INTRENET, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 2, 1995
The annual meeting of shareholders of Intrenet, Inc. will be
held at 270 Park Avenue, Third Floor Auditorium, New York, New
York, on Friday, June 2, 1995, at 11:00 a.m., New York City
time, for the following purposes:
(1) To elect nine directors to serve until the next
annual meeting of shareholders and until their successors
are elected and have qualified;
(2) To approve or disapprove the proposed amendment and
restatement of the Company s Articles of Incorporation
which, among other things, would increase the number of
authorized shares of common stock and provide for a new
class of capital stock;
(3) To approve or disapprove the appointment of Arthur
Andersen LLP as auditors for the Company for 1995; and
(4) To transact such other business as may properly come
before the meeting.
All shareholders of record at the close of business on March
31, 1995, will be eligible to vote.
It is important that your shares be represented at this
meeting. Whether or not you expect to be present, please fill
in, date, sign and return the enclosed proxy form in the
accompanying addressed, postage-prepaid envelope. If you
attend the meeting, your proxy will be canceled.
Jonathan G. Usher, Secretary
(ANNUAL REPORT FILED CONCURRENTLY)
<PAGE>
INTRENET, INC.
400 Technecenter Drive
Milford, Ohio 45150
PROXY STATEMENT
Annual Meeting of Shareholders
June 2, 1995
This statement is being furnished on or about April 28,
1995, in connection with the solicitation by the Board of
Directors of Intrenet, Inc. (the "Company") of proxies to be
voted at the annual meeting of shareholders to be held at
11:00 a.m., New York City time, on Friday, June 2, 1995, at
270 Park Avenue, Third Floor Auditorium, New York, New York,
for the purposes set forth in the accompanying Notice.
At the close of business on March 31, 1995, the record date
for the meeting, there were 13,162,178 shares of common stock,
without par value, of the Company ("Common Stock") outstanding
and entitled to vote at the meeting. On all matters,
including the election of directors, each shareholder will
have one vote for each share held.
If the enclosed form of proxy is executed and returned, it
may nevertheless be revoked at any time before it is voted.
If a shareholder executes more than one proxy, the proxy
having the latest date will revoke any earlier proxies.
Attendance in person at the meeting by a shareholder will
constitute revocation of a proxy, and the shareholder may vote
in person.
Unless revoked, a proxy will be voted at the meeting in
accordance with the instructions of the shareholder in the
proxy, or, if no instructions are given, for the election as
directors of all nominees listed under Proposal 1 and for the
proposals shown as Proposal 2 and Proposal 3. Assuming a
quorum is present at the meeting, directors will be elected by
a plurality of the votes cast by the shares entitled to vote
in the election at the meeting. Approval of Proposal 2 and
Proposal 3 is subject to the vote of a greater number of
shares favoring the proposal than opposing it, assuming a
quorum is present. A proxy may indicate that all or a portion
of the shares represented by such proxy are not being voted
with respect to a specific proposal. This could occur, for
example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of
instructions from the beneficial owner. Shares that are not
voted with respect to a specific proposal will be considered
as not present and entitled to vote on such proposal, even
though such shares will be considered present for purposes of
determining a quorum and voting on other proposals.
Abstentions on a specific proposal will be considered as
present, but not as voting in favor of such proposal. Because
<PAGE>
none of the proposals to be considered at the meeting requires
the affirmative vote of a specified number of outstanding
shares (they require only a plurality or a majority of the
shares voted), neither the non-voting of shares nor
abstentions on a specific proposal will affect the
determination of whether such proposal will be approved.
The Board of Directors knows of no matters, other than those
reported below, which are to be brought before the meeting.
However, if other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of
proxy to vote such proxy in accordance with their judgment on
such matters.
The cost of this solicitation of proxies will be borne by
the Company.
<PAGE>
ELECTION OF DIRECTORS
Nominees
Nine directors are to be elected at the meeting, each to
hold office for a term of one year and until his or her
successor is elected and has qualified. It is the intention
of the persons named in the accompanying form of proxy to vote
such proxy for the election to the Board of Directors of the
persons identified below, each of whom is now a director. The
Board of Directors has no reason to believe that any of the
nominees will be unable to serve if elected. If, for any
reason, one or more of such persons is unable to serve, it is
the intention of the persons named in the accompanying form of
proxy to nominate such other person(s) as director as they may
in their discretion determine, in which event the shares will
be voted for such other person(s).
The names, ages and principal occupations of the nominees
and other directorships held by them are set forth below.
Unless otherwise indicated in the following table, the
principal occupation of each nominee has been the same for the
last five years.
Director
Name Age Since Principal Occupation
Joseph A. Ades* 33 1993 Partner, ABI Management
Partners (real estate and
equity portfolio
management and
investment).
Jackson A. Baker 56 1993 President and CEO of the
Company. Mr. Baker has
been President and CEO
since January 1993. From
January 1990 to December
1992, he was self-
e m p l o y e d a s a
transportation
consultant. From
February 1987 to
December 1989, he was
President and COO of Sea-
Land Service, Inc.
(containerized shipping
firm).
Eric C. Jackson 50 1993 Chief Executive Officer,
Great Basin Southwest
Trucks, Inc. (group of
truck dealerships).
<PAGE>
Fernando Montero 48 1993 President, Hanseatic
Corporation (financial
and investment advisory
services).
Edwin H. Morgens 53 1991 Chairman, Morgens,
Waterfall, Vintiadis &
Company, Inc. (financial
services firm).
Mr. Morgens is a director
of Sheffield Exploration
Company. Mr. Morgens
also serves as Chairman
of the Board of the
Company.
Thomas J.
Noonan, Jr. 55 1990 Executive Vice President
and Chief Financial
Officer, Herman s
Sporting Goods, from July
1994 to present. From
February 1993 to June
1994, he was a Managing
Director and Chief
Executive Officer of
TFGII, a management
consulting firm. From
March 1990 to January
1993, Mr. Noonan was
Executive Vice President
of the Company. From
April 1989 to March 1990,
he was a consultant to
the Company. From June
1987 to March 1989, he
was a consultant for
Pilot Freight Carriers,
Inc., a less-than-
truckload carrier which
filed for bankruptcy in
April 1987 ("Pilot").
A. Torrey Reade 43 1991 President, Neptune
Management Company, Inc.
(investment management.
firm)
James L. Shelnutt 64 1993 Managing Director, The
Taggart/Fasola Group
(turnaround consultants)
since January 1993. From
November 1990 to January
1993, Mr. Shelnutt was
<PAGE>
Chief Operating Officer
of the Company. He was
also President of the
Company from April 1990
through January 1993.
From April 1989 to
November 1989, he was a
consultant to the
Company. From December
1988 to September 1989,
he was Vice President-
Operations for Pilot.
Jeffrey B. Stone* 39 1991 President, Ironhorse
Ventures, Inc.
(investment banking and
consulting firm) since
November 1992. From
January 1990 to
October 1992, Mr. Stone
was a Managing Director
of Anacostia and Pacific
Company, Inc. (investment
banking and consulting
f i r m ) . F r o m
December 1985 to January
1990, Mr. Stone held
various positions with
Wertheim Schroder & Co.,
Inc. (investment banking
and brokerage firm).
__________
* Mr. Ades and Mr. Stone are brothers-in-law.
<PAGE>
Meetings and Committees
During 1994, the Board of Directors of the Company held four
meetings. The Board of Directors had an Audit Committee, a
Compensation Committee and an Incentive Compensation Committee
during 1994. The Audit Committee, which currently consists of
Ms. Reade, Mr. Noonan and Mr. Montero recommends the
appointment of the Company's auditors and meets with the
auditors to discuss accounting matters and internal controls.
The Audit Committee met once during 1994. The Compensation
Committee, which currently consists of Messrs. Morgens, Baker,
Ades and Jackson, sets and reviews the compensation of
executive officers. The Compensation Committee met once
during 1994. The Incentive Compensation Committee was
appointed to administer the Company's 1994 Stock Option and
Incentive Plan. The members of the Incentive Compensation
Committee are Messrs. Morgens, Ades and Jackson. The
Incentive Compensation Committee met once in 1994.
In February 1994, the Board of Directors appointed a
Nominating Committee consisting of Messrs. Morgens, Baker and
Stone. The Nominating Committee, which recommends to the full
Board persons for nomination as directors, met once during
1994.
No director attended fewer than 75% of the aggregate of the
total number of meetings held in 1994 by the Board of
Directors and its committees.
Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of Common Stock, to file reports of
ownership with the Securities and Exchange Commission and
NASDAQ. Officers, directors and greater-than-ten-percent
shareholders are required to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received
by it, or written representations from certain reporting
persons that no Forms 5 were required for those persons, the
Company believes that, during 1994, all filing requirements
applicable to its officers, directors, and greater-than-ten-
percent shareholders were complied with, except that Mr. Davis
filed a late Form 4 that was due in June 1994 reporting a
purchase and Messrs. Usher and Davis each filed a late Form 5
that was due in February 1995 reporting option grants in
December 1994.
<PAGE>
PROPOSAL TO ADOPT RESTATED
ARTICLES OF INCORPORATION
The Board of Directors has adopted, subject to shareholder
approval, Restated Articles of Incorporation (the "Restated
Articles") and recommends that you vote for the proposal to
approve the Restated Articles. If the proposal to adopt the
Restated Articles is approved by the shareholders, the
Restated Articles will become effective at the time the
Company files Articles of Restatement with the Office of the
Indiana Secretary of State. It is anticipated that such
action will occur on June 5, 1995.
The substance and effect of certain provisions of the
Restated Articles are described below and the complete text of
the proposed Restated Articles is set forth in Exhibit "A" to
this Proxy Statement. The following discussions are qualified
in their entirety by reference to the text of the proposed
Restated Articles.
Amendments Affecting Capitalization
The Restated Articles reflect certain changes to the
Company's capitalization. The Restated Articles provide for
authorized capital stock for the Company consisting of
25,000,000 shares of Common Stock, without par value, and
10,000,000 shares of Preferred Stock, without par value. The
Company's current Articles of Incorporation (the "Current
Articles") authorize 20,000,000 shares of Common Stock,
without par value.
The Restated Articles would increase the amount of
authorized shares of Common Stock by 5,000,000. At March 31,
1995 the Company had 13,162,178 shares of Common Stock
outstanding. This number reflects the issuance of 3,636,352
shares of Common Stock as a result of the conversion of $6
million principal amount of the 7% Convertible Subordinated
Debentures of the Company. At March 31, 1995 there were
warrants or options outstanding to purchase an additional
1,067,750 shares of Common Stock. At the same date, the
Company had reserved 752,250 shares of Common Stock for
issuance under the Company's 1993 Stock Option and Incentive
Plan.
The additional authorized shares of Common Stock would be
available for general corporate purposes, including additional
stock option grants, dividends or splits, mergers and
acquisitions and public or private offerings of securities.
Except as required in connection with a transaction that would
otherwise require shareholder approval, such as a merger, no
further approval would be required for future issuances of
Common Stock. Although the current number of authorized
shares of Common Stock is sufficient to permit the Company to
<PAGE>
issue shares to meet its existing obligations as described
above, the Board of Directors believes that the authorization
of an additional 5,000,000 shares will provide greater
flexibility in structuring mergers, acquisitions, capital
raising transactions and employee benefit plans. The Company
has no present plans to issue any of the additional authorized
shares of Common Stock.
The Restated Articles authorize a class of Preferred Stock
not authorized under the Current Articles. Under the Restated
Articles, Preferred Stock could be issued in one or more
series upon adoption by the Board of Directors of an amendment
to the Restated Articles, without any further action by the
shareholders. The Restated Articles give the Board of
Directors the authority to determine the designation, rights,
preferences, privileges and restrictions, including voting
rights, conversion rights, right to receive dividends, right
to assets upon any liquidation, and other relative benefits,
restrictions and limitations of any series of Preferred Stock.
The Board of Directors will also determine whether such
Preferred Stock will be convertible into other securities of
the Company, including Common Stock. Accordingly, the
issuance of Preferred Stock, while promoting flexibility in
connection with possible acquisitions and other corporate
purposes, could adversely affect the voting rights of the
holders of, or the market price of, Common Stock. The holders
of Preferred Stock also have the right to vote separately as a
class on any proposal involving fundamental changes in the
rights of holders of Preferred Stock pursuant to the Indiana
Business Corporation Law. The Company has no present plans to
issue any shares of Preferred Stock.
The Restated Articles also reduce the proportion of
directors required to approve the issuance of authorized
Common Stock or Preferred Stock. The Current Articles require
that two-thirds (2/3) of the Company's directors must approve
the issuance of any shares. The Restated Articles require
approval of a majority of directors prior to issuance of any
shares.
Provisions Affecting the Size of the Board of Directors
The Restated Articles provide that the number of directors
of the Company shall be fixed by the Company's By-Laws. The
Current Articles set the number of directors of the Company at
nine (9).
<PAGE>
Deletion of Provisions Relating to 1991 Reorganization
The Restated Articles also delete several provisions of the
Current Articles that were required by or referred to the
Company s plan of reorganization that became effective in
January 1991. Such provisions are no longer considered
necessary.
Antitakeover Effect
The overall effect of certain provisions of the Restated
Articles, including the increase in authorized shares of
Common Stock and the creation of the new class of Preferred
Stock, may be to render more difficult or to discourage a
merger, tender offer or proxy contest, the assumption of
control of the Company by a holder of a large block of the
Company's stock or other person, or the removal of incumbent
management, even if such actions may be beneficial to the
Company's shareholders generally.
APPOINTMENT OF AUDITORS
The appointment of Arthur Andersen LLP as auditors for the
Company during 1995 is recommended by the Audit Committee of
the Board of Directors and will be submitted to the meeting in
order to permit the shareholders to express their approval or
disapproval. In the event that the votes cast against the
proposal exceed those cast in favor, the selection of auditors
will be made by the Board of Directors. A representative of
Arthur Andersen LLP is expected to be present at the meeting
and will be given an opportunity to make a statement if he
desires and to respond to appropriate questions.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth the cash and non-cash
compensation for each of the last three years awarded to or
earned by the Chief Executive Officer and the other executive
officers of the Company. The Company had no other executive
officers serving at December 31, 1994.
<TABLE>
<CAPTION>
Long Term
Compensa-
Annual Compensation tion
Number All Other
Name and Principal of Compensa-
Position Year Salary Bonus (1) Options tion (1)
<C> <C> <C> <C> <C> <C>
Jackson A. Baker 1994 $300,000 $0 0 $ 950
President and 1993 276,923 0 200,000 435
Chief Executive 1992 0 0 0 0
Officer
James V. Davis 1994 $200,000 $20,833 12,000 $ 750
Executive Vice 1993 76,923 0 100,000 435
President 1992 0 0 0 0
Jonathan G. Usher 1994 $146,428 $40,000 12,000 $ 600
Vice President - 1993 140,000 35,000 0 435
Finance and Chief 1992 145,385 0 45,000 435
Financial
Officer
</TABLE>
(1) Represents premiums paid for life and disability
insurance coverage, and matching contributions by the
Company under the Intrenet Employee Retirement Savings
Plan (401(k) Plan).
Director Compensation
Each non-officer director is paid a fee of $2,000 per
quarter and an attendance fee of $750 for each meeting of the
Board, and $500 for each other committee meeting attended.
<PAGE>
Employment Contracts and Change in Control Arrangements
As of the date of this Proxy Statement, the Company has
employment agreements in effect with each of its executive
officers.
The employment agreement with the Company's President and
CEO, Jackson A. Baker, became effective on January 19, 1993,
and is for a term through December 31, 1995. The agreement
provides for an annual base salary of $300,000. The agreement
may be terminated by the Company's Board of Directors with or
without "cause." If the Company terminates the agreement
without cause, the agreement provides for a severance payment
of $75,000. If such termination occurs within 90 days after a
"change in control," the severance payment increases to
$300,000. If the Company terminates the agreement with cause,
or if Mr. Baker terminates the agreement, dies or becomes
disabled, then there is no severance payment. On January 19,
1993, the Company also granted Mr. Baker non-qualified options
to purchase 200,000 shares of Common Stock at $1.50 per share
through December 31, 1997. The options have vested or will
vest as follows: 66,666 - July 1, 1993; 66,667 - July 1,
1994; and 66,667 - July 1, 1995. If Mr. Baker is not a full-
time employee of the Company on the vesting date, the options
lapse.
The employment agreement with the Company's Executive Vice
President, James V. Davis, became effective on August 2, 1993
and is for a term through June 30, 1996. The agreement
provides for an annual base salary of $200,000. The agreement
may be terminated by the Board of Directors with or without
"cause." If the Company terminates the agreement without
cause, the agreement provides for a severance payment of
$200,000. If the Company terminates the agreement with cause
or if Mr. Davis dies, becomes disabled or terminates the
agreement at any time other than within 90 days after a
"change in control," there is no severance payment. If
Mr. Davis terminates the agreement within 90 days after a
change in control, Mr. Davis is entitled to a severance
payment equal to the greater of $200,000 or the total
compensation, including bonus, paid to him for the preceding
year. On August 2, 1993, the Company issued Mr. Davis
incentive stock options under the Company's 1993 Stock Option
and Incentive Plan to purchase 100,000 shares of Common Stock
at $2.75 per share through June 30, 1998. All of such options
vested on or prior to January 1, 1995.
The employment agreement with the Company's Vice President -
Finance and Chief Financial Officer, Jonathan G. Usher, dated
March 1, 1994, has a term through February 28, 1996. The
agreement provides for an annual base salary of $145,000. The
agreement may be terminated by the Company or Mr. Usher either
with or without "cause," as defined in the agreement. If the
Company terminates the agreement without cause or if Mr. Usher
<PAGE>
terminates the agreement with cause, the agreement provides
for a severance payment of $145,000. The definition of cause
that would entitle Mr. Usher to such severance payment
includes, but is not limited to, a change in control of the
Company. If the Company terminates the agreement with cause
or if Mr. Usher terminates the agreement without cause, dies
or becomes disabled, there is no severance payment.
Option Plans
On August 15, 1992, the Board of Directors adopted the
Company's 1992 Non-qualified Stock Option Plan (the "1992
Plan"). The 1992 Plan authorized the Board of Directors to
grant options to purchase up to 590,000 shares of Common
Stock. Recipients of the options were employees of the
Company or its affiliates and certain independent contractors.
During 1992, the Board granted options to purchase 590,000
shares at prices of either $1.50 (market value on the date of
grant) or, in the case of three executive officers, $1.00 per
share. No further options may be granted under the 1992 Plan.
At December 31, 1994, there were a total of 460,000 options
outstanding under the 1992 Plan.
On April 6, 1993, the Board of Directors adopted the
Company's 1993 Stock Option and Incentive Plan (the "1993
Plan"). The 1993 Plan was approved by shareholders on May 19,
1993. The 1993 Plan authorizes the Incentive Compensation
Committee of the Board of Directors to make awards of non-
qualified and incentive stock options and restricted stock to
officers or key employees of the Company and its subsidiaries.
The total number of shares of Common Stock available for
awards is 1,000,000, subject to antidilution adjustments. The
1993 Plan will terminate no later than April 6, 2003. Through
December 31, 1994, the Incentive Compensation Committee had
granted options to purchase a total of 254,750 shares, of
which 245,750 were outstanding at such date.
<PAGE>
Option Grants
Shown below is further information on grants of stock
options during the year ended December 31, 1994, to the
persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of% of
Stock PriceTotal
AppreciationOptions
for Option Term (1)Granted
to Exer- Market
Employ- cise Price
ees in Price on
Options Fiscal (per Date of Expiration
Name Granted Year share) Grant Date 5% ($) 10% ($)
<C> <C> <C> <C> <C> <C> <C> <C>
James V. 5,000 4.71% $3.625 $3.625 03/14/04 $11,398.72 $28,886.58
Davis 7,000 3.875 3.875 12/14/04 $17,058.77 $43,230.26
Jonathan 5,000 4.71% $3.625 $3.625 03/14/04 $11,398.72 $28,886.58
G. Usher 7,000 3.875 3.875 12/14/04 $17,058.77 $43,230.26
</TABLE>
(1) Gains are reported net of the option exercise price, but
before taxes associated with exercise. These amounts
represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock
and overall stock conditions. The values reflected in
the table may not necessarily be achieved.
Option Exercises and Company's Year-End Values
Shown below is information with respect to the unexercised
options to purchase the Company's Common Stock granted in 1994
and prior years to the persons named in the Summary
<PAGE>
Compensation Table and held by them at December 31, 1994.
None of such persons exercised any stock options during 1994.
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options Held At In-The-Money Options At
Name December 31, 1994 December 31, 1994 (1)
Exercisable Unexercisable
<C> <C> <C> <C>
Jackson A. Baker 200,000 (2) $399,999 $ 200,001
James V. Davis 112,000 (3) $116,667 $ 67,083
Jonathan G. Usher 57,000 $157,500 $ 8,750
__________
</TABLE>
(1) Based on the closing price of the Company's Common Stock
as reported by NASDAQ for that date.
(2) 133,333 of such options were exercisable at December 31,
1994.
(3) 66,667 of such options were exercisable at December 31,
1994, and an additional 33,333 of such options became
exercisable on January 1, 1995.
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
During 1994, the Compensation Committee consisted of
directors Morgens, Baker, Ades and Jackson. None of the
committee members are involved in a relationship requiring
disclosure as an interlocking executive officer/director or
under Item 404 of Regulation S-K or as a former officer or
employee of the Company.
Compensation Committee Report on Executive Compensation
General. The Compensation Committee decides, or recommends
to the Board for its decision, all matters of policy relating
to compensation of executive management. The Compensation
Committee consists of Messrs. Morgens, Baker, Ades, and
Jackson. The Incentive Compensation Committee approves grants
of stock and options to purchase stock under the 1993 Stock
Option and Incentive Plan. The Incentive Compensation
Committee is composed of Messrs. Morgens, Ades and Jackson.
<PAGE>
Compensation programs for the Company's executive officers
are designed to attract, retain and motivate employees who
will contribute to achievement of corporate goals and
objectives. Elements of executive compensation include
salaries, bonuses, and awards of stock and options to purchase
stock, with the last two being variable in making its decision
or recommendations. The Incentive Compensation Committee
takes into account factors relevant to the specific
compensation component being considered, including
compensation paid by other business organizations of
comparable size and complexity, the generation of income and
cash flow by the business, the attainment of annual individual
and business objectives and an assessment of business
performance against peer groups of companies in the Company's
industries.
During 1994, the Incentive Compensation Committee granted
options to purchase 12,000 shares of the Company's Common
Stock to two of the Company's executive officers, Mr. Davis
and Mr. Usher. The options were granted at the market price
on the date of grant and have an exercise period of ten years.
The options granted to each executive officer represented less
than 5% of the total options granted to all employees during
1994. The Incentive Compensation Committee expects to
continue to consider grants of stock and options under the
1993 Stock Option and Incentive Plan on an annual basis to
executive officers in order to link executive compensation
more directly to increases in value in the Company's Common
Stock.
CEO Compensation. In late 1992, the Company began a search
for a new chief executive officer. In December 1992, the
Board of Directors approved the employment of Jackson A. Baker
as President and CEO to become effective at such time that the
Company completed its then-proposed recapitalization which
became effective on January 19, 1993. Mr. Baker's
compensation is described elsewhere herein. The Compensation
Committee was not asked in 1992 to determine Mr. Baker's
compensation; instead, the terms were negotiated by the
Board's Finance Committee at the time and submitted to the
entire Board for approval. The terms of Mr. Baker s
compensation were not altered during 1994. In general, the
factors considered by both the Finance Committee and the Board
of Directors included the Company's clear need to select a
qualified successor, Mr. Baker's experience as a chief
operating officer of a transportation firm and transportation
consultant, and the support for Mr. Baker indicated by
prospective investors who subsequently participated in the
January 1993 recapitalization. Neither the Finance Committee
nor the Board of Directors based their actions concerning
Mr. Baker's employment on the Company's prior performance.
The Compensation Committee
<PAGE>
Edwin H. Morgens
Jackson A. Baker
Eric C. Jackson
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder
return on the Common Stock for the last four years with a
cumulative total return on the NASDAQ Stock Market (US) Index
(the "NASDAQ Index") and the NASDAQ Trucking and
Transportation Stock Index (the "Trucking Index") over the
same period assuming the investment of $100 in the Company's
Common Stock, the NASDAQ Index and the Trucking Index on
May 9, 1991, the date on which the Common Stock began trading
on NASDAQ. The Company believes that comparisons with earlier
periods would not be meaningful. The shareholder return shown
on the graph is not necessarily indicative of future
performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
INTRENET, INC., THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCK INDEX
5/9/9 12/31/91 12/31/92 12/31/93 12/31/94
1
Intrenet 100.00 130.00 90.00 345.00 360.00
NASDAQ Index 100.00 120.00 140.00 160.00 159.32
Trucking 100.00 110.00 140.00 160.00 155.21
Index
[PERFORMANCE GRAPH APPEARS HERE]
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of
Common Stock owned by any person (including any group) known
by management to beneficially own more than 5% of the Common
Stock as of March 31, 1995. Unless indicated otherwise in a
footnote, each individual or group possesses sole voting and
investment power with respect to the shares indicated as
beneficially owned.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of Beneficially of
Beneficial Owner Owned Class
<S> <C> <C>
Morgens, Waterfall, Vintiadis &
Company, Inc. (1) 2,903,735 22.06%
610 Fifth Avenue
New York, NY 10020
Hanseatic Corporation and
Wolfgang Traber (2) 2,753,923 20.92%
450 Park Avenue
Suite 2302
New York, NY 10022
Allen Value Partners, L.P., et al. (3) 2,196,218 16.69%
711 Fifth Avenue
New York, NY 10022
Brookhaven Capital
Management Co., Ltd. (4) 707,223 5.37%
3000 Sandhill Road, Building 4,
Suite 130
Menlo Park, CA 94025
</TABLE>
__________
(1) The source of the information relating to this group of
shareholders is Amendment No. 2 to a statement filed with
the Securities and Exchange Commission by such group and
dated January 19, 1993. Other members of the group are:
Phoenix Partners, Betje Partners, Phaeton International
N.V., Morgens, Waterfall, Vintiadis Investments N.C.,
Restart Partners, L.P., Restart Partners II, L.P.,
Morgens, Waterfall, Vintiadis & Co., Inc. Employees'
Profit Sharing Plan, Morgens Waterfall Income Partners,
Edwin H. Morgens and Bruce Waterfall. Mr. Morgens is a
director of the Company. Each member of the group has
disclaimed beneficial ownership of the securities owned
by other members of the group.
<PAGE>
(2) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated January 19,
1993. Fernando Montero, President of Hanseatic
Corporation, is a director of the Company. Mr. Traber and
management officials of Hanseatic Corporation share
beneficial ownership of the securities owned by the
group.
(3) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated January 19,
1993. Other members of the group are Allen Value Limited
and Allen Holding, Inc. Allen Holding, Inc. has
disclaimed beneficial ownership of the securities owned
by other members except as to Allen Holding, Inc.'s
equity interest and profit participation in such
entities.
(4) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated October 26,
1994. Other members of the group are: Cadence Fund,
L.P., Vincent A. Carrino and Daniel R. Coleman. Certain
members of the group have disclaimed beneficial ownership
of Common Stock by other members of the group.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of
Common Stock beneficially owned by all directors, each of the
persons named in the Summary Compensation Table and directors
and executive officers as a group as of March 31, 1995.
Unless indicated otherwise in a footnote, each person
possesses sole voting and investment power with respect to the
shares indicated as beneficially owned.
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficially of
Beneficial Owner Owned Class
<S> <C> <C>
Joseph A. Ades 458,181 (1) 3.48%
Jackson A. Baker 451,005 (2) 3.39%
James V. Davis 110,500 (3) *
Eric C. Jackson 322,673 (4) 2.45%
Fernando Montero 2,753,923 (5) 20.71%
Edwin H. Morgens 2,903,735 (6) 22.06%
Thomas J. Noonan, Jr. 76,000 (7) *
A. Torrey Reade 626,884 (8) 4.76%
James L. Shelnutt 90,000 *
Jeffrey B. Stone 214,255 (9) 1.83%
Jonathan G. Usher 76,500 (10) *
All directors and executive
officers 8,083,656 (11) 61.42%
as a group (11 persons)
</TABLE>
__________
* Less than one percent.
(1) Includes 305,454 shares owned by affiliates of Mr. Ades
as to which Mr. Ades shares voting and investment power
with other persons.
(2) Includes 133,333 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
(3) Includes 105,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
<PAGE>
(4) Includes 317,673 shares owned of record by an affiliate
of Mr. Jackson with whom he shares voting and investment
power.
(5) Represents shares owned of record by Hanseatic
Corporation of which Mr. Montero is President.
Mr. Montero shares voting and investment power with other
management officials of Hanseatic Corporation and
Wolfgang Traber.
(6) Represents shares owned of record by various entities who
may be deemed affiliates of Mr. Morgens. Mr. Morgens has
disclaimed beneficial ownership of such securities.
(7) Includes 75,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
(8) Represents shares owned of record by various entities
affiliated with Ms. Reade. Ms. Reade has disclaimed
beneficial ownership of such securities.
(9) Includes 25,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
(10) Includes 45,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
(11) Includes 383,333 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Great Basin Southwest Trucks, Inc. ("Great Basin"), a Salt
Lake City-based truck dealership, is an affiliate of director
Eric C. Jackson. In 1994, Great Basin sold approximately 150
tractors to unaffiliated leasing companies who in turn leased
the tractors to the Company's subsidiaries. The tractors had
an aggregate fair market value of approximately $10.7 million.
As selling dealer, Great Basin was paid a commission by the
lessors equal to approximately 2% of the fair market value of
the tractors. During 1995, the Company expects to lease an
additional 370 tractors that will be sold by Great Basin to
unaffiliated lessors. Such tractors will have an aggregate
fair market value of approximately $27.1 million. The lessors
will pay Great Basin a commission of approximately 2%. The
terms of the leases entered into with such leasing companies
are the result of arm's-length negotiations between the
Company and the lessors. The Company believes that the
involvement of Great Basin as selling dealer has not resulted
and will not result in lease terms that are less favorable to
the Company than would otherwise be available to it. The
Company also purchases maintenance parts and services from
<PAGE>
Great Basin from time to time. Total payments to Great Basin
in 1994 for these services were $304,000.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
The date by which shareholder proposals must be received by
the Company for inclusion in proxy materials relating to the
1995 Annual Meeting of Shareholders is December 31, 1995.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1994
as filed with the Securities and Exchange Commission,
including financial statements, but excluding exhibits, may be
obtained without charge upon request to Jonathan G. Usher,
Intrenet, Inc., 400 Technecenter Drive, Suite 200, Milford,
Ohio 45150, (513) 576-6666.
INCORPORATION BY REFERENCE
The following information has been incorporated by reference
into this proxy statement: The audited financial statements
of the Company and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the
Company's Annual Report to Shareholders, which was mailed
concurrently herewith. You are encouraged to review the
financial information contained in the Annual Report before
voting on the proposal to adopt the Restated Articles.
To the extent this Proxy Statement has been or will be
specifically incorporated by reference into any filing by the
Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, the sections of
this Proxy Statement entitled Compensation Committee Report
on Executive Compensation and Comparative Stock Performance
shall not be deemed to be so incorporated unless specifically
otherwise provided in any such filing.
<PAGE>
EXHIBIT A
RESTATED ARTICLES OF INCORPORATION OF INTRENET, INC.
ARTICLE I
Name
The name of the Corporation is Intrenet, Inc. (the
"Corporation").
ARTICLE II
Purposes and Powers
Section 2.1. Purpose of the Corporation. The purpose for
which the Corporation is formed is to engage in the
transaction of any or all lawful business for which
corporations may now or hereafter be incorporated under the
Indiana Business Corporation Law (the "Corporation Law").
Section 2.2. Powers of the Corporation. The Corporation
shall have (a) all powers now or hereafter authorized by or
vested in corporations pursuant to the provisions of the
Corporation Law, (b) all powers now or hereafter vested in
corporations by common law or any other statute or act, and
(c) all powers authorized by or vested in the Corporation by
the provisions of these Restated Articles of Incorporation or
by the provisions of its By-Laws as from time to time in
effect.
ARTICLE III
Term of Existence
The period during which the Corporation shall continue is
perpetual.
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered office in
Indiana at the time of adoption of these Restated Articles of
Incorporation is Junction 231 & I-66, Rockport, Indiana 47635,
and the name of its Resident Agent at such office at the time
of adoption of these Restated Articles of Incorporation is
Phillip E. Weaver.
ARTICLE V
Shares
Section 5.1. Authorized Class and Number of Shares. The
total number of shares of all classes which the Corporation
<PAGE>
shall have authority to issue is 35,000,000 shares, consisting
of 25,000,000 shares of Common Stock, without par value
("Common Stock"), and 10,000,000 shares of Preferred Stock,
without par value ("Preferred Stock").
Section 5.2. Dividends. Subject to the provisions of law
and the rights of the Preferred Stock and any other class or
series of stock then outstanding having a preference as to
dividends over the Common Stock, dividends may be paid on the
Common Stock at such times and in such amounts as the Board of
Directors shall determine.
Section 5.3. Relative Rights of Shareholders. Upon the
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after any preferential
amounts to be distributed to the holders of the Preferred
Stock and any other class or series of stock then outstanding
having a preference over the Common Stock have been paid or
declared and set apart for payment, the holders of the Common
Stock shall be entitled to receive all of the remaining assets
of the Corporation available for distribution to its
shareholders.
Section 5.4. Rights and Terms of Preferred Stock. The
Board of Directors is hereby authorized to provide, out of the
unissued shares of Preferred Stock, for one or more series of
Preferred Stock. Before any shares of any such series are
issued, the Board of Directors shall fix, and hereby is
expressly empowered to fix, by the adoption and filing in
accordance with the Corporation Law, of an amendment or
amendments to these Restated Articles of Incorporation, the
terms of such Preferred Stock or series of Preferred Stock,
including the following terms:
(a) the designation of such series, the number of shares
to constitute such series and the stated value thereof if
different from the par value thereof;
(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law,
and, if so, the terms of such voting rights, which may be
special, conditional or limited or no voting rights except
as required by law;
(c) the dividends, if any, payable on such series,
whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such
dividends shall be payable, the preference or relation which
such dividends shall bear to the dividends payable on any
shares of stock of any other class or any other series of
Preferred Stock;
<PAGE>
(d) whether the shares of such series shall be subject
to redemption by the Corporation and, if so, the times,
prices and other conditions of such redemption;
(e) the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series
in, the voluntary or involuntary liquidation, dissolution or
winding up, or upon any distribution of the assets, of the
Corporation;
(f) whether the shares of such series shall be subject
to the operation of a retirement or sinking fund and, if so,
the extent to and manner in which any such retirement or
sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or other
corporate purposes and the terms and provisions relative to
the operation thereof;
(g) whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock of
any other class or any other series of Preferred Stock or
any other securities (whether or not issued by the
Corporation) or other property and, if so, the price or
prices or the rate or rates of conversion or exchange and
the method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange; and
(h) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding
upon the payment of dividends or the making of other
distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or any other series of
Preferred Stock.
Section 5.5. Assessability. Upon receipt by the
Corporation of the consideration for which the Board of
Directors authorized the issuance of shares, the shares issued
therefor shall be fully paid and nonassessable.
ARTICLE VI
Directors
Section 6.1. Number. The number of Directors shall be
fixed by the By-Laws.
Section 6.2. Qualifications. Directors need not be
shareholders of the Corporation or residents of this or any
other state of the United States.
Section 6.3. Vacancies. Vacancies occurring on the Board
of Directors shall be filled in the manner provided in the By-
Laws or, if the By-Laws do not provide for the filling of
<PAGE>
vacancies, in the manner provided by the Corporation Law. The
By-Laws may also provide that in certain circumstances
specified therein, vacancies occurring on the Board of
Directors may be filled by vote of the shareholders at a
special meeting called for that purpose or at the next annual
meeting of shareholders.
Section 6.4. Liability of Directors. A Director's
responsibility to the Corporation shall be limited to
discharging his duties as a Director, including his duties as
a member of any committee of the Board of Directors upon which
he may serve, in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar
circumstances, and in a manner the Director reasonably
believes to be in the best interests of the Corporation, all
based on the facts then known to the Director.
In discharging his duties, a Director is entitled to rely on
information, opinions, reports, or statements, including
financial statements and other financial data, if prepared or
presented by:
(a) One (1) or more officers or employees of the
Corporation whom the Director reasonably believes to be
reliable and competent in the matters presented;
(b) Legal counsel, public accountants, or other persons
as to matters the Director reasonably believes are within
such person's professional or expert competence; or
(c) A committee of the Board of which the Director is
not a member if the Director reasonably believes the
Committee merits confidence;
but a Director is not acting in good faith if the Director has
knowledge concerning the matter in question that makes
reliance otherwise permitted by this Section 6.4 unwarranted.
A Director may, in considering the best interests of the
Corporation, consider the effects of any action on
shareholders, employees, suppliers and customers of the
Corporation, and communities in which offices or other
facilities of the corporation are located, and any other
factors the Director considers pertinent.
A Director shall not be liable for any action taken as a
Director, or any failure to take any action, unless (i) the
Director has breached or failed to perform the duties of the
Director's office in compliance with this Section 6.4, and
(ii) the breach or failure to perform constitutes willful
misconduct or recklessness.
Section 6.5. Removal of Directors. Any or all of the
members of the Board of Directors may be removed, with or
without cause, only at a meeting of the shareholders called
<PAGE>
expressly for that purpose, by the affirmative vote of the
holders of outstanding shares representing at least a majority
of all the votes then entitled to be cast at an election of
Directors.
ARTICLE VII
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 7.1. Meetings of Shareholders. Meetings of the
shareholders of the Corporation shall be held at such times
and at such places, either within or without the State of
Indiana, as may be stated in or fixed in accordance with the
By-Laws of the Corporation and specified in the respective
notices or waivers of notice of any such meetings.
Section 7.2. Special Meetings of Shareholders. Special
meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Corporation Law, may be
called at any time by the Board of Directors or the person or
persons specifically authorized to do so by the By-Laws and
shall be called by the Board of Directors if the Secretary of
the Corporation receives one (1) or more written, dated and
signed demands for a special meeting, describing in reasonable
detail the purpose or purposes for which it is to be held,
from the holders of shares representing at least twenty-five
percent (25%) of all the votes entitled to be cast on any
issue proposed to be considered at the proposed special
meeting. If the Secretary receives one (1) or more proper
written demands for a special meeting of shareholders, the
Board of Directors may set a record date for determining
shareholders entitled to make such demand.
Section 7.3. Meetings of Directors. Meetings of the Board
of Directors of the Corporation shall be held at such times
and at such places, either within or without the State of
Indiana, as may be authorized by the By-Laws and specified in
the respective notices or waivers of notice of any such
meetings or otherwise specified by the Board of Directors.
Unless the By-laws provide otherwise (a) regular meetings of
the Board of Directors may be held without notice of the date,
time, place, or purpose of the meeting and (b) the notice for
a special meeting need not describe the purpose or purposes of
the special meeting.
Section 7.4. Action Without Meeting. Any action required
or permitted to be taken at any meeting of the Board of
Directors or shareholders, or of any committee of such Board,
may be taken without a meeting, if the action is taken by all
members of the Board or all shareholders entitled to vote on
the action, or by all members of such committee, as the case
may be. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by each
<PAGE>
Director, or all the shareholders entitled to vote on the
action, or by each member of such committee, as the case may
be, and, in the case of action by the Board of Directors or a
committee thereof, included in the minutes or filed with the
corporate records reflecting the action taken or, in the case
of action by the shareholders, delivered to the Corporation
for inclusion in the minutes or filing with the corporate
records. Action taken under this Section 7.4 is effective
when the last director, shareholder or committee member, as
the case may be, signs the consent, unless the consent
specifies a different prior or subsequent effective date, in
which case the action is effective on or as of the specified
date. Such consent shall have the same effect as a unanimous
vote of all members of the Board, or all shareholders, or all
members of the committee, as the case may be, and may be
described as such in any document.
Section 7.5. By-Laws. The Board of Directors shall have
the exclusive power to make, alter, amend or repeal, or to
waive provisions of, the By-Laws of the Corporation by the
affirmative vote of a majority of the entire number of
Directors at the time, except as expressly provided by the
Corporation Law. All provisions for the regulation of the
business and management of the affairs of the Corporation not
stated in these Restated Articles of Incorporation shall be
stated in the By-Laws. The Board of Directors may adopt
Emergency By-Laws of the Corporation and shall have the
exclusive power (except as may otherwise be provided therein)
to make, alter, amend or repeal, or to waive provisions of,
the Emergency By-Laws by the affirmative vote of a majority of
the entire number of Directors at the time.
Section 7.6. Interest of Directors. (a) A conflict of
interest transaction is a transaction with the Corporation in
which a Director of the Corporation has a direct or indirect
interest. A conflict of interest transaction is not voidable
by the Corporation solely because of the Director's interest
in the transaction if any one (1) of the following is true:
(i) The material facts of the transaction and the
Director's interest were disclosed or known to the Board of
Directors or a committee of the Board of Directors and the
Board of Directors or committee authorized, approved, or
ratified the transaction.
(ii) The material facts of the transaction and the
Director's interest were disclosed or known to the
shareholders entitled to vote and they authorized, approved
or ratified the transaction.
(iii) The transaction was fair to the Corporation.
<PAGE>
(b) For purposes of this Section 7.6, a Director of the
Corporation has an indirect interest in a transaction if:
(i) another entity in which the Director has a material
financial interest or in which the Director is a general
partner is a party to the transaction; or
(ii) another entity of which the Director is a director,
officer, or trustee is a party to the transaction and the
transaction is, or is required to be, considered by the
Board of Directors of the Corporation.
(c) For purposes of Section 7.6(a)(i), a conflict of
interest transaction is authorized, approved, or ratified if
it receives the affirmative vote of a majority of the
Directors on the Board of Directors (or on the committee)
who have no direct or indirect interest in the transaction,
but a transaction may not be authorized, approved, or
ratified under this Section 7.6 by a single Director. If a
majority of the Directors who have no direct or indirect
interest in the transaction vote to authorize, approve, or
ratify the transaction, a quorum shall be deemed present for
the purpose of taking action under this Section 7.6. The
presence of, or a vote cast by, a Director with a direct or
indirect interest in the transaction does not affect the
validity of any action taken under Section 7.6(a)(i), if the
transaction is otherwise authorized, approved, or ratified
as provided in such Section.
(d) For purposes of Section 7.6(a)(ii), shares owned by
or voted under the control of a Director who has a direct or
indirect interest in the transaction, and shares owned by or
voted under the control of an entity described in
Section 7.6(b), may be counted in a vote of shareholders to
determine whether to authorize, approve or ratify a conflict
of interest transaction.
Section 7.7. Nonliability of Shareholders. Shareholders of
the Corporation are not personally liable for the acts or
debts of the Corporation, nor is private property of
shareholders subject to the payment of corporate debts.
<PAGE>
Section 7.8. Indemnification of Officers, Directors and
Other Eligible Persons.
(a) To the maximum extent permitted by the Corporation
Law, every Eligible Person shall be indemnified by the
Corporation against all Liability and reasonable Expense
that may be incurred by him in connection with or resulting
from any Claim, (i) if such Eligible Person is Wholly
Successful with respect to the Claim, or (ii) if not Wholly
Successful, then if such Eligible Person is determined, as
provided in either Section 7.8(f) or 7.8(g), to have acted
in good faith, in what he reasonably believed to be the best
interests of the Corporation or at least not opposed to its
best interests and, in addition, with respect to any
criminal Claim, is determined to have had reasonable cause
to believe that his conduct was lawful or to have had no
reasonable cause to believe that his conduct was unlawful.
The termination of any Claim, by judgment, order, settlement
(whether with or without court approval), or conviction or
upon a plea of guilty or of nolo contendere, or its
equivalent, shall not create a presumption that an Eligible
Person did not meet the standards of conduct set forth in
clause (ii) of this subsection (a). The actions of an
Eligible Person with respect to an employee benefit plan
subject to the Employee Retirement Income Security Act of
1974 shall be deemed to have been taken in what the Eligible
Person reasonably believed to be the best interests of the
Corporation or at least not opposed to its best interests if
the Eligible Person reasonably believed he was acting in
conformity with the requirements of such Act or he
reasonably believed his actions to be in the interests of
the participants in or beneficiaries of the plan.
(b) The term "Claim" as used in this Section 7.8 shall
include every pending, threatened or completed claim,
action, suit or proceeding and all appeals thereof (whether
brought by or in the right of this Corporation or any other
corporation or otherwise), civil, criminal, administrative
or investigative, formal or informal, in which an Eligible
Person may become involved, as a party or otherwise:
(i) by reason of his being or having been an Eligible
Person, or
(ii) by reason of any action taken or not taken by him in
his capacity as an Eligible Person, whether or not he
continued in such capacity at the time such Liability or
Expense shall have been incurred.
(c) The term "Eligible Person" as used in this
Section 7.8 shall mean every person (and the estate, heirs
and personal representatives of such person) who is or was a
Director, officer, employee or agent of the Corporation or
is or was serving at the request of the Corporation as a
<PAGE>
director, officer, employee, agent or fiduciary of another
foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other organization or
entity, whether for profit or not. An Eligible Person shall
also be considered to have been serving an employee benefit
plan at the request of the Corporation if his duties to the
Corporation also imposed duties on, or otherwise involved
services by, him to the plan or to participants in or
beneficiaries of the plan.
(d) The terms "Liability" and "Expense" as used in this
Section 7.8 shall include, but shall not be limited to,
counsel fees and disbursements and amounts of judgments,
fines or penalties against (including excise taxes assessed
with respect to an employee benefit plan), and amounts paid
in settlement by or on behalf of, an Eligible Person.
(e) The term "Wholly Successful" as used in this
Section 7.8 shall mean (i) termination of any Claim against
the Eligible Person in question without any finding of
liability or guilt against him, (ii) approval by a court,
with knowledge of the indemnity herein provided, of a
settlement of any Claim, or (iii) the expiration of a
reasonable period of time after the making or threatened
making of any Claim without the institution of the same,
without any payment or promise made to induce a settlement.
(f) Every Eligible Person claiming indemnification
hereunder (other than one who has been Wholly Successful
with respect to any Claim) shall be entitled to
indemnification (i) if special independent legal counsel,
which may be regular counsel of the Corporation or other
disinterested person or persons, in either case selected by
the Board of Directors, whether or not a disinterested
quorum exists (such counsel or person or persons being
hereinafter called the "Referee"), shall deliver to the
Corporation a written finding that such Eligible Person has
met the standards of conduct set forth in
Section 7.8(a)(ii), and (ii) if the Board of Directors,
acting upon such written finding, so determines. The Board
of Directors shall, if an Eligible Person is found to be
entitled to indemnification pursuant to the preceding
sentence, also determine the reasonableness of the Eligible
Person's Expenses. The Eligible Person claiming
indemnification shall, if requested, appear before the
Referee, answer questions that the Referee deems relevant
and shall be given ample opportunity to present to the
Referee evidence upon which such Eligible Person relies for
indemnification. The Corporation shall, at the request of
the Referee, make available facts, opinions or other
evidence in any way relevant to the Referee's finding that
are within the possession or control of the Corporation.
<PAGE>
(g) If an Eligible Person claiming indemnification
pursuant to Section 7.8(f) is found not to be entitled
thereto, or if the Board of Directors fails to select a
Referee under Section 7.8(f) within a reasonable amount of
time following a written request of an Eligible Person for
the selection of a Referee, or if the Referee or the Board
of Directors fails to make a determination under
Section 7.8(f) within a reasonable amount of time following
the selection of a Referee, the Eligible Person may apply
for indemnification with respect to a Claim to a court of
competent jurisdiction, including a court in which the Claim
is pending against the Eligible Person. On receipt of an
application, the court, after giving notice to the
Corporation and giving the Corporation ample opportunity to
present to the court any information or evidence relating to
the claim for indemnification that the Corporation deems
appropriate, may order indemnification if it determines that
the Eligible Person is entitled to indemnification with
respect to the Claim because such Eligible Person met the
standards of conduct set forth in Section 7.8(a)(ii). If
the court determines that the Eligible Person is entitled to
indemnification, the court shall also determine the
reasonableness of the Eligible Person's Expenses.
(h) The rights of indemnification provided in this
Section 7.8 shall be in addition to any rights to which any
Eligible Person may otherwise be entitled. Irrespective of
the provisions of this Section 7.8, the Board of Directors
may, at any time and from time to time, (i) approve
indemnification of any Eligible Person to the maximum extent
permitted by the provisions of applicable law at the time
in effect, whether on account of past or future
transactions, and (ii) authorize the Corporation to purchase
and maintain insurance on behalf of any Eligible Person
against any Liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to
indemnify him against such liability.
(i) Expenses incurred by an Eligible Person with respect
to any Claim may be advanced by the Corporation (by action
of the Board of Directors, whether or not a disinterested
quorum exists) prior to the final disposition thereof upon
receipt of an undertaking by or on behalf of the Eligible
Person to repay such amount unless he is determined to be
entitled to indemnification.
(j) The provisions of this Section 7.8 shall be deemed
to be a contract between the Corporation and each Eligible
Person, and an Eligible Person's rights hereunder shall not
be diminished or otherwise adversely affected by any repeal,
amendment or modification of this Section 7.8 that occurs
subsequent to such person becoming an Eligible Person.
<PAGE>
(k) The provisions of this Section 7.8 shall be
applicable to Claims made or commenced after the adoption
hereof, whether arising from acts or omissions to act
occurring before or after the adoption hereof.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1. Amendment or Repeal. Except as otherwise
expressly provided for in these Restated Articles of
Incorporation, the Corporation shall be deemed, for all
purposes, to have reserved the right to amend, alter, change
or repeal any provision contained in these Restated Articles
of Incorporation to the extent and in the manner now or
hereafter permitted or prescribed by statute, and all rights
herein conferred upon shareholders are granted subject to such
reservation.
Section 8.2. Captions. The captions of the Articles and
Sections of these Restated Articles of Incorporation have been
inserted for convenience of reference only and do not in any
way define, limit, construe or describe the scope or intent of
any Article or Section hereof.
<PAGE>
APPENDIX A
INTRENET, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of shares of Common Stock of
Intrenet, Inc. (the "Company") hereby appoints Jackson A.
Baker, James V. Davis, and Jonathan G. Usher, and each of
them, the Proxies of the undersigned, with full power of
substitution, to attend and represent the undersigned at the
Annual Meeting of Shareholders of the Company to be held at
270 Park Avenue, Third Floor Auditorium, New York, New York,
on Friday, June 2, 1995, at 11:00 a.m., New York City time,
and any adjournment or adjournments thereof, and to vote as
indicated on the reverse side all of the shares of Common
Stock that the undersigned is entitled to vote at such Annual
Meeting or at any adjournment or postponement thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS
SPECIFIED. IF NO CHOICE IS INDICATED THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
LISTED IN ITEM NO.1 AS DIRECTORS OF THE COMPANY AND "FOR"
PROPOSAL NO. 2 AND PROPOSAL NO. 3. IF ANY OTHER MATTERS ARE
PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT
OR POSTPONEMENT THEREOF OF IF A NOMINEE FOR ELECTION AS A
DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH
MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY
RECOMMEND.
(THIS PROXY CONTINUES AND MUST BE SIGNED AND DATED ON THE
REVERSE SIDE)
<PAGE>
1. To elect nine directors to serve for terms of one year
each:
Nominees: Joseph A. Ades, Jackson A.
Baker, Eric C. Jackson,
Fernando Montero, Edwin H.
Morgens, Thomas J. Noonan,
Jr., A. Torrey Reade, James
L. Shelnutt, Jeffrey B.
Stone
__
[__] Vote for all nominees listed above
__
[__] Vote withheld for all nominees listed above
__
[__] Vote for all nominees listed above except
____________________________________________
2. To restate the Company's Articles of Incorporation:
__ __ __
[__] FOR [__] AGAINST [__] ABSTAIN
3. To ratify the selection of Arthur Andersen LLP as
independent auditors of the Company for the 1995 fiscal
year:
__ __ __
[__] FOR [__] AGAINST [__] ABSTAIN
4. In their discretion, the Proxies are authorized to vote
upon such other matters (none known at the time of
solicitation of this proxy) as may properly come before
the Annual Meeting or any adjournment or postponement
thereof.
The undersigned hereby acknowledges receipt of the Notice of
the Annual Meeting of Shareholders, the Proxy Statement
furnished therewith, and the Annual Report of the Company for
the fiscal year ended December 31, 1994. Any proxy heretofore
given to vote the shares of Common Stock which the undersigned
is entitled to vote at the Annual Meeting of Shareholders is
hereby revoked.
Signature:________________________Date________________________
Signature:________________________Date________________________
The signature must agree with the name on your stock
certificate.
NOTE: Please fill in, sign and return this proxy in the
enclosed envelope. When signing as Attorney, Executor,
Administrator, Trustee or Guardian, please give full title as
<PAGE>
such. If signer is a corporation, please sign the full
corporate name by authorized officer. Joint owners should
each sign individually.
APPENDIX B
This Appendix B contains the Management's Discussion and
Analysis of Financial Conditions and Results of Operations and
audited financial statements of Intrenet, Inc. as contained in
the Company's Annual Report to Shareholders. This information
has been incorporated by reference in the Proxy Statement and
is being submitted herewith in compliance with the
requirements of Rule 303 of Regulation S-T.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Introduction
The Company reported net earnings of $ 5.2 million ($0.52
per share) on revenues of $ 214.8 million in 1994, as compared
to net earnings of $2.7 million ($0.28 per share) on revenues
of $191.4 million in 1993 and a net loss of $0.2 million
($0.05 per share) on revenues of $174.8 million in 1992.
Management attributes the substantially improved earnings in
1994 to the following factors. First, the Company increased
the size of its company-operated fleet by approximately 22% in
1994, and overall business levels improved in the sectors of
the economy in which the Company participates. Further, the
Company reduced costs in several areas, particularly the
capital costs of its tractors and trailers, and its liability
and workers compensation insurance expense. Lastly, the
Company's 1994 provision for income taxes was less than the
statutory income tax rate as a result of the release of
valuation reserves held against the Company's existing net
deferred tax assets (See Note 6).
A discussion of the impact of the above and other factors on
the results of operations in 1994 as compared to 1993, and
1993 as compared to 1992 follows.
1994 Compared to 1993
Percentage
Key Operating Statistics 1994 1993 Change
Operating Revenues ($ millions)$214.8 $ 191.4 12.2%
Net Earnings $ 5.2 $ 2.7 91.4%
Average Tractors 1,840 1,708 7.7%
Total Loads (000's) 233.1 208.1 12.0%
<PAGE>
Revenue Miles (millions) 155.3 142.5 9.0%
Average Revenue per
Revenue Mile $ 1.32 $ 1.28 3.1%
Operating Revenues. Operating Revenues increased in 1994
to $ 214.8 million from $191.4 million in 1993. This 12.2%
increase in revenues in 1994 is attributable to an increase of
approximately 12.0% in the total number of loads and
approximately 9.0% in the number of revenue miles billed in
1994 as compared to 1993.
The 9.0% increase in volume in 1994 is attributable to an
increase in the average number and productivity of the
Company's trucks, coupled with an overall improvement in
general economic conditions. Management attributes this
improvement to the strengthening of general economic activity
in the full year of 1994 as compared to 1993.
The 3.1% improvement in revenue per mile is a result of
strong shipper demand for the Company's services, which has
allowed the Company to selectively choose loads that yield
higher revenues, coupled with rate increases implemented in
late 1993 and throughout 1994.
Operating Expenses. The following table sets forth the
percentage relationship of operating expenses to operating
revenues for the years ended December 31, 1994 and 1993.
1994 1993
Operating Revenues 100.0% 100.0%
Operating Expenses:
Purchased transportation and
equipment rents 37.2 38.2
Fuel and other operating expenses 23.2 23.6
Salaries, wages and benefits 22.5 21.0
Insurance 3.6 4.5
Operating taxes and licenses 4.6 3.8
Depreciation 2.2 2.8
Other operating expenses 1.9 2.6
Total Operating Expenses 95.2% 96.5%
In 1994 and 1993, the mix of company-operated versus
owner-operator equipment continued to shift toward
company-operated equipment as a result of increased
competition for qualified owner-operators, and the Company's
improved access to financing for equipment. At December 31,
1994, the Company fleet was 61% company-operated and 39%
owner-operator, as compared to 54% and 46%, respectively, at
December 31, 1993.
<PAGE>
The relatively higher use of company-operated equipment
results in increases in salaries, wages and benefits, fuel and
other operating expenses and fixed costs related to ownership
or lease of the equipment, and decreases in purchased
transportation as a percentage of revenue.
The Company's insurance expense decreased to 3.6% of revenue
in 1994 from 4.5% of revenue in 1993. This decrease results
primarily from reduced liability insurance premium rates due
to improved accident control over the past several years.
Approximately two-thirds of the Company's insurance expense in
1994 represented premium payments which are not susceptible to
significant adjustment in the future. The remaining one-third
of the expense is comprised of estimates for claim and
deductible obligations as a result of accidents and claims
which are subject to adjustment in the future.
Depreciation expense decreased in 1994 as compared to 1993
as the Company has replaced owned or capital-leased tractors
primarily with operating-leased tractors.
Operating taxes and licenses increased in 1994 as compared
to 1993 as a result of the greater proportion of
company-operated equipment in 1994, for which the Company is
responsible for operating taxes and licenses.
Other operating expenses decreased to approximately 1.9% of
revenue in 1994 from 2.6% in 1993, primarily as a result of
reduced legal, professional and consulting expenses, coupled
with reduced communication expenses. Also, the Company
incurred certain management change costs in 1993 which were
not incurred in 1994.
Interest Expense. Interest expense decreased by
approximately $0.3 million in 1994 as compared to 1993,
primarily as a result of the replacement of capital-leased
equipment with equipment financed under operating leases,
coupled with reduced interest as a result of lower average
bank borrowings, offset by higher average interest rates in
1994 as compared to 1993.
Following is a summary of interest expense for the years
ended December 31, (in millions):
1994 1993
Interest on Debentures $ 0.4 $0.4
Interest and fees on notes
payable to banks 1.4 1.5
Interest on capital leases and
other indebtedness 1.8 2.0
$ 3.6 $3.9
<PAGE>
Provision For Income Taxes. A provision for income taxes of
approximately $ 1.3 million, or approximately 20% of pre-tax
earnings, has been provided in 1994, as compared to a
provision of approximately $ 1.5 million which was provided in
1993. As more fully discussed in Note 6 of Notes to
Consolidated Financial Statements, the Company's 1994
provision for income taxes was favorably influenced by the
release of valuation allowances held against net deferred tax
assets.
Extraordinary Gain On Retirement Of Debt, Net. On January
19, 1993, in connection with the recapitalization discussed
further in Note 2 of Notes to Consolidated Financial
Statements, the Company retired approximately $7.2 million of
bank debt for approximately $5.4 million, yielding an
after-tax extraordinary gain of $1.2 million. No similar
transaction occurred in 1994.
1993 Compared to 1992
Percentage
Key Operating Statistics 1993 1992 Change
Operating Revenues
($ millions) $ 191.4 $ 174.8 9.5%
Net Earnings $ 2.7 $ (0.2) NM
Average Tractors 1,708 1,698 0.6%
Total Loads (000's) 208.1 190.2 9.1%
Revenue Miles (millions) 142.5 129.4 10.1%
Average Revenue
per Revenue Mile $ 1.28 $ 1.28 0.0%
Operating Revenues. Operating Revenues increased in 1993 to
$191.4 million from $174.8 million in 1992. The 9.5% increase
in revenues in 1993 is attributable to an increase of
approximately 9.1% in the number of total loads and
approximately 10.1 % in the number of revenue miles billed in
1993 as compared to 1992.
The approximately 10.1% increase in volume in 1993 is
attributable to an increase in the productivity of the
Company's trucks, coupled with an overall improvement in
general economic conditions. Management attributes this
improvement to the strengthening of general economic activity
in mid-to-late 1993 as compared to the relatively soft
economic conditions of 1992.
The Company's average revenue per mile remained essentially
unchanged in 1993 as compared to 1992. The Company enjoyed
some success in increasing rates towards the end of 1993,
primarily as a result of the sharp increase in fuel costs
which occurred October 1, 1993, which provided the Company the
<PAGE>
opportunity to raise rates. The effect of these late year
increases on the full year 1993, however, was nominal.
<PAGE>
Operating Expenses. The following table sets forth the
percentage relationship of operating expenses to operating
revenues for the years ended December 31, 1993 and 1992.
1993 1992
Operating Revenues 100.0% 100.0%
Operating Expenses:
Purchased transportation and
equipment rents 38.2 42.2
Fuel and other operating expenses 23.6 22.6
Salaries, wages and benefits 21.0 19.6
Insurance 4.5 4.6
Operating taxes and licenses 3.8 2.6
Depreciation 2.8 3.2
Other operating expenses 2.6 2.5
Total Operating Expenses 96.5% 97.3%
In 1993, the mix of company-operated versus
owner-operator equipment continued to shift toward
company-operated equipment as a result of increased
competition for qualified owner-operators, and the Company's
ability to secure financing for increased company-operated
equipment. At December 31, 1993, the Company fleet was 54%
company-operated and 46% owner-operator, as compared to 47%
and 53%, respectively, at December 31, 1992.
The relatively higher use of company-operated equipment
resulted in increases in salaries, wages and benefits, fuel
and other operating expenses and fixed costs related to
ownership or lease of the equipment, and decreases in
purchased transportation as a percentage of revenue. In
addition, the Company's transportation expenses related to
company-operated equipment were unfavorably impacted by
greater empty miles in 1992 as compared to 1993 as a result of
the less timely availability of freight due to the general
economic recession. Lastly, salaries, wages and benefits were
affected by increased workers compensation and health care
costs in 1993.
In 1992, the Company determined that the accrued
insurance claim liabilities for prior years were in excess of
the then current estimates of the remaining liability, and
reserves of $0.4 million were released to income in 1992. No
similar adjustment was recorded in 1993. Excluding the effect
of this release, the Company's insurance expense decreased to
4.5% of revenue in 1993 from 4.8% in 1992. This decrease
resulted primarily from reduced insurance provisions due to
improved accident control and lower liability insurance
premiums.
<PAGE>
Operating taxes and licenses increased in 1993 as
compared to 1992 as a result of the greater proportion of
company-operated equipment in 1993, for which the Company is
responsible for licensing and fuel and mileage taxes. In
addition, in 1993, the Company classified state fuel taxes
paid at the pump in Operating Taxes and Licenses. These taxes
were included in Fuel and Other Operating Expenses in 1992.
Depreciation expense decreased in 1993 as compared to
1992 as the Company replaced owned or capital leased
equipment primarily with operating leased equipment.
Other operating expenses increased to approximately 2.6%
of revenue in 1993, as compared to 2.5% in 1992, primarily as
a result of certain management change costs incurred in 1993
not incurred in 1992. The effect of this was offset somewhat
by reduced legal, professional and consulting expenses,
coupled with lower communication expenses in 1992.
Interest Expense. Interest expense decreased by
approximately $ 0.7 million in 1993 as compared to 1992 as a
result of a reduction in the amount of bank debt outstanding,
primarily due to the effects of the recapitalization
discussed in Note 2 of Notes to Consolidated Financial
Statements, partially offset by interest expense incurred on
the Debentures. Following is a summary of interest expense for
the years ended December 31, (in millions):
1993 1992
Interest on Debentures $0.4 $ -
Interest and fees on notes
payable to banks 1.5 2.6
Interest on capital leases and
other indebtedness 2.0 2.0
$3.9 $4.6
Provision For Income Taxes. A provision for income taxes of
approximately $ 1.5 million ($ 0.9 million classified as
operating and $ 0.6 million classified as extraordinary) was
provided in 1993. No provision for income taxes was required
in 1992 as the Company recorded a loss from operations.
Extraordinary Gain On Retirement Of Debt, Net. On January
19, 1993, in connection with the recapitalization discussed
further in Note 2 of Notes to Consolidated Financial
Statements, the Company retired approximately $7.2 million of
bank debt for approximately $5.4 million, yielding an
after-tax extraordinary gain of $1.2 million. No similar
transaction occurred in 1992.
Liquidity and Capital Resources
<PAGE>
The Company generated $0.4 million of cash and cash
equivalents in the year ended December 31, 1994, as compared
to $1.0 million in 1993 and a use of $0.5 million in 1992. As
reflected in the accompanying Consolidated Statements of Cash
Flows, in 1994, $ 11.6 million of cash was generated from
operating activities, $11.3 million, net, was used in
financing activities, and $ 0.1 million, net, was generated by
investing activities.
The Company's day-to-day financing is provided by borrowings
under the Company's bank credit facility. Presently, the
Company has a $22 million long-term credit facility with a
bank, consisting of a $7 million term loan with a final
maturity of December 31, 1997, and a $15 million revolving
line of credit which expires January 15, 1996. Quarterly
principal payments of $500,000 on the term loan commence April
1, 1995. The line of credit includes provisions for the
issuance of up to $15 million in stand-by letters of credit
which, as issued, reduce available borrowings under the line
of credit. Borrowings under the credit facility totaled $7.0
million at December 31, 1994, and outstanding stand-by letters
of credit totaled $9.5 million at that date. The combination
of these two bank credits totaled $16.5 million, leaving $5.5
million of borrowing capacity available at December 31, 1994.
The Company is negotiating a replacement bank credit facility
with its lender. The Company has requested an increase in the
total credit from $ 22 million to $ 33 million. This would
provide the Company adequate working capital lines to support
its growth plans and to finance the termination of the ongoing
sale of approximately $ 8.0 million of certain trade accounts
receivable.
The Company plans to acquire 370 new tractors in 1995.
Approximately 115 of the new tractors will replace older units
and the balance of approximately 255 units will represent
incremental growth units. The new tractors will be financed
primarily under walk-away operating leases, and are not
expected to require any significant amount of deposits or down
payments. In addition, the Company has commenced construction
of a new $ 3.0 million headquarters facility for RRT, and
improved driver facilities at the EMT headquarters.
Construction costs will be financed under the bank credit
facility, although the Company is seeking permanent financing
for the RRT headquarters.
On March 7, 1995, the Company issued a redemption notice
for its 7% Convertible Subordinated Debentures at a price of
107% of par. The Debentures are convertible into Common Stock
at $ 1.65 per share. If the Debentures are not converted, the
total redemption price would be $ 6,420,000. However, because
the conversion price is substantially below the current
trading price of the Common Stock, management expects all of
the Debentures will be converted and the Company will issue
approximately 3,636,352 new shares of Common Stock.
<PAGE>
The Company believes that cash generated from operations,
including cash from the continued sale of certain trade
accounts receivable, and cash available to it under the bank
credit facility will be sufficient to meet the Company's needs
during 1995.
Other Factors.
Inflation can be expected to have an impact on most of
the Company's operating costs although the impact in recent
years has been minimal.
Management believes the continued intense competition for
qualified drivers will lead to higher driver wages and
recruiting costs in the future. Recent changes in market
interest rates can be expected to unfavorably impact the
Company to the extent that revenue equipment is added and
replaced and because the Company's bank financing is based on
the prime rate.
The trucking industry is generally affected by customer
business cycles and by seasonality. Revenues are also
affected by inclement weather and holidays because revenues
are directly related to available working days of shippers.
Customers typically reduce shipments during and after the
winter holiday season. The Company's revenues tend to follow
this pattern and are strongest in the summer months.
Generally, the second and third calendar quarters have higher
load bookings than the fourth and first calendar quarters.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Shareholders and Board of Directors
of Intrenet, Inc.:
We have audited the accompanying consolidated balance sheets
of INTRENET, INC. (an Indiana corporation) and subsidiaries as
of December 31, 1994 and 1993, and the related consolidated
statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31,
1994. These financial statements and the schedule referred to
below 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.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
financial position of Intrenet, Inc. and subsidiaries as of
December 31, 1994, and 1993, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole.
The schedule listed in Item 14 (a) 2 is presented for purposes
of complying with the Securities and Exchange Commission's
rules and are not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth
therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
February 20, 1995.
<PAGE>
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Years Ended December 31, 1994 and 1993
(In Thousands of dollars)
Assets 1994 1993
Current assets:
Cash and cash equivalents $ 2,734 $ 2,356
Receivables, principally
freight revenue less
allowance for doubtful
accounts of $1,363 in 1994
and $1,481 in 1993 20,177 18,165
Prepaid expenses and other 6,409 6,685
Total current assets 29,320 27,206
Property and equipment, at cost
less accumulated depreciation
of $ 11,164 in 1994 and $ 11,048
in 1993 27,976 24,922
Reorganization value in excess
of amounts allocated to
identifiable assets, net of
accumulated amortization of
$ 1,680 in 1994 and $ 1,260 in 1993 8,451 11,901
Deferred tax assets, net of valuation
allowance of $ 4,884 in 1994 and
$ 11,273 in 1993 2,525 0
Other assets 786 607
Total assets $ 69,058 $ 64,636
Liabilities and Shareholders' Equity
Current liabilities:
Current notes payable to banks $ 2,000 $ 0
Current equipment borrowings
and capital lease obligations 5,425 6,795
Accounts payable and cash
overdrafts 8,553 8,720
Current accrued claim liabilities 5,062 3,801
Other accrued expenses 7,149 4,854
Total current liabilities 28,189 24,170
Long-term notes payable to banks 5,000 9,949
7% convertible subordinated debentures 5,988 5,984
Long-term equipment borrowings and
capital lease obligations 11,303 10,290
Long-term accrued claim liabilities 2,000 3,000
Total liabilities 52,480 53,393
<PAGE>
Shareholders' equity:
Common Stock, without par value;
20,000,000 shares authorized;
9,087,164 and 9,067,164 shares
issued and outstanding at
December 31, respectively 9,453 9,423
Retained earnings since
January 1, 1991 7,125 1,820
Total shareholders' equity 16,578 11,243
Total liabilities and
shareholders' equity $ 69,058 $ 64,636
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION> INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 1994, 1993 and 1992
(In Thousands of dollars, Except Per Share Data)
1994 1993 1992
<S> <C> <C> <C>
Operating revenues $ 214,838 $ 191,390 $ 174,801
Operating expenses:
Purchased transportation
and equipment rents 79,946 73,071 73,741
Fuel and other operating expenses 49,749 45,194 39,467
Salaries, wages, and benefits 48,309 40,247 34,196
Insurance and claims 7,680 8,622 8,010
Operating taxes and licenses 9,846 7,196 4,459
Depreciation 4,826 5,386 5,478
Other operating expenses 4,077 4,941 4,728
204,433 184,657 170,079
Operating Income 10,405 6,733 4,722
Interest expense (3,557) (3,949) (4,622)
Other expense, net (357) (352) (344)
Earnings (loss) before
income taxes and 6,491 2,432 (244)
extraordinary items
Provision for Income taxes (1,326) (922) -
Earnings (loss) before
extraordinary items 5,165 1,510 (244)
Extraordinary gain on retirement
of debt, net of related income
taxes of $612 - 1,188 -
Net earnings (loss) $ 5,165 $ 2,698 $ (244)
Earnings (loss) per common and
common equivalent share
Primary:
Before extraordinary items $ 0.52 $ 0.16 $ (0.05)
Extraordinary gain, net $ - $ 0.12 $ -
Net earnings (loss) $ 0.52 $ 0.28 $ (0.05)
Fully diluted:
Before extraordinary items $ 0.40 $ 0.14 $ (0.05)
Extraordinary gain, net $ - $ 0.09 $ -
Net earnings (loss) $ 0.40 $ 0.23 $ (0.05)
<PAGE>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders Equity
Years Ended December 31, 1994, 1993 and 1992
(In Thousands of dollars)
Retained Share-
Earnings holders'
Common Stock (Deficit) Equity
Shares Dollars
<S> <C> <C> <C> <C>
Balance, December 31, 1991 4,977,164 $ 3,308 $ (634) $ 2,674
Net Loss for 1992 -- -- (244) (244)
Balance, December 31, 1992 4,977,164 3,308 (878) 2,430
Issuance of Common Stock,
net of costs 4,000,000 5,980 - 5,980
Exercise of Stock Options 90,000 135 - 135
Net Earnings for 1993 - -- 2,698 2,698
Balance, December 31, 1993 9,067,164 9,423 1,820 11,243
Exercise of Stock Options 20,000 30 - 30
Net Earnings for 1994 - - 5,165 5,165
Balance, December 31, 1994 9,087,164 $ 9,453 $ 6,985 $ 16,438
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993 and 1992
(In Thousands of dollars)
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 5,165 $ 2,698 $ (244)
Adjustments to reconcile net
earnings (loss) to net cash
provided by operating activities:
Income taxes 1,326 922 -
Extraordinary gain on retirement of
debt, net - (1,188) -
Depreciation and amortization 5,246 5,806 6,206
Provision for doubtful accounts 93 701 866
Changes in assets and liabilities, net
Receivables (2,105) (3,654) 1,376
Prepaid expenses 215 1,220 (220)
Accounts payable and accrued expenses 1,774 (873) (1,510)
Other (178) (20) 231
Net cash provided by operating activities 11,536 5,612 6,705
Cash flows from financing activities:
Net repayments on line of credit (2,949) (9,950) (1,510)
Secured equipment borrowings 1,825 2,513 4,948
Principal payments on capital leases and
equipment borrowings (10,186) (9,689) (5,611)
Proceeds from sale of common stock and
7% convertible subordinated debentures - 12,000 -
Proceeds from exercise of stock options 30 135 -
Increase in claim liability collateral funds - (1,500) (200)
Other, net - - 600
Net cash (used in) financing activities (11,280) (6,491) (1,773)
Cash flows from investing activities:
Purchases of property and equipment (3,244) (3,639) (6,170)
Disposals of property and equipment 3,366 5,481 728
Net cash provided by (used in)
investing activities 122 1,842 (5,442)
Net increase (decrease) in cash
and cash equivalents 378 963 (510)
Cash and cash equivalents:
Beginning of period 2,356 1,393 1,903
End of period $ 2,734 $ 2,356 $ 1,393
<PAGE>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of Intrenet, Inc., and all of its
subsidiaries (the Company). Truckload carrier subsidiaries at
December 31, 1994 were Roadrunner Trucking, Inc. (RRT), Eck
Miller Transportation Corporation (EMT), Advanced Distribution
System, Inc. (ADS) , Roadrunner Distribution Services, Inc.
(RDS) and C.I. Whitten Transfer Company, (CIW). All
significant intercompany transactions are eliminated in
consolidation. Through its subsidiaries, the Company provides
general and specialized truckload carrier services on a
regional basis throughout the forty-eight continental states
and Canada.
Revenue Recognition
Operating revenues are recognized upon receipt of the
freight. Related transportation expenses, including driver
wages, purchased transportation, fuel and fuel taxes, agent
commissions, and insurance premiums are accrued when the
revenue is recognized.
Property and Equipment
Property and equipment is carried at cost less an
allowance for depreciation. Major additions and betterments
are capitalized, while maintenance and repairs that do not
improve or extend the life of the respective asset, are
expensed as incurred. Improvements to leased premises are
amortized on a straight-line basis over the terms of the
respective lease. Operating lease tractor rentals are
expensed as a part of purchased transportation and equipment
rents. Depreciation of property and equipment is provided,
principally on a straight-line basis over the following
estimated useful lives of the respective assets, or life of
the lease for equipment under capital leases:
Buildings and Improvements . . . . 10 - 40 years
Revenue Equipment . . . . . . . . . . . 3 - 8 years
Other Property . . . . . . . . . . . . 3 - 7 years
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
Reorganization Value in Excess of Amounts Allocated to
Identifiable Assets
Reorganization Value in Excess of Amounts Allocated to
Identifiable Assets, resulting from the reorganization of the
Company in 1990, is being amortized on a straight-line basis
over 35 years. Benefits from utilization of
pre-reorganization net operating loss carryforwards (see Note
6) are reported as reductions of the Reorganization Value, and
thus reduce its effective life. The estimated remaining
effective life was approximately 10 years at December 31,
1994.
Debt Issuance Costs and Bank Fees
Debt issuance costs and bank fees are amortized over the
period of the related debt agreements.
Income Taxes
The Company and its subsidiaries file a consolidated
Federal income tax return. Effective January 1, 1993, the
Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109 - Accounting for Income
Taxes. Under SFAS 109, the Company recognizes income taxes
under the liability method of accounting for income taxes.
The liability method recognizes tax assets and liabilities for
future taxable income or deductions resulting from differences
in the tax and financial reporting basis of assets and
liabilities reflected in the balance sheet and the expected
tax impact of carryforwards for tax purposes. The effects of
adopting this Statement did not have a material impact on the
results of operations or financial position of the Company.
Earnings (Loss) Per Share
Earnings (loss) per common and common equivalent share
have been computed using the weighted average common shares
outstanding during the periods (9.1 million in 1994, 8.8
million in 1993, and 5.0 million in 1992). No effect has been
included for options or warrants outstanding, if the effect
would be antidilutive. Fully diluted earnings per share have
been computed under the assumption that the Debentures (See
Note 2) were converted into common stock on the date of their
issuance, using the if-converted method.
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
Credit Risk
Financial investments that subject the Company to
concentrations of credit risk consist primarily of trade
accounts receivable. Concentrations of credit risk with
respect to customer receivables are limited due to the
Company's diverse customer base, with no one customer,
industry, or geographic region comprising a large percentage
of customer receivables or revenues.
Statements of Cash Flows
Cash equivalents consist of highly liquid investments
such as certificates of deposit or money market funds with
original maturities of three months or less, including $ 1.75
million required to be maintained in an investment account
with the Company's bank. See Note 3 of Notes to Consolidated
Financial Statements.
Cash payments for interest were $ 3.5 million, $4.1
million, and $4.5 million in 1994, 1993, and 1992,
respectively. Cash payments for Federal alternative minimum
income taxes were $ 0.2 million in 1994. No Federal tax
payments were made in 1993 or 1992.
Capital lease obligations of $ 8.0 million, $3.8 million
and $6.0 million were incurred in 1994, 1993 and 1992,
respectively, primarily for revenue equipment.
Reclassifications
Certain prior 1993 and 1992 amounts have been
reclassified for purposes of comparison to the related 1994
amounts.
(2) 1993 Recapitalization
On January 19, 1993, the Company sold certain equity and
debt securities in a private offering. A total of eighteen
investors purchased an aggregate of 5,000 Units, each Unit
consisting of 800 shares of Common Stock, without par value,
and $1,200 principal amount in 7% Convertible Subordinated
Debentures due 1998 (Debentures) yielding proceeds of $12.0
million. An aggregate of 4 million shares of common stock and
$6.0 million principal amount in Debentures were issued in the
offering. The Common Stock in the Units was sold at $1.50 per
share and the Debentures were sold at par. The Debentures bear
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
interest at 7% per annum and mature on January 1, 1998. There
is no sinking fund. The Debentures are convertible into Common
Stock at a price of $1.65 per share. The Debentures are
redeemable, at the Company's option, on or after February 1,
1995 at various premiums declining to par after January 31,
1997. See Note 11 of Notes to Consolidated Financial
Statements.
In addition to the private offering, on January 19, 1993,
the Company restructured its bank credit facilities. The
Company applied approximately $5.4 million of the proceeds of
the private offering to retire in full approximately $7.2
million in outstanding bank loans. The Company also entered
into a revised bank agreement with one of its lending banks
which provides the Company with a $22.0 million long-term bank
credit facility.
(3) Bank Credit Facility
The Company has a $ 22 million bank credit facility with
a bank consisting of a $15.0 million revolving line of credit
which expires January 15, 1996, and a $7.0 million term loan
with a final maturity on December 31, 1997. The line of
credit includes provisions for the issuance of up to $15.0
million in standby letters of credit which, as issued, would
reduce available borrowings under the line of credit.
Borrowings under the bank agreement totaled $ 7.0 million at
December 31, 1994, and outstanding letters of credit totaled
$ 9.5 million, leaving $ 5.5 million of available credit under
the $22.0 million facility.
Interest on the outstanding principal balance of loans
under the bank agreement is payable monthly at a variable rate
of 1.25% over the bank's prime rate. The interest rate was
9.75% and 7.25% at December 31, 1994 and 1993, respectively.
Principal of the $7.0 million term loan is not required to be
paid prior to April 1995. At that time, quarterly payments
ranging from $0.5 million to $0.75 million commence, with
total payments of $2.0 million in each of 1995 and 1996, and
$3.0 million in 1997. The bank agreement requires the Company
to maintain a minimum of $1.75 million in an investment
account with the bank, to meet certain minimum net worth
requirements, prohibits the payment of dividends and limits
capital expenditures to the amounts included in the Company's
operating plans. Obligations under the bank agreement are
secured by liens on or security interests in all of the
otherwise unencumbered assets of the Company and its
subsidiaries.
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
In connection with the bank agreement, the Company also
issued to the bank warrants to purchase 300,000 shares of
common stock at a price of $1.65 per share. The warrants are
exercisable at any time prior to December 31, 1998.
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(4) Leases and Other Long-Term Obligations
The Company finances a majority of its revenue equipment
under various capital and non-cancelable operating leases, and
with secured equipment borrowings. Secured equipment
borrowings range in term from 48 to 60 months with interest
rates at December 31, 1994 of 7.33% to 11.55%.
Scheduled annual payments on the Company's capital and
operating leases and secured equipment borrowings at December
31, 1994 were as follows (in thousands of dollars):
Secured
Capital Lease Equipment Operating
Obligations Borrowings Leases
1995 $ 4,029 $ 2,788 $ 16,216
1996 3,876 2,122 14,096
1997 3,030 1,120 7,968
1998 1,421 317 3,072
1999 766 18 -
Total minimum payments $ 13,122 $ 6,365 $ 41,352
Less amount
representing interest (2,078) (681)
Present value of minimum
lease payments $ 11,044 $ 5,684
Less amount classified
as current (3,068) (2,357)
Long-term obligations
under capital
leases $ 7,976 $ 3,327
Included in the $ 4,029 of capital lease payments
scheduled for 1995 is $ 78 of residual value payments which
typically are satisfied through the sales proceeds of the
related leased equipment.
Total rental expense under non-cancelable operating
leases was $14,728, $10,924, and $ 7,024 in 1994, 1993, and
1992 respectively. The Company presently intends to lease
approximately 370 tractors under operating leases and 278
trailers under capital leases in 1995.
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
Purchased transportation and equipment rents expense
includes payments to owner-operators of equipment under
various short-term lease arrangements.
(5) Litigation and Contingencies
The Company is a party to routine litigation incidental
to its business, primarily involving claims for personal
injury and property damage incurred in the transporting of
freight. The Company maintains insurance which at December
31, 1994 covered the first $25.0 million of liability
resulting from such transportation related claims, subject to
deductibles for the first $ 25,000 to $ 250,000 of exposure
for each incident. The Company is not aware of any claims or
threatened claims that might materially affect the Company's
operating or financial results.
(6) Income Taxes
The provision for income taxes for the years ended
December 31, 1994 and 1993 was as follows:
1994 1993
Current $ 200 $ -
Deferred:
Income from operations 1,126 922
Extraordinary gain on
retirement of debt - 612
Total Provision $ 1,326 $ 1,534
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
Income tax expense attributable to income from operations
differs from the amounts computed by applying the U. S.
Federal statutory tax rate of 34% to pre-tax income from
operations as a result of the following:
1994 1993 1992
Taxes at statutory rate $ 2,207 $ 827 $ (66)
Increase (decrease) resulting from:
Non-deductible amortization 143 143 143
Non-deductible driver
subsistence pay 1,489 499 -
Release of valuation allowance
held against post-reorganization
net deferred tax assets (2,538) (547) -
Other, net 25 - ( 77)
Provision for Income Taxes $ 1,326 $ 922 $ -
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
The tax effects of temporary differences that give rise
to significant portions of deferred tax assets and deferred
tax liabilities at December 31, 1994 and 1993 are as follows:
1994 1993
Deferred Tax Assets
Insurance claim liabilities $ 2,896 $ 2,554
Reserve for doubtful accounts 463 504
Other 123 208
3,482 3,266
Deferred Tax Liabilities
Property differences,
primarily depreciation (2,493) (1,249)
Other (474) (532)
(2,967) (1,781)
Net Temporary Differences 515 1,485
Carryforwards -
Pre-reorganization, limited,
net operating loss
carryforwards
(Expiring 2004-2006) 5,330 6,816
Post-reorganization net
operating loss
carryforwards
(Expiring 2006-2009) 1,564 2,972
Total Carryforwards 6,894 9,788
Net Deferred Tax Assets 7,409 11,273
Valuation Allowance (4,884) (11,273)
Recorded Net Deferred Tax Assets $ 2,525 $ -
Net changes to the valuation allowance were as follows:
Valuation allowance, balance
at beginning of year $ 11,273 $ 13,876
Release of allowance held
against pre-reorganization
deferred tax assets, and
charged against Reorganization
Value (3,851) (1,534)
Release of allowance held
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
against post-reorganization
deferred tax assets, and
taken to income (2,538) (547)
Valuation allowance, balance
at end of year $ (4,884) $ (11,273)
The amounts disclosed above for 1993 differ from those
previously disclosed as a result of the amendment of the
Company's 1988 to 1992 Federal income tax returns.
Benefits from realization of pre-reorganization net
deferred tax assets are reported as a reduction of
Reorganization Value in Excess of Amounts Allocated to
Identifiable Assets. Conversely, realization of
post-reorganization net deferred tax assets are recognized as
a reduction of income tax expense. In 1993 and 1994, the
Company released valuation allowances held against both pre-
and post-reorganization net deferred tax assets to the extent
those assets were realized in the Company's tax returns for
those years. In addition, in 1994, based upon current and
anticipated future operating results, the Company concluded
that future realization of a portion of the pre-reorganization
net deferred tax assets was more likely than not. As a result,
the Company released approximately $2.5 million of valuation
allowances held against those assets, and reduced the
Reorganization Value in Excess of Amounts Allocated to
Identifiable Assets by a corresponding amount.
While management is optimistic that all net deferred tax
assets will be realized, such realization is dependent upon
future taxable earnings. The Company's carryforwards expire at
specific future dates and utilization of certain carryforwards
is limited to specific amounts each year. Further limitations
on carryforward utilization is likely to result from the
potential ownership change discussed more fully in Note 11 of
Notes to Consolidated Financial Statements. Accordingly, the
Company has recorded a valuation allowance against a portion
of those net deferred tax assets.
(7) Stock Options and Employee Compensation
On August 15, 1992, the Company adopted the 1992
Non-Qualified Stock Option Plan (the 1992 Option Plan). The
1992 Option Plan allows the Company to grant options to
purchase up to 590,000 shares of Common Stock to employees
and independent contractors of the Company and its operating
subsidiaries. On the same date the 1992 Option Plan was
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
approved, the Company granted all of the options available
under the 1992 Option Plan.
All of the options granted vested immediately and are
exercisable at prices ranging from $1.00 to $1.50 per share.
The Company recorded $105,000 of compensation expense in
connection with the 1992 Option Plan in its 1992 consolidated
financial statements.
In 1993, the Company adopted the 1993 Stock Option and
Incentive Plan (the 1993 Option Plan). The 1993 Option Plan
allows the Company to grant options to purchase up to
1,000,000 shares of Common Stock to officers and key employees
of the Company and its operating subsidiaries. Options issued
to date under the 1993 Option Plan have an exercise price
equal to market value on the date of grant, and are generally
exercisable for a ten year period.
The activity in the Company's 1992 and 1993 Option Plans in
1992, 1993, and 1994 was as follows:
<TABLE>
<CAPTION>
Exercise
Shares Price Per Share
<S> <C> <C>
Balance at December 31, 1991 587,138 $1.89 to $3.78
Granted 590,000 $1.00 to $1.50
Exercised -
Canceled (587,138) $1.89 to $3.78
Balance at December 31, 1992 590,000 $1.00 to $1.50
Granted 100,000 $2.75
Exercised (90,000) $1.50
Canceled (20,000) $1.50
Balance at December 31, 1993 580,000 $1.00 to $2.75
Granted 104,000 $3.625
Exercised (20,000) $1.50
Canceled (9,000) $3.625
Balance at December 31, 1994 655,000 $1.00 to $3.625
</TABLE>
In addition to those options granted above, on January
19, 1993, the Company granted non-qualified options to
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
purchase 200,000 shares of Common Stock to an executive
officer of the Company, at $ 1.50 per share. These options
vest 1/3 on July 1, 1993, 1/3 on July 1, 1994 and 1/3 on July
1, 1995. If the executive is not an employee on the vesting
date, the options lapse.
In connection with the 1990 reorganization, and in
addition to those options granted above, the Company entered
into a Stock Option Agreement (the Option Agreement) with
Compton Management Corporation, a company that provided
management services to the Company. The Option Agreement
provides for the grant of an option to purchase 264,212 shares
of Common Stock at a purchase price of $ 0.125 per share. The
option may be exercised, in whole or in part, at any time
prior to January 16, 1996. The Option Agreement provides
Compton with certain registration rights to permit resale in
the public market.
(8) Property and Equipment
Property and equipment, substantially all of which is
pledged as security under the bank credit facility (see Note
3), other indebtedness or capital leases, at December 31
follows (in thousands of dollars):
1994 1993
Land $ 1,621 $ 1,626
Buildings and leasehold improvements 2,920 2,461
Revenue equipment 29,279 28,771
Other property 5,320 3,112
39,140 35,970
Less accumulated depreciation (11,164) (11,048)
$ 27,976 $ 24,922
(9) Prepaid and Accrued Expenses
An analysis of prepaid and accrued expenses at December
31, 1994, and 1993 follows (in thousands of dollars):
1994 1993
Prepaid expenses:
Insurance $ 1,406 $ 1,717
Tires 1,051 1,291
Shop and truck supplies 2,080 1,759
Other 1,187 1,172
$ 5,724 $ 5,939
Accrued Expenses:
Salaries and wages $ 1,930 $ 1,829
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
Fuel and mileage taxes 469 444
Equipment leases 585 517
Other 3,686 2,064
$ 6,670 $ 4,854
(10) Transactions with Affiliated Parties
In August 1991, the Company sub-leased 35 refrigerated
van trailers to a company affiliated with a member of the
Company's Board of Directors. The sub-lease was structured to
provide sub-lease payments to the Company in an amount equal
to the primary lease payments the Company was obligated to
make. The lease and related sub-lease expired in May, 1992.
The Company recorded approximately $115,000 of sub-lease
income in 1992.
In 1993, the Company entered into a financial consulting
agreement with an affiliate of a member of the Company's Board
of Directors. This agreement, which expired on January 31,
1994, provided for payments totaling $275,000 for consulting
services rendered.
In 1994, 1993 and 1992, the Company leased approximately
150, 430 and 180 tractors, respectively, from unaffiliated
leasing companies which had purchased the trucks from a
dealership affiliated with a member of the Company's Board of
Directors. The lessors paid a selling commission to the
dealership. The terms of the leases were the result of
arms-length negotiations between the Company and the lessors.
The Company believes the involvement of the selling dealership
did not result in lease terms that are more or less favorable
to the Company than would otherwise be available to it. The
Company also purchases maintenance parts and services from the
dealership from time to time. Total payments to the dealership
for these services was $ 307,000 in 1994 and $ 123,000 in
1993.
(11) Event (Unaudited) Subsequent to Date of Auditors' Report
On March 7, 1995, the Company issued a redemption notice
for the Debentures. (See Note 2 of Notes to Consolidated
Financial Statements) The Debenture holders have the option
of accepting cash equal to 107% of par, or converting the
Debentures into Common Stock at a price of $ 1.65 per share.
If the Debenture holders convert their Debentures into Common
Stock, the Company will issue approximately 3,636,352 new
shares. If none of the Debentures are converted, the Company
<PAGE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
will retire the Debentures with cash payments totaling
$ 6,420,000. The Debenture holders have until April 6, 1995
to surrender their Debentures for conversion, although the
Company has requested that they do so prior to March 31, 1995.
As the Common Stock has been trading at a price in excess of $
1.65 per share, management expects that all Debenture holders
will convert their Debentures into Common Stock.
In the event a significant portion of the Debentures are
converted, an "ownership change" for tax purposes is likely
to occur. This will result in a limitation of the amount of
tax net operating loss carryforwards the Company may utilize
in any single year. Management does not anticipate that this
limitation will have a material impact on the Company's future
tax payments.
<PAGE>
Schedule II
INTRENET, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
Additions
Charged to Charged
Beginning Costs and to Other Ending
Balance Expenses Accounts Deductions Balance
Year Ended
December 31, 1994:
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts $ 1,481 $ 93 $ - $ (211) $ 1,363
Deferred Tax Asset
Valuation Allowance $ (11,273) $ - $ - $(6,389) $(4,884)
Year Ended
December 31, 1993:
Allowance for
doubtful accounts $ 1,368 $ 701 $ - $ (588) $ 1,481
Deferred Tax Asset
Valuation Allowance [A]$(13,876) $ - $ - $(2,081) $(11,273)
Year Ended
December 31, 1992:
Allowance for
doubtful accounts $ 998 $ 866 $ - $ (496) $ 1,368
</TABLE>
[A] Amounts differ from those previously disclosed as a result
of the amendment of the Company's 1988 to 1992 tax returns.
<PAGE>
<TABLE>
<CAPTION>
INTRENET, INC.
STATEMENT RE: COMPUTATION
OF PER SHARE EARNINGS
1994 1993 1992
<S> <C> <C> <C>
Weighted average shares outstanding
during period 9,080,131 8,797,536 4,977,164
Assumed exercise of options and
warrants 884,370 757,721 310,527
Shares assumed for primary earnings
per share 9,964,501 9,555,257 5,287,691
Effect on number of shares of
using year-end share price
for fully diluted calculation 83,198 - -
Assumed conversion of 7% Convertible
Subordinated Debentures 3,636,363 3,457,036 -
Shares assumed for fully diluted
earnings per share 13,684,062 13,012,293 5,287,691
Earnings for the period:
($ in Thousands)
Before extraordinary items $5,165 $1,510 ($244)
Extraordinary items - 1,188 -
Net earnings $5,165 $2,698 ($244)
Earnings per common and common
equivalent share:
Primary:
Before extraordinary items $0.52 $0.16 ($0.05)
Extraordinary gain, net - 0.12 -
Net earnings $0.52 $0.28 ($0.05)
Fully diluted:
Before extraordinary items $0.40 $0.14 ($0.05)
Extraordinary gain, net - 0.09 -
Net earnings $0.40 $0.23 ($0.05)
EXHIBIT 11
</TABLE>
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
Intrenet, Inc.
December 31, 1994
Advanced Distribution System, Inc., a Florida Corporation
Eck Miller Transportation Corporation, an Indiana corporation
Mid-Western Transport, Inc., an Indiana corporation
Roadrunner Enterprises, Inc., an Indiana corporation
C. I. Whitten Transfer Company, a Delaware corporation
EXHIBIT 21
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into
the Company's previously filed Registration Statement File No.
33-69882.
Indianapolis, Indiana, Arthur Andersen LLP
March 24, 1995.
EXHIBIT 23
<PAGE>
