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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________________
Commission file number 1-9051
TRANSCISCO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
[TRANSCISCO LOGO]
Delaware 94-2989345
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
601 California Street, Suite 1301
San Francisco, CA 94108
(Address of principal executive offices) (Zip Code)
(415) 477-9700
(Registrant's Telephone Number,
including area code)
Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
----- -----
Indicate the number of common shares outstanding, as of the latest practicable
date.
Class Outstanding at February 14, 1996
Common Stock, $.01 par value 5,232,537 (excludes 794,390 shares
held in Treasury)
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PART I - FINANCIAL STATEMENTS
ITEM 1. TRANSCISCO INDUSTRIES, INC.
FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31
December 31 1995
1995 (restated)
---------- ----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,877 $ 1,371
Accounts receivable 5,624 6,221
Inventories 2,543 3,460
Other current assets 545 419
---------- ----------
Total current assets 11,589 11,471
Property and equipment, net
of accumulated depreciation 14,572 17,561
Investment in SFAT 15,755 11,024
Other assets 91 81
---------- ----------
$ 42,007 $ 40,137
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,071 $ 2,744
Accrued compensation and benefits 1,747 1,202
Short-term borrowing -- 1,730
Other current liabilities 1,541 3,041
Current portion of long-term debt 309 1,451
---------- ----------
Total current liabilities 6,668 10,168
Senior secured debt 2,186 --
Subordinated debt 3,000 --
Other long-term liabilities 2,728 2,613
Deferred maintenance liability 2,812 1,108
Long-term debt -- 11,822
Interest payable 222 1,261
Deferred income tax 321 321
Shareholders' equity:
Common Stock $.01 par value
15,000,000 shares authorized,
issued and outstanding, 5,232,537
in 1995 and 5,120,870 in 1994 52 51
Paid-in capital in excess of par 17,728 17,022
Retained earnings (accumulated deficit) 9,804 (1,235)
Less cost of Common Shares in Treasury:
794,390 in 1995, and 478,726 in 1994 (3,514) (2,994)
---------- ----------
Total shareholders' equity 24,070 12,844
---------- ----------
$ 42,007 $ 40,137
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
Note: The balance sheet at March 31, 1995 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. Certain balance sheet accounts have been reclassified to
conform to the presentation as of December 31, 1995. Also, the March 31, 1995
balance sheet has been restated to reflect the Company's investment in SFAT on
the equity method of accounting.
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TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER-SHARE DATA)
(UNAUDITED)
<TABLE>
Nine Months Ended Three Months Ended
December 31 December 31
--------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues, primarily maintenance and repairs $ 33,190 $ 26,060 $ 12,268 $ 9,185
Costs and expenses:
Operations and support 24,408 21,232 8,005 7,437
Selling, general and administrative costs 4,648 3,575 1,847 1,181
Interest (income) (58) (174) (18) (18)
Interest expense 802 1,229 179 439
Other (income) expense 22 (72) (7) --
Income from operations before tax,
asset write-down, and ---------- ----------- ----------- -----------
equity in earnings of SFAT 3,368 270 2,262 146
Asset write-down (3,000) -- (3,000) --
----------- ----------- ----------- -----------
Income from operations before tax
and equity in earnings of SFAT 368 270 (738) 146
Equity in earnings of SFAT (Note) 4,791 -- 1,365 --
Provision for income tax (178) -- (110) --
----------- ----------- ----------- -----------
Income from operations before extraordinary item 4,981 270 517 146
Extraordinary item: gain from debt refinancing 6,058 -- -- --
----------- ----------- ----------- -----------
NET INCOME $ 11,039 $ 270 $ 517 $ 146
=========== =========== =========== ===========
PER SHARE AMOUNTS:
Income from operations before
extraordinary item $ 0.85 $ 0.05 $ 0.08 $ 0.03
Extraordinary item: gain from debt refinancing 1.04 0.00 0.00 0.00
----------- ----------- ----------- -----------
NET INCOME $ 1.89 $ 0.05 $ 0.08 $ 0.03
=========== =========== =========== ===========
Shares used in calculations of per share amounts 5,827,877 5,326,697 6,244,060 5,347,880
</TABLE>
- --------------------------------------------------------------------------------
Note: SFAT's consolidated quarterly results for 1994 are not available and,
accordingly, are not presented in this table. However, SFAT's consolidated
1994 audited annual results ($8.9 million net income on $27.3 million in
revenue) and Transcisco's equity in SFAT's 1994 earnings (about $2 million)
will be reflected for the year ended March 31, 1995 in Transcisco's Form
10-K.
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TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended December 31
-----------------------------
1995 1994
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,039 $ 270
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in earnings of SFAT, net of dividends (4,731) --
Extraordinary item: gain on debt refinancing (6,058) --
Asset write-down 3,000 --
Interest payable 297 643
Depreciation and amortization 898 886
Common stock issued for services 429 10
Changes in operating assets and liabilities:
Accounts receivable 597 (1,696)
Inventories 917 (953)
Other current assets (127) 77
Notes receivable -- 2,000
Other assets 20 72
Accounts payable 327 16
Accrued compensation and benefits 545 (18)
Deferred maintenance liability 1,704 921
Other current liabilities (1,584) 215
Other long-term liabilities 114 --
-------- ---------
Net cash provided by operating activities 7,387 2,443
Cash flows from investing activities:
Capital expenditures, net (909) (575)
Cash flows from financing activities:
Payments on Class F and other senior debt (8,536) (2,576)
Borrowing under senior secured and
subordinated debt 5,293 --
Short term borrowing (repayment) (1,730) 1,004
-------- ---------
Net cash used in financing activities (4,973) (1,572)
-------- ---------
Net increase in cash and cash equivalents $ 1,506 $ 296
Cash and cash equivalents at beginning of period 1,371 725
-------- ---------
Cash and cash equivalents at the end of period $ 2,877 $ 1,021
======== =========
</TABLE>
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TRANSCISCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1995
1) BASIS FOR PRESENTATION.
The accompanying unaudited financial statements have been prepared in
accordance with generally accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period and the nine month
period ended December 31, 1995 are not necessarily indicative of the results
that may be expected for the fiscal year ended March 31, 1996. For further
information, refer to the financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended March 31, 1995.
The Company's wholly owned subsidiary, Transcisco Trading Company ("TTC"), owns
23.5% interest in SFAT, which the Company believes is the largest privately
owned railcar transportation company in Russia. The earnings of SFAT for the
three months and nine months ended December 31, 1995 have not been audited.
Although SFAT's audited results for the year ended December 31, 1994 were
prepared on a consolidated basis, the unaudited results for each of the
quarters in 1994 were not prepared on this same basis. The Company has
determined that the restatement of the 1994 quarterly results is not feasible.
Accordingly, the 1994 quarterly results are not presented for purposes of
comparison to the 1995 quarterly results. SFAT's audited consolidated results
for the year ended December 31, 1994 ($8.9 million in net income and $27.3
million in revenue) and Transcisco's equity in SFAT's earnings for this period
will be presented by restating Transcisco's results of operations for the year
ended March 31, 1995 in Transcisco's Form 10-K for year ending March 31, 1996
for purposes of comparison with the current year's financial performance.
2) ACCOUNTING FOR INVESTMENT IN SFAT.
The Company has resumed equity accounting for its investment in SFAT. The
resumption of equity accounting was based upon a number of factors including
the Company's continuing ability to influence SFAT's operations and the
availability of reliable financial data from SFAT. The accompanying statements
of operations for the three months and nine months ended December 31, 1995
reflect the Company's equity in the net earnings of SFAT.
The resumption of equity accounting will be presented as a $9 million
cumulative effect as of March 31, 1994 since audited financial statements for
SFAT are not available prior to this date. The results for the year ended
March 31, 1995 will be restated to reflect the Company's equity in the earnings
of SFAT of approximately $2 million. Transcisco will report its equity in the
earnings of SFAT on a one quarter lag basis beginning with its fiscal year end
March 31, 1995 (i.e., SFAT's results through December 31, 1994 will be reported
and included with Transcisco's income for the fiscal year end March 31, 1995).
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3) ASSET WRITE-DOWN.
In 1995, the Financial Accounting Standards Board issued a Statement of
Financial Accounting Standards, No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets for Long-Lived Assets to be Disposed of." SFAS
121 requires recognition of impairment of long-lived assets in the event the
net book value of such assets exceeds the undiscounted cash flows attributed to
such assets. The Company adopted the provisions of SFAS 121 as of October 1,
1995.
In connection with the refinancing of the Company's debt, the Company evaluated
the ongoing value of its property and equipment. Based on this evaluation, the
Company determined that assets at one facility with a carrying value of
approximately $5.5 million were impaired and such assets were written down by
$3 million to their fair value. Fair value was estimated based upon property
and equipment appraisals.
4) REFINANCING.
On August 1, 1995, Transcisco Industries, Inc. (the "Company") refinanced
substantially all of its long-term debt. Financing for the transaction was
provided by Transamerica Business Credit Corporation, ("Transamerica") and
Furman Selz Investments, Inc. ("Furman Selz"). Transamerica provided a $10
million asset-based credit facility, while Furman Selz purchased a $3 million
subordinated note (Furman Selz also purchased 1 million warrants to acquire 1
million shares of the Company's common stock at $1.50 per share). The proceeds
from these loans and approximately $3 million of the Company's available cash
were used to repurchase approximately $15 million of the Company's Class F debt
(including accrued interest) for a cash payment of $8.4 million and other
consideration, resulting in an approximate $6 million extraordinary gain. The
Company also used $1.7 million of proceeds from the refinancing to retire all
of its short-term revolving line of credit held by Congress Financial
Corporation.
In accordance with its plan of reorganization, on closing the refinancing,
304,822 shares of common stock were returned to the Company, which had been
held in escrow for the benefit of the previous holders of long-term debt.
5) BANK DEBT AND LONG TERM LIABILITIES.
(a) Senior Secured Debt:
Senior secured debt at December 31, 1995 consists of the following:
<TABLE>
<S> <C>
SENIOR TERM LOAN. Pursuant to a term loan with
Transamerica, principal payments are due in equal
monthly installments of $25,773.81 for 59 months
through June 30, 2000, with the balance of the then
outstanding principal due July 31, 2000; interest is
due monthly in arrears, computed at prime plus 2%. The
loan is secured by substantially all of the Company's
real estate and fixed assets. The term loan note
contains certain financial covenants, including certain
ratios that the Company must satisfy, and certain
prepayment fees for payments made before July 31, 1998.
BALANCE AT DECEMBER 31, 1995.............................. $2,062,000
REVOLVING CREDIT LINE. This credit facility with
Transamerica has a limit of $7,835,000, subject to
certain reserves and eligibility requirements. The
loan is collateralized by the Company's accounts
receivables and inventory (the
</TABLE>
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<TABLE>
<S> <C>
"collateral base"). The collateral base is computed on
a daily basis. Interest is accrued daily based on the
amount of loan outstanding, at a rate of prime plus
1.75%, payable in arrears. A fee of 0.25% is assessed
on any unused line of credit. A fee of 0.25% of the
daily average of loan outstanding during each month is
charged to the Company to cover Transamerica's
administrative and management costs. The term of the
credit line is five years (expiring July 31, 2000),
when all outstanding balances are due in full. Since
the inception of the credit line, the Company's
capacity for additional borrowing (as measured by its
borrowing base) has exceeded the Company's requirements
for short-term borrowings under the credit line.
BALANCE AT DECEMBER 31, 1995.............................. $133,000
SECURED REAL ESTATE LOAN. Collateral for this loan
(through the Wyoming Community Development Center)
consists of the real estate, land and buildings of
Transcisco Rail Services' Rock Springs, Wyoming
facility. The loan is payable in two remaining
installments: $100,000 in December 1997 and $200,000 in
December 2000. Interest is 6% and is due monthly.
BALANCE AT DECEMBER 31, 1995.............................. $300,000
----------
Total Senior Secured Debt................................. $2,495,000
Less current portion of debt.............................. $(309,000)
----------
LONG-TERM PORTION OF SENIOR SECURED DEBT.................. $2,186,000
==========
</TABLE>
(b) Subordinated Debt:
Subordinated debt for the Company at December 31, 1995 consists of the
following:
<TABLE>
<S> <C>
SERIES A, SENIOR SUBORDINATED NOTES. The notes were
issued to Furman Selz S.B.I.C., L.P. and James Dowling.
Principal is due in total in 2000. The note bears
interest at an annual rate of 10% through July 31,
1997, and 12% thereafter. Interest is payable on July
31, of 1996 and 1997, and January 31 and July 31 of
each year thereafter (all prepayments will first be
applied to the Series A notes). Half of the interest
due on July 31, 1996 and July 31, 1997 is to be
deferred and payable on July 31, 1998 and July 31,
1999, respectively. The subordinated debt may be
prepaid without penalty upon proper notice.
BALANCE AT DECEMBER 31, 1995.............................. $2,000,000
SERIES B, SENIOR SUBORDINATED NOTES. The notes were
issued to Furman Selz S.B.I.C., L.P. and James Dowling.
Principal is due in total in 2000. The note bears
interest at an annual rate of 14%. Interest payment
and other terms are similar to the Series A note.
BALANCE AT DECEMBER 31, 1995.............................. $1,000,000
----------
TOTAL SUBORDINATED DEBT AT DECEMBER 31, 1995.............. $3,000,000
==========
</TABLE>
(c) Long Term Debt:
Long term debt as of March 31, 1995 was $11.8 million,
primarily consisting of Class F bankruptcy debt, all of
which was purchased at a discount by the Company during
its refinancing in August 1995.
6) RECLASSIFICATION.
Certain March 31, 1995 balances have been reclassified to conform to the
presentation as of December 31, 1995.
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7) COMMON STOCK WARRANTS.
In connection with the refinancing, Furman Selz purchased 1 million warrants to
acquire 1 million shares of the Company's common stock at an exercise price of
$1.50 per share. The agreement governing the warrants was reached in June
1995, when the Company's stock price was approximately $1.50 per share. Furman
Selz paid $30,000 for the warrants, which expire in July 2005. The warrants
are subject to certain anti-dilution provisions and may be fully exercised at
any time. The warrants may be exercised for cash consideration only.
8) LEGAL PROCEEDINGS: REFER TO PART II, ITEM 1 OF THIS FORM 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1995 AS COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1994
REVENUES.
Revenue for the Company during the three month period ended December 31, 1995
increased to $12.3 million from $9.2 million in the comparable three month
period of 1994. The increase in revenue was primarily a result in Transcisco
Leasing Company's (TLC) arrangement of the purchase and sale of 1,036 coal cars
to a major financial institution. The transaction resulted in approximately
$2.9 million of revenue.
OPERATIONS AND SUPPORT EXPENSES.
Operation and support expenses include the cost of direct and indirect labor,
materials and overhead costs associated with the repair and maintenance of
railroad rolling stock. Operations and support expenses for the quarter ended
December 31, 1995 increased to $8 million from $7.4 million in the comparable
period of 1994. The increase was primarily a result of higher maintenance
expenses arising from growth in TLC's managed railcar fleet.
Operations and support expenses increased also as a result of an approximate
$400,000 charge related to operating changes implemented to more efficiently
administer accounting for low-dollar inventory items at Transcisco Rail
Services (TRS).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
Selling, general and administrative expenses include the sales, finance, human
resources, legal, purchasing and administrative operations of the Company.
These expenses increased to $1.8 million for the quarter ended December 31,
1995 from $1.2 million in the same period of 1994. This increase was caused by
higher personnel and marketing costs incurred to facilitate the Company's
revenue growth.
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EQUITY IN EARNINGS OF SFAT.
Effective with the quarter ended December 31, 1995, the Company resumed the
equity method of accounting for its 23.5% investment in SFAT. Under this
method, the Company accounts for its portion of SFAT's net income as "equity in
earnings of SFAT."
Since a portion of the Company's earnings are derived from its share of SFAT's
net income, the Company's future results may vary in accordance with changes in
SFAT's results. Management cautions that SFAT's earnings may fluctuate from
quarter-to-quarter and from year-to-year as a result of several factors,
including the timing of railcar assembly orders, the volume of tariffs
collected by SFAT on behalf of the Ministry of Railways and the general volume
of goods transported via railway. SFAT's quarterly results should not be
considered an indication of annual results.
As with other companies conducting business in developing nations, the
Company's investment in SFAT is subject to certain business, financial and
political risks. Although Russia's economy has shown signs of improvement,
there is no assurance this improvement will continue. If Russia's economy
deteriorates, the financial performance of SFAT and, as a result, of
Transcisco, may be adversely affected.
NET INCOME.
Net income for the quarter was $517,000, or $.08 per share. For the comparable
quarter of 1994, net earnings were $146,000 or $0.03 per share. The increase
in net income was a result of several factors, the most significant of which
was TLC's arrangement of the purchase and sale of 1,036 railcars, resulting in
a net contribution of earnings of $2.7 million. Another reason for the
Company's income growth was the addition of its $1.4 million of equity in
earnings of SFAT (see Note 1). The increase in income was offset by the $3
million asset write-down and the $400,000 charge related to operating changes
made at TRS (discussed earlier).
COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE NINE MONTHS ENDED
DECEMBER 31, 1995 AS COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 1994
REVENUES.
Revenue for the Company during the nine month period ended December 31, 1995
increased to $33.2 million from $26.1 million in the comparable nine month
period of 1994. The increase in revenue was a result of growth in TLC's
railcar fleet under management, which grew to over 8,500 railcars during the
previous nine months. The Company's revenue growth was also caused by TLC's
arrangement of the purchase and sale of 1,036 railcars, which contributed $2.9
million in revenues. TLC's growth in revenue was offset by lower revenues at
TRS, whose revenues dropped $1.3 from the comparable period of 1994 as a result
of lower program repair work.
OPERATIONS AND SUPPORT EXPENSES.
For the nine month period ended December 31, 1995, operations and support
expenses increased to $24.5 million from $21.2 million in the comparable period
of 1994. This increase
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was primarily a result of higher maintenance expenses arising from growth in
TLC's managed railcar fleet.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
For the nine month period ended December 31, 1995, selling, general and
administrative expenses increased to $4.6 million from $3.6 million in the same
period of 1994. This increase was caused by higher personnel and marketing
costs incurred to facilitate growth in revenue, primarily at TLC.
NET INCOME.
Net income for the nine month period ended December 31, 1995 was $11,030,000,
or $1.89 per share. Approximately $6.1 million of net income was a result of
an extraordinary gain from the debt refinancing. For the current nine month
period, income before the extraordinary gain was $4.98 million or $0.85 per
share. For the comparable period of 1994, net earnings were $270,000, or
$0.05 per share. The increase in income (before the extraordinary gain) was a
result of several factors. First, TLC's purchase and resale of 1,036 railcars
increased net earnings by $2.7 million. Second, growth in TLC's managed
railcar fleet boosted sales, which translated into higher earnings. Third, the
addition of equity in earnings of SFAT increased net income approximately $4.9
million (see Note 1). The increase in income was offset by the $3 million
asset write-down and the $400,000 charge related to operating changes made at
TRS (discussed earlier).
LIQUIDITY AND CAPITAL RESOURCES.
The ratio of current assets to current liabilities was 1.74 to 1.0 at December
31, 1995 compared to 1.13 to 1.00 at March 31, 1995. Working capital increased
by $3,618,000 as a result of cash flow from operations. This increase was also
due to the refinancing, whereby the Company retired its short-term line of
credit with Congress Financial Corporation.
The Company's cash requirements were satisfied primarily through cash on hand,
operating earnings and revolving loans (in addition to a term loan and
subordinated note used to fund the refinancing). The current revolving loan is
provided through Transamerica Business Credit Corporation, and has a maximum
limit of $7,835,000. Borrowings from this revolving loan at December 31, 1995
were $133,000. The loan is collateralized by the Company's accounts
receivables and inventory, subject to certain reserves and eligibility terms.
Based upon the Company's level of inventory and accounts receivable, coupled
with the revolving loan's eligibility requirements, the net availability of
funds under the facility to approximately $1.5 million as of December 31, 1995.
Management believes its present cash balance, availability of working capital
from the loan facility, and attainment of projected cash flow should be
sufficient to meet the Company's working capital requirements for the next 24
months.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On or about September 15, 1995, Great American Insurance Company ("Great
American") filed an action (the "Action") in the Superior Court of the State of
California in and for the County of Marin against Mark Hungerford, a former
Chairman, Director, and Chief Executive
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Officer of the Company. The action purports to set forth three causes of
action for declaratory relief, and prays for judgment in the amount of
$2,675,000 (plus interest as provided by law) against Mr. Hungerford.
According to the complaint, the Action purports to arise out of a certain
payment made by Great American on behalf of Mr. Hungerford in connection with
the partial settlement of certain litigation, captioned Daniels v. PLM
International, Inc., et al., to which Mr. Hungerford, and others including the
Company, previously were parties. The Daniels litigation has been settled, and
the state and federal complaints have been dismissed with prejudice. The
complaint in the Action also seeks a declaration that two endorsements each
barred coverage under a Directors and Officers Policy issued by Great
American to the directors and officers of the Company. The complaint in the
Action also seeks a declaration that no coverage is afforded under that policy
for the director and officer defendants in the Daniels litigation in their
capacities as directors or officers of PLM International, Inc. Prior to the
commencement of the Action in the Marin County Superior Court, the United
States District Court for the Northern District of California ruled, on a
summary judgment motion in a declaratory relief action, that neither of the
endorsements relied upon by Great American precluded coverage under the
particular Directors and Officers policy issued by Great American. The Court
of Appeals for the Ninth Circuit reversed and remanded that decision, directing
that it be dismissed on grounds which did not address the coverage issues under
the two endorsements. Great American thereafter filed the Action in Marin
County Superior Court. The Company has agreed to indemnify, defend and hold
harmless Mr. Hungerford from any claims, complaints, liabilities, causes of
action, costs and expenses arising out of any action by Great American or any
settlement thereof, so long as the Company approves any such settlement. In
connection with its indemnification obligation, the Company has retained
counsel to represent Mr. Hungerford in the action.
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of the Report:
Exhibits:
3.1 Joint Plan of Reorganization, incorporated by reference to
Form 8-A filed by the Company on August 12, 1993.
3.2 Restated Certificate of Incorporation, as Amended,
incorporated by reference to Form 8-A by the Company on
August 12, 1993.
3.3 By-Laws, as Amended, incorporated by reference to Form 8-A
filed by the Company on August 12, 1993.
10.1 Lease agreement for 601 California Street, incorporated herein
by reference to Company's filing of Form 10-K for December 31,
1988, filed with the Securities and Exchange Commission.
10.2 Transcisco Industries, Inc., Amended and Restated (1994) Stock
Option Plan (including implementing agreement: Transcisco
Industries, Inc., Stock Option Agreement) incorporated herein
by reference to Form S-8 filed April 13, 1995 with the
Securities and Exchange Commission.
10.3 Plan and Agreement of Reorganization, incorporated by
reference to the Company's Registration Statement on Form S- 4
(Reg. No. 33-2236) dated December 23, 1985, filed with the
Securities and Exchange Commission.
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10.4 Employment Agreement between TRS and Mr. Jahnke, dated April
13, 1995, incorporated herein by reference to the Company's
Form 10-K for the fiscal year ended March 31, 1995.
10.6 Transcisco Industries, Inc. Directors' (1994) Stock Option
Plan, incorporated by reference to the Company's Form S-8
filed April 8, 1995 with the Securities and Exchange
Commission.
10.7 Employment Agreement as amended, dated May 1, 1995 between Mr.
William F. Bryant and Transcisco Leasing Company, a subsidiary
of Company, incorporated herein by reference to the Company's
Form 10-K for the fiscal year ended March 31, 1995.
10.8 Agreement between Deucalion Securities, Inc., and Steven L.
Pease and the Company dated January 3, 1995, incorporated
herein by reference to the Company's Form 10-K for the fiscal
year ended March 31, 1995.
10.10 The Note and Warrant Purchase Agreement Among the Company,
Transcisco Rail Services Company, Transcisco Leasing Company,
and Transcisco Trading Company and Furman Selz S.B.I.C., L.P.
and James Dowling dated as of August 1, 1995 is incorporated
herein by reference to the Company's Form 8-K filed on October
6, 1995.
10.11 The Registration Rights Agreement by and between the Company,
Furman Selz S.B.I.C., L.P., and James Dowling dated August 1,
1995 is incorporated herein by reference to the Company's Form
8-K filed on October 6, 1995.
10.12 The Loan and Security Agreement between the Company,
Transcisco Rail Services Company, Transcisco Leasing Company,
Transcisco Trading Company, and Transamerica Business Credit
Corporation, dated as of July 31, 1995 is incorporated herein
by reference to the Company's Form 8-K filed on October 6,
1995.
10.13 The Shareholder Rights Plan by and between the Company and
First Interstate Bank of California, as rights agent, dated
September 5, 1995, is incorporated herein by reference to the
Company's Form 8-A filed on September 15, 1995.
10.14 Letter Agreement by and between the Company and Mark C.
Hungerford dated July 1, 1995, incorporated herein by
reference to the Form S-3 dated February 7, 1996.
21.1 List of subsidiaries of the Company, incorporated herein by
reference to the Company's Form 10-K for the fiscal year ended
December 31, 1993.
23.1 Consent of Independent Auditors, incorporated herein by
reference to the Company's Form 10-K for the fiscal year ended
March 31, 1995.
(b) Reports on Form 8-K
An 8-K was filed on January 18, 1996, including therewith a press release
issued in connection with the Company's change to the equity method of
accounting for SFAT.
An 8-K was filed on October 6, 1995, including therewith the primary documents
governing the refinancing: the Loan and Security Agreement between the Company
and Transamerica, dated July
12
<PAGE> 13
31, 1995 and the Note and Warrant Purchase Agreement among the Company, its
subsidiaries, Furman Selz, S.B.I.C., L.P. and James Dowling dated August 1,
1995.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSCISCO INDUSTRIES, INC.
February 14, 1996 /s/ Gregory S. Saunders
--------------------------------------------
Date Gregory S. Saunders - on behalf of the
Registrant and as Vice President, Controller
13
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