Months
----------------------
1995 1996 1995
-------- --------- --------
<S> <C> <C> <C>
Operating Revenues.............................. $ 25,862 $ 84,837 $ 79,043
Income from Continuing Operations............... 677 1,205 2,290
Income from Discontinued Operations............. 272 -- 867
-------- --------- --------
Net Income...................................... $ 949 $ 1,205 $ 3,157
======== ========= ========
Net Income Per Share:
Continuing Operations....................... $ 0.09 $ 0.18 $ 0.31
Discontinued Operations..................... 0.04 0.00 0.11
-------- --------- --------
Total.................................. $ 0.13 $ 0.18 $ 0.42
======== ========= ========
</TABLE>
The pro forma results of operations are not necessarily indicative of the actual
results that would have been obtained had the acquisitions been made at the
beginning of the respective periods, or of results which may occur in the
future.
3. PROFIT SHARING
In September 1988, the employees of Crouse Cartage Company ("Crouse Cartage"),
a wholly owned subsidiary of Anuhco, approved the establishment of a profit
sharing plan ("the Plan"). The Plan is structured to allow all employees (union
and non-union) to ratably share 50% of Crouse Cartage's income before income
taxes (excluding extraordinary items and gains or losses on the sale of assets)
in return for a 15% reduction in their wages. Plan distributions are made on a
quarterly basis. The Plan was recertified in 1991 and 1994, and shall continue
in effect through March 31, 1998, or until a replacement of the Collective
Bargaining Agreement is reached between the parties, whichever is the later.
The accompanying consolidated balance sheet as of September 30, 1996 includes an
accrual for profit sharing costs of $953,000. The accompanying consolidated
statements of income include profit sharing costs of $953,000 and $732,000 for
the third quarter of 1996 and 1995, respectively, and $2,142,000 and $2,918,000
for the first nine months of 1996 and 1995, respectively.
4. FINANCING AGREEMENTS
In October, 1995, the Company, APR, and APR Funding Corporation, a wholly
owned subsidiary of APR, entered into an extendible three year securitization
agreement whereby undivided interests in a designated pool of finance accounts
receivable can be sold on an ongoing basis. The maximum allowable amount of
receivables to be sold under the agreement is $30,000,000. This agreement
replaced a similar agreement with another financial institution that was entered
into in July, 1993. The purchaser permits principal collections to be
reinvested in new financing agreements. APR had securitized receivables of
$15.2 million at September 30, 1996. The cash flows from the sale of
receivables are reported as investing activities in the accompanying
consolidated statement of cash flows. The securitized receivables are reflected
as sold in the accompanying balance sheet. The proceeds from the initial
securitization of the receivables were used to pay off the previous securitized
receivables under the prior agreement.
APR did not record a gain or loss on the sales as the costs of receivables
sold approximated the proceeds. The terms of the securitization agreement
require that APR maintain a default reserve at specified levels which serves as
collateral. At September 30, 1996, approximately $1.8 million of owned finance
receivables served as collateral under the default reserve provision. APR
continues to service the securitized receivables for which it receives a
servicing fee.
As of September 30, 1996, UPAC had outstanding secured notes payable of $22.5
million under a restated secured credit agreement with three banks dated as of
July 29, 1994, as amended on August 14, 1995, April 3, 1996 and August 31, 1996.
The restated secured credit agreement is secured by UPAC receivables, and
provides an aggregate maximum principal amount outstanding not to exceed the
lesser of $30,000,000 or 85% of the qualified notes assigned to the banks and
the sum of the outstanding principal of and the accrued interest on, the
additional obligations to insurance agents with whom UPAC does business
evidenced by promissory notes. This credit agreement, as amended, is scheduled
to expire in the fourth quarter of 1996. After August 31, 1996, 76% of
borrowings, $17.1 million at September 30, 1996, are at 7.0%, while the
remaining 24% of borrowings, $5.4 million at September 30, 1996, are at the
bank's prime rate, which was 8.25%. The acquisition of UPAC by Anuhco resulted
in certain technical events of default of the secured credit agreement which
were waived by the lenders. UPAC's domestic banking system provides for the
daily replenishment of major bank accounts for check clearing requirements.
Accordingly, outstanding checks of $978,000 at September 30, 1996 are also
included in secured notes payable.
In September 1988, Crouse Cartage entered into a multi-year credit agreement
with a commercial bank which provided for maximum borrowings equaling the lesser
of $2,500,000 or the borrowing base, as defined in such agreement. In
September, 1995 the term of this agreement was extended to June 30, 1997. There
was no outstanding balance on this revolving line of credit at September 30,
1996.
5. SHAREHOLDERS' EQUITY
Income per share is based on the average number of common shares outstanding
during each period. The average number of common shares so computed was
6,609,287 and 6,877,995 for the quarter and nine months ended September 30,
1996, and 7,392,253 and 7,499,723 for the quarter and nine months ended
September 30, 1995, respectively.
On June 26, 1995, the Company adopted a program to repurchase up to 10% of its
outstanding shares of common stock. During the second quarter of 1996, the
Company completed this initial repurchase program and expanded the number of
shares authorized to be repurchased by an additional 10% of its then outstanding
shares. During the third quarter and first nine months of 1996, the Company
repurchased an additional 75,100 shares and 596,400 shares of common stock,
respectively, bringing the total shares repurchased to 1,013,500 shares, or
13.4% of outstanding shares before initiating the program, at a total cost of
$8,525,000.
6. AFS NET ASSETS
Under the provisions of a Joint Plan of Reorganization ("the Joint Plan"), AFS
is responsible for the administration of pre-July 12, 1991 creditor claims and
conversion of assets owned before that date. As claims are allowed and cash is
available, distributions to the creditors occur. The Joint Plan also provided
for distributions to Anuhco as unsecured creditor distributions occurred in
excess of 50% of allowed claims. Anuhco also will receive the full benefit of
any remaining assets of AFS through its ownership of AFS stock, after unsecured
creditors received distributions, including interest, equivalent to 130% of
their claims.
AFS has made the full payment of all its resolved claims and liabilities. The
remaining AFS net assets are estimated to have net realizable value of $11.1
million. The primary assets include approximately $6.2 million in cash and
investments. Gross unresolved claims, primarily related to workers'
compensation indemnification issues, are approximately $4 million. In July 1996,
AFS paid a dividend of $8.5 million to Anuhco. This dividend was paid from the
excess cash and investments of AFS and did not result in the recognition of
additional income from discontinued operations.
AFS is in the process of resolving these claims, however until this process is
completed the amount of liabilities cannot be ascertained. The ultimate
resolution of the amounts, validity and priority of recorded liabilities and
other claims is uncertain at this time. Accordingly, AFS net assets reflect
estimated amounts due on such liabilities and claims.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Third quarter and nine months ended September 30, 1996 compared to the third
quarter and nine months ended September 30, 1995
With the acquisition of APR on May 31, 1995, and UPAC on March 29, 1996,
Anuhco now operates in two distinct industries; transportation, through its
subsidiary, Crouse Cartage; and financial services, through its subsidiaries,
APR and UPAC.
TRANSPORTATION
- --------------
Operating Revenue - The changes in transportation operating revenue are
summarized in the following table (in thousands):
<TABLE>
<CAPTION>
Qtr. 3 1996 Nine Months 1996
vs. vs.
Qtr. 3 1995 Nine Months 1995
----------- ----------------
<S> <C> <C>
Increase (decrease) from:
Increase in LTL tonnage........................ $5,344 $9,261
Decrease in LTL revenue per hundredweight...... (1,232) (3,103)
Increase (decrease) in truckload revenues...... 172 (234)
------ ------
Net increase............................... $4,284 $5,924
====== ======
</TABLE>
Less-than-truckload ("LTL") operating revenues rose by 22.4% and 10.9% in the
third quarter and first nine months of 1996, respectively, as compared to the
same periods in 1995. In spite of severe winter weather in the first quarter of
1996 which management estimates caused a loss of three revenue days in the
quarter, Crouse achieved 29.1% and 16.3% increases in LTL tons for the third
quarter and first nine months of 1996, respectively, over the corresponding
periods of 1995. The trucking industry, including Crouse Cartage, continues to
be adversely impacted by the competitive market pressures on freight rates
during the current periods, which reduced Crouse Cartage's LTL revenue yield by
approximately 6.7% and 5.5% for the quarter and nine months, respectively.
Truckload operating revenues were 3.3% higher in the third quarter on 4.7%
more shipments, offset by a 1.4% decline in revenue per shipment. For the first
nine months of 1996, truckload operating revenue fell 1.5% on a 2.2% decline in
number of shipments and a 0.7% overall increase in revenue per shipment.
Operating Expense - A comparative summary of transportation operating expenses
as a percent of transportation operating revenue follows:
<TABLE>
<CAPTION>
Percent of Operating Revenue
---------------------------------------------
Third Quarter Nine Months
------------------- -------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Salaries, wages and employee benefits................... 56.2% 55.8% 55.9% 55.5%
Operating supplies and expenses.......................... 12.1% 11.2% 12.8% 11.4%
Operating taxes and licenses............................. 2.6% 2.5% 2.8% 2.7%
Insurance and claims..................................... 2.0% 2.3% 2.0% 2.2%
Depreciation............................................. 2.5% 2.6% 2.5% 2.4%
Purchased transportation................................. 21.1% 22.5% 21.2% 21.7%
----- ----- ----- -----
Total operating expenses............................. 96.5% 96.9% 97.2% 95.9%
===== ===== ===== =====
</TABLE>
Crouse Cartage's operating expenses as a percentage of operating revenue, or
operating ratio, fell from 96.9% to 96.5% for the third quarter and rose from
95.9% to 97.2% for the first nine months of 1995 as compared to 1996. The
decrease in Crouse's operating ratio for the third quarter was primarily due to
a reduction in purchased transportation resulting from a change in the mix of
LTL and TL tons from the third quarter of 1995. Additionally, in the third
quarter of 1996 fuel costs have remained at levels substantially above that
experienced in 1995. The increase in Crouse's operating ratio for the nine
months was primarily the result of continued high fuel costs, increased linehaul
and maintenance costs, the severe winter storms which occurred in Crouse's
operating territory in the first quarter and the reduction in operating revenue
per ton.
Management expects the difficult economic operating environment in the
transportation industry and the pressure on freight rates to continue in the
short term.* In addition, a 3.7% contractual increase in union salaries and
benefits went into effect on April 1, 1996. *This is a forward-looking
statement which involves risks and uncertainties that are detailed under caption
"Forward-Looking Statements".
FINANCIAL SERVICES
- -------------------
In the third quarter and first nine months of 1996, APR and UPAC (since March
29, 1996) financed $34.0 million and $85.9 million in insurance premiums at an
average annual yield of 14.7% and 14.4%, respectively. These operations
generated a net operating loss of $14,000 on net finance charges and fees earned
of $2.1 million for the third quarter of 1996, and operating income of $73,000
on net finance charges and fees earned of $5.1 million for the first nine months
of 1996. The Company has incurred some duplicate administrative costs as it
integrates the operations of APR and UPAC. Certain of these duplicate costs
will continue through the first half of 1997.
OTHER
- -----
Primarily as a result of its utilization of cash and short-term investments
for the acquisitions of APR and UPAC since the first quarter of 1995, Anuhco
recorded a substantial decrease in interest income for the third quarter and
nine months ended September 30, 1996, from the corresponding periods of 1995.
Anuhco's effective tax rate increased for the third quarter and nine months of
1996, to 50% and 46%, respectively, from 43% for the same periods of 1995.
These increases were due primarily to the impact of non-deductible purchase
intangibles amortization on reduced income levels in the financial services
operations. During the third quarter and nine months of 1995, the Company
recognized income from discontinued operations relating to additional deferred
tax benefits.
Outlook
- -------
The following statements are forward-looking statements, within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, and as such
involve risks and uncertainties which are detailed below under the caption
"Forward-Looking Statements".
The Company is currently developing a three-year strategic plan with the goals
of continuing the growth of its business segments, and making the financial
services segment a more equal contributor to the Company's earnings per share.
In the transportation segment the plan calls for the Company to continue to
provide and improve upon its already superior service to its customers in its
primary operating territory, while extending its operations throughout the
Midwest. As the Company makes the strategic investments necessary to support
this expansion, the Company intends to continue to improve the efficiency and
effectiveness of its existing base of operations.
The first step for the financial services segment is the successful
integration of the operations of APR and UPAC. The continued growth of this
operation will involve the expansion of its licensing and qualifications to
include all 50 states. The financial services segment will also focus on
increasing its market penetration in certain states with substantial population
and industrial base.
In addition to the expansion of its existing operations in each of its
business segments, the Company continues to consider potential acquisitions
which would complement these operations.
Forward-Looking Statements
- --------------------------
Certain statements contained in this Quarterly Report on Form 10-Q which are
not statements of historical fact constitute forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
including, without limitation, the statements specifically identified as
forward-looking statements in this Form 10-Q. In addition, certain statements
in future filings by the Company with the Securities and Exchange Commission, in
the Company's press releases, and in oral statements made by or with the
approval of an authorized executive officer of the Company which are not
statements of historical fact constitute forward-looking statements within the
meaning of the Act. Examples of forward-looking statements include, but are not
limited to (i) projections of revenues, income or loss, earnings or loss per
share, capital expenditures, the payment or non-payment of dividends, capital
structure and other financial items, (ii) statements of plans and objectives of
the Company or its management or Board of Directors, including plans or
objectives relating to the products or services of the Company, (iii) statements
of future economic performance, and (iv) statements of assumptions underlying
the statements described in (i), (ii) and (iii). These forward-looking
statements involve risks and uncertainties which may cause actual results to
differ materially from those anticipated in such statements. The following
discussion identifies certain important factors that could affect the Company's
actual results and actions and could cause such results or actions to differ
materially from any forward-looking statements made by or on behalf of the
Company that related to such results or actions. Other factors, which are not
identified herein, could also have such an effect.
Transportation
- --------------
Certain specific factors which may affect the Company's transportation
operation include: increasing competition from other regional and national
carriers for freight in the Company's primary operating territory; increasing
price pressure; changes in fuel prices; labor matters; including changes in
labor costs, and other labor contract issues; and, environmental matters.
Financial Services
- ------------------
Certain specific factors which may affect the Company's financial services
operation include: the performance of financial markets and interest rates; the
performance of the insurance industry; increasing competition from other premium
finance companies and insurance carriers for finance business in the Company's
key operating states; failure to achieve the Company's anticipated levels of
expense savings from the integration of APR's and UPAC's administrative
functions; difficulty in integrating the computer and operating systems; the
loss of experienced, trained personnel during the transition period; the loss of
customer identification with the Company as the businesses are combined; and,
the inability to obtain continued financing at a competitive cost of funds.
General Factors
- ---------------
Certain general factors which could affect both the Company's transportation
operation and the Company's financial services operation include: changes in
general business and economic conditions; changes in governmental regulation,
and; tax changes. Expansion of these businesses into new states or markets is
substantially dependent on obtaining sufficient business volumes from existing
and new customers in these new markets at compensatory rates.
The cautionary statements made pursuant to Section 21E of the Securities
Exchange Act of 1934, as amended, are made as of the date of this Report and are
subject to change. The cautionary statements set forth in this Report are not
intended to cover all of the factors that may affect the Company's businesses in
the future. Forward-looking information disseminated publicly by the Company
following the date of this Report may be subject to additional factors hereafter
published by the Company.
FINANCIAL CONDITION
The Company's financial condition remained strong at September 30, 1996 with
over $24 million in cash and investments at the Anuhco level, as well as
approximately $6 million in cash and investments included in the net assets of
AFS. In July 1996, AFS paid a dividend of $8.5 million to Anuhco from its
excess cash and investments. During the first quarter of 1996 Anuhco completed
the acquisition of UPAC using approximately $12 million in available funds. In
addition, during the first nine months of 1996, the Company has purchased $6.4
million of operating property and equipment, without incurring any long term
indebtedness.
On October 20, 1995 APR entered into a three year agreement with a receivable
purchaser to sell an undivided interest in a designated pool of receivables.
The maximum allowable receivables to be sold under this agreement is $30
million. Proceeds from the initial funding of this agreement were utilized to
eliminate all outstanding balances under a prior agreement. As of September 30,
1996, APR had securitized receivables with an outstanding balance of $15.2
million. Anuhco serves as guarantor in certain limited circumstances under this
agreement.
UPAC finances its outstanding receivables under a secured credit agreement
dated July 29, 1994, as amended on August 14, 1995, April 3, 1996, August 31,
1996 and, October 31, 1996, which provides for maximum borrowings of the lesser
of $30 million or 85% of qualified receivables. This agreement, as amended, is
scheduled to expire in the fourth quarter of 1996. As of September 30, 1996,
UPAC had outstanding secured notes payable under the credit agreement of $22.5
million. The Company is currently evaluating proposals to expand APR's
receivables securitization agreement to include UPAC's receivables or to replace
both financing arrangements within a combined receivables securitization
agreement with UPAC's primary bank lender, under terms comparable to APR's
securitization agreement.
On June 26, 1995, the Company adopted a program to repurchase up to 10% of its
outstanding shares of common stock. During the second quarter of 1996 the
Company completed this program and expanded the program to include an additional
10% of its then outstanding shares. During the third quarter and nine months of
1996, respectively, the Company repurchased an additional 75,100 and 596,400
shares of common stock bringing the total shares repurchased to 1,013,500, or
13.4% of outstanding shares before initiating the program, at a total cost of
$8,525,000. This program is being funded from available cash and investments.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Reference is made to Item 3 of the Registrant's
- --------------------------
Annual Report on Form 10-K for the year ended December 31, 1995.
Item 2. Changes in Securities None
- ------------------------------
Item 3. Defaults Upon Senior Securities None
- ----------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders None
- ------------------------------------------------------------
Item 5. Other Information None
- --------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
10(a)* Amendment No. 3, Extension, Waiver and Assignment to Restated
Secured Credit Agreement by and among Universal Premium
Acceptance Corporation, The First National Bank of Boston, Magna
Bank of Missouri and The Sumitomo Bank, dated August 31, 1996.
10(b)* Amendment No. 4 and Extension to Restated Secured Credit
Agreement by and among Universal Premium Acceptance Corporation,
The First National Bank of Boston and The Sumitomo Bank, dated
October 31, 1996.
19(a)* Report to Shareholders for the Third Quarter, 1996, dated October
24, 1996.
27 * Financial Data Schedule
* Filed herewith.
(b) Reports on Form 8-K None
( SIGNATURE)
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Anuhco, Inc.
---------------------------
Registrant
By: /s/Timothy P. O'Neil
--------------------------------
Timothy P. O'Neil, President &
Chief Financial Officer
Date: November 13, 1996
EXHIBIT INDEX
Assigned
Exhibit
Number Description of Exhibit
- ------ ------------------------------------------------------------------------
10(a) Amendment No. 3, Extension, Waiver and Assignment to Restated Secured
Credit Agreement by and among Universal Premium Acceptance Corporation,
The First National Bank of Boston, Magna Bank of Missouri and The
Sumitomo Bank, dated August 31, 1996.
10(b) Amendment No. 4 and Extension to Restated Secured Credit Agreement by and
Among Universal Premium Acceptance Corporation, The First National Bank
of Boston and The Sumitomo Bank, dated October 31, 1996.
19(a) Report to Shareholders for the Third Quarter, 1996, dated October 24,
1996.
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANUHCO,
INC.'S CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 AND CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000719271
<NAME> ANUHCO, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 10925
<SECURITIES> 13680
<RECEIVABLES> 47439
<ALLOWANCES> 1104
<INVENTORY> 0
<CURRENT-ASSETS> 80882
<PP&E> 39893
<DEPRECIATION> 19346
<TOTAL-ASSETS> 111715
<CURRENT-LIABILITIES> 34489
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> 76513
<TOTAL-LIABILITY-AND-EQUITY> 111715
<SALES> 0
<TOTAL-REVENUES> 83604
<CGS> 0
<TOTAL-COSTS> 82275
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 2260
<INCOME-TAX> 1040
<INCOME-CONTINUING> 1220
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1220
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
ANUHCO, INC. THIRD QUARTER 1996 REPORT TO SHAREHOLDERS
Anuhco's third quarter 1996 results reflect continued improvements in freight
volumes offset in part by the competitive pricing market in the transportation
industry and the high level of fuel costs experienced so far this year. Also
reflected are some duplicate costs incurred in integrating the Company's
financial services operations. Consolidated income from continuing operations
for the third quarter of 1996 was $505,000, or $0.08 per share, on operating
revenue of $30.0 million; compared to $675,000, or $0.09 per share on operating
revenue of $24.7 million during the same quarter of 1995. Income from
discontinued operations for the third quarter of 1995 was $272,000, or $0.04
per share.
Third quarter operating results for Crouse Cartage Company, Anuhco's general
commodities motor carrier, were up compared to 1995, resulting primarily from
growth in less-than-truckload ("LTL") tonnage which showed a 29.1% improvement.
Third quarter operating income was $981,000 on revenue of $27.9 million versus
$741,000 on revenue of $23.6 million during 1996 and 1995, respectively. The
improvement from growth in LTL tonnage was offset somewhat by continued pressure
on freight rates resulting from industry over-capacity which pushed Crouse
Cartage's revenue per hundredweight down 5.2% compared to the same quarter of
1995 and continued high fuel costs which contributed to an increase in operating
expenses.
Agency Premium Resource, Inc. ("APR") and Universal Premium Acceptance
Corporation ("UPAC"), Anuhco's insurance premium finance subsidiaries, generated
an operating loss of $14,000 on net finance charges and fees earned of $2.1
million for the third quarter of 1996. This loss was the result of certain
duplicate costs incurred while the back office operations of APR and UPAC are
integrated. Some additional integration costs will be incurred through the first
half of 1997. The fully integrated operations of APR and UPAC will provide a
nationwide presence and opportunity for further expansion in this market.
Anuhco continued the second phase of its program to repurchase an additional 10%
of its outstanding shares, approximately 681,300 shares. Through September 30,
1996, Anuhco has repurchased 257,800 shares.
Anuhco continues to maintain a strong cash and investment position of
approximately $24.6 million as of September 30, 1996. In July 1996, AFS,
Anuhco's discontinued operation, paid a dividend of $8.5 million to Anuhco from
its excess cash and investments. After the dividend, AFS had remaining net
assets of approximately $8 million, $6 million of which is in cash and
investments.
In the fourth quarter of 1996, Anuhco will offer a program to repurchase shares
of its common stock from odd lot holders (those shareholders with less than 100
shares) at current market prices. This program will reduce the Company's
administrative costs while providing an opportunity for small shareholders to
sell their shares with no broker commissions.
Timothy P. O'Neil Roy R. Laborde
President Chairman
<TABLE>
ANUHCO, INC.
UNAUDITED SUMMARY FINANCIAL STATEMENTS
(in thousands, except per share data)
CONSOLIDATED STATEMENTS OF INCOME
Third Quarter and Nine Months Ended September 30, 1996 and 1995
<CAPTION>
Third Quarter Nine Months
-------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Revenues.............................................. $ 30,041 $ 24,651 $ 83,604 $ 73,851
Operating Expenses.............................................. 29,332 23,967 82,275 71,716
----------- ----------- ----------- -----------
Operating Income................................................ 709 684 1,329 2,135
Non-Operating Income............................................ 297 500 931 1,635
----------- ----------- ----------- -----------
Income From Continuing Operations Before Income Taxes........... 1,006 1,184 2,260 3,770
Income Tax Provision............................................ 501 509 1,040 1,621
----------- ----------- ----------- -----------
Income From Continuing Operations............................... 505 675 1,220 2,149
Income From Discontinued Operations............................. -- 272 -- 867
----------- ----------- ----------- -----------
Net Income...................................................... $ 505 $ 947 $ 1,220 $ 3,016
Income Per Share -
Continuing Operations......................................... $ 0.08 $ 0.09 $ 0.18 $ 0.29
Discontinued Operations....................................... 0.00 0.04 0.00 0.11
----------- ----------- ----------- -----------
Total....................................................... $ 0.08 $ 0.13 $ 0.18 $ 0.40
Average Common Shares Outstanding............................... 6,609 7,392 6,878 7,500
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
09/30/96 12/31/95
----------- -----------
<S> <C> <C>
ASSETS
------
Cash and Short-Term Investments................................. $ 24,606 $ 33,983
Finance Accounts Receivable, net................................ 36,476 8,290
Other Current Assets............................................ 19,800 26,260
----------- -----------
Total Current Assets.......................................... 80,882 68,533
Operating Property, net......................................... 20,547 16,223
Intangible and Other Assets..................................... 10,286 3,670
----------- -----------
$ 111,715 $ 88,426
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Notes Payable, Secured.......................................... $ 23,440 $ --
Other Current Liabilities....................................... 11,049 7,603
----------- -----------
Total Current Liabilities..................................... 34,489 7,603
Deferred Income Taxes........................................... 637 543
Shareholders' Equity............................................ 76,589 80,280
----------- -----------
$ 111,715 $ 88,426
</TABLE>
Anuhco, Inc. 8245 Nieman Road, Suite 100, Lenexa, Kansas 66214
(913) 859-0055
AMENDMENT NO. 3, EXTENSION, WAIVER AND ASSIGNMENT TO
RESTATED SECURED CREDIT AGREEMENT
This Amendment No. 3, Extension, Waiver and Assignment to Restated Secured
Credit Agreement (this "Amendment") is entered into as of the 31st day of
August, 1996 by and among Universal Premium Acceptance Corporation (the
"Company"), a Missouri corporation, The First National Bank of Boston ("FNBB"),
in its capacity as agent for the Banks hereinafter referred to (in such
capacity, the "Agent"), in its individual capacity as a Bank and in its capacity
as Assignee as contemplated in Section 5 hereof, Magna Bank of Missouri,
successor by merger to Landmark Bank and formerly known as Magna Bank of St.
Louis, in its capacity as Assignor as contemplated in Section 5 hereof
("Magna"), and The Sumitomo Bank, Limited, as successor to The Daiwa Bank,
Limited ("Sumitomo"). Sumitomo and FNBB in its individual capacity are herein
referred to as the "Banks".
WITNESSETH:
WHEREAS, the Company, the Banks and the Agent are parties to that certain
Restated Secured Credit Agreement, dated as of July 29, 1994, as amended by
Amendment No. 1 to Restated Secured Credit Agreement dated as of August 14, 1995
and Amendment No. 2 and Waiver dated as of April 3, 1996 (as so amended, the
"Restated Secured Credit Agreement"); and
WHEREAS, the Company has requested the Agent and the Banks to extend the
maturity of the Restated Secured Credit Agreement for an additional period,
reduce certain pricing applicable thereto and amend a certain financial covenant
applicable to the Company thereunder; and
WHEREAS, the Agent and the Banks are willing to modify the Restated
Secured Credit Agreement to reflect such actions on the terms and subject to the
conditions set forth below; and
WHEREAS, Magna has requested FNBB to assume all of its outstanding rights
and obligations under the Restated Secured Credit Agreement, to be effective as
of the date of this Amendment, and FNBB is willing to do so on the terms and
subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises set forth above, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Terms defined in the Restated Secured Credit Agreement
which are used herein shall have the same meanings as set forth in the Restated
Secured Credit Agreement unless otherwise defined herein.
2. EXTENSION OF MATURITY DATE. As provided in the Restated Secured
Credit Agreement, the Revolving Loan Commitment is set to expire on August 31,
1996, due to the Banks' having given notice of the occurrence of the Maturity
Date on such date as contemplated in the definition of "Maturity Date" set forth
in Section 10.1 of the Restated Secured Credit Agreement. Notwithstanding such
notice, the Banks hereby agree to extend the Maturity Date for an additional
period to October 31, 1996. This extension shall be effective solely for the
period described above and shall not be deemed to be an agreement to grant any
further extensions of the Maturity Date, or a waiver of any rights or remedies
that the Banks may now or hereafter exercise under the Restated Secured Credit
Agreement, including the right to receive payment in full of all amounts then
outstanding on October 31, 1996.
3. AMENDMENTS TO RESTATED SECURED CREDIT AGREEMENT. Effective as of the
date first above written and subject to the satisfaction of the conditions
precedent set forth in Section 6 below, the Restated Secured Credit Agreement is
hereby amended as follows:
(a) Section 3.1.1 (a) of the Restated Secured Credit Agreement is amended
and restated in its entirety as follows:
"(a) The term "Effective Rate" shall mean, with respect to each portion
of the Revolving Loan (i) not subject to a LIBOR Pricing Option, a rate per
annum equal to the Base Rate, and (ii) subject to a LIBOR Pricing Option, a
rate per annum equal to the LIBOR Rate plus two percent (2.00%) for each
Interest Period applicable thereto; provided that with respect to the
Percentage Interest of FNBB in any portion of any Revolving Loan from and
after August 31, 1996, the Effective Rate shall mean, with respect to all
portions of the Revolving Loan (y) not subject to a LIBOR Pricing Option, a
rate per annum equal to 7%, and (z) subject to a LIBOR Pricing Option, a
rate per annum equal to the LIBOR Rate plus two percent (2.00%) for each
Interest Period applicable thereto in effect on August 31, 1996 but
expiring after such date, and a rate per annum equal to 7% after the expiry
of such interest period.".
(b) Section 8.13 of the Restated Secured Credit Agreement is hereby
amended and restated in its entirety as follows:
"8.13. Allowance for Losses. The Company shall not permit the "Allowance
for Losses" account on its balance sheet to, at the end of each month for
two consecutive months, be less than 1.0% of the aggregate amount of
finance receivables (net of unearned finance charges) on such balance sheet
for such months.".
(c) Schedule 13.1 to the Restated Secured Credit Agreement is amended by
deleting said schedule in its entirety and substituting therefor a new Schedule
13.1 in the form attached to this Amendment.
4. WAIVERS OF THE RESTATED SECURED CREDIT AGREEMENT. The Company has
advised the Banks that due to lower levels of historic losses and current
industry practice, the Company has changed the level of reserves maintained
against its finance receivables. This action caused a breach of the covenant
contained in Section 8.13 of the Restated Secured Credit Agreement (as in effect
prior to the date hereof), which section prohibited the Company from permitting
the "Allowance for Losses" account on its balance sheet to be less than 2.0% of
the aggregate amount of finance receivables (net of unearned finance charges) on
such balance sheet as of the end of each month for two consecutive months. Such
breach constitutes an Event of Default under Section 9.1.2 of the Restated
Secured Credit Agreement for the two-month periods ended May 31, 1996 and June
30, 1996. The Banks are willing to waive such Event of Default for such
periods, on the terms and conditions set forth herein, provided that the waivers
contained in this Amendment shall be effective solely for the matters and
periods described above and shall not be deemed to be a waiver of any other term
or condition of the Restated Secured Credit Agreement, or a waiver of any rights
or remedies that the Banks may now or hereafter exercise under the Restated
Secured Credit Agreement, including the right to enforce compliance by the
Company of said Sections 8.13 and 9.1.2 of the Restated Secured Credit Agreement
at all times after the date hereof.
5. ASSIGNMENT AND ASSUMPTION OF MAGNA'S SHARE OF REVOLVING LOAN
COMMITMENT AND REVOLVING LOANS.
(a) Assignment and Transfer of Assigned Rights. Effective on and as of
the date of this Amendment, Magna, as assignor (in such capacity, the
"Assignor") hereby irrevocably sells, transfers and assigns to FNBB, as assignee
(in such capacity, the "Assignee"), without recourse, and the Assignee hereby
purchases and acquires from the Assignor, 100% (the "Assigned Percentage") of
the Assignor's right, title and interest in and to the Restated Secured Credit
Agreement and the Bank Obligations owed to the Assignor thereunder and under the
other Bank Agreements, whether now existing or hereafter arising thereunder,
including without limitation the Percentage Interest of the Assignor in the
Revolving Loan Account evidencing the Revolving Loans and any collateral
security held in connection therewith (collectively referred to herein as the
"Assigned Rights"). Upon the execution of this Amendment by the parties hereto
and the payment of the purchase price by the Assignee as provided in Section
5(c) hereof, the Assignee shall acquire the Assigned Rights and the Company
shall thereafter make any payments due under the Restated Secured Credit
Agreement or the other Bank Agreements with respect to the Assigned Rights to
the Agent for the account of the Assignee. If any amount is received or
recovered by the Assignor in respect of the Assigned Rights on or after the date
hereof, the Assignor shall hold such amount in trust on behalf of the Assignee
and shall immediately pay such amount in full to the Assignee.
(b) Assumption of Obligations. Effective on and as of the date hereof,
the Assignee hereby assumes from the Assignor, and the Assignor is hereby
expressly and absolutely released from, the Assigned Percentage of the
Assignor's obligations arising under the Restated Secured Credit Agreement,
including without limitation the Assignor's obligation to fund a Percentage
Interest of each Revolving Loan as contemplated in the Restated Secured Credit
Agreement.
(c) Purchase Price. Concurrent with the execution of this Amendment by
the parties hereto, as full consideration for the sale, transfer and assignment
by the Assignor to the Assignee of the Assigned Rights, the Assignee shall pay
to the Assignor an amount equal to the Assignor's Percentage Interest of the
Assignor in the Revolving Loan Account evidencing the Revolving Loans, all
interest accrued thereon and all accrued commitment fees in immediately
available funds, by wire transfer of that amount to such account as the Assignor
may advise the Assignee.
(d) Representations and Warranties.
(i) The Assignor hereby represents and warrants to the Assignee as
follows:
(A) the Assignor has full power and authority to execute, deliver and
perform this Amendment in accordance with its terms, and the execution,
delivery and performance of this Amendment by the Assignor, and the
assignment and transfer of the Assigned Rights, have been duly authorized
by all necessary action of the Assignor. This Amendment constitutes the
legal, valid and binding obligation of the Assignor, enforceable against
the Assignor in accordance with its terms;
(B) the execution, delivery and performance of this Amendment by the
Assignor do not require any registration with or consent or approval of, or
any other action by, any governmental or other agency or other authority,
or any other party; and
(C) the Assignor is the legal and beneficial owner of the Assigned
Rights, free and clear of any claim, defense or counterclaim known to the
Assignor which may be asserted by the Company against the Assignor.
(ii) The Assignee hereby represents and warrants to the Assignor as
follows:
(A) the Assignee has the full power and authority to execute, deliver
and perform this Amendment in accordance with its terms, and the execution,
delivery and performance of this Amendment by the Assignee have been duly
authorized by all necessary action of the Assignee. This Amendment
constitutes the legal, valid and binding obligation of the Assignee
enforceable against the Assignee in accordance with its terms;
(B) the Assignee understands and agrees that, other than the
representations and warranties set forth in Section 5(d)(i) hereof, the
Assignor is not responsible for, and is not making any representation or
warranty with respect to, any closing condition, covenant or undertaking
under the Restated Secured Credit Agreement having been met or complied
with; and
(C) the Assignee has independently and without reliance upon the
Assignor and based on such documents and information as the Assignee has
deemed appropriate, made its own credit analysis and decision to purchase
the Assigned Rights.
6. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as
of the date first above written when and only when the Agent has received the
following:
(a) at least one copy (or counterparts) of this Amendment duly
executed and delivered by each of the parties hereto; and
(b) a certificate of the Secretary or an Assistant Secretary of the
Company with respect to resolutions of the Board of Directors of the
Company authorizing the execution and delivery of this Amendment and the
performance of the Restated Secured Credit Agreement as amended hereby and
identifying the officer(s) authorized to execute, deliver and take all
other actions required under this Amendment, and providing specimen
signatures of such officers.
7. REPRESENTATIONS AND WARRANTIES, ETC.
(a) The Company represents and warrants to the Agent and the Banks that
(i) the Company has the corporate power and all necessary authority to execute
and deliver this Amendment, and (ii) each of this Amendment and the Restated
Secured Credit Agreement (as amended hereby) is the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
respective terms.
(b) The Company hereby reaffirms all covenants, representations and
warranties made in the Restated Secured Credit Agreement to the extent not
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the date of this Amendment.
8. REFERENCES, ETC.
(a) Upon and after the effectiveness of this Amendment, (i) each reference
in the Restated Secured Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Restated Secured Credit Agreement as amended hereby, and (ii) each reference to
the Restated Secured Credit Agreement in all other Bank Agreements and other
related documents shall mean and be a reference to the Restated Secured Credit
Agreement, as amended hereby.
(b) Except as specifically amended or waived above, the terms of the
Restated Secured Credit Agreement, the Notes, the Security Agreement and all
other Bank Agreements shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as an amendment to, or a waiver of,
any provisions of the Restated Secured Credit Agreement or any right, power or
remedy of the Agent of the Banks.
9. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of The Commonwealth of Massachusetts.
10. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
11. COUNTERPARTS, ETC. This Amendment may be executed by one or more of
the parties to the Amendment on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of this Amendment may be made by telecopy of a duly signed
counterpart hereof. A counterpart of this Amendment is being signed by Magna
solely in its capacity as Assignor under Section 5 of this Amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
UNIVERSAL PREMIUM ACCEPTANCE
CORPORATION
By:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
INDIVIDUALLY, AS ASSIGNEE AND AS AGENT
By:
Title:
MAGNA BANK OF MISSOURI, AS ASSIGNOR
By:
Title:
THE SUMITOMO BANK, LIMITED
By:
Title:
By:
Title:
AMENDMENT NO. 4 AND EXTENSION TO
RESTATED SECURED CREDIT AGREEMENT
This Amendment No. 4 and Extension to Restated Secured Credit Agreement
(this "Amendment") is entered into as of the 31st day of October, 1996 by and
among Universal Premium Acceptance Corporation (the "Company"), a Missouri
corporation, The First National Bank of Boston ("FNBB"), in its capacity as
agent for the Banks hereinafter referred to (in such capacity, the "Agent"), in
its individual capacity as a Bank and The Sumitomo Bank, Limited, as successor
to The Daiwa Bank, Limited ("Sumitomo"). Sumitomo and FNBB in its individual
capacity are herein referred to as the "Banks".
WITNESSETH:
WHEREAS, the Company, the Banks and the Agent are parties to that certain
Restated Secured Credit Agreement, dated as of July 29, 1994, as amended by
Amendment No. 1 to Restated Secured Credit Agreement dated as of August 14,
1995, Amendment No. 2 and Waiver to Restated Secured Credit Agreement dated as
of April 3, 1996 and Amendment No. 3, Extension, Waiver and Assignment to
Restated Secured Credit Agreement dated as of August 31, 1996 (as so amended,
the "Restated Secured Credit Agreement"); and
WHEREAS, the Company has requested the Agent and the Banks to extend the
maturity of the Restated Secured Credit Agreement for an additional two-month
period; and
WHEREAS, the Agent and the Banks are willing to modify the Restated
Secured Credit Agreement to reflect such extension on the terms and subject to
the conditions set forth below;
NOW, THEREFORE, in consideration of the premises set forth above, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Terms defined in the Restated Secured Credit Agreement
which are used herein shall have the same meanings as set forth in the Restated
Secured Credit Agreement unless otherwise defined herein.
2. EXTENSION OF MATURITY DATE. As provided in the Restated Secured
Credit Agreement, the Revolving Loan Commitment was set to expire on August 31,
1996, due to the Banks' having given notice of the occurrence of the Maturity
Date on such date as contemplated in the definition of "Maturity Date" set forth
in Section 10.1 of the Restated Secured Credit Agreement. By means of Amendment
No. 3, Extension, Waiver and Assignment to Restated Secured Credit Agreement
dated as of August 31, 1996, this date was extended to October 31, 1996; the
Banks now wish to extend this date for an additional two-month period.
Accordingly, the Banks hereby agree to extend the Maturity Date for an
additional period to December 31, 1996. This extension shall be effective
solely for the period described above and shall not be deemed to be an agreement
to grant any further extensions of the Maturity Date, or a waiver of any rights
or remedies that the Banks may now or hereafter exercise under the Restated
Secured Credit Agreement, including the right to receive payment in full of all
amounts then outstanding on December 31, 1996.
3. AMENDMENT TO RESTATED SECURED CREDIT AGREEMENT. Amendment No. 3,
Extension, Waiver and Assignment to Restated Secured Credit Agreement dated as
of August 31, 1996 inadvertently misstated the Revolving Loan Commitment of
FNBB. To correct this error, and effective as of August 31, 1996, Schedule 13.1
to the Restated Secured Credit Agreement is amended by deleting said schedule in
its entirety and substituting therefor a new Schedule 13.1 in the form attached
to this Amendment.
4. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as
of the date first above written (or, in the case of paragraph 3 above, as of
August 31, 1996) when and only when the Agent has received the following:
(a) at least one copy (or counterparts) of this Amendment duly
executed and delivered by each of the parties hereto; and
(b) a certificate of the Secretary or an Assistant Secretary of the
Company with respect to resolutions of the Board of Directors of the
Company authorizing the execution and delivery of this Amendment and the
performance of the Restated Secured Credit Agreement as amended hereby and
identifying the officer(s) authorized to execute, deliver and take all
other actions required under this Amendment, and providing specimen
signatures of such officers.
5. REPRESENTATIONS AND WARRANTIES, ETC.
(a) The Company represents and warrants to the Agent and the Banks that
(i) the Company has the corporate power and all necessary authority to execute
and deliver this Amendment, and (ii) each of this Amendment and the Restated
Secured Credit Agreement (as amended hereby) is the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
respective terms.
(b) The Company hereby reaffirms all covenants, representations and
warranties made in the Restated Secured Credit Agreement to the extent not
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the date of this Amendment.
6. REFERENCES, ETC.
(a) Upon and after the effectiveness of this Amendment, (i) each reference
in the Restated Secured Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Restated Secured Credit Agreement as amended hereby, and (ii) each reference to
the Restated Secured Credit Agreement in all other Bank Agreements and other
related documents shall mean and be a reference to the Restated Secured Credit
Agreement, as amended hereby.
(b) Except as specifically amended or waived above, the terms of the
Restated Secured Credit Agreement, the Notes, the Security Agreement and all
other Bank Agreements shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as an amendment to, or a waiver of,
any provisions of the Restated Secured Credit Agreement or any right, power or
remedy of the Agent of the Banks.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of The Commonwealth of Massachusetts.
8. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. COUNTERPARTS, ETC. This Amendment may be executed by one or more of
the parties to the Amendment on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of this Amendment may be made by telecopy of a duly signed
counterpart hereof.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
UNIVERSAL PREMIUM ACCEPTANCE
CORPORATION
By:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
INDIVIDUALLY AND AS AGENT
By:
Title:
THE SUMITOMO BANK, LIMITED
By:
Title:
By:
Title:
